State Department: Improvements Needed to Strengthen U.S. Passport
Fraud Detection Efforts (29-JUN-05, GAO-05-853T).		 
                                                                 
Maintaining the integrity of the U.S. passport is essential to	 
the State Department's efforts to protect U.S. citizens from	 
terrorists, criminals, and others. State issued about 8.8 million
passports in 2004. During the same year, State's Bureau of	 
Diplomatic Security arrested about 500 individuals for passport  
fraud, and about 300 persons were convicted. Passport fraud is	 
often intended to facilitate other crimes, including illegal	 
immigration, drug trafficking, and alien smuggling. GAO examined 
(1) how passport fraud is committed, (2) what key fraud detection
challenges State faces, and (3) what effect new passport examiner
performance standards could have on fraud detection.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-05-853T					        
    ACCNO:   A28401						        
  TITLE:     State Department: Improvements Needed to Strengthen U.S. 
Passport Fraud Detection Efforts				 
     DATE:   06/29/2005 
  SUBJECT:   Fraud						 
	     Identity theft					 
	     Passports						 
	     Standards						 
	     Criminals						 
	     Crime prevention					 
	     Criminal activities				 
	     Law enforcement					 
	     Performance measures				 
	     Federal employees					 
	     Employee training					 
	     Dept. of State Consular Lookout and		 
	     Support System					 
                                                                 
	     Terrorist Screening Center Database		 

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GAO-05-853T

                 United States Government Accountability Office

GAO Testimony

Before the Committee on Homeland Security and Governmental Affairs, U.S.
Senate

For Release on Delivery

Expected at 9:30 a.m. EDT STATE DEPARTMENT

Wednesday, June 29, 2005

    Improvements Needed to Strengthen U.S. Passport Fraud Detection Efforts

Statement of Jess T. Ford, Director International Affairs and Trade

GAO-05-853T

[IMG]

June 29, 2005

STATE DEPARTMENT

Improvements Needed to Strengthen U.S. Passport Fraud Detection Efforts

                                 What GAO Found

Using the stolen identities of U.S. citizens is the primary method of
those fraudulently applying for U.S. passports. False claims of lost,
stolen, or damaged passports and child substitution are among the other
tactics used. Fraudulently obtained passports can help criminals conceal
their activities and travel with less scrutiny. Concerns exist that they
could also be used to help facilitate terrorism.

State faces a number of challenges to its passport fraud detection
efforts, and these challenges make it more difficult to protect U.S.
citizens from terrorists, criminals, and others. Information on U.S.
citizens listed in the federal government's consolidated terrorist watch
list is not systematically provided to State. Moreover, State does not
routinely obtain from the Federal Bureau of Investigation (FBI) the names
of other individuals wanted by federal and state law enforcement
authorities. We tested the names of 67 federal and state fugitives and
found that 37, over half, were not in State's Consular Lookout and Support
System (CLASS) database for passports. One of those not included was on
the FBI's Ten Most Wanted list. State does not maintain a centralized and
up-to-date fraud prevention library, hindering information sharing within
State. Fraud prevention staffing reductions and interoffice workload
transfers resulted in fewer fraud referrals at some offices, and
insufficient training, oversight, and investigative resources also hinder
fraud detection efforts.

Any effect that new passport examiner performance standards may have on
State's fraud detection efforts is unclear because State continues to
adjust the standards. State began implementing the new standards in
January 2004 to make work processes and performance expectations more
uniform nationwide. Passport examiner union representatives expressed
concern that new numerical production quotas may require examiners to
"shortcut" fraud detection efforts. However, in response to union and
examiner concerns, State eased the production standards during 2004 and
made a number of other modifications and compromises.

Crimes Suspected of 37 Federal and State Fugitives Not in CLASS Who Were
Included in Our Test

                              Type of crime Federal fugitives State fugitives 
                                     Murder                 5               4 
              Felonious assault and related                 2               7 
                                       acts                   
                         Child sex offenses                 4               1 
                           Drug trafficking                 3 
                           Attempted murder                 1               1 
                                   Bombings                 1 
                           Child kidnapping                                 1 
                               Other crimes                 4               3 
                                      Total                20              17 

Sources: State Department and other federal agencies.

