Investigative Programs

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*Protecting America's Financial Systems*

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*[Contents]{.underline}*

I.  *Press Release 1*

II. *Fact Sheet and Case Examples 3*

III. *A snapshot of successful ICE financial 10*

> *investigations since the creation of the*
>
> *Department of Homeland Security on*
>
> *March 1, 2003*

IV. *A snapshot of successful Secret Service 12*

> *financial investigations since the creation*
>
> *of the Department of Homeland Security*
>
> *on March 1, 2003*

V.  *Graphics: 14*

-   *Examples of How Money is Laundered Through Life Insurance Policies*

-   *Example of How Money is Laundered Through Global Trade*

-   *Features of the new \$20 Bill*

**U.S. DEPARTMENT OF HOMELAND SECURITY**

**Office of the Press Secretary**

FOR IMMEDIATE RELEASE July 8, 2003

**SECRETARY RIDGE ANNOUNCES**

**NEW FINANCIAL INVESTIGATIONS INITIATIVES**

Unveils Comprehensive New Programs to Protect U.S. Financial Systems
from Criminal Exploitation

NEW YORK, NY -- In a speech at the New York Federal Reserve, the
Secretary of Homeland Security, Tom Ridge, today announced programs to
safeguard the nation's financial systems against criminal exploitation.
Two of the many actions being taken by the Department of Homeland
Security (DHS) include the creation of a new financial crimes
investigative initiative and an expansion of already successful
electronics crime task forces. Secretary Ridge also announced a
groundbreaking initiative designed to share specific information with
the nation's top financial institutions, about financial systems
weaknesses discovered through the Department's criminal investigations.

Secretary Ridge announced *Operation Cornerstone,* a new financial
investigations initiative that will not only prosecute money laundering
crimes but will initiate a new approach of working with the private
sector to shore up potential weaknesses in financial systems.

In short, *Operation Cornerstone,* run by the Bureau of Immigration and
Customs Enforcement (ICE), is a new financial investigations program
that will identify vulnerabilities in financial systems through which
criminals launder their illicit proceeds, bring the criminals to justice
and work to eliminate the vulnerabilities. Through a working partnership
with industry representatives, ICE will share information learned from
these investigations to eliminate industry-wide security gaps that could
be exploited by money launderers and other criminal organizations.

Secretary Ridge also announced that the Secret Service is expanding its
highly successful Electronic Crimes Task Forces to four additional
cities. The Secret Service currently runs task forces in 9 cities. The
four new cities are Cleveland, Houston, Dallas and Columbia, South
Carolina. The 9 existing task forces are operating in New York, Los
Angeles, Miami, Charlotte, San Francisco, Las Vegas, Boston, Chicago,
and Washington, D.C.

These task forces investigate a wide range of computer-based criminal
activity. Examples include e-commerce frauds, identity crimes,
telecommunications fraud, and a wide variety of computer intrusion
crimes that affect a variety of infrastructures. Since its inception in
1995, the New York Electronic Crimes Task Force alone has charged over
800 people with electronic crimes valued at more than \$500 million.

Earlier in the day Secretary Ridge toured the Secret Service's
Electronic Crimes Task Force in New York, as well as ICE's El Dorado
Task Force. The El Dorado Task Force has investigated numerous money
laundering and other financial crimes since its inception in 1992. In
eleven years El Dorado Task Force agents have arrested 1,753 individuals
and seized nearly \$560 million in criminal proceeds.

"Safeguarding the integrity of America's financial systems is a key part
of homeland security," said Secretary Ridge. "Criminal organizations are
seeking new ways to finance their operations, and the Department of
Homeland Security is moving aggressively to identify vulnerabilities
within U.S. financial systems that could be exploited to those ends."

To aid the financial industry in its own efforts to shore up
vulnerabilities in its systems, Secretary Ridge announced a new program
jointly run by ICE and the Secret Service. Under this new program called
SHARE (Systematic Homeland Approach to Reducing Exploitation), officials
from the Secret Service and ICE will jointly conduct semi-annual
meetings with executive members of the financial and trade communities
impacted by money laundering, identity theft, and other financial
crimes. In these meetings special agents and analysts from the two
Homeland Security agencies will share data on specific investigative
outcomes from investigations into money laundering, identity theft, and
other financial crimes.

By taking the Secret Service's long experience with investigating crimes
like counterfeiting, identity theft and credit card fraud, and ICE's
long experience with investigating illegal efforts to launder or mask
the true source of criminal proceeds -- and sharing that experience with
the financial community, American pocketbooks and bank accounts will be
far safer, Secretary Ridge explained in his remarks.

Before his speech, Secretary Ridge met with leaders from the top
financial institutions to brief them on the new initiative. "It's
critical we work in partnership with the financial community," Secretary
Ridge told the financial leaders. "Unless we share the specific findings
of our investigations, we run the risk that our nation's financial
systems will remain vulnerable to exploitation. We can't let that
happen."

