T5 B5 Yates- Bill Fdr- 2-22-03 Mfr- William Yates 163

Commission Sensitive MEMORANDUM FOR THE RECORD WILLIAM YATES ASSOCIATE DIRECTOR, OPERATIONS, CIS/DBA DON CRUCETTI DIRECTOR - FRAUD DETECTION AND CUSTOMER SERVICES Event: Interview of Citizenship and Immigration Services, DHS (Pre 9-11-current) Date: Friday, February 22, 2003 Special Access Issues: None Prepared by: Walter T. Hempel Team Number: 5 (Border Security) Location: CIS Headquarters, 20 Massachusetts Ave, Washington, DC Participants - Non-Commission:

William Yates, CIS/DHS Louis D. Crucetti CIS/DHS Karen Fitzgerald CIS/DHS Peter Gregory, Assistant Counsel, CIS/DHS

Participants - Commission: Janice Kephart-Roberts, counsel Susan Ginsburg, senior counsel Walt Hempel, staff member

Note: no classification required Documents provided or requested. Requested: Percentage of fraud by application type, number of IBIS hits, number of IBIS hits that indicate a possible terrorist threat, draft of CIS/ICE MOU on use of ICE special agents to investigate fraud cases Recording: no NOTES: Mr. Yates stated that the Director of Citizenship and Immigration Services (CIS), Eduardo Aguirre, established three priorities for CIS: reduce processing time to six months for most applications, improve customer services and enhance national security. CIS is trying to meet these goals but has not had any significant increases in staffing. CIS is to be supported by fees for service and no appropriations are in the FY '05 budget except for backlog reduction. The Office of Management and Budget (OMB) would like

to establish a new fee schedule as it believes that the current funding mechanism is broken. On February 2, 2004, CIS released a budget request for FY '05 of $1,711 billion. It requested a 60% increase in funds to reduce the backlog. This budget reflects an increase of S60 million over FY'04.

BACKLOG REDUCTION Citizenship The current backlog for naturalization benefits is 621,794 applications (as of September, 2003). Although the number of applications has decreased from 2002, the number of applications processed has decreased by a similar amount. Therefore the backlog for 2002 and 2003 is about the same. Time and motion studies were conducted in 1997 to determine the fee structure for naturalization applications. CIS is to be totally funded by fees after FY '04. CIS receives all fees for applications except for those filed in the Virgin Islands or Guam. These fees are returned to the governments of these two territories. In 1999, the INS made the reduction of the naturalization backlog a top priority. As of February, 1999, there were 1.8 million form N-400s (Application for Naturalization) pending. This was due to the rapid increase in the number of applications filed. During the mid to late '80s, naturalization applications averaged about 225,000 a year. In the early!990's, the number of applications increased to millions per year. In 1996 and 1997, there were approximately 1.6 million new naturalization applications per year. There are many reasons for this increase in applications. The legalization program of 1986 gave legal resident status to millions of illegal aliens. This allowed them to file for citizenship after being a legal permanent resident for five years. Mexico changed its laws to allow its citizens to be dual nationals, citizens of both the United States and Mexico. Previously if a Mexican citizen naturalized in the United States, they lost their rights to owning property in Mexico. They could now also vote in both countries. The state of California passed a referendum, Proposition 197, which would have restricted state and local benefits to some aliens. (Although this action has been blocked by the courts, many aliens decided to legalize their alien status.) Nationalization services staffing could not keep up with the escalation of applications. There was also a lack of uniformity in processing times and decision making at the many local offices handling these cases. The decision was made to centralize the application process by having most of the applications sent to four Service Centers. These were designed to reduce the backlog by handling the applications more efficiently. Each center serviced a specific geographic area.

However with no staff increases at the Service Centers, the processing times began to slip. The public began to complain about the length of time it took to complete an application. A series of administrative decisions were made that cut processing times. There was still a backlog but more applications were being completed and the goal was to process most applications within 60 days. Again the backlog began to be reduced. Immigration Benefits The problem of lengthy processing times is not limited to applications for naturalization. Applications for other immigration benefits were also backlogged. As of September, 2003, there was a backlog of 5,510,553 pending applications. The volume of applications increased by 25% from 2002 to 2003. Again the increase was due to the large number of aliens requesting adjustment within the United States or qualifying for immigrant visas to enter the United States from abroad. These applications range from immigrant visas based on family relationships to extensions of stay for non-immigrant visitors. The processing time for each type of application is influenced by volume, the priority it is assigned and staffing levels at the Service Centers. Mr. Yates stated that the current "green card" still says INS/Department of Justice. CIS is in the process of designing a new DHS version. The current cards are expensive and difficult to produce. The change over to the new "green card" will occur when the new card design is approved, the production facility is operational and the old card stock has been depleted. National security is a prime consideration in any backlog reduction plan. No one wants to be the person who approved the paperwork for a terrorist. This means that there is less discretion in the processing cases. Applications which previously may have been approved through a broad interpretation of regulations are now being denied. The events of 9/11 caused INS to look at what security background checks were being conducted. The controversy of the post humorous sending of the approved student I-20s to the 9/11 hijackers Atta and Al-Shehhi further focused the issue. Processing times have to be balanced with the needs of national security. BACKGROUND CHECKS Under INS Commissioner James Ziglar, a risk assessment of the naturalization process was conducted. A number of areas of vulnerability were identified. No one document covers the results of the study. The extent of the background checks conducted by CIS are determined by regulation and the possible risks posed by the type of application. Naturalization which gives United States citizenship to an alien requires more background checks then a visitor who wants to stay in the United States a few months more.