United States Government Accountability Office

Madam Chairman and Members of the Committee:

I am pleased to be here today to discuss our report on the State
Department's efforts to strengthen U.S. passport fraud detection.1

Maintaining the integrity of the U.S. passport is essential to the State
Department's effort to protect U.S. citizens from terrorists, criminals,
and others. The department issued about 8.8 million passports in fiscal
year 2004. Each year, State passport examiners refer tens of thousands of
applications they suspect may be fraudulent to their local fraud
prevention offices. In fiscal year 2004, State's Diplomatic Security
Service arrested about 500 individuals for passport fraud and about 300
were convicted. Passport fraud is often intended to facilitate such crimes
as illegal immigration, drug trafficking, and alien smuggling.

Our report addressed three key issues: (1) how passport fraud is
committed, (2) what key challenges State faces in its fraud-detection
efforts, and (3) what effect new passport examiner performance standards
could have on fraud detection. Today I am going to focus my discussion on
the first two issues, and I will also discuss our recommendations to State
and State's response to them.

For our work on this subject, we reviewed various fraud statistics and
investigative case files maintained by relevant State bureaus and observed
State's fraud detection efforts at 7 of the 16 domestic passport-issuing
offices. We also tested State's use of electronic databases for fraud
detection and interviewed officials in various State offices and bureaus
involved in this issue. We conducted our work from May 2004 to March 2005
in accordance with generally accepted government auditing standards.

Summary 	We found that identity theft is the primary tactic used by
individuals fraudulently applying for U.S. passports. Specifically,
imposters' use of other people's legitimate birth and other identification
documents accounted for 69 percent of passport fraud detected in fiscal
year 2004, while false claims of lost, stolen, or damaged passports and
other methods

1U.S. Government Accountability Office, State Department: Improvements
Needed to Strengthen U.S. Passport Fraud Detection Efforts, GAO-05-477,
(Washington, D.C.: May 20, 2005)

accounted for the remaining 31 percent. According to State's Bureau of
Diplomatic Security, passport fraud is often committed in connection with
other crimes, including narcotics trafficking, organized crime, money
laundering, and alien smuggling. Fraudulently obtained passports help
enable criminals to hide their movements and activities, and concerns
exist that fraudulently obtained passports could also be used to support
terrorism. U.S. passports allow their holders to enter the United States
with much less scrutiny than is given to foreign citizens and also allow
visa-free passage into many countries around the world, providing obvious
potential benefits to terrorists and criminals operating on an
international scale.

Our report details a number of challenges to State's passport fraud
detection efforts, including information sharing deficiencies and
insufficient fraud prevention staffing, training, oversight, and
investigative resources. These challenges make it more difficult to
protect U.S. citizens from terrorists, criminals, and others who would
harm the United States. Specifically, State does not currently receive
information on U.S. citizens listed in the Terrorist Screening Center
(TSC) database, which is the federal government's consolidated terrorist
watch list, nor does State routinely obtain from the FBI the names of
individuals wanted by both federal and state law enforcement authorities.
Therefore, many of these individuals are not listed in State's Consular
Lookout and Support System (CLASS) name-check database for passports,2 and
they could obtain passports and travel internationally without the
knowledge of appropriate authorities. We tested the names of 67 different
federal and state fugitives-some wanted for serious crimes, including
murder and rape- and found that fewer than half were in State's system.
One of those not included was on the FBI's Ten Most Wanted list. Though
State, TSC, and the FBI began exploring options for more routine
information sharing on certain passport-related matters in mid-to late
2004, such arrangements are not yet in place.

In addition, State does not maintain a centralized electronic fraud
prevention library that enables information sharing on fraud alerts, lost
and stolen birth and naturalization certificates, counterfeit documents,
and other fraud prevention resources. Further, we found that fraud
prevention training is provided unevenly at different passport-issuing

2State maintains a separate CLASS database for visas. References to CLASS
throughout this testimony relate to the CLASS database for passports only.

offices, some examiners have not had formal fraud prevention training in
years, and training and oversight of passport acceptance agent operations
are even more sporadic. State does not have any way of tracking whether
many acceptance agent employees are receiving required training, it makes
oversight visits to only a limited number of acceptance facilities each
year, and it does not maintain records of all of the individuals accepting
passport applications at those facilities, posing a significant fraud
vulnerability.

Any effect that new passport examiner performance standards may have on
State's fraud detection efforts is unclear because State continues to
adjust the standards. State began implementing the new standards in
January 2004 to make work processes and performance expectations more
uniform nationwide. Passport examiner union representatives expressed
concern that new numerical production quotas may require examiners to
"shortcut" fraud detection efforts. However, in response to union and
examiner concerns, State eased the production standards during 2004 and
made a number of other modifications and compromises.

