Justice News

Deputy Attorney General James Cole Speaks at High Level Hemispheric Meeting Against Transnational Organized Crime
Mexico City D.F.
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.

Updated September 17, 2014