FORMER CHAIRMAN STANFORD INTERNATIONAL BANK CONVICTED IN $7 BILLION FRAUD SCHEME

The following excerpt is from the Department of Justice website:

Tuesday, March 6, 2012
"Allen Stanford Convicted in Houston for Orchestrating $7 Billion Investment Fraud Scheme
WASHINGTON – A Houston federal jury today convicted Robert Allen Stanford, the former Board of Directors Chairman of Stanford International Bank (SIB), for orchestrating a 20-year investment fraud scheme in which he misappropriated $7 billion from SIB to finance his personal businesses.

The guilty verdict was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Kenneth Magidson of the Southern District of Texas; FBI Assistant Director Kevin Perkins of the Criminal Investigative Division; Assistant Secretary of Labor for the Employee Benefits Security Administration Phyllis C. Borzi; Chief Postal Inspector Guy J. Cottrell; Special Agent in Charge Lucy Cruz of the Internal Revenue Service-Criminal Investigations (IRS-CI).

Following a six-week trial before U.S. District Judge David Hittner, and approximately three days of deliberation, the jury found Stanford guilty on 13 of 14 counts in the indictment.

Stanford, 61, was convicted of one count of conspiracy to commit wire and mail fraud, four counts of wire fraud, five counts of mail fraud, one count of conspiracy to obstruct a U.S. Securities and Exchange Commission (SEC) investigation, one count of obstruction of an SEC investigation and one count of conspiracy to commit money laundering.  The jury found Stanford not guilty on one count of wire fraud.

At sentencing, Stanford faces a maximum prison sentence of 20 years for the count of conspiracy to commit wire and mail fraud, each count of wire and mail fraud, and the count of conspiracy to commit money laundering, and five years for the count of conspiracy to obstruct an SEC investigation and the count of obstruction of an SEC investigation.

The investigation was conducted by the FBI’s Houston Field Office, the U.S. Postal Inspection Service, the IRS-CI and the U.S. Department of Labor, Employee Benefits Security Administration.  The case was prosecuted by Deputy Chief William Stellmach of the Criminal Division’s Fraud Section, Assistant U.S. Attorney Gregg Costa of the Southern District of Texas and Trial Attorney Andrew Warren of the Criminal Division’s Fraud Section.”

HOUSE WAYS AND MEANS CHAIRMAN INTRODUCES LEGISLATION TO CURB CHINA'S TRADE ADVANTAGES

The following excerpt is from Congressman Dave Camp's website:

"Combating China’s Trade Unfair Practices
Last week, Congressman Camp joined several members of the Ways and Means Committee, including Ranking Member Sander Levin (D-Royal Oak), in introducing legislation to protect American consumers, workers and job creators from unfair trade practices by China.  “This legislation preserves our ability to fight unfair subsidies granted by countries like China that injure our industries, cost U.S. jobs, and distort the market. Distorting trade policies are deeply troubling and cannot be allowed to stand."

Congressman Camp also led the committee in a hearing on the president's trade policy agenda and the future of U.S. trade negotiations with U.S. Trade Ambassador Ron Kirk. At the hearing, Camp urged Ambassador Kirk to take a more proactive stance in enforcing U.S. rights in regard to unfair and illegal Chinese trade practices, “There are too many problems with China that continue to put our workers and our businesses at a disadvantage – from indigenous innovation policies to subsidies to intellectual property theft to currency undervaluation – just to mention a few. We must push China on every front, and the Administration must ensure that China’s commitments are fully implemented.” 

U.S. SPOKESPERSON SAYS IRAN HELPING TO KEEP ASSAD REGIME IN POWER

The following excerpt is from the Department of Defense American Forces Press Service: "Mattis Explains Challenges in Syrian Situation By Donna Miles American Forces Press Service WASHINGTON, March 6, 2012 - As al-Qaida takes advantage of the unrest in Syria, Iran is working desperately to keep Syrian President Bashar al-Assad's regime in power to support its own agenda, the U.S. Central Command commander told Congress today. "The longer this goes on, the more potential there is for al-Qaida and for basically a full-scale civil war," Marine Corps Gen. James N. Mattis told the Senate Armed Services. Mattis noted signs of al-Qaida's role in the Syrian opposition, particularly in carrying out "rather spectacular [improvised explosive device] attacks." Meanwhile, Iran has flown in weapons and experts in what Mattis called "a full-throated effort ... to keep Assad there and oppressing his own people." "They're providing the kind of weapons that are being used right now to suppress the opposition," he said. This includes eavesdropping capability to identify opposition networks and "experts in oppressing." "They're pretty well schooled. They know how to oppress their own people in Tehran," Mattis said. "They've flown them into Damascus to help Assad do the same thing." Mattis noted that the fall of Assad's regime also would be a huge blow to Iran. "It'll be the biggest strategic setback for Iran in 20 years when Assad falls," he told the Senate panel. The general made clear that the question is a matter of "not if, but when he is going to go." Mattis said it's hard to say how long Assad will stay in power if current conditions persist with no external intervention. "He's going to be there for some time because I think he will continue to employ heavier and heavier weapons on his people," he said. "I think it will get worse before it gets better." Assad is gaining physical momentum on the battlefield and "clearly achieving what he wants to achieve," he said. But at the same time, "he's creating more enemies," Mattis said, fueling international pressure against him. Asked directly by a senator, the general declined to discuss in the open hearing whether the White House had directed him to prepare contingency plans to assist the Syrian opposition. He acknowledged, however, that an international effort like the one that helped Libyan rebels bring down Muammar Ghaddafi's regime would be much more challenging in Syria. In addition to Iran's support, the Russians have provided "very advanced integrated air defense capabilities – missiles, radars that sort of thing – that would make imposition of any no-fly zone challenging if we were to go in that direction," he said. Mattis and Navy Adm. William H. McRaven, commander of U.S. Special Operations Command, agreed on the possible unintended consequences of providing arms to the rebels. "I think we'd have to do our best to determine who we're providing the arms to and follow the physician's oath of 'First do no harm' to make certain what we're doing is actually going to reduce the scale of violence, ultimately," Mattis said. "I think it's always prudent to find out who your allies are and who your enemy is," agreed McRaven."

CDC WARNS OF DEADLY BACTERIA IMPACTING PATIENTS

The following excerpt is from the Centers For Disease Control website:

"Life-threatening germ poses threat across medical facilities
CDC highlights steps to prevent spread of deadly C. difficile bacteria, which impacts patients in nursing homes and outpatient care, not just hospitals

Infections from Clostridium difficile (C. difficile), a bacteria that causes diarrhea and other health issues, is a patient safety concern in all types of medical facilities, not just hospitals as traditionally thought, according to a new Vital Signs report today from the Centers for Disease Control and Prevention. Â While many health care-associated infections, such as bloodstream infections, declined in the past decade, C. difficileinfection rates and deaths climbed to historic highs.

“C. difficile harms patients just about everywhere medical care is given,” said CDC Director Thomas R. Frieden, M.D., M.P.H.  “Illness and death linked to this deadly disease do not have to happen. Patient lives can be saved when health care providers follow the 6 Steps to Prevention, which include key infection control and smart antibiotic prescribing recommendations.”

C. difficile is linked to about 14,000 U.S. deaths every year. Those most at risk are people who take antibiotics and also receive care in any medical setting. Almost half of infections occur in people younger than 65, but more than 90 percent of deaths occur in people 65 and older. Previously released estimates based on billing data show that the number of U.S. hospital stays related to C. difficile remains at historically high levels of about 337,000 annually, adding at least $1 billion in extra costs to the health care system. However, the Vital Signsreport shows that these hospital estimates may only represent one part of C. difficile’s overall impact.