IBIS Before 9/11, only selected applicants were checked against IBIS (Interagency Border Inspection System). The IBIS system combines some of the State Department, former Customs and former INS lookout databases. When IBIS checks were made mandatory, some local INS offices were unable to check IBIS since they didn't have access to TECS (Treasury Enforcement Computer System). Now the Service Centers check all names, petitioners and beneficiaries, through IBIS. This has added to the application processing time and backlog reduction has stalled. IBIS does not contain all names from all watch lists. NAME CHECKS Federal Bureau of Investigation Previously, INS had an MOU with the FBI to return name checks within a certain amount of time. Most were returned within 60 days. If there was some possible interest in the individual, the response could take up to 180 days. If a possible criminal record was found, the case had to be reviewed by an INS supervisor before setting up the naturalization or benefit interview. There are limitations to the FBI name check. In one case, CIS was told that they had naturalized a terrorist suspect. A review of the FBI name check records showed that the FBI had twice returned a "no record" on the subject. Consultation with the FBI revealed that the FBI never checked the name against the corporate side of their database. This meant that all the previous name checks may have been invalid. Also if the FBI had an applicant under investigation, it did not notify CIS of this fact. As a result of this discovery over 3.2 million names had to be rerun through the FBI. Today the name checks are conducted at the same time the APIS (Automated Fingerprint Identification System) fingerprints are submitted. Each FBI name check is logged in and tracked until a response is received. Most name checks are now returned within 2-48 hours.

Central Intelligence Agency A copy of the G-325 (Biographic Information) has always been sent to the CIA. Prior to 9/11, the CIA name check was not tracked. Post 9/11, the CIA name check is tracked and positive "hits" are forwarded to DHS/ICE (Immigration and Customs Enforcement). There the NSU (National Security Unit) within the Investigations Branch analyses the information.

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CIS has taken a position that it will not approve an application on anyone who is under investigation by the FBI or CIA for terrorism, drug trafficking or criminal activity. CIS has limited authority in these cases particularly when the information falls within the intelligence community. Applicants can take CIS to court and respond to derogatory information. In the worst case, CIS may have to grant the benefit but CIS will not issue the form 1-551 (Green Card). These are difficult cases for CIS to resolve. Name Variations Make Name Checking Difficult Much of the problem with name checks is the variety of name variations. Many foreign born individuals have different spellings of their names. This may be due to the different systems of transliteration used to convert to names to English. For example Chinese or Arabic names can be difficult to convert to English. In some cultures, names change with age or marital status or family position. Government agencies may misspell names on passports, identification cards or visa. As an example of this, Mr. Yates stated that after 9/11 there was an urgent effort to identify any INS records relating to the nineteen hijackers. A study concluded that there were 255 variations of the nineteen hijacker names. The National Security Unit ran all possible names against the INS automated systems. There were 3.2 million possibly related files. TIPOFF and the TSC (Terrorist Screening Center) CIS has access to the TIPOFF watch list through IBIS. CIS would like to see all terrorist watch lists consolidated into the TSC. CIS could then go through the TSC and not have to go to the CIA. Mr. Yates feels that this would reduce the wait time for responses. A copy of the G-325 (Biographic Information) would still be provided to the CIA. There have been discussions on this issue with the ICE Director of Operations, Michael T. Dougherty. ELECTRONIC FILING The following forms can be filed electronically: 1-129, used to classify a non-immigrant worker seeking status as an alien in a specialty occupation, an alien of extraordinary ability or achievement or an alien who is an internationally recognized athlete, artist or entertainer.

