AG HOLDER'S REMARKS AT FAREWELL CEREMONY FOR DEPUTY AG COLE

FROM:  U.S. JUSTICE DEPARTMENT 
Attorney General Holder Delivers Remarks at Farewell Ceremony for Deputy Attorney General Cole
Washington, DCUnited States ~ Thursday, January 8, 2015

Good afternoon – and thank you all for being here.  This is a bittersweet day – for this department, for me, and, I know, for everyone in this Great Hall.  But it is a pleasure to share this occasion with so many good friends, valued colleagues and proud family members.  And it’s a great privilege to join each of our distinguished guest speakers in welcoming you all to the Justice Department this afternoon – as we thank Jim Cole for his exemplary service to our nation, not only over the last four years, but throughout his career; as we celebrate the many achievements that have defined his leadership of this department as Deputy Attorney General; and as we wish him well as he marks the beginning of an exciting new chapter in his life.

I want to extend a special welcome to Jim’s wonderful wife, Susan; their son, Jackson; their daughter, Amanda; and every member of Jim’s extended family who’s here with us today.

As a former Deputy Attorney General myself, I understand in a personal way the toll that this highly-demanding – and far from glamorous – job can take.  I also know that having a family member serving in such a high-profile and high-pressure position has required great sacrifices from many of Jim’s friends and loved ones.  So I want to take a moment to thank each of you for your service, for your patience, and for your constant love and support over the last four years – which I know have meant the world to Jim, and which have made possible the record of achievement that will define his legacy as a senior leader in the Obama Administration.

What a legacy it is.  Over the past four years, Jim Cole has been my indispensable partner in leading the U.S. Department of Justice – and extending the promise of equality under the law for everyone in this country.

His persistence, his tenacity, and his relentless drive for results – on behalf of the American people he serves so faithfully – have marked him as an extremely effective Deputy Attorney General.  And his love of, and loyalty to, this great institution – and the extraordinary men and women who serve it – have earned him a reputation as a skilled and thoughtful manager; as a good steward of the principles that have guided this department since its earliest days; and as a champion of the cause of justice – in every case and circumstance.

As anyone who has worked closely with Jim over the years can tell you, many of these qualities have been evident since the moment he first reported for work at the Justice Department – as a member of the newly-created Public Integrity Section.

That, of course, is where Jim and I first met – more years ago than either of us would like to admit.  I quickly came to admire Jim’s work ethic, his judgment, his passion for public service and his intelligence and skill as an attorney.

Even before he was promoted to Deputy Chief of the Public Integrity Section, I saw – as did many of our colleagues – that Jim had a tremendous amount to offer to this department, and that he was destined for big things.  I'm not sure, however, that anyone could have predicted then that the two of us would someday lead the Justice Department.  But I knew, when he left the federal workforce and launched a distinguished career in private practice – that his service to our nation was not yet over.

Although neither of us would have dared to imagine it at the time, I was deeply gratified that our respective paths brought us back together in 2010.  And I have been both honored and humbled to lead this department alongside him ever since.

During times of great challenge and unprecedented resource constraints – through a hiring freeze and even a government shutdown – President Obama and I have relied upon Jim to ensure that the Justice Department operates as effectively and efficiently as possible.

His leadership and ingenuity have been critical in attaining historic results on behalf of the American people.  And, as one of the longest-serving Deputy Attorneys General in history, his management of the day-to-day operations of this department has left a profound and enduring impact.

On a policy level, his input, advice and strong leadership played a key role in the administration’s decision not to defend the constitutionality of the Defense of Marriage Act – and he has been a clear and consistent advocate for LGBT rights throughout the country.

As we considered ways to improve America’s criminal justice system, Jim became a champion – and a key architect – of the Smart on Crime initiative, helping to guide and implement it from the ground up.  His work has been particularly important in driving new reentry policies and launching our new executive clemency initiative.

And from the historic resolution in the Deepwater Horizon case – which he helped make possible – to our aggressive and ongoing efforts to combat financial fraud and hold accountable those individuals and institutions who have undermined our economy, his efforts have greatly benefited the American people – touching and improving countless lives from coast to coast.

On questions large and small, throughout his tenure as DAG, Jim’s guidance and wise counsel have made him an irreplaceable advisor, a proven and trusted leader, and a steadfast and valued friend.

Jim, I have been proud to know you, to work with you, and to depend upon you for close to four decades.  I am honored to join everyone here in thanking you for your tireless work and faithful service over the years.  And although you will be dearly missed by dedicated public servants at every level of the Justice Department – and although I will miss working with you a great deal – I want to join our valued colleagues in wishing you all the best as you move on to bigger and better things.

You will always be a treasured member of the Justice Department family.  And I look forward to all that you’ll undoubtedly contribute and achieve in the months and years to come.

At this time, in recognition of your achievements and your many contributions over the years, it is my great privilege to present you with the highest award I can bestow on a Justice Department employee – the Edmund J. Randolph Award.  Congratulations, my friend – and good luck.

Ladies and gentlemen, please join me in welcoming to the podium – our Deputy Attorney General, and my great friend, Jim Cole.

READOUT: DEPUTY AG COLE'S TOUR OF BORDER STATION IN MCALLEN, TX

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, July 9, 2014

Readout of Deputy Attorney General’s Tour of Border Station in McAllen, Texas
Deputy Attorney General James Cole made a return trip today to the U.S. Customs and Border Protection’s McAllen Station and processing facility to discuss steps the Department of Justice is taking to help address the influx of migrants crossing the southwest border.