According to Vital Signs, 94 percent of C. difficile infections are related to medical care. About 25 percent of C. difficile infections first show symptoms in hospital patients; 75 percent first show in nursing home patients or in people recently cared for in doctor’s offices and clinics. Â

Although the proportion of infection onset is lower in hospitals, these facilities remain at the core of prevention since many patients with C. difficile infections are transferred to hospitals for care, raising risk of spread within the facility.  The Vital Signs report shows that half of C. difficile infections diagnosed at hospitals were already present at the time the patient was admitted (present on admission), usually after getting care in other facilities. The other half were related to care given in the hospital where the infection was diagnosed.

The report highlights three programs showing early success in reducing C. difficile infection rates in hospitals.  Seventy-one hospitals in Illinois, Massachusetts, and New York decreased C. difficileinfections by 20 percent in less than two years by following infection control recommendations.  These promising results follow similar efforts in England, a nation that dropped C. difficile infections by more than 50 percent during a recent three-year period.Â

“C. difficile infections are usually a regional problem since patients transfer back and forth between facilities, allowing the disease to spread,” said L. Clifford McDonald, M.D., CDC medical epidemiologist and lead author of the study. “Health departments have the ability to work with many types of health care facilities, and have a unique opportunity to coordinate local, comprehensive prevention programs to reduce the occurrence of these infections.”

Patients get C. difficile infections most often within a few months of taking antibiotics and also receiving medical care. Antibiotics are lifesaving medicines that stop infections, but they also destroy the body’s good bacteria for several months.  During this time, patients can get sick from C. difficile picked up from contaminated surfaces or spread from a health care provider’s hands. Infection risk generally increases with age; children are at lower risk for C. difficile infection. Identifying C. difficile infection early and stopping its spread to other people can save lives.Â
Patients can help stop C. difficile by:

- Taking antibiotics only as prescribed by your doctor. Antibiotics can be lifesaving medicines.Â
- Telling your doctor if you have been on antibiotics and get diarrhea within a few months.
- Washing your hands after using the bathroom.
- Trying to use a separate bathroom if you have diarrhea, or being sure the bathroom is cleaned well if someone with diarrhea has used it.

CDC Vital Signs is a report that appears on the first Tuesday of the month as part of the CDC journal Morbidity and Mortality Weekly Report (MMWR). Vital Signs is designed to provide the latest data and information on key health indicators – cancer prevention, obesity, tobacco use, alcohol use, prescription drug overdose, HIV/AIDS, motor vehicle passenger safety, health care–associated infections, cardiovascular health, teen pregnancy, access to health care, and food safety.

CONSUMER FINANCIAL PROTECTION BUREAU TAKES COMPLAINTS ABOUT STUDENT LOANS

The following excerpt is from the Department of Education website:

"Washington, D.C. — The Consumer Financial Protection Bureau (CFPB) is now accepting complaints from borrowers having difficulties with their private student loans. The CFPB will assist all borrowers experiencing problems taking out a private student loan, repaying their private student loan, or managing a student loan that has gone into default and may have been referred to a debt collector.

"The ability to work hard and better yourself through education is part of what makes this country so great," said Richard Cordray, Director of the CFPB. "But getting a higher education can mean taking on significant debt—a big decision with a lot of consequences. The CFPB is now the one-stop federal agency where all private student loan borrowers can ask questions, get information, and file a complaint about this important market."

Student loans have now surpassed credit cards as the largest source of unsecured consumer debt. Millions of students turn to private loans to pay for college when scholarships and federal student loans do not cover the full costs. But unlike federal student loans, private student loans do not generally have the same borrower protections such as military deferments, discharges upon death, or income-based repayment plans.

Until recently, private student lenders have only been regulated by a patchwork of state and federal authorities. Prior to the Dodd-Frank Wall Street Reform and Consumer Protection Act, there was no federal supervisory program over nonbanks that issued student loans. That authority has now been given to the CFPB. Among its reforms, the law created a private student loan ombudsman to assist borrowers and review complaints. The ombudsman, Rohit Chopra, is also responsible for examining the complaints in order to develop recommendations to Congress and other federal government agencies.

Consumers can get help from the CFPB on student loans in a variety of ways including by the Bureau website, telephone, mail, and fax. Consumers can file complaints about any kind of student loan. While the CFPB will alone manage the private student loan complaints, the CFPB will work closely with the Department of Education to route complaints that fall under their purview as the overseer of federal student loans. The agencies executed a memorandum of understanding to ensure close coordination. Examples of federal loans include Direct loans, Stafford loans, Perkins loans, and PLUS loans.

Among the complaints that the Bureau anticipates receiving:

• Difficulties making full payment;
• Confusing advertising or marketing terms;
• Billing disputes;
• Deferment and forbearance issues; and
• Debt collection and credit reporting problems.

Working with the Department of Education, the CFPB released a Know Before You Owe "Financial Aid Shopping Sheet," which is a draft of important financial aid information that colleges could provide to students and their families, including information about monthly debt payment levels after graduation. The CFPB also launched a Student Debt Repayment Assistant, an interactive tool which tens of thousands of Americans have already used to help navigate their repayment options on student loans.

In November, the Bureau published a Notice in the Federal Register to ask students, lenders, servicers, schools, and other members of the public to share their experiences with the private student loan market. The Bureau received thousands of comments from consumers, industry, and the higher education community, which will be analyzed as part of a report to Congress on the private student loan market, to be released later this year.

The CFPB has been taking complaints in categories of consumer financial products and services since launching on July 21, 2011. The Bureau started by taking credit card complaints. In December, the Bureau expanded and began taking complaints on mortgages and other home loans. And, on March 1, the Bureau began taking complaints on checking accounts.

The Bureau expects financial institutions to respond to complaints within 15 days with the steps they have or plan to take, and expects complaints to be closed in 60 days. Consumers are given a tracking number after submitting a complaint and can check the status of their complaint by logging on to the CFPB website. Each complaint will be processed individually and consumers will have the option to dispute the lender's resolution.

The Bureau sent a letter this week to more than 6,000 university officials across the country notifying them of the new complaint system, so they can direct students and alumni to get help with their student loans."

ASSISTANT SECRETARY FOR FINANCIAL MARKETS MARY MILLER SPEAKS

The following excerpt is from a Department of Treasury e-mail:

