Saturday, April 5, 2014

SECRETARY KERRY'S REMARKS AT PLENARY OF THE U.S.-MOROCCO STRATEGIC DIALOGUE

FROM:  U.S. STATE DEPARTMENT 

Remarks at Opening Plenary of the U.S.-Morocco Strategic Dialogue

Remarks
John Kerry
Secretary of State
Ministry of Foreign Affairs
Rabat, Morocco
April 4, 2014




FOREIGN MINISTER MEZOUAR: (Via interpreter) Mr. John Kerry, Mr. Ambassador Dwight Bush, ladies and gentlemen, I’m very delighted to be hosting you today in this meeting and in this visit, which is as – important as the second round of the Strategic Dialogue between the United States and the Kingdom of Morocco. Delighted also to work with you together so that this round is a second boost for a strategic partnership between our two countries.

Welcome, Mr. John Kerry, the Secretary of State for foreign affairs, and also I would like to welcome the delegation, your delegation. Welcome, Mr. Ambassador Dwight Bush, whom we are delighted to have with us here. And we are convinced that he shares the same feelings.
Mr. Secretary of State, ladies and gentlemen, I would like first to commend the interest that the American administration has always shown towards Morocco as a country that represents a model for stability and quite democratic reforms, which reiterate its belief in the values of the freedom, justice, (inaudible). (Inaudible) would like for this interest which represents (inaudible) quite clear during the visit of His Majesty Mohammed VI to Washington. And that was the (inaudible) very interesting at the level of its result as translated by the statement, the common statement whose content is an optimistic roadmap for our two countries. And it opened horizons and opportunities, new horizons, and the new opportunities for cooperation to face the international changes and the many expectations of our two people.

The Strategic Dialogue which started in 2012 is based on a very (inaudible), also to see the future for a strategic partnership, a multidimensional partnership, (inaudible), economic, cultural, and peace relations based on common values in which we believe together the values of freedom, democracy, human rights, tolerance, peace, and human solidarity.

The economic cooperation (inaudible) a very important point in the Strategic Dialogue in spite of the progress that was achieved at this level, like the (inaudible) of the free exchange. We are looking forward, of course, to more cooperation. And in this context, the size of the investments, American investments in Morocco, shows efforts that we have to make because it represents only 8 percent of all the investments attracted by Morocco. At the time when we’re looking forward to the fifth international (inaudible).

(Inaudible) our cultural and education partnership, which is diverse and numerous, we would like to report the positive process into (inaudible) university education thanks to a network of American schools in the country, led by the University of New England, which will open in the city of Tangier, and also thanks to the programs of university exchange which has made it possible for thousands of Moroccan students to study in American universities.

Within the same spirit of cooperation and – because of the values of peace and tolerance, Morocco hosted the J. Christopher Stevens full – Virtual Exchange, which was launched by His Majesty Mohammed VI and President Obama, and it will contribute to the interaction of these two cultures. And I am convinced that the cultural and educational work group will be one of the concerns, and they will have to think about new topics for this cooperation at the level of university and youth.

Mr. Secretary of State, Morocco has always, under the leadership of His Majesty, in the process of reforms that are political – and its experience in the reconciliation was a model that became a reference not only in the region and contributed to the facilitation of the core democratic reforms, thanks to the (inaudible) of the institutions of Morocco and their maturity and their ability to react and interact with the changes, both nationally and internationally. The flexibility of our institution and their openness and their ability to listen and because they believe in the values of modern times might have helped Morocco to interact in a balanced way with new developments.

In this framework, the process of reforms was launched through the constitution of 2011 and its democratic provisions and guarantees of universal rights all through the reform of justice and good governance, in addition to the reinforcement of equality between men and women which, I think, agrees with the reforms of our country and its international commitments. In the domain of human rights, we put in place mechanisms to control those rights. And this is about the National Council for Human Rights, which opened branches in the regions of Morocco and made the recommendations to the government about the civil rights and political rights in their universal dimension. The government also worked on the translation of these recommendations on the ground in the form of laws, the last of which was making it impossible for – to present people to military courts. All these initiatives of reforms are guarantees that Morocco gave to its people on one hand, and this is very important, and also to its partners, led by the United States on one hand. And it made of it a special case which deserves to be called exceptional, and the uniqueness of its experience in the regional context, which is still seeking stability.

So this process came to reiterate the role of Morocco at a very precise moment in the region, facing challenges of violence, extremism, terrorism, and instability, in particular in the region of the Sahel. And in this context, the spiritual authority which His Majesty enjoys because he’s the leader of the believers, plays a very important role in facing extremism, and it also disseminates cooperation with African countries in the religious domain at a moment where Africa needs this spiritual support to face terrorism based on these values, the values of tolerance. But to guarantee the stability in the region and the Sahel in particular has to be the result of the settlement of the crisis in the Sahara. Therefore, Morocco appreciates the support that is given by the United States to the efforts of the Secretary General of the United Nations and his special envoy to find a final solution accepted to all about the Sahara on the basis of the Moroccan initiative for self-rule, which was considered by the American Administration to be very serious and realistic.

The Moroccan initiative in its content reacts to the expectations of the people in the Sahara in the management of their own affairs, which guarantees dignity, freedom, and development. And in this framework, I would like to report the role of the National Council for Human Rights and its regional communities, especially in the south of Morocco, to reinforce the culture of human rights. And I would like also to report the recommendations for the development of the region as suggested by the National Committee for Human Rights and which have been launched very recently.

So Morocco, to enter the African environment, is based on the support of our friendly people and that we need here to point out to the different visits conducted by His Majesty to a number of African countries, and which seeks to reinforce cooperation – South-South cooperation and focuses on peace and the settlement of conflicts in a peaceful way, and also human development and also the preservation of cultural identity and the religious identity of a number of African countries, and are very delighted to report at the same time the interest in the African continent and the initiative of the United States of America in the person of President Barack Obama to organize next August the first summit of the United States and Africa. And this is a strong sign to the commitment of the American Administration towards the development of this continent.

In this context, Morocco is convinced that it is necessary to implement common programs with our American partner to guarantee stability and economic prosperity and also to have access to energy and reinforce trade and encourage investments in various domains. We are convinced of our ability together to contribute to build a stronger partnership towards Africa based on three pillars – Morocco, the United States, and Africa – in order to invest in common because of the position of Morocco as a hub towards Europe and Africa, and also because of what we can do for the stability in the Sahel and in Africa in general.

The international current reality, Mr. Secretary of State, as well as the challenges for the peaceful settlement of conflicts imposes (inaudible) Morocco to continue its efforts in the framework of the United Nations and international agreements according to the statement on the – following the meeting of His Majesty and the President of the United States. So Morocco renews its commitment to work together with the United States and any other international actors for more coordination of our attitudes in order to put an end to bloodshed in the civilians – Syrian civilians – and in order to find a solution accepted to all for political transition that will guarantee the integrity of Syria. Our commitment to the values of peace is behind our attempt to find a solution to the Palestinian-Israeli conflict on the basis of the option of two countries that live together in peace. Undoubtedly, the recommendations of the 20th round of the Al Quds Committee held in Marrakesh and the – is a step towards the achievement of these common objectives.

Mr. Secretary of State, ladies and gentlemen, the atmosphere of an understanding – of the environment of understanding based on common political and references of democracy and human rights makes us believe in our ability for a common partnership on the basis of new developments (inaudible), and this will be very important and decisive in determining the process in this region and in Africa in general at the economic and – level, and also peace, but also to fight terrorism and disseminate stability, which have to go through the processing of tensions in the region. And this is a role that Morocco tries to play very strongly because it is convinced that a strategic partnership with the United States of America is going to bring the two countries together and achieve the objectives like our relations have done in the past in many domains.

I would like to welcome once again the Secretary of State as well as the delegation that comes with him, and also his (inaudible) ambassador. I wish the success to the proceedings of our group. Thank you very much indeed. (Applause.)

SECRETARY KERRY: Well, thank you very much, Minister Mezouar. Thank you for a very, very generous welcome. We had a spectacular dinner last night. As many of you know, the tradition of a great meal in Morocco is a long-held one and a very special one. And I want you to know that I’m going to try to persuade people in America that we need to have a meal where we have eight meals in one. It’s really – it was splendid, and it’s wonderful to come together in this beautiful hall, a mini-United Nations, really spectacular.

And I will tell you I’ve had the privilege in the last year visiting many foreign ministers in their offices, but very few are as splendid as the office I just was in with the view of the river and the wall and the old fort and the city in the background – absolutely spectacular. I don’t know how he gets any work done. From now on, I told him when I telephone him, I’m going to have this image in my mind of this extraordinary view as he sits there talking to me.

I value enormously, as President Obama does, our relationship with His Majesty as well as with the foreign minister and his team, and we’re very, very grateful to the Moroccan Ministry of Foreign Affairs in cooperation for hosting us here for this Strategic Dialogue. I’m very grateful to our new ambassador – many of you probably have not had the chance to meet him yet – Dwight Bush, who just arrived here five or six days ago, will present his credentials today prior to my meeting with His Majesty. And we’re grateful to the U.S. Mission for their cooperation and help here.

And we’ve got with us a really first-tier delegation involved in this dialogue, as you do, Mr. Minister. And I think this is an important step in helping our countries to build a very longstanding relationship and take it to a new level in a very new and challenging time, as you just described in your comments. We often talk about the rich history of the relationship between the United States and Morocco. Morocco was the first nation to recognize the United States in 1777, and we remember with great gratitude and with a sense of respect for history the important role that Morocco played during the Second World War. And it’s truly important to remember the deep historical foundation and friendship between Morocco and the United States. So when I hear the minister a few minutes ago talk about freedom and democracy, human rights, tolerance, peace, human values, we understand this is part of our DNA. And it’s not a coincidence that our relationship goes back to 1777.

