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Saturday, October 5, 2013


Remarks at a Press Availability With United States Trade Representative Ambassador Froman
John Kerry
   Secretary of State
Jen Psaki
   Department Spokesperson, Office of the Spokesperson
Bali, Indonesia
October 5, 2013

SECRETARY KERRY: Good afternoon, everybody. Thank you for being patient. We appreciate it very much. I’m delighted to continue my trip through Asia, and on behalf of President Obama, it is an honor to represent the United States at the annual APEC economic leaders meeting. And I’m delighted to be here with a member of the President’s cabinet, our United States Trade Representative, Ambassador Mike Froman.

I want to thank Indonesia for its extraordinary welcome and wonderful hospitality over the day and a half that we’ve been here meeting already, and we thank them for their exceptional hosting of the APEC conference.

First, I’d like to say just a few words about the disappointing situation back home, which, regrettably, has kept the President of the United States from attending this year’s APEC. I am not in partisan or elected politics anymore, but I did spend 28-plus years in the United States Senate, and I believe that those standing in the way in the other body of the Congress, standing in the way of reopening our government, need to think long and hard about the message that we send to the world when we can’t get our own act together. Because I’ve said many times, the values of great institutions like the United States Senate and the House is how we use them and what they represent to the world. And because these institutions are instruments of the people, they are broken only if we let them break. So I can tell you from experience that it is not only within Congress’ power to prevent the shutdown, it is also within Congress’ power to end it. To end it now. To end it today.

And to all of our friends and foes watching around the world, let me be crystal clear: Do not mistake this momentary episode in American politics as anything less than a moment of politics, or anything more than a moment of politics. This is an example, really, of the robustness of our democracy, the capacity for any people to make their voices heard, sometimes, we may feel, incorrectly. But nevertheless, it as a sign of the vibrancy and capacity of people to make their voices heard.

The American people are remarkably strong and resilient people, and we all know that we will get beyond this moment, and we will get beyond it quickly. And in the end, nothing will change with respect to the issues that bring us here to the APEC conference. Nothing will diminish our commitment to Asia, the rebalance that President Obama’s engaged in. We will continue to fulfill our responsibilities, and our engagement around the world, and I think people are confident of that.

For the moment, there are some things that do get affected, and that is regrettable. For instance, our security assistance for Israel, our closest ally in the Middle East, is being delayed. The new fiscal year started this last week, but because of the shutdown, some entities don’t have the funding that they need, including supporting the peacekeeping mission in the Sinai, at a time of growing unrest in a critical area. The U.S. Congress could fix this very quickly by reopening the U.S. Government.

Another example: The opportunity to engage diplomatically with Iran is critical to all of us in the world, and we wouldn’t be where we are today if it weren’t for the pressure that has been brought to bear by the sanctions. But right now, as a direct result of the shutdown, our Treasury Department’s Office of Foreign Asset Control has been forced to furlough nearly all of its staff.

So the world is watching to see whether a combination of tough sanctions and careful diplomatic diplomacy can lead Iran to verifiably give up the chase for nuclear weapons. I think it’s clear that we cannot lose this opportunity to moments of politics that deprive us of the opportunity to embrace larger and more important goals.

Of course, the situation back home, as I mentioned, has unfortunately kept President Obama from joining us here this weekend. I will be traveling at his request to Malaysia and to the Philippines in order to represent the United States. But I do want to make clear: None of what is happening in Washington diminishes one iota our commitment to our partners in Asia, including our efforts to promote trade and investment throughout the region. And this remains one of our top priorities, and I’m very, very pleased to be here together with two other members of the President’s cabinet – Ambassador Froman and Secretary of Commerce Pritzker – all of us engaged, as we will stay engaged, in this region.

Why does that matter to us? APEC matters because it provides a very critical platform for government and private sector partners to be able to come together and break down the barriers to commerce. It is the way in which we open up opportunity for all of our citizens, and begin to create rules of the road that bring our countries closer together. It is the way to create opportunity for all people. Today, even in our discussions, we had a talk about how we make this economic opportunity with equity, meaning that women and men all joined together in their capacity to share opportunity in the workforce. It’s a chance for us to come to a fast-growing region of the world – the fastest growing region – and begin to talk about how we invest in each other and how we can better connect our economies one to the other, and how we create jobs and economic growth in all of our countries.

That’s why the United States works so closely with Indonesia and with other APEC countries. We work together on regulatory issues, on how we can make it easier for exporters to be able to cut tariffs and be able to move their goods to another country. How we sell goods and services in foreign markets. We work together on logistical issues, like how you improve the performance and connectivity at every step along the supply chain of these goods. And all of this breaks down barriers between our countries and forges a stronger relationship, which adds to the peace and security and prosperity, not just of the region, but of the rest of the world.

We also work together on something that is very important to me personally, and that is promoting trade and investment in a way that can help our environment and the planet that we share and deal with the responsibilities of energy policy and of global climate change. For example, implementing tariff reductions on solar panels and other environmental goods will speed growth in the profitable sector of green technology, at a time when we see great environmental degradation and climate change that threatens the way of life In the Pacific region.

Here in Bali this week, we will also continue to advance the Trans-Pacific Partnership. Ambassador Froman and I will represent the President at a meeting of the leaders of the TPP countries. And this agreement is a key part of our agenda in the Asia Pacific and the President’s jobs agenda at home.

The relationship between the United States and the Asia Pacific has really never been more important than it is now. President Obama began a rebalance to this region in the course of his first four years, and we intend to continue that over the course of his second term. It is very clear that most of the economic issues that we face today require the kind of cooperation that APEC makes possible. And the United States views APEC as its premier forum for economic and development issues in this region.

So on behalf of President Obama, the United States looks forward in the next few days to a very productive dialogue and to a significant, continued collaboration with Indonesia and with the rest of our APEC partners.

Ambassador Froman.

AMBASSADOR FROMAN: Well, thank you very much, Mr. Secretary and good afternoon. As Secretary Kerry said, the United States has a strong commitment to APEC. We are Pacific nation, and we always will be. This is the fastest growing region of the world, and our work here is critical to expanding exports and therefore to promoting growth, creating jobs, and strengthening the America middle class.

APEC economies represent 55 percent of global GDP, and about 45 percent of global goods and services trade. The United States exports more than a trillion dollars of goods and service to APEC countries, and that’s more than 50 percent of total U.S. exports. And those exports support millions of hardworking American jobs. Our capacity to grow our economy and create jobs is integrally tied to the success of this region and our engagement with it.

From a trade and investment perspective, APEC continues to be an incubator for policy innovation. As APEC economies cooperate to advance the value of our regional relationships, we realize ideas together that can boost the whole global trading system.

APEC is on the leading edge of a number of global efforts to increase economic integration and opportunity. Together, we’re working to improve supply chains. Together, we’re working to fight new forms of protectionism, like localization; to implement regulatory policies that make it fast and more efficient to do business; and to building on the groundbreaking commitments in Honolulu in 2011 to advance trade and environmental goods.

At the same time, APEC economies continue to play an important leadership role in the multilateral trading system. The WTO’s Information Technology Agreement, for example, got its start at APEC. And now longstanding APEC priorities have the potential to be enshrined in a global trading rules at the WTO. These include a win-win agreement on trade facilitation that will help developed and developing countries alike, as well as an expanded information technology agreement. On that front, I’m pleased to announce that there is a hopeful sign this week of our ability to work creatively together to solve problems and make progress in the WTO. We were happy to work with China and others to get the information technology agreement talks back on track. After discussions this week, we’re hopeful that resumption of formal, plural-lateral negotiations will begin as soon as possible.

As I said in Geneva earlier this week, the United States is a strong supporter and believes in the World Trade Organization. Along with our APEC partners, we also believe that this is a crucial moment for that system. In two months, we’ll be back in Bali for the 9th WTO ministerial. If we succeed in producing a multilateral package on trade facilitation, agriculture, and development, it can provide impetus to the multilateral trading system. If we fail, it will harm – it will be hard to see how we further that agenda. And we’re pleased to see our APEC partners this week working together to push for a meaningful result at the WTO.

Finally, of course, as the Secretary said, we spent a great deal of time this week working on TPP. The TPP countries are strongly committed to working to conclude negotiations this year. In Brunei in August, and now in Bali, trade ministers have been charting a path forward on outstanding issues, particularly state-owned enterprises, intellectual property rights, environment, and market access, in order to move the negotiations toward completion.

And the U.S. continues to work for a high level of ambition and high standards for TPP with all due speed. We’ve made significant progress this week, and we look forward to briefing the TPP leaders on Tuesday about that progress and getting their political-level guidance to facilitate the conclusion of the negotiations.

In sum, our work here this week will further U.S. engagement in the Asia Pacific region and create new jobs and opportunities in the United States. Thank you.

MS. PSAKI: The first question will be from Matt Lee of the Associated Press.

