Wednesday, April 9, 2014

REMARKS BY WILLIAM BROWNFIELD ON "DRUGS, SECURITY, AND LATIN AMERICA"

FROM:   U.S. STATE DEPARTMENT 

Drugs, Security, and Latin America: The New Normal?

Remarks
William R. Brownfield
Assistant Secretary, Bureau of International Narcotics and Law Enforcement Affairs
Lyndon B. Johnson School of Public Affairs, University of Texas
Austin, Texas
March 27, 2014


Ladies and gentlemen, it is indeed a pleasure to be back in Austin. As the Dean has suggested, I spent three years of my life at that fine academic institution, just across the street in that direction, and in fact it was my nearly three years at the law school that brought me into the Foreign Service and the Department of State. Trust me when I tell you that the first year of law school was so decidedly unpleasant that when I saw the advertisement on the bulletin board, which said Foreign Service exam and included the magic word, “free,” I said, “Right. Maybe I want to be a Foreign Service Officer.”

And for those of you who actually are still trying to determine your own profession or career choice for the next 30 or 35 years of your lives, let me assure you: sometimes you just enter a profession, if you will, by the back door, through no more systematic or intellectually driven process than that the entry exam is free. And that, ladies and gents, was 35-plus years ago. And at least for me it worked out just fine.

Ladies and gentlemen, the title of today’s little talk is “Drugs, Security, and Latin America: The New Normal?” I’m actually going to talk about anything that you want me to talk about, because that is the purpose of a dialogue. However, there is some logic to the title. I have spent virtually my entire professional career doing Latin America, so logically I might have at least some observations of value that are related to Latin America. Drugs are part of what I now deal with for a living. I am the Assistant Secretary of State for Drugs and Law Enforcement, and to be clear, I officially oppose the former and support the second. I want there to be no confusion on that particular point, although I have a broader responsibility as the Assistant Secretary for INL.
We started life 40 years ago as the part of the State Department that does international drug programs. Beginning about 20 years ago, we expanded to broader crime issues, realizing perhaps that there is more crime out there of an international nature than just drug trafficking. Within about the last 15 years, we expanded more broadly into law enforcement writ large – police training, exchanges, equipment, support, academics, etc. And within the last 10 years or so, driven, believe it or not, by our experiences in Iraq and Afghanistan, we’ve expanded our portfolio and our writ to cover what we would call all of rule of law, which is not just police, but is also prosecutors, courts, judges, corrections systems. If it is part of the criminal justice system in essence, we will now work with and support it in some way, shape, or form.

And the last two or three words of the title of this talk – The New Normal? – is just a way to tease you into wondering if this is the direction we are heading in the Western Hemisphere in the 21st century.

Let me start with a little bit of history. I’ll offer some observations, and then I will stop and let you all actually guide me in the direction you would prefer to hear from me in terms of your own thoughts and your own interests.

A little bit of history: In the 1970s, the United States of America, or at least its government, discovered the drug issue. Richard Nixon declared a ‘war on drugs,’ a very unfortunate selection of terms, by the way, since in fact it’s not a war. It’s certainly not a war against our own population that in some way, shape, or form is part of the drug issue. And for that reason, ever so wisely, in the year 1993, the then newly-inaugurated president of the United States Bill Clinton said, and I quote, “It’s not a war, and we’re going to stop calling it a war on drugs.” Things move slowly in the federal government and the media, but don’t you all come at me in 15 minutes and start condemning me for the war on drugs, because I have already told you in advance it is not a war on drugs, it has not been a war on drugs for 21 years, and what we are doing goes a bit beyond the classical, typical definition of the term war, combined with the word drugs.

Having, however, declared a war on drugs in 1972, the Nixon Administration then proceeded to attempt to win it. They did it by what I would call single-issue approach to the drug abuse problem. First it was eradication. We will go down to Peru, Bolivia, and Colombia, eradicate it at the source, and the problem will be solved. Now, they had some success in eradicating. At the end of the day, however, for every hectare or acre eradicated, another acre or two or three would come under production and cultivation. Obviously, eradication alone was not the answer or the solution.

Solution number two, we will dismantle. We will go after the criminal organizations and arrest or remove their leadership from operation. Once we have removed the leadership of the criminal organizations, the cartels, the entire structure that drives the drug trafficking industry, will then collapse. Once again, there were the occasional successes. Those of you – and some of you are actually not old enough to remember when this happened – in 1993, in a particularly effective operation, the Colombian National Police took down, literally removed – perforated about 125 times – Mr. Pablo Escobar, who had been for the preceding 10-15 years the head of the largest, most vicious, most violent drug trafficking cartel in the history of the human race, called the Medellin Cartel, a cartel that might quite conceivably have been responsible for up to 10,000 murders in the preceding decade.

Impact? Well, 1994 came along and drugs continued to flow. Taking down or decapitating organizational leadership, in and of itself, obviously was not the solution.
Next proposal, in the 1980s, was interdiction. “Okay,” they said. “We can’t seem to stop it by eradicating at the source, we can’t seem to stop it by eliminating the leadership of the trafficking organizations. Let us build a picket line down below the U.S. southern borders, both on the ground and at sea, stop the ships, the boats, the planes that are bringing this stuff into the United States, andvoila, problem is solved.

Once again, there were some successes. The truth of the matter is the Caribbean in the 1980s was a region that was at risk of losing control. Fourteen different governments were at risk of losing control of their sovereign national territory to multi-billion dollar drug trafficking industries. And in their defense, that generation of the 1980s actually did effectively interdict the flow of drugs through the Caribbean toward the United – the southeastern United States of America.
But did that solve the problem? No. Where are we today? We’re in central Texas. Where do the drugs now flow into the United States? They come up straight through the land corridor, starting in Colombia, working their way through Central America, processing up through Mexico, and entering through the southwest border of the United States of America. In other words, yes, you can plug your finger in one hole of the dam, but in all likelihood – one might almost say with complete certainty – another hole is going to open up. And at the end of the day you have a finite number of fingers to plug with, defined by how much money the United States Congress and the taxpayers that send them to office are prepared to dedicate to this particular exercise.
Finally, and with somewhat greater coherence and success, the government began to develop an approach in the 1990s which I would call sustainable economic development. And that is accepting the reality that campesinos – or if you’re in Afghanistan and dealing with opium poppy, subsistence-level farmers, actually are not inherently criminal; they do not plant coca or opium poppy because they wish to be part of criminal enterprises. They do it because they are trying to provide a basic living to their families, and coca or opium poppy actually gives them better income and more secure income than corn or frijoles or wheat or whatever it might be that is otherwise being grown in that region.

Now this approach actually made some degree of sense, and I would suggest to you that where it is applied, it does produce long-term results. Problem: It is amazingly expensive. It costs a good bit of money to actually manage on a nationwide basis an alternative development program. It’s not just giving them a barrel of corn seed so that they will plant corn rather than coca. It’s also giving the tools and the training. It’s also giving them the infrastructure, the road system that allows them to get their product to market once they have harvested it, because remember: the drug traffickers will come to them, buy their product, and take it away at no cost to the farmer. The farmer who has instead two tons of corn somehow has to get it to market, or within a month or two he has more or less two tons of mulch that is gradually deteriorating and rotting in his back yard.

On top of that, if you want the campesino to remain committed to this, you have to give him or her some stake in the community. That means maybe schools, maybe clinics. That means electricity, running water, sewage, the sort of thing that makes a family say, one, I do have an interest in staying here, and two, I have a future here over and above whether I can grow an acre of coca or an acre of opium poppy.

Okay. Eradication, dismantling, interdiction, economic development – none of them in and of themselves solved the drug problem. So the question is, since the drugs are still an issue, what is the correct response? Are you ready? Bill Brownfield says the correct response is all of the above and then a little bit more as well.

Let us flash-forward to 1999, when the United States Government, jointly with the Government of Colombia, actually did this the right way. But I will prejudge the conclusion by letting you know the right way cost $8.5 billion over roughly a 12-year period of time. But we launched – the Colombian government launched what came to be called Plan Colombia. Plan Colombia was a comprehensive, structured approach designed to address the economic issue, the security issue, and the drugs and law enforcement issue. And when I said economic, I should also have said social, to include health impact, education, as well as job generation and economic activity.