So we have much to build on, and the work of the Strategic Dialogue and of our strategic partnership will contribute to the ability of the United States and Morocco to show that we value something a lot more powerful than our past, and that’s the future. We are here today to help shape a common future, and it’s a future defined by a shared prosperity and shared security that we can create together, but it’s also shared by all of those values that Salaheddine just a moment ago enumerated.

We just met a few minutes ago upstairs in a bilateral meeting. And the foreign minister laid out to me, to us, a very comprehensive and eloquent statement about the transformation and the transition that is taking place in Morocco, the efforts Morocco is making to manage this movement to the future. In some parts of the world, there is a major resistance to modernity, and how each nation makes this transition will be defined by each nation individually. There are going to be different ways, different speeds, different levels of accomplishment in different places.

We want to make sure that we are thoughtful and sensitive to that process, but obviously, we also want to make sure that we’re encouraging and working cooperatively and creatively to help countries be able to make this transition. We’re living in a world with a remarkable population bubble – unbelievable numbers of young people. Sixty percent of the country – this country and others – under the age of 30; 50 percent or more under the age of 25. It’s extraordinary. And the challenge of any government anywhere to be able to provide jobs, education, opportunity is enormous.

I mean, all of us remember that what began in Tunisia was not religiously driven; it wasn’t extremist driven. It was a fruit vendor who was exhausted by corruption, by the inability to be able to lead his life and sell his wares. And when a police officer slapped him around and refused to allow him to do what he was doing, he rebelled and set himself on fire, and that fire ignited a revolution.

In Tahrir Square, it wasn’t driven by the Muslim Brotherhood or any religious or other Islamist effort. It was driven by young people who were demonstrating against a structure that didn’t allow them to have opportunity. And everybody today is connected. No politician can shut off the world. Nobody has the ability to be able to tune it all out, because everybody through communications and travel and the internet and television, everybody knows what’s going on everywhere.

When I was in Kyiv, in Ukraine a few weeks ago, I met a man near the Maidan who said to me, “You know, I just came back from Australia. And the reason I came back is I want to make sure that in my country I have the ability to live the way I saw people living in Australia.” It’s pretty simple.

So this is our challenge together, and the United States is deeply committed to an incredibly vibrant and extraordinary capacity that Morocco has and is already exhibiting, already engaged in – by you, not by anybody else. You have, with the leadership of His Majesty, King Mohammed VI, already undertaken major reforms and major efforts to manage the future. And the United States has demonstrated commitment to that, I hope, in many ways, and we will continue to. We want to work with you. We have a $700 million Millennium Challenge Compact, which was completed last year. It’s just one step.

But I think the growth in our bilateral trade, which has actually tripled over the last 10 years, is very significant, and we want it to go further. I heard the foreign minister tell me that we’re still a small percentage of foreign direct investment. We want that to grow. And Morocco is one of fewer than 20 countries in the world, and the only country on this continent where the United States has a free trade agreement. That’s important. But we can’t pretend that that’s enough and we don’t come here pretending that it is.

We need to build on the strength of that investment, and we need to strengthen it. Morocco’s incredible potential for growth and it’s growing role as a vital gateway to a very dynamic continent, make it even more vital for the United States, frankly, to be able to grow the relationship.

So when Morocco is already among the top African nations investing in African nations, you can understand why investors around the world want to be part of it. And that’s part of what has attracted dozens of American companies to the U.S.-Morocco business development conference that took place last month. Morocco is clearly a country that is open for business and open to the world. And that’s exciting. It’s never been more clear than in recent months during King Mohammed VI’s recent outreach to the region.

With the 18 different agreements Morocco signed earlier this year with Mali, in areas from microfinance to infrastructure, Morocco is driving both greater security and greater prosperity in the region, in the Maghreb. And I also understand that his – after His Highness left Mali he left immediately to go to Guinea, Gabon, and the Ivory Coast, where he also brokered a series of new economic agreements. That’s all just in the first months of this year. So I guess it sounds like he and I have a similar travel schedule. But apart from that, he’s really aggressively out there trying to manage this process and push it forward.

And of course, King Mohammed VI was in Washington, as Salaheddine mentioned, for a very important meeting last fall where we clearly rededicated ourselves to the importance of the relationship, and I believe that visit has helped to strengthen ties that we see in every facet of this relationship.

We are also very appreciative and excited that Morocco is hosting the Global Entrepreneurship Summit later this year. I went to last year’s Summit in Kuala Lumpur. I had the privilege of speaking to about 5,000 young kids, all who want to be entrepreneurs. And I cannot tell you the energy and the excitement and the initiative of those young people, all of whom, in our language, want to be the next Bill Gates and the next Steve Jobs. They’re exciting. And it gives you enormous hope for the future. What we have to do is create the climate for these young people to be able to take an idea and make it into a business and use their energy and ingenuity.

So I firmly believe that the places where citizens have the freedom to dream up a new idea, and to take that idea and put it into reality, those are the places where people can be their own boss and where they’re free to fail – those are the societies that are the most successful, they’re the societies that are most cohesive, and those are the places that are most peaceful, tranquil, and satisfied.

USAID’s new strategy here in Morocco is focused on supporting exactly that kind of pursuit of prosperity. And the efforts that they began last year are concentrated on three areas: developing the workforce; supporting more responsive government; and improving education in those first, most critical years. If you can’t get a decent education and then get some kind of a job to build on that education, you will be economically handicapped the rest of your life. And that’s an important principle to begin any discussion about the future. USAID is making those commitments – I want to emphasize this, it’s very important – we’re making those commitments to support what the Moroccan people and the parliament have committed to together. We’re not trying to make independent initiatives. We’re not trying to do something that isn’t proved, not part of the process, but we want to support Morocco as it implements the organic laws, opens up its civil society, and finds the most effective ways to introduce difficult but necessary economic reforms.

Now obviously – although we talked upstairs about how possibly to deal with extremism and to deal with society, education and jobs and opportunity and civil society are in some ways equally important or more important than security – but still security is one of the most fundamental obligations that a government owes its citizens. And here too, the United States and Morocco stand side by side. In fact, the Moroccan Royal Armed Forces are wrapping up the 2014 African Lion military exercise in Agadir today. And for a decade now, the United States has participated in these exercises; we are expanding them to include other partners from Africa, Europe, and Canada. And Morocco’s military commitments continue to be a mark of strength and a stabilizing force in the region. And the evolving threats in the Maghreb make it clear that this kind of commitment is really more vital than it’s ever been.

I also want to commend Morocco for its leadership in the Global Counterterrorism Forum and especially Morocco’s proactive role in co-leading with the Netherlands the year-long GCTF initiative to address the phenomenon of foreign fighters.

So whether in Morocco’s support for Mali’s new government or its continued efforts to counter violent extremism, in its robust economic outreach in the region and commitment to fostering religious tolerance, Morocco is playing an essential leadership role and we come here today to show our understanding of and respect for that role.

The United States stands by and will stand by this relationship every step of the way. President Obama is deeply committed to that, and that commitment comes from much more than the impressive group of American officials who’ve come here today. It comes from our people.
We know that that commitment is evident in many different ways. You just mentioned the Christopher Stevens virtual exchange. We’re very, very grateful to your leadership with respect to that. And as you know, Christopher Stevens was a Peace Corps volunteer here. Today, I will be swearing in the latest class of Peace Corps volunteers, and they’re going to join the more than 4,000 Americans who have dedicated two years of their lives to serve here in Morocco since the day that President Kennedy started the Peace Corps and made this call for deeper engagement in the world.

We’re very, very grateful that Morocco has engaged the United States as a partner and as a friend from the very beginning of that initiative. And we take pride in what we’ve accomplished together and in the many ways that the bonds between our people have deepened. So I want you to know that President Obama is committed to making certain that that legacy is a legacy that we can build on here today and work together on every single day going forward in order to grow this relationship with the work that we do in the days to come. So Mr. Minister, thank you very, very much for your generous welcome here, and thank you for hosting this Strategic Dialogue. (Applause.)

RECENT U.S. DEFENSE DEPARTMENT PHOTOS FROM AFGHANISTAN

FROM:  U.S. DEFENSE DEPARTMENT 


U.S. soldiers conduct a presence patrol in Kandahar province, Afghanistan, March 26, 2014. The soldiers are assigned to Forward Support Company, 65th Engineer Battalion. National Guard photo by U.S. Army Cpl. Clay Beyersdorfer.


A U.S. soldier conducts a presence patrol in Kandahar province, Afghanistan, March 26, 2014. National Guard photo by U.S. Army Cpl. Clay Beyersdorfer.

REMARKS BY ROSE GOTTEMOELLER ON INTERNATIONAL DAY FOR MINE AWARENESS

FROM:  U.S. STATE DEPARTMENT

Mines Advisory Group's 25th Anniversary: International Day for Mine Awareness

Remarks
Rose Gottemoeller
Under Secretary for Arms Control and International Security 
Russell Senate Office Building
Washington, DC
April 2, 2014


As Prepared
Thank you, Jonathan, for the introduction. I don’t always watch television commercials, but when I do, I prefer that you are in them.

It is an honor to be here and to share the stage with Senator Leahy, Senator Casey, Congressman McGovern, and Ambassador Chedid. My particular thanks go out to Senator Leahy, for hosting this event. Senator, the State Department appreciates your longtime support for U.S. Humanitarian Mine Action programs, including the Leahy War Victims Fund that USAID has managed since 1989 to respond to the needs of civilian victims of conflict.
As we continue to focus our efforts on explosive remnants of war arising from past U.S. military operations, particularly in Southeast Asia and the Pacific, I would like to thank the Senator for his long-standing support of a well-funded Conventional Weapons Destruction program.
I appreciate being invited here by Rich Eisendorf and the MAG (Mine Action Group) America team. I congratulate you on 25 years of assisting post-conflict societies “survive the peace,” by clearing mines and unexploded ordnance that can threaten lives and livelihoods long after the fighting ends.