QUESTION: Okay. Thank you, Mr. Secretary. Can you hear me, first of all? I’m not sure – yes? Okay.

I’m curious as to, first, how do you make the case back at home to members of Congress that the shutdown hurts American security and potentially the security of its allies, while at the same time you are here, presumably, assuring those allies, at in Asia, that you still have their back, like what you said?

And secondly, how concerned are you that the perception of weakness created by the President’s having to cancel his visit here, whether or not that’s the reality, how concerned are you that that perception will encourage some countries in this region – notably China, but perhaps also Russia – to try and take advantage of the situation? Thank you.

SECRETARY KERRY: Well, Matt, it’s a very good question. It’s a fair question and my answer is very straight-forward. There are momentary disruptions. And the momentary disruption always has the ability to have an impact. I mean, if you are not funding a particular security operation at a particular moment – in the Sinai, for instance, or somewhere – there’s an opportunity for misjudgment. And the other examples that I gave are self-explanatory. But that’s not long term, and I’m convinced it’s not long term.

Now I think it’s reckless, personally, to even provide those moments where you have these risks that are exposed, but the bottom line is that the United States of America is not going to change one iota the fundamental direction of the policy under this President. And I think everybody in the region understands. I haven’t run into one question mark about the long term – everybody sees this as a moment on politics – an unfortunate moment – but they see it for what it is.

But in the long run I think people understand that on an issue like Iran with nuclear weapons, on an issue like North Korea and nuclear weapons, on our fundamental commitments to this region in terms of maritime security and freedom of navigation through the seas and so forth, our commitment is not going to change. And the American people understand the importance of those commitments and we’ll be steadfast.

So I think – I haven’t found one leader here who raised a question with me about the long term for the United States. What they do ask is how long is this going to go on and why is this happening, and those kinds of questions. And I think that people understand that the fundamental commitment of the United States is what it is, and I think they still trust it.

Now with respect to the perception of, quote, weakness, I just disagree with that premise. I don’t believe that anybody here believes there is some connection of any moment of weakness in the President making a decision to deal with his domestic politics. There isn’t one leader here who wouldn’t make the same decision if they were faced with a domestic moment in their politics where they have to resolve a budget or resolve a debt-ceiling or any other kind of issue.

But we just had a very strong meeting in Japan, Secretary Hagel and I. We just reannounced a next 15-20 year projected reevaluation of our guidelines for our relationship with Japan and in the region. Here in my conversation with the Foreign Minister from the Republic of Korea, we had the same kind of long-term horizon, and I think in the discussions that we’ve had in APEC about the code of conduct and the South China Sea and other issues, there hasn’t been one doubt or one question asked about whether the United States will fulfill its obligations and remain engaged.

So there is a distinction between short-term impact and, I think, the long-term interests that people perceive as being much more durable than any moment in our domestic, political life.

MS. PSAKI: The next question will be from Michael Tjandra of RTCI.

QUESTION: Thank you for this opportunity, Mr. Secretary. Where does Indonesia stand as an APEC member with America in playing a role to help to revive the global economy?

SECRETARY KERRY: Well, I’m going to let the Ambassador speak a little bit to that, but I will just tell you that Indonesia is growing at, I think, around 6 percent or so now. They have plans to even raise that level of growth more significantly. Indonesia is a very powerful, significant member of APEC – not just the chair of this year, but one of the larger countries, one of the more important exporting nations, a country with enormous resources, a capacity to contribute to the regional growth.

And we view Indonesia as very important partner in terms of adherence to rules and standards and to the rules of trade, which are so critical to transparency and accountability and to the willingness of people to invest capital and therefore grow economies. So Indonesia has proven itself to be very a significant partner with us in that regard, and I’ll let the Ambassador fill out perhaps a little more detail.

AMBASSADOR FROMAN: Well, the only thing I would add to that is, Indonesia one of the largest economies in the world and as a key member, for example, of the G-20, and has played a critical role in the G-20 in terms of bringing a perspective of an emerging economy to the global economic system and ensuring that issues were addressed in an appropriate way.

They’ve been – the President Yudhoyono and others from (inaudible) play a critical role in the G-20 over the last several years. And similarly, in just two months from now, Indonesia will host and chair the 9th meeting of the WTO ministerial. So it is playing a leadership role in the international trading system, and is working very hard – and that was a big topic of today’s meeting – today’s discussions this morning – working very hard both with APEC members but also with members from around the world to ensure a positive result from the multilateral trading system.

MS. PSAKI: The final question will be from Indira Lakshmanan from Bloomberg News.

QUESTION: Thank you, Secretary Kerry and Ambassador Froman. Secretary Kerry, you addressed this a little bit at the top of your remarks, but the whole question about the government shutdown has certainly created a perception in Asia that it’s undermining the President’s ability to fulfill his Asia pivot promise. And we’ve heard this both in public remarks from certain Asian leaders and also private remarks – that they feel it’s undermining the President’s, what is meant to be his signature issue of his second-term foreign policy distracting him. So I want to ask you: How can you reassure those leaders who’ve expressed their concerns that it’s not undermining the Asia pivot?

And secondly, also, how is affecting, for both of you, the ability to get TPP talks done this week, because again we’d expected the President to be here and his leadership creates a message? So is it giving an opportunity for China or others to work on rival trade groups to the TPP?

SECRETARY KERRY: Well, Indira, I think I did touch on this a little bit, but let me fill it out a little bit more.

President Obama is not here, and he planned to be here. And he is not here because he has to stay at home in order to deal with this domestic challenge, which has been presented to him by a small group of people within one branch of the United States Congress. That obviously undermines the President’s ability to have the conversation he was going to have with President Xi, or have the conversation he was going to have – or the meeting he was going to have with President Putin, all of which are important to the conduct of global affairs. So obviously there is the loss of that as a result of this.

But I think those leaders, all of them, know well enough that in terms of the long term, this will end and the United States will have a budget. And the United States will still be the strongest power in the world, in terms of our military capacity, largest economy in the world, an economy that is now increasingly stronger by the day, a debt that is coming down, a deficit that is coming down, job growth that is robust – not as much as we want – but robust in the circumstances. And importantly, increasingly, an energy power in the world – increasingly independent. I think I saw statistics just the other day that said we are now the largest oil and gas energy producer in the world.

So that is not insignificant. And as the world takes stock of who stands for what who’s fighting for what and who is pushing what values, I believe the United States still stands tall and will not diminish one iota the influence or the direction that we are fighting to move in. So this is a momentary impact. Obviously, if it were prolonged, or it were repeated, people would begin, I think to question the willingness of the United States to stay the course, or its ability to. But that’s not the case, and I don’t think that will be the case. We will get beyond this moment.

And the President wants Ambassador Froman and Secretary Pritzker and myself to make it clear to people that we remain as committed as ever to this robust shift in the Asia rebalance, and that’s why the three of us are out here. And as I said, I just had a very successful 2+2 meeting, a meeting with the defense secretary and the foreign secretaries of Japan and the United States.

We are now here. I am not here for five hours. I’m not here for one day. I’m here for five days. And I go from here to Malaysia and to the Philippines and to Brunei, and, all told, I’ll be out in this part of the world for about almost two weeks. So I think that is a significant statement about the United States presence, about the President’s commitment, and I am absolutely confident that when we get this moment of political silliness behind us, we will be back on track, that the world will respect and want to be part of.

AMBASSADOR FROMAN: Indira, all I’d add on the TPP question is that, as Secretary Kerry indicated in other areas, this is a long-term engagement. The U.S., including the President, has been deeply engaged in this initiative from the start. It’s a key part of our rebalancing agenda, of the economic component of the rebalancing agenda. And we’ve been here for the last several days meeting around the clock as ministers and negotiators making significant progress on the negotiations. Of course, we wish the President were here to lead the meeting of TPP leaders later in the week, but Prime Minister Key of New Zealand has agreed to chair on his behalf. And the leaders are all looking forward to engaging on this issue because they know it’s an important initiative, and they very much see it as a key part of U.S. engagement in the region.

MS. PSAKI: Thanks, everyone.

SECRETARY KERRY: Thank you all very much. Good to be with you.

Thank you.


Hagel Announces Recall of Most Defense Department Civilians
By Army Sgt. 1st Class Tyrone C. Marshall Jr.
American Forces Press Service

WASHINGTON, Oct. 5, 2013 - Defense Secretary Chuck Hagel announced today he is recalling most of the Defense Department civilians who were placed on furlough as a result of the government shutdown which began Oct. 1.

"Today, I am announcing that most DOD civilians placed on emergency furlough during the government shutdown will be asked to return to work beginning next week," he said.

"Immediately after President [Barack] Obama signed the Pay Our Military Act into law, I directed DOD's acting general counsel to determine whether we could reduce the number of civilian personnel furloughed due to the shutdown," Hagel said.

The Defense Department, he said, consulted closely with the Department of Justice, which expressed its view that the law does not permit a blanket recall of all civilians.

