Friday, May 30, 2014

PUERTO RICO JUDGE, BUSINESSMAN INDICTED IN CONSPIRACY AND BRIBERY CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, May 29, 2014
Puerto Rico Superior Court Judge and Local Businessman Indicted on Conspiracy and Federal Programs Bribery Charges

A current Puerto Rico Superior Court Judge and Puerto Rico businessman were charged with orchestrating a criminal scheme in which the businessman paid bribes to the judge presiding over the criminal case against the businessman according to an indictment unsealed today.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Rosa Emilia Rodríguez-Vélez of the District of Puerto Rico, and Special Agent in Charge Carlos Cases of the FBI’s San Juan Division made the announcement.

“The outcome of a criminal case should be determined by the evidence and the law, not by paid-for bias,” said Assistant Attorney General Caldwell.  “When citizens can’t have faith in the very people who are sworn to uphold the law, confidence in the entire system is shaken.  We are committed to restoring that faith by rooting out corruption wherever it may be found.”

“A fair and impartial criminal justice system is one of the cornerstones of our democracy,” said U.S. Attorney Rodríguez-Vélez.  “Judges, in particular, are expected to protect the public’s trust in the fairness of the judicial system.  Investigations such as the one leading to today’s indictment are crucial to deter corrupt officials influenced by greed from breaking their oath to uphold the rule of law.   This case should serve as a strong warning to those who might consider similar behavior.  No one is above the law and everyone is accountable for their misdeeds.”

“Rogue justice as the one allegedly imparted by Judge Manuel Acevedo-Hernández will not be tolerated by the FBI,” said Special Agent in Charge Cases.   “The FBI will continue vigorously to investigate allegations of corruption at all levels.”

The indictment, returned yesterday by a federal grand jury in the District of Puerto Rico and unsealed today, charges Manuel Acevedo-Hernandez, 62, and Lutgardo Acevedo-Lopez, 39, with conspiracy to commit federal programs bribery.  Acevedo-Hernandez was also charged with receipt of a bribe by an agent of an organization receiving federal funds, and Acevedo-Lopez was charged with paying a bribe to an agent of an organization receiving federal funds.

According to the indictment, Acevedo-Hernandez, a Supervisory Superior Court Judge in the Aguadilla judicial region of Puerto Rico, allegedly accepted bribes from Acevedo-Lopez and others, knowing that the payments were made so that Acevedo-Hernandez would use his official position as a Superior Court judge for Acevedo-Lopez’s benefit.    In particular, Acevedo-Hernandez presided over a criminal trial of Acevedo-Lopez and acquitted Acevedo-Lopez of all charges pending against him, including vehicular homicide.   In exchange for the acquittal, Acevedo-Lopez, through an intermediary, bribed Acevedo-Hernandez by paying taxes owed by Acevedo-Hernandez, paying for construction of a garage, and providing him with a motorcycle, clothing and accessories, including cufflinks and a watch.

The charges contained in the indictment are merely accusations.   The defendants are presumed innocent unless and until proven guilty.

The case is being investigated by the FBI’s San Juan Division and is being prosecuted by Trial Attorney Peter Mason of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Timothy Henwood and Jose Capo of the District of Puerto Rico.

Thursday, May 29, 2014

U.S. DEFENSE DEPARTMENT CONTRACTORS FOR MAY 29, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

AIR FORCE

Textron Defense Systems, Wilmington, Massachusetts, has been awarded a $190,065,670 firm-fixed-price contract for 361 sensor fuzed weapons, seven trainers and 18 wind corrected munitions dispenser tail kits. Work will be performed at Wilmington, and is expected to be completed by Dec. 31, 2016. This contract involves foreign military sales to the Republic of Korea. Air Force Life Cycle Management Center/OO-ALC/EBHKA, Hill Air Force Base, Utah, is the contracting activity (FA8213-14-C-0017).

ARMY

AAI Corp, Hunt Valley, Maryland, was awarded a $75,010,510 cost-plus-fixed fee contract to support the Army Aviation and Missile Research, Development and Engineering Center, Software Engineering Directorate's Joint System Integration Laboratory for technology integration into the contractor's fleet of unmanned aircraft systems, including the Shadow, and associated ground support equipment to allow the demonstration of enhanced or improved UAS platform, payload, and ground systems performance. The estimated completion date is May 29, 2018. Funding and work location will be determined with each order. One bid was solicited and one received. Army Contracting Command, Redstone Arsenal, Alabama is the contracting activity (W31P4Q-14-D-0020).

L-3 Communications Corp., Arlington, Texas, was awarded a $48,978,323 firm-fixed-price, foreign military sales (Saudi Arabia) contract for the acquisition of three UH-60L operational flight trainers for the Royal Saudi Land Forces. Work will be performed in Arlington, Texas, with an estimated completion date of May 25, 2018. One bid was solicited and one received. Fiscal 2014 other procurement funds in the amount of $48,978,323 are being obligated at the time of the award. Army Program Executive Office Simulation, Training & Instrumentation, Orlando, Florida, is the contracting activity (W900KK-14-C-0001).

Bethel/ERRG JV,* Bethel, Alaska (W911KB-14-D-0018); EA Engineering, Science & Technology Inc.,* Hunt Valley, Maryland (W911KB-14-D-0019); and Environmental Compliance Consultants,* Anchorage, Alaska (W911KB-14-D-0020) were awarded a $30,000,000 firm-fixed-price, indefinite
delivery/indefinite-quantity, multiple award contract for environmental quality services at various locations primarily within Alaska. Funding and work location will be determined with each order with an estimated completion date of May 28, 2019. Bids were solicited via the Internet with 17 received. U.S. Army Corps of Engineers, Elmendorf AFB, Alaska, is contracting activity.

Sikorsky Aircraft Corp., Stratford, Connecticut, was awarded a $24,000,000 modification (P00163) to contract W58RGZ-12-C-0008 to realign the funding between the fiscal 2014 advance procurement funds and the planned aircraft production funds for fiscal 2015, with no change to the UH-60 or HH-60 contract price. Fiscal 2014 other procurement funds in the amount of $24,000,000 were obligated at the time of the award. Work will be performed in Stratford, with an estimated completion date of Dec. 31, 2015. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity.

JAM-MAP JV,* San Antonio, Texas, was awarded a $9,420,746 firm-fixed-price contract for the construction of unmanned aerial systems site work, utilities, and entry control point at Fort Hood, Texas, with an estimated completion date of May 28, 2016. Option one will be exercised at the time of award. Bids were solicited via the Internet with six received. Fiscal 2014 military construction funds in the amount of $9,420,746 are being obligated at the time of the award. U.S. Army Corps of Engineers, Fort Worth, Texas, is the contracting activity (W9126G-14-C-0016).

Pacchiosi Drill USA, Inc. New York, New York, was awarded a $9,232,436 firm-fixed-price contract for American River Common Features, Sites R7 and L7, to construct cutoff walls using the jet grout method along the waterside slope of the levee in Sacramento, California with an estimated completion date of March 9, 2015. Bids were solicited via the Internet with two received. Fiscal 2014 other procurement funds in the amount of $9,232,436 are being obligated at the time of the award. U.S. Army Corps of Engineers, Sacramento, California is the contracting activity (W91238-14-C-0041).

American Rheinmetall Munitions Inc., Stafford, Virginia, was awarded a $6,797,433 firm-fixed-price contract for 34,762 grenades (66mm, smoke screening infra-red vehicle-launched) and first article test. Work will be performed in Germany with an estimated completion date of May 27, 2020. Bids were solicited via the Internet with one received. Fiscal 2013 other procurement funds in the amount of $5,235,716, and fiscal 2014 other procurement funds in the amount of $1,561,716, are being obligated at the time of the award. Army Contracting Command, Rock Island Arsenal, Illinois is the contracting activity (W52P1J-14-C-0042).

NAVY

L-3 Communications Vertex Aerospace LLC, Madison, Mississippi, is being awarded a $55,410,943 modification to a previously awarded indefinite-delivery requirements contract (N00019-13-D-0007) to exercise an option for logistics services support of the TH-57 aircraft fleet. Services to be provided include all logistics services and materials for organizational and depot level services to support and maintain the aircraft. Work will be performed at Naval Air Station Whiting Field, Milton, Florida, and is expected to be completed in May 2015. No funds are being obligated at the time of award. Funds will be obligated against individual delivery orders as they are issued. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

Softchoice Corp., McLean, Virginia, is being awarded $42,557,745 for firm-fixed-price delivery order NS09 under a previously awarded single Blanket Purchase Agreement (M67854-12-A-4701) to procure Microsoft brand name software support, known as software assurance.