I know it’s been mentioned, but the event’s photo exhibit is absolutely stunning. Please take a look before you leave. Sean Sutton’s photographs beautifully illustrate not only the hardship and danger that communities face from explosive remnants of war, but also the hope for the future that international assistance provides.

The hope is clear in the photo of the MAG Sri Lanka female deminers that MAG and Sean graciously provided the State Department for the cover of our 2013 edition of our annual report, To Walk the Earth in Safety. These women are clearly devoted to this cause, and the U.S. State Department is proud to fund their work and that of many other deminers around the world who are making their communities safer.

The United States shares common cause with MAG America and all those working to address the harmful effects on civilians from landmines and unexploded ordnance left over from wars. Without the work of MAG America and other clearance operators around the world, these items will remain hazardous to civilians for decades after the end of armed conflict.
U.S. efforts have assisted 15 countries around the world to become free of the humanitarian impact of landmines and have helped to dramatically reduce the world’s annual landmine casualty rate. In 1999, the casualty rate from landmines and explosive remnants of war was just over 9,000 annually – that number dropped to less than 4,000 in 2012.

Since the inception of the Humanitarian Mine Action program in 1993, the U.S. government has delivered over $2.2 billion in aid in over 90 countries to help overcome threats from landmines and explosive remnants of war, as well as the destruction of excess, loosely-secured, or otherwise at-risk weapons and ammunition. We are the world’s single largest financial supporter of Conventional Weapons Destruction programs.

We have provided much of this assistance through non-governmental implementing partners, like MAG. It is their dedication, expertise, and professionalism that make the difference in affected communities and helps us maintain a global reach. Thank you to MAG and all our partners.

Here are a few examples of how they work:
MAG’s commitment to mine action in the hostile environment of Northern Iraq continues to contribute to increased security in that region. MAG was actually one of the first organizations providing assistance on the ground in Libya in 2011.

And in 2013, MAG was the first international NGO to conduct survey and clearance operations in Quang Nam province, Vietnam. This is a testament to your years of excellent work in the region.

In these budget-constrained times, State Department assistance programs are under great scrutiny. However, our support for the clearance of landmines and unexploded ordnance has proven a wise investment that saves lives and fosters stability in every region of the world.
The program helps countries recover from conflict and creates safe, secure environments to rebuild infrastructure; return displaced citizens to their homes and livelihoods; help those injured by these weapons to recover and provide for their families; and promote peace and security by helping to establish conditions conducive to stability, nonviolence, and democracy.
In closing, thank you all, and particularly our host Senator Leahy, for your support for the International Day of Mine Awareness and Assistance in Mine Action. Most importantly, thank you to the professionals around the world in and out of the government who work to reduce the threat to life and limb from landmines and unexploded ordnance.

MORE CASES OF HEARTLAND VIRUS IDENTIFIED

FROM:  CENTERS FOR DISEASE CONTROL AND PREVENTION  
CDC Reports More Cases of Heartland Virus Disease
New virus infects six more people and found in second state

The Centers for Disease Control and Prevention (CDC) in collaboration with health officials in Missouri and Tennessee have identified six new cases of people sick with Heartland virus: five in Missouri and one in Tennessee. The new cases, discovered in 2012 and 2013, are in addition to two discovered in 2009 and are described today in CDC’s Morbidity and Mortality Weekly Report.

Heartland virus was first reported in two northwestern Missouri farmers who were hospitalized in 2009 with what was thought to be ehrlichiosis, a tick-borne disease. However, the patients failed to improve with treatment and testing failed to confirm ehlrlichiosis. Working with state and local partners, CDC eventually identified the cause of the men’s illness: a previously unknown virus in the phlebovirus family now dubbed Heartland virus.

Ongoing investigations have yielded six more cases of Heartland virus disease, bringing to eight the total number of known cases. All of the case-patients were white men over the age of 50. Their symptoms started in May to September and included fever, fatigue, loss of appetite, headache, nausea, or muscle pain. Four of the six new cases were hospitalized. One patient, who suffered from other health conditions, died. It is not known if Heartland virus was the cause of death or how much it contributed to his death. Five of the six new cases reported tick bites in the days or weeks before they fell ill.

Nearly all of the newly reported cases were discovered through a study conducted by the Missouri Department of Health and Senior Services and CDC are actively searching for human cases at six Missouri hospitals.

CDC has been working closely with the Missouri and Tennessee state health departments and other federal agencies to advance understanding of Heartland virus disease by learning more about the patients who were infected, their illness and their exposure to ticks. CDC seeks to determine the symptoms and severity of the disease, where it is found, how people are being infected, and how to prevent infections.

CDC studies to date have shown Heartland virus is carried by Lone Star ticks, which are primarily found in the southeastern and eastern United States. Additional studies seek to confirm whether ticks can spread the virus to people and to learn what other insects or animals may be involved in the transmission cycle. CDC is also looking for Heartland virus in other parts of the country to understand how widely it may be distributed.

“During the past two years, CDC has worked closely with state health departments, hospitals, and many experts from universities and other federal agencies to learn more about Heartland virus,” said Roger Nasci, Ph.D., chief of CDC’s Arboviral Diseases Branch. “By gathering information about the disease Heartland virus causes, and about how it’s spread to people, we hope to better understand the potential impact on the public’s health and how we can help protect people from this virus CDC developed the blood tests used to confirm the new cases of Heartland virus disease. CDC teams are working to further validate these tests and develop additional tests. As more is learned, CDC hopefully can develop a diagnostic test that public health laboratories could use to test for the virus.

There is no specific treatment, vaccine or drug for Heartland virus disease. Because it is caused by a virus, the disease also does not respond to antibiotics used to treat tickborne bacterial infections such as Lyme disease. However, supportive therapies such as IV fluids and fever reducers can relieve some Heartland disease symptoms.

To reduce the risk of Heartland and other vector-borne diseases, CDC recommends that people:
Avoid wooded and bushy areas with high grass and leaf litter;
Use insect repellent when outdoors;
Use products that contain permethrin on clothing;
Bathe or shower as soon as possible after coming indoors to wash off and more easily find ticks that are crawling on you;
Conduct a full-body tick check after spending time outdoors; and
Examine gear and pets, as ticks can “ride” into the home and attach to a person later.

FINANCIAL FIRM CHARGED BY SEC WITH IMPROPER CALCULATION OF ADVISORY FEES

FROM:  SECURITIES AND EXCHANGE COMMISSION 
The Securities and Exchange Commission today announced charges against a St. Petersburg, Fla.-based financial services firm for improperly calculating advisory fees and overcharging clients.

SEC examinations and a subsequent investigation found that Transamerica Financial Advisors offered breakpoint discounts designed to reduce the fees that clients owed to the firm when they increased their assets in certain investment programs.  The firm permitted clients to aggregate the values of related accounts in order to get the discounts.  However, Transamerica failed to process every aggregation request by clients and also had conflicting policies on whether representatives were required to pass on to clients the savings from breakpoint discounts.  As a result, the firm overcharged certain clients by failing to apply the discounts and failed to have adequate policies and procedures to ensure that the firm was properly calculating its fees.

Transamerica has agreed to settle the SEC’s charges.  As a result of the SEC investigation, the firm reviewed client records and has reimbursed 2,304 current and former client accounts with refunds and credits totaling $553,624 including interest.  In the settlement, Transamerica has agreed to pay an additional $553,624 penalty.

“Transamerica failed to properly aggregate client accounts so that they could receive a fee discount, and this systemic breakdown caused retail investors to overpay for advisory services in thousands of client accounts,” said Julie M. Riewe, co-chief of the SEC Enforcement Division’s Asset Management Unit. 

According to the SEC’s order instituting settled administrative proceedings, Transamerica’s failure to properly process aggregation requests occurred since 2009.  SEC examiners first alerted Transamerica about aggregation problems in 2010 after an examination of a branch office.  While the firm went on to provide refunds to clients of that branch office, Transamerica failed to undertake a firm-wide review of all client accounts as SEC examiners recommended.  Hence during a subsequent examination of the firm’s headquarters in 2012, SEC examiners found that Transamerica was still failing to aggregate certain related client accounts.  The problem persisted beyond any one branch office.  In fact, Transamerica had conflicting policies throughout its branch offices on whether the firm required its representatives to provide breakpoint discounts to advisory clients.

“The securities laws require investment advisers to charge advisory fees consistent with their own disclosures and stated policies so investors get what they bargained for,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.  “Transamerica failed to take appropriate remedial steps even after SEC examiners had flagged the problem.”

The SEC’s order finds that Transamerica willfully violated Sections 206(2), 206(4), and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-7.  Transamerica agreed to a censure without admitting or denying the SEC’s findings, and must cease and desist from committing or causing any further violations of those provisions of the federal securities laws.  In addition to the monetary reimbursements and sanctions, Transamerica agreed to retain an independent consultant to review its policies and procedures pertaining to its account opening forms, fee schedules, and fee computation methodologies as well as the firm’s account aggregation process for breakpoints. 

The SEC’s investigation was conducted by Salvatore Massa and Tonya Tullis under the supervision of Chad Alan Earnst in the Miami Regional Office.  Mr. Massa and Mr. Earnst are members of the Enforcement Division’s nationwide Asset Management Unit.  The 2012 examination that led to the investigation was conducted by Jean Cabot, Jesse Alvarez, and Roda Johnson under the supervision of John Mattimore in the Miami office.