"However, DOD and DOJ attorneys concluded that the law does allow the Department of Defense to eliminate furloughs for employees whose responsibilities contribute to the morale, well-being, capabilities and readiness of service members," Hagel said.

"Consequently, I am now directing the military departments and other DOD components to move expeditiously to identify all employees whose activities fall under these categories," he said.

Hagel noted he expects the military departments to be able to "significantly reduce – but not eliminate – civilian furloughs under this process."

"Employees can expect to hear more information from their managers starting this weekend," he added.

The defense secretary said the department has tried to "exempt as many DOD civilian personnel as possible" from furloughs, and will continue to try to bring all civilian employees back to work as soon as possible.

"Ultimately, the surest way to end these damaging and irresponsible furloughs, and to enable us to fulfill our mission as a department, is for Congress to pass a budget and restore funds for the entire federal government," Hagel said.

"This has been a very disruptive year for our people – including active duty, National Guard and reserve personnel, and DOD civilians and contractors," he said. "Many important activities remain curtailed while the shutdown goes on."

Civilians under furlough, Hagel said, face the uncertainty of not knowing when they will receive their next paycheck.

"I strongly support efforts in Congress to enact legislation to retroactively compensate all furloughed employees," he said.

"And I will continue to urge Congress to fulfill its basic responsibilities to pass a budget and restore full funding for the Department of Defense and the rest of the government," Hagel said.

Weekly Address: End the Government Shutdown | The White House

Weekly Address: End the Government Shutdown | The White House


FTC Sends Refunds to Consumers Harmed by Robocallers Who Claimed to Reduce Credit Card Interest Rates

The Federal Trade Commission is mailing 134 refund checks to consumers who lost money to a phony debt relief services scam that claimed it would dramatically reduce consumers’ credit card interest rates.  The scam operated under several names, including “AFL Financial Services,” and contacted consumers through robocalls that purported to be from “Card Services.”

More than $132,000 is being returned to consumers, each of whom will receive a refund of their full loss amount, ranging between $289 and $2,600.  Those who receive the checks from the FTC’s refund administrator should cash them within 60 days of the mailing date.  The FTC never requires consumers to pay money or to provide information before refund checks can be cashed.  Those with questions should call the refund administrator, Rust Consulting Inc., at 1-866-245-7027, or visit for more general information.
The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action.  To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to antitrust{at}ftc{dot}gov, or write to the Office of Policy and Coordination, Bureau of Competition, Federal Trade Commission, 601 New Jersey Ave., N.W., Room 7117, Washington, DC 20001.  To learn more about the Bureau of Competition, read Competition Counts.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.


Carter: U.S.-India Defense Collaboration Moves to Next Level
By Cheryl Pellerin
American Forces Press Service

WASHINGTON, Sept. 30, 2013 - Deputy Secretary Ash Carter delivered a groundbreaking collaborative defense proposal to Indian military officials during his recent trip there and is committed to continuing to put new ideas on the table, he told an audience today at the Center for American Progress.

Carter traveled to India, Afghanistan and Pakistan on a 7-day trip that began Sept. 12, but at this event he focused on what he called the strong and rapidly growing defense partnership between the United States and India.

"In the United States, with U.S. industry ... we identified and put forward to the Indians a truly groundbreaking entirely new collaborative proposal to co-develop with India a next-generation Javelin antitank capability," Carter said.

The proposal addresses a key military requirement for both armies and is an unprecedented offer the United States has made unique to India, the deputy secretary added.

During the trip, Carter delivered a second round of potential capability areas of cooperation proposed by U.S. industry. And in India, Carter said he made sure to hear from senior Indian industry representatives about their ideas for increasing private-sector partnerships.

The push to reach the next level of defense collaboration and co-development with India comes after 15 months of effort between the countries to overcome bureaucratic obstacles to such work, Carter said.

The underlying program, called the Defense Trade Initiative, was devised by former Defense Secretary Leon E. Panetta and Indian National Security Adviser Shivshankar Menon, and Menon and Carter used DTI to find ways to take the nations' defense cooperation to the next level.

Among the advances made possible through DTI, Carter said, involved export controls.

"We have demonstrated repeatedly that we can release sensitive technology to India," Carter said.

"We've adapted our system in ways that will speed our release process for India," he added, "especially in the Department of Defense, recognizing that for ... all partners this process is subject to case-by-case review and there will always be some technologies that we will keep to ourselves."

Areas of progress include technology transfer, licensing agreements, license exceptions, end-use monitoring and others.

"We've also taken unprecedented steps to identify forward-leaning proposals by industry, from industry on both sides for defense items to be co-produced and -- the true measure of our common goal -- co-developed by the U.S. and India," Carter said.

These include a maritime helicopter, a naval gun, a surface-to-air missile system and a scatterable antitank system, all of which the deputy secretary discussed with Indian officials during his recent visit, he said.

"In each instance," Carter noted, "the United States has fast-tracked these projects to ensure that our internal processes are ready to go as soon as the Indian government wants to move forward."

U.S. and Indian research and development experts also play a critical role in areas that include the cognitive sciences and others in which DOD would incentivize increased cooperation by U.S. defense researchers, the deputy secretary said.

"I let the Indian government know last week that I will be incentivizing U.S. researchers who seek and find Indian partners in key research areas we identified previously," he added. "We'll ensure that those innovative projects receive priority funding. This is an approach we've only ever taken with the United Kingdom and Australia, and now India will join that company."

When Carter visited India a year ago, he visited the Lockheed Tata plant in Hyderabad, which assembles parts for the C-130J cargo plane, a partnership between an American company and an Indian company, he said.

"This was a partnership that was encouraged and applauded by the U.S. and Indian governments but was not founded by either one," Carter added.

"This year I had the opportunity to travel to Hindon Air Force Station, where the Indian Air Force operates a growing number of C-130Js and also C-17s," he said.

While he was there, the deputy secretary was briefed by an Indian Air Force pilot who landed and took off in a C-130J in the Himalayas from an altitude well above 16,000 feet, "certainly a record and quite an accomplishment," Carter said.

"We're excited to have the next tranche of six C-130Js included in a pipeline of several major defense sales currently under consideration by the Indian government," he added. "Our goal is for India to have all the capabilities it needs to meet its security requirements and to be a key partner in that effort."

The Defense Department also invests in joint exercises, Carter said, because the U.S. and Indian militaries remain the most visible cooperative efforts between the two nations and serve as a cornerstone of the defense cooperative relationship.

Such exercises allow the U.S. and Indian militaries exposure to one another's tactics, techniques and procedures, he said.

"They also allow Indian troops access to U.S. troops, making operating together possible if it proves necessary to further U.S. and Indian interests and, perhaps most importantly, helping foster person-to-person ties in the defense area that are so important to our two countries in other areas," Carter observed.

In May, he said, 200 Indian Army soldiers trained with members of the 82nd Airborne Division at Fort Bragg, [N.C.,] where they jointly conducted various scenarios related to a U.N. peacekeeping mission, from humanitarian assistance to air assault.

"I hear Indian soldiers were even able to shoot off a Javelin or two," the deputy secretary added. "And one day soon I'm confident that we'll co-develop these weapons."

As for the United States and India, Carter said, "we're each big, complicated democracies. We move slowly, but over the long run we also move surely. And that to me is the trajectory for us and India in the defense area."


Statement on release of September employment numbers

WASHINGTON — The Department of Labor issued the following statement about the September 2013 Employment Situation report:
"Due to the lapse in funding, the Employment Situation release which provides data on employment during the month of September, compiled by the U.S. Department of Labor’s Bureau of Labor Statistics, will not be issued as scheduled on Friday, October 4, 2013. An alternative release date has not been scheduled. The Employment Situation release includes the unemployment rate (from the household survey) and payroll employment (from the business establishment survey)."


In the week ending September 28, the advance figure for seasonally adjusted initial claims was 308,000, an increase of 1,000 from the previous week's revised figure of 307,000. The 4-week moving average was 305,000, a decrease of 3,750 from the previous week's revised average of 308,750.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending September 21, an increase of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 21 was 2,925,000, an increase of 104,000 from the preceding week's revised level of 2,821,000. The 4-week moving average was 2,837,250, a decrease of 4,750 from the preceding week's revised average of 2,842,000.


The advance number of actual initial claims under state programs, unadjusted, totaled 252,092 in the week ending September 28, a decrease of 3,018 from the previous week. There were 301,054 initial claims in the comparable week in 2012.

The advance unadjusted insured unemployment rate was 1.9 percent during the week ending September 21, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,518,557, an increase of 55,408 from the preceding week. A year earlier, the rate was 2.2 percent and the volume was 2,821,233.

The total number of people claiming benefits in all programs for the week ending September 14 was 4,002,455, an increase of 81,089 from the previous week. There were 5,088,619 persons claiming benefits in all programs in the comparable week in 2012.