Work will be performed in McLean, and is expected to be completed by May 2015. Fiscal 2014 operations and maintenance (Navy) funding in the amount of $42,557,745 will be obligated at the time of award, and funds will expire at the end of the current fiscal year. This delivery order is issued against a single award BPA, which was competitively awarded. The contracting activity is the Space and Naval Warfare System Command, San Diego, California it will award the delivery order on behalf of its organizational partner, Program Executive Office for Enterprise Information Systems.

Raytheon Integrated Defense Systems, Largo, Florida, is being awarded an $11,014,015 modification to previously awarded contract (N00024-12-C-5231) to exercise an option for five AN/USG-3B Cooperative Engagement Capability (CEC) Airborne Systems. CEC is a sensor netting system that significantly improves battle force anti-air warfare capability by extracting and distributing sensor-derived information such that the superset of this data is available to all participating CEC units. CEC improves battle force effectiveness by improving overall situational awareness and by enabling longer range, cooperative, multiple, or layered engagement strategies. Work will be performed in St. Petersburg, Florida (90 percent), Largo, Florida (10 percent), and is expected to be completed by November 2015. Fiscal 2014 aircraft procurement (Navy) funding in the amount of $11,014,015 will be obligated at time of award. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.

Sechan Electronics Inc.*, Lititz, Pennsylvania, is being awarded an $8,734,680 firm-fixed-price delivery order under previously awarded contract (N00024-12-D-5203) for production of Signal Data Processor – Sierra (SDP-S) assemblies in support of the Cooperative Engagement Capabilities (CEC) program. The SDP-S assemblies provide an open architecture assembly to the CEC systems using commercial-off-the-shelf components. The SDP-S provides the core of the CEC system providing processing capability. The SDP-S assemblies are used on CEC shipboard, airborne and land mobile platforms to provide a composite network picture. CEC is a sensor netting system that significantly improves battle force Anti-Air Warfare capability by extracting and distributing sensor-derived information such that the superset of this data is available to all participating CEC units. CEC improves battle force effectiveness by improving overall situational awareness and by enabling longer range, cooperative, multiple, or layered engagement strategies. Work will be performed in Lititz, and is expected to be completed by June 2015. Fiscal 2013 and 2014 other procurement (Navy); fiscal 2012 procurement (Marine Corps); fiscal 2013 and 2014 aircraft procurement (Navy); fiscal 2013 and 2014 shipbuilding and conversion (Navy); and fiscal 2014 research, development, test & evaluation contract funds in the amount of $8,734,680 will be obligated at time of award. Contract funds in the amount of $1,164,624 will expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, District of Columbia, is the contracting activity.

DEFENSE LOGISTICS AGENCY

Science Application International Corporation, Fairfield, New Jersey, has been awarded a maximum $15,800,000 fixed-price, indefinite-delivery/indefinite-quantity, prime vendor bridge contract for maintenance, repair and operations for the Hawaii region. This contract was a sole-source acquisition. Location of performance is New Jersey, with a Sept. 15, 2014 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPM500-04-D-BP06/P00037).

Essex Industries, Inc.,* St. Louis, Missouri, has been awarded a maximum $7,699,472 firm-fixed-price contract for emergency passenger oxygen system. This contract was a sole-source acquisition. This is a one-year base contract with four one-year option periods. Location of performance is Missouri with a May 22, 2015 performance completion date. Type of appropriation is fiscal 2014 defense working capital funds. The using military service and contracting activity is the Defense Logistics Agency Aviation, Richmond, Virginia (SPE4A7-14-D-0170). (Awarded May 22, 2014).

Allied Tube and Conduit Corporation, Harvey, Illinois, has been awarded a maximum $6,670,408 fixed-price with economic-price-adjustment contract for razor wire. This is a two-year base contract with three one-year option periods. Location of performance is Illinois with a May 28, 2016, performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. This contract was a competitive acquisition with three offers received. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8E6-14-D-0006).

Cobra Systems, Inc.,* Bloomington, New York, has been awarded a maximum $6,670,408 fixed-price with economic-price-adjustment contract for razor wire. This is a two-year base contract with three one-year option periods. Location of performance is New York with a May 28, 2016, performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. This contract was a competitive acquisition with three offers received. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8E6-14-D-0007).

Berenfield Containers, Inc.,* Mason, Ohio, has been awarded a maximum $6,500,000 fixed-price with economic-price-adjustment contract for steel shipping and storage drums. This is a two-year base contract with three one-year option periods. Location of performance is Ohio with a May 28, 2016, performance completion date. Using military services are Army, Navy, Air Force and Marine Corps. This contract was a competitive acquisition with two offers received.Type of appropriation is fiscal 2014 through fiscal 2016 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania (SPE8ED-14-D-0005).

*small business

SECRETARY KERRY'S STATEMENT ON COMMEMORATION OF INTERNATIONAL DAY OF UN PEACEKEEPERS

FROM: U.S. STATE DEPARTMENT 

Commemoration of International Day of UN Peacekeepers

Press Statement
John Kerry
Secretary of State
Washington, DC
May 29, 2014


We pause today in grateful recognition of the service and sacrifice of the more than 116,000 men and women serving across 16 UN peacekeeping missions in some of the most dangerous and inhospitable parts of the world.

I am especially proud of the more than 140 U.S. military and police personnel currently deployed in support of UN peacekeeping operations in the Democratic Republic of the Congo, Haiti, Liberia, Mali, South Sudan, and the Middle East. I thank them all for their service and dedication to seeing these critical missions succeed.

President Obama and I are well aware of the dangers peacekeepers face every day, and we honor the more than 3,200 men and women—including 72 Americans—who have laid down their lives in the service of peace since 1948.

UN peacekeepers embody the international community’s commitment to helping member states emerge from conflict and make progress on the road to a lasting peace.
The United States remains a committed partner in UN peacekeeping as an effective and efficient tool for addressing threats to international peace and security, including through such efforts as the Department’s Global Peace Operations Initiative, which has helped train and equip more than 260,000 peacekeepers from 69 partner countries.

MAN PLEADS GUILTY IN VOTER INTIMIDATION AND IDENTIFICATION FRAUD CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, May 29, 2014
Seattle Man Pleads Guilty to Voter Intimidation and Identification Fraud for Letters Sent to Florida Residents in Conjunction with the 2012 Federal Elections

James Webb Baker Jr., 58, of Seattle, pleaded guilty today to one count of voter intimidation and one count of identification fraud in the U.S. District Court for the Middle District of Florida.  Prior to the 2012 federal elections, Baker created and sent 200 fake voter eligibility letters to Republican Party donors across Florida that questioned the recipients’ citizenship status.  During the plea hearing, Baker admitted that he intended the letters to look as if they were written by county elections officials and that his purpose in sending the letters was to intimidate the recipients and interfere with their right to vote.

According to the evidence presented in court proceedings and documents, in October 2012, Baker read about the efforts of the Florida Governor and the Florida Secretary of State to remove the names of voters from the official Florida county lists of eligible voters.  Angered by what he believed to be an attempt to suppress voter turnout, specifically of Hispanic voters who would vote for candidates of the Democratic Party, Baker created “false” or “copycat” voter eligibility letters of the actual letters sent by county officials.  Baker sent his letters, which questioned the recipient’s eligibility to vote, to 200 Republican Party donors.  The letters required the recipients to complete a voter eligibility form within 15 days or else their name would be removed from the voter registration rolls.  Baker inserted a line of text in bold stating that a nonregistered voter who casts a vote may be subject to criminal sanctions.

The letters looked almost identical to official county Supervisor of Elections letters, and included the county official’s name, letterhead, address and contact information.  During the plea proceedings, Baker admitted to making several changes to the original official letters in order to stress the threats that the recipients would lose their right to vote and/or be imprisoned if they did not first document their citizenship and right to vote in person to the registrar.

“Protecting the right to vote is one of the department’s top priorities,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.  “The Civil Rights Division is strongly committed to comprehensive and vigorous enforcement of laws that protect the rights of every American to vote free from intimidation, coercion, or threats.”

“My office is committed to aggressively protecting the integrity of the election process,” said U.S. Attorney A. Lee Bentley III for the Middle District of Florida.  “Each citizen must be able to vote without intimidation or discrimination and to have that vote counted.  It is imperative that those who have specific information about intimidation, discrimination or election fraud make that information available immediately to my office, the FBI or the Civil Rights Division.”