Secretary Ridge announced that the first meeting under the SHARE program
will take place by mid-October.

\###

U.S. DEPARTMENT OF HOMELAND SECURITY

**Office of the Press Secretary**

July 2003 -- Fact Sheet

## 

## Financial Investigations and Financial Infrastructure Protection

The Department of Homeland Security plays a critical role in the
government's efforts to investigate financial crimes and to help the
financial community identify and eliminate potential weaknesses in our
nation's financial infrastructure. DHS is drawing on the expertise of
the Bureau of Immigration and Customs Enforcement (ICE) -- a part of the
Border and Transportation Security Directorate -- and the U.S. Secret
Service -- to expand their existing capabilities in an effort to better
protect America's financial service systems from illegal money
laundering, insurance schemes, identity theft, bulk cash smuggling,
counterfeiting, credit card fraud and similar financial crimes.

**[Initiatives:]{.underline}**

***Expanding Electronic Crimes Task Forces from 9 to 13:***

Under the USA Patriot Act of 2001, the U.S. Secret Service was
authorized to establish a nationwide network of electronic crimes task
forces, drawing on its successful New York task force. Thus far, the
Secret Service has established nine task forces in New York, Los
Angeles, Miami, Charlotte, San Francisco, Las Vegas, Boston, Chicago,
and Washington, D.C. Four additional electronic crimes task forces are
being established in Cleveland, Houston, Dallas and Columbia, South
Carolina

The Thirteen Electronic Crimes Task Forces will -

-   Focus primarily on computer-based crimes involving the theft of
    funds, credit information, identities, and network intrusions.

-   Investigate identity crimes, telecommunications fraud, and computer
    intrusion crimes (such as credit card fraud).

-   Identify weaknesses in key systems through which criminals could
    steal funds, credit card information or individual identities.

-   Partner with federal, state and local law enforcement agencies, as
    well as key segments of the private sector (e.g., the
    telecommunications industry) and academic community to understand
    and eliminate systemic weaknesses.

***Launching Operation Cornerstone, A New Financial Investigations
Program:***

The Bureau of Immigration and Customs Enforcement (ICE) is launching
Operation Cornerstone -- a new financial investigations program to
identify vulnerabilities in financial systems through which criminals
launder their illicit proceeds, bring the criminals to justice,
eliminate the vulnerabilities, and develop a working partnership with
industry representatives to share information and close industry-wide
security gaps that could be exploited by money launderers and other
criminal organizations.

Cornerstone will

-   Identity and assess the means and methods used by criminals to
    exploit financial systems in order to transfer, launder and
    otherwise mask the true source of criminal proceeds.

-   Work with specific private sector industries to gather new
    information and reduce vulnerabilities found within existing
    financial systems.

-   Assign a dedicated special agent to each of the 25 ICE field offices
    to liaison with the private sector.

-   Investigate and prosecute criminal organizations exploiting emerging
    traditional and non-traditional financial systems.

-   Work with financial institution security teams to help them
    understand how criminal organizations exploited financial systems in
    their industry.

-   Provide the private sector with a quarterly report that details
    specific examples of how certain U.S. financial systems are being
    exploited by criminal organizations to transfer, launder or mask the
    true source of criminal proceeds. The report will provide
    recommendations to industry on how to detect and prevent such
    exploitation.

***Launching the SHARE program:***

Under the SHARE (Systematic Homeland Approach to Reducing Exploitation)
program, officials from the Secret Service and ICE will jointly conduct
semi-annual meetings with executive members of the financial and trade
communities impacted by money laundering, identity theft, and other
financial crimes, to share data on specific investigative outcomes from
investigations into money laundering, identity theft, and other
financial crimes. The first meeting under the SHARE program will take
place by mid-October.

**[Historic Expertise]{.underline}**

***Protecting Against Computer-based Crime:***

-   Since 1984, the Secret Service has been the primary authority for
    the investigation of access device fraud, including credit and debit
    card fraud.

-   Today, the vast majority of financial transactions are electronic.
    Billions of dollars are moved through financial payment systems each
    day.

-   Identity crime includes identity theft, credit card fraud, bank
    fraud, check fraud, false identification fraud, and passport/visa
    fraud (See Appendix A for case examples).

-   Identity crimes are almost always associated with other crimes such
    as narcotics and weapons trafficking, organized crime, mail theft
    and fraud, money laundering, immigration fraud, and terrorism.

-   Last year the Secret Service arrested 1143 people for violations
    involving credit card or access device fraud.

-   In FY 2002, the Secret Service opened 1833 new cases involving
    credit card fraud, with a potential dollar loss totaling \$565
    million.