No state was triggered "on" the Extended Benefits program during the week ending September 14.

Initial claims for UI benefits filed by former Federal civilian employees totaled 1,032 in the week ending September 21, a decrease of 102 from the prior week. There were 2,150 initial claims filed by newly discharged veterans, a decrease of 4 from the preceding week.

There were 19,999 former Federal civilian employees claiming UI benefits for the week ending September 14, an increase of 976 from the previous week. Newly discharged veterans claiming benefits totaled 31,705, an increase of 372 from the prior week.

States reported 1,470,027 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending September 14, an increase of 121,501 from the prior week. There were 2,143,049 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity.

The highest insured unemployment rates in the week ending September 21 were in Puerto Rico (4.0), Alaska (3.2), New Jersey (3.1), Virgin Islands (3.0), New Mexico (2.9), Connecticut (2.8), Pennsylvania (2.7), California (2.4), Illinois (2.4), Nevada (2.4), Arkansas (2.3), and District of Columbia (2.3).
The largest increases in initial claims for the week ending September 21 were in Oregon (+489), New Jersey (+327), Massachusetts (+306), Colorado (+304), and Maine (+194), while the largest decreases were in California (-3,754), Georgia (-2,719), New York (-2,376), South Carolina (-1,516), and Washington (-1,178).


Presenter: Secretary of Defense Chuck Hagel; Press Secretary George Little October 04, 2013
Remarks on USS Stethem

SECRETARY CHUCK HAGEL: Ladies and gentlemen, good morning. I am very proud of what you're doing. The president of the United States is proud of what you're doing. America is proud of what you're doing.

 I'm here in Japan for a couple of days, came over from South Korea before that, talked to troops, meetings. I think we've made some progress with our bilateral partners and friends to strengthen the alliance between the Japanese and the Americans, as well as the Republic of South Korea and the United States.

 The trilateral relationship of our three countries is particularly important. You play a big role in that. The 50,000 men and women who represent U.S. Forces Japan are really the anchor and the cornerstone of America's presence in the Asia Pacific. And we, again, appreciate your service and your sacrifices, and particularly your families'. And I want you to greet your families for me, tell your families that we appreciate what they're doing.

 These are challenging times. You all understand that better than almost anyone. You are right out here where it matters most. And you are doing work where there is little margin for error. It is critically important, as we build relationships and alliances and we defend our interests, as well as the interests of our allies. These are defining times.

These are times you will look back on as you complete your service to our country and have not only the sense of pride and purpose that you accomplished something pretty special, but you helped shape history, and that's what you're doing out here. You really are shaping history. You're not just observing history, but you are participating in history.

I know you're from all over. I've seen your backgrounds. You represent the best America has. And I know occasionally you wonder if anybody's paying attention. We are paying attention. And, again, I came out here specifically to say hello to you and to thank you for everything you're doing.

I've got some time for questions, advice, whatever you want to talk about. I'd be glad to spend some time with you on it. I always value what our troops think, what our people believe. What are we doing right? What are we doing wrong? I know as you look on Washington these days, it appears that we are having some difficulty governing ourselves. But that is part of the business of democracy.

You know that the president is totally committed to you. As you know, he signed a bill into law that exempts our military from the shutdown. That means, as you all know, our country wants you to stay on the job, needs you to stay on the job, and you're going to be paid for it. I know that's not an insignificant factor in your lives, but you were specifically cut out of the shutdown process by the Congress, and the president signed that bill into law.

So we'll get through this in Washington. Yes, it's difficult. It's messy. And you all are aware of that. But our country is too good, too strong. Our people are too good and too strong. We'll get through it, and we'll be better for it.

All right. What do you want to talk about? Anything.

I am well aware, by the way, of the history of this ship, who it was named after and why. I recall that -- that time in 1985, and I know your every proud to have Stethem's name on this ship and your part of it. And I know you recognize that every time there's a change of command, and it's a tremendous tradition to have Robert Stethem's brother come out here and be part of that change of command ceremony.

And I'm proud that we would recognize such a great American hero as Robert Stethem this way, in naming an important ship that is at the forefront of protecting America's interest and our allies' interest. Anything that you want to talk about. Yes?

Q: Mr. Secretary, the government shutdown, what's the effect on the DOD schools?

SECRETARY HAGEL: The question is DOD schools, how are they affected by the government shutdown? And we're exempting all of the -- the vital components of supporting our military. That's part of the exceptions. I have asked our lawyers and our comptroller to examine what additional civilians we could bring back. We had -- we were forced by law to furlough many, many of our civilian workers. But we're trying to find a solid legal interpretation here in the law that can bring back more people in support of our military.

The fact is, all our civilians who work for the Department of Defense support our military. There's no job in our Department of Defense that doesn't support the military. So I think theoretically -- I'm not a lawyer, but I do have some appreciation for common sense, and common sense tells you that if you're working for the Department of Defense, you're supporting the defense and the security of America, and you're supporting those who are on the front lines, those in uniform, like you, who do this nation's business. So we're going to take care of all the components of DOD that support you and your families.

Q: Good morning, Mr. Secretary --

SECRETARY HAGEL: I'm sorry. Yeah, I'll come back to you here. We'll get -- go ahead.

Q: (off mic)

SECRETARY HAGEL: That's a good question. The question was, what is the role of the United States in the next three years? Well, the president has been very clear on this point, that starting with the rebalance to the Asia Pacific, does not mean that we're retreating from any other part of the world. We're not.

We have responsibilities in the Middle East. We have friends. We have allies in the Middle East, as we do all over the world, and we will continue with our allies to play a role in the Middle East.

I think what happened at the United Nations last week was very positive, was very encouraging, to get the United Nations to act on the chemical weapons issue in Syria. We were able to bring the Security Council together on this. We are in the forefront of dealing with that. DOD is part of that.

I think, on the Iranian piece of this, there was very positive developments last week. A long way to go. Actions must match words. We're very clear-eyed and realistic about all of it. We have the greatest, strongest military in the world. We're the strongest nation in the world, our economy, our military, every component of who we are. That's how you assure your freedom and your security.

But at the same time, Secretary Kerry and I addressed this issue yesterday. Democracies engage. Engagement is a sign of strength. And we'll see where it goes. But I think we all agree that if we can resolve differences and problems peacefully, versus going to war, I think you're the first to agree that's probably a better option, because you've got to fight the wars.

So there will be a role for the United States in the Middle East. And as said, we're not retreating from any part of the world. Alliances become more and more critical, maybe more critical than they have ever been. It is building capacities for our allies, helping our allies. It's what we're doing here in the Middle East, part of what you're doing -- I mean, here in the Asia Pacific. It's what we're doing in the Middle East, is as you -- as you build alliances, strengthen those alliances, you strengthen their capabilities and capacities to defend themselves.

And that's much of what we're doing here, certainly in the Asia Pacific, as well as the Middle East and around the world.

GEORGE LITTLE: We're going to get one more.

SECRETARY HAGEL: Okay, one more. We had somebody in the front row here, yes.

Q: (off mic) with the government shutdown, will there be any effect on Seventh Fleet operations?

SECRETARY HAGEL: With the government shutdown, will there be any effect on Seventh Fleet operations? No.

Okay. (Laughter.) How's that? My team like it when I give one-answer -- one-word answers. How's that? I get myself in less trouble. (Laughter.)

Thank you all very much. Much success to you. We're very, very proud of you. Take care of yourselves. Thank you.


Default Rates Continue to Rise for Federal Student Loans
SEPTEMBER 30, 2013

The U.S. Department of Education today announced the official FY 2011 two-year and official FY 2010 three-year federal student loan cohort default rates (CDR). The national two-year cohort default rate rose from 9.1 percent for FY 2010 to 10 percent for FY 2011. The three-year cohort default rate rose from 13.4 percent for FY 2009 to 14.7 percent for FY 2010.

The Department is replacing its CDR calculations from two-year to three-year calculations as required by the Higher Education Opportunity Act of 2008. Congress included this provision in the law because more borrowers default after the two-year monitoring period; thus, the three-year CDR better reflects the percentage of borrowers who ultimately default on their federal student loans.

The FY 2010 three-year cohort default rate is the second that the Department has issued, following the release of last year’s FY 2009 three-year cohort default rate. Under the law, only three-year rates will be calculated starting next year. At that time, three 3-year rates will have been calculated (FY 2009 published in 2012, FY 2010 published in 2013, and FY 2011 published in 2014).

“The growing number of students who have defaulted on their federal student loans is troubling,” U.S. Secretary of Education Arne Duncan said. “The Department will continue to work with institutions and borrowers to ensure that student debt is affordable. We remain committed to building a shared partnership with states, local governments, institutions, and students—as well as the business, labor, and philanthropic leaders—to improve college affordability for millions of students and families.”