“This joint investigative effort is yet another example of the fortitude and commitment  of our collective agencies to protect our citizen’s individual and constitutional rights,” said FBI Special Agent in Charge Paul Wysopal for the FBI Tampa Field Office.

“This case was complex,”  said Florida Department of Law Enforcement Commissioner Gerald Bailey.  “It required the expertise and dedication of FDLE Executive Investigations, crime lab analysts and intelligence analysts.  Their efforts led to the identification and conviction of Baker.  My thanks to each of them.”
           
“Using the U.S. Mail to threaten or intimidate voters will not be tolerated,” said  Inspector in Charge Brad Kleinknecht with the Seattle Division of the U.S. Postal Inspection Service.  “The Postal Inspection Service, along with its law enforcement partners, will continue to investigate all cases of this nature to ensure the U.S. Mail continues to play a key role our nation's election process.”

This case was investigated by the FBI, U.S. Postal Inspection Service and the Florida Department of Law Enforcement.  It is being prosecuted by Special Litigation Counsel Mark Blumburg and Trial Attorney William E. Nolan of the Civil Rights Division, and Assistant U.S. Attorney Robert A. Mosakowski of the U.S. Attorney’s Office for the Middle District of Florida.

MEDICAL CENTER TO PAY ALMOST $41 MILLION TO RESOLVE ALLEGED UNNECESSARY BILLING FOR CARDIAC PROCEDURES, KICKBACKS

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, May 28, 2014
King’s Daughters Medical Center to Pay Nearly $41 Million to Resolve Allegations of False Billing for Unnecessary Cardiac Procedures and Kickbacks

Ashland Hospital Corp. d/b/a King’s Daughters Medical Center (KDMC) has agreed to pay $40.9 million to resolve allegations that it submitted false claims to the Medicare and Kentucky Medicaid programs for medically unnecessary coronary stents and diagnostic catheterizations and had prohibited financial relationships with physicians referring patients to the hospital, the Justice Department announced today.

Assistant Attorney General Stuart F. Delery of the Justice Department’s Civil Division, U.S. Attorney Kerry Harvey for the Eastern District of Kentucky and Special Agent in Charge Derrick L. Jackson at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Kentucky region made the announcement.

“Hospitals that place their financial interests above the well-being of their patients will be held accountable,” said Assistant Attorney General Delery.   “ The Department of Justice will not tolerate those who abuse federal health care programs and put the beneficiaries of these programs at risk by providing medically unnecessary care.”

The government alleged that, between 2006 and 2011, KDMC billed for numerous unnecessary coronary stents and diagnostic catheterizations performed by KDMC physicians on Medicare and Medicaid patients who did not need them.   The government also alleged that the physicians falsified medical records in order to justify these unnecessary procedures, which allegedly generated millions of dollars in Medicare and Kentucky Medicaid reimbursements for KDMC.

“The conduct alleged in this matter is unacceptable, victimizing both taxpayers and patients,” said U.S. Attorney Harvey.   “Treatment decisions motivated by financial gain undermine public confidence in our health care system and threaten vital federal programs upon which so many of our citizens rely.   We will not relent in our efforts to protect the public from the sort of systematic misconduct alleged in this case.”

The settlement also resolves allegations that KDMC violated the Stark Law by paying certain cardiologists salaries that were unreasonably high and in excess of fair market value.   The Stark Law is designed to limit the influence of money on physicians’ medical decision-making by prohibiting financial relationships between hospitals and referring physicians, unless these relationships meet certain designated exceptions.

In connection with this settlement, KDMC has agreed to enter into a Corporate Integrity Agreement with HHS-OIG, which obligates the hospital to undertake substantial internal compliance reforms and to commit to a third-party review of its claims to federal health care programs for the next five years.

“Medically unnecessary procedures can cause serious health issues, cost the taxpayers millions of dollars each year and drain the Medicare Trust Fund,” said Special Agent in Charge Jackson.   “The OIG will continue to protect beneficiaries and hold health care providers accountable for improper claims.”

“This type of alleged conduct deceives individuals when they are seeking medical treatment and are vulnerable,” said Special Agent in Charge Perrye K. Turner of the FBI’s Louisville Field Division.  “The level of funds involved in this matter is staggering.   This money has been stolen from the patients and the taxpayers.”

The Commonwealth of Kentucky will receive approximately $1,018,380, which represents the state’s share of the recovered Medicaid funds.   The Medicaid program is funded jointly by the federal and state governments.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $19 billion through False Claims Act cases, with more than $13.4 billion of that amount recovered in cases involving fraud against federal health care programs.

The investigation was conducted by the FBI, the HHS-OIG, the Kentucky Office of Attorney General, Medicaid Fraud and Abuse Control Unit, the Commercial Litigation Branch of the Department of Justice’s Civil Division and the U.S. Attorney’s Office for the Eastern District of Kentucky.   The claims settled by this agreement are allegations only, and there has been no determination of liability.

CHAIRMAN JOINT CHIEFS GIVE TAKE ON IRAN'S INFLUENCE

FROM:  U.S. DEFENSE DEPARTMENT 
Dempsey Discusses Iran’s Influence on Region
By Jim Garamone
American Forces Press Service

ABU DHABI, United Arab Emirates, May 28, 2014 – A diplomatic solution to the problems caused by Iran’s pursuit of nuclear weapons technology is infinitely preferable to a military operation, but the military option remains available, the chairman of the Joint Chiefs of Staff said here today.

Army Gen. Martin E. Dempsey said in an interview that the United States maintains a “credible and capable amount of military force in the region so that if the diplomatic track fails, it is available to my leaders.”

President Barack Obama has stated many times that the United States will not allow Iran to develop nuclear weapons. “If [Iran] takes the opportunity and comes to that conclusion diplomatically, everyone will be better off,” he said.
But ending Iran’s nuclear ambitions won’t solve the problem the country poses to the region, the chairman said.

“They exert malign influence in others ways, to include surrogates and proxies [such as] Lebanese Hezbollah [and] the IRGC Quds Force. They are the region’s biggest trafficker in weapons. They are very active in a malign way in cyber,” he said. “There are many things that cause me concern about Iran, both regionally and globally, that will not be solved even if the nuclear issue is solved.”

Unless they change their behavior, Dempsey said, Iranian leaders will be held accountable for other things, adding that the United States would like Iran to change its behavior and be a constructive influence in the world.

“But we’re not naive,” he said. “There’s a pretty significant distance to where we are today with Iran and where we might like to be.”

With its rich history and a culture that has influenced the world, Dempsey said, Iran can take a constructive turn. “We certainly would hope Iran would take advantage of those things and stop its malign activities,” he added.

SEC FILES ACCOUNTING FRAUD CHARGES AGAINST COMPANY FOR MANIPULATING INVENTORY ACCOUNTS

FROM:  SECURITIES AND EXCHANGE COMMISSION 
The Securities and Exchange Commission today filed accounting fraud charges against a Dallas-based company and its former chief financial officer for manipulating its inventory accounts.

The SEC alleges that I. John Benson made repeated false accounting entries that materially inflated the value of inventory on the balance sheets at DGSE Companies Inc., which buys and sells jewelry, diamonds, fine watches, rare coins, precious metals and other collectibles.  Benson’s entries made it appear that DGSE owned certain inventory that actually still belonged to customers in consignment arrangements where DGSE held the goods on the owner’s behalf until they were sold.  Benson then misled the company’s independent auditors about the journal entries, and DGSE subsequently overstated its inventory by anywhere from 99.1 percent to 227.4 percent in public filings during 2009, 2010, and 2011.

DGSE agreed to settle the SEC’s charges, and Benson agreed to a settlement in which he will pay a $75,000 penalty, be permanently barred from serving as an officer or director of a public company, and be suspended from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.

“Benson’s job as CFO was to protect the integrity of DGSE’s financial statements,” said David Woodcock, chair of the SEC Enforcement Division’s Financial Reporting and Audit Task Force and director of the Fort Worth Regional Office.  “Instead he took advantage of DGSE’s weak internal control environment to intentionally manipulate its public filings.”

According to the SEC’s complaint filed in the Dallas Division of U.S. District Court for the Northern District of Texas, deficiencies in DGSE’s accounting systems and controls led to problems that significantly compromised the integrity of the company’s financial data.  The deficiencies included the failure to properly record intercompany transactions such as inventory transfers between stores.  As a result, DGSE’s intercompany accounts became out of balance by millions of dollars.