Ladies and gentlemen, I would suggest that that worked for Colombia. The huge cartels that in the 1990s were actually threatening the very existence of the Colombian government have been atomized, admittedly to still annoying criminal activities, but are not anywhere remotely as powerful, as strong, or as threatening as Mr. Pablo Escobar and his Medellin cartel at the start of the 1990s, or the Rodriguez Orejuela brothers and the Cali cartel at that same timeframe.
Cocaine production in Colombia, we estimate, is down 60 percent or so from its heyday, as recently as 10 years ago. The tourism industry in Colombia today is booming. There are probably 20 times as many tourists going to Colombia today as 10 years ago. And if you will, tourists vote with their feet. If tourists are going to Colombia, you assume the security situation obviously has reached a point where people are prepared voluntarily to spend their own money to go visit a country that 10 or 15 years ago they would not have dreamed of doing so without a battalion of the United States Army or Marine Corps joining them and providing them security at every step.

And may I note as well that there is some correlation between the fact that production of cocaine in Colombia has dropped by some 60 percent, and consumption of cocaine in the United States of America has dropped by some estimates between 40 and 50 percent? I’m not giving you the Pollyanna story here. I freely acknowledge other sorts of drug consumption have grown in this same time period. But the two things that have most driven the Latin America to North America drug trafficking crisis – cocaine and methamphetamines – have both gone down dramatically in terms of demand in the United States.

Heroin is moving at a much smaller level – I mean, the simple truth, the quantity of heroin that moves. Marijuana, synthetics, and pharmaceuticals: apparently we’re quite capable of producing our own domestically in the United States of America. What has been driving the crisis of violence, of homicide, of crime in the Central America-Mexico corridor is cocaine and methamphetamines. The extent to which that product and the trafficking in that product is going down is actually good news for those seven Central American and Mexican countries and governments.

That said, I do not mean to suggest to you that by addressing the problem in Colombia the problem was resolved. On the contrary – and I’m not going to walk you through each of these in the same degree of detail, but the balloon theory – they were squeezed, the bad guys were squeezed in Colombia. What did they do? Largely they moved to Mexico, where, as those of you who could remember where we were about seven or eight years ago, Mexico was confronting a crisis of large cartels that actually represented a threat to the sovereignty of the government itself. And we launched what came to be known as the Merida Initiative, a joint effort in which the Mexican Government offered roughly $13 to every $1 offered by the United States to address this problem.

We squeezed them in Mexico, and what happened? Many of them moved to Central America. The crisis of the last five years has been the surge in violence, in homicides, in crime, in gang activities in Central America. Response? CARSI, the Central America Regional Security Initiative. Much smaller than that for Mexico, but the truth of the matter is there’s a finite number of dollars that are available to be applied to this problem. We squeeze them in Central America and what do we see increasingly happening? You will be stunned to learn that the statistics of drug flows through the Caribbean, that same region that was in fact successfully shut down in the 1980s, has been growing from a factor of roughly 4 percent of U.S. drug consumption three years ago to 8 percent two years to 9 or 10 percent over the last year, and now an estimated 14 percent.

If you’re tracking the trend line, even if we don’t know precisely how much is moving, the fact of the matter is what I have described for you is a tripling of drug flow through the Caribbean over the last three years. Watch this space. If in the course of the next two or three years you see the occasional headline saying, “Drug crisis in the Caribbean,” you will be able to say, yeah, Brownfield at least was prescient enough to predict that would be happening.
Each of the initiatives that I have laid out – Plan Colombia, Colombia; Merida Initiative, Mexico; CARSI, Central America; CBSI, Caribbean Basin Security Initiative, for the Caribbean – had, I would suggest – while each was different, each had its own particular characteristics – they had several common principles.

One, there was an attempt and still is an attempt to link together all the elements of the problem: law enforcement, security, rule of law institutions, economic and social development. Second, they are sustainable. Sustainable means the host government – whether it’s Colombian, Mexican, Central American, Caribbean – sees enough of their own interest at stake that they’re prepared to put their own resources into the problem and the solution. Third, they accept as a principle that the host government makes the decision. If we want a particular program and they don’t, at the end of the day, their view is what determines what will be done. Fourth, they try to focus on institutions and institution-building rather than equipment, rather than hard stuff, rather even than operations, the thinking being if you build an institution, you get value for a generation. If you do a successful takedown operation, you get a headline and value that might last you for a day or two.

Fifth, they are regional in nature – by the way, even the bilateral programs, Colombia and Mexico, are regional to the extent that they link into other countries in the region. Today, for example, Colombian police are training more police in Central America than is the United States. And some of it is actually being done with our assistance, which is another way of saying we actually pay for it. But the quality of the training and the ability of the trainers from Colombia is actually greater than what we ourselves can offer, partly because of their experience, partly because, of course, it’s a lot easier for a Spanish-speaking national police officer from Colombia to do training in Central America than it is even for a Spanish-language-trained U.S. law enforcement officer.

And the sixth principle that we have – I think linking all of these together – is the concept of partners. With each initiative, we have drawn in more and more international partners to play into this effort. Why? One reason I suggest to you is that even as consumption of cocaine in the United States has been dropping steadily since 2007, consumption of cocaine in Western Europe or in East Asia has been growing dramatically, without even mentioning the largest country in South America – Brazil – which is today confronting what could almost be called a crack cocaine crisis. And obviously, as their populations and communities are increasingly victims – or participants, depending upon your perspective – in this process, there is obviously greater interest in joining in efforts as partners to address the problem either at its source or in the midpoint, in short, before it arrives on the shores of France or Italy or Spain or the United Kingdom.

Ladies and gentlemen, may I suggest to you that it is a little bit early, perhaps a century or two, perhaps a millennium or so, to declare success on this particular issue? May I suggest to you it is not too early to say the year 2014 and the next five or ten years will offer a different problem set, a different set of realities from what we were dealing with in the 1970s, ‘80s, ‘90s, or even the last decade? First, you have one nation that has emerged, if you will, from the hell of the 1990s, and is now able to export its experience and its talent set. That nation is Colombia. And let us not forget that having a model out there that other nations in the region can look at has an impact. That is different from where we were 10 or 15 years ago.

Second, let us accept that you now have two new – not so new, but two much more major players in this drama in the region. They are named Bolivia and Peru, and their production level is moving in a sharply upward direction. What is also new, however, is that they are not feeding the North American market; they are feeding the Brazilian and Western European market. It’s an east-west problem as much as a north-south problem. I don’t say one is better than the other; I say it is a different problem set, which is going to require a different set of solutions.
Third, as I have mentioned several times, we are dealing with a consumption matter, a consumption issue, that is changing. As the American taste, if you will, shifts from cocaine and methamphetamines to other sorts of drugs, whether it is heroin or opium-based drugs, other synthetics, diverted pharmaceuticals or marijuana, it is a different problem set and presumably requires a different set of solutions.

Fourth – if you wondered if I was going to mention it, and I’m going to mention it right now – nations are experimenting with alternative approaches to drug control. Uruguay, a small nation located in between Brazil and Argentina, has recently, as a matter of national law, legalized the consumption of marijuana throughout the country. Some of you who have been asleep for the last 12 months may be unaware that two states of the union in the United States of America have done exactly the same thing. One of them is wrapping up its third month of this experiment, that’s Colorado, and the other goes online sometime, I think, about the first of July as they work their way through their rules and procedures. And I am not yet in a position to draw any firm conclusions from any of these experiences. I am in a position to say this is a 2014 reality, and let’s take it into account as we figure: How are we going to work this issue over the next five to ten years?

And fifth, and finally – and I do emphasize this point, because I do believe we haven’t – this Administration, the Administration of Barack Obama has not gotten credit or at least as much credit for this as it should – there is a strong realization in this country, your country, the United States of America, that drugs, drug abuse, and the overall total drug issue is far more a matter of public health than it is a matter of criminal justice. It is both unfair to the criminal justice system as well as to many of those who are caught up in the criminal justice system to try to address drug abuse solely in the criminal justice system. It is not just a matter of criminal justice. It is obviously a matter of health, of the medical care and medical profession, and of how you deal with the health and medical aspects of the use of drugs.

Now, I am not saying that the one excludes the other, but I am very definitely saying that trying to address the issue from only one side is pretty much condemned to failure. Those, I submit, are four new elements available as of the 27th of March, 2014, that were different from what we would’ve discussed if we had been sitting here 20 years ago, 10 years ago, quite frankly even as recently as five years ago. We’ve got to figure how to incorporate them into our own thinking.
These are, ladies and gentlemen – those of you who are – it’s about 75 percent of you who I predict are at least below the age of 40 if not below the age of 30 – these are going to be your challenges. Why? Because, I got to tell you, old Brownfield’s going to be checking out of this business in another three or four years, and it’s going to be you and your generation who have to figure out how to deal with these issues. I will offer you only five suggestions as you move proudly into the future on this issue on how to do it.