To ensure that students are aware of the flexible income-driven loan repayment options available through Federal Student Aid (FSA), this fall the Department will expand its outreach efforts to struggling borrowers to inform them about the different plans. The Department has also released new loan counseling tools to help students and families make more informed decisions about planning for college. Students and families can visit for more information.

Calculation and breakdown of the rates

For-profit institutions continue to have the highest average two- and three-year cohort default rates at 13.6 percent and 21.8 percent, respectively. Public institutions followed at 9.6 percent for the two-year rate and 13 percent for the three-year rate. Private non-profit institutions had the lowest rates at 5.2 percent for the two-year rate and 8.2 percent for the three-year rate.

The two-year CDR increased over last year’s two-year rates for both the public and for-profit sectors, rising from 8.3 percent to 9.6 percent for public institutions, and from 12.9 percent to 13.6 percent for for-profit institutions. CDRs held steady for private non-profit institutions at 5.2 percent. The three-year CDR increased over last year’s three-year rates for both the public and private non-profit sectors, rising from 11 percent to 13 percent for public institutions, and from 7.5 percent to 8.2 percent for private non-profit institutions. CDRs decreased for for-profit institutions, slipping from 22.7 percent to 21.8 percent.

The two-year default rates announced today were calculated based on a cohort of borrowers whose first loan repayments were due in FY 2011 (between Oct. 1, 2010 and Sept. 30, 2011), and who defaulted before Sept. 30, 2012. More than 4.7 million borrowers from nearly 6,000 postsecondary institutions entered repayment during this window of time, and more than 475,000 defaulted on their loans, for an average of 10 percent.

The three-year rates announced today were calculated based on the cohort of borrowers whose loans entered repayment during FY 2010 (between Oct. 1, 2009, and Sept. 30, 2010), and who defaulted before Sept. 30, 2012. More than 4 million borrowers from over 5,900 postsecondary institutions entered repayment during this window of time, and approximately 600,000 of them defaulted, for an average of 14.7 percent.


No sanctions will be applied to schools based on the three-year rates until the CDRs have been calculated for three fiscal years, which will be with the release of the FY 2012 rates next year. Until then, sanctions will continue to be based on the two-year CDR only.

Certain schools are subject to sanctions for having two-year default rates of 25 percent or more for three consecutive years, or over 40 percent for one year. As a result, these schools will face the loss of eligibility in federal student aid programs unless they bring successful appeals. Please click here for more information about possible sanctions:

The Department provides extensive assistance to schools to help minimize institutional cohort default rates. FSA provides a variety of training opportunities to the higher education community, including webinars and online training, participation in state, regional and national association training forums, and through face-to-face training events such as the FSA Training Conference for Financial Aid Professionals. In addition, any school with a three-year CDR of 30 percent or more must establish a default prevention task force and submit a default management plan to the Department. There were 221 schools that had three-year default rates over 30 percent.

Friday, October 4, 2013


Aegis Ballistic Missile Defense System Completes Successful Intercept Flight Tests

The Missile Defense Agency (MDA), U.S. Pacific Command, and U.S. Navy sailors aboard the USS Lake Erie (CG 70) successfully conducted an operational flight test of the Aegis Ballistic Missile Defense (BMD) system, resulting in the intercept of a medium-range ballistic missile target over the Pacific Ocean by the Aegis BMD 4.0 Weapon System and a Standard Missile-3 (SM-3) Block IB guided missile.

At approximately 7:33 p.m. Hawaii Standard Time, Oct. 3 (1:33 a.m. EDT, Oct.4), a medium-range ballistic missile target was launched from the Pacific Missile Range Facility on Kauai, Hawaii. The target flew northwest towards a broad ocean area of the Pacific Ocean. Following target launch, the USS Lake Erie detected and tracked the missile with its onboard AN/SPY-1 radar. The ship, equipped with the second-generation Aegis BMD weapon system, developed a fire control solution and launched the SM-3 Block IB guided missile to engage the target. The SM-3 maneuvered to a point in space and released its kinetic warhead. The kinetic warhead acquired the target reentry vehicle, diverted into its path, and, using only the force of a direct impact, engaged and destroyed the target.

Program officials will assess and evaluate system performance based upon telemetry and other data obtained during the test.

This test exercised the latest version of the second-generation Aegis BMD Weapon System, capable of engaging longer range and more sophisticated ballistic missiles.

Today's event, designated Flight Test - Standard Missile-22 (FTM-22), was the fifth consecutive successful intercept test of the SM-3 Block IB guided missile with the Aegis BMD 4.0 Weapon System. Findings of operational tests, FTM-21 and 22 will support follow-on production decisions for the SM-3 Block IB guided missile.

FTM-22 is the 28th successful intercept in 34 flight test attempts for the Aegis BMD program since flight testing began in 2002. Across all Ballistic Missile Defense System programs, this is the 64th successful hit-to-kill intercept in 80 flight test attempts since 2001.

Aegis BMD is the naval component of the MDA's Ballistic Missile Defense System. The Aegis BMD engagement capability defeats short- to intermediate-range, unitary and separating, midcourse-phase ballistic missile threats with the SM-3, as well as short-range ballistic missiles in the terminal phase with the Standard Missile-2 (SM-2) Block IV missile. The MDA and the U.S. Navy cooperatively manage the Aegis BMD program.


SEC Obtains Asset Freeze and Other Emergency Relief in Ponzi Scheme Targeting Investors in Japan

The Securities and Exchange Commission announced an emergency action to freeze the assets of a Las Vegas resident and his companies in connection with a Ponzi scheme that defrauded thousands of investors living primarily in Japan.

The SEC alleges that Edwin Yoshihiro Fujinaga and his company MRI International, Inc. raised more than $800 million from investors who were told that their money would be used to buy medical accounts receivable (MARs) that medical providers in the United States held against insurance companies. Fujinaga and MRI represented that the company used investors' money to buy MARs from medical providers at a discount and tried to recover the full value of the MARs from the insurance companies. Fujinaga and MRI represented that they used investor money solely and exclusively to buy MARs.

According to the SEC's complaint, which was filed under seal on September 11, 2013 and unsealed last week in the U.S. District Court for the District of Nevada, MRI was a fraudulent Ponzi scheme designed to misappropriate money from investors. Fujinaga and MRI used investor money to pay the principal and interest due to earlier investors, for the expenses of MRI and other businesses owned by Fujinaga, and to buy luxury cars and pay Fujinaga's credit card bills, alimony, and child support.

The Honorable James C. Mahan for the U.S. District Court for the District of Nevada granted the SEC's request for a temporary restraining order, asset freeze and other emergency relief against MRI, Fujinaga, and CSA Service Center LLC, as a relief defendant.

The Commission's complaint alleges that Fujinaga and MRI violated Sections 17(a)(1), (2), and (3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; and seeks disgorgement of ill-gotten gains from Fujinaga, MRI, and relief defendant CSA, as well as financial penalties, permanent injunctions and other emergency relief.

The SEC's investigation, which is continuing, has been conducted by Danette R. Edwards and Thomas C. Swiers and supervised by Gregory G. Faragasso. The JFSA's Yuichiro Enomoto, who was seconded to the SEC, provided valuable assistance. The SEC's litigation is being led by Richard E. Simpson and Robert I. Dodge. The SEC appreciates the assistance of the JFSA, SESC, and the State of Nevada Division of Mortgage Lending.


Attorney General Eric Holder Delivers Remarks at the Summit for Preventing Youth Violence
~ Thursday, September 26, 2013

Thank you, Karol [Mason], for those kind words; for your outstanding leadership of the Office of Justice Programs; and for your ongoing commitment to the cause that brings us together.  I’d like to extend a special welcome to the United States Attorneys who are with us today – including Barbara McQuade, Melinda Haag, and Kenneth Polite.

It is an honor to stand with you this morning – and to join so many dedicated leaders and passionate citizens from across the country in opening our third annual Summit on Preventing Youth Violence.  As Karol just said, we gather this year in a moment of tremendous challenge and great consequence – when resources are scarce, but the urgency of the problems before us has been brought into stark focus.

We know that the majority of America’s children – more than 60 percent of them – have been exposed to crime, violence, and abuse – as victims or as witnesses.  We’ve seen that violence among or directed toward our young people can take many forms.  And we understand that exposure can happen virtually anywhere: in our schools; on our streets; in our homes; and even online, where kids face new and evolving threats every day.  Studies have shown that young people who are exposed to violence can suffer a range of consequences that have the potential to cause long-term physical, psychological, and emotional harm.  These children often face elevated risks of failing in school, suffering from anxiety and depression, or turning to drug or alcohol abuse later in life.  They are more likely than their peers to develop chronic illnesses or have difficulty forming emotional attachments.  And far too many continue the cycle of violence by harming others.