The SEC alleges that Benson subsequently made a number of fraudulent accounting entries in order to bring the intercompany accounts and DGSE’s general ledger as a whole back into balance.  The entries resulted in a number of errors in DGSE’s financial statements including the large overstatement of DGSE inventory by millions of dollars.  Benson concealed the improper entries by manipulating inventory detail listings to improperly reflect the consigned inventory as being owned by DGSE.  Benson sent these listings to DGSE’s external auditor, and misled the auditor to believe the consigned goods were owned by DGSE.  Benson then knowingly signed misleading public filings by DGSE, including annual reports for the 2009 and 2010 fiscal years as well as quarterly filings.  Benson also signed false management certifications that were attached to these filings.

Benson is charged with violating the antifraud, reporting, recordkeeping, lying-to-accountants and internal controls provisions of the federal securities laws.  DGSE is charged with reporting, recordkeeping, and internal controls failures.  DGSE and Benson each consented to injunctions against future violations of these provisions.  DGSE also agreed to the appointment of an independent consultant to review the company’s accounting controls, and DGSE has taken or agreed to take remedial steps to correct its deficiencies.

The SEC’s investigation was conducted by Chris Davis, Keith Hunter, and Joann Harris of the Fort Worth Regional Office.

FDIC REPORTS INSURED INSTITUTION FIRST QUARTER INCOME OF $37.2 BILLION, DOWN $3.1 BILLION

FROM:  U.S. FEDERAL DEPOSIT INSURANCE CORPORATION 
Commercial banks and savings institutions insured by the Federal Deposit 

Insurance Corporation (FDIC) reported aggregate net income of $37.2 billion in the first quarter of 2014, down $3.1 billion (7.6 percent) from earnings of $40.3 billion the industry reported a year earlier. The decline in earnings was mainly attributable to a $7.1 billion (10.7 percent) decline in noninterest income. Lower income from reduced mortgage activity and a drop in trading revenue contributed to a year-over-year decline in noninterest income. Additionally, noninterest income was higher one year ago due to a one-time gain at one institution. Despite the decline in earnings, more than half of the 6,730 insured institutions reporting (54 percent) had year-over-year growth in quarterly earnings. The proportion of banks that were unprofitable during the first quarter fell to 7.3 percent from 8.5 percent a year earlier.

"We saw further improvement in the condition of the banking industry in the first quarter," said FDIC Chairman Martin J. Gruenberg. "Asset quality continues to improve, loan balances are trending up, fewer institutions are unprofitable, and the number of problem banks continues to decline. However, industry revenue has been affected by narrow margins, modest loan growth, and a decline in noninterest income as higher interest rates have reduced mortgage-related activity and trading income fell."

Asset quality indicators continued to show improvement as insured banks and thrifts charged off $10.4 billion in uncollectible loans during the quarter, down $5.5 billion (34.8 percent) from a year earlier. The amount of noncurrent loans and leases (those 90 days or more past due or in nonaccrual status) fell by $12.1 billion (5.8 percent) during the quarter. The percentage of loans and leases that were noncurrent declined to 2.46 percent, the lowest level since the 2.35 percent posted at the end of third quarter 2008.

Total loan and lease balances rose by $37.8 billion (0.5 percent) in the first quarter to $7.9 trillion. Credit card balances posted a seasonal decline and banks continued to reduce their inventories of mortgage loans held for sale, but most other loan categories registered modest growth. Over the last 12 months, loan and lease balances increased by 3.6 percent, the highest 12-month growth rate since before the recent financial crisis.

Despite the overall growth in loan and lease balances, income from mortgage-related activity remained well below the level of a year earlier. Noninterest income from the sale, securitization and servicing of mortgages was $4.0 billion (53.6 percent) lower than a year ago. One- to four-family residential real estate loans originated and intended for sale were $323.6 billion (70.6 percent) lower than in the first quarter of 2013, as rising interest rates in the second quarter of 2013 reduced the demand for mortgage refinancings. Realized gains on available-for-sale securities also were lower than a year ago, as higher medium- and long-term interest rates reduced the market values of fixed-rate securities. Banks reported $827 million in pretax income from realized gains in the first quarter, a decline of $1.2 billion (60.1 percent) from the first quarter of 2013.

First quarter net operating revenue (the sum of net interest income and total noninterest income) of $163.7 billion was $6.7 billion (4.0 percent) lower than a year earlier, as a $361 million (0.3 percent) increase in net interest income was outweighed by the drop in noninterest income. The average net interest margin (the difference between the average yield banks earn on loans and other investments and the average cost of funding those investments) was 3.17 percent, the lowest since the third quarter of 1989 as declining asset yields at larger institutions outpaced the decline in the cost of funds.

Total noninterest expense was $18 million (0.02 percent) lower than in the first quarter of 2013, as payroll expenses fell by $579 million (1.2 percent). Banks set aside $7.6 billion in provisions for loan losses, a reduction of $3.3 billion (30.3 percent) compared to a year earlier. This is the 18th consecutive quarter that the industry has reported a year-over-year decline in quarterly loss provisions.

The average return on assets (ROA) fell to 1.01 percent in the first quarter from 1.12 percent a year earlier and the average return on equity (ROE) fell to 8.99 percent from 9.96 percent.

Financial results for the first quarter of 2014 are contained in the FDIC's latest Quarterly Banking Profile, which was released today. Also among the findings:

Community banks earned $4.4 billion during the quarter. The FDIC has added a new section to the Quarterly Banking Profile that reports on the performance of community banks – those institutions that provide traditional, relationship-based banking services in their local communities. Based on criteria developed for the FDIC Community Banking Study published in December 2012, there were 6,234 community banks (93 percent of all FDIC-insured institutions) in the first quarter of 2014 with assets of $2.0 trillion (14 percent of industry assets). Although net income at community banks of $4.4 billion was down $67 million (1.5 percent) from a year earlier, the percentage decline was far less than the 7.6 percent decline in earnings reported by the industry. The report also finds that loan balances at community banks grew at a faster pace than the industry, asset quality indicators continued to show improvement, and community banks accounted for 45 percent of small loans to businesses.

The number of "problem banks" fell for the 12th consecutive quarter. The number of banks on the FDIC's "Problem List" declined from 467 to 411 during the quarter. The number of "problem" banks now is less than half the post-crisis high of 888 at the end of the first quarter of 2011. Five FDIC-insured institutions failed in the first quarter.

The Deposit Insurance Fund (DIF) balance continued to increase. The DIF balance (the net worth of the Fund) rose to $48.9 billion as of March 31 from $47.2 billion at year-end 2013. Assessment income was the primary contributor to the growth in the Fund balance. Estimated insured deposits increased 1.9 percent, and the DIF reserve ratio (the Fund balance as a percentage of estimated insured deposits) rose to 0.80 percent as of March 31 from 0.79 percent at the end of 2013. A year ago, the DIF reserve ratio was 0.60 percent. By law, the DIF must achieve a minimum reserve ratio of 1.35 percent by 2020.

INTERNATIONAL RHINO HORN, ELEPHANT IVORY SMUGGLER SENTENCE TO 70 MONTHS IN PRISON

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, May 28, 2014
Ringleader of International Rhino Smuggling Conspiracy Sentenced in New Jersey to 70 Months in Prison for Wildlife Trafficking Crimes

Zhifei Li, the owner of an antique business in China, was sentenced today to serve 70 months in prison for heading an illegal wildlife smuggling conspiracy in which 30 rhinoceros horns and numerous objects made from rhino horn and elephant ivory worth more than $4.5 million were smuggled from the United States to China.

The sentence – one of the longest sentences to be imposed in the United States for a wildlife smuggling offense – was announced by Sam Hirsch, the Acting Assistant Attorney General for the Environment and Natural Resources Division of the Department of Justice; Paul J. Fishman, U.S. Attorney for the District of New Jersey; Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida; and Dan Ashe, Director of the U.S. Fish and Wildlife Service (USFWS).

Li, 30, of Shandong, China, the owner of Overseas Treasure Finding in Shandong, previously pleaded guilty before U.S. District Judge Esther Salas to a total of 11 counts: one count of conspiracy to smuggle and violate the Lacey Act; seven counts of smuggling; one count of illegal wildlife trafficking in violation of the Lacey Act; and two counts of making false wildlife documents.  Judge Salas also imposed the sentence today in Newark federal court.