We are recommending that State, as it works to improve the coordination
and execution of passport fraud detection efforts, take several actions to
improve and expedite information sharing, specifically by ensuring that
State's CLASS system for passports contains a more comprehensive list of
individuals identified in the Terrorist Screening Center database as well
as state and federal fugitives, and by establishing and maintaining a
centralized electronic fraud prevention library. We are also recommending
that State consider designating additional positions for fraud prevention
coordination and training in some domestic passport-issuing offices;
examine the impact of other workload-related issues on fraud prevention;
and strengthen its fraud prevention training and acceptance agent
oversight programs.

In commenting on a draft of this report, State generally concurred with
our findings and conclusions. State indicated that it has already begun
taking, plans to take, or is considering measures to address most of our
recommendations.

Background 	A U.S. passport is not only a travel document but also an
official verification of the bearer's origin, identity, and nationality.
Under U.S. law,

the Secretary of State has the authority to issue passports. Only U.S.
nationals3 may obtain a U.S. passport, and evidence of citizenship or
nationality is required with every passport application. Federal
regulations list those who do not qualify for a U.S. passport, including
those who are subjects of a federal felony warrant.

                           State Passport Operations

The Deputy Assistant Secretary for Passport Services oversees the Passport
Services Office, the largest component of State's Consular Affairs Bureau.
Passport Services consists of three headquarters offices: Policy Planning
and Legal Advisory Services; Field Operations; and Information Management
and Liaison. Also within Consular Affairs is the Office of Consular Fraud
Prevention, which addresses passport, visa, and other types of consular
fraud; the Consular Systems Division, responsible for the computer systems
involved in passport services and other consular operations; and the
Office for American Citizens Services, which handles most issues relating
to passport cases at overseas posts. The Bureau of Diplomatic Security is
responsible for investigating individual cases of suspected passport and
visa fraud. The State Department Office of the Inspector General (OIG)
also has some authority to investigate passport fraud.

State operates 16 domestic passport-issuing offices, which employ
approximately 480 passport examiners who approve and issue most U.S.
passports that are printed each year. The number of passports issued by
domestic passport offices has risen steadily in recent years, increasing
from about 7.3 million in fiscal year 2000 to 8.8 million in fiscal year
2004. Overseas posts deal with a much lower volume of passports by
comparison, handling about 300,000 worldwide in fiscal year 2004.

Passport Application and Approval Process

The majority of passport applications are submitted by mail or in-person
at one of almost 7,000 passport application acceptance facilities
nationwide.4 The passport acceptance agents at these facilities are
responsible for, among other things, verifying whether an applicant's
identification document (such as a driver's license) actually matches the
applicant.

3National means a citizen of the United States or a noncitizen owing
permanent allegiance to the United States.

4Number is as of March 2005. State officials noted that this number
changes frequently as new acceptance facilities are added and others are
dropped.

Then, through a process called adjudication, passport examiners determine
whether they should issue each applicant a passport. Adjudication requires
the examiner to scrutinize identification and citizenship documents
presented by applicants to verify their identity and U.S. citizenship. The
passport adjudication process is facilitated by computer systems,
including the Travel Document Issuance System, which appears on passport
examiners' screens when the adjudication begins and automatically checks
the applicant's name against several databases. Figure 1 identifies the
key computer databases available to help examiners adjudicate passport
applications and detect potential fraud.

Figure 1: Electronic Databases Available to Passport Examiners

In addition, examiners scrutinize paper documents and other relevant
information during the fraud detection process, watch for suspicious
behavior and travel plans, and request additional identification when they
feel the documents presented are insufficient. When examiners detect
potentially fraudulent passport applications, they send the applications
to their local fraud prevention office for review and potential referral
to State's Bureau of Diplomatic Security for further investigation.

  Identity Theft a Primary Means of Committing Fraud

State's Bureau of Diplomatic Security investigators stated that imposters'
use of assumed identities, supported by genuine but fraudulently obtained
identification documents, was a common and successful way to fraudulently
obtain a U.S. passport. This method accounted for 69 percent of passport
fraud detected in fiscal year 2004. Investigators found numerous examples
of aliens and U.S. citizens obtaining U.S. passports using a false
identity or the documentation of others to hide their true identity. In
one example, in 1997, a naturalized U.S. citizen born in Cuba stole a Lear
jet and transported it to Nicaragua. At the time of his arrest in 2003, he
was using an assumed identity and possessed both false and legitimate but
fraudulently obtained identification documents, including a U.S. passport
in the name he used while posing as a certified pilot and illegally
providing flight instruction. Seized at his residence when he was arrested
were two Social Security cards, four driver's licenses, three Puerto Rican
birth certificates, one U.S. passport, one pilot identification card,
numerous credit cards and checking account cards, and items used to make
fraudulent documents. In October 2004, he pled guilty to knowingly
possessing five or more "authentication devices" and false identification
documents, for which he was sentenced to 8 months confinement. In another
case, a man wanted for murdering his wife obtained a Colorado driver's
license and a passport using a friend's Social Security number and date
and place of birth. Three and four years later he obtained renewal and
replacement passports, respectively, in the same assumed identity. He was
later arrested and pled guilty to making a false statement in an
application for a passport. He was sentenced to about 7 months time served
and returned to California to stand trial for murdering his wife.