One, think long term. We didn’t get into this mess overnight, and we’re not going to get out of it overnight. Don’t even think in terms of years, maybe not even decades. Think in terms of generations. Don’t come up with some program that is supposed to solve the problem by 2015. It’s not going to happen.

Second, flexible and adaptable. Tastes change, conduct and behavior changes. The bad guys, the large, transnational criminal organizations who are involved in this, are constantly adapting and adjusting their approach. You had better have your own strategy and policy that can be adjustable and adaptable as well.

Third, be comprehensive. We tried the single-issue approach, ladies and gentlemen. It doesn’t work. We cannot just eradicate ourselves out of this problem. We cannot just interdict our way out of this problem. We also cannot just economic develop our way out of this problem. We have got to address all aspects of the problem. Otherwise we will not succeed.

Fourth principle, build institutions. No one loves a cool operation more than I do. No one loves some snappy new equipment as much as I do. But at the end of the day, your long-term value comes from building better law enforcement capabilities, building more competent prosecutors and investigators, building more effective, efficient, and honest courts and judicial systems, and don’t forget, building a corrections system that actually provides correction as opposed to a graduate course on how to advance from Criminal Activity 101 to the advanced Ph.D. course during three months of incarceration in a detention facility.

And finally, if I might, there is and always will be a criminal justice aspect to this, but principle number five: focus on the big organizations. It’s fine to pump up your numbers, I guess, in terms of how many you can arrest, but if you’re not going after the multibillion dollar organizations who engage not just in drug trafficking, but in trafficking in firearms, trafficking in people, trafficking in general contraband, money laundering that actually corrupts and undercuts and hollows out entire financial institutions, if you’re not focused on them, you’re missing the entire picture.
Okay, back to the title. So what is the new normal? Are you ready? The new normal is constant change. That, ladies and gents, is what we had better wrap our heads around. And we never have for the last 40 years. We’ve always taken the snapshot and said here is what we’re dealing with; now let us develop a strategy that will solve that problem. Wrong-o. That is not what we are going to be dealing with. What we’re looking at today on the 27th of March, I absolutely assure you, is going to be completely different by the time we get into 2015. That’s the new normal. And we had better be ready and able to address that, domestically and internationally, as a criminal justice matter and as a public healthcare matter.

The truth of the matter is we have to have a policy and approach that allows us to move in whatever direction our societies and those who are trying to take advantage of them will be moving in. And ladies and gentlemen, if that’s the new normal, I at least think we’ve got an approach that we can work with in a realistic way and that at least would take us one step beyond where we were 30 or 35 years ago when we started down this road.

RECENT U.S. NAVY PHOTOS FROM THE ARABIAN SEA

FROM:  U.S. NAVY 


140407-N-VH054-010 ARABIAN SEA (April 7, 2014) Aviation Ordnanceman 2nd Class Jason McManus, second from left, conducts MK122 switch training on BBU-54 bombs aboard the aircraft carrier USS George H.W. Bush (CVN 77). George H.W. Bush is supporting maritime security operations and theater security cooperation efforts in the U.S. 5th Fleet area of responsibility. (U.S. Navy photo by Mass Communication Specialist 3rd Class Harry Andrew D. Gordon/Released).


140407-N-SI489-150 ARABIAN SEA (April 7, 2014) Sailors assigned to security division participate in an M16 training exercise aboard the aircraft carrier USS George H.W. Bush (CVN 77). George H.W. Bush is supporting maritime security operations and theater security cooperation efforts in the U.S. 5th Fleet area of responsibility. (U.S. Navy photo by Mass Communication Specialist Seaman Andrew Johnson/Released).

DOJ ANNOUNCES SETTLEMENT IN LANDMARK AMERICANS WITH DISABILITIES ACT CASE

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, April 8, 2014
Department of Justice Reaches Landmark Americans with Disabilities Act Settlement Agreement with Rhode Island

The Justice Department announced today that it has entered into a statewide settlement agreement that will resolve violations of the Americans with Disabilities Act (ADA) for approximately 3,250 Rhode Islanders with intellectual and developmental disabilities (I/DD).   The landmark ten year agreement is the nation’s first statewide settlement to address the rights of people with disabilities to receive state funded employment and daytime services in the broader community, rather than in segregated sheltered workshops and facility-based day programs.  Approximately 450,000 people with I/DD across the country spend their days in segregated sheltered workshops or in segregated day programs.   The agreement significantly advances the department's work to enforce the Supreme Court's decision in Olmstead v. L.C, which requires persons with I/DD be served in the most integrated setting appropriate .

As a result of the settlement, 2,000 Rhode Islanders with I/DD who are currently being served by segregated programs will have opportunities to work in real jobs at competitive wages.   Additionally, over the next ten years, 1,250 students with I/DD will receive services to help transition into the workforce.

“Today’s agreement will make Rhode Island a national leader in the movement to bring people with disabilities out of segregated work settings and into typical jobs in the community at competitive pay,” said Acting Assistant Attorney General Jocelyn Samuels for the Civil Rights Division.   “As Rhode Island implements the agreement over the next ten years, it will make a dramatic difference in the lives of people with disabilities, businesses and communities across the state.   We congratulate Governor Chafee and state officials for signing this agreement, as we believe that Rhode Island will be a model for the nation with respect to integrated employment for people with disabilities.”

“The filing of today’s consent decree is a critically important event in Rhode Island history,” said U.S. Attorney Peter F. Neronha for the District of Rhode Island.  “It ushers in a new day of opportunity – opportunity for Rhode Island residents with intellectual or developmental disabilities to live, work and spend their recreational time alongside their fellow Rhode Islanders.  It is an opportunity for this State to move forward; to recognize, finally, that we are better, stronger, when all of us – all of us –are interwoven in the fabric that is Rhode Island.”


Under the agreement, Rhode Island has agreed to provide:

·       Supported employment placements that are individual, typical jobs in the community, that pay at least minimum wage, and that offer employment for the maximum number of hours consistent with the person’s abilities and preferences, amounting to an average of at least 20 hours per week across the target population;
·       Supports for integrated non-work activities for times when people are not at work including mainstream educational, leisure or volunteer activities that use the same community centers, libraries, recreational, sports and educational facilities that are available to everyone;
·       Transition services for students with I/DD, to start at age 14, and to include internships, job site visits and mentoring, enabling students to leave school prepared for jobs in the community at competitive wages;
·       Significant funding sustained over a ten year period that redirects funds currently used to support services in segregated settings to those that incentivize services in integrated settings.

The ten year agreement will allow the state to ensure that the services necessary to support individuals with I/DD in competitive, integrated jobs will not disappear with a change in administration or legislative leadership.   As a result of this commitment, the business community has already stepped up to partner with the state.   The U.S. Business Leadership Network (USBLN), a network of Fortune 500 companies, and Walgreens will co-host a regional business summit in Rhode Island in June 2014 to explore how to improve those partnerships.

The agreement is the result of an ADA investigation that began in January 2013 into Rhode Island’s day activity service system for people with I/DD.   The department, the state, and the City of Providence entered into an interim settlement agreement in June 2013.   The interim settlement agreement focused on a single provider, which was one of the largest facility-based employment service providers in the state’s system, and a school-based sheltered workshop at a Providence, R.I., high school, which was a point of origin for many people entering the provider’s workshop.

The department continued its investigation of the statewide system, and in January 2014 issued findings determining that the statewide system over-relied on segregated services, to the exclusion of integrated alternatives, in violation of the ADA.   The department found workers with I/DD in settings where they had little or no contact with persons without disabilities, and where they earned an average wage of $2.21 per hour.   The investigation found that workers typically remain in such settings for many years, and sometimes decades.   The department also found that students in Rhode Island schools were often not presented with meaningful choices to participate in integrated alternatives, such as integrated transition work placements and work-based learning experiences, which put students at serious risk of unnecessary postsecondary placement in segregated sheltered workshops and facility-based day programs.