“Li was the ringleader of a criminal enterprise that spanned the globe and profited from an illegal trade that is pushing endangered animals toward extinction,” said Sam Hirsch, Acting Assistant Attorney General for the Environment and Natural Resources Division.  “As this case clearly demonstrates, rhino trafficking is increasingly organized, well financed, and a threat to the rule of law.  The United States is resolved to bring wildlife traffickers to justice.”

“The multibillion-dollar illegal wildlife market is supplied by animal poaching of unthinkable brutality and fed by those willing to profit from such cruelty,” said U.S. Attorney Fishman.  “Zhifei Li appropriately faces 70 months in prison for orchestrating schemes worth millions of dollars and for violating laws meant to protect the most vulnerable species.”

“Wild populations of rhinos are being slaughtered at appalling rates due to the greed and indifference of criminals like Li and his accomplices,” said U.S. Fish and Wildlife Service Director Dan Ashe. “The sentence handed down today serves notice to other organized trafficking and poaching rings that their crimes will not go unpunished.  We will relentlessly work across the U.S. government and with the international law enforcement community to destroy these networks, while strengthening protections for rhinos in the wild and reducing demand for horn in consumer countries.”

Li was arrested in Florida in January 2013, shortly after arriving in the country, on federal charges brought under seal in New Jersey.  Before he was arrested, he purchased two endangered black rhinoceros horns from an undercover USFWS agent in a Miami Beach hotel room for $59,000 while attending an antique show.  Li was arrested as part of “Operation Crash” – a nationwide effort led by the USFWS and the Justice Department to investigate and prosecute those involved in the black market trade of rhinoceros horns and other protected species.

In papers filed in Newark federal court, Li admitted that he was the “boss” of three antique dealers in the United States whom he paid to help obtain wildlife items and smuggle them to him via Hong Kong.  One of those individuals was Qiang Wang, aka “Jeffrey Wang,” who was sentenced to 37 months in prison on Dec. 5, 2013, in the Southern District of New York .   Li played a leadership and organizational role in the smuggling conspiracy by arranging for financing to pay for the wildlife, purchasing and negotiating prices, directing how to smuggle the items out of the United States, and getting the assistance of additional collaborators in Hong Kong to receive the goods and smuggle them to him in mainland China.

Rhinoceros are an herbivore species of prehistoric origin and one of the largest remaining mega-fauna on earth.  They have no known predators other than humans. All species of rhinoceros are protected under United States and international law.  Since 1976, trade in rhinoceros horn has been regulated under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (known as CITES), a treaty signed by over 170 countries around the world to protect fish, wildlife and plants that are or may become imperiled due to the demands of international markets.

In pleading guilty, Li admitted that he sold 30 smuggled, raw rhinoceros horns worth approximately $3 million – approximately $17,500 per pound – to factories in China where raw rhinoceros horns are carved into fake antiques known as Zuo Jiu (which means “to make it as old” in Mandarin).   In China, there is a centuries old tradition of drinking from an intricately carved “libation cup” made from a rhinoceros horn.  Owning or drinking from such a cup is believed by some to bring good health, and true antiques are highly prized by collectors.  The escalating value of such items has resulted in an increased demand for rhinoceros horn that has helped fuel a thriving black market, including recently carved fake antiques.

In addition to the prison term, Judge Salas ordered Li to serve two years of supervised release and to forfeit $3.5 million in proceeds of his criminal activity as well as several Asian artifacts. Various ivory objects seized by the USFWS as part of the investigation have also been surrendered.

The investigation is continuing and is being handled by the U.S. Fish & Wildlife Service’s Office of Law Enforcement, the U.S. Attorney’s Office for the District of New Jersey, the U.S. Attorney’s Office for the Southern District of Florida and the Justice Department’s Environmental Crimes Section.

The government is represented by Assistant U.S. Attorneys Kathleen P. O’Leary and Barbara Ward of the New Jersey U.S. Attorney’s Office Criminal Division and Asset Forfeiture and Money Laundering Unit, Assistant U.S. Attorney Thomas Watts-FitzGerald of the U.S. Attorney’s Office for the Southern District of Florida and Senior Counsel Richard A. Udell of the Justice Department’s Environmental Crimes Section of the Environment and Natural Resources Division.