Friday, April 4, 2014

U.S. DEFENSE DEPARTMENT CONTRACTS FOR APRIL 3, 2014

FROM:  U.S. DEFENSE DEPARTMENT 
CONTRACTS

ARMY

ABM Government Services LLC, Hopkinsville, Ky. (W91278-14-D-0025); Brasfield & Gorrie LLC, Birmingham, Ala. (W91278-14-D-0026); Hoar Construction LLC, Birmingham, Ala. (W91278-14-D-0027); ITSI Gilbane Co., Walnut Creek, Calif. (W91278-14-D-0028); J&J Maintenance Inc., doing business as J&J Worldwide Services; Austin, Texas (W91278-14-D-0029); John J. Kirlin Special Projects LLC, Rockville, Md. (W91278-14-D-0030); United Excel Corp., Merriam, Kan.(W91278-14-D-0031), were awarded a $249,000,000 firm-fixed-price multi-year multiple-award task order contract to design and build Army medical facilities. Funding and work performance location will be determined with each order. Estimated completion date is April 2, 2019. Bids were solicited via the Internet with 29 received. U.S. Army Corps of Engineers, Mobile, Ala., is the contracting activity.

McCann World Group Inc., New York, N.Y., was awarded a $196,034,789 modification (P00012) to multi-year contract W9124D-11-D-0036 for a full range of professional marketing and advertising services in support of a nationwide advertising campaign for recruitment and retention programs throughout the Army. Funding and work performance location will be determined with each order. Estimated completion date is April 6, 2015. Army Contracting Command, Fort Knox, Ky., is the contracting activity.

The Boeing Co., Ridley Park, Pa., was awarded an $18,962,520 modification (0307) to contract W58RGZ-04-G-0023 to integrate improved drive train development with the Block II system level engineering effort being conducted under the Block II Aircraft Component Improvement Program supporting the CH-47 aircraft. Fiscal 2014 research, development, testing, and evaluation funds in the amount of $18,962,520 were obligated at the time of the award. Estimated completion date is May 29, 2015. Army Contracting Command, Redstone Arsenal., Ala., is the contracting activity.

L-3 Communications Aerospace LLC, Madison, Miss., was awarded an $18,086,317 modification (P00030) to contract W912NW-11-F-0102 to provide logistical, administrative, and base operations support to include data input and data gathering for the Corpus Christi Army Depot mission to overhaul, repair, modify, retrofit, test and modernize helicopters, engines and components for all services and foreign military customers. Fiscal 2014 other procurement funds in the amount of $18,086,317 were obligated at the time of the award. Estimated completion date is Oct. 28, 2014. Army Contracting Command, Corpus Christi, Texas, is the contracting activity.

Kearfott Corp., Black Mountain, N.C. was awarded an $8,628,628 firm-fixed-price contract for the Actuator, Electro-Me for the Blackhawk weapons system. The minimum quantity is 120 and the maximum quantity is 1,440. Funding and work performance location will be determined with each order. Estimated completion date is April 3, 2018. Two bids were solicited with one received. Army Contracting Command, Redstone Arsenal, Ala., is the contracting activity (W58RGZ-14-D-0073).

Contrack International Inc., McLean, Va., was awarded a $6,749,291 firm-fixed-price contract for constructing a power plant to power the Army prepositioned stocks-5 warehouses, Camp Arifjan, Kuwait. Fiscal 2010 military construction funds in the amount of $6,749,291 were obligated at the time of the award. Estimated completion date is Nov. 30, 2015. Bids were solicited via the Internet with thirteen received. Work will be performed in Kuwait. U.S. Army Corps of Engineers, Winchester Va., is the contracting activity (W912ER-14-C-0011).
NAVY
BAE Systems Electronic Solutions, Nashua, N.H., is being awarded a $47,352,248 indefinite-delivery/indefinite-quantity delivery order contract for the manufacture of the transmitter countermeasures T-1687A/ALE-70 (V) in support of the Joint Strike Fighter program. Work will be performed at Nashua, N.H., and work is expected to be completed by April 2017. Fiscal 2014 procurement of ammunition Navy and Marine Corps, and fiscal 2012 Air Force aircraft funding in the amount of $14,314,816 will be obligated at the time of award. The Air Force funds in the amount of $6,308,224 will expire at the end of the current fiscal year. This contract was not competitively procured in accordance with 10 U.S.C. 2304 (c)(l). The NAVSUP Weapon Systems Support, Mechanicsburg, Pa., is the contracting activity (N00104-14-D-K054).

DLT Solutions, Herndon, Va., is being awarded a potential $35,664,115 fixed-price blanket purchase agreement (BPA) under the Department of Navy (DoN) Enterprise Software Licensing initiative to provide Symantec brand-name software licenses and maintenance renewal for the Navy and Marine Corps. The resulting award will be subject to the DoN policy entitled, “Mandatory Use of Department of the Navy Enterprise Licensing Agreements.” This one-year base award includes four, one-year option periods which, if exercised, would bring the potential value of this award to an estimated $322,034,113. Work will be performed in Herndon, Va., and the base period is expected to be completed April 2, 2015. This agreement will not obligate funds at the time of award. BPA calls or orders will be placed by requesting activities as needed during the ordering period. This agreement was competitively procured with a brand-name justification in accordance with FAR 8.405-6 via a limited source solicitation and publication on the General Services Administration eBuy website. Four quotations were received and one was selected for award. The Space and Naval Warfare Systems Center Pacific, San Diego, Calif., is the contracting activity (N66001-14-A-0058).

General Dynamics, Electric Boat Corp., Groton, Conn., is being awarded an $11,000,000 cost-plus-fixed-fee modification to the previously awarded contract (N00024-13-C-4308) to incrementally fund previously exercised options to provide non-nuclear submarine repair work on Groton-based submarines under the New England Maintenance Manpower Initiative (NEMMI). Under the terms of the contract, Electric Boat will provide NEMMI tasks in support of non-nuclear maintenance, modernization and repair of operational nuclear powered submarines, floating dry docks, support and service craft, and plant equipment assigned to the Naval Submarine Support Facility, New London, Conn. Work will be performed in New London, Conn., and is expected to be completed by September 2014. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $11,000,000 will be obligated at time of award and will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.

Lone Star Aerospace,* Addison, Texas, is being awarded an $8,719,004 modification to a previously awarded cost-plus-fixed-fee, indefinite-delivery/indefinite-quantity contract (N68936-12-D-0033) for additional predictive business and technical decision analysis services in support of Naval Air Systems Command and the Naval Aviation Enterprise. The services to be provided includes support of existing, in production data collection and data collection systems, as well as analysis, modeling and simulation including data collection and validation, requirement derivation and analysis, quantitative and qualitative analysis; modeling personnel and processes, decision and other modeling, business case and benefit/cost modeling, total ownership cost modeling, should cost/will cost, analysis of alternative modeling, performance modeling; scenario based simulations, “what if” simulations, gaming simulations, performance simulations, simulation delivery and reports, briefings and studies. This modification also provides for operational support, including implementation and planning support, spiral model evolution, training and sustaining support of deployed models; customer satisfaction measurement; other analysis including enterprise environmental scans and assessments, industry/ competitive analysis and assessments, red cell opportunity/capability analysis, revision of existing data and implementation planning and support. Work will be performed in Addison, Texas (80 percent); Patuxent River, Md. (10 percent); China Lake, Calif. (5 percent); and Point Mugu, Calif. (5 percent), and is expected to be completed in July 2015. No funds will be obligated at the time of award. Funds will be obligated on individual delivery orders as they are issued. The Naval Air Warfare Center Weapons Division, China Lake, Calif., is the contracting activity.

DEFENSE LOGISTICS AGENCY

Agilent Technologies, Inc., Englewood, Colo., has been awarded a maximum $9,607,650 firm-fixed-price contract for signal generators. This is a sole-source acquisition. This is a three-year base contract with no option periods. Location of performance is Colorado with an April 15, 2017 performance completion date. Using military service is Navy. Type of appropriation is fiscal year 2014 through fiscal year 2017 Navy working capital funds. The contracting activity is the Defense Logistics Agency Land and Maritime, Mechanicsburg, Pa., (SPRMM1-14-A-ZZ11).

MISSILE DEFENSE AGENCY

Raytheon Missile Systems Co., Tucson, Ariz., is being awarded a $36,964,090 modification (P00021) to cost-plus-fixed-fee, cost-plus-incentive-fee contract. The modification increases the total contract value from $924,603,146 to $961,567,236. Under this modification, the contractor will perform Standard Missile-3 Block IB sustaining engineering support. The work will be performed in Tucson, Ariz. The performance period is from April 3, 2014 through April 2, 2015. Fiscal 2014 defense wide procurement funds in the amount of $36,964,090 are being obligated on this award. The Missile Defense Agency, Dahlgren, Va., is the contracting activity (HQ0276-13-C-0001).
*Small Business

SECRETARY KERRY'S REMARKS IN RABAT, MOROCCO

FROM:  U.S. STATE DEPARTMENT 

Remarks at Embassy Rabat Meet and Greet

Remarks
John Kerry
Secretary of State
Rabat, Morocco
April 3, 2014


AMBASSADOR BUSH: Good evening, everyone, and thank you for coming here to join me in welcoming Secretary Kerry to Morocco. I am honored and delighted to have this opportunity to greet the Secretary in Rabat after arriving just five days ago myself. In fact, we were both hoping to come to Morocco in the fall, and events outside of our control certainly kept us away at that time.

The U.S.-Morocco relationship is one of strategic and historical significance, dating back to the 1786 Moroccan-American Treaty of Friendship, which still is in force and effect today. The Secretary’s visit and his participation in the U.S.-Morocco Strategic Dialogue is further proof of the importance of this relationship, and it serves as another indication of the strength of ties between our countries.