***Protecting Against Money Laundering:***

-   Agents from the former U.S. Customs Service have investigated money
    laundering and similar financial crimes since the 1970's. This
    expertise is now vested in the Department's Border and
    Transportation Security Directorate, within ICE.

-   Drug organizations and other criminal groups have used many methods
    to launder their illegal proceeds. ICE agents have investigated
    thousands of cases that used these various schemes. They are now
    using that expertise to not only investigate criminal organizations,
    but through the newly announced SHARE program, to also alert
    financial institutions about the methods -- or typologies -- they
    uncovered.

-   ICE agents have become expert at investigating the complete range of
    systems exploited by money launderers and other criminals to cleanse
    or mask the source of their illicit proceeds, including banking
    systems, money services businesses, bulk cash smuggling systems,
    trade-based money laundering systems, illicit insurance schemes, and
    illicit charity schemes. (See Appendix A for case examples.)

-   Billions of dollars in criminal proceeds each year flow through the
    nation's financial systems. In one case alone in the mid-1990's, ICE
    agents discovered a scheme that funneled more than \$1 billion in
    drug proceeds from New York to Colombia through wire remitters.

***Protecting Against Counterfeiting:***

The U.S. Secret Service was founded in 1865 expressly to fight the
counterfeiting that had become rampant during the Civil War -- nearly
one third of all currency was fake. For 138 years, the Secret Service
has worked to protect the integrity of our nation's currency. Today the
Secret Service fights counterfeiting in new ways.

-   New Color of Money - On May 13, 2003, the new design for the latest
    \$20 Federal Reserve Note was unveiled. The Secret Service worked
    closely with Treasury officials to develop features that make the
    bill more difficult to counterfeit. It's the first time that the
    U.S. dollar has been printed with colors other than green and black
    since the early 1900s, and the first time that offset printing --
    for the background colors -- will appear on U.S. currency **(See
    Graphic)**.

-   New Features -- The new design also contains improved features to
    deter counterfeit notes produced using home computers, office
    copiers, and similar technology. These include:

    -   *Watermark* \-- the faint image similar to the large portrait,
        which is part of the paper itself and is visible from both sides
        when held up to the light.

    -   *Security thread* \-- also visible from both sides when held up
        to the light, this vertical strip of plastic is embedded in the
        paper. "USA TWENTY" and a small flag are visible along the
        thread.

    -   *Color-shifting ink* \-- the numeral "20" in the lower-right
        corner on the face of the note changes from copper to green when
        the note is tilted. The color shift is more dramatic and easier
        to see on the new-design notes.

**[Partnering With the Law Enforcement and the Financial
Community]{.underline}**

-   The Department of Homeland Security is launching the SHARE
    (Systematic Homeland Approach to Reducing Exploitation) program to
    provide private sector executives with progress updates on its
    financial investigations and information on new trends and
    vulnerabilities discovered during these investigations. The SHARE
    program is a joint ICE / Secret Service initiative that provides
    data on specific investigative outcomes to executive members of the
    financial and trade communities impacted by money laundering,
    identity theft, and other financial crimes. The first meeting will
    be convened by mid-October.

-   DHS is also conducting joint studies and training programs for
    members of the financial and trade communities:

    -   As part of the *Cornerstone* Program, ICE has created a unit
        solely dedicated to providing training to the private sector on
        how to identify and prevent exploitation by criminal
        organizations.

    -   The Secret Service and the Computer Emergency Response Team
        Coordinating Center (CERT/CC) of Carnegie Mellon University have
        embarked on an analysis of network, system and database
        compromises committed by malicious insiders. The results of the
        "Insider Threat Study" will help the partnering agencies develop
        accurate information about insider intrusions that can help
        efforts to identity and prevent future intrusions before they
        occur.

**[Leading Task Forces]{.underline}**

***El Dorado Task Force:***

-   The El Dorado Task Force (EDTF) was started in 1992 as a joint
    initiative between the former Customs Service and the Internal
    Revenue Service. The mission of the El Dorado Task Force is to
    dismantle and disrupt money-laundering and criminal financing
    organizations operating in the New York/New Jersey area utilizing
    the tools and resources of all participating agencies. The EDTF, the
    largest money-laundering task force in the nation, has seized over
    \$557 million dollars and arrested 1,753 individuals since its
    inception.

-   The EDTF is made up of two components, an operational component and
    intelligence component. The operational component is housed in 7
    offices and consists of 263 members from 37 agencies. The EDTF
    intelligence unit consists of 39 members from 12 agencies with
    participating liaisons from 5 agencies.

-   The EDTF is comprised of representatives from the IRS, NYPD, New
    York State Police, FBI, Manhattan and Queens District Attorney
    Office.

***Electronic Crimes Task Forces:***

-   Since its inception in 1995, the New York Electronic Crimes Task
    Force has charged over 800 people with electronic crimes valued at
    more than \$500 million. The task force has also trained over 13,000
    law enforcement personnel and private representatives in the
    criminal abuses of technology and how to prevent them.