Chief Patrol Agent Kevin Oaks and Deputy Chief Patrol Agent Raul Ortiz gave the Deputy Attorney General a tour of the facility and a briefing on the operations at McAllen.  McAllen staff discussed the numbers of migrants that are arriving each day, including the numbers of unaccompanied children, families and adults; and the reasons, including violence in Central American countries, that many are giving for making the dangerous trek to the U.S. border.  Cole also viewed the station’s processing facility, where migrants who have arrived in the past few days are housed.

During his talk with McAllen staff, Cole took the opportunity to highlight the Justice Department’s commitment to prioritizing adjudication of cases that fall into the following four groups: unaccompanied children who recently crossed the border; families who recently crossed the border and are held in detention; families who recently crossed the border but are on “alternatives to detention;” and other detained cases, including border crossers and significant public safety threats.  He also emphasized that the department’s intention to reassign immigration judges in immigration courts around the country from their current dockets to hear the cases of individuals falling in these four groups.

Cole noted that the department is also seeking new funding for as many as 40 more immigration judges and to provide technical assistance to Central American countries in identifying and dismantling smuggling operations that take advantage of migrants seeking to enter the U.S.  He also noted that the department has requested funding to provide technical assistance in combating transnational crime and the threat posed by criminal gangs.  Cole reiterated that the department continues to focus on investigating and prosecuting smugglers who exploit and victimize vulnerable migrants, including children, in partnership with DHS and foreign governments. The discussion with McAllen staff also included a productive exchange of ideas on strategic ways to combat smuggling.

The Deputy Attorney General was impressed by the professionalism and dedication of the McAllen staff and thanked them for their service.  Cole last visited the facility in November 2013.

DEPUTY AG COLE'S REMARKS ON THE INCREASING NUMBER OF HEROIN DEATHS

FROM:  U.S. JUSTICE DEPARTMENT 

Deputy Attorney General James M. Cole Delivers Remarks at the “Pills to Needles: the Pathway to Rising Heroin Deaths” Event

~ Tuesday, June 10, 2014

Thank you, Joyce, for that kind introduction.  And thank you to the University of Alabama-Birmingham School of Public Health and the Jefferson County Department of Public Health for partnering with the United States Attorney’s Office for the Northern District of Alabama to host today’s community awareness summit.  It is an honor to be here with such a dedicated and diverse group of professionals, community leaders, and concerned citizens.

While I am pleased to be here, the issue that brings us together, prescription drug and heroin abuse, is not a happy one.  Unfortunately, the need to address these problems has become critical.  But the way we begin to deal with it is to come together as a community to better understand the symptoms and the underlying causes of the problem.  With the community, family, and friends, aware and engaged, we get that much closer to practical and sustainable solutions.

As the Attorney General recently observed, heroin and opiate addiction and abuse “is impacting the lives of Americans in every state, in every region, and from every background and walk of life.”

You have experienced this crisis, firsthand, here in the Birmingham region, where you have witnessed a more than five-fold increase in heroin overdose deaths between 2008 to 2012.  That rate is nothing short of tragic, and cannot be tolerated in our neighborhoods and it cannot be tolerated anywhere in our nation.

Communities like yours across the country are grappling to find solutions.  In Cleveland, Ohio, the community came together last fall for a daylong summit, much like this one, hosted by the Cleveland Clinic, the United States Attorney’s Office, and other state and local health care and law enforcement leaders after witnessing a 400% increase in heroin-related deaths.

They generated a plan to address every aspect of the problem, including education and prevention, health care policy, law enforcement and treatment.  As part of that plan, the Cuyahoga County Prosecutor’s Office produced a website “letsfaceheroin.com” that looks to increase awareness and understanding of the problem, and offers support and resources to those in need in the community, including young people, parents, community leaders, and current users.

In Vermont, the family of a heroin overdose victim joined with the United States Attorney’s Office to create an award-winning documentary, “The Opiate Effect,” to educate people about the realities and dangers of opiate abuse.

Clearly, part of the solution is prosecution. Here in the federal court in Birmingham, a 20-year sentence was handed down last month to Harold Mims for selling heroin that resulted in an overdose death.  There is also the ongoing prosecution of Patropius Foster, who is charged with distributing heroin that resulted in the death of local University of Alabama student Baker Mims.

We just heard from Baker’s parents, Ronnie and Beverly, and Tracy Bynum, whose daughter Madison also died of an overdose.  I want to offer you and your families my sympathy and my support, as well as my gratitude and respect.  You exhibit such strength and courage to come here today and speak personally about the tragedies you have faced.  I know how hard it must be for you to do this, but I also know that you do this so that others might be spared your pain.

While we can prosecute cases such as these two in Alabama – and the hundreds just like them around the country -- I want to make it clear that what we face is not just a crime problem, it is also a nationwide public health problem and a community problem.  And everywhere people look at this problem they come to the same three conclusions:  1. there is no single answer; 2. we cannot stand by and do nothing; and 3. we cannot arrest and prosecute our way out of it.

This issue demands that we all join together to employ a comprehensive strategy that addresses every aspect, every phase, every cause of this crisis.

The heroin use and overdose epidemic gripping this country has its roots in more than a decade of prescription drug abuse.  As the Attorney General recently remarked, the “increase in heroin abuse is a sad but not unpredictable symptom of the significant increase in prescription drug abuse over the past decade.”

