Internet Sales: Undercover Purchases on eBay and Craigslist	 
Reveal a Market for Sensitive and Stolen U.S. Military Items	 
(10-APR-08, GAO-08-644T).					 
                                                                 
Unauthorized individuals, companies, terrorist organizations, and
other countries continue their attempts to obtain sensitive items
related to the defense of the United States. The Internet is one 
place that defense-related items can be purchased, raising the	 
possibility that some sensitive items are available to those who 
can afford them. In addition to the risk that sensitive 	 
defense-related items could be used to directly harm U.S. service
members or allies on the battlefield, these items could be	 
disassembled and analyzed (i.e., reverse engineered) to develop  
countermeasures or equivalent technology. Given the risks posed  
by the sale of sensitive defense-related items to the public, and
the Internet's international reach and high volume of commerce,  
the Subcommittee asked GAO to conduct undercover testing to	 
determine whether the general public can easily purchase these	 
items on the Internet, including on the Web sites eBay and	 
Craigslist. To perform this work, GAO investigators used	 
undercover identities to pose as members of the general public,  
meaning that they conducted their work with names, credit cards, 
and contact information that could not be traced to GAO.	 
Investigators interviewed sellers where possible and referred	 
cases to the appropriate law enforcement entities for further	 
investigation.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-644T					        
    ACCNO:   A81642						        
  TITLE:     Internet Sales: Undercover Purchases on eBay and	      
Craigslist Reveal a Market for Sensitive and Stolen U.S. Military
Items								 
     DATE:   04/10/2008 
  SUBJECT:   Combating terrorism				 
	     Consumer education 				 
	     Consumer protection				 
	     Criminal investigation				 
	     Federal property					 
	     Federal property management			 
	     Internet						 
	     Investigations by federal agencies 		 
	     National defense operations			 
	     Risk adjustments					 
	     Risk assessment					 
	     Risk factors					 
	     Risk management					 
	     Sales						 
	     Terrorists 					 
	     Websites						 

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GAO-08-644T

   

     * [1]Summary of Investigation
     * [2]Background
     * [3]Sensitive and Stolen Defense-Related Items Available on the

          * [4]Sensitive and Stolen Defense-Related Items Purchased on the

               * [5]Case 1: F-14 Antenna
               * [6]Case 2: Helicopter Antenna
               * [7]Cases 3 and 4: Night Vision Equipment
               * [8]Case 5: ACU and Accessories
               * [9]Case 6: Kevlar Helmet
               * [10]Case 7: Nuclear Biological Chemical Gear
               * [11]Cases 8 through 10: Body Armor and SAPIs

          * [12]Other Defense-Related Items

               * [13]Civilian Sellers of Stolen Property
               * [14]MREs

     * [15]eBay and Craigslist Have Few Safeguards to Prevent the Sale

          * [16]eBay
          * [17]Craigslist

     * [18]Contacts and Staff Acknowledgments
     * [19]GAO's Mission
     * [20]Obtaining Copies of GAO Reports and Testimony

          * [21]Order by Mail or Phone

     * [22]To Report Fraud, Waste, and Abuse in Federal Programs
     * [23]Congressional Relations
     * [24]Public Affairs

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Reveal a Market for Sensitive and Stolen U.S. Military Items' which was 
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Testimony: 

Before the Subcommittee on National Security and Foreign Affairs, 
Committee on Oversight and Government Reform, House of Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:00 a.m. EDT: 
Thursday, April 10, 2008: 

Internet Sales: 

Undercover Purchases on eBay and Craigslist Reveal a Market for 
Sensitive and Stolen U.S. Military Items: 

Statement of Gregory D. Kutz, Managing Director: 
Forensic Audits and Special Investigations: 

GAO-08-644T: 

GAO Highlights: 

Highlights of GAO-08-644T, a testimony before the Subcommittee on 
National Security and Foreign Affairs, Committee on Oversight and 
Government Reform, House of Representatives. 

Why GAO Did This Study: 

Unauthorized individuals, companies, terrorist organizations, and other 
countries continue their attempts to obtain sensitive items related to 
the defense of the United States. The Internet is one place that 
defense-related items can be purchased, raising the possibility that 
some sensitive items are available to those who can afford them. In 
addition to the risk that sensitive defense-related items could be used 
to directly harm U.S. service members or allies on the battlefield, 
these items could be disassembled and analyzed (i.e., reverse 
engineered) to develop countermeasures or equivalent technology. 

Given the risks posed by the sale of sensitive defense-related items to 
the public, and the Internetï¿½s international reach and high volume of 
commerce, the Subcommittee asked GAO to conduct undercover testing to 
determine whether the general public can easily purchase these items on 
the Internet, including on the Web sites eBay and Craigslist. 

To perform this work, GAO investigators used undercover identities to 
pose as members of the general public, meaning that they conducted 
their work with names, credit cards, and contact information that could 
not be traced to GAO. Investigators interviewed sellers where possible 
and referred cases to the appropriate law enforcement entities for 
further investigation. 

What GAO Found: 

GAO found numerous defense-related items for sale to the highest bidder 
on eBay and Craigslist. A review of policies and procedures for these 
Web sites determined that there are few safeguards to prevent the sale 
of sensitive and stolen defense-related items using the sites. During 
the period of investigation, GAO undercover investigators purchased a 
dozen sensitive items on eBay and Craigslist to demonstrate how easy it 
was to obtain them. Many of these items were stolen from the U.S. 
military. According to the Department of Defense (DOD), it considers 
the sensitive items GAO purchased to be on the U.S. Munitions List, 
meaning that there are restrictions on their overseas sales. However, 
if investigators had been members of the general public, there is a 
risk that they could have illegally resold these items to an 
international broker or transferred them overseas. 

Table: Examples of Sensitive Items Purchased by Undercover 
Investigators: 

No. 1: 
Item: F-14 antenna; 
Web site: eBay; 
Notes: F-14 components are in demand by Iran, the only country with 
operating F-14s; Winning bidders on other auctions held by the seller 
were located in countries such as Bulgaria, China (Hong Kong), and 
Russia. 

No. 2: 
Item: Nuclear biological chemical gear; Web site: Craigslist; 
Notes: Could be reverse engineered to develop countermeasures or 
produce equivalent technology; Stolen military property. 

No. 3: 
Item: Enhanced small arms protective inserts; Web site: eBay; 
Notes: Body armor plates manufactured in June 2007 and currently in use 
by troops in Afghanistan and Iraq; Winning eBay bidders on other body 
armor items offered by this seller included individuals in China (Hong 
Kong), Taiwan, and Singapore; Stolen from U.S. military or 
manufacturer. 

Source: GAO. 

[End of table] 

GAO investigators also identified examples of U.S. government property 
that was stolen and sold for a profit rather than being utilized by 
DOD. For example, GAO found two civilian store owners who acted as 
conduits for defense-related property that was likely stolen from the 
military. The store owners told GAO they purchased gear from service 
membersï¿½including Kevlar vests, flak jackets, and gas masksï¿½and sold it 
through eBay to the general public. GAO also purchased stolen military 
meals, ready-to-eat (MRE) and found a robust market for stolen military 
MREs on eBay and Craigslist. 

Advertisements for the sensitive defense-related items GAO purchased 
were not removed by Web site administrators, allowing investigators to 
buy the items. Both Web sites maintain lists of items that are 
prohibited from sale, including stolen items, but only eBay contains 
warnings related to overseas sales and the improper sale of sensitive 
defense-related items. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-644T]. For more 
information, contact Gregory D. Kutz at (202) 512-6722 or 
[email protected]. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

Unauthorized individuals, companies, organizations, and other countries 
continue their attempts to obtain sensitive items related to the 
defense of the United States. For example, a 2003 undercover 
investigation by Immigrations and Customs Enforcement (ICE) revealed 
that an individual in Florida attempted to purchase and illegally 
export roughly $750,000 worth of U.S. F-14 fighter jet components to 
the Iranian military. According to the indictment, the individual 
planned to ship these components through other countries, including 
Italy, to conceal Iran as the ultimate destination. As we have reported 
before, Iran's acquisition of F-14 components could threaten national 
security. In another example, ICE agents arrested a Columbian national 
in 2005 for attempting to illegally export 80 AK-47 assault rifles, an 
M-60 machine gun, and an M-16 machine gun to the Autodefensas Unidas de 
Colombia, a U.S.-designated terrorist organization. 