Our mission in Morocco is a large one, with hundreds of Americans and local staff spread throughout the country, from the Tangier Legation located in Tangiers that still stands as a symbol of the historic ties between our two countries, to the Consulate General office in Casablanca where our colleagues fulfill our mission to aid and protect American citizens in Morocco. It expands to our robust USAID and Peace Corps programs that are aimed at promoting Moroccan economic engine development, and finally to the Embassy in Rabat, where we engage with our counterparts in the Moroccan Government on a wide array of issues of mutual interest. I am proud to be a part of the U.S. mission to Morocco and to serve and represent our country in the noble cause of strengthening the U.S.-Moroccan diplomatic partnership.

I know the Secretary is eager to meet you, to speak with you, and he’s well aware of how long you’ve stood around waiting for us. And so without any further ado, please allow me to introduce the U.S. Secretary of State John Kerry. (Applause.)

SECRETARY KERRY: Thank you, Dwight. Thank you, Mr. Ambassador. (Applause.) Thank you very much. Thank you. How long have you been standing around? (Laughter.) What’s the truth here now? Was it a long time? I’m really sorry. Are you kids – are you guys all right? Did you find something to do while I wasn’t here? (Laughter.) Are you all mad at me already? (Laughter.) Okay, good. Thank you very much. I appreciate that.

Well, I think I should be welcoming the ambassador here. I mean, I don’t know. (Laughter.) Five days seniority over my visit? I’m really happy that he’s here. He’s got a distinguished career in the private sector, a lot of banking initiatives, other efforts, worked for Sallie Mae and so forth, and opened his own company which gives financial advice. So if any of you need help on the side, here’s the man. (Laughter.)

AMBASSADOR BUSH: I’m out of that business.

SECRETARY KERRY: You’re out of that business now. Anyway, and I’m delighted to welcome his family here. We’ve got – Antoinette is here, and thank you very much. Antoinette Cook Bush, I think. Is that correct? And Dwight Junior and the beautiful Jacqueline who’s over here. Thank you. And they’re all on spring break, guys. They’re just here, quick and easy. I guess, no. You’re here on a sort of visiting thing for high school, right? That’s kind of cool.
So I’m happy to see them. And while I’ve been gone, the Red Sox went to the White House, and I’m really angry that I wasn’t there. (Laughter.) It’s, like, painful for me. And I read the Boston Globe story of all these politician friends of mine who were all over there at the White House having a good time. And it was really funny because Republicans and Democrats alike were fawning over every Red Sox player. So Senator Kelly Ayotte of New Hampshire and Senator Shaheen were there. It was the most bipartisan moment in Washington in recent memory.
And it’s my understanding you guys have a raging softball season? Is that true? And we have – let me see now, we’ve got Swat. Any Swat people here? (Cheers.) And we’ve got Barbarians? Is that true? Are there Barbarians here? I mean of a different kind. (Laughter.) And then there’s the Nomads, right? Which I particularly find appealing. And why is there only one or two people from each of these teams here? (Laughter.) I don’t know. Anyway – well, good luck to you all. May you not destroy each other on the field.

It’s really a pleasure for me to be in this very historic mission. The ambassador, in his comments, talked about the long, long history we’ve had here. And obviously, our history goes way back here for security reasons, ironically. That’s what brought us to this part of the world. Just today, earlier, I was in Algeria, where they showed me and gave me, actually, a copy of the treaty of 1795, which was our Treaty of Amity and Friendship with Algeria, which is part of the same sort of process that brought us here.

And we have a very close relationship with the Kingdom of Morocco. I met with His Majesty the King when he came to Washington recently. We had a very good discussion, interesting discussion. The foreign minister has become a good acquaintance, friend, through the international organizations and meeting that we’d wind up attending together. And all in all, we are really hoping that we can take an already strong relationship and make it even stronger.
It’s very important for us to build our security relationship here, and that’s because of what’s happening in the region. In Mali, in Chad, you run around the region – obviously Libya, Tunisia, all the way over to the other side of North Africa – Egypt, et cetera. We really need the countries that have the capacity to be stable to expand the rights that people are enjoying, to put in place the political and economic and civil society kinds of reforms that strengthen them for the long run, and also to provide economic opportunity. We’re living in a global marketplace, a global world. And so our jobs are their jobs, their jobs are our jobs, our companies, their companies; it’s all melded now. And we need to understand that there are some people fighting fiercely against modernity, against globalization, who don’t really have a philosophy that they want people to hang their hat on, but who have an ideology which is pretty extreme that suggests you’ve got to do what they say, live the way they want to live, and that’s all there is to it. And if they don’t, they may take your life, as you know. It’s violent. It’s disruptive. It has no rule of law. And it is contrary to all the values of individual choice, freedom, and of the values of collective rule of law which has really governed the world since the post-World War II period, which we have now seen suddenly disrupted with events with Russia and Ukraine.

So a lot is at stake. And what you all are doing here is connected to everything that we’re doing in every other part of the world. It’s very important work. And I want to thank you for it on behalf of President Obama and myself. We are very proud of the work that you do. I think there about 143 families out here. There some 400-plus people who are working here, a bunch of local folks. Local employees, would you mind raising your hands, those of you who are local? Look at you all. Thank you. We can’t do this without you, and everybody is very grateful for what you do. Thank you. (Applause.) I know sometimes you wind up getting the burden of our mistakes, or if people don’t like something we’ve said or done you hear about it, so we’re really grateful to you.

And for everybody else, Foreign Service officers and Civil Service, political appointees, temporary duty, agencies who are sharing the roof of the Embassy and working together, I just want to wish you all well as you go forward in these duties. I want to thank you on behalf of your country, the President. I was with him in Italy the other day. He talked to the Embassy folks there and told them how proud he is not just of them but of everybody in the diplomatic service who carries the values and the interests of our country every single day in everything that you do.
So I ask you to go forward remembering that I will have your back in everything you do. I promise you that. We have an amazingly hardworking crew back in Washington, from Pat Kennedy and the Deputy Secretary Bill Burns and everybody who are watching out for security issues on a daily basis, and all of your interests.

And by the way, I have really good news. I’m here to tell you that the pay freeze that was in place has been lifted and you’re all going to get a little bit of a pay raise, and I hope you’re happy about that. (Cheers and applause.) The only negative part of that is I said a little bit of a pay raise. (Laughter.) I wish it was gigantic, but that’s not the world we’re living in now.

So I want to know – this is really important – how long have you been here, and how do you like it? Can you come here? Come here and tell me something. Come on. Do you mind if I put you on the microphone? You can share a thought with everybody, because I’m always interested in this. How old are you?

PARTICIPANT: I’m nine.

SECRETARY KERRY: Nine years old. And how long have you been here?

PARTICIPANT: About half.

SECRETARY KERRY: Half a year. Are you learning some language?

PARTICIPANT: Yeah.

SECRETARY KERRY: What are you learning?

PARTICIPANT: French.

SECRETARY KERRY: And how’s your French? Pretty good?

PARTICIPANT: No.

SECRETARY KERRY: No. Okay. (Laughter.) All right. You get the honesty award. (Laughter.) Anybody else got something to tell me about what they’re doing which is fun?
Come on up here. Come on up. What’s your name?

PARTICIPANT: Max.

SECRETARY KERRY: Mac?

PARTICIPANT: Max.

SECRETARY KERRY: Okay. And how old are you?

PARTICIPANT: Seven.

SECRETARY KERRY: Seven years old. Okay. And are you learning some language?

PARTICIPANT: French.

SECRETARY KERRY: Okay. That’s cool. Can you say something in French?

PARTICIPANT: Bonjour
.
SECRETARY KERRY: Okay. (Laughter and applause.) Great job. That’s so good.
Okay, you’ve something to tell me? Come on up here. All right. What’s your name?

PARTICIPANT: Jack.

SECRETARY KERRY: And Jack, how old are you?

PARTICIPANT: Seven.

SECRETARY KERRY: That’s cool. You’re both seven. That’s wild. Are you at school here?

PARTICIPANT: Yes.

SECRETARY KERRY: What school do you go to?

PARTICIPANT: RES
.
SECRETARY KERRY: Okay. Is that –

PARTICIPANT: It’s an American --

SECRETARY KERRY: Oh, okay. That’s the American school.

PARTICIPANT: (Off-mike.)

SECRETARY KERRY: Are you? Okay. And what – are you learning a language?

PARTICIPANT: Yes.


SECRETARY KERRY: What are you learning?

PARTICIPANT: French.

SECRETARY KERRY: Also French. What are you going to do with that? Speak it, right?

PARTICIPANT: Yeah. (Laughter.)

SECRETARY KERRY: Say something to everybody.

PARTICIPANT: In French?

SECRETARY KERRY: Yeah.

PARTICIPANT: Ca va?

SECRETARY KERRY: Ah, right. Yeah. (Laughter and applause.)
All right. Wow, you guys are great. Anybody studying a language other than French? Come on up here, Lauren. Come on, don’t be bashful. Come on. I won’t embarrass you, I promise you. But I’m going to – how old are you?

PARTICIPANT: Eleven.

SECRETARY KERRY: I was eleven when I went abroad with my dad in the Foreign Service, and I was 11 years old, and I learned a little bit of German, Italian. They sent me to school to learn – what did they send me to school to learn? They sent me to school to learn German, and they wound up having so many Italians there, if I wanted to eat or do anything I had to learn Italian. And then I promptly forgot it pretty soon afterwards. But I knew enough to swear at people and do other things. (Laughter.) So how are you doing?

PARTICIPANT: Good.

SECRETARY KERRY: Is it fun?

PARTICIPANT: Yeah.

SECRETARY KERRY: What language are you learning?

