SECRETARY KERRY'S REMARKS ON INTERNATIONAL DAY AGAINST DRUG ABUSE AND ILLICIT TRAFFICKING

FROM:  U.S. STATE DEPARTMENT

On the Occasion of International Day Against Drug Abuse and Illicit Trafficking

Press Statement

John Kerry

Secretary of State

Washington, DC

June 26, 2014

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This is more than a moment to focus on drug abuse and addiction. It’s a time to connect the dots between the global flow of illicit drugs, violence that destroys communities and even nations the world over, and 21^st century challenges, from human trafficking to elephant poaching to transnational crime and corruption. In short: Illicit trafficking doesn’t exist in a vacuum. It’s part of a web of crime that threatens our security. It’s all connected.
I got my education on this insidious, connected network more than twenty years ago when I investigated and helped uncover a common international infrastructure for transnational crime, the Bank of Credit and Commerce International. Drugs were at the very center. It was a wakeup call about the clandestine interconnected world of money launderers, drug traffickers, arms merchants, and terrorists. We witnessed just how dirty drug money and narcotics and corruption and violence flow together. It is no less true today. In fact, it is more true. We live in the age of narco-trafficking 2.0 that funds an underworld of evil.

These issues don’t stop at any border. That’s why the men and women of the State Department are on the front lines promoting citizen security in a vastly more complicated world where change is coming at us faster than ever before. We work with our partners to counter sophisticated supply chains that produce, distribute, and market illicit drugs and fuel transnational criminal organizations. And we are committed to sharing our experience and expertise with other countries wrestling with these challenges. Today of all days, we need to plot a national strategy to counter this global scourge.

TREATING AIDS WITH SUPERCOMPUTERS

FROM:   NATIONAL SCIENCE FOUNDATION 

Computing a cure for HIV

Nine ways NSF-supported supercomputers help scientists understand and treat the disease

HIV/AIDS has caused an estimated 36 million deaths, according to the World Health Organization, and remains a major menace worldwide. Today, approximately 35 million people are living with the human immunodeficiency virus (HIV), including more than a million individuals in the United States.

The tendency of HIV to mutate and resist drugs has made it particularly difficult to eradicate. Some treatments have shown progress in slowing or even stopping the progress of the virus, but no cure or vaccine has been discovered that can truly stamp out the disease.

In the last decade, scientists have begun using a new weapon in the fight against HIV: supercomputers.

Scientists harness the power of thousands of computer processors simultaneously to better understand how the HIV virus interacts with the cells it infects, to discover or design new drugs that can attack the virus at its weak spots and even to use genetic information about the exact variants of the virus to develop patient-specific treatments.

Among the researchers using supercomputers to study HIV is Klaus Schulten, the keynote speaker at the 2014 International Supercomputing Conference, held earlier this week in Leipzig, Germany. Schulten, a professor of physics at the University of Illinois at Urbana-Champaign, invented the Nanoscale Molecular Dynamics (NAMD) software program, one of the most widely used tools for understanding diseases at a molecular level.

Supported by the National Science Foundation (NSF) and using some of the nation's most powerful supercomputers, teams of researchers are pushing the limits of what we know about HIV, and how we can treat it.

Below are nine examples of how scientists are applying massive computing power and computational know-how to combat the disease.

1) Modeling HIV: from atoms to actions

In order for HIV to infect non-dividing cells, the HIV virus must enter the cell and entice cellular proteins to act as chaperones, ushering the virus towards the cell nucleus and helping it integrate its genes into the cell's genome. This infection process offers opportunities for medical intervention and may suggest new HIV treatments. However the dynamics of the process can only be "observed" through computational modeling and simulation.

The size of the HIV capsid or shell, combined with its irregular shape, had long prevented scientists from simulating the full capsid structure with adequate resolution. But researchers from Klaus Schulten's group at the University of Illinois at Urbana-Champaign, using the NSF-funded Blue Waters supercomputer, observed how the capsid interacts with drugs and host proteins at the atomic level. The model, consisting of about 1,300 proteins and 4 million atoms, is currently the largest entry in the Research Collaboratory for Structural Bioinformatics Protein Data Bank, a repository for the three-dimensional structural data of large biological molecules.

2) Discovery of hidden pocket in HIV protein leads to ideas for new inhibitors

Researchers from the University of California, San Diego; the Salk Institute for Biological Studies and the National Cancer Institute collaborated on an effort to discover new drug candidates to combat HIV.

With the help of the San Diego Supercomputer Center, the scientists ran molecular simulations to capture the movements of a small pocket on the virus's surface that they believed could be targeted by drugs to prevent the replication of the virus. Using the pocket as a target, they virtually screened thousands of compounds and tested 16 for their ability to block HIV infection in human tissue cultures. Ultimately, they discovered two compounds that inhibit HIV replication and block the activity of reverse transcriptase as effectively as a leading FDA-approved drug, nevirapine. The researchers believe these compounds have the potential to develop into future drugs and are exploring them further.

3) Preventing HIV from reaching its mature state

The mature capsid of the HIV virus is comprised of thousands of interlinked proteins that act like a suit of armor around the virus's genetic material. If this armor-like structure does not form, then the virus is unable to infect cells.

Researchers from the University of Chicago used the Kraken supercomputers at the National Institution for Computational Science (NICS) to study how the mature HIV capsid formed. They found that the seemingly complicated behavior of the capsid's self-assembly was relatively simple once they understood the shape and behavior of the proteins that made it up. The work advanced our understanding of the HIV life cycle and is inspiring the development of new drugs to disrupt the virus's growth. Results appeared in the Biophysical Journal in October 2012.

4) Crowdsourcing a cure

After scientists repeatedly failed to piece together the structure of a protein-cutting enzyme that plays an important role in HIV, they called on the players of FoldIt, an online puzzle video game, to find a solution. Using FoldIt, "citizen scientists" were able to determine how the enzyme folded and solved the mystery of its structure. With further help from the game-players, researchers were able to identify target drugs to neutralize the enzyme.

FoldIt is part of an experimental research project supported by NSF and developed by the University of Washington's Center for Game Science in collaboration with the UW Department of Biochemistry. The case of the crowdsourced protein structure serves as a critical example of how games with a purpose can solve real-world problems.

5) Virtual screening of HIV inhibitors

A team of researchers from Pennsylvania used computer modeling and virtual screening, powered by supercomputers, to identify novel inhibitors of HIV and better understand how they react with the HIV virus. They focused on small molecules that block the interaction between the receptors on the surface of human cells and an important protein on the surface of the HIV envelope.

Using the Blacklight system at the Pittsburgh Supercomputing Center, the researchers virtually screened more than 10 million compounds to find small molecules that would be a good molecular fit for the protein that they were targeting. From the 10 million, they identified six, small-molecule, HIV surface protein complexes that display unique modes of binding. Taken together, they constitute what the researchers believe is a potent class of entry inhibitors against HIV.

6) Membrane effects

Some proteins that anchor HIV to cell membranes are thought to promote the development of the virus. Researchers have found that combining experimental methods with computer simulations can reveal much about the cell-binding dynamics.

Hirsh Nanda of the National Institute of Standards and Technology leads a research team that studies the initial stages of the formation of new HIV virus particles in an infected cell. During these first steps, HIV proteins latch onto cell membranes.

Using the Kraken supercomputer at NICS, Nanda's team was able to study the forces that govern protein assemblies on membranes in far greater detail and much faster than if they were using their lab's computers. Kraken also greatly accelerated the analysis of experimental neutron scattering data that they used to compare with simulations.

The simulations revealed that an important HIV surface protein simultaneously binds to the cell membrane and to viral RNA in order to change shape. Also revealed was how another HIV protein transitions between compact and extended structures upon anchoring to the cell membrane. These discoveries are inspiring new treatment approaches that center on membrane interactions.

7) Computing patient-specific treatment methods

Doctors know that there are many different strains of HIV and that drugs for the disease do not have the same effects in all people. Subtle genetic differences between strains and among individuals lead to a range of treatment outcomes. Using the NSF-supported Kraken and Ranger supercomputers, researchers from University College London and Rutgers University determined the shape of a key protein involved in HIV infection in an individual patient, and then ranked the drug molecules most likely to block the activity.

The project demonstrated how researchers might use genetic sequencing techniques and massive computations to design patient-specific treatment protocols in near-real-time. In the future, it is expected that this type of patient-specific drug selection will become routine.

The research was reported at the annual meeting of the American Association for the Advancement of Science and was published in the Journal of Chemical Theory and Computation.

8) Preparing the next generation to continue the fight

At Merrimack College in Massachusetts, students are learning how to conduct virtual screening using the Stampede supercomputer. Virtual screening uses computational methods to identify small molecules that are likely to bind to a known drug target, often a protein. The method has become a valuable tool for many biotechnology and pharmaceutical companies.

The activity exposes students to massive computing resources and shows them a method of conducting science that few previously knew existed. It's one of many ways that educators around the nation are beginning to prepare students for the workforce of the future by incorporating computational techniques into their curriculum.