Applicants commit passport fraud through other means, including submitting
false claims of lost, stolen, or mutilated passports; child substitution;
and counterfeit citizenship documents. Some fraudulently obtain new
passports by claiming to have lost their passport or had it stolen or
damaged. For example, one individual who used another person's Social
Security number and Ohio driver's license to report a lost passport
obtained a replacement passport through the one-day expedited service.
This fraudulently obtained passport was used to obtain entry into the
United States 14 times in less than three years. Diplomatic Security
officials told us that another means of passport fraud is when individuals
obtain replacement passports by using expired passports containing
photographs of individuals they closely resemble. This method of fraud is
more easily and commonly committed with children, with false applications
based on photographs of children who look similar to the

child applicant.5 Assuming the identity of a deceased person is another
means of fraudulently applying for a passport.

Passports Used to Commit Other Crimes

  State Faces Challenges to Fraud Detection Efforts

According to State Bureau of Diplomatic Security documents, passport fraud
is often commited in connection with other crimes, including narcotics
trafficking, organized crime, money laundering, and alien smuggling.
According to Diplomatic Security officials, concerns exist within the law
enforcement and intelligence communities that passport fraud could also be
used to help facilitate acts of terrorism. Using a passport with a false
identity helps enable criminals to conceal their movements and activities,
and U.S. passports provide their holders free passage into our country
with much less scrutiny than is given to foreign citizens. U.S. passports
also allow visa-free passage into many countries around the world,
providing obvious benefits to criminals operating on an international
scale. According to State officials, the most common crime associated with
passport fraud is illegal immigration. For example, one woman was recently
convicted for organizing and leading a large-scale passport fraud ring
that involved recruiting American women to sell their children's
identities, so that foreign nationals could fraudulently obtain passports
and enter the United States illegally. According to the Department of
State, the woman targeted drug-dependent women and their children, paying
them about $300 for each identity and then using the identities to apply
for passports. The woman then sold the fraudulently obtained passports to
illegal aliens for as much as $6,000 each.

One of the key challenges to State's fraud detection efforts is limited
interagency information sharing. Specifically, State currently lacks
access to the Terrorist Screening Center's consolidated terrorist watch
list database, which was created in 2003 to improve information sharing
among government agencies. By consolidating terrorist watch lists, TSC is
intended to enable federal agencies to access critical information quickly
when a suspected terrorist is encountered or stopped within the United
States, at the country's borders, or at embassies overseas. However,
because State's CLASS name-check database does not contain the TSC
information, U.S. citizens with possible ties to terrorism could
potentially

5In an effort to address this problem, State established a new requirement
in February 2004 that children aged 14 and under appear with their parents
when applying for a passport to allow comparison of the children to the
photographs being submitted.

obtain passports and travel internationally without the knowledge of
appropriate authorities.

Although TSC has been operational since December 2003, State and TSC did
not begin exploring the possibility of uploading data from the TSC
database into passport CLASS until December 2004. State and TSC have not
reached an agreement about information-sharing, though State sent an
official proposal to TSC in January 2005. A TSC official told us that she
does not foresee any technical limitations, and added that TSC agrees that
it is important to work out an agreement with State. We recommended that
State and other parties expedite such arrangements, and State said that it
and the TSC are actively working to do so.

CLASS Does Not Include Names of All Wanted Federal and State Fugitives

Because the FBI and other law enforcement agencies do not currently
provide State with the names of all individuals wanted by federal law
enforcement authorities, State's CLASS name-check system does not contain
the names of many federal fugitives, some wanted for murder and other
violent crimes; these fugitives could therefore obtain passports and
potentially flee the country. The subjects of federal felony arrest
warrants are not entitled to a U.S. passport. According to FBI officials,
FBI databases contain the names of approximately 37,000 individuals wanted
on federal charges. State Department officials acknowledge that many of
these individuals are not listed in CLASS. We tested the names of 43
different federal fugitives and found that just 23 were in CLASS;
therefore, passport examiners would not be alerted about the individuals'
wanted status if any of the other 20 not in CLASS applied for a passport.
In fact, one of these 20 did obtain an updated U.S. passport 17 months
after the FBI had listed the individual in its database as wanted. A
number of the 20 federal fugitives who were included in our test and were
found not to be in CLASS were suspected of serious crimes, including
murder. One was on the FBI's Ten Most Wanted list. Table 1 lists the
crimes suspected of the federal fugitives in our test.