 Abuse of prescription drugs leads to dependency and that dependency leads to demand for more prescription drugs. That demand, users find, ultimately cannot be satisfied by the harder-to-obtain and more expensive prescription pills.  That is where the heroin problems sneak in.  The ready availability and lower cost of heroin makes it an easy and cheap alternative with tragic consequences.

Now don't kid yourselves into thinking that the pills-to-heroin epidemic won’t come to your neighborhood, your family members, your churches.  This problem does not begin on the street or in prison; more often than not, it begins at home.  Even, in the homes of those closest to us.  More than half of all prescription drug abusers first obtained pills from friends or family, often by raiding the family medicine cabinet.  And no one should think that the size of their wallet or the size of their house or the extent of their education will protect them against the threat of heroin in their communities.

The demographic of prescription drug abusers has broadened and is hitting all geographic and socio-economic populations.   As a result, the growth of this problem is staggering.  Let me give you some examples:  among women, between 1999 and 2010, there was a 400% increase in the abuse of prescription painkillers.

Among people 25 to 64 years of age, drug overdoses cause more deaths than motor vehicle accidents.  Every day, 105 people die as a result of drug overdoses, and nearly 7,000 more are treated in emergency rooms.

In 2012, approximately 6.8 million people reported abusing prescription drugs in the prior month.   As a country and as a community, we cannot sustain this path.

Then, there is the issue of where the prescription drug abuse all too often leads.  The heroin use and overdose epidemic follows swiftly in the footsteps of the prescription drug abuse problem.  In a survey between 2008 and 2010, 81% of first-time heroin users had previously abused prescription painkillers.

The number of heroin users has seen a dramatic increase in the past several years.  In 2012, the number of heroin users had doubled from 2007.  More than 156,000 people reported using heroin for the first time during 2012.  Perhaps most troubling, the age of first-time heroin use is decreasing.  Predictably, and tragically, the increased heroin use has led to an increase in the number of heroin overdose deaths.

DEA has reported a disturbing, but unfortunately logical, trend in the heroin marketplace.  Mexican drug cartels have significantly expanded their production of heroin and distribution within the United States.  And, heroin traffickers are moving into areas with existing prescription drug abuse problems.  Like any business, they are finding the demand and meeting it.

Prescription drug abusers who have recently switched to heroin are the most vulnerable potential victims.  They are typically inexperienced users, more often younger than the average drug user.  They have a lower tolerance for the dangerous effects of heroin and are unfamiliar with drug purity and strength.  These problems are exacerbated as the heroin available in our communities has increased in purity and has in many cases been mixed with other drugs or substances, such as fentanyl, that not only dramatically increase the effects of heroin, but also increase the risk of overdose.

So why is the United States Department of Justice involved?  Why did I fly in from Washington to talk to you about this?  Because we need to sound the alarm.  Today, our children and grandchildren, our friends and neighbors, are abusing prescription drugs.  But far too often, and unless we act, tomorrow they will be heroin overdose victims.

I am here to elevate this issue to the national platform.  We are seeing, across the country, that a comprehensive public health strategy to address the heroin and prescription drug abuse and overdose crisis must include education, prevention, enforcement, and treatment.  To be successful, we must enlist the combined efforts of doctors and health care providers, educators, community leaders, law enforcement officials, faith-based groups, state and local public health officials, and the friends and family of drug abusers.

Here in Birmingham, the United States Attorney’s Office has worked with federal, state, and local law enforcement to attack the supply side of the heroin problem, prosecuting more than 50 people in a collaborative and focused effort to target dealers and their sources of supply.

Nationwide, since 2011, DEA has opened more than 4,500 heroin-related investigations.  As both a sign of the increasing problem and the efforts to combat the supply of heroin in the United States, the amount of heroin seized along the southwest border increased more than 320% between 2008 and 2013.

But I don’t want anyone to think that what we are talking about is simply a problem of drugs crossing our borders, or another country’s bad actors harming us.  This is an American problem, through and through.  Make no mistake, the practitioners who illegally dispense prescriptions, those who operate pill mills for prescription painkillers and the pharmacists who fill those prescriptions knowing their true purpose, are drug dealers no different from street-level heroin dealers.

They may look different than the Hollywood image of a drug dealer. They may even be our friends and our neighbors.  But they contribute to the problem just as much as the person selling $10 bags of powder.  Which is why, in addressing these issues, we must confront the problems of prescription drug diversion if we ever hope to reduce the number of future heroin users.

We confront this problem initially with education and supply reduction.  The Department of Justice, through the DEA, educates doctors, pharmacists, and other health practitioners in the identification and prevention of prescription drug diversion.  DEA’s Office of Diversion Control has conducted dozens of Pharmacy Diversion Awareness Conferences and one is coming to Alabama next year.

DEA also has worked to address the problem of prescription drug availability in the home.  DEA periodically conducts Nationwide Prescription Drug Takeback Days.  More than 780,000 pounds of prescription drugs were destroyed this year, and over 4.1 million pounds of prescription drugs have been destroyed since 2010.  Every prescription painkiller like this taken out of a medicine cabinet is one less pill that can end up in the hands of a young, first-time drug user.

DEA also uses Tactical Diversion Squads for enforcement, and there is one in Birmingham.  Their primary purpose is to investigate, disrupt and dismantle diversion schemes, pill mills, rogue clinics and pharmacies, doctor shoppers, and prescription forgery rings.