Remarks by Assistant Secretary for Financial Markets Mary Miller at the Annual Washington Conference of the Institute Of International Bankers (IIB)
“As prepared for delivery
 WASHINGTON - Good morning and welcome to Washington. I welcome the chance to meet with a group that is focused on the perspectives of the international banking community in the United States.  As the Assistant Secretary for Financial Markets at the Treasury Department, I am part of the Office of Domestic Finance.  But as this group knows well, our financial markets are global and interconnected.  In my work at Treasury, I deal with the international nature of our markets every day. Two of my main responsibilities are managing the U.S. Government’s debt issuance and helping implement the Dodd-Frank Wall Street Reform and Consumer Protection Act.  While both of these roles have fairly obvious connections to global financial markets, they are also more closely connected to each other than you might think. The financial crisis and its aftermath took a heavy toll on our nation’s economy and our fiscal situation.  Millions of jobs were destroyed, countless families have lost their homes, and billions of dollars of Americans’ savings were wiped out. We had no choice but to take aggressive steps to stabilize financial markets and help restart economic growth.  And at the same time, the fallout from the crisis caused tax receipts to go down while payments for programs like unemployment insurance were going up. To pay for these measures, we had to issue more debt.  Although government borrowing peaked two years ago and deficits are coming down relative to GDP, our debt is still growing and economic growth remains moderate.  Interest rates remain at historically low levels and have helped keep the costs of responding to the crisis much lower than they otherwise might have been. But interest rates won’t stay this low forever, and the long-term fiscal trend in the U.S. is unsustainable.  As one of the officials responsible for our debt issuance, I know that American workers, families, homeowners and entrepreneurs can’t afford another crisis. And the government can’t either.  Fortunately, in the wake of the crisis, the President asked Congress to pass the reforms our outdated financial regulatory system needed, before memories of the crisis faded.  Congress’s response, the Dodd-Frank Act, put in place a number of important measures to strengthen and modernize the safeguards for our financial system. Much of the basic framework of these reforms is already coming into effect.  The Federal Deposit Insurance Corporation has finalized rules for winding down large firms that fail through an orderly bankruptcy-like process that will help limit the fallout from their failure. Had this “resolution authority” been in place in 2008, we would have had much more effective tools to mitigate the financial crisis.  The Consumer Financial Protection Bureau is up and running and undertaking initiatives for better disclosure to consumers.  Regulators are deploying new authority and greater enforcement resources on a more coordinated basis to go after fraud and unfair practices.  The majority of the new initiatives for reducing risk and improving the transparency of the previously unregulated derivatives markets have been proposed and more rules are being finalized with each passing month.  2012 should bring much more clarity to firms adjusting for these changes. As a result of the reforms we have been putting into place, the financial system is getting stronger and safer.  Financial institutions are better capitalized, less leveraged, and more liquid, which reduces systemic risks.  Some of these changes have already been required, some anticipate Basel III, and some simply reflect caution after the financial crisis. But the gains we have made will erode over time if we are not able to complete the work that is underway. Given the stark reality presented by our fiscal situation, the deep and widespread damage that the crisis inflicted, and the continuing uncertainty in markets overseas, we must be careful not to succumb to a collective amnesia about how close we came to a complete financial collapse less than four years ago.  As Secretary Geithner wrote in the Wall Street Journal on Friday, “Remember the crisis when you hear complaints about financial reform – complaints about limits on risk-taking or requirements for transparency or disclosure.” But as we continue moving forward, rest assured that we are not just trying to get reforms done so that we can check a box.  We are focused on getting the reforms right so that they reduce risk, improve transparency and help restore market discipline in our system, while preserving the best features of our markets and the competitiveness of our financial institutions.        We aren’t just looking at individual rules in isolation.  Partly through the efforts of the Financial Stability Oversight Council, we are also beginning to look at the way rules interact with each other and assess their combined impact across the financial system.  We want to be careful to get the balance right—building a more stable financial system, with better protections for consumers and investors, while allowing for healthy financial innovation in support of economic growth. *** Usually when I talk about progress on financial regulatory reform, I focus on the reforms we are putting in place at home and only have the opportunity to briefly discuss the importance of establishing strong and comparable standards and safeguards throughout the world.  But given this audience, I would like to switch that around today and focus more on some of the international aspects of our reform efforts. While regulations are adopted at the national level, markets are global and difficult cross-border issues are bound to arise.  This is complex terrain, and we must work hard to align our national frameworks and develop high-quality international standards.  We should strengthen international coordination and always keep in mind our collective goals to protect the safety and soundness of our markets; to achieve a level playing field globally; and to realize the economic benefits of global finance. To protect our economy from risks that arise outside the United States, and to provide a fair and level playing field for U.S. firms, we need comparable international standards.  And it’s important to realize the benefits of setting high standards, not just in terms of reducing risks and promoting financial stability but also in terms of attracting investors and capital. Before I came to Treasury, I worked for 26 years as an investor and manager of clients’ assets.  As an investor in global fixed income assets I did not look for the least regulated markets, with the lowest transparency, the weakest investor protections, and the greatest risks.  I looked for opportunities with expectations of reasonable returns, with appropriate disclosures, and with strong legal and financial protections for the safety of the investments.  Whether acting directly as investors or advising your clients, I expect that many of you share this view.     Comparable standards are particularly important in the reforms that toughen rules on capital, margin, liquidity and leverage, as well as in the global derivatives markets.  In these areas we are working to discourage other nations from applying softer rules to their institutions that could create systemic risks for the global financial system.  Specific challenges include:

aligning the developing derivative regimes around the world;
preventing attempts to soften the national application of new capital rules;
and designing the rules for resolution of large global financial institutions whose operations cross national borders.
        Aligning the substance of the rules as much as possible is not enough, however. It’s also important to align the timing as much as possible, to avoid leaving gaps that present risks to financial stability in the interim as well as creating competitive advantages for institutions in jurisdictions that are not as far along the path of reform.  There’s a delicate balance between leading with strong regulatory reform proposals in the U.S. and striving for timely adoption of comparable measures in other jurisdictions. Also, in certain areas, U.S. reforms are tougher or just different from the rules forthcoming in other markets, so we need to figure out sensible ways to apply those rules to the foreign operations of U.S. firms and the U.S. operations of foreign firms.  This is very complicated, and another example of where we need a clearly articulated consistent approach across the U.S. regulatory agencies. The Volcker rule provides a good example of an area where the U.S. is pursuing reforms to reduce risk and conflicts of interest, but where most other nations have not followed.  As you likely know, the comment period for the notice of proposed rulemaking to implement the Volcker rule recently closed for four of the five rule-writing agencies.  Treasury is not writing the Volcker rule but the Secretary, as Chairperson of the Financial Stability Oversight Council, does have a specific statutory role as the coordinator of that process for the five agencies that are charged with implementing it. More than 16,000 comments have been submitted in response to the proposed rule. Although the vast majority of those comments are identical form letters, there are still hundreds of unique comment letters, some of which run over a hundred pages in length.  As you know, the Institute of International Bankers (IIB) submitted a comment letter, and dozens of other commenters have weighed in on a variety of issues relating to the international implications of the proposed rule. A number of the issues that IIB raised in its comment letter are reflected in other letters that we received from individual market participants and foreign governments as well.  Some of these issues include – but are certainly not limited to:
the treatment of foreign government securities;

the definition of activities that are conducted solely outside of the United States;
the treatment of foreign funds that are comparable to U.S. mutual funds; and
the compliance and reporting requirements that would apply to institutions.
 
We welcome this input, view it as an essential part of the process, and firmly believe that the final rule will benefit from the additional information, perspectives, and insights we receive through the comment process. Getting the Volcker rule right is an important issue for the safety of our financial markets and for preserving their liquidity and efficiency.  It’s important to separate risky proprietary trading activity from the federal safety net.  But as a former investor, including during the financial crisis, I also appreciate the role of market-making and know the importance of deep, liquid markets.  It is essential to have buyers who are willing to step up and buy a position, particularly during times of market stress. The statutory language of the Volcker Rule recognizes the importance of striking that balance, and so does the study issued by the Financial Stability Oversight Council last January.  We are equally committed to achieving the right balance in the final rule.  Along with the rule-writing agencies, Treasury is actively reviewing the comments, absorbing the valuable information they provide, and beginning to consider the best ways to address them as we coordinate the process for finalizing the rules. *** While the Treasury Secretary has a specific statutory role in coordinating the Volcker rule, Treasury is not a rule-writer for many parts of financial regulatory reform. We still have some important responsibilities either through coordination or direct assignments.  I would like to provide two examples where we are engaged in activities of interest to foreign institutions. One area where the Dodd-Frank Act does give Treasury specific responsibility is for a decision regarding foreign exchange swaps and forwards.  This is also an area where a common international approach is important, because the foreign exchange market, by its very nature, is a global one. Treasury has issued a Notice of Proposed Determination that central clearing and exchange-trading requirements would not apply to foreign exchange swaps and forwards.  Consistent with the statutory factors, the proposed determination is based on an assessment that the unique characteristics and existing oversight of the foreign exchange swaps and forwards market already reflect many of Dodd-Frank’s objectives for derivatives reform, including high levels of transparency and strong settlement practices. As with the Volcker rule and all rulemaking processes, we are carefully considering the comments we received in response to the proposed determination, but have not made a final determination.  We are also closely monitoring the evolution of   foreign exchange market structure, especially with regard to reporting.  We are very interested, for example, in the global trade repository that is being set up to provide more insight and transparency into the foreign exchange market. This issue is a good example of how there are multiple ways for regulators and industry participants to work together to improve the financial system.  The private sector doesn’t have to wait on regulators and governments to act to implement reforms that could reduce risks, improve returns, increase transparency to market participants, and strengthen financial institutions.  As industry continues to develop the global FX trade repository, we are closely watching to see what kind of information the trade repository will provide publicly. We believe it is possible to provide detailed market information without compromising confidentiality.  Industry has a chance to collectively decide whether it will make useful information available on a timely basis.  Finally, because the foreign exchange market is a global market, having a global trade repository should be very beneficial to both market participants and regulators.  Both should be able to benefit from consolidating information in a single location. Another important initiative that we are working on to promote international consistency and that should benefit both regulators and market participants,  is the development of a global standard for identifying parties to financial transactions: a legal entity identifier, or LEI.  If legal entity identifiers had been in place during the financial crisis, regulators, policymakers, and market participants would have had a much better understanding of exposures and interconnectedness across financial institutions.  Precise identification of counterparties would have helped wind down complex, troubled institutions.  In the near future, the LEI initiative should lead to more accurate data collection at a lower cost.  Specifically, it should allow you to report to regulators with the same data you use in your management information and risk-management systems, and to run those systems better. The LEI initiative continues to move forward globally with significant coordination among domestic and international regulators and financial trade associations. U.S. and global regulators will soon build its use into their reporting systems. We are confident that this effort will enhance the effectiveness of oversight tools for regulators and provide substantial risk management benefits to the market. *** These two very practical examples of public-private collaboration illustrate ways that we can work together to strengthen the global financial marketplace.  I believe we share common interests in safe, strong, and competitive financial markets, not just in the United States but throughout the world.  We have made progress on a number of fronts, but much remains to be done.  We will continue to remain focused on implementing reform as quickly as practical to provide not only clarity and certainty, but more importantly, the measures we need to keep our financial system the safest and strongest in the world.Thank you very much for your time and attention, and I look forward to taking a few of your questions.”

