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Senate Hearings Concerning Document Fraud - Part 1 By Michael Phulwani, Esq. On September 9, 2003, the Senate Committee on Finance held a hearing on Homeland Security and terrorism concerns relating to document fraud, identity theft, and social security number misuse. The hearing focused on document and identity fraud in relation to national security, including discussion of the results of a U.S. General Accounting Office (GAO) report, Security: Counterfeit Identification and Identification Fraud Raise Security Concerns. I Testifying, among others, were Asa Hutchinson, Under Secretary of the Department of I Homeland Security's Directorate of Border and Transportation Security; James B. Lockhart, III, Deputy Commissioner of Social Security; Patrick P. O'Carroll, the SSA's Assistant Inspector General for Investigations; Linda R. Lewis, President and Chief Executive Officer of the American Association of Motor Vehicle Administrators (AAMVA); and John S. Pistole, Acting Assistant Director of the Federal Bureau of Investigation's (FBI's) Counterterrorism Division. A similar hearing, with some overlap of witnesses, was conducted on October 1, 2003, before the House Select Committee of Homeland Security. Following are highlights of the two hearings and the GAO report. GAO REPORT

The GAO's investigations revealed the homeland security is vulnerable to identity fraud and that, unless action is taken, individuals who intend to cause harm can easily exploit vulnerabilities. The GAO found that government officials generally did not recognize the documents the agency presented as counterfeits; some officials failed to follow security procedures and were not alert to the possibility of identity fraud; and identity verification procedures are inadequate. For example, during its border security investigation, in which the agency used counterfeit driver's licenses and birth certificates to enter the U.S., border inspectors never questioned the authenticity of the documents and GAO investigators "encountered no difficulty entering the country." Because immigration regulations do not require U.S. citizens traveling from countries in the Western Hemisphere to show passports when entering the U.S., the GAO noted, persons entering the U.S. from such countries commonly present driver's licenses to border inspectors, but the inspectors currently have no way of checking with the states to verify identity or to determine whether a driver's license is authentic. The GAO said that, from September 2002 through May 2003, the agency used counterfeit documentation, including counterfeit dirver's licenses and fictitious names, to enter the U.S. with no difficulty from Jamaica, Barbados, Mexico and Canada. SEPTEMBER 9 HEARING

Sen. Max Baucus (D-Mont), Ranking Minority Member of the Senate Finance Committee, noted at the September hearing that seven of the 19 hijackers who conducted the terrorist attacks of September 11, 2001, had obtained driver's licenses fraudulently through the Virginia Department of Motor Vehicles, and used the licenses to board the planes on that day. What is most important about a driver's license is the "apparent legitimacy it establishes," Sen. Baucus said. He called for better standards for issuing identity documents, to increase detection of fictitious or fraudulent documents used to establish identity; better training of motor vehicles employees, and more sophisticated technology. He said departments of motor vehicles should also become better able to communicate with each other and with law enforcement officials. Hutchinson testimony. Under Secretary Hutchinson said in written testimony that both fraudulent documents and legitimate documents issued in reliance upon fraudulent "breeder" documents (such as fake birth certificates, social security cards, or immigration documents) are used to gain entry into the U.S. He noted that there are more than 240 different types of valid driver's licenses issued within the U.S., and more than 50,000 different versions of birth certificates issued by states, counties, and municipalities in the U.S. Even excluding baptismal records, he said, it would not be easy for border inspectors to have a passing familiarity with, let alone a working knowledge of, each of these documents. Further, forgers and counterfeits can produce highquality, fake birth certificates and driver's licenses using off-the-shelf software programs and materials that are difficult to detect without sensitive instruments and sufficient time to examine them.

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4/27/2004

Volume 1, Issue 1, December 2(

^ U.S. Immigration and Customs Enforcement

TRIPWIRE

"Integrity is the CORNERSTONE of our financial systems."

Cornerstone A New ICE Financial Investigations Division Program

Financial Investigations Around the World ICE in Iraq Since the commencement of Operation Iraqi Freedom, U.S. Immigration and Customs Enforcement (ICE) Senior Special Agents have been on the ground in the Iraqi Theater of Operation, locating and identifying Iraqi "front" companies and procurement networks. These companies and networks were allegedly used to help advance Iraq's efforts to acquire, develop, and maintain weapons of mass destruction and advanced weapons systems. ICE's efforts involve the utilization of financial records, import and export documents, and related sources. As an example, ICE Special Agents in Baghdad are working jointly with Central Bank of Iraq employees in reconstructing the financial history of Iraq in an effort to locate hidden Saddam Hussein-regime assets and identify additional investigative leads pertaining to violations of United States (U.S.) laws.