9) A boy and the BEAST

When Armand Bilge was a 10th-grader at Lexington High School in Massachusetts, he created a map and timeline that identified when HIV arrived in the Americas, and where and when HIV spread across these continents. To do so, Bilge used a combination of molecular sequencing software and NSF-funded high-performance computing resources.

As a member of an after-school computer club, Bilge used a software program called BEAST to create a detailed evolutionary tree, based on similarities and differences in the 3,000 nucleotide subunits of a gene among 400 known HIV strains. The software ran on the CIPRES (CyberInfrastructure for Phylogenetic Research) science gateway, a public resource developed by the San Diego Supercomputer Center and supported by NSF that allows those interested in evolutionary relationships to study virtually every species on Earth.

Bilge's conclusions support previously published results of HIV experts that suggest that "a single introduction of the virus in Haiti in the mid-1900s resulted in its dispersion across the American continent." The project won first place in biology for the 2012 Massachusetts Science and Engineering Fair.

-- Aaron Dubrow, NSF
Investigators
John Towns
Dan Stanzione
Ralph Roskies
Philip Andrews
Gregory Peterson
Patricia Kovatch
Nancy Wilkins-Diehr

NEW BATTERY TECHNOLOGY MAY LET VEHICLES RUN FURTHER ON CHARGE

FROM:   NATIONAL SCIENCE FOUNDATION 

New, high-energy rechargeable batteries

Researchers develop molten air battery with commercial potential

While electric vehicles offer many advantages--including reducing greenhouse gas emissions and the country's dependence on imported petroleum--at least one barrier stands in the way of their large-scale adoption: "range anxiety."

The current 2014 electric Nissan Leaf, for example, has a range of just 84 miles on a fully charged battery.

With support from the National Science Foundation, researchers at George Washington University, led by Stuart Licht, think they have developed a novel solution, and they're calling it the "molten air battery."

These new rechargeable batteries, which use molten electrolytes, oxygen from air, and special "multiple electron" storage electrodes, have the highest intrinsic electric energy storage capacities of any other batteries to date. Their energy density, durability and cost effectiveness give them the potential to replace conventional electric car batteries, said Licht, a professor in GWU's Columbian College of Arts and Sciences' Department of Chemistry.

The researchers started with iron, carbon or vanadium boride for their ability to transfer multiple electrons. Molten air batteries made with iron, carbon or vanadium boride can store three, four and 11 electrons per molecule respectively, giving them 20 to 50 times the storage capacity of a lithium-ion battery, which is only able to store one electron per molecule of lithium.

"Molten air introduces an entirely new class of batteries," Licht said.

Other multiple-electron-per-molecule batteries the Licht group has introduced, such as the super-iron or coated vanadium boride air battery, also have high storage capacities. But they had one serious drawback: They were not rechargeable. Rechargeable molten batteries (without air), such as a molten sulfur battery, have been previously investigated, but are limited by a low storage capacity.

The new molten air batteries, by contrast, offer the best of both worlds: a combination of high storage capacity and reversibility. As the name implies, air acts as one of the battery electrodes, while simple nickel or iron electrodes can serve as the other. "Molten" refers to the electrolyte, which is mixed with reactants for iron, carbon or vanadium boride, then heated until the mixture becomes liquid. The liquid electrolyte covers the metal electrode and is also exposed to the air electrode.

The batteries are able to recharge by electrochemically reinserting a large number of electrons. The rechargeable battery uses oxygen directly from the air, not stored, to yield high battery capacity. The high activity of molten electrolytes is what allows this charging to occur, according to Licht.

The electrolytes are all melted to a liquid by temperatures between 700 and 800 degrees Celsius. This high-temperature requirement is challenging to operate inside a vehicle, but such temperatures are also reached in conventional internal combustion engines.

The researchers continue to work on their model to make the batteries viable candidates for extending electric cars' driving range. In the Licht group's latest study, the molten air battery operating temperature has been lowered to 600 degrees Celsius or less. The new class of molten-air batteries could also be used for large-scale energy storage for electric grids.

"A high-temperature battery is unusual for a vehicle, but we know it has feasibility," Licht said. "It presents an interesting engineering question."
-- Lisa Van Pay, George Washington University
-- Lauren Ingeno, George Washington University
Investigators
Stuart Licht
Christopher Rhodes
Related Institutions/Organizations
George Washington University

SECRETARY KERRY'S PRESS AVAILABILITY AT NATO HEADQUARTERS

FROM:  U.S. STATE DEPARTMENT 

Press Availability at NATO Headquarters

Press Availability

John Kerry

Secretary of State

Brussels, Belgium

June 25, 2014

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SECRETARY KERRY: Good afternoon, everybody. Excuse me. As you know, this is the last foreign ministers gathering before NATO’s next Heads of State Summit in September. Excuse me, let me just get a little water here. (Laughter.) I’ve got the travel whatever. So today, we had a chance to take stock of the strong measures that have been taken in order to provide reassurance to our eastern allies on the land, on sea, and air, and we’ve taken measures that demonstrate that our Article 5 commitment is absolutely rock solid. We also affirmed NATO’s open door policy as well as the vital importance of having strong, capable partners.
Today we spent a significant amount of time in our discussions focused on Ukraine and our allies’ sustained support for Ukraine’s sovereignty and the right of its people to determine their own future. The Ukrainian Government has recently taken a series of important steps to forge a more inclusive society for all Ukrainians, no matter what language they speak or what region the country they live in or what their ethnic background may be. And after a free and fair election, the Ukrainian people celebrated a peaceful transfer of power earlier this month and are now implementing a ceasefire and a peace plan which offers constitutional reform, broad decentralization of power, and local autonomy to Ukraine’s regions and communities.
The United States commends the Ukrainian Government for reaching out to separatists and to the Russian Government. And now we believe it is critical for President Putin to prove by his actions, not just his words, that he is indeed fully committed to peace. It is critical for him to stop the flow of weapons and fighters across the border, to call publicly for the separatists to lay down their arms, to pull Russian forces and equipment back, and to help get OSCE hostages released.

Until Russia fully makes that kind of commitment to the peace process and to the stability of Ukraine, the United States and Europe are compelled to continue to prepare greater costs, including tough economic sanctions, with the hopes that they will not have to be used. But that is dependent on the choices that Russia and its president make in the next days and weeks.
As Secretary General Rasmussen has said, Russia’s recent moves in Ukraine served as a wakeup call. As our economies begin to grow again, a strong NATO requires defense spending by all, and President Obama is committed that the United States will do its part, and he has asked Congress for an additional $1 billion for defense spending in Europe.
As we head to the Wales summit, every ally spending less than 2 percent of their GDP needs to dig deeper and make a concrete commitment to do more. And all you have to do is look at a map in order to understand why – Ukraine, Iraq, Syria – all threats to peace and to security, and they surround the region.

On the minds of all of us today also is the situation in Iraq. Earlier this week, I traveled to Baghdad and Erbil at the request of President Obama, and while here I briefed my fellow foreign ministers on the conversations that I had with Iraq leaders. Iraq is obviously facing an extraordinary security challenge and a set of political challenges and choices. The United States is also working to support Iraq in its fight against ISIL. We need to remember that ISIL is a terrorist army that threatens not only Iraq, but threatens every country in the region which is opposed to it, and Europe and the United States.

Succeeding in this fight is going to require Iraqis to come together, finally, in order to form an inclusive government. And in every meeting with leaders of each of Iraq’s main communities, I stressed the importance, the urgency of them coming together to do just that.

President Obama has also asked me to travel to Saudi Arabia on Friday in order to meet with His Majesty King Abdullah and to discuss regional issues, including the situation in Iraq and how we can counter the shared threat that is posed by ISIL, as well to discuss our support for the moderate opposition in Syria. None of us need to be reminded that a faraway threat can have tragic consequences at home in the most unexpected way at the most unexpected moment.

Just a few months ago right here in Brussels, a man who had recently returned from fighting in Syria shot three people at a local museum. NATO allies in the entire international community must remain focused on combatting the growth of extremism. With the Wales summit in September, our alliance has the chance to become far more adaptable in how we meet emerging threats and far more capable in how we build the capacity of our countries to be able to not only respond to them but, more importantly, to preempt them.

One of the first tests of NATO’s ability to forge stronger, more capable partners will be resolute support – NATO’s post-2014 train, advise, and assist mission with the people of Afghanistan. And today we discussed our coordinated efforts to wind down our combat presence in Afghanistan while continuing our commitment to combatting terrorism and preserving the gains made by the people of Afghanistan. NATO, significantly, has succeeded as an alliance for more than six decades now because it has always recognized that security threats of the future will not always look like the security threats that you face today, and certainly not like those of the past.

Remarkably, this gathering that is now discussing Afghanistan – 50 nations – has come together and stayed together for 12 years. At a time when people doubt the ability of multilateral efforts to make a difference, the meeting here today stands in stark testimony to the contrary. It does make a difference. It has made a difference. And at the Wales conference – summit, I am confident that NATO will demonstrate strength at home in its unity and in meeting, in new ways, many of the 21st century challenges that we face today.