Table 1: Crimes Suspected of 20 Federal Fugitives Not in CLASS Who Were
Included in Our Test

Type of crime

Number of fugitives

Murder

Felonious assault and related crimes

Child sex offenses

Drug trafficking

Attempted murder

Bombings

Other crimes

Sources: Various law enforcement agency databases and Web sites and the
State Department's CLASS name-check system.

State officials told us that they had not initiated efforts to improve
information sharing with the FBI on passport-related matters until the
summer of 2004 because they had previously been under the impression that
the U.S. Marshals Service was already sending to CLASS the names of all
fugitives wanted by federal law enforcement authorities. State officials
were not aware that the information in the U.S. Marshal's database was not
as comprehensive as that contained in the FBI-operated National Crime
Information Center database. State officials became aware of this
situation when the union representing passport examiners brought to their
attention that a number of individuals on the FBI's Ten Most Wanted list
were not in CLASS. In the summer of 2004, the FBI agreed to State's
request to provide the names from the FBI's Ten Most Wanted list. As part
of these discussions, State and the FBI explored other information-sharing
opportunities as well, and FBI headquarters officials sent a message
instructing agents in its field offices how to provide names of U.S.
citizens who are FBI fugitives to State on a case-by-case basis.

Additionally, State began discussions with the FBI about receiving
information on individuals with FBI warrants on a more routine and
comprehensive basis. According to FBI officials, State requested that the
FBI provide only the names of FBI fugitives and not those of individuals
wanted by other federal law enforcement entities. However, the FBI is the
only law enforcement agency that systematically compiles comprehensive
information on individuals wanted by all federal law enforcement agencies,
and, according to FBI officials, it is the logical agency to provide such
comprehensive information to State. We recommended that State expedite
arrangements to enhance interagency information sharing with the FBI to
ensure that the CLASS system contains a more comprehensive

list of federal fugitives. According to State, it sent a written request
on this issue to the FBI in April 2005. State also noted that it had
reached agreement in principal with the FBI on information sharing efforts
related to FBI fugitives.

In addition to its role in compiling information on federal fugitives, the
FBI is also the only law enforcement agency that compiles comprehensive
information on individuals wanted by state and local authorities.
According to FBI officials, FBI databases contain the names of
approximately 1.2 million individuals wanted on state and local charges
nationwide. FBI officials told us that some of the most serious crimes
committed often involve only state and local charges. We tested the names
of 24 different state fugitives and found that just 7 were in CLASS;
therefore, the CLASS system would not flag any of the other 17, were they
to apply for a passport.6 Table 2 lists the crimes suspected of the 17
tested state fugitives not in CLASS who were included in our test.

Table 2: Crimes Suspected of 17 State Fugitives Not in CLASS Who Were
Included in Our Test

                       Type of crime Number of fugitives

Murder

Felonious assault and related crimes

Child sex offenses

Attempted murder

Child kidnapping

Other crimes

Sources: Various law enforcement agency databases and Web sites and the
State Department's CLASS name-check system.

During our review, State Department officials told us that having a
comprehensive list of names that included both federal and state fugitives
could "clog" State's CLASS system and slow the passport adjudication
process. They also expressed concern that the course of action required of
State would not always be clear for cases involving passport applicants
wanted on state charges. We recommended that State work with the FBI to
ensure that the CLASS system contains a more comprehensive list of

6We also noted that 10 of the 20 tested federal fugitives that were not in
CLASS were also wanted on state charges. Thus, if State fugitives had been
listed in CLASS, these individuals would have been flagged, even if
information on their federal warrants had been missed.

state fugitives. In commenting on a draft of our report, State said that
it now intends to work with the FBI and U.S. Marshals Service to establish
an automated mechanism for integrating information on state warrants into
CLASS.