PARTICIPANT: French.

SECRETARY KERRY: I thought you were learning another language. (Laughter.) I thought you were learning a different language. You’re learning another one, too? Any other languages? Is that it?

PARTICIPANT: Yeah.

SECRETARY KERRY: What? What’s the other?

PARTICIPANT: The other is Bulgarian.

SECRETARY KERRY: No kidding. That’s fantastic. Can you say something in Bulgarian for everybody that we won’t understand? (Laughter.)

PARTICIPANT: Zdrasti.

SECRETARY KERRY: What’s that?

PARTICIPANT: Zdrasti.


SECRETARY KERRY: Zdrasti. Is that “hello”?


PARTICIPANT: Yeah.


SECRETARY KERRY: Yeah, I thought so. (Laughter.) Ah, you did understand it. Okay. Thank you. You guys are heroes. Thank you all very, very much. (Applause.)
So I want to have a chance just to say hi to everybody, and again, a profound thank you to all of you for your service. It’s great. Appreciate it.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT FOR WEEK ENDING MARCH 29, 2014

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT
          SEASONALLY ADJUSTED DATA

In the week ending March 29, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 16,000 from the previous week's revised figure of 310,000. The 4-week moving average was 319,500, an increase of 250 from the previous week's revised average of 319,250.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending March 22, an increase of 0.1 percentage point from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 22 was 2,836,000, an increase of 22,000 from the preceding week's revised level of 2,814,000. The 4-week moving average was 2,842,250, a decrease of 13,500 from the preceding week's revised average of 2,855,750.
UNADJUSTED DATA
The advance number of actual initial claims under state programs, unadjusted, totaled 289,535 in the week ending March 29, an increase of 15,463 from the previous week. There were 317,494 initial claims in the comparable week in 2013.
The advance unadjusted insured unemployment rate was 2.4 percent during the week ending March 22, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 3,088,725, a decrease of 43,379 from the preceding week. A year earlier, the rate was 2.6 percent and the volume was 3,344,342.
The total number of people claiming benefits in all programs for the week ending March 15 was 3,201,504, a decrease of 105,367 from the previous week. There were 5,279,851 persons claiming benefits in all programs in the comparable week in 2013.
No state was triggered "on" the Extended Benefits program during the week ending March 15.
Initial claims for UI benefits filed by former Federal civilian employees totaled 996 in the week ending March 22, a decrease of 14 from the prior week. There were 1,802 initial claims filed by newly discharged veterans, a decrease of 25 from the preceding week.
There were 18,244 former Federal civilian employees claiming UI benefits for the week ending March 15, a decrease of 1,115 from the previous week. Newly discharged veterans claiming benefits totaled 27,298, a decrease of 1,056 from the prior week.
The highest insured unemployment rates in the week ending March 15 were in Alaska (5.3), New Jersey (3.9), Pennsylvania (3.8), Connecticut (3.7), Rhode Island (3.7), California (3.4), Illinois (3.4), Montana (3.4), Massachusetts (3.3), and Wisconsin (3.3).
The largest increases in initial claims for the week ending March 22 were in Texas (+2,424), Florida (+1,698), Puerto Rico (+668), Iowa (+580), and Kansas (+326), while the largest decreases were in California (-8,725), Nebraska (-1,121), Washington (-801), Arkansas (-713), and Tennessee (-698).

U.S. MARINES PARTICIPATE IN EXERCISE SSANG YONG 14 IN SUESONGRI, SOUTH KOREA

FROM:  U.S. DEFENSE DEPARTMENT 


U.S. Marines fire a practice rocket from a high-mobility, artillery rocket system during a live-fire exercise on Rodriguez range, South Korea, March 28, 2014. U.S. Marine Corps photo by Cpl. Lauren Whitney.


U.S. Marines position a high-mobility, artillery rocket system during a live-fire exercise on Rodriguez range, South Korea, March 27, 2014. This is the first time the system been deployed and fired within South Korea. The Marines are assigned to Delta Battery, 2nd Battalion, 14th Marine Regiment. U.S. Marine Corps photo by Cpl. Lauren Whitney.


FRIENDS CHARGED WITH TRADING ON INSIDER INFORMATION

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged two friends with insider trading on confidential information from an investment banker about an impending transaction between engineering and construction companies.

The SEC alleges that Walter D. Wagner of Rockville, Md., and Alexander J. Osborn of Alexandria, Va., illicitly profited by nearly $1 million combined by trading on nonpublic information in advance of the acquisition of The Shaw Group by Chicago Bridge & Iron Company.  Wagner was tipped by his longtime friend John W. Femenia, who worked at a firm that was considering whether to finance the transaction.  Wagner then tipped Osborn with the inside information so they could each trade heavily in Shaw Group securities ahead of the public announcement on July 30, 2012, when the closing stock price jumped approximately 55 percent from the previous day.

Wagner has agreed to settle the SEC’s charges by disgorging his ill-gotten gains plus interest.  Any additional financial penalty will be decided by the court at a later date.  A parallel criminal action against Wagner was announced today by the U.S. Attorney’s Office for the Western District of North Carolina.

The SEC’s litigation continues against Osborn.  The SEC already charged Femenia in a related insider trading case.  He was subsequently barred from the securities industry.

“Wagner and Osborn had never bought stock or call options in The Shaw Group, yet they suddenly spent significant portions of their available cash resources to make sizeable purchases in the weeks preceding the public announcement of the acquisition,” said William P. Hicks, associate director for enforcement in the SEC’s Atlanta Regional Office.  “The SEC is committed to deciphering the stories behind suspicious trades and exposing those who trade on confidential information obtained from corporate insiders.”

According to the SEC’s complaint filed in federal court in Greenbelt, Md., all three attended the U.S. Merchant Marine Academy.  Wagner and Femenia met in college and remained friends after graduating in 2003.  Osborn, who graduated in 2006, became friends with Wagner around 2009 when they worked in the same office building for different government contractors.  The SEC alleges that Femenia collected nonpublic details about the acquisition while at work and communicated them to Wagner via text messages and phone calls in violation of the duty he owed his firm to keep the information confidential.  Wagner knew Femenia was employed in investment banking at Wells Fargo Securities.  Wagner in turn tipped Osborn, who knew that Wagner’s source was employed in the finance industry.  Wagner and Osborn used the nonpublic information to obtain illegal trading profits of approximately $517,784 and $439,830 respectively.

The SEC’s complaint charges Wagner and Osborn with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. In addition to the financial sanction of $528,175 in disgorgement and prejudgment interest, Wagner has consented to the entry of a judgment permanently enjoining him from violations of Section 10(b) of the Exchange Act and Rule 10b-5.

The SEC’s investigation was conducted by Monifa F. Wright and supervised by Matthew F. McNamara in the Atlanta Regional Office.  The SEC’s litigation is being handled by Paul T. Kim.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of North Carolina, Federal Bureau of Investigation, Financial Industry Regulatory Authority, and Options Regulatory Surveillance Authority.

IRS COMMISSIONER KOSKINEN'S REMARKS TO NATIONAL PRESS CLUB

FROM:  INTERNAL REVENUE SERVICE 
Prepared Remarks of Commissioner of Internal Revenue Service John Koskinen before the National Press Club 

WASHINGTON – Thank you for that warm welcome. It’s an honor for me to be here today at the National Press Club for the first time as IRS Commissioner.

Now that we’ve turned the calendar to April, I know there are usually two things on peoples’ minds. The first is Spring and the second is taxes. Plus watching the Final Four this weekend. As a former Chairman of the Duke Board of Trustees, we had a moment of silence earlier in the tournament. But the loss to Mercer was part of a longer term-strategy to increase the Duke endowment in the hopes of a substantial contribution from an unnamed major investor in the United States, in recognition of the billion dollars we saved him by losing the game.

Moving on, if you came to this luncheon or tuned in expecting to hear about the state of affairs at the Internal Revenue Service, you’ve come to the right place.

I was sworn in as IRS Commissioner a little over three months ago, and I feel exactly the same way I did on Day One: Excited and proud to lead an agency that’s critical to the functioning of our government and one that touches virtually every American. These last three months I’ve traveled to 18 of the 25 largest IRS offices around the country. I have talked with and listened to about 8,000 employees so far and been delighted to see the professionalism, skills and dedication of our employees.

I am on this journey because, throughout my career, I have found that the people who know most about what’s going on in an organization are the front line employees. They have important insights into the opportunities and challenges an organization faces.

In light of all that has happened to Federal employees in the last four years, and IRS employees in particular – no pay raises for four years, government shutdowns, furloughs and the negative publicity about the IRS the last year – you might have expected that I would have heard a lot of grumbling from employees about not being paid enough or having to work too hard. Instead, the consistent response I have heard is a concern that we do not have enough employees to provide the level of taxpayer services our employees want to provide and feel taxpayers deserve.

I also have heard at every stop – even in the 18th city last Friday – interesting observations and suggestions about how we can improve the day-to-day operations of the agency. And I have explained in town halls with front line workers and meetings with managers at each office that one of my goals is to foster an environment where information flows easily from the bottom up in the agency as well as from the top down.

This is critical, not only for us to get the benefit of observations and suggestions from employees, but also to learn as quickly as possible about problems or challenges. I have noted that it is illusory to think that we’ll never have a problem or make a mistake.  We have 90,000 employees administering the world’s most complicated tax code and dealing with millions of taxpayers. Instead, my goal is for us to find problems quickly, fix them promptly, make sure they stay fixed, and be transparent about the entire process. I’ve told our employees that if there’s a problem anywhere in the organization, it’s my problem and we’ll fix it together. If an employee makes an honest mistake, it’s my mistake as well, and we’ll work together to remedy the situation. And if there’s a problem that I don’t know about, that’s my fault, because it would mean we haven’t built a culture that encourages information to flow up from the front lines through the organization.