Although it is not illegal to buy and sell some defense-related items 
domestically, many sensitive items are manufactured strictly for 
military purposes and were never meant to be a part of everyday 
American life. The Department of Defense (DOD) assigns demilitarization 
codes (demil codes) to some items so that, when they are no longer 
needed by the military, the items can be recognized and rendered 
useless for their intended purpose prior to leaving government control. 
We are defining sensitive defense-related items as those items that, if 
acquired by DOD, would have to be demilitarized before disposal--a 
process that could involve everything from removing a sensitive 
component to destroying the item entirely. Our prior reports found that 
control breakdowns at DOD allowed members of the general public to 
acquire sensitive defense-related items, including F-14 components, 
from the Government Liquidation Web site; these items had not been 
demilitarized properly.[Footnote 1] Although DOD has made improvements 
in the management of its excess property system, saving millions of 
dollars and reducing the likelihood that sensitive items are improperly 
sold, concerns remain that members of the general public can acquire 
sensitive defense-related items through additional weaknesses involving 
the government's acquisition, use, storage, and sale of these items. 

The Internet is one place that defense-related items can be purchased, 
raising the possibility that some sensitive items are available to 
those who can afford them. In addition to the Government Liquidation 
Web site, many military surplus stores across the United States have 
Web pages with online ordering capability. Furthermore, Web sites such 
as eBay and Craigslist are popular because they allow sellers to 
advertise individual items and appear to provide some element of 
anonymity. For the most part, these Web sites have an international 
reach--meaning that it is possible for sellers to identify buyers in 
foreign countries and quickly export purchased items. Sellers use eBay 
to auction goods or services, receive bids from prospective buyers, and 
finalize a sale. eBay also features "store fronts" in which property is 
listed and bought without going through a bidding process. In contrast, 
Craigslist functions as an automated version of the newspaper 
classifieds, listing jobs, housing, goods, services, personals, 
activities, advice, and just about anything users wish to sell, 
advertise, or promote. The service is community-based and moderated, 
operating in 450 cities worldwide, and is largely free of charge. 

While potential buyers for some sensitive items certainly include 
hobbyists, military enthusiasts, and emergency response or law 
enforcement units, the ICE cases clearly show the real risk that 
illegal weapons brokers, terrorists, and unauthorized agents of foreign 
governments also number among potential buyers. In addition to the risk 
that sensitive defense-related items could be used directly against 
U.S. interests, some items could be disassembled and analyzed to 
determine how they work. This technique, known as reverse engineering, 
could allow the creation of (1) countermeasures to defeat or minimize 
the military significance of the item or (2) the development of an 
equivalent item that could be used against U.S. interests. 

Given the risks posed by the sale of sensitive defense-related items to 
the public, and the Internet's international reach and high volume of 
commerce, you asked us to conduct undercover testing to determine 
whether the general public can easily purchase these items on the 
Internet, including on the Web sites eBay and Craigslist. 

To perform this investigation, we searched for certain target items on 
eBay and Craigslist. When these items were identified, investigators 
attempted to purchase them--either through bidding or a direct purchase 
(eBay) or by contacting the seller and arranging an in-person meeting 
or sale via U.S. mail (Craigslist). Investigators used undercover 
identities to pose as members of the general public when purchasing 
these items, meaning that they conducted their work with names, credit 
cards, and contact information that could not be traced back to GAO. In 
the case of eBay purchases, investigators worked with eBay's Fraud 
Investigations Team to obtain information regarding the identity and 
account history of the sellers. We also searched the DOD Employee 
Interactive Data System (DEIDS) database to determine whether sellers 
were active members of the U.S. military. Where applicable and 
feasible, investigators interviewed the sellers and performed 
additional follow-up investigative work or, in some instances, made 
immediate referrals of the cases to field agents of the appropriate law 
enforcement entities. 

After purchasing a questionable item, our investigators matched the 
National Stock Number (NSN) on the item to those listed in DOD's 
Federal Logistics System (FedLog) to validate that it met our 
definition of a sensitive defense-related item.[Footnote 2] We also 
spoke with officials from the Defense Criminal Investigative Service 
(DCIS), Demilitarization Coding Management Office (DCMO), the Air Force 
Office of Special Investigations (Air Force OSI), and the Army Criminal 
Investigation Division (Army CID) regarding the sale of U.S. military 
property. We referred pertinent information to DCIS, Army CID, and Air 
Force OSI for further investigation. We also spoke with officials from 
eBay and Craigslist about the policies and procedures governing 
commerce on their Web sites and performed legal research. 

We conducted our investigation from January 2007 through March 2008 in 
accordance with quality standards for investigations as set forth by 
the President's Council on Integrity and Efficiency. It is important to 
note that our investigation does not represent a comprehensive 
assessment of all sensitive defense-related items sold through these 
Web sites during this period. Rather, our report provides only a 
"snapshot" of some items that investigators identified and purchased. 
Further, we did not attempt to perform a comprehensive audit or 
analysis to determine whether systemic property-management problems at 
DOD ultimately resulted in the sale of these items on the Internet 
during this period. As a result, our investigation of sellers was 
limited, in most cases, to their claims regarding how they obtained the 
items. We also did not test the government's enforcement of export 
controls by attempting to transfer what we purchased overseas, or 
validate whether eBay and Craigslist sellers we identified actually 
exported items to other countries. 

Summary of Investigation: 

We found numerous defense-related items for sale to the highest bidder 
on eBay and Craigslist from January 2007 through March 2008. A review 
of eBay and Craigslist policies and procedures determined that, 
although these Web sites have taken steps to regulate their user 
communities and define items that are prohibited from sale, there are 
few safeguards to prevent sensitive and stolen defense-related items 
from being sold to either domestic or foreign users of these sites. 
During the period of our investigation, undercover investigators 
purchased a dozen sensitive items to demonstrate how easy it was to 
obtain them. The items were shipped to us "no questions asked." Many of 
these items were stolen from the U.S. military. According to DOD, it 
considers the sensitive items we purchased to be on the U.S. Munitions 
List, meaning that there are restrictions on their overseas sales. 
However, if investigators had been members of the general public, there 
is a risk that they could have illegally resold these items to an 
international broker or transferred them overseas. Many of the 
sensitive items we purchased could have been used directly against our 
troops and allies, or reverse-engineered to develop countermeasures or 
equivalent technology. For example, we purchased: 

* Two F-14 components from separate buyers on eBay. F-14 components are 
in demand by Iran. Given that the United States has retired its fleet 
of F-14s, these components could only be used by the Iranian military. 
By making these components available to the general public, the eBay 
sellers provided an opportunity for these components to be purchased by 
an individual who could then transfer them to Iran. The continued 
ability of Iran to use its F-14s could put U.S. troops and allies at 
risk. We were unable to determine where the sellers obtained the F-14 
components, and we found that ICE had an open investigation of one of 
the sellers. 

* Night vision goggles containing an image intensifier tube made to 
military specifications (milspec) that is an important component in the 
U.S. military's night-fighting system. Although night vision goggles 
are commercially available to the public, the milspec tube in the pair 
of goggles we purchased on eBay is a sensitive component that allows 
U.S. service members on the battlefield to identify friendly fighters 
wearing infrared (IR) tabs. We also purchased IR tabs from a different 
Internet seller. These IR tabs work with the goggles we purchased, 
giving us access to night-fighting technology that could be used 
against U.S. troops on the battlefield. 

* An Army Combat Uniform (ACU) and uniform accessories that could be 
used by a terrorist to pose as a U.S. service member. After a January 
2007 incident in which Iraqi insurgents, dressed in U.S. military 
uniforms, entered a compound in Karbala and killed five U.S. service 
members, DOD issued a bulletin declaring that all ACUs should be 
released only "to Army, Navy, Air Force, Marines and their Guard or 
Reserve components." We purchased the ACU on eBay in April 2007, after 
DOD's bulletin had been issued. The ACU we purchased also came with IR 
tabs, which could have allowed an enemy fighter to pose as a "friendly" 
during night combat. The seller represented to us that he obtained the 
ACU at a flea market near Fort Bragg, North Carolina. This ACU appears 
to be stolen military property. 