But we realize that even with these enforcement efforts, drug abuse and overdoses will continue to occur.  That is where you – the parents, friends, educators, and medical professionals – come in.  You must be educated on the early warning signs and the key indicators of abuse and you must realize that the most caring thing you can do is intervene.  Early detection and intervention has been demonstrated to be one of the most effective ways to reduce long-term substance abuse.

We can also help by taking greater advantage of proven methods of treating overdoses and saving lives in emergency situations.  The drug Naloxone can reverse the effects of heroin and opioid overdoses and has been proven to prevent overdose deaths.  More than 10,000 overdoses have been reversed using naloxone since 2001.

In Quincy, Massachusetts, where they faced a similar heroin epidemic, after police began carrying naloxone, overdose deaths dropped by 70%.  In New York, earlier this year, the state Senate and Assembly voted unanimously to allow wider distribution and use of naloxone.

But we also know that our work must include breaking the cycle of addiction and crime.  By treating drug addiction as a disease instead of a crime, we provide better outcomes for the defendant and the community.  That is why the Department of Justice is supporting more than 2,600 drug and specialty courts across the country that connect over 120,000 people convicted of drug-related offenses with the services and support they need to break the cycle of drug use and rejoin their communities.

By understanding the medical causes of drug addiction, making treatment available, and recognizing that alternatives to incarceration may be the appropriate answer for many drug users, we are being smart on crime and using all the tools we have to deal with these problems.

Unquestionably, these problems that bring us together today are daunting.  They present us with a challenge whose scope and deadly consequences are like nothing we've seen before.  But we have no choice, we have to deal with these issues head on.  And not just with a single, one dimensional approach, but with every tool we've got, it's that important.  And that means it's the responsibility of each and every one of us to do our part.  Parents, brothers and sister, aunts, uncles, and grandparents need to step in when they see a family member going down the dangerous path of drug abuse.  Teachers and coaches need to sit down with a student who's lost his or her way and counsel them.  And all of us, young and old, need to overcome the discomfort of confronting a friend who we see is in trouble.  Because without that loving confrontation, the trouble just gets worse and can end up with our losing that friend.

As much as I'd like to, I cannot stop this problem today or tomorrow.  But I can commit to you that we at the Department of Justice are dedicated to joining with you in the search for comprehensive solutions.  And I truly believe, that with sustained and committed effort by all of us, we will find those solutions; we will stop this crisis; and we will emerge a safer, stronger and healthier community and nation.  Thank you.

DEPUTY AG COLE'S SPEECH ON PRISON RAPE ELIMINATION ACT

FROM:  U.S. JUSTICE DEPARTMENT 

Deputy Attorney General James Cole Speaks at Press Conference Updating States’ Efforts to Comply with Prison Rape Elimination Act

Washington, D.C. ~ Wednesday, May 28, 2014

Hello everyone.  Thank you for joining us this afternoon to discuss the Prison Rape Elimination Act (PREA) and the work being done across the country to implement the National PREA Standards.

I’m joined by Mary Lou Leary, the Principal Deputy Assistant Attorney General of the Department’s Office of Justice Programs.  She and I will both make brief statements, and then we will take a few questions from you.

Let me start with some background on PREA.  PREA was passed, unanimously, by Congress and signed into law by then-President Bush in 2003.  PREA required, among other things, the development and promulgation of “national standards for the detection, prevention, reduction and punishment of prison rape.”  These standards, like the law mandating them, are intended to address a serious public safety, public health and human rights problem – the incidence of sexual violence in our nation’s confinement facilities.

According to our most recent research, an estimated 4 percent of state and federal prison inmates and 3.2 percent of jail inmates reported experiencing one or more incidents of sexual victimization by another inmate or a facility staff member within the previous 12 months.  Even more troubling, an estimated 9.5 percent of adjudicated youth in state juvenile facilities and state contract facilities reported sexual victimization in the previous 12 months.

These statistics are alarming and they are unacceptable.  No one should be subjected to sexual abuse while in the custody of our justice system.  It serves as a violation of fundamental rights, an attack on human dignity and runs contrary to everything we stand for as a nation.

To stem the tide, back in 2009, a bipartisan national commission submitted draft PREA standards to the Department of Justice.  We opened those standards to two rounds of public comment that generated more than 2,000 comments from members of the public and stakeholder groups – including justice system policymakers and practitioners, corrections professionals, and victim and inmate advocates.  In addition, the commission and the department held several public hearings to get feedback from corrections professionals and other constituent groups.  After incorporating many of the comments and input from the hearing, we issued the final standards in 2012.

The states and territories have since begun auditing their facilities for compliance with the standards, and the governors have been asked to submit certifications of compliance or assurances that they are working toward compliance.

This May 15th served as the deadline for state governors to indicate to the Department of Justice that their states and territories fully comply with the National PREA Standards or, in the alternative, that they will use a portion of certain department grant funds to work to achieve full compliance with the standards in the future.

The deadline for those certifications and assurances recently passed.  I’ll let Mary Lou discuss the responses in more detail, but I do wish to say that we were very encouraged.  Forty-six states and territories provided assurances that they will leverage a portion of grant funding to work toward achieving compliance.  Two states – New Hampshire and New Jersey – certified that they are in full compliance.  It’s clear that states and territories are taking this issue seriously and that addressing sexual abuse in confinement facilities is a high nationwide priority.

We know that there are real challenges associated with compliance.  In that regard, the department is fully committed to working closely with the states and territories to help them meet their PREA responsibilities.