AMBASSADOR DELAURENTIS OF THE U.S. SPEAKS ON SOMALIA AT UN

The following excerpt is from a U.S. State Department e-mail:

“Remarks by Ambassador Jeffrey DeLaurentis, U.S. Alternate Representative to the United Nations for Special Political Affairs, at a Security Council Session on Somalia
Jeffrey DeLaurentis
United States  Ambassador and Alternate Representative for Special Political Affairs
U.S. Mission to the United Nations New York, NY
March 5, 2012
Thank you, Mr. President, and welcome, Mr. Minister. We extend our congratulations to the United Kingdom for assuming the Council’s presidency and thank the delegation of Togo for its leadership of the Council last month. We thank the Secretary-General for his statement this morning, and thank you, Special Representative Mahiga, for your briefing.

Mr. President, Somalia stands at a critical moment. The international community has an important but limited window of opportunity. AMISOM and Somali forces have driven al Shabaab out of Mogadishu and other areas. The mandate of the Transitional Federal Government -- the TFG -- comes to an end in August 2012, and Somalia now has a blueprint for a state after twenty years without a functional government. At the same time, Somalia is emerging from the worst humanitarian crisis in the world.

The TFG and the international community have already taken important steps. The unanimous adoption of Security Council resolution 2036 on February 22, immediately followed by the London Conference on Somalia, show the international community is united in its commitment to Somalia’s future. I would like to thank the United Kingdom for hosting this important conference, and commend members of the Council for giving unanimous support to AMISOM’s expansion. AMISOM troop levels are now increasing and its funding needs have been established. The “Garowe II” constitutional conference has shown the way to more inclusive governance, with clear benchmarks, and UNPOS is established in Mogadishu.

We have accomplished much, but this is no time to lose momentum. A number of critical tasks lie ahead before the Roadmap’s August deadline. We have six months, and we need to use them wisely.

First, the most important achievement of the London Conference was to galvanize high-level and public international support to continue to keep pressure on Somali leaders to complete the Roadmap by August. The Conference participants, including the United States, concluded that the August deadline is firm: There must be no extension of the Transitional Federal Government’s mandate beyond August 20. The Roadmap signatories must fulfill their commitments and complete the difficult work ahead to bring stability to Somalia for the first time in many of its people’s lives. The critical next steps are to complete the drafting of the new constitution and to establish the constituent assembly. Fundamental to this effort will be developing a public-information and outreach process to win popular consent for the ongoing process. The United States will support sanctioning of political spoilers and other individuals who threaten the peace, stability, and security of Somalia.

Second, for political progress to continue, we must redouble our efforts to disrupt terrorism. Despite the military successes of AMISOM, al Shabaab remains dangerous. It continues to destroy the lives of innocent Somalis. We welcome the Council’s decision, as requested by the TFG, to further degrade al-Shabaab by imposing an international ban on imports and exports of charcoal from Somalia. This decision targets a primary revenue stream for al Shabaab. But sanctions only work when they are implemented. We urge all member states to take immediate steps to comply with the obligation contained in resolution 2036 to ban the trade of Somali charcoal, particularly those most active in such trade.

We must also stop the movement of terrorists to and from Somalia, further disrupt the flow of their finances, and develop capacity to conduct criminal investigations and prosecutions as well as operate secure detention facilities. The Security Council should continue advancing international cooperation to produce concrete results in these areas.
We also ask all member states to build the capacity of the Somali security sector to pave the way for Somalis to take charge of their own security. We urge new donors to assist the Somali National Security Forces by providing training, equipment, salaries, infrastructure, and logistical support. The United States has obligated over $106 million to support this effort, and we ask others to do their part.

Third, to maximize the pressure on al Shabaab, we must implement fully and swiftly the expansion mandated in UN Security Council 2036. The sacrifices made by AMISOM and the Somali National Security Forces testify to their dedication to bringing peace and stability to Somalia. We call on additional troop contributors to respond quickly to enable AMISOM to be fully staffed. We also urge member states to increase their voluntary support for AMISOM troop-contributing countries, particularly in the form of equipment and funding for the UN Trust Fund for AMISOM. The United States has a long and strong tradition of support for this. Now support for AMISOM must become a truly international effort. Maritime assets will be critical to AMISOM’s mission, and we hope that providing sustainable and reliable funding for the maritime component will be addressed in the coming months.

As we continue to reinforce AMISOM’s capacity to root out al Shabaab and establish conditions for effective and legitimate governance, we must also ensure timely and visible benefits accrue to ordinary Somalis in recently liberated areas – improved security but also access to food, water, healthcare and livelihoods. Stabilization programming in these areas must be expanded swiftly to cement military gains and to lay a foundation for long-term reconstruction and economic development.

Fourth, as we continue to press for political progress and diminish the threat of terrorism, we must sustain our humanitarian response to Somalia. All parties to the conflict must allow unrestricted humanitarian access. The United States is deeply concerned about displaced people pouring into Mogadishu. There is a widespread housing shortage, a lack of clean water and sanitation, and a serious threat of disease. We remain particularly concerned about the plight of Somali women and children, many of whom are vulnerable to increased levels of sexual and gender-based violence.

We urge the international community to continue to provide life-saving assistance to these populations and others in need in Somalia and its neighbors. Secretary of State Clinton announced at the London Conference that the United States will increase our humanitarian assistance to the Horn of Africa by $64 million, bringing our total emergency assistance to the region since 2011 up to more than $934 million. That amount includes more than $211 million for life-saving programs in Somalia. We urge all member states to strongly support the $1.5 billion UN Consolidated Appeal for Somalia, which is currently funded at only $165 million or 11 percent.

Mr. President, let me reiterate our strong support for AMISOM and our continued commitment to work with the international community in seeking solutions to the challenges faced by the people of Somalia, who have suffered for too long. In this six-month period we have a unique opportunity, and we must do everything we can to seize it.

Thank you.”