So I’d be happy to take some questions.

MS. PSAKI: The first question will be from Anne Gearan of The Washington Post.

QUESTION: Mr. Secretary, you said a moment ago that Russian President Putin will be judged by his actions, not his words, on Ukraine. He did call this week for the rescinding of the invasion powers for Ukraine, and that was acted on today. Is that enough, in your view, to at least start the conversation about what the West might do in response – specifically, not taking the sectoral sanctions step? Is there anything really practical that you want to see Putin do in the next couple of days before the EU meets on Friday to continue that conversation? The things you outlined are much more long term. What do you want to see him do in the next like 36 hours that would change that conversation on Friday?

SECRETARY KERRY: Well, first of all, we are not announcing a new round of sanctions today, but we are going to continue to take steps to prepare in the event that the circumstances on the ground warrant those sanctions. And so we’re coordinating with our European partners in order to prepare for that.

Now, we are delighted that President Putin put to the Duma the retraction of that law which empowered Russia to take action in Ukraine. That’s important. It’s a great step. But it could be reversed in 10 minutes, and everyone knows that. The greatest difference will be made by the president publicly calling for the separatists to lay down their arms, by President Putin engaging his diplomatic service actively in the effort to help empty buildings, helping to get people to disarm, helping to convene the meetings that need to take place in order to negotiate and to move forward.

There are concrete actions – moving forces out, not allowing tanks and rocket launchers to actually cross the border. There are many concrete things that would make a difference, and we intend to work as cooperatively as possible. These aren’t – what we’re trying to do is make a set of concrete suggestions that really make the difference to what is happening on the ground. Yesterday, a helicopter – a Ukrainian helicopter was shot down and nine Ukrainian soldiers were killed. And it was shot down with a Russian weapon, with a MANPAD RPG capacity that took that helicopter out. And so it is – there are concrete steps, and we are prepared to work very, very closely with Russia in an effort to implement those steps.

And likewise, Ukraine also can take steps in a mutual way, and they’re prepared to do that. President Poroshenko obviously has done so by unilaterally putting in place a ceasefire and by taking great political heat himself in doing so. Now’s the time for this moment to really come together, and that is why the allies are talking about preparing sanctions – not implementing them today, but preparing them in the event that this effort were to fail.

MS. PSAKI: The next question is from Erik Eenlo from Baltic News Service.

QUESTION: Yes. This readiness action plan that NATO is preparing – is that something that addresses the Russian arms buildup and increasing number of military provocations in the Baltic Sea region?

SECRETARY KERRY: Well, it certainly – that is part of it. But it’s also much broader than that. It’s an effort to recognize that we’re living in a different world. The type of threats that existed in the past are not what played out in Crimea, where you had soldiers who were hiding behind masks and without any identification on them, and a massive public relations campaign simultaneously denying the reality of what everybody was seeing on the ground; where you had this incredible capacity for deception, for denial, which was both a surrogate effort of a government and a linkage to activists, terrorists, and others.

That’s a new animal in a sense, and I think we’re seeing with ISIL crossing from Syria and moving rapidly into Iraq a similar kind of hybrid new form of effort, which is going to require people to think through strategically intelligence gathering, preparations, response, response times, nature of response. And that’s what the NATO alliance has always done effectively, and that’s what the – a lot of today’s discussion focused on, is how do you have not just permanent basing in certain places, but permanent vigilance and permanent capacity to be ahead of the curve. And that’s really the – that’s what readiness really means, and that will be a lot of the focus of the Wales summit.

MS. PSAKI: The final question is from James Rosen of Fox News.

QUESTION: Thank you, Mr. Secretary. I wanted to ask about two different facets of the Iraq crisis, if I may. First, I presume you saw the comments that Prime Minister al-Maliki made in his weekly address, in which he spoke of a “national salvation government,” quote unquote, as a coup against constitutional processes in Iraq and one in which he declared his refusal to participate. I wonder what you make of those comments, whether you regard them as helpful or not to the task of government formation in Iraq, and whether it is still the professed position of the United States Government that the Obama Administration is utterly disinterested in the question of whether al-Maliki stays or goes.

And the second facet of the crisis I’d like to ask you about is this: I wonder if the disclosure that Iran has been secretly flying drones over Iraq – from an airfield in Baghdad, no less – and has been secretly shipping literally tons of military equipment to the central government in Baghdad serves effectively to complicate the United States’ own evolving military operations and diplomatic mission in Iraq, and whether in fact it represents a widening of the war there.

SECRETARY KERRY: So let me take each question. With respect to the prime minister’s remarks about a so-called salvation government, that is not something that I discussed with him. That is not something that was on the table in the context of our meetings while we were there. In fact, there was no discussion that I had with any of the leaders there regarding a so-called salvation government. And I’ve heard reports about it, but I’m not sure exactly what it is that he rejected or spoke to.

What I do know is that in the prime minister’s remarks today he did follow through on the commitments that he made in our discussions. He clearly committed to completing the electoral process, he committed to meeting on the 1st of July and having the Council of Representatives come together, and he committed to moving forward with the constitutional processes of government formation. And that is precisely what the United States was encouraging. He also called on all Iraqis to put aside their differences to unite in their efforts against terrorism. That is also what we had discussions about.

So what he said today with respect to the things we talked about was entirely in line with the conversations that I had with him when I was there. And the constitutional process that we’ve urged all Iraqis to commit to at this time, we believe is critical to the ability to form a government.

Now, Iraqis will decide that. And the United States is not disinterested in what happens in a future leadership, but the United States is not going to engage in the process of suggesting to Iraqis who that ought to be. It’s up to Iraqis to make those decisions. And we have stated clearly that we have an interest in a government that can unite Iraqis that, like Grand Ayatollah Sistani said, will not repeat the mistakes of the past and go backwards but can actually bring people together. It’s up to Iraqis to decide who has the ability to do that and who represents that future.
With respect to Iran and its intentions and role in Iraq, frankly, you should best direct that question to Iran and to the Government of Iraq. But from our point of view, we’ve made it clear to everyone in the region that we don’t need anything to take place that might exacerbate the sectarian divisions that are already at a heightened level of tension. And so it’s very important that nothing take place that contributes to the extremism or could act as a flash point with respect to the sectarian divide. And --

QUESTION: Has the war been widened?

SECRETARY KERRY: Well, widened from what? Widened from five minutes ago, an hour ago, yesterday? It’s been widened, obviously, in the last days with the reports of IRGC personnel, of some people from Iran being engaged in Iraq, with perhaps even some Syrian activities therein. And that’s one of the reasons why government formation is so urgent so that the leaders of Iraq can begin to make decisions necessary to protect Iraq without outside forces moving to fill a vacuum.

And again, President Obama is very, very clear that our priority is that government formation, and we’re going to take every step we can over the next days. We had conversations about it here. There are people here who will be encouraging that to take place. I know William Hague, the foreign secretary of Great Britain, will be traveling there. He will be having conversations. This is a multiple allied interest in having a unity government that can move Iraq to the future and pull it back from this precipice. And all of us remain hopeful that in the next days that can happen.

Thank you all.

FTC SETTLES WITH ALLEGED HOME-BASED BUSINESS SERVICE PROVIDER MISCONDUCT

FROM:  U.S. FEDERAL TRADE COMMISSION 

Defendants Who Allegedly Took Millions from Consumers Trying to Launch Or Succeed in Home-Based Businesses Settle FTC Charges

Tax Club Defendants Will Surrender $15 Million for Return to Consumers

The Federal Trade Commission halted the allegedly deceptive practices of two schemes that targeted consumers hoping to succeed through home-based businesses. The defendants behind both operations have agreed to settlements that will prohibit future misconduct, and in the Tax Club case, they will surrender assets valued at more than $15 million.

The FTC cases against The Tax Club and American Business Builders are part of a federal-state crackdown on scams that falsely promise jobs and opportunities to “be your own boss.” In the Tax Club case, brought by the FTC and the New York and Florida Attorneys General, operators sold services they allegedly falsely claimed would help consumers’ home-based businesses succeed. The operators of American Business Builders allegedly sold a home-based business opportunity where consumers could earn income offering payment processing services, credit card terminals, and merchant cash advances to small businesses.

“Before you put money into a work-at-home business opportunity, ask questions to determine if it is legitimate,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, adding, “We encourage consumers to read our consumer information to learn how to recognize schemes that promise more than they deliver.”

The Tax Club

According to the complaint filed in January 2013, The Tax Club called consumers and falsely claimed to be affiliated with companies that consumers had already bought services or products from. The complaint alleges that the defendants’ telemarketers pitched business development services such as business coaching services, corporate formation services, and credit development services, falsely claiming the services were essential to the success of consumers’ businesses. The complaint further alleges that after an initial sale, they called consumers numerous times to  sell more “essential” services, typically for several thousand dollars per service, with a large initial fee and recurring smaller monthly “membership” payments. Many of the services offered by the defendants were neither essential nor provided as promised, according to the complaint.