For instance, we’ve put into place a number of resources to aid corrections directors and staff, jail administrators, sheriffs, those who oversee and work in juvenile facilities and others.  Since 2010, we’ve made almost 100 awards totaling over $22 million to support state and local jurisdictions in creating zero-tolerance cultures for sexual abuse in confinement facilities.  And we established the PREA Resource Center to provide training and intensive technical assistance to justice system actors and victim advocates on a broad range of issues related to PREA.

While we are encouraged by the responses from the states and territories working actively toward compliance, I must be clear that the jurisdictions that do not comply with the standards – of which there are eight – will be held accountable, as we are required to do by law.

We will continue to work to provide all jurisdictions with the assistance they need to come into compliance.  We expect that the commitment to ending sexual violence in our nation’s confinement facilities – voiced by so many of our nation’s governors – will be reflected not by their words alone, but in the action they take.

The enactment of PREA 11 years ago signaled an unequivocal rejection of the outdated – and morally unconscionable – acceptance of rape as part of the sentence being served by an adult or juvenile in the American correctional system.  The PREA standards have lead us closer to ending the culture of violence in our nation’s prisons, jails, and juvenile facilities.  Going forward, we will continue to help the states and territories work to ensure that their correctional facilities are safe and live up to the standards we’ve set.

I’d now like to let Principal Deputy Assistant Attorney General Mary Lou Leary provide you with details about what OJP has learned from the governors, and OJP’s next steps to assist with compliance.

DEPUTY AG COLE'S REMARKS AT DRUG POLICY REFORM CONFERENCE

FROM:  U.S. JUSTICE DEPARTMENT 
Deputy Attorney General James M. Cole Delivers Remarks at the Office of National Drug Control Policy Drug Policy Reform Conference
~ Monday, December 9, 2013

Thank you Gil for that introduction, for your partnership, and for your tireless work on drug prevention, drug treatment, and criminal justice strategies to break the cycle of drug use and crime.  It is an honor to be among this dedicated and diverse group of professionals, policymakers and community leaders whose work promotes public health and safety.  The agenda for this conference is both important and timely.

At the Department of Justice, we have undertaken a number of initiatives that address the law enforcement, public safety, and public health aspects of drug policy reform.  Law enforcement plays an indispensable part in protecting communities from drug-related crime and violence.  We know that there are dangerous people out there, running drug organizations and committing murders as part of the drug trade.  Those individuals need to be incarcerated for the crimes they commit.

But there are also lower level drug defendants.  Many suffer from their own drug abuse issues, and fall into a vicious cycle of drug abuse, criminal behavior, incarceration, and release.  Too often, this cycle repeats.  But recognizing that these lower level drug defendants don’t present the same public safety risks as the more serious criminals, our approach to dealing with the problems posed by drugs should not be one-size-fits-all.  Instead, we should look to provide a range of responses that include the chance to overcome an addiction, provide the opportunity to get help before going to prison, and provide an off-ramp from the vicious cycle of drugs and crime.

This approach could result in the avoidance of a criminal conviction in the first place or it could positively affect the defendant’s ability to successfully reintegrate into society in years to come.  It shifts the paradigm by providing treatment and services to individuals who are motivated and truly want to turn their lives around.  The advantages to this approach are many: we not only assist individuals and their families, but we gain the ability to improve public safety and public health, directly benefiting our citizens and our society and more efficiently using taxpayer dollars.

Together with our state and local law enforcement partners in the field -- whose tireless work keeps our communities safe -- we continue to make real inroads in protecting public safety.  Even within limited budgets, we have been able to focus our efforts on prevention and reentry, as well as enforcement.  For example, through the Justice Reinvestment Initiative, the Department has brought state leaders, local stakeholders, private partners, and federal officials together to reform corrections and criminal justice practices.  In recent years, no fewer than 17 states – supported by the Department, and led by governors and legislators of both parties – have directed funding away from prison construction and toward evidence-based programs and services that are designed to allow states to provide drug treatment and reduce recidivism.  And the results are telling:  many participating states have seen drops in recidivism rates and prison populations, while still maintaining public safety.

We are doing the same thing in the federal system because it has become clear that the trajectory of the federal criminal justice system, left unaltered, is unsustainable.  Dollars are finite and the increasing costs of the federal prison and detention population drain funds from other enforcement priorities.  They take dollars away from the Department’s prevention and recidivism reduction programs, and limi our capacity to fund other pressing criminal justice and national security priorities, such as hiring more agents and prosecutors or providing support to state and local partners to help in the fight against violent crime.  Put simply, if we don’t find a way to reduce the federal prison population, public safety is going to suffer.

To try to address this problem, earlier this year the Department embarked on a review of its criminal justice policies.  We made some specific changes to existing policy and strengthened our commitment to our prevailing goals.  We modified the Justice Department’s charging policies so that certain low-level, non-violent drug defendants who have no significant ties to large-scale organizations, gangs, or cartels, will no longer be charged with offenses that impose mandatory minimum sentences.  Instead, these low-level drug defendants will be charged with offenses for which the accompanying sentences are better suited to their individual conduct.  By reserving the most severe prison terms for serious, high-level, or violent drug traffickers or kingpins, we enhance public safety.

The Department is also promoting and strengthening its diversion programs – such as drug treatment initiatives – to provide more effective alternatives to incarceration for some individuals.  This summer, the Department issued a “best practices” memorandum to encourage more widespread adoption by prosecutors of programs such as drug courts, specialty courts and other treatment courts.