JUPITER TO EARTH

"This image of Jupiter and its moons Io and Ganymede was acquired by amateur astronomer Damian Peach on Sept. 12, 2010, when Jupiter was close to opposition. South is up and the "Great Red Spot" is visible in the image. Ground-based astronomy will play a vital role in the success of NASA's Juno mission. Because Jupiter has such a dynamic atmosphere, images from amateur astronomers will assist the JunoCam instrument team predict what features will be visible when the camera's images are taken. With its suite of science instruments, the Juno spacecraft will investigate the existence of a solid planetary core, map the planet's intense magnetic field, measure the amount of water and ammonia in the deep atmosphere and observe the planet's auroras. Image Credit: NASA/Damian Peach"



The above picture and excerpt are from the NASA website:

U.S. STATE DEPARTMENT HOSTS A "DOING BUSINESS IN IRAQ WORKSHOP"

The following excerpt is from a U.S. State Department e-mail:

‘Doing Business in Iraq Workshop: U.S. Department of State Engaging U.S. Businesses on Iraq
Media Note Office of the Spokesperson Washington, DC
March 5, 2012
Today, the U.S. Department of State’s Office of Iraq Affairs hosted a Doing Business in Iraq Workshop in Washington, D.C, where over 100 U.S. businesses interested in all sectors of the Iraqi economy registered. The workshop is part of a larger initiative that aims to engage, educate, and support U.S. businesses as well as provide information on the business climate, risk factors, and upcoming business opportunities in Iraq. It is intended to broaden the pool of U.S. businesses interested in the Iraqi market.

Speakers included the Iraqi ambassador, officials from the Department of State, the Department of Commerce, the Overseas Private Investment Corporation, the Export Import Bank, and U.S. diplomats in Iraq via live video feed from three locations. The various presentations addressed upcoming business opportunities, information on relevant Iraq legislation, and financing options. There was a particular focus on the near term priority areas for Iraq: electricity, transportation, public works, water and oil The Government of Iraq has allocated $32 billion of its 2012 budget for public investment.

This workshop, beyond building the economic agenda with Iraq, is part of Secretary Clinton’s Jobs Diplomacy effort, a series of actions that are part of the Economic Statecraft agenda focused on promoting American businesses abroad. Building upon Deputy Secretary Nides’ June 2011 Business Forum on Iraq, Department economic officers have met U.S. businesses potentially interested in the Iraqi market and successfully encouraged over 30 U.S. businesses to participate in the first American pavilion at Baghdad International Trade Fair in 20 years. Moving forward, similar workshops will be held for U.S. businesses, with both webinars and workshops for specific sectors. The State Department will continue to work on extending U.S. business ties with Iraq as well as supporting the business promotion efforts of the U.S. Department of Commerce.

While Iraq has experienced significant economic growth over the last several years, efforts to rebuild its economy are still in the early stages. Business engagements like these are one way to ensure Iraq’s economy continues to recover from war and isolation and that U.S. businesses are aware of and able to benefit from new opportunities in Iraq.”

U.S. REPRESENTATIVE SPEECH ON UNITED NATIONS MANAGEMENT AND REFORM

The following excerpt is from a U.S. State Department e-mail:

Statement by Ambassador Joesph Torsella On the Organization of Work of the Fifth Committee at the First Resumed Session of the 66th GA
Ambassador Joseph M Torsella
U.S. Representative for UN Management and Reform
U.S. Mission to the United Nations New York, NY March 5, 2012
“Mr. Chairman, we meet after a historic main session where we all came together to take a noteworthy decision on a more responsible budget for the 2012-2013 biennium in a time of worldwide fiscal constraint. We commend the Secretary-General for his leadership and we are hopeful that the organization will continue its efforts towards more responsible stewardship of resources and higher standards of performance and outcomes.

So our first task in 2012 is to apply the Hippocratic Oath in the Fifth Committee: First, do no harm. We must continue to be vigilant during the biennium to realize the gains we made in December. In that regard, we look forward to seeing structural and sustainable management reforms in 2012, and to building on the foundation we established in December 2011. And we echo the sentiments expressed here today on this point by our colleagues in the EU and CANZ.

In our discussions this session on accountability, air travel, limited budgetary discretion for the Secretary General, increased transparency through the public disclosure of OIOS audit reports and the report of the Joint Inspection Unit, we have the opportunity to advance key parts of an agenda for reform that should be shared by all who want to strengthen, rather than weaken, this institution. This is a chance for the Committee to take important steps to move the United Nations forward and enhance confidence and trust of stakeholders in the Organization.

Apart from the specific reform issues before us, this Committee must also continue to make clear to the Secretariat the importance of keeping the renovation of the United Nations on track in relation to the project schedule and budget. We are carefully considering the proposal the Secretary-General has put forward and we look forward to discussing it in the context of updated information on the project status.

In addition, we look forward to hearing an update on the feasibility study for the UN Headquarters long-term accommodation and the options the UN is pursuing. My delegation believes the UN must develop further detailed information on all alternatives, and provide information demonstrating underlying need, in order to enable the Committee to make an informed decision on the future footprint of the United Nations in New York. In that vein, we encourage the Secretariat to move forward with the discussions necessary to provide a full cost-benefit analysis of all various options without prejudice to any decision the General Assembly may make.

In regards to the financing of unforeseen and extraordinary expenses arising from resolutions and decisions of the Human Rights Council, we believe the ACABQ has given the Committee a wise recommendation which should be allowed to work before changing to another funding mechanism.

Another issue that my delegation is studying closely is the pension schemes for the members of the International Court of Justice and judges of the International Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda. The United States acknowledges the historic work these judges have done under very difficult circumstances, but in changing pension schemes, it is important that we consider what is best for the United Nations as a whole.

While we will be making a separate statement on the proposal by the Under Secretary General of the Office of Internal Oversight Services (OIOS) to publicly disclose audit reports, we welcome this proposal and Ms. Lapointe’s commitment to further transparency at the UN. In addition, we look forward to considering the Secretary General’s report regarding accountability. We believe continued focus must be given to the Organization's efforts and commitment to integrating an accountability culture across the Secretariat.

In other matters, my delegation continues to be concerned with the issues surrounding implementation of the enterprise resource planning project. We were very concerned over the lack of leadership of the project which contributed to project delays. However, we commend the Secretary General for moving quickly to appoint a well-qualified interim director, Mr. Ernesto Baca of the World Food Program. We are hopeful that under his leadership this important project will be brought back on track and advanced in the way Member States envisioned.

Turning to another oversight body—the Joint Inspection Unit—it is well known within this Committee that the United States strongly supports reform of the Unit. A revitalized JIU would create more opportunities for strengthening accountability and effectiveness throughout the UN system. Unfortunately, the JIU's analysis of reform progress and options for enhancing its effectiveness fall short of expectations. The Unit fails to propose the kind of bold and far reaching reforms that would make it more influential and effective in promoting results and accountability in UN organizations.

Finally, Mr. Chairman, we reiterate the importance of the principle of consensus here in the Fifth Committee. We recall that the General Assembly first established the imperative of consensus in this committee in response to calls for even more dramatic changes, with the intent of ensuring that in this Committee budgetary decisions could not simply be imposed by one group on another, and that any outcome would meet with approval of all interests – south and north, small and large alike. We reaffirm our commitment to achieving such true, meaningful and voluntary consensus as the only legitimate basis for decisions of this Committee, and we therefore look forward to working with colleagues on each of the issues in a constructive manner and concluding the session within the time allotted.
Thank you.”

FORMER FDA CHEMIST GOES TO PRISON FOR INSIDE TRADING

The following excerpt  is from the Department of Justice website:

Monday, March 5, 2012
“Former FDA Chemist Sentenced to 60 Months in Prison for Insider Trading
WASHINGTON – Cheng Yi Liang, a former Food and Drug Administration (FDA) chemist from Gaithersburg, Md., was sentenced today to 60 months in prison for engaging in insider trading on multiple occasions based on material, non-public information he obtained in his capacity as an FDA scientist.  Liang was previously ordered to forfeit $3.7 million representing the proceeds of the insider trading scheme.

The sentence was announced today by Assistant Attorney General Lanny A. Breuer of the Criminal Division; U.S. Attorney for the District of Maryland Rod J. Rosenstein; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Elton Malone, Special Agent in Charge, Department of Health and Human Services, Office of the Inspector General (HHS-OIG), Office of Investigations, Specials Investigations Branch.