Wednesday, May 28, 2014

BACKGROUND CONFERENCE CALL REGARDING PRESIDENT'S COMMENCEMENT ADDRESS AT WEST POINT

FROM:  THE WHITE HOUSE 

Background Conference Call on the President's Commencement Address at West Point

11:15 A.M. EDT
SENIOR ADMINISTRATION OFFICIAL:  I’ll just say a few things and then take your questions.  So in the President’s speech today he was focused on defining, as we come out of a period dominated by the wars in Iraq and Afghanistan, what the next phase of our foreign policy is, both as it relates to our counterterrorism mission and also our broader role in the world.  You heard him speak at length about that.  I’ll only comment on a number of things.
First of all, as we laid out yesterday, we have a commitment now and a decision about how to wind down the war in Afghanistan that involves keeping a force of 9,800 U.S. servicemembers at the beginning of 2015, and then stepping down to a security presence in our embassy in Kabul, as we did in Iraq, by the end of 2016. 
Having made that decision and that announcement yesterday, today the President wanted to discuss the counterterrorism strategy that comes next, what replaces the approach that was focused on the large-scale deployments that we had in Iraq and Afghanistan.  And he made very clear that that approach needs to match our resources to the threat, which has changed as al Qaeda core has been severely degraded, but other al Qaeda affiliates and extremist groups have emerged in different parts of the region from South Asia to the Sahel. 
The President was very clear that the focus of our efforts must be capacity building.  We need to build essentially a network of partners across this region so that we can deal with the terrorist threat.  And we will support that series of partnerships in different ways.  In some instances, we will provide training and equipping.  In some instances, we will facilitate actions like we were doing in Mali for the French.  We have resources that range from intelligence to special operations to trainers.  And, of course, we will take direct action against a terrorist when it is necessary for our own security.
In order to provide funding and resources for this capacity building, the President announced that he will be working with Congress to establish a Counterterrorism Partnerships Fund of up to $5 billion.  And the purpose of this fund is to make sure that we have the resources available, and the flexibility available, to support all these different missions. 
We highlight the challenge of Syria as both a huge humanitarian crisis and a growing counterterrorism issue.  And the President indicated that this additional funding will support, for instance, Syria’s neighbors who are dealing with a terrorist threat that crosses borders.  He also made very clear that we will continue to find ways to support the Syrian opposition.  And we have, as we’ve told you, provided different types of support, including military support, to the Syrian opposition and we are doing more to increase that support.  And that’s something that we’re going to continue to do going forward.  And we will work with Congress, as he indicated, to find ways to increase that support for the Syrian opposition.
Beyond counterterrorism, he laid out his vision for U.S. leadership in the world, one that is rooted in the United States strengthening existing international institutions and norms, but also working to establish clear rules of the road for emerging challenges from cybersecurity to maritime issues to climate change.  And you heard him highlight two of our key priorities, Iran and Ukraine, where we have worked through collective action with the international community to achieve our objectives.
And, of course, you heard the President speak about our ongoing commitment to promote our values around the world, both through support for democratic transitions in countries like Burma and in the Middle East and North Africa, but also through an increased focus on broadening our relationships and networks with peoples around the world.
With that, I’m happy to move to questions about any elements of the speech or any of the policies that the President touched on. 
Q    On Syria, could you give some more details on what the President means when he says he will work with Congress to find ways to ramp up support for the opposition?  Is the administration considering an open effort by the U.S. military to train and arm in some way the opposition?
SENIOR ADMINISTRATION OFFICIAL:  Yes, it’s a good question.  So, first of all, we have an ongoing effort to ramp up our support for the moderate opposition, and that is an effort that we coordinate very closely with our Arab partners and our European allies.  And we believe that the trajectory of that assistance has been upward and can make a real difference in strengthening the moderate opposition.
We also, as I indicated, are going to commit additional resources to the neighbors -- Jordan, Lebanon, Turkey, Iraq -- who are dealing with both refugee and counterterrorism challenges.  But as we look for additional ways to strengthen the opposition, we want to review a variety of different options.  We believe, again, that strengthening the opposition is both the best counterweight to Assad and also the best counterweight to the extremist elements within Syria.  And we do want to work to review the possibility of the United States military participating in that effort.
I would draw your attention, for instance, to a provision in the National Defense Authorization Act, the NDAA, which indicates support for and authorities for the Secretary of Defense to provide military assistance to the vetted Syrian opposition.  I think that indicates an emerging view in Congress that is supportive of providing that type of authority for the United States military to participate in support for the opposition.
So this is a conversation that we want to have with Congress as they develop their approaches, as we develop ideas for how to increase resources that can flow to the Syrian opposition.  So this is something, again, we’ll be discussing with Congress in the coming weeks and months.  I think the basic principle is, what are the best ways for us to provide support to the Syrian opposition; what are the different means of doing so; how can we increase resources, as the President spoke about; and how do we explore areas like authorities that are within that provision that I think was an initiative of Carl Levin, but also then drew broad support in the Armed Services Committee -- I believe it passed 26 to 1 23-3.
So this will be an ongoing focus for us as we head into the summer.
Q    After listening to your answer just now it’s still not entirely clear to me whether the U.S. will train an armed Syrian opposition.  Are you able to give a yes or no answer to that?  And secondly, the President talked about giving more support to Syria’s neighbors.  Is there a monetary figure on that support?  Thank you.
SENIOR ADMINISTRATION OFFICIAL:  We have been very clear that we do provide military assistance to the Syrian opposition, the armed Syrian opposition.  We don’t detail the specifics of that support. 
What we’re saying today, in addition to that, is not only do we want to continue to increase the assistance that we provide to the Syrian opposition, but we do want to have this discussion with Congress about the potential for there to be a role for the U.S. military in that effort.  We would need authorities to do that, obviously, and that is what, for instance, is in the Levin provision that I mentioned.
So this is something that we have to work with Congress on going forward.  But again, we are, as we said, providing military assistance to the Syrian opposition, and it’s something that will continue to be a focus given both the need to counter Assad but also to deal with the counterterrorism challenge within Syria.
In terms of the neighbors, this would be a part of this fund, again, that is up to $5 billion to deal with different contingencies across the region.  So I don’t want to break down the specific dollar amounts for individual countries; that’s something that we’ll be reviewing within the administration and the Congress as well. 
But the fact is, we want a fund like this precisely so we have flexibility, so that if we need to surge particular resources to a particular counterterrorism partner we can do that, even as we have steady support in places like Yemen or Somalia for security forces and peacekeeping forces.
So it will be a part of that Counterterrorism Partnerships Fund that the President discussed today. 
Q    Just a little more on that counterterrorism fund.  You all are asking for that money.  What’s sort of the plan if Congress doesn’t go along and actually fund that counterterrorism fund?  Do you have a second idea how you want to approach that?  And would you call the section of the speech where the President talked about our role in the world being less effective if perception takes hold, that we are conducting surveillance against ordinary citizens, the Edward Snowden effect?  And how much did the Edward Snowden leaks play into how the speech was developed?
SENIOR ADMINISTRATION OFFICIAL:  Sure.  So on your first question, obviously, we need the support of Congress for any type of additional funding above and beyond what’s already established.  I think that, generally, we’ve had broad bipartisan support for counterterrorism missions in Congress, so we’re optimistic that this is the type of approach that can sustain that support as we discuss our overseas contingency funding with Congress in the coming weeks. 
Again, we also I think would say that this is substantially less funding than was required for the wars in Iraq and Afghanistan.  So for instance, recently, at the height of the Afghan war, we were spending $10 to $15 billion a month in Afghanistan.  Part of what we’re able to do, even with the type of presence that we’re going to have in Afghanistan next year, is have a substantial drawdown in resources and funding dedicated to Afghanistan.  We want to take some of those resources and apply it to this type of fund for counterterrorism partnerships. 
That’s part of reallocating our resources across the region to match the threat.  The threat is not overwhelmingly in Afghanistan and Pakistan anymore; in fact, it’s much more dispersed.  This is an effort to reallocate resources to match the threat so that we’re spending less in Afghanistan and we’re able to dedicate more resources to the partnerships that the President talked about in the Middle East and North Africa.
On your second question, this is not a focus of the speech.  Obviously, the speech that the President gave at the Justice Department earlier this year dealt broadly with not just the disclosures by Mr. Snowden, but our approach to bulk collection and other intelligence activities.
What the President was making a point of today is we must hold ourselves to high standards as a part of maintaining American leadership; that the legitimacy that the United States has to lead the world flows from the fact that we don’t act outside of the international standards that we’ve helped to establish, and that the confidence of other nations and people that work with us is rooted in their belief that the United States has a commitment, for instance, to the rule of law and to human rights.
And again, as a part of that, we do believe that we need to give greater confidence to not just the American people, but to foreign publics as well, that the United States is not engaged in bulk collection for the purpose of conducting surveillance on ordinary people; they were focused on threats.  And so we’re taking a number of steps that the President outlined earlier this year to give those additional protections to citizens in other countries to provide assurances about what our intelligence is focused on and what it’s not focused on.
So this is going to be a significant focus for us in the next two and a half years.  And it’s a part of how we lead not just through our extraordinary capabilities in areas like intelligence, but in our commitment to use those capabilities in a way that people have confidence is not violating their privacy unnecessarily. 
Q    It’s a two-parter.  On climate change, since it’s a mention in the national security context, I’m wondering whether the administration is considering or committed to both framing the rollout of coal stuff and other climate change stuff in a national security framework, and also using that as sort of executive power authorization to do climate change policy. 
And then, I’m sorry to beat the dead horse -- I’m just a little slow -- on the Syria consideration of U.S. military to do some of the rebel training, can you review real quickly what you think Hagel can do now and what you think it is that he needs congressional authority to do?  And would the training be in Syria or in neighboring countries? 
SENIOR ADMINISTRATION OFFICIAL:  On the climate change issue, I think, broadly, climate change is a challenge that cuts across many different areas.  One of those is national security, because, as the President said, this is going to pose increasing national security dangers to the United States, and we’re going to be called upon to respond to conflicts or situations that have connections to climate change.  You can’t draw a red line, but clearly there has been an uptick in extreme weather events. 
When there’s a typhoon in Southeast Asia, when there’s a tsunami, the U.S. military is often called in for disaster response.  As the President referenced today, when there are refugees or conflicts over basic resources like food and water, that ultimately can have a bearing on national security.  So there’s a very clear intersection, we believe, between a changing climate and our national security interests. 
I think what’s important to note here is that our efforts domestically do intersect with our leadership internationally.  Next year, we are aiming to conclude a global climate framework agreement that has been a process of negotiation since Copenhagen in 2009.  Any successful international climate agreement is going to depend on many nations, including the United States, making commitments to reduce their emissions.  So in other words, actions that nations take domestically are going to have to be a part of how we build an international response, because everybody has to step up to the plate.  Of course, one of the things we said is we’re willing to take steps to reduce our emissions, but we need countries like China and India that are emerging emitters to take steps as well.