And to make sure these programs are a top priority, every U.S. Attorney now must designate a Prevention and Reentry Coordinator in his or her district to ensure that this work is done.

In addition, the Bureau of Prisons has expanded capacity for its Residential Drug Abuse Program, which provides important treatment to inmates.  This expansion will provide more non-violent inmates with the opportunity to deal with their drug and mental health issues that are so often at the root of criminal behavior, so they can successfully re-enter and become productive members of society.  

Our reforms also include changes in the Department's framework for considering compassionate release requests.  We expanded the medical criteria that can be considered and announced new criteria including allowing consideration for elderly inmates and certain inmates who are the only possible caregiver for their dependents.  

And finally I want to talk about the Federal Interagency Reentry Council.  Created by the Attorney General, it brings together over 20 federal departments and agencies to focus an all of government approach to helping those coming out of prison.  This collaboration works to reduce barriers to housing, employment and education and increase access to healthcare and treatment for those re-entering society.  And this collaboration has borne fruit – not only by increasing the chances of successful re-entry for those leaving federal prison, but also helping incarcerated veterans get back on track, assisting children of the incarcerated, and reducing the unnecessary collateral consequences of a conviction.  Across the federal government, we are partnering to strengthen communities, reduce recidivism, and improve public safety.

This morning, I’ve discussed several steps the Department has taken to build upon successes and make changes to our criminal justice system.  In light of our limited resources, we have had to take a hard look at our policies and our priorities, and have recommitted to maintaining public safety in a manner that is both smart and efficient when battling drug related crime and the conditions that breed it.

As we move forward with these and other reforms, we will continue to stand and work alongside you, drawing upon your experience, relying on your expertise, and depending on your engagement to refine and strengthen each new proposal.  Today’s conference -- and the exchange of ideas it will foster among our Nation’s drug policy experts -- is a necessary and important step in this process.

Thank you.

DEPUTY AG COLE MAKES REMARKS AT MONEY LAUNDERING ENFORCEMENT CONFERENCE

FROM:  U.S. JUSTICE DEPARTMENT 
Deputy Attorney General James M. Cole Delivers Remarks at Money Laundering Enforcement Conference in Washington, D.C.
~ Monday, November 18, 2013

Thank you, Amy, for that kind introduction.  I would also like to thank both the American Bar Association and the American Bankers Association for hosting this money laundering enforcement conference and inviting me to speak today.  I am honored to be here, especially on the 25th anniversary of this important conference, which provides invaluable Bank Secrecy Act and anti-money laundering training – and underscores the vital importance of the compliance function at financial institutions.

As all of you know, banking and financial services play a vital role in our country.  They spawn growth, spread risk, facilitate the creation of jobs, and generally drive our economy.  Without it, much of the prosperity that allows for our freedoms and our power in the world would not exist.

But it is also susceptible to abuse.  It can be used to launder the illegal proceeds of criminal and terrorist organizations.  It can be used to defraud people, particularly when the transactions are complex.  And the flow of dollars through our financial system is so large, that even a small fraudulent adjustment of a rate or a fee can result in billions of dollars being illegally diverted.  Just as the financial industry has the power to create great good, it has the power to create great harm.  The crash in 2008 was a stark reminder of this power to harm.
 
At the Department of Justice, we know that compliance officers within financial institutions, and the lawyers, bankers, and others who work with them, are the first line of defense against abuse within these institutions.  Compliance officers are critical to protecting both a bank’s reputation and its bottom line.  They’re essential when it comes to preventing criminal activity – and if that effort is not entirely successful, detecting and reporting such conduct.  It is not an exaggeration to say that compliance is fundamental to protecting the security of our financial institutions and is essential to the integrity of our entire financial system.

Despite, and in some ways because of, this crucial role, I know that working in compliance is often difficult.  Compliance is seldom thought of as a “money-maker” for any bank, and it may be challenging to get sufficient resources and authority to do the job well.  To some, compliance may not seem to fit within the culture of a fast-moving, cutting-edge institution.  And at times, certain business units or managers may seem downright hostile toward the compliance function.

We at the Department of Justice understand this reality.  And we appreciate that, despite these challenges, you and your colleagues are fully committed to helping protect the integrity of your institutions and our financial system.

I want to assure you today that I am grateful for that,  because you are our strongest partners in the fight against money laundering, fraud, and other financial crimes.  You’re in a unique position to understand that a strong compliance culture is not only good for a bank’s overall standing and reputation in the business community, it is ultimately good for its business.

Right now, compliance within financial institutions is of particular concern to the Department, because we have recently seen cases that involved not only criminal conduct by bank customers, but – more concerning – serious criminal conduct by bank employees, including managerial employees.  I’d like to speak with you today about how the Department evaluates financial institutions that violate the law, along with some of the considerations that all bankers should be mindful of as they decide how their institutions should operate.

            I want to begin with the fundamental proposition that no individual or business – including a financial institution – is immune from prosecution.  As I’m sure you’ve noticed, the Justice Department is taking a hard look at financial institutions in all areas – including AML, BSA, IEEPA, securities laws, tax violations, and all other forms of financial fraud.  We are committed to holding banks and their employees responsible for their misconduct.