Clearly, the consequences of inaction in the face of such trauma would be too great to ignore.  And the associated costs – in human, moral, and even economic terms – are far too much to bear.  In fact, the cost of failing to intervene in the life of a young person who’s at risk of becoming delinquent could add up to more than $3 million over the course of his or her lifetime.  And the incremental costs of violence and abuse on America’s health care system could amount to roughly 37.5 cents out of every dollar that’s spent on health care.

But this will always be about much more than simple dollars and cents.

As we speak, the Administration is working diligently to implement the Affordable Care Act – which will have a significant impact on the provision of physical, mental, and behavioral health services to young people who are at risk and in need.  And, while this is an important start, I’m pleased to say that it’s only the beginning.

Like many of you, I have seen the devastating impact that violence has on young people, on families, and on entire communities.  During my time as a judge on the Superior Court here in Washington – and later, as U.S. Attorney for the District of Columbia – I witnessed these consequences firsthand, as, day after day, lines of young men, young defendants, streamed into my courtroom.  In almost every case, these individuals had long histories of interactions with social services – and educational and juvenile justice systems – which had failed to interrupt the dangerous and potentially avoidable trajectory that had led them there.

I quickly learned that – as a nation, and as a people – we must resolve to do much better.  We must identify strategies for getting involved earlier; addressing the violence, the poverty, and the distress that takes too many kids off the track of normal development; and providing intervention resources at every phase of the “trauma-to-violence” process.

For me – and I know for all of you – this has always been much more than a professional obligation.  As our nation’s Attorney General – and as the father of three wonderful kids – it is also a personal priority.  Although we come together today as law enforcement executives, policymakers, public health professionals, educators, elected officials, and other community leaders – our actions must be rooted, first and foremost, in what we can accomplish as parents and as friends; as mentors and advocates; as Scout leaders and little league coaches.  Our efforts will only be successful if we can ensure that our kids grow up in neighborhoods where adults can reach out to them – and where moms and dads, teachers and faith leaders, grandparents and neighbors can be trusted and positive influences on their lives.

That’s why Summits like this one – and efforts like those you’re leading in each of our Forum cities – are so important.  It’s why the work you’re doing to rally local stakeholders to improve law enforcement, increase support for violence prevention efforts, and expand access to family and social services – is so critical.  And it’s why the Obama Administration – led, in part, by this Justice Department – has stepped to the forefront of these efforts, making an unprecedented commitment to help strengthen prevention, intervention, enforcement, and reentry programs in each of the communities represented here.

At the heart of this commitment is our National Forum on Youth Violence Prevention.  Thanks to your leadership – from Boston to Camden; from Chicago to Detroit; from Memphis to Minneapolis; from New Orleans to Philadelphia; and from Salinas to San Jose – we’re building a multidisciplinary approach, bringing together a range of allies – and applying innovative, data-driven strategies for contending with local challenges.  As you’re discussing this week, these efforts are showing tremendous promise – improving lives and winning praise from experts as well as local residents.  And today, we affirm that we must do more than just keep up the great work.  It’s time to take it to a new level.

I’m proud to report that my colleagues and I are taking a variety of steps to do just that.  And nowhere is this clearer than in the work of our Office of Justice Programs, under the leadership of Assistant Attorney General Mason – who’s been a strong voice on this issue for many years, ever since she helped create our Task Force on Children Exposed to Violence and led the Defending Childhood Initiative I launched in 2010.

Thanks to leaders like her, the Justice Department is moving aggressively to tackle the most serious problems and provide assistance to the most afflicted areas.  Last month – as part of the Department’s “Smart on Crime” initiative to strengthen America’s criminal justice system – I announced that we’ve convened a new Task Force to respond to the extreme levels of violence faced by far too many American Indian and Alaska Native children.  We’ve launched a national public awareness campaign to call attention to the challenges too many young people face.

We’re working hand-in-hand with partners across the federal government – and far beyond – to disrupt the so-called “school-to-prison pipeline.”  And we’re fighting to end the zero-tolerance school disciplinary policies that transform too many educational institutions from doorways of opportunity into gateways to the criminal justice system.  A child who has committed a minor disciplinary offense should end up in the principal’s office – and not in a police precinct.

Of course, my colleagues and I also recognize – as you do – that these problems can only be addressed cooperatively, by entire communities – through the kind of collective action and comprehensive effort that this Forum is helping to institutionalize.  By your presence here this morning, and the work you’re advancing across the country every day – all of you are proving that, despite the challenges before us, we’ll be able to keep making the positive difference, and securing the progress, that America’s young people deserve.  I’m confident in where these efforts will lead us in the critical days ahead.  I want you to know that I’m proud to count you as colleagues, and partners, in our efforts to prevent and respond to youth violence.  I thank you, once again, for your tireless work on behalf of our youngest citizens.  And I look forward to all that we must – and will – accomplish together in the months and years to come.

At this time, it’s my privilege to turn things over to Cecelia Muñoz.  Please join me in welcoming her to the stage.


U.S., Canadian Consumers Lost More Than $6 Million

At the Federal Trade Commission’s request, a federal court has halted an elusive business opportunity scheme that allegedly conned more than $6 million from American and Canadian consumers. The FTC has alleged that the defendants falsely promised consumers that they could make money by referring merchants in their area to the defendants’ non-existent money-lending service.
The court froze the defendants’ assets and appointed a receiver to take control of the operation, pending litigation. The FTC seeks to permanently shut down the operation and return money to consumers.

The FTC’s complaint, filed in August 2013, names 20 individuals and eight companies as defendants in the case against the enterprise, which started out doing business under the name “Money Now Funding.” To avoid detection by law enforcement, they often changed product names, office locations, and merchant identities, at one point changing the company’s name to “Cash4Businesses.”

According to the FTC, the defendants falsely claimed consumers would earn up to $3,000 per month by referring small businesses to the defendants to obtain an average loan or cash advance of $20,000, and that they could operate a profitable business from their home. Act quickly, they said, or the opportunity would go to someone else. Consumers paid from $299 to $499 to buy the business opportunity.

The FTC also charges that after the defendants allegedly promised consumers assistance in finding referrals in their area, the defendants then told consumers that, to succeed, they needed to buy business leads, that is, lists of “high quality” or “pre-approved” merchants supposedly obtained from well-known lenders. The leads provided to consumers were nothing but random names and email addresses, many with no apparent connection to any business. The total charge for the so-called leads often exceeded $10,000, and some consumers paid tens of thousands of dollars.

The FTC has alleged that the defendants violated the FTC Act by misrepresenting that consumers would earn substantial income, and violated the agency’s Telemarketing Sales Rule by calling phone numbers listed on the National Do Not Call Registry, calling consumers who had told them not to call, repeatedly calling consumers to annoy them, using obscenities and threats, and failing to pay the Registry access fee. The FTC also charged the defendants with violating the Commission’s Business Opportunity Rule, which requires business opportunity sellers to provide specific information to help consumers evaluate a business opportunity, and prohibits sellers from making earnings claims without substantiation.

On August 5, 2013, at the FTC’s request, the federal district court for the District of Arizona issued a temporary restraining order against all defendants, freezing assets, and appointing a receiver over the corporate entities. The court entered a preliminary injunction on August 19, 2013 against all the corporate entities and fifteen of the individual defendants, including Lukeroy Rose and Lance Himes. On September 13, the court entered a preliminary injunction against defendants Cordell Bess, Clinton Rackley, and Ronald W. Hobbs.

The corporate defendants are Money Now Funding LLC, also known as Money Now Funded, Cash4Businesses, and CashFourBusinesses; Rose Marketing LLC; DePaola Marketing LLC; Affiliate Marketing Group LLC; Legal Doxs LLC, a/k/a First Business LLC; US Doc Assist LLC, a/k/a First Business LLC; Affinity Technologies LLC; and Marketing Expert Solutions LLC.

The individual defendants are Lukeroy K. Rose, a/k/a Luke Rose; Cordell Bess, a/k/a Blaine Thompson, also doing business as JJB Marketing; Solana DePaola; Jennifer Beckman; William D. Claspell, a/k/a Bill Claspell; Richard Frost, a/k/a Richard Strickland; Dino Mitchell, a/k/a Dino Jones; Clinton Rackley, a/k/a Clinton Fosse; Lance Himes, a/k/a Lance R. Himes, a/k/a Raymond L. Himes, a/k/a Lance Haist; Leary Darling; Donna F. Duckett, also d/b/a D&D Marketing Solutions; Della Frost, also d/b/a ZoomDocs and Zoom Docs LLC; Christopher Grimes, also d/b/a Elite Marketing Strategies; Alannah M. Harre, also d/b/a National Marketing Group; Ronald W. Hobbs, a/k/a Ron Hobbs, also d/b/a Ron Hobbs & Associates and Sales Academy USA LLC; Janine Lilly, also d/b/a Doc Assistant; Michael McIntyre, also d/b/a McIntyre Marketing; Benny Montgomery, also d/b/a Montgomery Marketing; Virginia Rios, also d/b/a V&R Marketing Solutions; and Kendrick Thomas, also d/b/a KT Advertising.