So the Climate Action Plan that we’ve developed over the course of the last year or so informed America’s commitment that we can then make as we pursue this type of global climate agreement.  These are steps that are important to take in their own right for the sake of the American people, and they’re also steps that will allow us to meet the types of commitments that we made in Copenhagen, whether you’re talking about fuel efficiency standards or coal-fired power plants. 
I won’t get into the specifics of those development elements beyond saying that they do intersect with the way in which we’re going to lead, as the President said, in pursuing this global climate framework agreement next year.  And that’s a big piece of business for us, and it’s going to demand U.S. leadership -- because, frankly, this is not the type of agreement that’s going to work if it’s only a handful of nations.  We really need the entire international community to make their commitments, to stand by those commitments in a transparent manner.  And that’s what we’ll be pursuing.
On Syria, I think if you look at the different options for providing assistance, the U.S. military would need certain additional authorities and resources to be able to step up with assistance to the Syrian opposition.  And you see in the language of the Levin provision that just moved through committee the types of authorities to the Secretary of Defense that would enable him to provide assistance to the vetted Syrian opposition. 
So that is something where there needs to be coordination and a dialogue between the administration and Congress.  That’s a discussion that’s ongoing that we’ll continue to have.  And again, that is one option available for looking at ways to increase support to the Syrian opposition.  We’re working across many lines of effort.  We provide many types of assistance, from humanitarian to nonlethal, to the types of military support we’ve indicated, to the Syrian opposition.  That’s one area where we want to explore whether we can come to some understanding with Congress about the best way to maximize our resources and to get additional support to the Syrian people.
Q    To continue on this same subject of the Counterterrorism Partnerships Fund, first, do you envision that as being both a Title 10 and Title 50 available fund -- in other words, able to do both types of CT missions? 
Second, you’ve talked a lot about the role that the military might play in Syria, and you seem to be focusing on a training role.  But can you envision emerging from these discussions with Congress something broader in which the military would assist in some ways in providing greater security in the zones that the opposition now holds in the north and south? 
And finally, you’ve said again and again we’re going to have discussions with Congress, we have to talk about this with Congress.  Has the administration itself made up its mind what it wants to propose yet?  It sounds to me as if you haven’t. 
SENIOR ADMINISTRATION OFFICIAL:  So on your first question, this is military funding title, so this would not get at the intelligence community; this would be for security support for a range of different purposes.  The President said a couple of examples today where we’ve dedicated some resources.  We dedicate resources to Mali to facilitate French actions with intelligence, with logistical support that is essential for their operations.  We train Yemeni security services.  We provide support to AMISOM in Somalia.  We equip Iraqi security forces. 
So these are all different missions that have a common thread of building capacity for partners, and the assistance would take place in that context.  The intelligence community has a separate budgeting process.
On Syria -- and your question overlaps with part of Margaret’s -- look, no, this is not -- we’re talking specifically about assistance to the opposition; we’re not talking about activities within Syria by the United States military.  That is not something that we’re contemplating. 
So I think the way to characterize the last part of your question is that we have decided that we need to continue to find ways to increase support to the opposition.  We have different ways to do that, both through our own actions, to the manner in which we collaborate with allies and partners in Europe and the Gulf, and we also want to consider whether an approach that involves the U.S. military could add to that capability.
So I think we’re looking across many different means that we have to provide this assistance.  And this is an additional option that we want to pursue with Congress and make a determination then about whether it’s the best way to increase that support.
But I think irrespective of that, clearly our trajectory is more support to the neighbors, more support to the opposition, more coordination with, for instance, the countries in the London 11, and then consideration of this additional alternative means of providing support to the opposition. 
Q    Yes, let me try this one more time, because I don’t think we’re getting a straight answer here.  Is it safe to say the White House has not decided whether to endorse the Senate language here?  Because that’s really the only thing on the table in Congress, and they’re quite clear that they have the Pentagon train and support and provide assistance to the rebels.  Have you not decided that yet?  Is that where we are? 
And if that’s the case, what do you say to critics who say, listen, you should have trained and armed the rebels two years ago when the entire national security establishment said, do so.  So what do you say to them that this whole notion of coordinating and dialogue is just delaying?
SENIOR ADMINISTRATION OFFICIAL:  Well, first of all, we have been providing assistance to the opposition for some time now.  So we’re not at a standing start here when it comes to support for the armed opposition in Syria. 
With respect to the Levin provision, clearly we think that it puts forward a good concept, which is why we made a point today of indicating the fact that we want to pursue these discussions with Congress.  The fact of the matter is this is not something we can do alone as an administration; this is something that we have to do in partnership with Congress.  So I think that’s why we want to see this discussion move forward between the executive branch and the legislative branch. 
And we also want to make sure that wherever we land in terms of those discussions, that it fits appropriately into our broader strategy as it relates to how we’re working with the partners in the Arab World, how we’re working with our allies.  All these pieces need to fit together.
So this would be an additional piece, and we’re looking carefully at it.  We do think that language in the Levin provision is positive and puts forward a good concept, but we want to take the time necessary to ensure that we get this right and that we fold this into a broader strategy that supports our objectives inside of Syria. 
Q    On Syria, again -- what’s the White House’s sense of timing on this, with increasing evidence that the opposition is losing militarily after the fall of Aleppo?  What’s the timeframe for making a decision and actually beefing up military assistance if that’s indeed what the White House wants to do?  Is there a sense of urgency here? 
SENIOR ADMINISTRATION OFFICIAL:  There are two questions here.  We are beefing up our assistance.  That is an ongoing process.  So resources are reaching the opposition, resources are reaching the armed opposition.  Coordination has improved with our partners in the Arab World, particularly in the Gulf. 
So there is that upward trajectory already.  That’s not in question at all.  And additional funding that can support that effort and support the neighbors is a focal point of how we look at building partnerships across the region, which is what the President said today. 
Then there’s the separate question of simply what additional authorities might be necessary for the U.S. military to participate in our efforts.  And that’s the question that we’ll be pursuing in the coming weeks.  But again, that doesn’t foreclose the fact that we are working this already, we are increasing our support already, we are coordinating better with partners already.  That’s going to continue to be the case no matter what. 
Q    I wanted to just turn to China and ask you, what is the message to China here?  I mean, we heard the President talk about the use of military action to defend the security of U.S. allies, which of course includes Japan and the Philippines.  But he also called out the U.S. Senate for not ratifying UNCLOS.  So what’s the message to China?
SENIOR ADMINISTRATION OFFICIAL:  The message is that the United States is going to support basic international rules of the road that should apply to everyone.  And we’ve said many times our Asia rebalance strategy is not aimed at China.  It’s focused on strengthening U.S. engagement in the region, but also strengthening the rules of the road across the region -- whether it’s on trade through the Trans-Pacific Partnership, whether it’s on maritime security where we would like to see disputes resolved consistent with international law.
So the bottom line is that the United States would like to see China act consistent with those rules of the road.  And we believe that they have an opportunity to do so, for instance, through negotiation of a code of conduct with the ASEAN countries or through taking the different claims that are at stake in the South China Sea to international law and dispute resolution.  At the same time, though, we are going to be very clear that we object to bigger nations bullying smaller ones; that the United States is going to support those nations that abide by rules of the road and work to isolate those nations that don’t. 
So for China we would like to see them as a part of an Asia Pacific community that is adhering to high standards of trade, that is resolving disputes peacefully, consistent with international law, that is respecting basic rules and norms.  But if China acts outside of those norms, as they’ve done, for instance, on cyber issues, we’re going to call them out.
With respect to the Law of the Sea, the President made very clear that part of how the United States shows our own commitment to those rules and norms is by upholding them ourselves.  And we act consistent with the Convention on the Law of the Sea, but it would send an important message for the Senate to ratify it, because that is the means by which we want to see disputes resolved. 
So, again, we lead on behalf of an international order that can uphold peace and security both by what we do in regions like the Asia Pacific and on issues like trade and cyber and maritime, but we also have to lead on behalf of that international order through our own example.  And that’s why we believe the Senate has long passed the time when they should have ratified the Law of the Sea.
Q    Just one subject that the President didn’t bring up and I was hoping you might be able to lend some clarity to would be the status of -- about a year ago, the President called for a review and even repeal of the AUMF.  I’m wondering whether the administration is planning to send Congress specific language in terms of fixing it, any timetable in terms of when they want to work with Congress in terms of getting that repealed.  And if you could provide a little bit of maybe a window into the administration’s thinking in terms of how to approach this subject.
SENIOR ADMINISTRATION OFFICIAL:  Yes, I’d say a couple of things.  The point the President made at NDU is that we shouldn’t just have open-ended authorities for the use of military force that continue indefinitely; that we shouldn’t be in a permanent war here; that the AUMF in 2001 was written for a specific purpose and time.  And I think in terms of the timeframe, we look at the end of 2014 as a very important milestone as our combat mission comes to a close in Afghanistan and as our mission shifts there.  And so we look at a whole host of issues as intersecting with the end of 2014. 
The AUMF, which was written in the context of us going to Afghanistan -- we’ll want to talk to Congress about the AUMF as we approach the end of the year.  That’s a good time to have that discussion because we will be pivoting from where our combat mission is today and the type of role we’ll be playing in Afghanistan after 2014.  
GTMO is another issue that is relevant here.  GTMO was opened, after all, when we went into Afghanistan.  And the initial detainee population was heavily weighted with people who were taken off the battlefield in Afghanistan.  So we believe, again, as we bring our combat mission to an end in Afghanistan, that this is an appropriate year to make a redoubled effort to close GTMO.  So this is the context for how we’re approaching the AUMF as well.  I think this is a discussion we’ll have as we get closer to the end of the year.
I think in terms of what we’re looking for, we’re not looking for simply layering on more and more and more authorities within the existing AUMF.  The point here is to not just keep expanding some universal AUMF that applies to every challenge.  As the President said at NDU, what we want to do is narrow and refine authorities so that they’re focused on specific groups that do pose a direct threat to the United States.  And so that’s the approach that we would take into this discussion, which is how do we make sure that we have authorities that are focused on those groups who pose a direct threat to the United States and not simply stacking on additional authorities in the existing AUMFs. 
So this will be a part of how we wind down the war in Afghanistan and pivot to a more sustainable and focused counterterrorism effort across the region. 
Thanks, everybody, for getting on the call.  We can stay in touch on these issues.  And the only thing I’d say in closing is we said to you, I think, in the run-up to this that we weren’t solely focused on one speech here.  The President will obviously be going to Europe next year -- or next week.  In Poland, he’ll be able to talk about our commitment to European security, our commitment to NATO and our NATO allies.  He’ll have a G7.  He’ll speak at Normandy.  Other members of the administration will talk about different elements of our foreign policy priorities.  The President laid out I think a pretty clear roadmap of the types of issues he wants to get done in the next two and a half years. 
And I think you’ll hear different administration figures speak to different pieces of that agenda in the coming weeks as well.  So we’ll look forward to staying in touch.
MS. HAYDEN:  Thanks, everyone, for joining us.  Again, a reminder this call is on background to senior administration official.  And, as he noted, feel free to be in touch with us with other questions you have.  But everyone have a great day.  Thanks.
END
11:55 A.M. EDT