In recent years, we have proven our determination to pursue a range of challenging and complex financial crimes.  For example, in one of the more brazen types of misconduct we have encountered in the financial industry, the Department and other law enforcement agencies and regulators around the world are investigating the manipulation of LIBOR and other benchmark interest rates.  As you all know, LIBOR serves as the premier benchmark for short-term interest rates around the globe.  Hundreds of trillions of dollars in financial derivatives, corporate debt, credit card debt, mortgages, student loans, and other financial instruments worldwide are tied to LIBOR.  But LIBOR necessarily depends on the integrity of the rate setting process and the bankers who provide input into that process.  The investigation revealed that traders in some banks were manipulating their bank’s LIBOR submissions in the hopes of affecting the final published LIBOR fix – thereby increasing their trading profits.  Some even coordinated with traders at other banks and inter-dealer brokers to try to get several banks to submit LIBORs favorable to their trading positions.  We’ve also seen that certain banks artificially lowered their LIBORs in order to appear more credit-worthy during the financial crisis.

Unfortunately, these manipulations were not isolated incidents involving a few rogue traders.  In some institutions, LIBOR manipulation was pervasive.  We found institutions with traders in multiple offices around the world attempting to manipulate LIBOR and other benchmark rates tied to multiple currencies, with the conduct at some banks extending over a period of five or more years.  During our investigation, it became apparent that certain institutions condoned a culture of illegal behavior.  And it was this culture that led the Justice Department to investigate and prosecute not just the individuals engaged in LIBOR manipulation, but the institutions that condoned it.

As a result of our enforcement actions stemming from this illegal conduct, billions of dollars have been paid in penalties, banks have admitted to serious crimes, and certain employees have been criminally charged.  To date, corporate LIBOR resolutions with Rabobank, Barclays, UBS, RBS, and the brokerage firm ICAP have resulted in over $3.7 billion in penalties paid to law enforcement and regulatory agencies.  Thus far, the Department has charged five individuals – two former senior traders at UBS, and three former brokers at ICAP – with crimes in connection with the LIBOR investigation.  In addition, many in executive management on whose watch these crimes took place have paid a heavy price.  Two CEOs have resigned, other senior managers have stepped down; executives have testified before the U.K. Parliament; bonuses have been withheld; and other compensation has been clawed back.  And this may be only the beginning – because our investigation of LIBOR is far from over.

As another example, just last month, a jury in the Southern District of New York found Countrywide, Bank of America, and a senior executive liable for making bad loans and removing quality control checks.  Countrywide initiated the “hustle” program to move loans quickly through the origination process and eliminate quality control steps that could slow it down.  Countrywide, then Bank of America, sold the toxic mortgage loans to Fannie Mae and Freddie Mac, knowing that they did not meet the representations of quality.

We have also seen IEEPA violations involving the circumvention of sanctions against Cuba and Iran; violations of the Bank Secrecy Act; Residential Mortgage Backed Securities fraud and mortgage origination fraud; anti-trust violations; tax violations involving off-shore accounts; and civil rights violations for discriminatory lending practices.

And in one of the more recent developments, the Department's Criminal and Antitrust Divisions, along with the FBI, regulators and other law enforcement agencies around the world, are aggressively investigating possible manipulation of foreign exchange rates, involving a number of financial institutions, and you will be hearing more about these investigations in the future.

These investigations are just a few examples of how the Justice Department is pursuing corporate financial malfeasance.  Financial institutions have agreed to pay about $17 billion in settlements with law enforcement and regulators in the United States this year alone.  And that number will increase, as we are more committed than ever to investigating crimes committed by and within financial institutions, and to hold the perpetrators of those crimes accountable.

In every case and circumstance, our decisions about prosecuting corporate crime are guided by the Principles of Federal Prosecution of Business Organizations, which describes nine factors we consider when determining whether to charge a corporation.  Those factors include, among other things: the nature and seriousness of the offense; the pervasiveness of the wrongdoing within the corporation, including the complicity of corporate management; the corporation’s history of similar misconduct, including prior criminal, civil, and regulatory actions against it; and the adequacy of a corporation’s pre-existing compliance program.  We have found that these factors are often linked.  How widespread the misconduct is, how high in the corporate hierarchy knowledge of it goes, and how effective a corporate compliance program is – are often related to each other, and to a corporation’s criminal history.
           
The notion that compliance must be firmly embedded in a corporation’s culture has been raised before, including at this conference, by many government officials.  You’ve heard a great deal about the importance of “tone at the top.”  Indeed, companies regularly argue during negotiations that they have taken various steps to set the right tone at the highest levels of their institutions.  But based on what we have seen, we cannot help but feel that the message is not getting through often enough or clearly enough.

Despite years of admonitions by government officials that compliance must be an important part of a corporation’s culture, we continue to see significant violations of law at banks, inadequate compliance programs, and missed opportunities to prevent and detect crimes.
           
We are concerned that too many bank employees and supervisors value coming as close to the line as possible, or even crossing the line, as being “competitive” or “aggressive.”  Too many seem to be willing to take advantage of any edge – including those of dubious legality – to make money.  Too many supervisors seem to incentivize excessive risk-taking – knowing that risky products can be unloaded down the road, or anticipating that they will have left for another bank by the time such risks are played out, leaving someone else to deal with the consequences.  And we are troubled that many employees believe that their supervisors, including in some cases corporate management, actually want them to behave this way.  Even a single employee who thinks this way is one too many.  And what we’ve been seeing and making public in a number of our recently-announced resolutions should give everyone pause, and cause all leaders and managers within financial institutions to reflect on how they can do better.
           