Since June 2013, the state and city have provided supported employment services to people with I/DD transitioning from the original two facilities covered by the interim settlement agreement.   Many of these individuals have now accessed jobs in typical work settings where they can interact with non-disabled coworkers and customers, and enjoy the same employment benefits as their non-disabled peers.  Individuals have secured jobs at both locally owned and national companies. Because of the interim settlement agreement, Pedro , an individual who transitioned from the in-school sheltered workshop to the adult workshop, where he earned just 48 cents an hour, is now making minimum wage working at a restaurant.   Peter , another former sheltered workshop employee who was earning approximately $1.50 per hour, now has a job earning more than minimum wage working for the state as a custodian at a hospital.  Louis has gone from earning sub-minimum wages performing rote tasks at the sheltered workshop to a full-time position at a state hospital, where he uses his strong computer skills and passion for mathematics to generate Excel reports, record time sheets, and complete other office tasks.

SEC CHARGES, FREEZES ASSETS OF "VIRTUAL CONCIERGE MACHINES" (VCM) ALLEGED PONZI SCHEMERS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today announced fraud charges and an asset freeze against the operators of a South Florida-based Ponzi scheme targeting investors through YouTube videos and selling them investments in a product called virtual concierge machines (VCMs) that would purportedly generate guaranteed returns of 300 to 500 percent in four years.

In a parallel action, the U.S. Attorney’s Office for the Southern District of Florida today announced criminal charges.

The SEC alleges that Joseph Signore of West Palm Beach, Paul L. Schumack II of Pompano Beach, and their respective companies JCS Enterprises Inc. and T.B.T.I. Inc. falsely promised hundreds of investors nationwide that their funds would be used to purchase ATM-like machines that businesses could use to advertise products and services via touch screen and printable tickets or coupons.  Investors supposedly needed to do nothing to earn returns on their investment in a VCM, which would purportedly be placed at such locations as hotels, airports, and stadiums where they would derive revenue from the businesses paying to advertise through them.  However, instead of advertising revenue serving as the driving force behind the returns paid to investors, the two men and their companies paid returns to earlier investors using money from newer investors.  Signore and Schumack also diverted millions of dollars in investor funds for their personal use and other unrelated expenses.

“Signore and Schumack touted VCMs as a revolutionary enterprise and fail-safe investment based on a stream of advertising revenue that would generate the guaranteed returns paid to investors,” said Eric I. Bustillo, director of the SEC’s Miami Regional Office.  “However, the advertising revenue was virtually non-existent and investors aren’t enjoying the riches touted on YouTube.”

According to the SEC’s complaint unsealed today in U.S. District Court for the Southern District of Florida, Signore, Schumack, JCS, and T.B.T.I. fraudulently raised more than $40 million since at least 2011 by guaranteeing exorbitant returns.  The SEC alleges that JCS Enterprises promoted VCMs through YouTube videos, e-mail solicitations, and investor seminars.  In one YouTube video, an apparent investor is polishing his new Cadillac as a friend proclaims, “What an amazing car! How can you afford this?”  The investor responds, “My Virtual Concierge.”  A similar scene ensues with a different investor showing a friend her new pool.  A spokesperson appears and asks the viewer, “Do you want to make more money?  Then it is time for you to own a Virtual Concierge.”

The SEC alleges that Signore, Schumack, and their companies promised to locate, place, and manage the VCMs while informing investors where their VCMs were located.  Investors were to be provided a password to allow them online access to monitor the activity of their VCMs.  However, VCMs were not placed anywhere near the rate of those purchased by investors, who were never provided the locations of their VCM and could not track activity as promised.  The scheme collapsed in typical Ponzi fashion once new investor funds dried up.  The majority of investors stopped receiving their monthly payments in January 2014, yet Signore and Schumack continued to solicit new investors while fabricating excuses to placate irate investors no longer receiving their returns.  JCS went so far as to issue a press release claiming that TBTI had defrauded JCS and it was “investigating the matter.”

Glenn S. Gordon, associate director of the SEC’s Miami Regional Office, said, “The defendants never told investors the most important way in which these machines resembled ATMs – as a source of ready cash from investors that the defendants used for their own benefit.”

The SEC also alleges that Signore and Schumack misappropriated investor funds for themselves while never telling investors they would do so.  Signore used investor funds from accounts at JCS to divert approximately $2 million directly to himself and family members. Signore also routed investor money to unrelated business ventures he operates with his wife.  Debit charges from JCS accounts indicate that approximately $56,000 in investor funds were spent at restaurants, merchandising stores, and a tanning salon as well as other credit card bills.  Money from T.B.T.I’s accounts was similarly used for personal expenses.  For example, Schumack’s wife signed a check for $500,000 made out to the IRS.  T.B.T.I. also has transferred approximately $4 million from its investor account to an unrelated account from which Schumack and others executed more than 100 cash withdrawals totaling around $4.8 million, which was 91 percent of the account balance.  Another $23,000 of investor money was used by Schumack for personal expenses including restaurants, merchandising stores, and a nutrient therapy center.

The SEC’s complaint charges JCS Enterprises, T.B.T.I., Signore, and Schumack with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 along with Rule 10b-5.  The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, and financial penalties among other relief for investors.  The Honorable Donald Middlebrooks granted the SEC’s request for a temporary restraining order and a temporary asset freeze against JCS, T.B.T.I., Signore and Schumack, and further required the defendants to provide accountings.  Judge Middlebrooks also entered an order appointing James D. Sallah, Esq. as receiver for JCS and T.B.T.I.  A court hearing has been scheduled for April 17.

The SEC’s investigation, which is continuing, has been conducted by Fernando Torres, Linda S. Schmidt, Vincent T. Hull, and Mark Dee in the Miami Regional Office.  The case has been supervised by Jason R. Berkowitz.  The SEC’s litigation is being led by Russell Koonin and Mr. Hull.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of Florida as well as the Federal Bureau of Investigation, Florida Office of Financial Regulation, and Texas State Securities Board.

DEFENSE SECRETARY HAGEL STRESSES U.S.-CHINA MILITARY-TO-MILITARY RELATIONS

Right:  Defense Secretary Hagel with Chinese Defense Minister Gen. Chang Wanquan in Beijing, April 8, 2014. DOD photo by Erin A. Kirk-Cuomo  

FROM:  U.S. DEFENSE DEPARTMENT 
Hagel, China’s Defense Minister Build Military Relations Model
By Cheryl Pellerin
American Forces Press Service

BEIJING, April 8, 2014 – At the invitation of Chinese Defense Minister Gen. Chang Wanquan, Defense Secretary Chuck Hagel visited the Chinese Defense Ministry’s headquarters here today.

Hagel met with Chang and then a larger group of defense officials before he and Chang revealed during a news conference a new model for U.S.-China military-to-military relations.

The secretary’s visit to Beijing comes in the middle of a 10-day trip to the Asia-Pacific region, during which he visited Japan and will travel to Mongolia later this week. The trip began in Hawaii with the first meeting for defense ministers of the 10 member countries of the Association for Southeast Asian Nations to be held in the United States.

“One focus of our discussion today was how we develop a new model of military-to-military relations,” Hagel said about his meeting with Chang. “We’ve just finished a very good meeting,” the secretary added, “during which I restated that the United States is committed to continuing to build a constructive and productive relationship with China.”

Hagel explained that the United States believes its approach should be to build a sustained and substantive dialogue, deepen practical cooperation in areas of common interest, and manage competition and differences through openness and communication.

In each area, he added, there is much work to do, but the nations are making strong progress.

“As General Chang announced, we agreed today on several new ways to improve our military-to-military relationship,” Hagel said. First, the U.S. and Chinese defense agencies will establish an army-to-army dialogue as an institutionalized mechanism within the framework of the U.S.-China military-to-military relationship.

Second, the secretary added, “we agreed to participate in a joint military-medical cooperative activity. This will build on experiences gained at the 2014 Rim of the Pacific exercise, a U.S.-hosted multilateral naval exercise that China will participate in for the first time this summer.”

Third, Hagel said, the defense agencies will establish an Asia-Pacific security dialogue between the assistant secretary of defense for Asia-Pacific security affairs and the director of the Chinese Defense Ministry’s foreign affairs office to exchange views on a range of security issues.

“This dialogue will build on the discussions Gen. Chong and I had today on regional security issues,” the secretary said, “including North Korea and the growing threat posed by its nuclear and missile programs.”

Hagel added that continued instability in Northeast Asia is not in China’s interest, and that the United States is deeply concerned about the threat North Korea poses to U.S. treaty allies and, increasingly, to the homeland.

“The United States and China have a shared interest in achieving a verifiable denuclearization of the Korean Peninsula,” he said.

Hagel and Chang also discussed tensions in the East and South China seas.
“I underscored that all parties should refrain from provocative actions and the use of intimidation, coercion or aggression to advance their claims,” the secretary said. “Such disputes must be resolved peacefully and in accordance with international law.”