* Body armor vests and Small Arms Protective Inserts (SAPI), including 
advanced Enhanced SAPI (E-SAPI) plates that are currently used by our 
troops in Iraq and Afghanistan. Unauthorized individuals, companies, 
terrorist organizations, or other countries could use reverse 
engineering on this body armor to develop countermeasures, equivalent 
technology, or both. Body armor could also be used domestically by a 
violent felon to commit crime. The body armor vests, SAPIs, and E- 
SAPIs, which we purchased from eBay and Craigslist sellers, appear to 
have been stolen from DOD. 

In addition to the above case studies, our investigators identified 
examples of U.S. government property that was likely stolen and sold 
for personal profit rather than being utilized by DOD (i.e., conversion 
of government property). According to DOD officials, U.S. military 
personnel are not authorized to sell certain items that have been 
issued to them, such as body armor; doing so is considered theft of 
government property. Although not all of the stolen property items 
available on eBay and Craigslist were sensitive, each item was 
purchased with taxpayer money and represents a waste of resources 
because it was not used as intended. For example, we found two civilian 
store owners who acted as conduits for defense-related property that 
was likely stolen from the military. The store owners told us they 
purchased gear from service members--including Kevlar helmets, flak 
jackets, gas masks, and ACUs--and sold it through eBay to the general 
public. We also investigated sales of military meals, ready-to-eat 
(MRE) and found a robust market for stolen military MREs on eBay and 
Craigslist. Both civilians and service members sold us numerous cases 
of new/unused military MREs despite the fact that they were marked 
"U.S. Government Property, Commercial Resale Is Unlawful." Because the 
military MREs we bought had been originally purchased by the government 
for use by U.S. troops, we conclude that these MREs were stolen from 
DOD. For example, we found that an active duty Army Private First Class 
stationed in South Korea stole military MREs from a warehouse and sold 
them to us on eBay. After our referral, Army CID executed a search 
warrant of the seller's residence and discovered a substantial amount 
of stolen U.S. military property, as well as nearly $2,000 in cash. The 
seller was subsequently linked to a string of larcenies on the base and 
is currently serving over 3 years in prison. 

Advertisements for the sensitive defense-related items we purchased 
were not removed by the administrators of these Web sites, allowing us 
to complete the transactions. Both Web sites maintain published lists 
of items that are prohibited from sale, including stolen items, but 
only eBay contains warnings related to the improper sale of sensitive 
defense-related items. Furthermore, only eBay contains warnings related 
to export control issues and overseas sales, even though both Web sites 
have an international reach. While eBay has an administrative staff and 
investigative teams that look into fraud and prohibited sales occurring 
on the site, Craigslist has a smaller staff and largely relies on its 
user community for identifying inappropriate advertisements or 
postings. For example, when we asked a Craigslist manager about whether 
his company had a Fraud Investigations Team (FIT), he said, "I am the 
FIT for Craigslist." Generally, neither eBay nor Craigslist can incur 
criminal liability for being the conduit through which stolen or 
sensitive defense-related items are sold, even if the items are sold 
overseas. 

Background: 

DOD assigns demil codes to all military property to identify their 
required disposition when no longer needed. Demil codes are contained 
in the Defense Demilitarization Manual, which implements DOD policy to 
apply appropriate controls and prevent improper use or release of these 
items outside of DOD. Demil codes indicate whether property is 
available for public use without restriction or whether specific 
restrictions apply, such as removal of classified components, 
destruction, or trade security controls. For example, if an item is 
designated as demil D, DOD requires this item to be totally destroyed 
"so as to preclude restoration or repair to a usable condition" rather 
than allowing a member of the general public to purchase the item. 

According to DOD's Defense Logistics Information Service, it considers 
sensitive defense-related items to be U.S. Munitions List items. This 
list, which is maintained by the State Department, identifies defense- 
related items that require government approval prior to export or 
temporary import. There are 20 categories of items on the U.S. 
Munitions List, including firearms and ammunition; aircraft and 
associated components; protective personnel equipment (such as body 
armor); nuclear weapons and related items; and directed energy weapons. 
Some of these items are also defined as significant military equipment, 
which are items for which special export controls are warranted because 
of their capacity for substantial military utility or capability. Any 
person or company in the United States that engages in either 
manufacturing or exporting U.S. Munitions List items must register with 
the State Department. Prior to exporting these items, a State 
Department-issued license is generally required. 

The table below defines the DOD demil codes, their associated 
designation as U.S. Munitions List items or Significant Military 
equipment, and DOD's approach to disposing of the item under each code. 

Table 1: DOD Demil Codes: 

Demil code: A; 
U.S. Munitions List item[A]: No; 
Significant Military Equipment: No; 
Required disposal action: Demilitarization not required. 

Demil code: B; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: No; 
Required disposal action: Demilitarization not required; trade security 
controls required at disposition. 

Demil code: C; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: Yes; 
Required disposal action: Remove and/or demilitarize installed key 
point(s) as prescribed (e.g., partial destruction). 

Demil code: D; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: Yes; 
Required disposal action: Total destruction of item and components so 
as to preclude restoration or repair to a usable condition by melting, 
cutting, tearing, scratching, crushing, breaking, punching, 
neutralizing, etc. 

Demil code: E; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: No; 
Required disposal action: Remove and/or demilitarize installed key 
point(s) as prescribed (e.g., partial destruction)[B]. 

Demil code: F; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: Yes; 
Required disposal action: Demilitarization instructions furnished by 
DOD item specialist. 

Demil code: G; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: Yes; 
Required disposal action: Demilitarization required and, if necessary, 
declassification and/or removal of sensitive marking or information. 

Demil code: P; 
U.S. Munitions List item[A]: Yes; 
Significant Military Equipment: Yes; 
Required disposal action: Declassification, and any other required 
demilitarization and removal of sensitive markings or information. 

Demil code: Q; 
U.S. Munitions List item[A]: No; 
Significant Military Equipment: No; 
Required disposal action: Demilitarization not required; dual use items 
under the jurisdiction of the U.S. Department of Commerce. 

Source: Defense Logistics Information Service. 

[A] These designations as U.S. Munitions List items are according to 
DOD rather than the State Department, which maintains the U.S. 
Munitions List. 

[B] This demil code is now obsolete according to the Defense Logistics 
Information Service. 

[End of table] 

Despite the use of demil codes and other safeguards, our prior reports 
show that DOD faces significant challenges in properly disposing of 
sensitive military property. For example, in our May 2005 report on 
excess property, we found that some sensitive defense-related items in 
the DOD excess property system were lost, stolen, or damaged before DOD 
could decide what to do with them. Losses included nearly 150 chemical 
and biological protective suits, over 70 units of body armor, and 5 
guided missile warheads. Because 43 percent of the reported losses 
involved military and commercial technology requiring demilitarization, 
we reported that these losses posed a security risk. In follow-up work 
reported in July 2006, we found that the Government Liquidation Web 
site sold over 2,500 sensitive-defense related items to nearly 80 
individuals between November 2005 and June 2006. We also reported that 
our undercover investigators purchased items from the Government 
Liquidation Web site that should not have been sold to the public, 
including SAPIs (which were in demand by U.S. service members in Iraq 
and Afghanistan); a time-selector unit used to ensure the accuracy of 
computer-based equipment, such as global positioning systems and system-
level clocks; digital microcircuits used in F-14 fighter aircraft; and 
numerous other items. In our most recent July 2007 report, we found 
that DOD has made significant improvements in preventing the sale of 
sensitive defense-related items through the Government Liquidation Web 
site. Throughout our investigation, we detected items that were 
potentially sensitive, but DOD or Web site employees regularly 
identified the same property items and removed them from the site 
before they were sold. 

In addition to the improper sale of sensitive defense-related items, we 
have also reported that the sale of demil code A and other nonsensitive 
military items can result in waste and reduces the efficiency of DOD 
operations. For example, in our May 2005 report, we found that DOD sold 
new and unused items to the general public for pennies on the dollar 
through the Government Liquidation Web site at the same time other DOD 
agencies requested these items. Rather than allocate its resources 
effectively, DOD simply paid the full acquisition cost again to 
purchase the same new and unused items. We determined that, from fiscal 
years 2002 through 2004, $3.5 billion in new, unused, and excellent 
condition items were being transferred or donated outside of DOD, sold 
on the Internet for pennies on the dollar, or destroyed rather than 
being reutilized. DOD has made progress in this area, with improved 
utilization of property resulting in millions of dollars in recent 
savings. Another area involving waste where we have performed 
investigative work involves the sale of military MREs. Although 
military MREs are nonsensitive items and are not on the U.S. Munitions 
List, we have identified civilians and service members selling military 
MREs on eBay for commercial gain.[Footnote 3] We concluded that 
military MREs are procured by government entities using taxpayer 
dollars, and consequently, if they are sold to the general public on 
eBay, they are clearly not reaching their intended recipients. 