Under settlement orders announced today, the settling defendants are required to surrender assets valued at more than $15 million, and they are banned from selling business coaching services and work-at-home opportunities, subject to certain exemptions. They are also permanently prohibited from misrepresenting material facts about any product or service, selling or otherwise benefitting from consumers’ personal information, violating the Telemarketing Sales Rule, and failing to clearly disclose the seller’s identity, that the purpose of a call is to sell a good or service, and the nature of the good or service.

The order against Edward B. Johnson  also bans him from selling credit development, business planning, and merchant account processing services, and imposes a $115 million judgment that will be suspended upon surrender of certain assets valued at approximately $2.6 million. The assets to be turned over include bank and brokerage accounts, and proceeds from the sale of real and personal property. The full judgment will become due immediately if Johnson is found to have misrepresented his financial condition.

Under a separate settlement order, Brendon A. Pack, Michael M. Savage and all but one of the corporate defendants named in the complaint are also banned from selling credit development services. They are also prohibited from outbound telemarketing unless they have a consumer’s express written agreement to receive calls or they are fulfilling or providing services previously purchased by the consumer. The order imposes a $140 million judgment that will be suspended upon surrender of assets valued at approximately $13 million, including investment accounts and proceeds from the sale of numerous real properties. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

“As a result of this settlement, former Tax Club executives will be giving up a substantial chunk of their personal assets,” said New York Attorney General Eric Schneiderman. “Before turning over your hard-earned money to telemarketers, it’s important to make sure they have a reputation for delivering what they promise.” Florida Attorney General Pam Bondi concurred, stating, “While work-at-home careers are an attractive opportunity for many people, it is imperative that Florida consumers do their research and report any possible scams to my office.”

The Commission vote authorizing the staff to file the proposed stipulated final orders was

5-0. The orders were entered by the U.S. District Court for the Southern District of New York on June 2, 2014.

American Business Builders

According to an FTC complaint filed in November 2012, the American Business Builders defendants falsely claimed that, for a fee ranging from $295 to $495, consumers could make substantial income in several ways, including earning commissions on terminals sold or leased to merchants in consumers’ communities. They also sold sales leads and promised to conduct telemarketing campaigns that would generate customers and income. The defendants charged $10 per lead, with some consumers paying up to $40,000, but they failed to provide the promised customer leads for the consumers, and the consumers did not earn any income. The court subsequently halted the operation, froze its assets, and put the companies into receivership.

Under the settlements in the American Business Builders case, defendants are banned from selling business and work-at-home opportunities and related services. In addition to the business and work-at-home opportunity ban, the settlement orders permanently prohibit the defendants – American Business Builders LLC, UMS Group LLC,  United Merchant Services LLC, Unlimited Training Services LLC, Shane Michael Hanna, also known as Shane Michael Romeo, Stephen Spratt, Universal Marketing and Training LLC, and ENF LLC, also doing business as Network Market Solutions – from misrepresenting that consumers are likely to earn money and misrepresenting any material fact about a product or service. The defendants also are barred from selling or otherwise benefitting from consumers’ personal information, and failing to properly dispose of customer information.

The orders impose a judgment of more than $5.4 million, which will be suspended upon surrender of certain bank accounts and real and personal property, including a 2013 Cadillac Escalade ESV. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The Commission vote authorizing the staff to file the proposed stipulated final orders was 5-0. The orders were entered by the U.S. District Court for the District of Arizona on May 19, 2014.

ATTORNEY SENTENCED FOR ARRANGING OVER $7 BILLION TAX FRAUD

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 25, 2014

Former Jenkens & Gilchrist Attorney Sentenced to 15 Years in Prison for Orchestrating Multibillion Dollar Criminal Tax Fraud Scheme

Paul M. Daugerdas Personally Received More Than $95 Million in Fees from Tax Shelter Scheme That Generated Over $7 Billion in Fraudulent Tax Deductions
Deputy Assistant Attorney General Ronald A. Cimino for the Tax Division of the Department of Justice and U.S. Attorney Preet Bharara for the Southern District of New York announced that Paul M. Daugerdas, 63, a tax attorney and certified public accountant, was sentenced today in Manhattan federal court to serve 15 years in prison for orchestrating a massive fraudulent tax shelter scheme in which he and his co-conspirators designed, marketed and implemented fraudulent tax shelters used by wealthy individuals to evade over $1.6 billion in taxes owed to the Internal Revenue Service (IRS).  The 20-year scheme, which Daugerdas hatched while working at the Arthur Andersen accounting firm and then continued while a partner at two law firms – Altheimer & Gray and then Jenkens & Gilchrist (J&G) – generated over $7 billion in fraudulent tax losses and yielded approximately $95 million in fees to Daugerdas personally.  In October 2013, Daugerdas was convicted following a seven-week jury trial, presided over by U.S. District Judge William H. Pauley III, who also imposed today’s sentence.

“Paul Daugerdas used his legal and accounting expertise to cheat the system and unlawfully deprive the government of over $1.6 billion of tax revenue,” said U.S. Attorney Bharara.  “With today’s sentence, Daugerdas’s giant tax fraud scheme has reached its just conclusion under the law, with a sentence of 15 years in prison.”

“Dishonest professionals who market tax fraud schemes to their clients need to sit up and take note of today’s sentence,” said Deputy Assistant Attorney General Cimino.  “The Justice Department and IRS are committed to holding responsible those who would misuse their skills and expertise to help others to evade their lawful tax obligations.”

According to the evidence at trial and other documents filed in the case:

From 1994 through 2004, Daugerdas, who is a lawyer, a certified public accountant, and the former head of the Chicago office of J&G and its tax practice, participated in a scheme to defraud the IRS by designing, marketing, implementing and defending fraudulent tax shelters.

As part of the scheme, Daugerdas and others plotted to defraud the IRS by, among other things, corruptly endeavoring to prevent the IRS from: detecting their clients’ use of these shelters; understanding how the transactions operated to produce the tax results reported by the clients; learning that, rather than serving as legitimate investment transactions, the tax shelters lacked economic substance in that they were designed and marketed as cookie-cutter products intended exclusively to eliminate or reduce large tax liabilities; learning that the clients were not seeking profit-making investment opportunities, but were instead seeking huge tax benefits; and learning that, from the outset, all of the clients intended to complete a pre-planned series of steps that had been designed to lead to the specific tax benefits they sought.  Daugerdas and others created and assisted in creating transactional documents and other materials that falsely and fraudulently described their clients’ motivations for entering into the tax shelters and for taking various steps in order to yield the tax benefits.

As part of the scheme, Daugerdas and his co-conspirators also fraudulently backdated some of the tax shelter transactions.  In particular, Daugerdas and his co-defendants learned that certain tax shelter transactions had been implemented incorrectly during the year of the transactions in that they failed to produce the amount or type of tax losses requested by the clients.  Rather than reporting those tax shelter results as they occurred – as required by the Internal Revenue Code – Daugerdas and others engaged in corrupt “correcting” transactions after the close of the pertinent tax years, and then backdated the tax shelter documents to make it appear that the amount and type of tax losses sought by the clients had in fact been generated during the pertinent tax years.  Daugerdas also authored fraudulent tax opinion letters that falsely described when certain aspects of the transactions had actually occurred.  As a result of the fraudulent backdating, Daugerdas and others caused tax shelter clients to file tax returns that falsely and fraudulently claimed tens of millions of dollars of tax losses to which the clients were not entitled.

As a result of the scheme, Daugerdas and his co-conspirators made millions of dollars in fees and bonuses.  Daugerdas himself made $95 million in profits but used tax shelters to reduce the taxes he paid to less than $8,000; without the shelters, he would have owed over $32 million in taxes.

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Daugerdas, of Wilmette, Illinois, was convicted of conspiring to defraud the IRS, to evade taxes, and to commit mail and wire fraud, and of corruptly endeavoring to obstruct and impede the internal revenue laws.  He was also convicted of four counts of tax evasion relating to the use of various tax shelters for specified clients, and of mail fraud.

In addition to the prison term, Judge Pauley ordered Daugerdas to forfeit $164,737,500 in proceeds of the offenses, which included certain assets that had been seized and frozen at the time Daugerdas was indicted.  The forfeited proceeds include a lakefront home on Lake Geneva in Wisconsin, and over $20 million in various securities and financial accounts.  Judge Pauley also ordered Daugerdas to pay $371,006,397 in restitution to the IRS.  At sentencing, Judge Pauley said that Daugerdas “was at the apex of tax shelter racketeers who tapped into the greed of the super wealthy who did not want to pay taxes.”