Limited Intra-agency Information Sharing May Be Affecting Fraud Detection

State does not maintain a centralized and up-to-date electronic fraud
prevention library, which would enable passport-issuing office personnel
to efficiently share fraud prevention information and tools. As a result,
fraud prevention information is provided inconsistently to examiners among
the 16 domestic offices. For example, at some offices, examiners maintain
individual sets of fraud prevention materials. Some print out individual
fraud alerts and other related documents and file them in binders. Others
archive individual e-mails and other documents electronically. Some
examiners told us that the sheer volume of fraudrelated materials they
receive makes it impossible to maintain and use these resources in an
organized and systematic way.

Other information sharing tools have not been effectively maintained.
Consular Affairs' Office of Consular Fraud Prevention maintains a Web site
and "e-room" with some information on fraud alerts, lost and stolen state
birth documents, and other resources related to fraud detection, though
fraud prevention officials told us the Web site is not kept up to date, is
poorly organized, and is difficult to navigate. We directly observed
information available on this Web site during separate visits to State's
passport-issuing offices and noted that some of the material was outdated
by as much as more than a year. The issuing office in Seattle developed
its own online fraud library that included information such as the
specific serial numbers of blank birth certificates that were stolen,
false driver's licenses, fraud prevention training materials, and a host
of other fraud prevention information resources and links. However, this
library is no longer updated. Most of the 16 fraud prevention managers we
talked to believed that the Bureau of Consular Affairs should maintain a
centralized library of this nature for offices nationwide.

We recommended that State establish and maintain a centralized and
upto-date electronic fraud prevention library that would enable passport
agency personnel at different locations across the United States to
efficiently access and share fraud prevention information and tools.
Commenting on our draft report, State said that it now intends to design a
centralized online passport "knowledgebase" that will include extensive
sections on fraud prevention resources.

Staffing Change Reduced Time Available to Review Fraud Cases

In January 2004, State eliminated the assistant fraud prevention manager
position that had existed at most of its domestic passport-issuing
offices, and most Fraud Prevention Managers believe that this action was
harmful to their fraud detection program. State eliminated the position
primarily to enable more senior passport examiners to serve in that role
on a rotational basis to gain deeper knowledge of the subject matter and
enhance overall fraud detection efforts when they returned to adjudicating
passport applications. However, managers at 10 of the 12 offices that
previously had permanent assistants told us that the loss of this position
had been harmful to their fraud detection program. In particular, managers
indicated that the loss of their assistant impacted their own ability to
concentrate on fraud detection by adding to their workload significant
additional training, administrative, and networking responsibilities,
while also diverting from their fraud trend analysis and preparation of
reports and case referrals.

Fraud Prevention Managers and other State officials have linked declining
fraud referrals to the loss of the assistant fraud prevention manager
position. In the 12 offices that previously had permanent assistants,
fraud referral rates from the managers to Diplomatic Security decreased
overall by almost 25 percent from fiscal year 2003 through 2004,7 the
period during which the position was eliminated, and this percentage was
much higher in some offices.8 Without their assistants helping them screen
fraud referrals, check applicant information, and assist with other duties
related to the process, managers said they are making fewer fraud
referrals to Diplomatic Security because they lack the time and do not
believe they can fully rely on new rotational staff to take on these
responsibilities.

We recommended that State consider designating additional positions for
fraud prevention coordination and training in domestic passport-issuing
offices. Passport Services management told us they were not planning to
re-establish the permanent assistant role, but that they are in the
process of filling one to two additional fraud prevention manager
positions at each of the 2 offices with the largest workloads nationwide.
State also plans to establish one additional fraud prevention manager
position at another

7In the 4 offices that did not previously have permanent assistants, fraud
referral rates decreased on average by only 7 percent during the same
period.

8Two offices that had assistant fraud prevention managers in 2003 saw
increases in their fraud referral rates. These 2 offices received just
over 8 percent of the total applications received by offices that had
assistants.

issuing office with a large workload. Commenting on our draft report,
State said that it would now also consider rotating GS-12 Adjudication
Supervisors through local fraud prevention offices to relieve Fraud
Prevention Managers of some of their training responsibilities.

Interoffice Transfers of Passport Adjudication Workload Result, in Some
Cases, in Fewer Fraud Referrals Back to Originating Office

State routinely transfers adjudication cases among the different offices
to balance workloads, and Fraud Prevention Managers at a number of issuing
offices said they had noticed a lower percentage of fraud referrals
returned to them from the 3 offices that were assigned a bulk of the
workload transfers. In fiscal year 2004, 28 percent of passport
applications were transferred to 1 of these 3 offices for adjudication,
while other issuing offices adjudicated 72 percent. Although these 3
offices received 28 percent of the applications, they provided only 11
percent of total fraud referrals to the originating agencies. For fiscal
year 2003, the 3 processing centers adjudicated 26 percent of the
applications but provided only 8 percent of the fraud referrals. In 2004,
1 of the issuing offices transferred out to processing centers 63 percent
of its applications (about 287,000) but received back from the processing
centers only 2 percent of the fraud referrals it generated that year. In
2003, this office transferred out 66 percent of its workload while
receiving back only 8 percent of its total fraud referrals.