Sensitive and Stolen Defense-Related Items Available on the Internet to 
the Highest Bidder: 

We found numerous defense-related items for sale to the highest bidder 
on eBay and Craigslist from January 2007 through March 2008. Undercover 
investigators purchased a dozen sensitive items to demonstrate how easy 
it was to obtain them. The items were shipped to us "no questions 
asked." Many of these items were stolen from the U.S. military. 
According to DOD, it considers the sensitive items we purchased to be 
on the U.S. Munitions List, meaning that there are restrictions on 
their overseas sales. However, if investigators had been members of the 
general public, there is a risk that they could have illegally resold 
these items to an international broker or transferred them overseas. 
Some items we purchased were assigned demil code D, meaning that, if 
the items were in DOD's possession, the item should be destroyed rather 
than made available to members of the general public. Our investigators 
also identified examples of U.S. government property--both sensitive 
and nonsensitive items--being stolen and sold for personal profit 
rather than being utilized by DOD (i.e., conversion of government 
property). In addition to being cases of probable theft, these examples 
represent a waste of resources because DOD is effectively purchasing 
items that are subsequently not used for their intended purpose. 

While some sellers were active-duty members of the military, other 
sellers included retired or reserve status military members and 
civilians. Our investigation of the sellers found that they obtained 
the sensitive defense-related items in various ways, though in many 
cases theft from DOD was involved. According to DOD officials, U.S. 
military personnel are not authorized to sell certain items that have 
been issued to them, such as body armor; doing so is considered theft 
of government property. Moreover, if a civilian (such a surplus store 
owner) receives military property that they know has been stolen from 
the government, they are in violation of the law.[Footnote 4] See 
figure 1 for a photograph of the defense-related items we purchased 
from eBay and Craigslist sellers during our investigation. 

Figure 1: Defense-Related Items Purchased from eBay and Craigslist 
Sellers: 

[See PDF for image] 

This figure is a photograph of defense-related items purchased from 
eBay and Craigslist sellers. 

Source: GAO. 

[End of figure] 

The sale of sensitive defense-related items over the Internet can have 
serious consequences, both abroad and here in the United States. In 
addition to the threat that sensitive items could be used directly 
against U.S. troops or allies, criminals could take advantage of some 
sensitive items to commit domestic crime. Sensitive defense-related 
items could also be reverse-engineered to develop countermeasures or 
equivalent technologies. 

Sensitive and Stolen Defense-Related Items Purchased on the Internet: 

Our investigators purchased a dozen sensitive defense-related items 
from Internet sellers during the period of our review. According to 
DOD, these items are on the U.S. Munitions List, meaning that there are 
restrictions on their overseas sales. Table 2 summarizes the majority 
of the items we purchased, followed by detailed case-study narratives. 

Table 2: Sensitive and Stolen Defense-Related Items Purchased on the 
Internet: 

Case: 1; 
Item: F-14 antenna; 
Seller location: Loveland, Colo.; 
Web site: eBay; 
Case details: 
* Item in demand by Iran, the only country with operating F-14s; 
* Winning bidders on other auctions held by the seller were located in 
countries such as Bulgaria, China (Hong Kong), Malaysia, Russia, and 
Thailand; 
* The seller told us that he obtained the part, along with other 
aircraft components, from an individual in the Denver area whose name 
and address he could not remember; 
* We could not determine how this part became available to the general 
public. 

Case: 2; 
Item: Helicopter antenna; 
Seller location: The Colony, Tex.; 
Web site: eBay; Case details: 
* Item currently used in the Blackhawk, Apache, and Chinook 
helicopters; 
* Components that can be used in the Chinook helicopter are in demand 
by Iran; 
* Winning bidders on other auctions held by the seller were located in 
countries such as Cyprus, the Czech Republic, Malaysia, and Slovenia; 
* We could not determine how this part became available to the general 
public. 

Case: 3; 
Item: Night vision goggles; 
Seller location: Tequesta, Fla.; 
Web site: eBay; 
Case details: 
* These night vision goggles contain a milspec image intensifier tube, 
making them demil F when owned by DOD; 
* In combination with IR tabs (see cases 4 and 5 below), these goggles 
are components in a night-fighting system that allows U.S. service 
members to identify friendly warfighters; 
* These goggles could be used to identify U.S. troops on the 
battlefield. 

Case: 4; 
Item: IR tabs; 
Seller location: Marlboro, N.Y.; 
Web site: Internet storefront; 
Case details: 
* Enemies could use IR tabs to pose as a friendly fighter during night 
combat, creating confusion on the battlefield and putting troops at 
risk; 
* Seller claimed that he always verifies the identification of IR tab 
buyers to ensure that only military and law enforcement officials 
obtain the tabs; 
* Our undercover investigators ordered tabs using the seller's online 
store front and obtained the tabs without any type of verification 
check. 

Case: 5; 
Item: ACU and accessories; 
Seller location: Fayetteville, N.C. and other locations; 
Web site: eBay; Case details: 
* In combination with accessories purchased from other sellers (e.g., 
patches, boots, a beret), item could allow anyone to look like a U.S. 
service member; 
* ACU came with IR tabs, meaning that the enemy could also use this ACU 
to pose as a friendly fighter during night combat, creating confusion 
on the battlefield and putting troops at risk; 
* Seller is a civilian who claimed to obtain the ACU at a flea market 
near Fort Bragg, N.C.; 
* Property appears to be stolen. 

Case: 6; 
Item: Kevlar helmet; 
Seller location: Bloomingdale, Ill.; 
Web site: eBay; 
Case details: 
* Demil B item that cannot be exported without a license from the State 
Department, which the seller said he did not have; 
* According to eBay records, winning eBay bidders for other Kevlar 
helmets included buyers in countries such as Costa Rica, the Czech 
Republic, Hungary, and Thailand; 
* Seller represented to us that he canceled transactions when auctions 
were won by overseas bidders; 
* Seller is a civilian who said he legitimately obtained the helmets 
from the Government Liquidation Web site. 

Case: 7; 
Item: Nuclear biological chemical gear; 
Seller location: Oxnard, Calif.; 
Web site: Craigslist; 
Case details: 
* Item that could be reverse engineered to develop countermeasures or 
produce equivalent technology; 
* Craigslist ad identified the seller as a Marine who was selling gear 
he had been issued; 
* When we interviewed the seller, he stated that, contrary to what he 
wrote in his advertisement, an acquaintance gave him the gear; 
* Stolen government property. 

Case: 8; 
Item: E-SAPIs; 
Seller location: Arlington, Tex.; 
Web site: eBay; 
Case details: 
* Item that could be reverse engineered to develop countermeasures or 
produce equivalent technology; 
* According to eBay records, winning eBay bidders on body armor offered 
by this seller included individuals in China (Hong Kong), Poland, 
Taiwan, and Singapore; 
* Stolen from government or manufacturer. 

Case: 9; 
Item: Body armor/SAPIs; 
Seller location: Fayetteville, N.C.; 
Web site: Craigslist; 
Case details: 
* Items that could be reverse engineered to develop countermeasures or 
produce equivalent technology; 
* Seller is an Army Special Forces Staff Sergeant assigned to Fort 
Bragg, N.C.; 
* The seller stated that he purchased these items at a yard sale and 
paid cash; 
* He said that he thought it was "OK" to sell the body armor on 
Craigslist because he had seen other body armor for sale there; 
* Stolen government property. 

Case: 10; 
Item: Body armor/SAPIs; 
Seller location: Minot, N.D.; 
Web site: eBay; 
Case details: 
* Items that could be reverse engineered to develop countermeasures or 
produce equivalent technology; 
* Seller was a Senior Airman with the Air Force Reserve at the time of 
our investigation; 
* Minot Air Force Base security police and the county sheriff's office 
investigated the matter and determined that the body armor was stolen 
from the base; 
* Seller knew he was selling government property. 

Source: GAO. 