In connection with this scheme, David Parse, a former broker at Deutsche Bank, was convicted of various tax fraud charges in May 2011 after an 11-week jury trial, and was sentenced in March 2013 to serve 46 months in prison.  Donna Guerin, a former lawyer at J&G’s Chicago tax practice, pleaded guilty in September 2012 to various tax fraud charges related to her role in the scheme.  She was sentenced in March 2013 to serve eight years in prison.

Former J&G partner Erwin Mayer, former BDO Seidman vice chairman and board member Charles W. Bee Jr., former BDO principal and former member of BDO Seidman’s TSG and Tax Opinion Committee Michael Kerekes, former BDO Seidman vice chairman and TSG member Adrian Dicker, BDO Seidman partner Robert Greisman, and BDO Seidman partner Mark Bloom have all previously been convicted in connection with this scheme.

This case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Stanley J. Okula Jr. and Niketh Velamoor for the Southern District of New York and Assistant Chief Nanette L. Davis of the Tax Division are in charge of the prosecution.

U.S. DEFENSE DEPARTMENT CONTRACTS FOR JUNE 26, 2014

FROM:  U.S. DEFENSE DEPARTMENT 

CONTRACTS

AIR FORCE

Sikorsky Aircraft Corp., Stratford, Connecticut, has been awarded a $1,277,618,606 fixed-price-incentive-firm at target price/firm-fixed-price contract for the initial engineering, manufacturing and development Combat Rescue Helicopter (CRH) program. The CRH program will replace the aging HH-60G Pave Hawk helicopter with new air vehicles, training systems, and product support required for the Personnel Recovery mission.  The requirement is for 112 new air vehicles (most probable quantity); however, the contract has been structured to handle fluctuations of quantities.  The contract will include the development, integration, production, and initial sustainment of the entire CRH system.  Work will be performed at Stratford, Connecticut, and is expected to be completed by June 2029, if all options are exercised.  This award is the result of a competitive acquisition.   If all options are exercised, the total contract amount is estimated at $7,900,000,000.  One offer was received in response to the solicitation issued Oct. 19, 2012.  Fiscal 2013 and 2014 research, development, test and evaluation funds in the amount of $298,458,978 are being obligated at time of award.  Air Force Life Cycle Management Center/WISV, Rotary Wing Branch of Special Operations Forces and Personnel Recovery Division/ISR Directorate, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8629-14-C-2403).

The Massachusetts Institute of Technology has been awarded a $656,656,998 modification (P00532) on a cost-reimbursable, no-fee contract (FA8721-05-C-0002) for the operation of the Lincoln Laboratory Federally Funded Research and Development Center.  This contract modification provides an additional $656,000,000 in contract ceiling for research and development work under the basic contract for several agencies of the U.S. government, including the Department of Defense.  Work will be performed at the Lincoln Laboratory facilities in Lexington, Massachusetts, on Hanscom Air Force Base, Massachusetts, and in several remote locations.  This contract is incrementally funded; additional funds are not being  obligated at time of award.  Air Force Life Cycle Management Center, Enterprise Acquisition Division/PZM, Hanscom Air Force Base, Massachusetts, is the contracting activity.

General Atomics - Aeronautical Systems, Inc., Poway, California, has been awarded a $15,293,442 firm-fixed-price contract for the MQ-9 Fuel Bladder Retrofit Kits, Time Compliance Technical Orders (TCTO) and initial spares. This contract action is for the build and delivery of certified O-level TCTO to enable the removal of existing Aero Tech Labs fuel bladders and enable the installation of the new fuel bladders on MQ-9 Reaper Block 1 aircraft. This effort is also for the build and delivery of O-level retrofit hardware kits, update existing technical orders and manuals, as well as produce and deliver initial retrofit spares with the components of the respective fuel bladder retrofit kits.  Work will be performed in Poway, California, and is expected to be completed by March 6, 2017.  This award is the result of a sole-source acquisition.  Fiscal 2013 aircraft procurement funds in the amount of $8,134,540 and fiscal 2012 aircraft procurement funds in the amount of $7,158,902 are being obligated at time of award for Delivery Order 0071.  Air Force Life Cycle Management Center/WIIK, Medium Altitude Unmanned Aircraft Systems, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8620-10-G-3038).

Northrop Grumman Systems Corp., Warner Robins, Georgia, has been awarded a $15,212,790 firm-fixed-price contract for the repair of the AN/ALQ-135 Electronic Countermeasures System's Band 3 and Bands 1&2 Traveling Wave Tubes.  Work will be performed at Warner Robins, Georgia, and is expected to be completed by June 25, 2015. This award is the result of a sole-source acquisition and is 100 percent foreign military sales for Saudi Arabia.  FMS funds in the amount of $15,212,790 will be obligated at time of award. Air Force Life Cycle Management Center/WNKCB, Robins Air Force Base, Georgia, is the contracting activity (FA8540-14-C-0009).

ARMY

Accenture Federal Services, Reston, Virginia, was awarded a $42,446,917 modification (P00352) to a firm-fixed-price, multi-year contract (WN00104-04-A-ZF12) to exercise option year nine for the general fund enterprise business system.  Funding and performance location will be determined with each order.  The estimated completion date is June 27, 2015.  Army Contracting Command – Rock Island Arsenal, Rock Island, Illinois is the contracting activity.
Smiths Detection, Edgewood, Maryland, was awarded a $21,867,004 modification (P00040) to  firm-fixed-fee contract (W911SR-07-C-0080) to exercise the option to purchase 3,353 M4A1 joint chemical agent detectors, 580 communication adapter kits, one platform interface kit, 2,713 Stryker communication adaptors, 137 sieve packs and 25 nozzles.  Appropriations were obligated at the time of award as follows: fiscal 2014other procurement (Army): $12,653,175, $6,978,033 and $162,462; fiscal 2014 operations and maintenance (Army): $110,149; fiscal 2013 other procurement (Army): $569,350; fiscal 2012 other procurement (Army): $1,285,473 and $106,888; and other: $1,474.  Work will be performed at Edgewood, Maryland, with an estimated completion date of Sept. 30, 2016.  Army Contracting Command – Edgewood Division, Aberdeen Proving Ground, Maryland is the contracting activity.

EMI Technologies*, Las Cruces, New Mexico, was awarded a $20,000,000 modification (P00004) to a firm-fixed-price contract (W9124R-11-D-0207) to acquire general purpose instrumentation vans shelters and trailers in support of White Sands Missile Range, New Mexico.  Funding and performance location will be determined with each order.  Estimated completion date is June 25, 2015.  Army Contracting Command, White Sands Missile Range, New Mexico, is the contracting activity.

Northrop  Grumman, Huntsville, Alabama, was awarded a $15,000,000 modification (P00106) to a cost-plus-fixed-fee contract (W31P4Q-08-C-0418) for research and development for Advance Electronic Protect, Integrated Air and Missile Defense system of systems capability, and IAMD Battle Command System system development and demonstration.  Two bids were solicited via the Internet with two received.  Fiscal 2014 research, development, test and evaluation funds in the amount of  $15,000,000 are being obligated at award.  Work will be performed at Huntsville, Alabama, with an estimated completion date of Sept. 30, 2015.  Army Contracting Command – Redstone Arsenal – Missile, Redstone Arsenal, Alabama, is the contracting activity.

EADS-NA, Herndon, Virginia, was awarded a $14,436,295 modification (P00811) to a firm-fixed-price contract (W58RGZ-06-C-1094) to exercise options for contractor logistics support for the Utility Helicopter 72A Lakota.  Fiscal 2014 operations and maintenance (Army) funds for $14,436,295 were obligated at the time of the award.  Work will be performed at Columbus, Mississippi with an estimated completion date of May 15, 2015.  Army Contracting Command Redstone Arsenal - Aviation, Redstone Arsenal, Alabama, is the contracting activity.

Carahsoft, Reston, Virginia, was awarded a $14,424,968 modification (P00031) to firm-fixed-price contract (W91QUZ-11-F-0027) to add additional users and products for software and licenses and support for Army Enterprise Resource Planning.  Multiple funding appropriations obligated at the time of the award are: fiscal 2014 operations and maintenance (Army) funds of $3,623,968; fiscal 2014 other procurement (Army) funds of $10,775,000; and fiscal 2014 research, development, test and evaluation funds of $26,000.  Work will be performed at Reston, Virginia with an estimated completion date of June 23, 2016.  Army Contracting Command, Rock Island Arsenal, Illinois, is the contracting activity.
Arriba Corp., Norfolk, Virginia was awarded a $7,890,050 firm-fixed-price contract for addition to and alteration of the Curtis Bay Army Reserve Center, Baltimore, Maryland.  Work will be performed in Maryland with an estimated completion date of June 30, 2016.  Fiscal 2010 military construction funds in the amount of $158,963; fiscal 2013 military construction funds in the amount of $7,612,086 and fiscal 2014 operations and maintenance (Army) funds in the amount of $119,000 are being obligated at award.  Bids were solicited via the Web with five received.  U.S. Army Corps of Engineers – Louisville District, Louisville, Kentucky is the contracting activity (W912QR-14-C-0023).