“Taking advantage of his special access as a chemist at the FDA, Mr. Liang used sensitive inside information to reap illegal profits in the pharmaceutical securities market,” said Assistant Attorney General Breuer.  “For years, he exploited his position in the agency to make easy money on the stock market.  But today’s sentence shows that easy money has consequences.  Investors engage in insider trading at their peril.”

 “Cheng Yi Liang bought and sold stocks based on non-public information, and he tried to conceal his crimes by using the names of friends and relatives,” said U.S. Attorney Rosenstein.  “Mr. Liang violated his duty of loyalty to the FDA and profited from inside information.”

“Liang brazenly sought to profit based on sensitive, insider information.  What he didn’t know is that investigators have been utilizing sophisticated technical tools to identify and track criminal behavior,” said Special Agent in Charge Malone of HHS-OIG.  “We will continue to insist that federal government employee conduct be held to the highest of standards.”

“Mr. Liang breached the trust of his employment by obtaining sensitive information and using it for his own profit,” said Assistant Director in Charge McJunkin.  “Together with our partner agencies, the FBI will continue to pursue and hold accountable those who perpetrate such financial crimes, as we work to protect American taxpayers and our financial markets.”

Liang, 58, was sentenced by U.S. District Judge Deborah K. Chasanow in the District of Maryland.  He pleaded guilty on Oct. 18, 2011, to one count of securities fraud and one count of making false statements.

According to court documents, Liang had been employed as a chemist since 1996 at the FDA’s Office of New Drug Quality Assessment (NDQA).  Through his work at NDQA, Liang had access to the FDA’s password protected internal tracking system for new drug applications, known as the Document Archiving, Reporting and Regulatory Tracking (DARRTS) system.  FDA uses DARRTS to manage, track, receive and report on new drug applications.  Liang reviewed DARRTS for information relating to the progression of experimental drugs through the FDA approval process.  Much of the information accessible on the DARRTS system constituted material, non-public information regarding the pharmaceutical companies that had submitted their experimental drugs to the FDA for review.
In his plea, Liang admitted that between in or about July 2006 and in or about March 2011, using material, non-public information from DARRTS and other sources, he traded in the securities of pharmaceutical companies in violation of the duties of trust and confidence he owed the FDA.  Liang utilized accounts of relatives and acquaintances, including his son, to execute the trades.  When the FDA insider information about a company’s product was positive, Liang purchased securities through the accounts he controlled.  When the FDA insider information was negative, Liang would sell short a company’s stock.  After the FDA’s action with respect to a drug was made public, Liang executed trades to profit from the change in the company’s share price as a result of the FDA announcement, resulting in total profits gained and losses avoided of $3,776,152.
During the time he was employed by the FDA, Liang was required to file a confidential financial disclosure form, disclosing, among other things, investment assets with a value greater than $1,000 and sources of income greater than $200.  During the time period of his insider trading scheme, Liang annually filed these forms and failed to disclose using various brokerage accounts under his control or his income from the illicit securities trading.   For example, on Feb. 16, 2010, Liang signed and submitted the 2010 confidential financial disclosure form, failing to disclose that during 2009 he earned approximately $1,040,000 from trading on material, non-public information obtained from the FDA.

In related actions, the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS) filed a civil complaint in the District of Maryland for forfeiture of proceeds related to the insider trading scheme.  To date, the government has obtained over $1 million through the civil forfeiture of nine bank and brokerage accounts.  The forfeiture of two real properties – a house and a condominium in Montgomery County, Md. – is still pending.  Liang previously consented to the entry of final judgment as to the U.S. Securities and Exchange Commission’s (SEC) civil enforcement action against him, also in the District of Maryland.

This case is being prosecuted by Trial Attorneys Kevin Muhlendorf and Thomas Hall of the Criminal Division’s Fraud Section, Assistant U.S. Attorney David Salem for the District of Maryland, and AFMLS Senior Trial Attorney Pamela J. Hicks and Trial Attorney Jennifer Ambuehl.  The case was investigated by the FBI’s Washington Field Office and the HHS-OIG. The department acknowledges the substantial assistance of the SEC, in particular its Market Abuse Unit, which referred the matter to the Criminal Division’s Fraud Section.

This prosecution is part of efforts underway by President Barack Obama’s Financial Fraud Enforcement Task Force.  President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes.  The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources.  The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.”

PHOTO OF PRESIDENT OBAMA, NSA TOM DONILON AND SECRETARY OF STATE HILLARY CLINTON

President Barack Obama talks with National Security Advisor Tom Donilon and Secretary of State Hillary Rodham Clinton in the Oval Office, March 5, 2012. (Official White House Photo by Pete Souza)

WASHINGTON ADVISER TRAVELS TO BRAZIL, ARGENTINA TO MEET ON CHILDREN'S ISSUES

The following excerpt is from a Department of State e-mail:

“Special Advisor for International Children's Issues Travels to Brazil and Argentina
Media NoteOffice of the SpokespersonWashington, DC
March 5, 2012
Ambassador Susan Jacobs, Special Advisor for International Children’s Issues, is traveling to Brazil and Argentina March 5-9, 2012. While in Brazil, Ambassador Jacobs will participate in the second meeting of the U.S.-Brazil Working Group on Children’s Issues. The meetings will further conversations about ways to work together on intercountry adoption, resolving international parental child abduction cases, and collaborating to encourage other countries to join the Hague Conventions. While in Argentina, she will meet with the Argentine Central Authority and judicial officials to discuss international parental child abduction.”

42ND ANNIVERSARY OF NONPROLIFERATION OF NUCLEAR WEAPONS TREATY

The following excerpt is from a Department of State e-mail:

“42nd Anniversary of the Treaty on the Nonproliferation of Nuclear Weapons (NPT)
Fact SheetOffice of the SpokespersonWashington, DC
March 5, 2012
Forty two years ago today, the Treaty on the Nonproliferation of Nuclear Weapons (NPT) entered into force, becoming a cornerstone of U.S. and international security. The Treaty, the most widely adhered to international nonproliferation and disarmament instrument, also promotes the peaceful uses of nuclear energy. The United States remains steadfast in its support for the NPT. As President Obama has said, the Treaty’s basic bargain is sound and together we must work to strengthen it as a basis for cooperation.

The United States is committed to working with its NPT partners to strengthen implementation of all aspects of the Treaty and the international nuclear nonproliferation regime. To this end, we are working with Russia to implement the New START Treaty, pursuing U.S. ratification and entry into force of the Comprehensive Nuclear-Test-Ban Treaty, and with our partners in the Conference on Disarmament, working to begin long-overdue negotiations on a verifiable international agreement to halt the production of fissile material for use in nuclear weapons. The United States is partnering with other countries to secure fissile material from theft or misuse, and we look forward to participating in the second Nuclear Security Summit in Seoul later this month. We are also committed to ensuring that the International Atomic Energy Agency has the resources and authority it needs to carry out its vital safeguards responsibilities and that states will stand together to hold states accountable when they violate their nonproliferation obligations.
The United States’ commitment extends to all aspects of the Treaty. Expanding on long-standing U.S. support for the IAEA’s peaceful uses activities, at the 2010 NPT Review Conference Secretary Clinton pledged $50 million in extra-budgetary support for the IAEA’s Peaceful Uses Initiative (PUI), and encouraged other states to help match this contribution. Through the PUI, the United States has already supported numerous IAEA projects related to human health, food security, water resource management, and nuclear power infrastructure development, benefitting over 100 IAEA Member States. We also welcome the establishment of international fuel reserves, which enable states to access peaceful nuclear energy without increasing the risks of proliferation.

At the 2010 NPT Review Conference, the Treaty Parties reached consensus for the first time in a decade on a comprehensive agenda to further the goals of the Treaty. The United States looks forward to engaging with other NPT State Parties this spring at the first meeting of the Preparatory Committee for the 2015 Review Conference to consider ways to sustain and build on the Action Plan adopted in 2010.
As an essential part of our continued pursuit of President Obama’s commitment to seek the peace and security of a world without nuclear weapons, the United States looks forward to continuing to work constructively with our global partners to strengthen all aspects of the NPT.”