Hagel noted that yesterday he toured China’s aircraft carrier, met personnel aboard the ship and had an opportunity to listen. He will later speak to officers at the National Defense University and is looking forward to visiting with noncommissioned officers, whom he characterized as the backbone of all militaries.

“Exchanges like this at every level of command are critical for building mutual understanding and also respect, Hagel said. “Our vision is a future where our militaries can work closely together on a range of challenges, such as humanitarian assistance and disaster relief missions.”

To reach this objective, the secretary said, “we must be candid about issues we disagree about, [but also continue] to deepen our cooperation in areas where we do agree. We have many common interests, and we agree on many things.”
Regarding cybersecurity, Hagel emphasized the need for the United States and China to be more open about each other’s capabilities and intentions in this critically important domain.

“Greater openness about cyber reduces the risk that misunderstanding and misperception could lead to miscalculation,” he said. “More transparency will strengthen China-U.S. relations.”

The U.S.-China relationship is important for stability and security in the Asia-Pacific, and for achieving prosperity for both nations in the 21st century, the secretary added.

“As President [Barack] Obama has said,” Hagel noted, “the United States welcomes the rise of a stable, peaceful and prosperous China.”


Tuesday, April 8, 2014

U.S. DEFENSE DEPARTMENT CONTRACTS FOR APRIL 8, 2014

FROM:  U.S. DEFENSE DEPARTMENT DEFENSE DEPARTMENT 
CONTRACTS
DEFENSE LOGISTICS AGENCY

Rosenbauer America,* Lyons, S.D., has been awarded a maximum $382,500,000 fixed-price with economic-price-adjustment contract for the procurement of commercial type fire and emergency vehicles. This contract is a competitive acquisition, and 24 offers were received. This contract is one of up to 20 contracts being issued against solicitation number SPM8EC-11-R-0005. This contract is for a term of five years and is for a portion of the estimated $382,500,000, and will be competed amongst other contractors who receive a contract under this solicitation. Request for quotations will be issued to all twenty and the resulting contract delivery order(s) will be awarded to the offerer with the lowest price that is technically acceptable. Locations of performance are South Dakota and Minnesota with an April 7, 2019 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 through fiscal 2019 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EC-14-D-0015).

Atlantic Diving Supply Inc.,* Virginia Beach, Va., has been awarded a maximum $66,783,068 modification (P00003) exercising the first option period on a one-year base contract (SPM2D0-13-D-0003) with nine one-year option periods for various medical/surgical products. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is Virginia with an April 8, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 warstopper funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.

Henry Schein Inc., Melville, N.Y., has been awarded a maximum $26,602,450 modification (P00012) exercising the fourth option period on a one-year base contract (SPM2DE-10-D-7342) with four one-year option periods for various laboratory supplies. This is a fixed-price with economic-price-adjustment, indefinite-delivery/indefinite-quantity contract. Location of performance is New York with an April 25, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, and federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.

Labatt Food Service, San Antonio, Texas, has been awarded a maximum $17,250,000 modification (P00204) exercising the first option period on a one-year base contract (SPM300-13-D-3655) with one one-year option period for full line food distribution. This is a fixed-price with economic-price-adjustment, indefinite-quantity contract. Location of performance is Texas with an April 12, 2015 performance completion date. Using military services are Army and Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa.

Stern Produce Co.,* Phoenix, Ariz., has been awarded a maximum $16,625,000 fixed-price with economic-price-adjustment contract for fresh fruit and vegetables support. This is a competitive acquisition, and one offer was received. This is an 18-month base contract with two 18-month option periods. Location of performance is Arizona with an Oct. 12, 2015 performance completion date. Using military services are Army, Navy, Air Force, Marine Corps, federal civilian agencies, and Department of Agriculture schools and reservations. Type of appropriation is fiscal 2014 through fiscal 2015 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE300-14-D-P255).

RPR Industries,* Grantsville, W.Va., has been awarded a maximum $11,601,492 firm-fixed-price contract for life preservers and component parts. This is a competitive acquisition, and two offers were received. This is a two-year base contract with three one-year option periods. Location of performance is West Virginia with a July 12, 2016 performance completion date. Using military service is Air Force. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPE8EH-14-D-0007).

Exelan Pharmaceuticals Inc., Lawrenceville, Ga., has been awarded a maximum $8,509,384 firm-fixed-price contract for pharmaceutical products. This is a competitive acquisition, and four offers were received. This is a one-year base contract with four one-year option periods. Locations of performance are Georgia and New York with an April 7, 2015 performance completion date. Using services are federal civilian agencies. Type of appropriation is fiscal 2014 defense working capital funds. The contracting activity is the Defense Logistics Agency Troop Support, Philadelphia, Pa., (SPM2D0-14-D-N005).

ARMY

Savi Technology Inc.,* Alexandria, Va., was awarded a $102,000,000 firm-fixed-price, indefinite-delivery/indefinite-quantity contract for Active Radio Frequency iIdentification hardware, software, documentation, and incidental services to authorized government users worldwide. Incidental services include training, warranty, and technical engineering services. Funding and work performance locations will be determined with each order. Estimated completion date is April 6, 2017. Bids were solicited via the Internet with one received. Army Contracting Command, Rock Island Arsenal, Ill., is the contracting activity (W52P1J-14-D-0014).

NAVY

Patricia I. Romero Inc., doing business as Pacific West Builders*, National City, Calif. (N62473-14-D-0038); Peter Vander Werff Construction Inc.,* El Cajon, Calif. (N62473-14-D-0039); Dimensions Construction Inc.*, San Diego, Calif. (N62473-14-D-0040); I.E.-Pacific Inc.,* San Diego, Calif. (N62473-14-D-0041); and Halbert Construction Co., Inc.,* El Cajon, Calif. (N62473-14-D-0042) are each being awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity multiple award construction contract for new construction, renovation, and repair of general building construction at various locations within the Naval Facilities Engineering Command (NAVFAC) Southwest area of responsibility (AOR). The maximum dollar value including the base period and four option years for all five contracts combined is $99,000,000. Types of projects may include, but are not limited to: administration buildings, school buildings, hospitals, auditoriums, fire stations, gymnasiums, office buildings, hangars, laboratories, and parking structures. No task orders are being issued at this time. All work on these contracts will be performed within the NAVFAC Southwest AOR including, but not limited to, California (90 percent), Arizona (6 percent), Nevada (1 percent), Utah (1 percent), Colorado (1 percent), and New Mexico (1 percent). The terms of the contracts are not to exceed 60 months, with an expected completion date of April 2019. Fiscal 2014 operations and maintenance, Navy contract funds in the amount of $25,000 are being obligated on this award and will expire at the end of the current fiscal year. This contract was competitively procured as a set-aside for Historically Underutilized Business Zone and/or Service-Disabled Veteran-Owned Small Businesses via the Navy Electronic Commerce Online website, with 35 proposals received. These five contractors may compete for task orders under the terms and conditions of the awarded contracts. The Naval Facilities Engineering Command, Southwest, San Diego, Calif., is the contracting activity.
Lockheed Martin Mission Systems and Training, Moorestown, N.J., is being awarded a $45,351,395 modification to previously awarded contract (N00024-14-C-5114) to provide multi-year procurement funding for Aegis Weapon System MK 7 equipment sets. Work will be performed in Moorestown, N.J. (85.5 percent), Clearwater, Fla. (13.1 percent), and Akron, Ohio (1.4 percent) and is expected to be completed by September 2021. Fiscal 2014 shipbuilding and conversion, Navy funding in the amount of $45,351,395 will be obligated at time of award. Contract funds will not expire at the end of the current fiscal year. The Naval Sea Systems Command, Washington, D.C., is the contracting activity.