The Commission acknowledges the assistance of the U.S. Postal Inspection Service, the Oregon Department of Justice, and the Better Business Bureau of Central, Northern, and Western Arizona.

The Commission vote authorizing the staff to file the complaint was 4-0. The complaint was filed in the U.S. District Court for the District of Arizona.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.


SEC Charges Stock-Collateralized Loan Companies and Their Owner with Fraud

The Securities and Exchange Commission announced that, on September 26, 2013, it filed a civil action in the United States District Court for the Eastern District of Pennsylvania against William Dean Chapman, Jr. ("Chapman"), a resident of Sterling, Virginia, and his companies, Alexander Capital Markets, LLC and Alexander Financial, LLC (collectively, the "Alexander Companies"), charging them with operating a fraudulent stock-collateralized loan business.

The Commission's complaint alleges that, from at least June 2006 through June 2009, Chapman and the Alexander Companies raised money by inducing borrowers to transfer ownership of millions of shares of publicly traded securities to them as collateral for purported non-recourse loans based on false promises, including the promise to return the shares, or remit share profits in excess of accrued interest, to borrowers who repaid their loans. By no later than June 2006, Chapman and the Alexander Companies were doing nothing to ensure their ability to repurchase and return shares to borrowers who elected to repay their loans, or remit share profits in excess of accrued interest to borrowers. Instead they used the proceeds to pay other borrowers, for operating costs, and for their own benefit. This was despite the fact that many of the loan agreements entered into by Chapman and the Alexander Companies with borrowers assured borrowers that the defendants would engage in "hedging" strategies, would "hedge," or would enter into contracts with counterparties that would ensure that the portfolios could be returned. In so doing, they deliberately or recklessly misrepresented to new borrowers that, among other things, they could perform under new agreements. By early 2007, Chapman and the Alexander Companies were unable to honor maturing loan agreements, but continued to enter into new agreements under false pretenses. Defendants also fraudulently accepted over $2 million in loan repayments from at least two borrowers and used the funds to repay other borrowers and for Chapman's personal benefit.

As a result of the conduct described in the complaint, the Commission alleges that the defendants violated the antifraud provisions of the securities laws set forth in Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement together with prejudgment interest, and civil monetary penalties from the defendants.

Thursday, October 3, 2013



U.S., Japan Agree to Expand Security, Defense Cooperation

By Karen Parrish
American Forces Press Service

TOKYO, Oct. 3, 2013 - In a joint statement today, U.S. and Japanese diplomatic and military leaders agreed to revise the 1997 Guidelines for U.S.-Japan Defense Cooperation, increase security and defense collaboration in the Asia-Pacific region and beyond, and advance the realignment of American troops in Japan.

Secretary of State John F. Kerry and Defense Secretary Chuck Hagel met with their counterparts, Japanese Foreign Affairs Minister Fumio Kishida and Defense Minister Itsunori Onodera, in a series of meetings today that culminated in a "two-plus-two" engagement. At a news conference following the engagement, Hagle said all four discussed, "Our goal ... [of] a more balanced and effective alliance, where our two militaries are full partners working side-by-side with each other, and with other regional partners, to enhance peace and security."

Kerry and Hagel are the first U.S. secretaries of state and defense to attend such a meeting here together. The gathering was highlighted by intense interest in Japan as the nation's government is reportedly considering expanding the role of its self-defense forces.

Hagel said during the news conference that after 16 years, revising the defense guidelines makes sense. The close alliance between the two countries, rising security threats in the region and the increasingly global nature of those threats, he said, all urge a reexamination of the agreement governing each nation's roles and responsibilities in defense and contingency operations.

Other key agreements the four ministers announced include:

A second Army Navy Transportable Radar Surveillance system, or AN-TPY-2, will be placed at the Japanese Air Self-Defense Force base at Kyogamisaki, where it will augment one previously set up in Shariki on the northern part of Honshu Island.

-- The new radar will "close the gaps," a U.S. official said, and will increase protection for the United States while defending Japan against possible North Korean missile strikes.

The "Tippy-Two," as it's commonly known, is an X-band, high-resolution, phased-array radar designed specifically for ballistic missile defense. It searches for and tracks inbound threats, and can be integrated with the Aegis Ballistic Missile Defense system and ground-based interceptors.

-- Increase bilateral cooperation in the region on space and cyberspace; intelligence, surveillance and reconnaissance; planning, use of facilities, extended deterrence, information security, training and exercises.

-- Reinforce trilateral and multilateral cooperation "that preserves and promotes a peaceful, prosperous and secure Asia-Pacific region." The statement adds, "Our mutual cooperation is to expand over time, and we are committed to working in partnership with other like-minded countries to build sustainable patterns of cooperation."

-- Implement agreements on realignment of U.S. forces in Japan "as soon as possible while ensuring operational capability, including training capability, throughout the process."

The realignment plan will relocate U.S. Marine Corps Air Station Futenma, now in the center of Okinawa's Ginowan City, to a more remote area of the island. It also moves a Marine Corps squadron of KC-130 Hercules aircraft from Futenma to MCAS Iwakuni, transfers elements of the Navy's Carrier Air Wing 5 from Atsugi Air Facility to Iwakuni, and shifts thousands of Marines from Okinawa to Guam in the first half of the 2020s.

-- Deploy more advanced U.S. capabilities to Japan such as the U.S. Marines' MV-22 Osprey aircraft, two squadrons of which are here and will be training with Japanese self-defense forces. Other equipment headed to Japan in the coming years includes Navy P-8 maritime patrol aircraft, in what will be its first deployment outside the United States; rotational deployment of Global Hawk unmanned aircraft; and, in another first deployment outside the United States in 2017, the F-35B short takeoff and vertical landing joint strike fighter variant for the Marine Corps.

The four ministers also addressed territorial disputes in the East China Sea, where Japan and China both claim rights to the Senkaku Islands.

While U.S. policy is that sovereignty in such disputes is an issue for the disputing nations to resolve, Hagel reiterated a statement he made in April: since they are under the administrative control of Japan, they fall under U.S. treaty obligations to Japan.

"We strongly oppose any unilateral or coercive action that seeks to undermine Japan's administrative control," he said. "We will continue to consult especially closely on this issue."

Hagel closed his statement at today's news conference with a strong endorsement of the alliance.

"The United States-Japan relationship has underwritten the peace, stability, and prosperity of the Asia-Pacific region for more than half a century," he said. "Today, we have helped ensure this alliance continues to do so in the 21st century."

The secretary also thanked U.S. troops serving here. He will visit some of them tomorrow, before concluding his weeklong trip that also took him to South Korea.

Following the press conference, Hagel and Kerry were scheduled to meet with Japanese Prime Minister Shinzo Abe.


CFTC Charges New York-Based The Yorkshire Group Inc. and Its Owner, Scott Platto with Engaging in Illegal, Off-Exchange Precious Metals Transactions

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it filed a civil injunctive enforcement action in the U.S. District Court for the Eastern District of New York against Defendants The Yorkshire Group Inc. (Yorkshire) of Staten Island, New York, and its sole owner, Scott Platto, also of Staten Island. The CFTC Complaint, filed on September 25, 2013, charges the Defendants with engaging in illegal, off-exchange financed transactions in precious metals with retail customers. The Complaint further alleges that Platto, as the owner, operator, and controlling person of Yorkshire, is liable for Yorkshire’s violations of the Commodity Exchange Act (CEA)

According to the Complaint, between September 2011 and August 2012, the Defendants solicited retail customers by telephone to buy physical precious metals such as silver and palladium in off-exchange leverage transactions. Retail customers engaging in financed transaction with Yorkshire were allegedly told that they were borrowing money to purchase precious metals. Customers paid Yorkshire a portion of the purchase price for the metals, and Yorkshire financed the remainder of the purchase price, while charging the customers interest on the amount they purportedly loaned to customers. The Complaint further alleges that Yorkshire’s customers never took delivery of the precious metals they purportedly purchased and that the Defendants neither bought, sold, loaned, stored, or transferred any physical metals for these transactions.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which expanded the CFTC’s jurisdiction over retail commodity transactions like these, prohibits fraud in connection with such transactions, and requires that these transactions be executed on or subject to the rules of a board of trade, exchange, or contract market. Thus, since Yorkshire’s and Platto’s transactions were executed off exchange, they were illegal, according to the Complaint.

When Yorkshire and Platto allegedly engaged in these illegal transactions, they were acting as a dealer for metals merchant Hunter Wise Commodities, LLC (Hunter Wise), which the CFTC charged with fraud and other violations in federal court in Florida on December 5, 2012 (see CFTC Press Release 6447-12). On February 25, 2013, the court granted a preliminary injunction against Hunter Wise, froze the firm’s assets, and appointed a corporate monitor to assume control over those assets (see CFTC Press Release 6522-13).