DEPUTY AG SPEAKS ON TRANSNATIONAL ORGANIZED CRIME WHILE IN MEXICO CITY

The following excerpt is from the Department of Justice website:

“Deputy Attorney General James Cole Speaks at High Level Hemispheric Meeting Against Transnational Organized Crime Mexico City ~ Thursday, March 1, 2012
Mr. President, Madame Attorney General, Madame Minister, Mr. Secretary General, distinguished attorneys general and guests.

It is a distinct pleasure to be in Mexico City at today’s Hemispheric Meeting and to have the unique opportunity to speak with you – our shared partners in the Americas and Spain – about transnational organized crime, undoubtedly a global menace that we must work together to defeat.   Organized criminals have adapted rapidly to the new, globalized world.   They are, in fact, helping to shape that world, and not in a good direction.   Our peoples, our governments, must prove equally adaptable if we are to prevail.   The steps that the U.S. Department of Justice, the U.S. government as a whole, and our partners around the world are taking to address the threat cannot be overstated.

For many decades the fight against organized crime has been one of the highest enforcement priorities of the Department of Justice.   Many dedicated agents and prosecutors over the past 80 years have devoted their careers to the battle against the families of La Cosa Nostra, Italian-American crime groups that at one time existed in most major cities in the United States.   More recently, agents and prosecutors have brought an equal level of dedication to the fight against the narco-trafficking cartels, who have been and remain some of the most sophisticated and dangerous transnational organized crime groups in the world.

But even as we continue to vigorously investigate and prosecute these criminal groups, we are aware that the landscape of organized crime has been shifting.   The advance of globalization and the internet, while hugely beneficial to people everywhere, has also created unparalleled opportunities for criminals to expand their operations and use the facilities of global communication and commerce to carry out their criminal activities across national borders.

In December 2010 the United States government completed a comprehensive review of international crime.    That review concluded that in the previous 15 years transnational criminal networks have forged new and powerful alliances among themselves and with powerful figures in business and government, and that they are engaged in an unprecedented range of illicit activities that are destabilizing to nations and populations around the globe.

Our review noted that the new transnational organized crime groups pose special challenges to law enforcement.   For example, some countries undergoing the transition from authoritarian rule often serve as fertile breeding grounds for organized crime.   These countries face serious organized crime challenges that will stifle not only their own economic development, but will also have global implications in our increasingly interconnected world.

Organized crime groups in the past often featured rigid lines of authority and closed
memberships.   This not only imposed a level of discipline, but it also made them easier to define and combat.   The newer organizations often consist of loose networks of individuals or groups that may cooperate on an ad hoc basis to share expertise, skills and resources, while still operating independently and transcending national boundaries.   This allows criminals to more easily evade law enforcement and to adapt quickly to changing market conditions.   The decentralized nature of their operations also means that law enforcement can no longer cripple the network by arresting a few key leaders.

Because of the sophistication of the world economy, organized crime groups have developed an ability to exploit legitimate actors and their skills in order to further the criminal enterprises.  For example, transnational organized criminal groups often rely on lawyers to facilitate illicit transactions.    These lawyers create shell companies, open offshore bank accounts in the names of those shell companies, and launder criminal proceeds through trust accounts.   Other lawyers working for organized crime figures bring frivolous libel cases against individuals who expose their criminal activities.   Business owners and bankers are enlisted to launder money, and employees of legitimate companies are used to conceal smuggling operations.   The range of illicit-to-licit relationships is broad.   At one end, criminals draw on the public reputations of legitimate actors to maintain a facade of legality for their operations.   At the other end are specialists with skills or resources who have been completely subsumed into the criminal networks.

The range of criminal activities that these transnational organized crime groups engage in is extremely broad.   While our review concentrated on the crimes these groups were committing in the United States, we see evidence that these groups are committing the same crimes from locations in many other countries as well.   I’d like to offer a few examples.

Transnational organized criminals are penetrating key strategic markets.   Our review found that alliances between organized criminals and oligarchs from the former Soviet Union threaten U.S. businesses and domestic markets.   Industry officials in certain sectors like commodities fear that quasi-licit firms and individuals with major organized crime ties are gaining market share.  With their international business connections, large sums of money and political ties, some Eurasian oligarchs operate as quasi-legitimate business figures to open the doors of U.S. companies and markets to organized crime influence.

We also found that transnational organized crime groups increasingly use cyberspace to target U.S. consumers and businesses, using a variety of techniques to drain their bank accounts and steal their identities.   In addition to “phishing”, advanced fee fraud schemes and Internet auction fraud, criminals use more sophisticated techniques such as the remote targeting of point-of-sale machines.   The U.S. Secret Service estimates that criminals using anonymous web sites to buy and sell stolen identities have caused billions of dollars in losses to the United States’ financial infrastructure.   Some estimates indicate that online frauds perpetrated by Central European cybercrime networks alone have defrauded U.S. citizens or entities of approximately $1 billion in a single year.

Transnational organized crime groups are increasingly engaging in a variety of public sector fraud, including frauds against the U.S. Government.   Such crimes include food stamp and welfare fraud, Medicare and Medicaid fraud, and government grant and loan program fraud.  For example, in October 2010 seventy-three defendants, including a number of alleged members and associates of an Armenian-American organized crime enterprise, were charged with various health care fraud-related crimes involving more than $163 million in fraudulent billing to Medicare and insurance companies.

We also found that transnational organized criminal networks are increasingly active in stealing critical U.S. intellectual property, including through intrusions into corporate and proprietary computer networks.   Theft of this kind of property, ranging from movies to proprietary designs of high-tech devices and manufacturing processes, causes significant business losses and erodes our competitiveness in the global marketplace.   From 2005 to 2010 the yearly value of seizures in the United States of illegal products that violated intellectual property laws jumped from $93 million to $188 million.   Products originating in China accounted for 66 per cent of these seizures in 2010.

Finally, transnational criminals prey upon weaknesses and differences in international transportation and customs security regimes.   Specialized criminal networks feature prominently in the trafficking of narcotics, the movement of contraband items, the counterfeiting of goods and the smuggling and trafficking of humans into the United States.   For example, between 2005 and 2007, we identified several Uzbek criminal networks engaged in human trafficking.   They operated cleaning companies that exploited guest workers to service national hotel and retail chains, and they moved operations regularly to avoid detection.  Similarly, drug cartels’ control of smuggling routes along the 2,000 mile border with the United States is a key to their ability to make money.   Human traffickers have also exploited those same smuggling routes across the U.S.-Mexico border to target undocumented migrants for labor or sex trafficking.

What are the results of these disturbing trends and new patterns of crime?   In short, our review concluded that transnational organized crime has risen to the level of a national security threat.  Countries in key regions around the world are finding their governments penetrated, weakened and even taken over by organized crime, undermining their democratic institutions and prospects for economic growth.   Economies, including critical markets and the world financial system are being subverted, exploited and distorted by organized criminals through corruption and violence, making it harder for legitimate businesses to compete in those markets and harder for those economies to develop and provide jobs for the law abiding citizens. Terrorists and insurgents are increasingly turning to organized crime to generate funding and acquire logistical support to carry out their violent acts.   Cybercrime threatens sensitive government and corporate computer networks, undermines confidence in the international financial system, and costs consumers billions of dollars annually.   And despite our many successes, illicit drugs remain a serious threat to the health, safety, security and financial well-being of our citizens.

These are sobering findings, made even more so by the fact that we recognize that our domestic law enforcement, working alone, cannot defeat these threats.   Organized crime cases, involving informants, undercover agents, wiretaps, cooperating witnesses and sophisticated legal tools, are already among the most complex and challenging investigations undertaken by the Justice Department.   Transposed to an international setting, where much of our evidence and many of our witnesses and defendants reside in other countries, and where the rules governing investigations that cross numerous borders are quite complex and at times inadequate, the demands of an organized crime investigation can quickly outstrip any level of resources that we are able to devote to it.   The result in too many cases will inevitably be that the most culpable individuals are not brought to justice.