As I tell the employees, my theory is that “bad news is good news,” since the only problem we can’t solve is one we don’t know about. And, as a corollary, employees need to know that we don’t shoot messengers, we thank them.

In moving the IRS forward, one of the most important things we have to do is restore public trust in the agency, which was shaken by the management problems that came to light last year with regard to the determination process used for applicants to become tax exempt social welfare organizations under section 501(c)(4) of the IRS code. Organizations that have 501(c)(4) status can be everything from garden clubs to homeowners associations, but the focus for the last year has been on advocacy groups that spend part of their time and money on political campaigns.

As a result of the inappropriate use of an organization’s name alone as the criterion for setting its application aside for special treatment, doubt has been cast by some on the independence of the IRS. This is an important issue that deserves our attention.  But it is also important to put this issue into the proper perspective.  The IRS has about 800 employees in its Exempt Organizations Division, and only a small subset of those folks work on processing applications for tax-exempt status for social welfare organizations. Meanwhile, there about 89,000 other IRS employees in offices all across the country who are also doing critical work for our tax system and for the nation in other areas.

Nonetheless, taxpayers need to be confident that the IRS will treat them fairly. It doesn’t make any difference who they are, what organizations they belong to, or whom they voted for in the last election. None of that matters to us at the IRS. We will do about one million audits of individual taxpayers this year. Some who get audited may be Democrats, some may be Republicans, and others may be something else altogether. But they will all have one thing in common: They’re being contacted by us because there was something on their tax returns that needed follow up. Perhaps we just need a clarification. Maybe there was a mathematical error. Or there could be something seriously wrong with the return. But the return alone is the reason for our inquiry. And anyone else with the same issue would receive the same treatment from the IRS.

To make sure that this problem does not recur, we’ve done a number of things. We have accepted all nine of the recommendations from the Inspector General for Tax Administration. It was his report last May that found applications for 501(c)(4) status were being screened using inappropriate criteria in the determinations process.

Since then, for the last several months the IRS has been cooperating with the investigations into this matter that were launched last summer. There are six ongoing investigations, four conducted by Congressional committees, one by the Department of Justice and one by the IG.

We were asked by members of Congress to quantify the work we’ve done and how much it has cost. The answer is that more than 250 IRS employees have spent over 100,000 hours working directly on complying with the investigations. This work has cost more than $14 million, which includes adding capacity for our computer systems to make sure we are protecting taxpayer information while processing and producing these materials.

In letters to Congressional Committees two weeks ago and in my testimony before the House Oversight and Government Reform Committee last week, I was pleased to report that we now have provided all the documents we have identified as being related to the determinations process – which was the focus of the IG’s report last May. We have provided the tax writing committees, our primary oversight committees, with almost 700,000 pages of documents.  We are still redacting taxpayer information from the last of those documents before they can be shared with the Committees that do not have authority to see taxpayer information.

 As a result, my hope is that at least some of the six pending investigations will be concluded and reports issued in the near future. I have made it clear that we will respond appropriately to the facts and recommendations of those reports and move the agency forward.

Our production of materials has proceeded according to priorities set with all of the investigating committees and, as we have now completed our production of documents related to the determinations process, we are prepared to work with the committees on any new avenues they may want to pursue.

You may have noticed that, during my three-hour hearing last week before the House Oversight and Government Reform Committee, some members of the Committee expressed unhappiness with the rate at which we are producing redacted information for them. As I tried to make clear, we never indicated that we would not respond to the very broad subpoena for documents we received in mid-February. Indeed, we have produced documents responsive to each of the subpoena’s categories. In the private sector, a court would require these requests to be reduced to those relevant to the inquiry. Unfortunately, the subpoena contains no such limitations, so the volume of materials requested means we could be at this for a long time.

Another recommendation by the IG was that the Treasury Department and the IRS should provide clearer guidance on how to assess the permissibility of 501(c)(4) social welfare organizations’ activities. So last November, Treasury and the IRS issued proposed regulations that are designed to clarify the extent to which a 501(c)(4) organization can engage in political activity without endangering its tax-exempt status.

While I was not involved in the issuance of this draft proposal, because it happened before I was confirmed as Commissioner, I believe it is extremely important to make this area of regulation as clear as possible. Not only does that help the IRS properly enforce the law, but clearer regulations will also give a better roadmap to applicants, and will help those that already have 501(c)(4) status properly administer their organizations without unnecessary fears of losing their tax-exempt status.

During the comment period, which ended in February, we received more than 150,000 comments. That’s a record for an IRS rulemaking comment period. In fact, if you take all the comments on all Treasury and IRS draft proposals over the last seven years and double that number, you come close to the number of comments we are now beginning to review and analyze. It’s going to take us a while to sort through all those comments, hold a public hearing, possibly repropose a draft regulation and get more public comments. This means that it is unlikely we will be able to complete this process before the end of the year.

Before leaving this topic, I want to note one other thing. Last month, former IRS Commissioner Randolph Thrower passed away at the age of 100. Commissioner Thrower led the IRS from 1969 to 1971, during the early years of the Nixon Administration, which turned out to be a challenging time for the agency. Commissioner Thrower held firm against attempts being made at that time to politicize the agency. The White House eventually fired him for his principled stance.

I’m sure if Commissioner Thrower were here today, he would say he was only doing his job. But he was doing much more. His refusal to let politics compromise the IRS is an important reminder to all IRS Commissioners now and in the future of what our mission is. I intend to follow his example. I want to reassure everyone listening to me today that the IRS is an agency of career civil servants who are dedicated to serving the American taxpayer in a fair and impartial manner. That’s how it’s always been, and that’s how it will stay on my watch.

We have other important challenges to face. One example of this is insuring that the tax filing season goes smoothly. When I started in December, I told our employees that I wanted to help with the filing season and, as the new kid on the block, the best thing I could probably do was to stay out of the way. I’ve been very successful at that and, at least partially as a result, the filing season has gone very well thus far.  Through the end of March, we’ve received more than 90 million tax returns and issued more than 73 million refunds, for approximately $207 billion.

As we get closer to the April 15th deadline for filing returns, I think it’s important to realize what a tremendous accomplishment it is for the agency to process 150 million individual taxpayer returns every year. This doesn’t happen by accident and it doesn’t happen automatically. It happens because thousands of dedicated and experienced employees work for months planning for the next filing season and then administering it.

Another top priority of ours: taxpayer service. This filing season, as we do every year, the IRS provides services to taxpayers to help them fulfill their tax obligations.

Taxpayers want and need more online tax information and services, and we’re working to meet that demand by making improvements to our website, IRS.gov. Last year alone, taxpayers viewed IRS.gov web pages more than 450 million times, to get forms and publications, find answers to their tax questions and check the status of their refunds.

One of the most popular features on IRS.gov is the “Where’s My Refund?” electronic tracking tool, which taxpayers used more than 200 million times last year. Now that doesn’t mean, of course, that there are 200 million taxpayers. Some of them just can’t resist checking over and over to see how their refund is doing.

This year we have several new digital applications that will expand what taxpayers can do online. One of these applications is IRS Direct Pay, which provides taxpayers with a secure, free, quick and easy online option for making tax payments. Another innovation, Get Transcript, is a secure online system that allows taxpayers to view and print a record of their IRS account, also known as a transcript, in a matter of minutes. We are also in the final stages of revamping the IRS Online Payment Agreement, which allows taxpayers to apply for an installment agreement online.

To provide better service, the IRS is also expanding the methods it uses to communicate information to taxpayers. We have moved beyond traditional media, like newspapers and TV news to also take advantage of social media, such as YouTube, Twitter and Tumblr.

During my three months on the job, I have been surprised to learn how much time, effort and resources we provide trying to help taxpayers determine the amount they owe and how to pay it. As I have said, it may take me a while to convince the average taxpayer that “we’re from the IRS and we’re here to help you,” but we really do work hard to make it as easy as possible to file your taxes.

Along with taxpayer service, another high priority for the IRS is maintaining a robust tax compliance program and building on the work that’s been done to improve compliance in a number of areas. One of the most important of these is the battle against refund fraud, especially fraud caused by identity theft. I say “battle” because we really do have a fight on our hands against identity thieves who steal peoples’ information outside the tax system and use that information to file a tax return claiming a refund.

We’re doing a much better job of stopping suspicious returns before they can be processed compared to a couple of years ago, and our criminal investigators are making great progress in helping the Justice Department find these criminals and put them behind bars. Last year we protected $17.8 billion from refund fraud, we initiated 1,400 investigations, and we obtained over 1,000 indictments and 400 convictions. We’re also doing a lot better at helping identity theft victims clear up their IRS accounts after they have been victimized. The time for resolving a new case has been reduced from over 300 days to roughly 120 days. But there’s still room for improvement, and we intend to do even better.

Perhaps our most intense challenge is fulfilling the responsibility Congress has given us to implement tax-related provisions of enacted legislation, including the Affordable Care Act.  We have a lot of work to complete if we are going to be prepared for major ACA provisions that go into effect this year, including the premium tax credit and the individual shared responsibility provision. As I have told our employees, the significant challenge of implementing the Affordable Care Act provides us with a major opportunity to demonstrate the skill, dedication and competence of the IRS. After the difficulties experienced last fall with the rollout of ACA, if we can have a smooth filing season next year including the appropriate review of the returns of taxpayers who took or were eligible for the advanced premium tax credit, the public and the Congress will have to say, “That’s some organization with an amazing work force.”