1-140, a petition for an immigrant worker 1-539, application for non-immigrants requesting a change of non-immigrant status or extension of stay Aliens seeking TPS (Temporary Protected Status) may also file their initial claim via the internet. 1-907, a request for premium service (requires the payment of an additional fee of $1,000) to expedite case processing In some cases an application can be filed electronically but the applicant will have to be processed and/or interviewed at an ASC (Application Support Center). The ASC also takes the digital photograph, fingerprints and digital signature. This prevents someone from submitting a fingerprint card in their name but with the fingerprints of someone who does not have a criminal record. The ASCs are located in metropolitan areas. They operate by appointment and may be a distance from the applicant's residence. CIS plans to expand the number of forms that can be filed electronically. Paper forms must be converted into an electronic format to be handled efficiently. About 80% of all applications are eventually captured electronically. These applications are maintained in the CLAIMS 3 (Computer Linked Application Information Management System) database. The CLAIMS 3 database has some links to the US VISIT Entry-Exit system through name checking. However, at the present time the two systems are not connected through biometrics. This could present problems. US Visit will in the future capture two fingerprints and a photo of some aliens who depart the United States. CIS may not know when an alien with a pending application leaves the United States. Applications are considered abandoned in these cases and should be denied. This was the case with the change of status applications for 9/11 hijackers Mohammed Atta and Marwan al Shehhi. Both left the country but their applications for vocational student status were not denied as the adjudications branch was unaware of their departures. CIS is in the process of designing and building a new database.

BIOMETRICS Biometrics offer the best way to insure that an alien only has one identity with CIS. The current biometric for all of CBP (Customs and Border Protection), ICE, and CIS is fingerprints. In most cases one or both index fingers of an applicant are captured electronically. These are flat prints, not rolled fingerprints which go from nail edge to nail edge. Flat prints capture a smaller fingerprint area. This reduces the amount of information to be stored but also limits the minutia points that can be compared. The FBI requires a standard rolled ten finger print for identification. The two flat finger impressions are used by an APIS (Automated Fingerprint Identification System) system utilizing advanced matching technology to verify identity. A digital photograph is also a

9/11 Law Enforcement Sensitive

part of the IDENT system. This photograph assists in identification when the search returns multiple possible records. Note: The IDENT (INS Automated Biometric Identification System) utilizes two flat index fingerprints. IDENT is an inkless system that is used to collect two fingerprints from aliens who are arrested for immigration violations, some applicants for immigration benefits, persons entering the United States under the US Visit program and persons who were registered under the NSEERS (National Security Entry Exit Registration System ) program The FBI also contributes some criminal alien fingerprints to IDENT but only the two index fingerprints which are stripped from the FBI ten fingerprint cards and converted into the IDENT format. | ~] '

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Some applications such as political asylum and naturalization require that all ten fingers be printed and submitted to the FBI fingerprint division for a search. These are checked against the FBI criminal fingerprint records for any matches. The civil applicant cards are retained by the FBI and CIS is notified if any criminal records are found. The FBI does not enter civil applicant fingerprint cards into a searchable database. The FBI only enters criminal fingerprint cards into their database. The IDENT system is used throughout the application process to verify the identity of applicants. A CIS adjudicator can verify the identity of the alien at interviews, processing, etc. This prevents aliens from using a new identity if their previous application is denied. Mr. Yates felt that biometrics were a key to the integrity of the application system. He stated that some of the delays were due to the transition from INS to DHS. He also feels that the systems integration board, which directs and approves major systems changes at DHS, was aware of the needs at CIS. BENEFIT FRAUD Mr. Yates was asked about the amount of benefit fraud that CIS has to deal with. He stated that there were previous studies that indicated significant fraud. Also that fraud was systemic but the amount of fraud varied among the different benefit programs. He does not want to approve any applications where there is an indicator of fraud. Last year, Mr. Yates requested that ICE conduct field investigations on a sampling of a few types of applications. This was to assist CIS in determining the fraud rate. A small number of applications chosen at random were given to ICE Special Agents to investigate. For instance, agents were asked to check if the photo on the Form 1-90 (Request to Replace Form 1-551) matched the original card holder and were not of an impostor. The initial finding was that only 1% of these cases were fraudulent. What this example does not show is how many of the replacement "green cards" were obtained for use by relatives or friends.