Fraud Prevention Managers and other officials told us that one reason
fewer fraud referrals return from these 3 offices is that passport
examiners handling workload transfers from a number of different regions
are not as familiar with the demographics, neighborhoods, and other local
characteristics of a particular region as are the examiners who live and
work there. For example, some officials noted that, in instances when they
suspect fraud, they might telephone the applicants to ask for additional
information so they can engage in polite conversation and ask casual
questions, such as where they grew up, what school they attended, and
other information. The officials noted that, due to their familiarity with
the area, applicants' answers to such questions may quickly indicate
whether or not their application is likely to be fraudulent. One examiner
in an office that handled workload transfers from areas with large
Spanishspeaking populations said that the office had an insufficient
number of Spanish-speaking examiners, emphasizing the usefulness of that
skill in detecting dialects, accents, handwriting, and cultural references
that conflict with information provided in passport applications.

We recommended that State assess the extent to which and reasons why
workload transfers from one domestic passport issuing office to another

were, in some cases, associated with fewer fraud referrals and to take any
corrective action that may be necessary. In its official comments on our
draft report, State did not address this recommendation.

State Lacks Established Refresher Training; Such Training Is Provided
Unevenly

State has not established a core curriculum and ongoing training
requirements for experienced passport examiners, and thus such training is
provided unevenly at different passport-issuing offices. While State
recently developed a standardized training program for new hires that was
first given in August 2004, we reviewed the training programs and
materials at all 7 issuing offices we visited and discussed the programs
and materials at other offices with the remaining nine Fraud Prevention
Managers by telephone and found that the topics covered and the amount and
depth of training varied widely by office. Some had developed
regionspecific materials; others relied more heavily on materials that had
been developed by passport officials in Washington, D.C., and were largely
outdated. Some scheduled more regular training sessions, and others did so
more sporadically. Several examiners told us they had not received any
formal, interactive fraud prevention training in at least 4 years. Some
Fraud Prevention Managers hold brief discussions on specific fraud cases
and trends at monthly staff meetings, and they rely on these discussions
to serve as refresher training. Some Fraud Prevention Managers
occasionally invite officials from other government agencies, such as the
Secret Service or DHS, to share their fraud expertise. However, these
meetings take place only when time is available. For example, officials at
one issuing office said the monthly meetings had not been held for several
months because of high workload; another manager said he rarely has time
for any monthly meetings; and two others said they do not hold such
discussions but e-mail to examiners recent fraud trend alerts and
information.

We recommended that State establish a core curriculum and ongoing fraud
prevention training requirements for all passport examiners. State said
that it is implementing a standardized national training program for new
passport examiners but that it is still providing training to existing
passport examiners on a decentralized basis. State officials told us that
they intend to develop a national training program for experienced
examiners, after certain organizational changes are made in State's
headquarters passport operation.

Sporadic Training and Limited Oversight of Acceptance Agents Constitute
Significant Fraud Vulnerability

Numerous passport-issuing agency officials and Diplomatic Security
investigators told us that the acceptance agent program is a significant
fraud vulnerability. Examples of acceptance agent problems that were
brought to our attention include important information missing from
documentation and identification photos that did not match the applicant
presenting the documentation. Officials at one issuing office said that
their office often sees the same mistakes multiple times from the same
acceptance facility. These officials attributed problems with applications
received through acceptance agents to the sporadic training provided for
and limited oversight of acceptance agents. State has almost 7,000
passport acceptance agency offices, and none of the 16 issuing offices
provide comprehensive annual training or oversight to all acceptance
agency offices in their area. Instead, the issuing offices concentrate
their training and oversight visits on agency offices geographically
nearest to the issuing offices, or in large population centers, or where
examiners and Fraud Prevention Managers had reported problems, or in high
fraud areas. Larger issuing offices in particular have trouble reaching
acceptance agency staff. At one larger issuing office with about 1,700
acceptance facilities, the Fraud Prevention Manager said he does not have
time to provide acceptance agent training and that it is difficult for
issuing office staff to visit many agencies. A manager at another large
issuing office that covers an area including 11 states said she does not
have time to visit some agencies in less populated areas.