AIR FORCE

Lockheed Martin Coherent Technologies Inc., Louisville, Colo., has been awarded a $9,387,611 cost-plus-fixed-fee contract to develop a ground-based wind profiler to meet the functional, performance, and environmental requirements for precision airdrop. The objective of this effort is to develop an affordable, rugged, set-and-start solution for precise wind measurement for precision air drop (PAD) at forward operating bases that shall enable the government to achieve 50 meters drop accuracy. This technology development shall enable accurate wind measurements from the ground to altitudes near the aircraft, and shall contribute to all-weather accurate determination of the computed-air release point for a single-pass aircraft scenario for PAD. Work will be performed at Louisville, Colo., and is expected to be completed by Oct. 16, 2015. The award is a result of a competitive acquisition under an open-ended Broad Agency Announcement. Unlimited offers were solicited and one offer was received. Fiscal 2013 ($500,000) and fiscal 2014 ($1,819,300) research and development funds are being obligated at time of award. Air Force Research Laboratory/RQKPD, Wright-Patterson Air Force Base, Ohio, is the contracting activity (FA8650-14-C-2444).
*Small Business

NLRB ANNOUNCES VALERO SERVICES AGREES TO RESCIND UNLAWFUL SOCIAL MEDIA POLICY

FROM:  NATIONAL LABOR RELATIONS BOARD 
Valero Services agrees to rescind its nationwide social media policy
April 8, 2014

On April 7, 2014, Valero Services, Inc. agreed to rescind its nationwide social media policy and to post and mail a NLRB remedial notice to its employees throughout the country in response to a complaint filed by the National Labor Relations Board (NLRB). Valero Services provides employee leasing services to refineries and plants located throughout the United States, including a refinery located in Port Arthur, Texas.

The United Steelworkers of America filed an unfair labor practice charge with the NLRB Region 16, alleging that Valero Services social media policy interfered with employees’ rights to discuss their terms and conditions of employment on social media. Region 16 found merit to the allegations and issued complaint. During the hearing, Associate Chief Administrative Law Judge William N. Cates approved a settlement agreement resolving the dispute. Under the terms of the settlement, Valero Services agreed to notify employees that it will rescind its unlawful social media policy and to post NLRB notices at its 52 facilities nationwide, as well as to mail notices to employees, advising them that they will not be prohibited from using social media to discuss their terms and conditions of employment.

PRESIDENT OBAMA'S REMARKS ON EQUAL PAY FOR EQUAL WORK

FROM:  THE WHITE HOUSE 

Remarks by the President on Equal Pay for Equal Work

East Room
11:58 A.M. EDT
THE PRESIDENT:  Thank you, everybody.  (Applause.)  All right.  Well, thanks to my friend, Lilly Ledbetter, not only for that introduction but for fighting for a simple principle:  Equal pay for equal work.  It's not that complicated.  And, Lilly, I assure you, you remain the face of fair pay.  (Laughter.)  People don't want my mug on there.  (Laughter.)  They want your face.  
As Lilly mentioned, she did not set out to be a trailblazer. She was just somebody who was waking up every day, going to work, doing her job the best that she could.  And then one day, she finds out, after years, that she earned less than her male colleagues for doing the same job.  I want to make that point again.  (Laughter.)  Doing the same job.  Sometimes when you -- when we discuss this issue of fair pay, equal pay for equal work, and the pay gap between men and women, you’ll hear all sorts of excuses about, well, they’re child-bearing, and they’re choosing to do this, and they’re this and they’re that and the other.  She was doing the same job -- probably doing better.  (Laughter and applause.)  Same job.  Working just as hard, probably putting in more hours.  But she was getting systematically paid less.   
And so she set out to make sure this country lived up to its founding, the idea that all of us are created equal.  And when the courts didn’t answer her call, Congress did. 
The first time Lilly and I stood together in this room was my tenth day in office, and that's when we signed the Lilly Ledbetter Fair Pay Act.  (Applause.)  First bill I signed into law.  And some of the leaders who helped make that happen are here today, including Leader Pelosi and Senator Mikulski and Congresswoman DeLauro.  (Applause.)  I want to thank all the members of Congress and all the state legislators who are here  and all the advocates who are here, because you all contributed to that effort.  And I want to give a special thanks to the members of the National Equal Pay Task Force, who’ve done outstanding work to make workplaces across America more fair.
We’re here because today is Equal Pay Day.  (Applause.)  Equal Pay Day.  And it's nice to have a day, but it's even better to have equal pay.  (Applause.)  And our job is not finished yet. Equal Pay Day means that a woman has to work about this far into 2014 to earn what a man earned in 2013.  Think about that.  A woman has got to work about three more months in order to get what a man got because she’s paid less.  That's not fair.  That’s like adding an extra six miles to a marathon.  (Laughter.)  It’s not right.
AUDIENCE MEMBER:  Ain’t right.
THE PRESIDENT:  Ain’t right.  (Laughter.)  It's not right and it ain’t right.  (Laughter.) 
America should be a level playing field, a fair race for everybody -- a place where anybody who’s willing to work hard has a chance to get ahead.  And restoring that opportunity for every American -- men and women -- has to be a driving focus for our country. 
Now, the good news is today our economy is growing; businesses have created almost 9 million new jobs over the past four years.   More than 7 million Americans have signed up for health care coverage under the Affordable Care Act.  (Applause.)
That’s a good thing, too.  I know it’s Equal Pay Day and not Obamacare Day -- (laughter) -- but I do want to point out that the Affordable Care Act guarantees free preventive care, like mammograms and contraceptive care, for tens of millions of women, and ends the days when you could be charged more just for being a woman when it comes to your health insurance.  (Applause.)  And that’s true for everybody.  (Applause.)  That’s just one more place where things were not fair. 
We’ll talk about drycleaners next, right -- (laughter) -- because I know that -- I don’t know why it costs more for Michelle’s blouse than my shirt.  (Laughter.) 
But we’ve got to make sure that America works for everybody. Anybody who is willing to work hard, they should be able to get ahead.  And we’ve got to build an economy that works for everybody, not just those at the top.  Restoring opportunity for all has to be our priority.  That’s what America is about.  It doesn’t matter where you started off, what you look like -- you work hard, you take responsibility, you make the effort, you should be able to get ahead. 
And we’ve got to fight for an opportunity agenda, which means more good jobs that pay good wages, and training Americans to make sure that they can fill those jobs, and guaranteeing every child a world-class education, and making sure the economy rewards hard work for every single American. 
And part of that is fighting for fair pay for women -- because when women succeed, America succeeds.  (Applause.)  When women succeed, America succeeds.  It’s true.  I believe that.  (Applause.)  It’s true.  It’s true.  It's true. 
Now, here’s the challenge:  Today, the average full-time working woman earns just 77 cents for every dollar a man earns; for African American women, Latinas, it’s even less.  And in 2014, that’s an embarrassment.  It is wrong.  And this is not just an issue of fairness.  It’s also a family issue and an economic issue, because women make up about half of our workforce and they’re increasingly the breadwinners for a whole lot of families out there.  So when they make less money, it means less money for gas, less money for groceries, less money for child care, less money for college tuition, less money is going into retirement savings. 
And it’s all bad for business, because our economy depends on customers out there, and when customers have less money, when hardworking women don’t have the resources, that’s a problem.  When businesses lose terrific women talent because they’re fed up with unfair policies, that’s bad for business.  They lose out on the contributions that those women could be making.  When any of our citizens can’t fulfill their potential for reasons that have nothing to do with their talent or their character or their work ethic, we’re not living up to our founding values.  We don’t have second-class citizens in this country -- and certainly not in the workplace.
So, tomorrow, the Senate has the chance to start making this right by passing a bill that Lilly already alluded to -- the Paycheck Fairness Act.  (Applause.)  They’ve got a chance to do the right thing.  And it would put sensible rules into place, like making sure employees who discuss their salaries don’t face retaliation by their employers. 
And here’s why this is important.  There are women here today who worked in offices where it was against the rules for employees to discuss salaries with one another.  And because of that, they didn’t know they were being paid less than men -- just like Lilly didn’t know -- for doing the exact same work.  For some, it was years before they found out.  And even then, it only happened because a manager accidentally let it slip or, as in Lilly’s case, a sympathetic co-worker quietly passed a note.  She only found out she earned less than her male colleagues for doing the same work because somebody left an anonymous note. 
We can’t leave that to chance.  And over the course of Lilly’s career, she lost more than $200,000 in salary, even more in pension and Social Security benefits -- both of which are pegged to salary -- simply because she was a woman. 
And Lilly, and some of the other women here, decided it was wrong, set out to fix it.  They went to their bosses; they asked for a raise.  That didn’t work.  They turned to the law; they filed suit.  And for some, for years after waiting and persisting they finally got some justice. 
Well, tomorrow, the Senate could pay tribute to their courage by voting yes for paycheck fairness.  (Applause.)  This should not be a hard proposition.  This should not be that complicated.  (Applause.) 
And so far, Republicans in Congress have been gumming up the works.  They’ve been blocking progress on this issue, and of course other issues that would help with the economic recovery and help us grow faster.  But we don’t have to accept that.  America, you don’t have to sit still.  You can make sure that you’re putting some pressure on members of Congress about this issue.  And I don’t care whether you’re a Democrat or a Republican.  If you’re a voter -- if you’ve got a daughter, you got a sister, you got a mom -- I know you got a mom -- (laughter) -- this is something you should care about. 
And I’m not going to stand still either.  So in this year of action I’ve used my executive authority whenever I could to create opportunity for more Americans.  And today, I’m going to take action -- executive action -- to make it easier for working women to earn fair pay.  So first, I’m going to sign an executive order to create more pay transparency by prohibiting federal contractors from retaliating against employees who discuss their pay with each other.  (Applause.)  Pay secrecy fosters discrimination and we should not tolerate it -- not in federal contracting or anywhere else. 
Second, I’m signing a presidential memorandum directing the Department of Labor and our outstanding Secretary of Labor, Tom Perez, to require federal contractors to provide data about their employee compensation so pay discrimination can be spotted more easily. 
Now, I want to be clear:  There are great employers out there who do the right thing.  There are plenty of employers out there who are absolutely certain that there’s no pay discrimination happening in their offices.  But then sometimes when the data is laid out, it paints a different picture.  Many times they then do everything they can to fix the problem, and so we want to encourage them to fix these problems if they exist by making sure that the data is out there.
So everybody who cares about this should pay attention to how the Senate votes tomorrow on this paycheck fairness act, because the majority of senators support this bill, but two years ago, a minority of Senate Republicans blocked it from getting a vote.  Even worse, some commentators are out there saying that the pay gap doesn’t even exist.  They say it’s a myth.  But it’s not a myth; it’s math.  (Laughter and applause.)  You can look at the paychecks.  You can look at the stubs.  (Applause.)
I mean, Lilly Ledbetter didn’t just make this up.  (Laughter.)  The court, when it looked at the documents, said, yep, you’ve been getting paid less for doing the same job.  It’s just the court then said, you know, it’s been -- as Lilly said -- it’s been happening so long, you can’t do anything about it anymore -- which made no sense and that’s why we had to sign another bill.  It’s basic math that adds up to real money.  It makes a real difference for a lot of Americans who are working hard to support their families. 
And of course, the fact that we’ve got some resistance from some folks on this issue up on Capitol Hill just fits with this larger problem, this vision that the congressional Republicans seem to be continually embracing -- this notion that, you know what, you’re just on your own, no matter how unfair things are.  You see it in their budget.  The budget the Republicans in Congress just put forward last week, it’s like a bad rerun.  It would give massive tax cuts to households making more than a million dollars a year, force deep cuts to things that actually help working families like early education and college grants and job training. 
And, of course, it includes that novel idea of repealing the Affordable Care Act.  (Laughter.)  Fiftieth time they’ve tried that -- which would mean the more than 7 million Americans who’ve done the responsible thing and signed up to buy health insurance, they’d lose their health insurance; and the 3 million young adults who’ve stayed on their parents’ plan, they’d no longer have that available; take us back to the days when insurers could charge women more just for being a woman.
On minimum wage, three out of four Americans support raising the minimum wage.  Usually when three out of four Americans support something, members of Congress are right there.  (Laughter.)  And yet here, Republicans in Congress are dead set against it, blocking a pay raise for tens of millions of Americans -- a majority of them women.  This isn’t just about treating women fairly.  This is about Republicans seemingly opposing any efforts to even the playing field for working families. 
And I was up in Michigan last week and I just asked -- I don’t understand fully the theory behind this.  I don’t know why you would resist the idea that women should be paid the same as men, and then deny that that’s not always happening out there.  If Republicans in Congress want to prove me wrong, if they want to show that they, in fact, do care about women being paid the same as men, then show me.  They can start tomorrow.  They can join us in this, the 21st century, and vote yes on the Paycheck Fairness Act.  (Applause.)  Vote yes. 
And if anybody is watching or listening, if you care about this issue, then let your senators know where you stand -- because America deserves equal pay for equal work.
This is not something we’re going to achieve in a day.  There’s going to be a lot of stuff that we’ve got to do to close the pay gap.  We got to make it possible for more women to enter high-paying fields that up until now have been dominated by men, like engineering and computer science.  Women hold less than 6 percent of our country’s commercial patents -- that’s not good enough.  We need more parents and high school teachers and college professors encouraging girls and women to study math and science.  We need more businesses to make gender diversity a priority when they hire and when they promote.  Fewer than five percent of Fortune 500 companies have women at the helm. 
I think we’d all agree that we need more women in Congress. (Applause.)  Fewer than 20 percent of congressional seats are held by women.  Clearly, Congress would get more done if the ratio was -- (laughter) -- evened out a little bit.  So we’ve got to work on that. 
And we’ve all got to do more to make our workplaces more welcoming to women.  Because the numbers show that even when men and women are in the same profession and have the same education, there’s still a wage gap, and it widens over time.  So we’re going to keep making the case for why these policies are the right ones for working families and businesses.  And this is all going to lead up to this first-ever White House Summit on Working Families on June 23rd.
So, ultimately, equal pay is not just an economic issue for millions of Americans and their families.  It’s also about whether we’re willing to build an economy that works for everybody, and whether we’re going to do our part to make sure that our daughters have the same chances to pursue their dreams as our sons, and whether or not we’re willing to restore to the heart of this country that basic idea -- you can make it, no matter who you are, if you try.  
And that’s personal for me.  I’ve said this before -- I’ve got two daughters and I expect them to be treated just like anybody’s sons.  And I think about my single mom working hard, going to school, trying to raise two kids all at the same time.  And I think about my grandmother trying to work her way up through her career and then hitting the glass ceiling.  And I’ve seen how hard they’ve worked, and I’ve seen how they’ve sucked it up.  And they put up with stuff and they don’t say anything, and they just take care of their family and they take care of themselves, and they don’t complain a lot.  But at a certain point, we have the power to do something about it for the next generation.  And this is a good place to start. 
So, for everybody out there who’s listening, ask your senator where you stand on paycheck fairness.  (Applause.)  If they tell you that there’s not a pay gap out there, you tell them to look at the data, because there is.  It’s time to get this done.  And I’m going to do my small part right now by signing this executive order and presidential memoranda.  (Applause.)
END   
12:18 P.M. EDT