NAVY

Northrop Grumman Systems Corp., San Diego, California, is being awarded a $63,070,969 modification to a previously awarded cost-plus-fixed-fee contract (N00019-07-C-0055) for the Phase II continuation of post-demonstration activities in support of the Navy Unmanned Combat Air System program.  These activities include continued X-47B aircraft systems, test bed and flight test support at both shore-based locations and associated carrier detachments, continued development of Fleet Concepts of Operations, X-47B maintenance support, lab and test bed operational support and continued flight test opportunities.  Work will be performed in San Diego, California (70 percent) and Patuxent River, Maryland (30 percent), and is expected to be completed in March 2015.  Fiscal 2013 and 2014 research, development, test and evaluation (Navy) funds in the amount of $45,877,152 will be obligated at time of award, of which $42,551,064 will expire at the end of the current fiscal year.  The Naval Air Systems Command, Patuxent River, Maryland, is the contracting activity.

Northrop Grumman Corp., Bethpage, New York, is being awarded $8,258,253 for ceiling priced delivery order 7252 under a previously awarded Basic Ordering Agreement (N00383-12-G-034G) for the repair of 51 line items for the Advanced Hawkeye system used on the E-2D aircraft.  Work will be performed at Melbourne, Florida (40.26 percent); Liverpool, New York (18.39 percent); Baltimore, Maryland (13.74 percent); Davenport, Iowa (6.54 percent); Falls Church, Virginia (5.56 percent); and 12 other various locations in the United States (15.51 percent).  Work will completed by June 25, 2015.   Fiscal 2014 aircraft procurement (Navy) funds in the amount of $8,258,253 will be obligated at the time of award, and these funds will not expire before the end of the current fiscal year.  This is a non-competitive requirement in accordance with 10 U.S.C 2304(c)(1).  The NAVSUP Weapons System Support, Philadelphia, Pennsylvania, is the contracting activity.

Rockwell Collins, Inc., Cedar Rapids, Iowa, is being awarded a $7,694,320 modification to a previously awarded firm-fixed-priced contract (N00019-09-C-0069) to exercise an option for the procurement of AN/ARC-210(V) Electronic Radios and ancillary equipment for a variety of aircraft.   This option provides for the procurement of 80 RT-1939(C)/ARCs and 80 994M-4 Link 11 Smart Mounts without Isolators.  Work will be performed in Cedar Rapids, Iowa, and is expected to be completed in May 2016.  Fiscal 2014 aircraft procurement (Navy) funds in the amount of $7,694,320 will be 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.

Innova Systems International, LLC, San Diego, California, was awarded a $6,663,365 firm-fixed-price contract in support of the U.S. Marine Corps Training and Education Command, Aviation Standards Branch, for software maintenance to support and implement enhanced functionality of the Marine Corps Sierra Hotel Aviation Readiness Program (M-SHARP) software.  Work will be performed at Quantico, Virginia, and is expected to be completed June 30, 2015.  With all options exercised, work will continue through June 30, 2017.   Fiscal 2014 operations and maintenance funds in the amount of $6,663,365 are being obligated at the time of award.  Contract funds in the amount of $6,663,365 will expire at the end of the current fiscal year.  This contract was competitively procured via the Federal Business Opportunities Government website, with one offer received.  The Regional Contracting Office – National Capital Region, Quantico, Virginia, is the contracting activity (M00264-14-C-1008).

DEFENSE LOGISTICS AGENCY

Bell Helicopter Textron Inc., Fort Worth, Texas, has been awarded a maximum $8,102,691 firm-fixed-price contract for aircraft blade assemblies. This contract was a sole-source acquisition. This is a 39-month base contract with no option periods.  Location of performance is Texas with an Aug. 31, 2017 performance completion date.  Using military service is Navy.  Type of appropriation is fiscal 2014 Navy working capital funds.  The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania (SPRPA109G004Y-6220).

Bell Helicopter Textron Inc., Fort Worth, Texas, has been awarded a maximum $7,907,537 firm-fixed-price contract for aircraft blade assemblies. This contract was a sole-source acquisition. This is a 39-month base contract with no option periods. Location of performance is Texas with an Aug. 31, 2017, performance completion date.  Using military service is Navy. Type of appropriation is fiscal 2014 Navy working capital funds.  The contracting activity is the Defense Logistics Agency Aviation, Philadelphia, Pennsylvania (SPRPA109G004Y-6221).

*Small business

DOD SAYS MORE U.S. "ASSESSMENT TEAMS" ARRIVE IN IRAQ

FROM:  U.S. DEFENSE DEPARTMENT 

More U.S. Assessment Teams Arrive in Baghdad

By Jim Garamone

American Forces Press Service

WASHINGTON, June 26, 2014 – U.S. forces in Baghdad have opened a joint operations center in the city to assess the security situation in the wake of the rapid territorial gains made by Sunni militants, bringing the number of American service members there to about 500, Defense Department officials said today.

An additional four teams of U.S. advisors arrived in the Iraqi capital last night, Pentagon spokesman Army Col. Steve Warren said, bringing the number of teams to six.

Warren described the deployments as enhanced teams commanded by lieutenant colonels that are fanning out across Baghdad and assessing the Iraqi military. President Barack Obama ordered the teams to Iraq following gains made by Syrian-based Sunni militants of the Islamic State of Iraq and the Levant who have overrun towns and cities across Iraq’s northern and western provinces as they move closer to Baghdad, facing little or no resistance from Iraqi security forces.
The four teams bring 50 people with them, which puts the number of American assessors on the ground to 90. Warren said an additional 90 personnel have set up the joint operations center in Baghdad, meaning 180 of the possible 300 U.S. service members Obama said he is prepared to send to Iraq have arrived.
Overall, there are approximately 500 American military personnel in Iraq. “Some of them are conducting an advise and assist mission, some are manning the joint operations center, some of them are part of the [Office of Security Cooperation] and yet others are Marines that are part of a [fleet anti-terrorism security team] platoon,” Warren said.

The assessment teams are mostly made up of Army Special Forces personnel. They will advise and assist the Iraqi military at various levels of command.
The teams will take two to three weeks to assess the Iraqi military and make their reports, officials said.

Warren would not comment on reports that Iran is operating drones over Iraq and supplying the Baghdad government with arms. He did however, call on all regional countries to “participate constructively in the situation” in Iraq. The United States does not want ethnic or religious tensions increased.
Warren said the United States will establish another joint operations center in northern Iraq in the coming days or weeks. The commander of the U.S. forces in Iraq is Army Maj. Gen. Dana Pittard.

NSA RICE'S REMARKS AT DINNER HONORING ISRAELI PRESIDENT PERES

FROM:  THE WHITE HOUSE 

Remarks by National Security Advisor Susan E. Rice at a Dinner Honoring Israeli President Shimon Peres

Washington, DC
Wednesday, June 25, 2014
As Delivered 

Good evening everyone—erev tov.  And, thank you so much, Ron, Rhoda, for this lovely evening.  It’s a true honor, Ron, to be asked to celebrate one of Israel’s greatest sons and a walking global treasure, my friend President Shimon Peres. 

Over the years, Mr. President, you have been many things—a dreamer, a state-builder, a founding father, a prime minister, a peacemaker.  Your life has been the life of the state of Israel. You all sometimes hear him called an “elder statesman,” but I know every one of us in this room would kill to have the energy that you have (Laughter),  You’ve won the world’s admiration and most of its medals, including the Presidential Medal of Freedom and, tomorrow, the Congressional Gold Medal—together, America’s highest civilian honors.  And you didn’t just win the Nobel Peace Prize, you earned it, and you earn it every single day.  So thank you, Mr. President, for your tireless efforts to make this world a better place—for your tireless commitment to the state of Israel and tikkun olam. 

President Peres and I became friends after we met in 2009 in New York, and he invited me to Israel later that year to speak at the incredible conference that he convenes.  And since then, I’ve been extremely privileged to meet with him many times and to benefit not only from his extraordinary wisdom but also from his unbelievable kindness.  On more than one occasion, when from very far away, he sensed that perhaps I was having a bit of a rough patch, he would call or write or find some other special way of letting me know that he was there, and that I was in his thoughts.  What a wonderful man.  Thank you.

Someone once asked Meir Dizengoff, the first mayor of Tel Aviv, how it is that you become mayor of a city in Israel—and he said, first, you build the city (Laughter).  So, if someone asks President Peres how he came to lead the state of Israel, well—first, you build the state of Israel.  And that is just what you have done, more than any other man alive.  And, that makes him a great gift to all of us—the last of Israel’s founding lions.

From the moment that President Truman made the United States the very first country to recognize the Jewish state, 11 minutes after Shimon’s great mentor David Ben-Gurion declared Israel’s independence in Tel Aviv, the relationship between our two proud democracies has grown like a mighty oak.  As President Obama reaffirmed when he met with President Peres today, the United States’ commitment to the peace and security of Israel is unbreakable and unshakable.  Our peoples share a friendship that’s rooted in our common values:  liberty, democracy, human rights, and human dignity. You can see it in this room tonight, where we’ve all gathered—leaders and citizens from across America’s political spectrum, united in our love and support for Israel.  And so much of that, too, is because of the personal efforts—over a lifetime—of Shimon Peres. 