But, far from despairing, we believe that recognizing the scale of the challenges facing us is the first step to overcoming them.   Under the leadership of the White House, the Department of Justice and other parts of the U.S. government came together and developed the Strategy to Combat Transnational Organized Crime, which was released in July of last year.   The Strategy set out several overarching goals to be achieved by our government to meet the threat of transnational organized crime.

First, we must protect our citizens and the citizens and nationals of our partner nations from the harm, violence and exploitation of transnational criminal networks.   Under the Strategy, we are targeting the networks that pose the gravest threat to safety and security, including those that traffic illicit drugs, arms and people, sell substandard, tainted and counterfeit goods, commit robberies, extortions and kidnappings, and seek to terrorize and intimidate through acts of torture and murder.

Second, we must help partner countries strengthen governance and transparency, break the ability of transnational criminal networks to corrupt public officials, and sever alliances between criminals and governments.   We recognize that we need willing, reliable and capable partners to combat the corruption and instability generated by transnational organized crime.  We are actively working with our international partners to develop capabilities to strengthen public safety, security and justice institutions to fight these threats.

Third, we must break the economic power of transnational criminal networks and protect our markets and financial systems from penetration by organized crime.   We have already begun a program of attacking the financial underpinnings of the top transnational criminals, stripping them of their illicit wealth, cutting off their access to the financial system, and exposing their criminal activities hidden behind legitimate fronts.

Finally, we must build international consensus, multilateral cooperation, and public-private partnerships to defeat transnational organized crime.   Stopping organized crime is not a task limited to one government, or even many governments.   We must build new partnerships, new networks, with industry, finance, academia, civil society and non-governmental organizations, to combat organized crime networks.   We must protect press freedoms so that the media and journalists can expose the harms inflicted by organized crime.   We are working to deepen our understanding, information sharing and cooperation with foreign partners and multilateral institutions, and through this we will further international norms against tolerating or sponsoring crime in all its forms, including cyberspace.

To achieve these goals, the Strategy set in motion actions across the U.S. government, starting new initiatives and enhancing existing ones, and bringing the different agencies together so that we could have the greatest impact on organized crime.

At the Justice Department, we had already begun to tackle transnational organized crime.   We recognized that part of the challenge posed by transnational organized crime lay in the fact that information concerning these groups was scattered across the federal law enforcement community.   We therefore began by bringing together the heads of nine federal law enforcement agencies, from the FBI, DEA and ICE to the Postal Inspectors and Department of Labor, to advise the Attorney General in an Organized Crime Council.   Their deliberations resulted in the creation of the International Organized Crime Intelligence and Operations Center in 2009.   This Center pools the resources of the nine agencies, plus federal prosecutors, in a setting where all of the agencies’ relevant information can be sifted to produce a complete picture of the workings of a criminal organization.   Furthermore, the Center produces this picture in a form that can immediately be put to use by agents investigating the organization.   We also created a top target list for organized crime groups common to all nine federal agencies.   At a minimal cost, these steps did much to unify the disparate efforts of many agencies and provide a single focus on the greatest perceived transnational organized crime threats.

As part of the Administration’s overall Strategy, the Justice Department also took a hard look at the legal tools that we are using to fight organized crime.   We found that many of our statutes had not kept up with developments in the criminal world.   Our money laundering statutes, groundbreaking when first enacted, had gaps when applied to illicit proceeds in the U.S. that were generated by criminal activity in other countries.   Our famous anti-racketeering statute, known as RICO, did not explicitly cover some of the crimes being committed by transnational organized crime groups – like foreign bribery or certain types of computer fraud – and recent court decisions made it unclear whether RICO could even be used to prosecute an organized crime group if most of their activities were transnational in nature.  To remedy these and other gaps the Department prepared a series of legislative proposals that were announced at the same time as the Strategy and that are now beginning to work their way through Congress.

The Strategy recognized that agencies outside the category of law enforcement had a critical role to play in the fight against transnational organized crime.   Most importantly, perhaps, the Strategy was accompanied by an Executive Order, signed by the President, which directed the Treasury Department to establish a sanctions program to block the property of and prohibit transactions with significant criminal networks that threaten national security, foreign policy, or economic interests.   This power had previously been restricted to terrorists and narcotics kingpins, but was now extended to other transnational organized crime groups.   By shutting designated individuals and their companies out of the U.S. financial system, these sanctions programs have the power to affect criminals operating around the world.   Just last week the Treasury Department announced the first individual sanctions under this order, naming seven members and associates of the Brothers’ Circle Eurasian organized crime group and two members of the Japanese Yakuza criminal organizations, and prohibiting U.S. individuals and companies from doing business with them.   The Justice Department and the Treasury Department are working closely with each other to further develop this program.

The Strategy also took direct aim at those criminals who try to portray themselves as legitimate businessmen and seek to gain respectability by traveling to and conducting business in the United States.   A Presidential Proclamation under the Immigration and Naturalization Act gave the State Department the power to deny U.S. entry to transnational criminal aliens and others who have been targeted for financial sanctions.   The State Department was also directed to establish a new rewards program, expanding upon the success of the narcotics rewards program, to obtain information that leads to the arrest and conviction of leaders of transnational criminal organizations that pose the greatest threats to national security.

To tie these efforts together, the Strategy also directed the establishment of an interagency working group to identify those transnational organized crime threats that present a sufficiently high national security risk and coordinate the work of the whole spectrum of U.S. agencies in acting against that threat.

Woven throughout the Strategy is the recognition that transnational organized crime is a threat to law abiding citizens of all nations, and that nations must work together if it is to be defeated.  We understand that nations are affected by transnational organized crime in different ways, and that different nations have different capabilities to fight these groups.   But we must come together and combine those capabilities if we hope to ultimately prevail against this growing menace.

We welcome today’s Hemispheric Meeting sponsored by our Mexican hosts and the OAS as a sign that our concerns are shared by our partners in the Americas.   Our work at this conference is critically important, for it is here over the next two days that we can reach a common understanding of the problem of transnational organized crime, and begin to craft a united response.   Looking out among you, I am confident that we will succeed.

Thank you, again, for the opportunity to speak with you this morning.   It is a positive step that we are here together, forging a path forward to combat this evolving global threat. “

U.S. STATE DEPARTMENT CONGRATULATES RUSSIAN PEOPLE ON ELECTION

The following excerpt is from a U.S. Department of State e-mail:

“Presidential Elections in Russia
Press Statement Victoria Nuland
Department Spokesperson, Office of the Spokesperson Washington, DC
March 5, 2012
The United States congratulates the Russian people on the completion of the Presidential elections, and looks forward to working with the President-elect after the results are certified and he is sworn in.

The United States endorses the preliminary report of the observer mission of the Organization for Security and Cooperation in Europe (OSCE) and the Parliamentary Assembly of the Council of Europe (PACE), and welcomes the many other assessments of the Russian presidential election by Russian election monitors. We note the statement by the head of delegation for PACE that the election had a clear winner with an absolute majority. We also note, however, the OSCE’s concerns about the conditions under which the campaign was conducted, the partisan use of government resources, and procedural irregularities on election day, among other issues.

We urge the Russian Government to conduct an independent, credible investigation of all reported electoral violations. As underscored in the OSCE report, we also note the new steps that the Central Election Commission took to increase transparency of the voting process since the parliamentary elections last December. We urge Russian authorities to build on these steps to ensure that the procedures for future elections will be more transparent.

We are encouraged to see so many Russian citizens voting, monitoring voting in their local precincts, exercising their constitutional right to free assembly, and expressing their views peacefully about the political and electoral processes. The number of Russian election observers who monitored this vote is unprecedented and a sign that Russian society seeks to participate in the improvement of Russia’s democratic institutions. We also recognize the government’s efforts to reform the political system, including the reintroduction of direct elections for governors, the simplification of party registration procedures, and the reduction in the numbers of signatures needed to register presidential candidates.”