The ICE Director of Operations, Michael T. Dougherty terminated the investigation at about the midpoint of the study. He felt that the results were skewed and invalid because investigations were not being thoroughly conducted. Some ICE Special Agents never did the required field investigations but completed cases at their desks. Mr. Dougherty felt that the data was going to be inaccurate and that it was better to terminate the sampling then try to explain the results. Mr. Crucetti stated that CIS has the responsibility to identify any fraud in the application process. The most simple and expedient option in fraud cases is to deny the benefit and remove the alien from the United States. If the fraud was complex and widespread, the case would be given to ICE to determine if an ICE Special Agent would be assigned to the investigation. ICE tentatively agreed to make this determination within 30 days of receiving the case from CIS. If the case referral is refused by ICE, CIS also had the option to do further review of the case and again present it to ICE with any new evidence. CIS feels that the regulations governing the benefits program preclude CIS from prosecuting its own criminal cases. Therefore it is critical that CIS and ICE have a working agreement on how cases will be accepted or refused for investigation by ICE Special Agents. Mr. Crucetti said that he has been working on a Memorandum of Understanding between CIS and ICE on this critical issue. No MOU had been signed at the time of the interview. Fraud Detection Units (FDU) These are located within the CIS Service Centers. There are 44 FTEs for this purpose. Not all are currently filled. The FDUs will do analytical work with the adjudications staff to identify both individual and systemic fraud. They will use data mining, matching technologies, CLAIMS 3 programming and intelligence leads to prevent the approval of suspected fraudulent applications. Many complex fraud rings operate in multiple locations. The Service Centers will have to share their data to be effective. The FDUs will also assemble the basic cases and evidence. Yates said that when he was the director of the Vermont Service Center, a large, complex case that involved over 7,000 fraudulent political asylum cases was identified. This case resulted in a successful Federal prosecution. The FDUs will pass on their suspected cases to the Benefit Fraud Units. Benefit Fraud Units (BFU) The benefit fraud units are made up of ICE Special Agents to be assigned to each Service Center. Currently most are working in Vermont and California. In most cases these Special Agents had previously been assigned to the INS Regional Offices. The Regional Offices were dissolved with the transition to DHS/ICE. The current distribution of these ICE Special Agents among the service centers varies greatly. The BFU will take the suspect cases from the FDUs and develop them further. They will assemble the evidence, determine the administrative and criminal violations, use advanced investigative techniques, and determine how the case can be successfully prosecuted.

ICE, with a limited number of special agents, only wants to prosecute large, complex conspiracies or those involving national security. ICE has not said how many ICE Special Agents will handle the CIS fraud cases. Until last year, some ICE Special Agent positions were funded through the application fees received by CIS. The regulations dividing the former INS into three different branches under DHS prevents the transfer of any CIS fee monies to ICE. Therefore, there may be only a few Special Agents under each ICE SAC who will be available to do these immigration fraud prosecutions. It is unresolved how ICE will determine which cases will be accepted and what will happen to the potential criminal cases that ICE does not accept. Mr. Yates is also concerned that historically INS has been very successful in prosecuting the key conspirators but made little or no effort to remove the aliens who benefited by the fraud. Referrals to ICE Special Agents How the case referral process is to be handled is not finalized. The MOU is still under negotiation. BFU will forward to ICE cases that involve benefit fraud organizations, facilitators and individuals who pose an imminent threat to public safety or national security. CIS will also refer large, complex conspiracies cases. ICE will accept or reject the case. If it accepts the case, ICE will investigate it and prosecute it or return it to CIS with recommendations. Timelines on how long ICE will have to make a decision on each case are not decided. ICE has a very limited complement of special agents. It remains to be seen how many CIS fraud cases ICE will be willing and able to investigate. Non-criminal Investigations Many suspected benefit fraud cases require some field investigation below the level of criminal investigation. This may be a simple drive by to establish that a residence is actually a residence and not a mail drop. Or that a business that claims to have fifty employees is not a "mom and pop" deli. These investigations do not require highly trained Federal criminal investigators but they still need to be done. CIS is proposing that about 270 compliance positions be created to meet these needs. These employees will not have arrest powers. They may be Federal employees or contract employees. They will be located throughout the country. This will be a new approach which is necessitated by the transition from INS to DHS. Volume of Applications Even if there is only a 1% fraud rate, the numbers of aliens benefiting from fraud is staggering. 1% of the 5.6 million back log is 50,600 aliens. Any fraud strategy has to deal with massive numbers of applications. According to CIS, each adjudicator completes 1.2 cases an hour. At that rate the backlog cannot be reduced. Any future expansion of immigration benefits will have to be considered in light of the current volume and backlog.

Summary Every day the Department of Homeland Security, Citizenship and Immigration Services issues 20,000 "green cards", conducts 140,000 background checks, adjudicates 30,000 applications, receives 50,000 telephone calls, takes 8,000 fingerprints at the ASCs, and naturalizes 3,000 new citizens. Benefit fraud detection and prevention is critical to the integrity of the overall immigration program. The challenge is to integrate an effective fraud detection and prevention program into a system that is overwhelmed with volume, under going restructuring, under funded by a fee system and reducing a 5.6 million application backlog while responding to enhanced national security concerns.

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