[End of table] 

In addition to the items in the above table, we also purchased other 
items including an F-14 radio receiver and a body armor vest with SAPI 
plate. According to DOD, these are U.S. Munitions List items. We also 
purchased nonsensitive defense-related items such as boots, berets, 
patches, and an ACU chest rig. 

Case 1: F-14 Antenna: 

On October 10, 2007, we purchased a new antenna for the F-14 Tomcat 
from an eBay seller located in Loveland, Colorado. The seller lives 
about 60 miles from Buckley Air Force Base in Colorado. The antenna has 
a demil code of D, which requires DOD to destroy it when no longer 
needed. Our past work identified the control of excess F-14 components 
as a major challenge for DOD. The only country with operational F-14s, 
Iran, is known to be seeking such components. We interviewed the 
seller, who told us that he sells industrial electronic surplus items. 
He said he purchases these items from individuals, Internet sales 
sites, other eBay sellers, manufacturers, and occasionally the 
Government Liquidation Web site. The seller told us that he obtained 
this antenna from an individual located in the Denver, Colorado, area, 
whose name and address he could not remember. We were unable to 
determine how this part became available to the general public. We 
referred the seller to DCIS for criminal investigation. See figure 2 
for a picture of the antenna. 

Figure 2: F-14 Antenna Purchased from eBay Seller: 

[See PDF for image] 

Photograph of F-14 Antenna. 

[End of figure] 

Case 2: Helicopter Antenna: 

On September 19, 2007, we purchased a used flush-mount antenna, which 
is currently in use by the military in the Blackhawk, Apache, and 
Chinook helicopters, from an eBay seller located in The Colony, Texas. 
This city is located about 130 miles from Sheppard Air Force Base. The 
antenna is assigned demil code D, which requires DOD to destroy it when 
no longer needed. Chinook components are reportedly in demand by Iran, 
making this a national security issue. We interviewed the seller, who 
told us that he buys aircraft components from auctions and companies 
that are going out of business (not from Government Liquidation). He 
explained that he targets specific aircraft components that can be used 
in both military and commercial aircraft because he can better market 
these items to collectors. For example, he said that if he buys a 
Boeing 707 part he will resell it and advertise the part as belonging 
to a KC-135 Stratotanker (a midair refueling aircraft) because it would 
better pique the interest of a collector. According to eBay records, 
winning eBay bidders for other auctions held by this seller were 
located in Cyprus, the Czech Republic, Malaysia, and Slovenia. The 
seller said he did not recall the sale of this particular part, and it 
is unclear how it became available to the general public. We referred 
the seller to DCIS for criminal investigation. 

Cases 3 and 4: Night Vision Equipment: 

We obtained both milspec night vision goggles and IR tabs on the 
Internet. Although night vision goggles are commercially available to 
the public, the milspec tube in the goggles we purchased is a sensitive 
component that allows U.S. service members on the battlefield to 
identify friendly fighters wearing infrared (IR) tabs. These tabs are 
known as an IFF (identification friend or foe) element and can be 
detected at night by both ground troops and airborne combat pilots 
equipped with night vision equipment. Obtaining either of these two 
items could give enemies an undue advantage in night combat situations, 
either by using the night vision goggles to detect U.S. troops or by 
posing as U.S. troops (or friendly forces) with the IR tabs. We 
purchased these items directly from distributors who could sell these 
products domestically without violating any laws. However, officials 
representing the manufacturer of the night vision goggles told us that 
the goggles should not be sold on eBay and that, consequently, a 
violation of its distribution policies had occurred at some point in 
the distribution process. Officials told us they would conduct an 
investigation into where the violation of policy occurred and would 
remove the offending distributor from its list of authorized 
distributors. 

Case #3: Night Vision Goggles. On March 29, 2007, we purchased new/ 
unused milspec night vision goggles from an eBay seller located in 
Tequesta, Florida. The fully operational goggles have a 
demilitarization code of F, meaning that, if the goggles are part of 
DOD inventory, they cannot be sold to the general public unless the 
milspec image intensifier tube has been removed. The image intensifier 
tube was included in the goggles we purchased. See figure 3 for a 
picture of the night vision goggles. 

Figure 3: Night Vision Goggles Purchased on eBay: 

[See PDF for image] 

Photograph of Night Vision Goggles. 

[End of figure] 

Our investigators determined that the seller is a retired U.S. Marine 
Corps Colonel. The seller is the manager of business development for a 
General Services Administration scheduled business that distributes 
tactical, surveillance, and force protection equipment. According to 
the retired Colonel, he originally obtained 28 night vision goggles 
from an authorized distributor and sold most of them to active-duty 
military units, the U.S. Fish and Wildlife Service, U.S. Department of 
Homeland Security, U.S. Bureau of Land Management, and a number of 
municipal and state law enforcement agencies. The retired Colonel told 
us that, when he was unable to sell all 28 goggles, he used his 
personal eBay account to sell the remaining goggles to 10 individuals 
across the United States. He represented to us that he asked all 
potential clients for the goggles whether they were U.S. citizens as 
part of the eBay sales process. However, he did not ask our undercover 
investigator this question. Based on interviews with the goggle 
manufacturer and our legal research, we determined that the seller did 
not violate the law by selling these goggles domestically to members of 
the general public. However, it does appear the sale and distribution 
of these goggles violated the manufacturer's policy. Officials 
representing the goggle manufacturer told us they would conduct an 
investigation into where the violation of policy occurred and would 
remove the offending distributor from its list of authorized 
distributors. We referred this matter to DCIS for investigation. 

Case #4: IR tabs. We purchased new/unused IR tabs from an Internet 
store front (not eBay or Craigslist) maintained by a business owner in 
Marlboro, New York. We were alerted to this seller through his eBay 
advertisements and located the associated online store front. An enemy 
fighter wearing these IR tabs could pass as a friendly service member 
during a night combat situation, putting U.S. troops at risk. Prior to 
this purchase, our investigators had visited the physical store 
location, which is near the U.S. Military Academy at West Point. The 
physical store sells a variety of military items ranging from parachute 
cords to military patches. Our investigators identified themselves as 
GAO investigators and asked the store owner, a former Army Captain, 
whether he sells IR tabs to the general public. The store owner stated 
that he only sells the tabs to U.S. military personnel and that he 
always obtains proof of employment before completing an order. Several 
days after the interview, our investigator ordered and received several 
tabs from the seller's online store front. The validity of the order 
was never questioned, and the owner did not attempt to verify the 
employment of our investigator, as he stated during the interview. 
According to the manufacturer, these tabs have the same properties as 
the IR tabs affixed to ACUs and are a comparable product. Our own in- 
house tests confirmed that the tabs had IR properties and appeared to 
function the same way. We referred this matter to DCIS for 
investigation. 

Case 5: ACU and Accessories: 

During the course of this investigation, we purchased all the items 
necessary to build a complete, current U.S. military uniform--from 
boots to beret--using only the Internet Web sites eBay and Craigslist. 
Our intent was to demonstrate that the general public can purchase, 
over the Internet, all the gear necessary to dress and look like a U.S. 
service member. DOD has recognized the security risk associated with a 
member of the general public being able to acquire a full uniform. In 
January 2007, Iraqi insurgents dressed in U.S. military uniforms were 
allowed to pass through a police checkpoint in Karbala, Iraq. They 
subsequently broke into a secure compound using percussion bombs and 
killed five U.S. service members. After this incident, DOD issued a 
Demil Bulletin noting that ACUs "ï¿½will only be released to Army, Navy, 
Air Force, Marines and their Guard or Reserve components." 

On April 17, 2007--after the Demil Bulletin had been issued by DOD--we 
purchased a new/unused ACU with IR tabs from an eBay seller located in 
Fayetteville, North Carolina. As discussed above, IR tabs allow U.S. 
service members to identify friendly fighters during night combat. In 
addition to the risk that an enemy could pose as a U.S. service member 
in this ACU, the readily available IR tabs would also allow an enemy 
fighter to pose as a friendly fighter during night combat. The DOD- 
issued IR tabs are demil code D, which requires DOD to destroy them 
when no longer needed. According to the Defense Logistics Agency, the 
ACU that we purchased from this seller is ineligible for resale or 
release to the general public. The seller told us that he purchased the 
ACU at a flea market near Fort Bragg, North Carolina, and added that, 
on many occasions, he has observed flea market vendors purchasing 
military items from individuals who arrive at the flea market. The 
vendors then sell the items to the general public at the flea market. 
After concluding the interview, our investigators visited the flea 
market and observed several vendors selling used ACUs (none contained 
IR tabs). The flea market vendors told our undercover investigators 
that they obtain the ACUs at yard sales in the area and from soldiers. 
This ACU appears to have been stolen from DOD. We referred this matter 
to DCIS for criminal investigation. See figure 4 for a picture of the 
ACU. 