In its continuing litigation against Yorkshire and Platto, the CFTC seeks restitution to defrauded customers, a return of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the CEA, as charged.

The CFTC Division of Enforcement staff responsible for this action are Karin N. Roth, Philip Rix, David W. MacGregor, Lenel Hickson, Jr., Stephen J. Obie, and Vincent A. McGonagle.

CFTC’s Precious Metals Fraud Advisory

In January 2012, the CFTC issued a Precious Metals Consumer Fraud Advisory to alert customers to precious metals fraud. The Advisory states that the CFTC had seen an increase in the number of companies offering customers the opportunity to buy or invest in precious metals. The CFTC’s Advisory specifically warns that companies often fail to purchase any physical metals for their customers, instead simply keeping the customer’s funds. The Advisory further cautions consumers that leveraged commodity transactions are unlawful unless executed on a regulated exchange.


Remarks at the Meeting of the U.S. - Japan Security Consultative Committee (2+2)
John Kerry
Secretary of State
Iikura Guest House
Tokyo, Japan
October 3, 2013

Well, thank you very much Foreign Minister Kishida and Defense Minister Onodera. We have very honored to be here, Secretary Hagel and I.

This is – as you have remarked, this is an historic meeting, the first time we’ve ever had this meeting in Japan, the 2+2. And it’s also critical because the framework that we will be discussing today will really lay out the security relationship between the United States and Japan for this region for the next 15 or 20 years.

This alliance, which we believe is the lynchpin alliance for the United States in the region, has not been updated since 1997. And as you said in your opening comments, a great deal has changed in this period of time. There are different threats and different kinds of threats. So it is important for us to recognize that this bilateral alliance remains a vital element of our respective national security strategies. And today, I am convinced, from the work our staffs have done and the groundwork that’s been done leading to today, we’re going to take a very important step forward to modernize that and to bring it up to date.

I’d just close by saying that for more than 60 years Japan has been one of the closest allies and one of our closest global partners, and most important partners. I want to thank you personally, Fumio, for your terrific support and help in New York during the General Assembly meeting on the subject of Syria. Japan has been playing an increasingly visible and important role on a number of different global crises, and we’re very grateful for Japan’s leadership with respect to that. And I’m confident that we’re going to have a very substantive and very productive discussion, so we look forward to getting to work.

Thank you.


Military Must Slow Growth for Military Pay, Health Care
By Jim Garamone
American Forces Press Service

SEOUL, South Korea, Oct. 1, 2013 - The military has to look at the entire package of compensation, health care and retirement, Army Gen. Martin E. Dempsey told a U.S. Forces Korea Town Hall meeting here today.

 The chairman of the Joint Chiefs of Staff and his wife, Deanie, spent an hour answering question from the joint service audience. Budget issues were a main concern for the service members.

Personnel costs have to be brought under control, the chairman said. He assured the service members that any changes to military retirement would be grandfathered. "So the question is what do we do with retirement for the next generation of soldiers, sailors, airmen and Marines," he said. "But compensation ... and health care costs are growing at rates that are unsustainable to the all-volunteer force."

This does not mean cuts, the chairman said, "we may not actually have to reduce pay and benefits, but we have to slow the growth."

Last year, for example, DOD recommended a 1 percent pay raise for military personnel. Congress upped the total to 1.8 percent. Slowing the rate by just that much would have saved DOD $13 billion. Instead, the money to pay for the raise came out of readiness accounts, the chairman said.

In an interview with reporters traveling with him, Dempsey expanded on this. He noted he has been through three drawdowns in his career that began in 1974 – the post-Vietnam drawdown, the post-Cold War drawdown and the current one. This one is alarming to him because it is the steepest drawdown he has seen.

"The steepness of it puts us in a position to not exert enough control on balancing our requirements across all the accounts, whether they are manpower accounts, modernization, maintenance, training, family care," he said. "It's extraordinarily challenging to try to balance the budget because of the steepness of this drawdown."

He is worried about the long-term effects of the drawdown. Under sequester, DOD must cut an additional $52 billion from the budget in fiscal 2014. "If I were able to shrink the force, close some unnecessary infrastructure, potentially cancel some weapons systems that we don't think are as important as others, I think I can probably balance it and not affect readiness to the extent we are," he said.

But Congress will not allow another base realignment and closure process, and Congress has continued some weapons systems the department has specifically said it does not need. "Because there are parts of the budget that are untouchable to me at this point," he said. "Unless I can touch some of those things, it all comes out of readiness, which means the next group to deploy will be less ready than they should be.

"That's not a position that our armed forces should be in as the greatest military on the planet serving the greatest nation on the planet."

And sequestration could continue to be a year-by-year process, and that is dangerous "because we are asking the force to live with uncertainty and do it a year at a time," he said. "Eventually I think they are going to lose faith if we do it a year at a time."


Press Release Better, Faster Lab Reports Help States’ Outbreak Response
CDC Push for Electronic Lab Reports Showing Gains

Once labs detect dangerous infections, it’s crucial for the correct information to get to health departments quickly and in a format that allows them to recognize disease outbreaks. The Centers for Disease Control and Prevention’s (CDC) efforts to speed this process and ensure that the best and most complete information about disease cases is reported is paying off, according to new data released in today’s issue of Morbidity and Mortality Weekly Report (MMWR).

A key to speeding lab reports is widespread adoption of electronic laboratory reporting (ELR) by the approximately 10,400 labs that send reportable data to health agencies. ELR is an important tool that gives health officials vital information on infectious disease cases. Since 2010, CDC has provided funds to help 57 states, local and territorial health departments increase the use of electronic laboratory reporting (ELR).

The MMWR report shows that the number of state and local health departments receiving electronic reports from laboratories has more than doubled since 2005, when CDC last evaluated ELR reporting. In the past year, the number of individual reports received electronically increased by 15 percent. States and local health departments now estimate that nearly two-thirds (62 percent) of total lab reports were received electronically. The number of reports received through ELR varied by jurisdiction, the types of labs reporting and by disease reported.

“Infectious disease outbreaks will always be with us—and rapid recognition of an outbreak saves lives,” said CDC Director Tom Frieden, M.D., M.P.H. “Thanks to electronic laboratory reporting (ELR), we’re detecting outbreaks faster than ever. Unfortunately, only a quarter of the 10,000 labs across the country use ELR. We must keep expanding use of ELR to help CDC and our partners save lives and reduce healthcare costs.”


Pentagon Official: U.S. Must Continue to Work with Somalia
By Jim Garamone
American Forces Press Service

WASHINGTON, Oct. 8, 2013 - Progress in Somalia has been "significant," a senior Defense Department official told the Senate Foreign Relations Committee today, and the United States will continue to work with the Somali government to defeat terrorism there.

Amanda J. Dory, the deputy assistant secretary of defense for African affairs, told the committee that al-Shabaab -- an al-Qaida affiliated terrorist group -- once controlled large swaths of Somalia, including most Somali cities.

"Today, Somali, [African Union Mission in Somalia] and Ethiopian forces have weakened al-Shabaab as a conventional fighting force in Somalia," she said in prepared remarks.

Still, al-Shabaab remains dangerous, she said. The terror group is capable of launching sophisticated unconventional attacks aimed at the African Union mission and the fledgling Somali government, Dory told the senators.

"For the foreseeable future," she added, "we must maintain focus on Somalia to sustain security progress made to date, as al-Shabaab is likely to remain the primary threat to Somalian and East African stability for some time to come."

The African Union mission -- supported by the United States -- has provided critical space for the Somali government to stand up and establish its legitimacy. The United States recognizes the new government and wants to normalize military-to-military contacts. U.S. Africa Command will work with State Department personnel to assist with the development of a unified Somali security force, Dory said.

Piracy that originated from Somalia has been virtually eliminated, Dory said.

"As recently as 2011, Somali pirates held nearly 600 mariners hostage aboard 28 captured ships, and roamed an area the size of the continental United States looking for their next opportunity," she said. "Today, thanks to changes in business practices by the commercial maritime industry, and the presence of international naval forces, piracy is almost nonexistent off the coast of Somalia. The last successful hijacking of a major commercial ship was in 2012."

Dory said she is encouraged by the way the African Union mission in the country has provided stability. The troops come from Uganda, Burundi, Kenya, Djibouti and Sierra Leone. They work with Ethiopian forces and the Somali National Army.

The United States and international partners have provided important training and equipment to the Somalis. The proposal for training in fiscal 2014 will stress logistics, personnel management, finance and budgeting and maintenance, Dory said. All this is done in close cooperation with the Somali government.

The antipiracy mission must continue, as the progress made is perishable, she said, adding that Somalia will continue to present problems and opportunities.

"With sustained assistance from the United States and other international partners, Somalia's national security apparatus will be better positioned to fend off the al-Shabaab insurgency, and gradually transform the fragile state into a success story," she said.