AG HOLDER TESTIFIES BEFORE HOUSE COMMITTEE ON THE JUDICIARY

FROM:  U.S. JUSTICE DEPARTMENT 
Attorney General Eric Holder Testifies Before the U.S. House Committee on the Judiciary
~ Tuesday, April 8, 2014

Chairman [Bob] Goodlatte, Ranking Member [John] Conyers, and Members of the Committee: thank you for the opportunity to appear before you today to discuss the recent achievements of the U.S. Department of Justice; to join you in advancing our ongoing priorities; and to stress, on behalf of my hardworking colleagues in Department offices around the world, our continued commitment to the cause of justice and the missions we share: securing our nation and protecting the American people.

This is, and will always be, our top priority.  And over the past year, the Department has done important work in this regard – strengthening our ability to safeguard America’s national security, to disrupt potential terrorist plots, and to ensure that those who attempt to harm our nation, its vital interests, or its people can be held accountable to the fullest extent of the law.

Last month, the Department achieved a major milestone when we secured the conviction of Sulaiman Abu Ghayth, the son-in-law of Usama bin Laden and a senior member of al Qaeda, on terrorism-related charges.  This verdict has proven that proceedings such as these can safely occur in the city I am proud to call my hometown, as in other locations across our great nation.  We never doubted the ability of our Article III court system to administer justice swiftly in this case, as it has in hundreds of other cases involving terrorism defendants.  And it would be a good thing for the country if this case has the result of putting that political debate to rest.

Last week, the Senate Intelligence Committee voted to declassify key portions of its report into past interrogations practices.  I agree that as much of the report as possible should be made public, of course allowing for redactions necessary to protect national security.  So I was pleased the Committee voted to send portions of the report forward for declassification.  Having prohibited these practices upon taking office, the President believes that bringing this program into the light will help the American people understand what happened in the past and can help guide us as we move forward, so that no Administration contemplates such a program in the future.

Beyond our national security work, the Department will continue to build on the progress we’ve made in confronting a range of threats and challenges.  The full resources of the Department and the FBI have been made available to help conduct a thorough investigation into last week’s horrific mass shooting at Fort Hood.  And going forward, my colleagues and I will do everything possible to achieve justice for our brave men and women in uniform – and prevent these far-too-common tragedies from happening again.