CHAIRMAN JOINT CHIEFS OF STAFF SAYS U.S. "NOT POLITICALLY EXHAUSTED"

FROM:  U.S. DEFENSE DEPARTMENT 
Dempsey Rejects Notion of Exhausted United States
By Jim Garamone
American Forces Press Service

ABU DHABI, United Arab Emirates, May 28, 2014 – The United States is not politically exhausted, “and it would be a mistake to come to that conclusion,” Army Gen. Martin E. Dempsey said during an interview here today.

“In fact, it would be a mistake to decide that we are politically exhausted or weary militarily,” the chairman of the Joint Chiefs of Staff told Sky News.

Many in the Persian Gulf region believe that the United States is exhausted from 13 years of war. They point to the withdrawal of troops from Iraq and the coming drawdown in Afghanistan as proof of this weariness, and they extrapolate a U.S. withdrawal from the region at large.

But this is not the case, Dempsey said, citing what has happened to al-Qaida as an example. Al-Qaida was a centralized organization based out of Afghanistan and Pakistan. The United States and its allies -- including the United Arab Emirates -- put pressure on the terror organization. Central al-Qaida is a shadow of its former self, but the group has adapted, the chairman said.

“They have taken advantage of unsettled and ungoverned spaces elsewhere in the Middle East and North Africa,” the general said. “The terror group is a long-term problem and not one the United States is giving up on.”

Rather than being weary or wary, Dempsey said, the United States is “rebalancing our efforts to build partners, to enable others and to do certain things ourselves -- but that should be our last resort.”

“For the most part,” he added, “we ought to address these challenges collaterally and collaboratively with partners.”

U.S. forces do face fiscal challenges, the chairman said, but he doesn’t see that affecting the Persian Gulf region. “We are going through a period of retraction in our budget, but it’s a matter of history,” he explained. “We go through this about every 20 years, and the United States still has the military capability to do many more than one thing at a time.”

The United States doesn’t face a choice to be either in the Atlantic or the Pacific, in Europe or the Middle East, or in Asia or Africa, Dempsey said.

“We have global responsibilities. We have global partnerships,” the chairman said. “One of the greatest strengths of the United States is its alliances, its partnerships, unlike some others who aspire to be great powers, but they don’t have friends, they don’t have partners. They try to go it alone. We, on the other hand, see our strength through our partners.”

U.S. DEFENSE DEPARTMENT CONTRACTS FOR MAY 28, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

ARMY

BAE Systems, Nashua, New Hampshire, was awarded a $447,051,113 modification (P00004) to contract W58RGZ-13-D-0245 to increase the ceiling by the announcement amount for the acquisition of Common Missile Warning Systems (CMWS) and associated spare parts, and systems engineering, technical, and logistics support services for both CMWS and Advanced Threat Infrared Countermeasures (ATIRCM). This modification is to establish negotiated prices for all part numbers in all ranges and increase the ceiling for both hardware and services support. Funding and work location for systems and services will be determined with each order. The estimated completion date is Sept. 29, 2016. Army Contracting Command, Redstone Arsenal, Alabama, is the contracting activity.

MEB General Contractors, Chesapeake, Virginia, was awarded an $8,433,000 firm-fixed-price contract for construction services to alter the KC-46A apron fuels distribution system, including supporting facilities, and to relocate fuel vents/valves at the 3-bay hangar and 2-bay hangars at McConnell Air Force Base, Kansas, with an estimated completion date of Dec. 3, 2015. Bids were solicited via the Internet with two received. Fiscal 2014 military construction funds in the amount of $8,433,000 are being obligated at the time of the award. U.S. Army Corps of Engineers, Kansas City, Missouri, is the contracting activity (W912DQ-14-C-4010).

TSS-Garco JV*, Richland, Washington, was awarded a $7,716,000 firm-fixed-price contract for the construction of multi-purpose machine gun range PN54106 at the Yakima Training Center, Yakima, Washington, with an estimated completion date of Nov. 27, 2015. Bids were solicited via the Internet with 12 received. Fiscal 2014 military construction funds in the amount of $7,716,000 are being obligated at the time of the award. U.S. Army Corps of Engineers, Seattle, Washington, is the contracting activity (W912DW-14-C-0012).

NAVY

Battelle Memorial Institute, Columbus, Ohio, is being awarded a maximum amount $30,000,000 indefinite-delivery/indefinite-quantity, architect-engineer contract for environmental restoration projects at various activities in the Naval Facilities Engineering Command Northwest area of responsibility. No task orders are being issued at this time. Work will be performed at various government installations including but not limited to Washington (75 percent); Alaska (22 percent); Idaho (1 percent); Montana (1 percent); and Oregon (1 percent). The term of the contract is not to exceed 60 months with an expected completion date of May 2019. Fiscal 2014 environmental restoration (Navy) contract funds in the amount of $10,000 are obligated on this award and will not expire at the end of the current fiscal year. This contract was competitively procured via the Navy Electronic Commerce Online website, with three proposals received. The Naval Facilities Engineering Command, Northwest, Silverdale, Washington, is the contracting activity (N44255-14-D-9013).

Northrop Grumman Guidance and Electronics Co., Inc., Woodland Hills, California, is being awarded $24,964,058 for delivery order 0002 against a previously issued Basic Ordering Agreement (N00019-11-G-0016) for the procurement of 119 H-1 upgrade tech refresh mission computers for the UH-1Y and AH-1Z aircraft for the U.S. Marine Corps. Work will be performed in Woodland Hills (79 percent); Salt Lake City, Utah (13 percent); and Baltimore, Maryland (8 percent); it is expected to be completed in October 2017. Fiscal 2013 and 2014 aircraft procurement (Navy) funds in the amount of $10,908,664 are being obligated at time of award, none of which will expire at the end of the current fiscal year. The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

Force 3, Inc., Crofton, Maryland, is being awarded a $10,518,147 five-year, firm-fixed-price, indefinite-delivery/indefinite-quantity contract for the upgrade and maintenance support of Marine Corps outer routers. This contract contains four one-year options, which if exercised, would being the maximum dollar value to $13,760,881. Work will be performed in Crofton and is expected to be completed May 2015. If all options are exercised, work will continue through May 2019. No funds will be obligated at the time of award and contract funds will not expire at the end of the current fiscal year. This contract was competitively procured via the Federal Business Opportunities website, with seven offers received. The Marine Corps System Command, Quantico, Virginia, is the contracting activity (M67854-14-D-4400).

CORRECTION: The contract announcement on Dec. 23, 2013, for BAE Systems Technology Solutions & Services, Rockville, Maryland (N00421-14-C-0011), for $48,860,666, was announced with an incorrect award amount and incorrect funding types and obligated amount. The correct award amount should have read $36,144,645. The correct obligated amount should have read fiscal 2011 and 2013 shipbuilding and conversion (Navy); fiscal 2013 operating expense (Coast Guard); and fiscal 2014 working capital funds in the amount of $4,589,425, were obligated at the time of award.

DEFENSE LOGISTICS AGENCY

Invivo Corporation, Orlando, Florida, has been awarded a maximum $11,788,948 modification (P00101) exercising the third option period on a one-year base contract (SPM2D1-11-D-8346) with seven one-year option periods. This is a fixed-price with economic-price-adjustment contract for radiology systems, subsystems and components. Location of performance is Florida with a May 31, 2015, performance completion date. Using military services are Army, Navy, Air Force, Marine Corps and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pennsylvania.

*small business

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