Along with the ACA, another important piece of legislation we’re in the process of implementing is the Foreign Account Tax Compliance Act, which is more commonly known as FATCA. This law is important because it requires foreign financial institutions to tell us about accounts owned by U.S. citizens. With this information, we can do a much better job of combatting offshore tax evasion. Our goal is to make it more and more difficult for Americans to hide their money in a tax haven to avoid paying taxes.

The importance of FATCA is not just that we’ll be collecting more money. It is also important because the average taxpayer has to be confident that, while they are paying their taxes, the very wealthy, with fancy lawyers and accountants, are no longer able to hide their money in foreign countries and avoid paying their fair share to support the operations of the government.

When I became Deputy Mayor of Washington, the city’s theory of snow removal had been that “the sun will come up tomorrow.” So, when I began, we had a “snow summit” and I told the leadership team that, whatever else we were going to do, we were going to get the snow off the streets. That’s my feeling today at the IRS. Whatever else we are going to do, we are going to implement the non-discretionary legislative mandates we have been given: the Affordable Care Act and FATCA.

This brings me to what I believe is the biggest challenge facing the IRS today, the substantial decline in our funding, which puts significant strain on our ability to provide adequate services to taxpayers and to maintain strong service and enforcement levels to ensure the integrity of our voluntary compliance system.

For the IRS to keep making progress in all the areas I’ve just mentioned, it is critical for us to receive adequate resources. The agency continues to be in a very difficult budget environment since we are the only major agency functioning basically at the
post-sequester level rather than having been moved back toward the pre-sequester level of funding. Since Fiscal 2010, IRS appropriations have been cut by about $900 million and we have 10,000 fewer employees even as our responsibilities continue to expand.

We recognize the need to become more efficient, no matter what happens to our funding level. Since 2010, the IRS has cut annual spending on professional and technical service contracts by $200 million. We generated $60 million in annual printing and postage savings by eliminating the printing and mailing of certain tax packages and publications, and by transitioning to paperless employee pay statements.

Real estate is another area where we have found major savings. In 2012 the IRS began a sweeping space-reduction initiative that is projected to reduce rent costs by more than $40 million and reduce total IRS office space by more than 1.3 million square feet by the end of this fiscal year. Taken together, we’re spending $300 million a year less in these areas.

We will continue our efforts to find savings and efficiencies wherever we can.  And we will continue to carry out our core responsibilities and work toward preserving the public’s faith in the essential fairness and integrity of our tax system. But these budgetary constraints will pose serious challenges to our efforts to enforce the tax laws and provide excellent customer service.

Essentially, the federal government is losing billions in revenue collection to achieve budget savings of a few hundred millions dollars, since the IRS estimates that, for every $1 invested in the IRS budget, it produces $4 in revenue.

As I said during my confirmation hearing, I didn’t find a single organization in my 20 years of private-sector experience that said, “Let’s take our revenue operation and starve it for funds and see how it does.”

So far this filing season, we have been fortunate that the volume of phone calls to our toll-free lines is actually down a bit compared to this time last year. One factor is the lack of major tax changes in 2013, which means fewer questions from taxpayers. Our improved website and its applications also have helped provide taxpayers with important support without requiring a phone call.

As a result, for now, we’re maintaining a level of phone service around 72 percent. That’s much better than last year’s overall average of 60.5 percent. But we expect that for the year we will drop well below 70 percent and end up closer to last year’s 60.5 percent. That would mean more than 30 percent of taxpayers trying to reach us on the phone couldn’t get through.  It wasn’t that long ago, with proper funding, that our level of service was 88 percent.

Along with phone service, we’re also concerned about the amount of time it takes for people to get help in person when they go to one of our Taxpayer Assistance Centers. We’ve had reports from field staff in offices across the country of taxpayers lining up outside our centers well before the centers open in the morning to make sure they receive service the same day, sometimes waiting up to three hours to be served after they enter the office. Expanding our online offerings can only go so far to ameliorate these problems. As Forbes magazine noted earlier this year, when you punish the IRS you punish taxpayers.

Our information technology operation is still another area that the IRS has always been focused on. Our use of IT helps us do a better job of stopping potentially fraudulent returns before they are processed and allows us to keep making improvements to our operations and our website.  Our 2014 budget had $330 million for IT work related to implementing ACA. None of that money was provided. Since we are mandated by statute to implement ACA, that has meant that other vital IT projects have had to be shelved.

The solution to the budget problem that we face starts with the Administration’s Fiscal Year 2015 budget proposal, which was released last month. The Administration proposes a funding level of approximately $12.5 billion for the IRS for Fiscal 2015, which would reverse the erosion in our budget over the last several years.

I think it’s fair to ask what value the American taxpayer would get for that extra billion or so dollars that the Administration is proposing. It would help taxpayers get the service they need and strengthen compliance efforts in key areas, especially the two I mentioned earlier – refund fraud and offshore tax evasion. The budget proposal halts the declines in key enforcement personnel we’ve had and allows the IRS to again invest in necessary basic infrastructure.

Ultimately, it’s in everyone’s best interests to have an IRS that can do its job. We don’t believe that any member of Congress wants their constituents – be they taxpayers, tax preparers or financial advisors – to go through the aggravation of not getting the help they need from the IRS. They don’t want their constituents waiting in line for hours at a taxpayer assistance center or having trouble getting through on our toll free lines.

So my hope is that once we get beyond the issues surrounding the 501(c)(4) application process, and once the major tax-related provisions of the Affordable Care Act that I mentioned earlier are up and running, we can have a more normal discussion about our budget. I look forward to working with Congress to solve this budget problem. I hope that one of the legacies of my time as IRS Commissioner will be that we put the agency’s funding on a more solid and sustainable footing.

There’s another way in which Congress can help the IRS improve the work it does to assist taxpayers and ensure compliance with the tax laws, and that is to simplify the tax code. Congressman Dave Camp, Chairman of the House Ways and Means Committee, put it well when he introduced his tax reform proposal a few weeks ago. He said that the tax code is ten times the size of the Bible, without the good news. The IRS Taxpayer Advocate has estimated that individuals and businesses spend about 6.1 billion hours a year complying with the filing requirements of the tax code. All in an effort to determine and pay the right amount of taxes.

We can do better than that. And, while tax policy is the domain of the Treasury Department, the Administration and the Congress, those of us involved in tax administration are anxious to do whatever we can to assist in the process.

Thank you very much for letting me spend this time with you. With that, I’d be happy to take some questions.

FLORIDA COUPLE, COMPANY ORDERED TO PAY $5.76 MILLION FOR FOREX FRAUD

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Federal Court Orders St. Augustine, Florida Couple and Their Company to Pay $5.76 Million for Defrauding Customers in Foreign Currency Scheme

Queen Shoals Consultants, Gary D. Martin, and Brenda K. Martin Charged in March 2011 CFTC Anti-Fraud Action

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) obtained federal court supplemental consent Order requiring Defendants Gary D. Martin and Brenda K. Martin of St. Augustine, Florida, and their company, Queen Shoals Consultants, LLC (QSC) of Charlotte, North Carolina, to jointly pay a total of $5.76 million in civil monetary penalties for defrauding customers through a retail foreign currency (forex) trading scheme (see CFTC Press Release and Complaint 6004-11, March 17, 2011). None of the Defendants has ever been registered with the CFTC.

Specifically, the supplemental Order, entered on May 14, 2013, by Chief Judge Robert Conrad, Jr., of the U.S. District Court for the Western District of North Carolina, requires QSC and Gary Martin to pay a civil monetary penalty (CMP) of $4,320,000 and Brenda Martin to pay a $1,440,000 CMP. The Defendants’ CMP obligation and post-judgment interest shall be joint and several, according to the supplemental Order.

In 2011, the Court Entered a Consent Order of Permanent Injunction

Earlier, on August 1, 2011, Judge Conrad entered a consent Order of permanent injunction against the Defendants (see CFTC Press Release and Order 6090-11), finding that the Defendants defrauded customers in the forex scheme. The Order requires that the Defendants make full restitution “to all persons who gave funds, either directly or indirectly, to Defendants as a result of the course of the illegal conduct” charged in the CFTC Complaint. The Order also required the Defendants to pay a CMP to be determined at a later date.

According to the Order, a website created by the Martins “lured customers by claiming QSC and the Martins had a ‘vast background in financial services’ with over 20 years of experience in financial services and a staff of experts ready to assist customers.” In reality, however, the Defendants had no expertise or experience in trading forex, and all of the representations concerning trading, guaranteed profits, and profitable accounts were false. Furthermore, Gary Martin admitted under oath that the Defendants never engaged in any forex trading or investing on behalf of customers and that there were no forex accounts, according to the Order.

The CFTC’s Complaint charged, among other things, that the Martins, unknown to customers, turned over all customer funds to Sidney S. Hanson of Charlotte, North Carolina, an undisclosed third party, in return for a referral fee of up to five percent of each customer’s initial and subsequent investment. Hanson allegedly paid the Martins at least $1.44 million in such undisclosed referral fees. On August 4, 2009, the CFTC charged Hanson and other Defendants with operating a Ponzi scheme involving more than $22 million in connection with off-exchange forex trading (see CFTC Press Releases 5689-09, August 7, 2009, and 6133-11, November 1, 2011). Hanson pleaded guilty to securities fraud and mail fraud in the criminal matter (United States v. Sidney Stanton Hanson, Case No. 09-CR-09CR139-RJC (U.S. District Court for the Western District of North Carolina)) for acts arising out of his operation of the Queen Shoals Group, among other entities. Hanson was sentenced on April 1, 2011, to 22 years in prison and ordered to pay $33 million in restitution to victims of the Ponzi scheme.

The CFTC appreciates the assistance of the State of North Carolina Department of the Secretary of State, Securities Division.

CFTC Division of Enforcement staff members are responsible for this case are Timothy J. Mulreany, Michael Amakor, and Paul Hayeck.

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