From an announcement by Tom Ridge, Secretary of Homeland Security, at the New York Federal Reserve, New York, NY On July 8, 2003, Secretary Ridge unveiled U.S. Immigration and Customs Enforcement's (ICE) investigations program to safeguard the integrity of the nation's financial infrastructure against criminal exploitation. Secretary Ridge explained that Cornerstone - under the auspices of ICE's Financial Investigations Division - was established to identify vulnerabilities in financial systems through which criminals launder their illicit proceeds. Cornerstone aims to develop a working partnership with private sector representatives to share information and eliminate financial industry-wide security gaps that could be exploited by individuals, criminal organizations and/or terrorists. As part of the Cornerstone program, ICE has created a unit solely dedicated to provide training to the private sector on identifying and preventing exploitation by criminal organizations.

ICE Agents recovered approximately $32 million of the previous regime's hidden assets. Additionally, ICE assisted American Military Forces in the recovery of millions more in U.S. currency in Iraq. In April 2003, ICE initiated Operation Iraqi Heritage, an effort to identify and recover cultural property items looted from the Iraq National Museum. ICE, assisted by U.S. Military Forces, has recovered more than 39,400 manuscripts and 1,000 artifacts. ICE Agents Arrest Father-son Team Accused of Arming Saddam Hussein

'Cornerstone' continued on page 2

In This Issue: December 2003 Cornerstone/Financial Division Overview

1

ICE in Iraq

1

Emerging Financial Vulnerabilities

2

Financial Tidbits

3

The "Cloak and Dagger" of ATMs

4

Fraudulent Mortgage Schemes

4

ICE Field and Financial Community Outreach

4

Outreach Calendar of Events

5

On October 15, 2003, officials from ICE announced the arrest of Sabri Yakou, 69, and his son Regard Yakou, 43, on charges of brokering the sale of six armed patrol boats, worth some $ 11 million, to the Saddam Hussein regime prior to the recent war in Iraq. Sabri Yakou, an Iraqi native, is a legal permanent resident of the United States with businesses in California, Singapore, Iraq, and elsewhere. His son is a naturalized U.S. citizen. The arrests were the first to result from the deployment of ICE teams to Iraq in March of this year to search for evidence that U.S. persons or entities may have supplied Iraq with arms, technology or materials in violation of U.S. laws and United Nations embargoes. To date, ICE agents have uncovered evidence in Iraq that has prompted roughly 30 ongoing investigations into possible illegal exports of U.S. arms, technology or materials to Iraq, (see http://www.ice.gov for full Press Release)

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Homeland Security Supporting Local Law Enforcement

Law Enforcement Support Center (LESC) Enclosed: Press Release Fact Sheet (LESC FY 2003 Stats) (LESC State Statistics) (Operation Predator Statistics)

Communities - State andLocaJ-^

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COMMUNITIES State and Local Law Enforcement Support Center The Law Enforcement Support Center (LESC) serves as a national enforcement operations center by providing timely immigration status and identity information to local, state and federal law enforcement agencies on aliens suspected, arrested or convicted of criminal activity. The LESC operates 24 hours a day, 7 days a week assisting law enforcement agencies with information gathered from 8 service databases, the National Crime Information Center (NCIC), the Interstate Identification Index (III) and other state criminal history indices. In addition to providing real time assistance to law enforcement agencies that are investigating, or have arrested, foreign-born individuals involved in criminal activity, the LESC also performs the following investigative functions: National Crime Information Center (NCIC) - The LESC administers and controls immigration related cases in this nationwide law enforcement consortium and criminal database for Investigations and Criminal Enforcement (ICE). Investigative Services Branch - The LESC provides support to a host of on-going multi-agency investigative initiatives. Working in concert with ICE field units, task forces and other local, state and Federal investigators the Center gathers, analyzes and responds to thousands of off-line query requests. Special Response Unit (SRU) - The LESC is the central point of contact for the Federal Bureau of Investigation National Instant Criminal Background Check System (NICS) program. Every foreign-born firearm applicant is screened by the LESC for immigration status before being authorized to purchase or possess a weapon. The SRU also handles queries and field responses relating to national security employment issues (Bio-Terrorism, CDL with Haz-Mat endorsement, Nuclear Industry, etc.) The LESC Communications Center serves the law enforcement community with NCIC hit confirmation information as well as ICE Special Agents and Deportation Officers nationwide with after-hours telephonic enforcement support via our digitally recorded duty lines confirmed by Personal Identification Numbers. To contact the Department of Homeland Security tip-line, call 1-866-DHS-2ICE.

Partnering With the Law Enforcement and the Financial Community The Department of Homeland Security launched the Systematic Homeland Approach to Reducing Exploitation (SHARE) program to provide private sector executives with progress updates on its financial investigations and information on new trends and vulnerabilities discovered during these investigations. The SHARE program is a joint ICE / Secret Service initiative that provides data on specific investigative outcomes to executive members of the financial and trade communities impacted by money laundering, identity theft, and other financial crimes.

http://www.ice.gov/text/enforce/comm/comm_sl.htm

4/27/2004