Figure 4: ACU Purchased on eBay: 

[See PDF for image] 

Photograph of ACU. 

[End of figure] 

Case 6: Kevlar Helmet: 

On April 21, 2007, we purchased a used Kevlar helmet from a civilian 
eBay seller located in Bloomingdale, Illinois. Even though the eBay 
seller's ad indicated that the helmet could not be exported, our 
investigation of his eBay history indicated that buyers in countries 
such as Costa Rica, the Czech Republic, Hungary, and Thailand had won 
eBay auctions for the helmets. When we interviewed the seller, he told 
us that he had never shipped Kevlar helmets overseas and he canceled 
sales when overseas buyers won these auctions. He said he originally 
obtained the helmets from the Government Liquidation Web site, which 
required him to sign an end use certificate stating, among other 
things, that the helmets would not be exported without a license from 
the State Department. Further review of the seller's eBay records 
reveals that he had completed auctions for $21,000 worth of Kevlar 
helmets from February 2007 to July 2007. We referred this matter to 
DCIS for criminal investigation. 

Case 7: Nuclear Biological Chemical Gear: 

On August 23, 2007, we purchased a used Nuclear Biological Chemical 
(NBC) protective suit, used gas mask, used gloves and boots, and unused 
chemical-biological canister (containing the gas mask filter that is 
used to protect against chemical and biological warfare agents) from a 
Craigslist seller located in Oxnard, California. Although the NBC suit 
was removed from packaging and therefore not usable to protect against 
an attack, according to a DOD Product Specialist with whom we spoke, 
the NBC suit is susceptible to reverse engineering and should not be 
sold to the public. The Craigslist advertisement stated that the seller 
was a former member of the military and that he was selling the gear 
because he needed money. When we interviewed the seller, he claimed 
that, despite what he wrote in the Craigslist advertisement, the gear 
was not his. He said that he left the Marines in 2002 and that the suit 
was given to him by an acquaintance who was also a Marine. Upon further 
questioning about the origin of the gear, the seller stated that (1) he 
did not remember his acquaintance's first name; (2) his acquaintance 
had not been issued the gear either, obtaining it at what he called a 
"swap meet" and; (3) his acquaintance had recently died in a motorcycle 
accident. This property was likely stolen from DOD. We referred this 
matter to DCIS for criminal investigation. See figure 5 for a picture 
of the NBC gear (worn by a GAO investigator). 

Figure 5: NBC Gear Purchased on eBay: 

[See PDF for image] 

Photograph of NBC Gear. 

[End of figure] 

Cases 8 through 10: Body Armor and SAPIs: 

Our May 2005 and July 2006 work identified two types of body armor that 
DOD's excess property system did not manage adequately--body armor 
vests and SAPIs. SAPIs are ceramic plates designed to slide into 
pockets sewn into the front and back of body armor vests in order to 
protect the warfighter's chest and back from small arms fire. They are 
currently used by service members in Iraq and Afghanistan. According to 
DCIS, service members are not authorized to sell body armor vests or 
SAPIs, and selling these items is considered theft of government 
property. Moreover, body armor vests and SAPIs are designated demil 
code D, meaning that DOD should destroy them when no longer needed. We 
purchased three body armor vests and seven SAPIs, including two current-
issue E-SAPIs, on eBay and Craigslist. Because service members are not 
authorized to sell these items, we concluded that they were stolen from 
the military. See figure 6 for a picture of some of the stolen SAPIs 
and body armor vests we purchased. 

Figure 6: Body Armor Vests with SAPIs Purchased on eBay and Craigslist: 

[See PDF for image] 

Photograph of Body Armor Vests with SAPIs. 

[End of figure] 

The availability of body armor and SAPIs to the general public has both 
national security and domestic safety implications. Regarding national 
security, reverse engineering could allow the creation of equivalent 
technology or the discovery of countermeasures based on potential 
weaknesses in the armor. On the domestic front, it is prohibited for 
violent felons to purchase, own, or possess body armor. Although 
sellers do not have a responsibility to determine whether they are 
selling body armor to a violent felon, and it is not illegal to do so, 
the wide availability of body armor online makes it easier for violent 
felons to break the law by obtaining body armor. The following case 
studies describe three of the four investigations we conducted into 
body armor we purchased online. 

Case #8: E-SAPI. On September 13, 2007, we purchased two new/unused 
body armor inserts identified as E-SAPIs from an eBay seller located in 
Arlington, Texas. This city is about 120 miles from Sheppard Air Force 
Base. The E-SAPI plates were manufactured in June 2007 and are 
currently used by U.S. service members in Iraq and Afghanistan. We 
determined that, from September 2006 to February 2008, the seller, who 
did not appear to be affiliated with the U.S. military, had completed 
eBay auctions of over 600 body-armor-related items totaling 
approximately $60,000. Much of the body armor appears to have been 
stolen from the military. In addition to domestic sales in the United 
States, the seller's eBay history indicates that the highest bidders on 
auctions for other body armor items were located overseas in such 
countries as China (Hong Kong), Poland, Taiwan, and Thailand. We 
referred this matter to DCIS for criminal investigation: 

Case #9: Body Armor and SAPIs. On September 22, 2007, we purchased a 
used body armor vest and two SAPIs from a Craigslist seller located in 
Fayetteville, North Carolina. Our investigation determined that the 
seller is an active-duty Staff Sergeant in the U.S. Army stationed at 
Fort Bragg. We interviewed the Staff Sergeant about the purchase. He 
claimed that he purchased the body armor at a garage sale while he was 
stationed at Fort Stewart, Georgia. He could not recall the specific 
location of the sale or the name of the seller and said that he paid 
cash. He stated that he thought it was "OK" to sell body armor on 
Craigslist because he had seen other advertisements for it. This is 
another case of theft of government property, which we referred to DCIS 
for criminal investigation. 

Case #10: Body Armor and SAPIs. On March 30, 2007, we purchased a used 
body armor vest and two SAPIs from an eBay seller located in Minot, 
North Dakota. The seller lives near Minot Air Force Base. Our 
investigation determined that the seller was a Senior Airman with the 
Air Force Reserve. Further, we determined that the individual had 
completed eBay auctions for 18 body armor vests and SAPIs from June 
2006 to April 2007 for a total of over $3,300. According to eBay 
records, an individual in Japan was the highest bidder in one of the 
auction rounds. After we referred this matter to Air Force OSI, we 
learned that the Minot Air Force Base security police and the county 
sheriff's office had investigated the matter and determined that the 
body armor was stolen from the base. According to Air Force OSI, this 
individual knew that the items were government property when he sold 
them on eBay. 

Other Defense-Related Items: 

Our investigators also identified examples of U.S. government property-
-both sensitive and nonsensitive--that was likely stolen and sold for 
personal profit rather than being utilized by DOD (i.e., conversion of 
government property). In addition to being cases of probable theft, 
these examples represent a waste of resources because DOD is 
effectively purchasing items that are subsequently not used for their 
intended purpose. 

Civilian Sellers of Stolen Property: 

We identified two civilian sellers with eBay store fronts who bought 
defense-related items from service members and sold these items to the 
general public on eBay. These items could have been stolen from the 
military. If these sellers knew the property they bought from the 
service members was stolen, they too would be violating the law. 
[Footnote 5] 

Gun-Store Owner. This eBay seller owns a gun store in Barstow, 
California. He lists U.S. military items on his eBay store front, 
including sensitive defense-related items such as Kevlar helmets and 
NBC gear. When we asked the seller to identify the source of the items 
listed on his eBay store front, he told us that military personnel 
frequently arrive at his shop with the items for sale. He gave us a 
record of the military items he had purchased from military personnel. 
For each sale, the gun-store owner obtained the signature of the seller 
and photocopied their identification card--in some cases, sellers 
provided him with their military IDs. We cross-matched the names of the 
individuals who sold items to the gun-store owner with the DEIDS 
database to determine whether any of the sellers were currently serving 
in the military. Table 3 contains details about selected service 
members who sold items to the gun-store owner and the nature of the 
items. 