More than ever before, the Department’s law enforcement work today must contend with new and emerging technology, including virtual currencies such as Bitcoin. Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity.  This potential must be closely considered.  We are working with our financial regulatory partners to account for this emerging technology.  Those who favor virtual currencies solely for their ability to help mask drug trafficking or other illicit conduct should think twice; the Department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals’ ability to move funds anonymously.  As virtual currency systems develop, it will be imperative to law enforcement interests that those systems comply with applicable anti-money laundering statutes and know-your-customer controls.

Across the board, the Department’s comprehensive efforts reflect our commitment to integrity and equal justice – in every case and circumstance.  And nowhere is this commitment stronger than in our work to strengthen America’s federal criminal justice system.  Through the Smart on Crime initiative I announced last August, my colleagues and I are taking action on a number of evidence-based reforms – including modifications to the Department’s charging policies with regard to mandatory minimum sentences for certain nonviolent, low-level drug crimes.  This commonsense change will ensure that the toughest penalties are reserved for the most dangerous or violent drug traffickers.  And I’m pleased to note that Members of this Committee have shown tremendous leadership in the effort to codify this approach into law.

I’ve been proud to join many of you in supporting the bipartisan Smarter Sentencing Act – introduced by Representatives Scott and Labrador and cosponsored by Ranking Member Conyers – which would give judges more discretion in determining appropriate sentences for people convicted of certain federal drug crimes.  And I pledge to keep working with leaders like you – and like Senator Rand Paul and others – to address the collateral consequences of certain convictions, including felony disenfranchisement policies that permanently deny formerly incarcerated people their right to vote.

We will never be able to simply arrest and incarcerate our way to becoming a safer nation.  That’s why we need to be both tough and smart in our fight against crime and the conditions and behaviors that breed it.  And this struggle must extend beyond our fight to combat gun-, gang-, and drug-fueled violence – to include civil rights violations and financial and health care fraud crimes that harm people and endanger the livelihoods of hardworking Americans from coast to coast.

Last November, the Justice Department secured a major victory in this struggle when we obtained a $13 billion settlement with JPMorgan Chase & Co. – the largest settlement with a single entity in American history – to resolve federal and state civil claims related to the company’s mortgage securitization process.  As part of our ongoing efforts to hold accountable those whose conduct contributed to the mortgage crisis, the Department also filed a lawsuit against the ratings firm S&P.  And with the $1.2 billion agreement we reached with Toyota last month – the largest criminal penalty ever imposed on an automotive company – we’re making good on our determination to protect consumers and address fraud in all its forms.

Moving forward, my colleagues and I will continue to build upon these and other important efforts.  And we’ll keep working alongside Members of Congress, including Ranking Member Conyers, Representative Sensenbrenner, and Representative Lewis, to address the void that has been left by last year’s Supreme Court decision invalidating one of the Voting Rights Act’s core provisions – so we can help protect that most basic right of American citizenship.

I thank you, once again, for the chance to discuss these and other priorities with you today – and for your continued support of the Justice Department’s critical efforts.  I look forward to working closely with you to build upon the public safety and law enforcement accomplishments my colleagues have made possible in recent years.  And I would be happy to answer any questions you may have.

SMALL BUSINESS ADMINISTRATION ANNOUNCES NATIONAL SMALL BUSINESS WEEK

FROM:  U.S. SMALL BUSINESS ADMINISTRATION 

SBA Announces National Small Business Week Week-long, cross-country events to feature entrepreneurship forums on business  start-up and growth; Naming of National Small Business Person of the Year; Event registration now open

WASHINGTON – Aspiring entrepreneurs, small business owners and others are invited to attend the U.S. Small Business Administration’s National Small Business Week events held May 12-16, 2014.

Every year since 1963, the U.S. Small Business Administration takes the opportunity to highlight the impact of outstanding entrepreneurs, small business owners, and others from across the nation through National Small Business Week.  This year, events will take place across the country to engage the small business community and highlight their importance as innovators and job creators who strengthen the nation’s economy.

Activities will include forums and panels discussing trends in small business, business innovation, financing, growth, matchmaking events, as well as networking opportunities and award ceremonies. National Small Business Week will culminate in Washington, D.C., where the 2014 National Small Business Person of the Year will be named.  Candidates from all 50 states, the District of Columbia, Guam and Puerto Rico will be competing for the award.  Small business owners and their employees who attend will interact with federal government officials, local elected leaders, representatives from national businesses and other small business experts.

The cities and dates for National Small Business Week are as follows:

•             San Francisco – May 12

•             Kansas City – May 13

•             Boston and Washington, D.C. – May 15

•             Washington, D.C. – May 16

Throughout the week there will also be webinars and other live events.

SEC CHARGES CVS CAREMARK CORP. WITH MISLEADING INVESTORS

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission today charged CVS Caremark Corp. with misleading investors about significant financial setbacks and using improper accounting that artificially boosted its financial performance.

CVS has agreed to pay $20 million to settle the charges.

According to the SEC’s complaint filed in federal court in Rhode Island, CVS has two business segments as a pharmacy benefits manager and a retail chain of drug stores.  In offering documents for a $1.5 billion bond offering in 2009, CVS fraudulently omitted that it had recently lost significant Medicare Part D and contract revenues in the pharmacy benefits segment.  Investors were therefore misled about the expected future financial results for that line of business.  When CVS eventually revealed the full extent of the setbacks on Nov. 5, 2009, its stock price fell 20 percent in one day.  CVS further misled investors on an earnings call that same day by maintaining there was a slight improvement in its “retention rate,” which is a key metric of retained business often used to compare pharmacy benefits management companies.  But CVS omitted the fact that it had manipulated how it calculated the rate and concealed the full extent of its lost business.

“CVS broke faith with investors in both its stock and its bonds by disguising significant setbacks for its pharmacy benefits management business,” said Andrew Ceresney, director of the SEC’s Division of Enforcement.  “The intentional misconduct by CVS breached the core principle of fair and accurate reporting of financial performance.”

The SEC’s complaint further alleges that CVS made improper accounting adjustments that overstated the financial results for its retail pharmacy line of business.  During the same 2009 timeframe, CVS altered the accounting treatment for its acquisition of another drug store chain – Longs Drugs – and failed to disclose the adjustments in its quarterly report filed on November 5.  CVS improperly reduced the value of $189 million of personal property in the Longs stores down to $0, and then reversed $49 million of depreciation that had been taken on those assets since the acquisition.  The undisclosed depreciation reversal increased the third-quarter earnings and enabled CVS to exceed analysts’ expectations at a time when it was otherwise announcing significant bad news about earnings projections in its pharmacy benefits line of business.

The SEC alleges that the improper accounting adjustments were orchestrated by Laird Daniels, who was the retail controller at CVS and is charged with accounting violations in a related SEC administrative proceeding.  According to the SEC’s order against Daniels, proper accounting would have treated the asset write-down as a current period expense, and the third quarter earnings per share for CVS would have been reduced by as much as 17 percent.  As Daniels described in an e-mail, the dramatic change in accounting turned the acquisition of Longs Drugs from a “bad guy” to a “good guy” in terms of purported profitability for CVS.

“The accounting standards are designed to provide the public with a fair and consistent measure of public company performance.  Instead, CVS and Daniels used improper accounting tactics to give investors a misleading picture of the company’s retail pharmacy earnings,” said Paul Levenson, director of the SEC’s Boston Regional Office.

Daniels has agreed to settle the administrative case against him by paying a $75,000 penalty and being barred for at least one year from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.  Without admitting or denying the allegations, Daniels agreed to the entry of a cease-and-desist order finding that he willfully violated Sections 17(a)(2) and (3) of the Securities Act of 1933 and Rule 13b2-1 under the Securities Exchange Act of 1934.  The order finds that Daniels willfully aided, abetted, and caused violations by CVS of the reporting, books and records, and internal control provisions of the federal securities laws.

The SEC’s complaint charges CVS with violations of Section 10(b) of the Exchange Act and Rule 10b-5, and Section 17(a) of the Securities Act.  CVS also is charged with violations of the reporting, books and records, and internal control provisions of the federal securities laws.  In addition to the $20 million penalty, CVS consented to the entry of a final judgment permanently enjoining the company from violating various anti-fraud, books and records, and internal control provisions of the securities laws.  CVS neither admitted nor denied the allegations.  The settlement is subject to court approval.

The SEC’s investigation was conducted by Marc Jones, Ruth Anne Heselbarth, Frank Huntington, Amy Gwiazda, and Kevin Currid of the Boston Regional Office.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

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