While State officials told us all acceptance agency staff must be U.S.
citizens, issuing agency officials told us they have no way of verifying
that all of them are. Management officials at one passport-issuing office
told us that, while their region included more than 1,000 acceptance
facilities, the office did not maintain records of the names of
individuals accepting passport applications at those facilities.

We recommended that State strengthen its fraud prevention training efforts
and oversight of passport acceptance agents. In commenting on a draft of
our report, State said that it is adapting and expanding computerbased
training for U.S. Postal Service acceptance facilities for more widespread
use among acceptance agents nationwide. State also indicated that it would
institute a nationwide quality review program for its acceptance
facilities. However, State officials recently told us that the quality
reviews would focus only on new acceptance facilities and existing
facilities with reported problems. It is unclear whether State will
perform quality reviews for the rest of its nearly 7,000 facilities.

Overstretched Investigative Resources Hinder Fraud Detection

Although State's Bureau of Diplomatic Security has provided additional
resources for investigating passport fraud in recent years, its agents
must still divide their time among a number of competing demands, some of
which are considered a higher priority than investigating passport fraud.
A Diplomatic Security official told us that, after the September 11th
terrorist attacks, the bureau hired about 300 additional agents, at least
partially to reduce investigative backlogs.9 Diplomatic Security and
passport officials told us that, while the increased staff resources had
helped reduce backlogs to some degree, agents assigned to passport fraud
investigations are still routinely pulled away for other assignments. At
most of the offices we visited, few of the agents responsible for
investigating passport fraud were actually there. At one office, all of
the agents responsible for investigating passport fraud were on temporary
duty elsewhere, and the one agent covering the office in their absence had
left his assignment at the local Joint Terrorism Task Force to do so.
Agents at one office said that five of the eight agents involved in
passport fraud investigations there were being sent for temporary duty in
Iraq, as were many of their colleagues at other offices.

Agents at all but 2 of the 7 bureau field offices we visited said they are
unable to devote adequate time and continuity to investigating passport
fraud. We noted that the number of new passport fraud investigations had
declined by more than 25 percent over the last five years, though
Diplomatic Security officials attributed this trend, among other factors,
to refined targeting of cases that merit investigation. The
Special-Agent-in-Charge of a large Diplomatic Security field office in a
high fraud region expressed serious concern that, in 2002, the Bureau of
Diplomatic Security began requiring, to reduce backlog of old cases, that
most cases be closed after 12 months, whether or not the investigations
were complete. The agent said that about 400 incomplete cases at his
office were closed. A Diplomatic Security official in Washington, D.C.,
told us that, while field offices had been encouraged to close old cases
that were not likely to be resolved, there had not been a formal
requirement to do so. State officials agreed that Diplomatic Security
agents are not able to devote adequate attention to investigating passport
fraud, and told us that the Bureau of Diplomatic Security plans to hire 56
new investigative agents over the next few years. According to State
officials, these new investigators will be

9State officials also noted that the Bureau of Consular Affairs funds more
than 120 Diplomatic Security agent positions nationwide to help support
efforts to investigate passport fraud.

solely dedicated to investigating passport and visa fraud and will not be
pulled away for other duty.

Effect of New Examiner Performance Standards on Fraud Detection Remains
Unclear

  Contacts and Acknowledgments

Although State's approach to developing new nationwide passport examiner
production standards, implemented in January 2004, raises methodological
concerns, subsequent changes to the standards make an assessment of their
impact on fraud detection premature. State developed new nationwide
passport examiner production standards in an effort to make performance
expectations and work processes more uniform among its 16 issuing offices.
However, State tested examiner production before standardizing the
passport examination process; differences in work processes across offices
at the time of the test limited the validity of the test results. State
then used the results in conjunction with old standards to set new
nationwide standards. The new standards put additional emphasis on
achieving quantitative targets. Responding to concerns about their
fairness due to changes that may have slowed the examination process, as
well concerns that the new standards led examiners to take "shortcuts" in
the examination process to meet their number targets, State made a number
of modifications to the production standards during the year. The various
modifications have made it unclear what impact the standards have had on
passport fraud detection.

Madam Chairman, this completes my prepared statement. I would be happy to
respond to any questions you or other Members of the Committee may have at
this time.

If you or your staff have any questions about this testimony, please
contact Jess Ford at (202) 512-4128 or [email protected], or Michael Courts at
(202) 512-8980 or [email protected].

Individuals making key contributions to this testimony included Jeffrey
Baldwin-Bott, Joseph Carney, Paul Desaulniers, Edward Kennedy, and Mary
Moutsos.

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