Table 3: Service Members Who Sold U.S. Military Property to a Gun-Store 
Owner in Barstow, California: 

Number: 1; 
Rank: Staff Sergeant (E-6); 
Branch: Army (active); 
Current assignment: U.S. Army Recruiting Command, Ariz.; 
Items sold to gun shop owner: 3 helmets and miscellaneous gear. 

Number: 2; 
Rank: Sergeant (E-5); 
Branch: Army (active); 
Current assignment: Fort Dix, N.J.; 
Items sold to gun shop owner: Flak vest and miscellaneous gear. 

Number: 3; 
Rank: Specialist (E-4); 
Branch: Not serving; 
Current assignment: N/A; 
Items sold to gun shop owner: 2 Kevlar helmets, distress markers, and 
weapons-related gear. 

Number: 4; 
Rank: Specialist (E-4); 
Branch: Army (active); 
Current assignment: Fort Irwin, Calif.; 
Items sold to gun shop owner: Flak vest and gas mask. 

Number: 5; 
Rank: Specialist (E-4); 
Branch: Army (reserve); 
Current assignment: Portsmouth, Va.; 
Items sold to gun shop owner: Helmet and miscellaneous gear. 

Number: 6; 
Rank: Private First Class (E-2); 
Branch: Marine Corps (active); 
Current assignment: Twenty-nine Palms, Calif.; 
Items sold to gun shop owner: 27 head mounts (possibly for night vision 
goggles). 

Number: 7; 
Rank: Private (E-1); 
Branch: Not serving; 
Current assignment: N/A; 
Items sold to gun shop owner: Flak vest. 

Source: Barstow, California, gun-store owner; DEIDS. 

[End of table] 

We investigated this seller in 2005 in our report related to stolen 
MREs sold over eBay and referred him to the DOD Inspector General (IG) 
for review and criminal investigation.[Footnote 6] We have not received 
specific information from the DOD IG regarding their actions on this 
referral. We continue to believe this matter requires investigation and 
have made an additional referral to Army CID for criminal 
investigation. 

Military Surplus Store Owner. This eBay seller owns a military surplus 
store in Abilene, Texas. Our investigators visited the physical store 
location associated with the eBay store and observed a number of new 
ACUs with IR tabs affixed to them. As discussed above, IR tabs are an 
IFF element that can be detected at night by both ground troops and 
airborne combat pilots equipped with night vision equipment and 
represent one part of the military's night-fighting system. IR tabs on 
ACUs are demil code D. When our investigators pointed this out to the 
store owner, he said he was unaware of the restriction and removed the 
ACUs from the sales rack. The store owner said he purchased the ACUs 
from service members. He added that many of the items in his store were 
acquired from local military personnel who arrive, unannounced, at his 
shop with items for sale. He said that he maintains a record of 
transactions and provided a copy to our investigators. We cross-matched 
information on these individuals with the DEIDS database to determine 
whether any of the sellers were currently serving in the military. 
Table 4 contains details about selected service members who sold items 
to the store owner and the nature of the items. 

Table 4: Service Members Who Sold U.S. Military Property to a Military 
Surplus Store Owner in Abilene, Texas: 

Number: 1; 
Rank: Master Sergeant (E-7); 
Branch: Not serving; 
Current assignment: N/A; 
Items sold to store owner: 8 flight suits, 2 flight jackets, 15 battle 
dress uniforms (BDU). 

Number: 2; 
Rank: Staff Sergeant (E-5)[A]; 
Branch: Air Force (active); 
Current assignment: Dyess Air Force Base, Tex.; 
Items sold to store owner: 5 Kevlar vests. 

Number: 3; 
Rank: Staff Sergeant (E-5); 
Branch: Air Force (active); 
Current assignment: Kunsan Air Force Base, South Korea; 
Items sold to store owner: Helmets. 

Number: 4; 
Rank: Senior Airman (E-4)[A]; 
Branch: Air Force (active); 
Current assignment: Dyess Air Force Base, Tex.; 
Items sold to store owner: 9 BDUs. 

Number: 5; 
Rank: Senior Airman (E-4); 
Branch: Air Force (active); 
Current assignment: Dyess Air Force Base, Tex.; 
Items sold to store owner: Gas mask and filters, BDUs. 

Source: Abilene, Texas, military surplus store owner; DEIDS. 

[A] The records provided by the store owner listed the name of the 
service member's spouse. DEIDS includes the names of spouses. 

[End of table] 

We referred this matter to Air Force OSI for criminal investigation. 

MREs: 

Military MREs are designed to sustain an individual engaged in 
strenuous activity, such as military training or actual military 
operations, when normal food service facilities are not available. In 
general, military MREs are boxed in cases of 12. Each MRE contains a 
full meal packet in a flexible bag. The cases and bags for military 
MREs are marked with the words "U.S. Government Property, Commercial 
Resale Is Unlawful." Although we do not consider MREs to be sensitive 
property, military MREs are procured by government entities using 
taxpayer dollars and are intended to be consumed by individuals from 
authorized organizations and activities. Consequently, if military MREs 
are sold to the general public on the Internet, they are clearly not 
reaching their intended recipients and represent a waste of taxpayer 
dollars. Since service members are not authorized to take MREs and sell 
them for personal gain, the vast majority of the military MREs for sale 
on the Internet represent stolen military property. 

During our investigation, we purchased numerous cases of MREs from eBay 
and Craigslist sellers. The sellers were mostly civilians. Three 
examples of our investigative work related to military MREs follows: 

* One civilian seller in Louisiana[Footnote 7] indicated that she has 
been selling military MREs on eBay for a number of years. She said that 
she acquires the MREs from service members assigned to a nearby 
military base, and that they arrive at her home unannounced. She added 
that most of the service members have 2 or 3 MRE cases but that others 
have had as many as 10 to 12 cases. She told us that she does not know 
any of the service members or where they get the MREs, but suggested 
they are "left over" from field exercises. She said that she usually 
pays service members about $20 per case in cash and that she can sell 
the cases on eBay for about $55 per case. We reviewed eBay records and 
learned that, from September 2006 through February 2008, she completed 
eBay auctions totaling about $55,000 for MREs. These MREs were likely 
stolen from the nearby military base. We referred this case to Army CID 
for criminal investigation. 

* A second seller living in Phenix City, Alabama, is employed as a 
civilian aircraft mechanic at Fort Benning, Georgia. She told us that 
she obtains military MREs from dumpsters at Fort Benning. She stated 
that she visits the dumpsters several times a week, removing unopened 
MREs from the dumpsters and cleaning, packaging, and mailing them to 
her eBay customers. According to sales data provided by eBay, from July 
30, 2006, to February 6, 2008, this individual had completed 
approximately $54,000 in MRE auctions. Because of the volume of sales 
activity we referred this case to Army CID for criminal investigation. 

* A third seller was a Private First Class in the U.S. Army stationed 
in Camp Casey, South Korea. Based on our referral, Army CID executed a 
search warrant at the seller's residence and discovered a substantial 
amount of stolen U.S. military property, as well as nearly $2,000 in 
cash. According to Army officials, the seller was charged with drug 
possession and use in the summer of 2006. He was demoted and placed in 
a supply clerk position in charge of MRE inventories while awaiting 
discharge from the military, which gave him the opportunity to steal 
MREs and sell them over eBay. Army CID linked the seller to a series of 
unsolved larcenies on base. The seller was sentenced to over 3 years in 
prison. 

eBay and Craigslist Have Few Safeguards to Prevent the Sale of Stolen 
and Sensitive U.S. Military Items: 

Advertisements for the sensitive defense-related items we purchased 
were not removed by eBay and Craigslist Web site administrators, 
allowing us to complete the transactions. Both Web sites maintain 
published lists of items that are prohibited from sale, including 
stolen items, but only eBay contains warnings related to sensitive 
defense-related or export-controlled items even though both Web sites 
have an international reach. eBay employs administrative staff and 
investigative teams intended to deter fraud and prohibited sales from 
occurring on the site. Meanwhile, Craigslist has a smaller staff and 
largely relies on its user community for identifying inappropriate 
advertisements or postings. Officials with both Web sites told us they 
cooperate with law enforcement agencies to stop the sale of illegal, 
counterfeit, or stolen items, and identify and deter individuals from 
using these Internet services for a fraudulent or improper purpose. 
Generally, neither eBay nor Craigslist can incur criminal liability for 
being the conduit through which stolen or export-controlled items are 
sold, even if the items are sold overseas. Because the Web sites never 
take possession of the goods, do not set the price of transactions, and 
do not actually deliver the items, no relevant federal criminal statute 
applies to their activities. Table 5 summarizes the policies, proactive 
enforcement efforts, and penalties that each of these Internet 
companies maintain to deter the sale of prohibited items. 