Now we’ve seen numerous news reports of senior bank management condemning the uncovered conduct after an announced resolution – calling the conduct “shameful”[1]; “contrary to our core values”[2]; “reprehensible.”[3]  One CEO said that he “strongly condemn[ed]” the behavior at issue;[4] another said that learning about the misconduct made him “physically ill.”[5]  While it’s easy for everyone to agree with these after-the-fact condemnations of the discovered misconduct, our collective goal must be to establish cultures within these important institutions that prevent people from engaging in this type of conduct in the first instance.  Labeling certain behavior “shameful” after being caught is simply too little, too late.

This is why, when deciding whether to prosecute an institution for the actions of its employees, we look hard at the messages that bank management and supervisors are actually giving to employees in the context of their day-to-day work.  We look at chats, emails, and recorded phone calls -- things that are readily available to senior management and compliance professionals.  We talk to witnesses in order to determine what kinds of messages about compliance have been conveyed, or, on the flip side of that coin, what encouragement they may have received to exploit any possible edge to make money.  We examine the incentives that banks provide their employees to either cross the line, or to exhibit compliant behavior.  If a financial institution wants to encourage compliance – if its values are not skewed towards making money at all costs – then that message must be conveyed to employees in a meaningful and effective way if they’d like Department to view it as credible.  To have an effective compliance program, we expect banks to put in place procedures to detect problems, and proactively utilize those procedures -- without waiting until the government comes knocking at their door with a subpoena.
           
When a problem is identified, we expect banks to undertake a thorough search – at every level, across the institution – for misconduct that may have been committed elsewhere, by similarly-situated employees or in similar business units.  We expect that banks will not look only at employees in the same positions or in the same offices to determine whether they are violating the law – but that, cognizant of the ways in which violations have occurred, they will also look to other places or other types of employees where similar misconduct could take place.  Whenever employees in different units, or in different office locations, or involved in different product lines, are engaging in criminal conduct at the same institution, it is well past time for that institution to think more broadly about problems that may span across the organization as a whole.  In fact, we have seen this pattern in a number of financial institutions and what this tells us is that even if a specific conduct didn't directly involve senior management, that repetition speaks volumes about the culture senior management has create in the institution.  A culture that breeds violations instead of a culture that encourages compliance.

The benefits of having a strong compliance program can go a long way toward mitigating institutional liability.  For instance, last year, we announced the guilty plea of a former managing director of Morgan Stanley to a violation of the Foreign Corrupt Practices Act.  The managing director admitted that he had conspired to evade Morgan Stanley’s internal accounting controls in order to transfer a multi-million dollar ownership interest in a Shanghai building to himself and a Chinese public official.  The Department announced that it was declining to bring any enforcement action against Morgan Stanley – in large part because the bank had voluntarily disclosed the misconduct, cooperated throughout the investigation, and had constructed and maintained a system of internal controls that provided reasonable assurances that its employees were not bribing government officials.  Our decision not to prosecute Morgan Stanley was founded primarily on the strength of its robust and active compliance program.

But where we do not see such exemplary conduct, we must – and we will – use all of the tools available to us to hold banks answerable for their crimes.

When we see criminal violations in multiple business units or locations, we will hold banks accountable.  When we see compliance programs that are not comprehensive, or are not funded, or lack sufficient resources to be effective, we cannot give them credit.  When we see repeat players – such as banks that have previously entered into non-prosecution agreements or deferred prosecution agreements with the Department, and yet come under scrutiny again for other violations of law – we will have no choice but to consider all of the possible actions at our disposal.  And when we see crimes condoned by management, banks, like all corporations, will face significant consequences.

Of course, we are mindful of the consequences of our actions, and we must act responsibly.  Collateral consequences, including harm to innocent employees and to the public, is one of the nine factors we carefully consider in determining what action to take.  And in this regard, we work closely with our regulatory partners, both here and abroad, to ensure that we understand the specific, likely consequences for a bank when it is accused of criminal conduct or when when it is resolving criminal conduct.  And we take steps to minimize those consequences, while holding the individuals and institutions that are responsible to account.  But to be clear, the size of a financial institution does not mean that it gets immunity in a criminal case.  
           
The last session in this conference is entitled “What to tell your CEO when you return to the bank:  A 30-minute recap of the critical issues from the conference.”  With this in mind, here is my message to you:  Businesses need to create a culture of compliance.  To do this, compliance programs must be real, effective, and proactive.  Banks need to think more broadly about problems within their institutions, and redouble their efforts to detect and prevent them.  It will never be enough merely to identify and address a particular problem once it surfaces.  If we see illegal conduct at a number of the bank's business units, the old saw of "It's an isolated instance of bad actors in a single business unit.  The institution as a whole should not be held accountable" won't cut it.  Instead, banks must actively seek out whether there could be similar misconduct elsewhere.  They must analyze what steps are necessary to reduce the risk of such misconduct occurring.  And then they must take those steps.  All banks should demonstrate their institutional commitments to ensuring that a clear and powerful message is being sent to their employees: that compliance matters, and if they cross the line, both they and their employer will face serious consequences.  I know these can be difficult messages to deliver, but they are important messages to deliver -- messages that in the long run are good for the bank as well as good for society as a whole.

I want to thank you for the opportunity to discuss these issues with you today.  I’m grateful for your hard work, your dedication to the goals we share, and your resolve to help strengthen compliance programs and instill cultures of accountability throughout the financial sector.  I look forward to continuing this critical dialogue at future forums like this one.