Now, everyone here knows that he’s eminently quotable.  He’s the inventor of the “Peres-ism” (Laughter).   I’m sure all of you have your favorites. There’s the one that every campaign manager should know, and I quote, he actually said it today, “Polls are like perfume—nice to smell, dangerous to swallow” (Laughter). Especially apt in this room.  But the one that most stays with me is pretty simple.  He said, “There are no hopeless situations, only hopeless people.”

Shimon Peres is someone who believes that despair is a sin and service is a duty.  And, serve is what you have done your entire life—from your early days on the kibbutz, making the desert bloom, and throughout your decades of dedication to Israel.  That’s the spirit in which Shimon Peres has worked with every American president since John F. Kennedy.  That’s how he’s earned admirers the world over.  And that’s why he remains so committed to advancing the cause of peace between Israelis and Palestinians, including through his meeting with President Abbas and Pope Francis at the Vatican this month. 

Mr. President, you set an example for us all.  And so, we too will stay true to the cause of peace between Israelis and Palestinians.  Because ultimately, the only path out of this tragic conflict is a secure, democratic, Jewish state living side-by-side in peace and security with a viable, independent Palestinian state (Applause).

Tonight as well, all of our hearts are hurting for the three Israeli students who were kidnapped in the West Bank, one of whom, as you all know, is also an American.  President Obama and all of us in the U.S. government are deeply concerned.  We have offered every assistance, and, as parents—in my case of a sixteen year old boy—we all feel this very personally.  So, we pray for their safe return and for the strength for their families through this agonizing vigil.  And, continued cooperation between Israel and the Palestinians is also critical—both to ensure that the search succeeds and to prevent the situation in the West Bank from further destabilizing.

One might argue that these are difficult days.  But there are no hopeless situations, only hopeless people—and President Peres reminds us never to count ourselves among them.  What counts is working to bend history in the direction of hope. 

So, in the book that I know as Psalms, and that many of you know as Tehillim, Moses beseeches the Lord, quote, “establish thou the works of our hands upon us.”  Many of us were raised on that prayer, though some of you learned it in the original.  And I hear in it not only a cry to heaven, but a call to action here on earth.  That’s a call you have answered, Mr. President, every day of your life.  And, we are all inspired by the work to which you have put your able hands.  This room is full of people deeply moved by your service, your courage, and your determination to pursue progress, security, and peace.  

So, tonight, we celebrate the next chapter in the life of Shimon Peres.  We join you in recommitting ourselves to the cause of peace.  And, together, we ask for that ancient blessing:  Establish thou the works of our hands, oh Lord.  On behalf of President Obama and all of your friends here in the United States, we wish you, like Moses, “Ad meyah v’essreem!”  May you live to 120! (Laughter) Thank you. 

READOUT PRESIDENT OBAMA'S CALL WITH ITALY'S PRIME MINISTER RENZI

FROM:  THE WHITE HOUSE 

June 25, 2014

Readout of the President’s Call with Prime Minister Renzi of Italy

The President spoke today with Prime Minister Renzi of Italy about the latest developments in Ukraine.  They agreed on the importance of the Government of Ukraine and the separatists continuing discussions to implement the peace plan put forward by President Poroshenko.  They also stressed the need for Russia to use its influence over separatist groups to persuade them to abide by the cease-fire and for Russia to take immediate concrete steps to stop the flow of weapons and militants across the border.  The leaders agreed we will continue to coordinate measures to impose additional costs on Russia if it fails to take rapid action to deescalate the situation in eastern Ukraine.

READOUT VP BIDEN'S MEETING WITH PRIME MINISTER LEE LOONG OF SINGAPORE

FROM:  THE WHITE HOUSE 

June 25, 2014

Readout of the Vice President’s Meeting with Prime Minister Lee Hsien Loong of Singapore

The Vice President met today with Prime Minister Lee Hsien Loong of Singapore at the White House, their third meeting since April 2013. The Vice President and the Prime Minister affirmed the importance of the strategic and economic partnership between the United States and Singapore, and consulted on a range of bilateral, regional, and global issues. The Vice President thanked the Prime Minister for Singapore’s leadership in shaping a more peaceful and prosperous Southeast Asia. The two leaders discussed mutual concerns over a pattern of destabilizing behavior in the South China Sea and reiterated their mutual interest in international law, freedom of navigation, and the peaceful resolution of maritime and territorial disputes. The Vice President reaffirmed the U.S. commitment to the rebalance to Asia and highlighted U.S. efforts to deepen its engagement with the region on the political, security, and economic fronts. Noting the advanced state of Trans-Pacific Partnership (TPP) negotiations, the two leaders agreed on the importance of working together to finalize an ambitious, high-standard agreement as soon as possible. The Vice President underscored the importance of working to establish new rules of the road to meet the world’s economic needs in the 21st century.

AG HOLDER CRITICIZES WISCONSIN VOTER ID STATUTE

A.G. HOLDER U.S. JUSTICE DEPARTMENT PHOTO

FROM:  U.S. JUSTICE DEPARTMENT 

Wednesday, June 25, 2014

Criticizing Wisconsin’s Voter Id Statute, Attorney General Holder Pledges Aggressive Enforcement of Remaining Parts of Voting Rights Act
WASHINGTON—On the one-year anniversary of the Supreme Court decision that struck down a key part of the Voting Rights Act, Attorney General Eric Holder pledged Wednesday that the Justice Department would remain aggressive in using Section 2 of the law—which was left intact by the Court’s decision—to guard against unjust voting restrictions.

Section 2, which prohibits barriers to voting that disadvantage minority groups, provided the basis for the department’s lawsuits last year against voting laws in North Carolina and Texas. It also formed the basis for a recent challenge to a voter ID statue in Wisconsin. In April, a federal district court sided with the plaintiffs in that case, declaring that the Wisconsin law violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.

Holder joined in criticizing the Wisconsin law in his message Wednesday.

“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest,” Holder said.

“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts,” he added.

A full copy of the Attorney General’s video message appears below.

“One year ago today, in the case of Shelby County, a narrowly split but deeply divided U.S. Supreme Court struck down a key part of the historic Voting Rights Act of 1965.

“This was a deeply flawed decision – and it effectively invalidated a cornerstone of American civil rights law.

“In the nearly five decades leading up to that ruling, a critical provision of the Voting Rights Act known as Section 5 – which enjoyed consistent support from Members of Congress and presidents of both parties – provided the Justice Department with a rigorous tool to fight unjust attempts to abridge voting rights.

“It required certain jurisdictions with histories of discrimination to seek “preclearance,” from the Department or a federal court, before new voting changes could take effect – so these proposals could be subjected to fair and thorough review.

“This empowered the Justice Department to protect the right of every American to cast a ballot – unencumbered by discriminatory rules, regulations, and procedures that, intentionally or not, discourage and disenfranchise.

“Indeed, not long before the Shelby County decision, a federal judge considering the Department’s objection to South Carolina’s voter ID law noted the ‘continuing utility’ of preclearance ‘in deterring problematic, and hence encouraging non-discriminatory, changes in state and local voting laws.’

“When the Shelby decision effectively denied us this tool, the Department’s Civil Rights Division shifted resources to the enforcement of other protections that remain on the books – including Section 2 of the Voting Rights Act, which prohibits barriers to voting that disadvantage minority groups.

“During the past year, we filed Section 2 challenges to specific laws in North Carolina and Texas that could disproportionately restrict access to the ballot box for minority citizens.
“Section 2 also provides a valuable tool to individual voters who seek to protect their voting rights.

“In April, a federal district court in Wisconsin ruled that Wisconsin’s unnecessarily restrictive voter-ID law, which disproportionately impacted the state’s African-American and Latino voters, violated both the equal protection clause of the Constitution and Section 2 of the Voting Rights Act.

“The Wisconsin law erected significant barriers to equal access without serving any legitimate government interest – because, as the judge found, and I quote, “The defendants could not point to a single instance of known voter impersonation occurring in Wisconsin at any time in the recent past.”

“By restricting access and decreasing voter participation, laws such as those in Wisconsin would shrink – rather than expand – access to the franchise.

“This is inconsistent not only with our history, but with our ideals as a nation – a nation founded on the principle that all citizens are entitled to equal opportunity, equal representation, and equal rights.

“And that’s why, across this country, the Department of Justice will continue to take aggressive steps to stand against disenfranchisement wherever it exists – and in whatever form.

“It’s clear that discriminatory voting laws, rules, and regulations are not confined to any particular region. And thanks to Section 2 of the Voting Rights Act, neither are our enforcement efforts.

“We will not simply stand by as the voices of many citizens are shut out of the process of self-governance.