Table 5: eBay and Craigslist Policies and Procedures: 

Policy or procedure: Prohibited items list includes stolen items?; 
eBay: Yes; 
Craigslist: Yes. 

Policy or procedure: Prohibited items list includes items that have not 
been demilitarized (i.e., sensitive defense-related items)?; 
eBay: Yes, but is listed only under the "Firearms, Weapons, and Knives" 
category related to ordnance; 
Craigslist: Not explicitly mentioned. 

Policy or procedure: Prohibited items list includes export-controlled 
items?; 
eBay: Yes; contains information on international sales and provides a 
ink to [hyperlink, http://www.export.gov]; 
Craigslist: No; provides a link to Treasury's Office of Foreign Assets 
Control. 

Policy or procedure: Prevents the sale of property on its prohibited 
lists?; 
eBay: Prohibited Item Team attempts to detect prohibited items and 
delete prohibited postings. Additionally, users can report prohibited 
items being sold or other violations of policies; 
Craigslist: Relies on users to detect and report advertisements for 
prohibited items. 

Policy or procedure: Works with law enforcement agencies?; 
eBay: Fraud Investigations Team cooperates with law enforcement to 
report information about sellers and makes proactive referrals; does 
not require subpoena to disclose seller information; 
Craigslist: One individual at Craigslist is tasked to work with law 
enforcement and requires subpoena to disclose seller information. 

Policy or procedure: Have penalties for non-compliance with policies?; 
eBay: Penalties for violating policies include property listing 
cancellation, limits on account privileges, elimination of "Power 
Seller" status, and suspension of accounts; 
Craigslist: Penalties include deletion of user's account and other 
attempts to prevent the user from accessing the site. 

Source: GAO analysis of eBay and Craigslist policies and procedures, 
and information provided by respective Web site officials. 

[End of table] 

eBay: 

Advertisements for the sensitive defense-related items we purchased 
were not removed by eBay administrators, allowing us to complete the 
transactions. According to its prohibited items list, eBay prohibits 
stolen property from being sold. eBay also provides extensive 
information about international trading on its prohibited items list, 
including a link to a government Web site on export controls. There are 
no explicit references to the sale of military MREs and other stolen 
military property on the prohibited items list. However, eBay does 
discuss a prohibition on defense-related items that have not been 
disposed in accordance with DOD demilitarization policies. According to 
an eBay official with whom we spoke, his company has created two teams 
that inspect user sales--the Fraud Investigations Team and the 
Prohibited Items Team. The Fraud Investigations Team deals directly 
with law enforcement organizations and provides information on sales or 
seller activity. We received invaluable assistance from the Fraud 
Investigations Team during our investigation. The official stated that 
the Fraud Investigations Team also proactively refers cases to relevant 
law enforcement agencies for further investigation and prosecution. 
Meanwhile, the Prohibited Items Team has an automatic filtering system 
to identify potentially prohibited sales and responds to reports on 
prohibited activity. If the Prohibited Items Team discovers a 
prohibited item, its mandate is to remove the advertisement for the 
item, educate the seller, and suspend the seller's account if the 
activity continues. When we asked the eBay official about the sale of 
military body armor on eBay, he admitted that it was a difficult issue 
for eBay because some body armor can be sold legally. He said that the 
Fraud Investigations Team does not scan eBay sales to try to identify 
what body armor is illegal to sell, e.g., body armor that has been 
stolen from the military. Regarding the sale of military MREs, the 
official stated that "nobody has indicated to us that it's illegal to 
sell MREs." To penalize users who violate eBay policies, eBay officials 
can cancel listings, limit account privileges, eliminate users' "Power 
Seller" status, and suspend accounts. 

Craigslist: 

Advertisements for the sensitive defense-related items we purchased 
were not removed by Craigslist administrators, allowing us to complete 
the transactions. Craigslist policies and procedures prohibit the sale 
of stolen property. However, its prohibited items list does not mention 
sensitive defense-related items, export controls, or international 
trading despite the fact that the Web site serves cities around the 
world. Further, there are no explicit references to the sale of 
military MREs and other stolen military property on the prohibited 
items list. Because these items are not included on the list, 
Craigslist officials and users are unlikely to prohibit these sales. 
Craigslist maintains a much smaller staff than eBay (25 people 
according to its Web site). When we asked a Craigslist manager about 
whether his company had a Fraud Investigations Team (FIT), he said, "I 
am the FIT for Craigslist." This official added that Craigslist relies 
primarily on its user community to identify suspicious advertisements 
and report prohibited item sales. We observed this in several cases 
during our investigation, when questionable advertisements for weapons 
and other obviously prohibited sales we identified were also apparently 
noticed by Craigslist users, leading to removal of the items from the 
Web site. The Craigslist official with whom we spoke indicated that 
Craigslist works with law enforcement agencies but does not proactively 
call issues to their attention. The official said that Craigslist 
deletes advertisements for questionable items, such as body armor and 
night vision goggles, when contacted by law enforcement. However, 
unlike eBay, Craigslist will not provide seller information to a law 
enforcement agency without a subpoena. To penalize users who do not 
comply with Craigslist policies, company officials can delete the 
user's account or otherwise attempt to prevent the user from accessing 
the site. 

Contacts and Staff Acknowledgments: 

For further information about this testimony, please contact Gregory D. 
Kutz at (202) 512-6722 or [email protected]. Major contributors to this 
testimony include Mario Artesiano, Johana Ayers, Nabajyoti Barkakati, 
Norman Burrell, Shafee Carnegie, Bruce Causseaux, Thomas Denomme, 
Dennis Fauber, Richard Guthrie, Kenneth Hill, Jason Kelly, Barbara 
Lewis, Andrew McIntosh, James Murphy, Gertrude Moreland, and Richard 
Newbold. 

[End of section] 

Footnotes: 

[1] The Government Liquidation Web site, which is run by a DOD 
contractor, is the mechanism the Defense Logistics Agency (DLA) uses to 
sell items from its excess property system to the general public. See 
GAO, Sales of Sensitive Military Property to the Public, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-07-929R] (Washington, D.C.: July 
6, 2007); GAO, DOD Excess Property: Control Breakdowns Present 
Significant Security Risk and Continuing Waste and Inefficiency, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-943] (Washington, 
D.C.: July 25, 2006); GAO, DOD Excess Property: Management Control 
Breakdowns Result in Substantial Waste and Inefficiency, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-277] (Washington, D.C.: May 
13, 2005); and GAO, DOD Excess Property: Risk Assessment Needed on 
Public Sales of Equipment That Could Be Used to Make Biological Agents, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-15NI] (Washington, 
D.C.: Nov. 19, 2003). 

[2] An NSN is a 13-digit number that identifies standard use inventory 
items. The first 4 digits of the NSN represent the Federal Supply 
Classification, such as 8430 for men's footwear, followed by a 2-digit 
North Atlantic Treaty Organization (NATO) code and a 7-digit 
designation for a specific type of boot, such as cold weather boot. 
FedLog is the logistics information system published by the Defense 
Logistics Information Service (DLIS). FedLog lists the demil code 
associated with each item in the system. 

[3] See GAO, Military Meals, Ready-to-Eat sold on eBay, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-06-410R] (Washington, D.C.: Feb. 
13, 2006). 

[4] An individual may be in violation of 18 U.S.C. ï¿½ 641 if he or she 
"receives, conceals, or retains [property of the United States] with 
intent to convert it to his use or gain, knowing it to have been 
embezzled, stolen, purloined or converted." 

[5] 18 U.S.C. ï¿½ 641. 

[6] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-410R]. 

[7] We have removed detailed information about the location of this 
seller because of an ongoing investigation by Army CID, which was based 
on our referral. 

[End of section] 

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