“And in the days ahead, we will continue to work with Congressional leaders to fill the void left by the Supreme Court’s ruling – and use every available tool to safeguard the most basic right of American citizenship.”

SECRETARY KERRY, FRENCH FOREIGN MINISTER FABIUS MAKE REMARKS AFTER MEETING

FROM:  U.S. STATE DEPARTMENT 

Remarks With French Foreign Minister Laurent Fabius After Their Meeting

Remarks

John Kerry

Secretary of State

Paris, France

June 26, 2014

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SECRETARY KERRY: I want to thank Foreign Minister Fabius for France’s extraordinary hospitality and helping to provide the venue for a number of meetings today. And Foreign Minister Fabius and I discussed each of the individual many hotspots that we are challenged by today. We particularly agree on Iraq that we want a government formation as rapidly as possible that represents unity for the country. We are also deeply concerned about the challenge of Syria. We talked about that as well as the Iran nuclear talks, which we are deeply involved in and partnering in very significantly.

Ukraine, we are in full agreement that it is critical for Russia to show in the next hours, literally, that they are moving to help disarm the separatists, to encourage them to disarm, to call on them to lay down their weapons and begin to become part of a legitimate political process. And the European Community will be meeting on their component of the sanctions. We all agree that they need to be ready. But our preference is not to have to be into a sanctions mode. We would like to see a cooperative effort between the United States, Europe, and Russia and the Ukrainians. And we are going to try to encourage that as much as we can.

FOREIGN MINISTER FABIUS: (In French.)

SECRETARY KERRY: Do you want to say anything in English for the American audience?

FOREIGN MINISTER FABIUS: Pidgin English. (Laughter.) And afterwards you say something in French.

We have discussed with Secretary John Kerry, as we are doing very frequently, nearly every day, at least every week, and particularly about Iraq and about Ukraine and Iran as well, and have insisted – we have insisted on the very, very difficult situation in Iraq where the ISIL group has shown terrible ferocity and brutality, and we are expecting from the Iraqi that it could get united. And it’s a necessity not only for Iraq but for the whole region, because it’s a menace for Iraq, for the region, for Europe, and for U.S. as well.

And we have discussed about Ukraine. There is some sort – but we will be very careful – of a de-escalation. There has been yesterday a long conversation between French president, German chancellor, Russian president, and Ukrainian president as well. There are commitments which have been taken, and we hope that it will be implemented today and in the coming days.

And we have discussed particularly about Iran and nuclear talks, because we are 5+1 and Iran on the other hand, and we want – we accept perfectly that Iran could have nuclear civil energy, but as sometime I am summarizing very briefly, atomic bomb, no.
Thank you.

SECRETARY KERRY: Merci. Thank you.

STELLAR SCENE FROM THE INTERNATIONAL SPACE STATION

FROM:  NASA 

On June 23, 2014, Expedition 40 Flight Engineer Reid Wiseman captured this image which connects Earth to the International Space Station and to the stars. Among the "stellar" scene is part of the constellation Orion, near the center of the frame. The U.S. laboratory or Destiny is seen in the upper right.  Image Credit: NASA

EXPORT-IMPORT BANK TELLS CONGRESS AGGRESSIVE FOREIGN COMPETITION COSTS U.S. JOBS

FROM:  U.S. EXPORT-IMPORT BANK 

Export-Import Bank Report to Congress: Aggressive, Unregulated Financing from Foreign Competitors is Costing U.S. Jobs 

Report Also Highlights the Importance of the U.S. Export-Import Bank To Ensure Competitiveness for American Businesses and Workers

Washington, D.C. – Today, Export-Import Bank (Ex-Im Bank) Chairman and President Fred P. Hochberg unveiled the Bank’s Annual Competiveness Report to Congress, which underscores the need for continued Ex-Im support for American exporters to help level the playing field in an increasingly competitive global marketplace.

“There is no stronger brand in the world than ‘Made in America,’ but the increasingly aggressive approach by some foreign competitors in the export financing marketplace presents an ever-growing threat to U.S. jobs,” said Export-Import Bank Chairman and President Fred P. Hochberg. “Our job at the Export-Import Bank is to back American workers and ensure that U.S. exporters, especially small businesses, remain competitive and have the support they need to export their products and create jobs here at home.”

The Bank’s competitiveness report for 2013 shows that while for decades, global export competition was governed by international standards put in place to ensure that companies could compete on free-market factors like price and quality rather than on aggressive government financing, today the global marketplace is changing. While 100 percent of official support for trade operated under these international rules 15 years ago, today that number has plummeted to 34 percent. Currently Russia, China and other countries offer subsidies and financing terms – including support of their state-sponsored companies – that threaten American jobs and export opportunities.

The report also highlights the rapid growth of export financing from three Asian competitors: Korea, Japan and China. These countries provided significantly more export-credit support to their respective domestic companies and industries than did the United States in 2013.

In addition, the report underscores two trends: unregulated competition is expanding and commercial banks have largely withdrawn from pockets of the export-finance arena, including providing support for small businesses. The United States faces more robust competition from export-credit agencies offering terms that are not regulated by the Organisation for Economic Co-operation and Development (OECD), which encourages global export competition based on free-market principles and mutually agreed-upon standards. For example, Ex-Im Bank support for all of its $15 billion in medium- and long-term financing was regulated by the OECD Arrangement, but other OECD member countries offered more than $60 billion alone of unregulated export financing support (on top of $83 billion in export financing governed by the OECD Arrangement).

Nations that are not subject to the OECD framework, including Brazil, Russia, India and China, provided $115 billion in trade-related financing. Unregulated support totaled substantially more than all OECD-regulated support, a trend the report expects to continue and one which is poised to place U.S. exporters at a competitive disadvantage absent the tools made available by Ex-Im Bank.

Moreover, the report found that the appetite of commercial banks for long-term projects continued to diminish since the implementation of Basel III and other banking reforms. As liquidity sources for certain projects remain scarce, export-credit agency support has become more necessary to fill gaps in the trade finance marketplace and ensure that American exporters remain competitive. Consequently, U.S. exporters will continue to rely upon Ex-Im Bank support as they seek to take advantage of emerging economies and the 95 percent of consumers that live abroad.

CAPE RAY LEAVES SPAIN TO RECEIVE SYRIAN MATERIALS

FROM:  U.S. DEFENSE DEPARTMENT 

Cape Ray Leaves Spain to Receive Syrian Materials

American Forces Press Service

WASHINGTON, June 25, 2014 – The U.S. motor vessel Cape Ray departed Rota, Spain, this morning en route to the port of Gioia Tauro, Italy, where the ship will receive declared Syrian chemical materials transferred from the Danish vessel Ark Futura.

In a statement announcing the departure, Pentagon Press Secretary Navy Rear Adm. John Kirby said the transit to Italy is expected to take several days.
After the transfer is complete, the Cape Ray will depart Gioia Tauro for international waters to begin neutralization of the chemical agents using the embarked field deployable hydrolysis system, Kirby said. “Neutralization will be conducted in a safe and environmentally sound manner,” he added. “Nothing from this operation will be released into the environment.”

The Cape Ray and the field-deployable hydrolysis system are part of the U.S. contribution to the Organization for the Prohibition of Chemical Weapons -- U.N. Joint Mission to eliminate Syria's declared chemical materials stockpile. The vessel is part of the Transportation Department Maritime Administration's Ready Reserve Force program.

“As [Defense Secretary Chuck Hagel] has made clear, we will work hard to destroy these materials so they never again pose a threat to the Syrian people or America's allies in the region,” Kirby said.

WHITE HOUSE PROGRESS REPORT ON PRESIDENT OBAMA'S CLIMATE CHANGE PLAN

FROM:  THE WHITE HOUSE 

PROGRESS REPORT: President Obama’s Climate Action Plan

Today – one year after the President laid out his comprehensive Climate Action Plan – the White House released a new report detailing progress towards cutting carbon pollution and protecting our communities and public health.

In the year since the President’s speech at Georgetown University, the Administration has announced new efficiency standards, permitted renewable energy projects on public lands, and proposed carbon pollution standards for new and existing power plants. Alongside state, tribal, local, and private sector partners, the Administration is taking steps to make our communities more resilient to the effects of severe weather and is working with other countries to reduce emissions of greenhouse gases internationally. In fact, when fully implemented, the policies put forward just in the past year since the President’s Plan was released will:

• Cut nearly 3 billion tons of carbon pollution between 2020 and 2025, an amount equivalent to taking more than 600 million cars off the road for a year;
• Enable the development of 8,100 megawatts of wind, solar, and geothermal energy, enough to power nearly 2 million homes;
• Train more than 50,000 workers to enter the solar industry;
• Save consumers more than $60 billion on their energy bills through 2030;
• Improve the energy efficiency of more than 1 billion square feet of city buildings, schools, multifamily housing complexes, and business across the country, an area the size of 17,000 football fields; and
• Protect the health of vulnerable Americans, including children and the elderly, by preventing 150,000 asthma attacks and up to 3,300 heart attacks.