-   With the passage in October 2001 of the USA PATRIOT Act, a direct
    response to the September 11th terrorist attacks, the U.S. Secret
    Service was authorized by Congress to expand beyond the New York
    City task force, and establish a nationwide network of similar
    electronic crimes task forces.

-   The types of investigations handled by the task forces encompass a
    wide range of computer-based criminal activity. Examples include
    e-commerce frauds, identity crimes, telecommunications fraud, and a
    wide variety of computer intrusion crimes that affect a variety of
    infrastructures.

**APPENDIX A**

**[Case Examples]{.underline}**

-   **Credit Card Network Intrusion** - In early February 2003, a Credit
    Card processing company reported a potential network intrusion to
    the Secret Service. A computer forensic examination by Secret
    Service agents determined that the company's computer system had
    been compromised, and over 10 million credit card numbers, with
    corresponding expiration dates had been stolen. A computer forensic
    investigation of the Internet Service Provider (IP) addresses traced
    the intrusion to a number of web servers in the United States,
    Europe, and Southeast Asia. The Secret Service worked in conjunction
    with the company to prevent losses due to this theft and to date, no
    fraud loss has been associated with these stolen credit card
    numbers. The investigation is continuing.

-   **Money Laundering Through Insurance Schemes --**During a long-term
    drug trafficking investigation in the 1990s, ICE agents in Miami
    learned that Colombian drug cartels were laundering large quantities
    of money through the purchase of life insurance policies in Europe,
    the United States, and offshore jurisdictions. Based on this
    information, ICE agents launched Operation Capstone in 2000. The
    probe soon revealed the Colombian cartels, using a small number of
    insurance brokers, were purchasing investment-grade life insurance
    policies with cartel associates as the beneficiaries. The policies
    were purchased with drug proceeds sent to the insurance companies
    via wire transfers and checks by third parties around the globe. The
    investigation revealed that the cartels were then cashing out these
    policies after short periods of time, despite the financial
    penalties invoked for early liquidation. The cartel beneficiaries
    would then receive a check or wire transfer from the insurance
    company that, on its surface, appeared to be legitimate
    insurance/investment proceeds. The cartels could use these "clean"
    funds virtually without question. Agents determined the cartels had
    used this scheme to purchase at least 250 life insurance policies
    and launder some \$80 million worth of drug proceeds. In December
    2002, ICE announced the seizure of nearly \$30 million, the arrest
    of nine individuals, and charges against five additional individuals
    as a result of this joint probe by authorities in the United States,
    the Isle of Man, the United Kingdom, Colombia, and Panama. **(See
    Graphic)**

-   **Treasury Securities Fraud --** In early 2002, the Secret Service
    was notified by the Bureau of Public Debt of a scheme to defraud the
    government of \$1.3 billion in Treasury Securities. This scheme was
    perpetrated using the popular electronic system, TreasuryDirect,
    which sells Treasury securities through an auction-style bidding
    process. TreasuryDirect was initiated in 1986 to allow individuals
    to buy bills and bonds at a noncompetitive auction without having to
    receive paper certificates. In 1997, electronic access was added to
    the system to allow bids over the telephone and the Internet. A
    discrepancy of involving improper bids first attracted the attention
    of Treasury officials after an investor failed to submit payment for
    the Treasury securities. A computer forensic investigation of the
    bid by agents of the Secret Service revealed that an individual
    established a TreasuryDirect account and placed orders for
    approximately \$1.3 billion in Treasury Bills and Treasury Notes.
    This bid was backed by funds allegedly held in California bank
    account. Investigation of that bank account revealed that it held a
    zero balance. Further investigation by agents of the Secret Service
    resulted in the arrest and conviction of one individual for
    violation of federal wire fraud statutes.

-   **Commodities-Based Money Laundering: Gold & Diamonds** -- On June
    5, 2003, ICE agents arrested 11 individuals at seven different
    jewelry stores in Manhattan's diamond district on charges of
    participating in an international money laundering scheme. The
    arrests were the culmination of a long-term investigation which
    began when ICE agents received information that Colombian drug
    cartels were laundering substantial amounts of money through the
    purchase, smuggling, and resale of gold and diamonds. Intelligence
    indicated that Colombian drug organizations were instructing their
    U.S. employees to purchase precious stones in New York with drug
    proceeds, then smuggle these items to Colombia, where they were
    resold to refiners for "clean" pesos that the traffickers could use
    risk-free. Based on this information, ICE agents launched an
    investigation in 1999 into several New York jewelers alleged to be
    involved in the money laundering scheme. According to the charges,
    the New York jewelers were approached by undercover agents posing as
    drug dealers. The undercover agents informed the jewelers they were
    looking to buy gold and diamonds with their illicit funds so they
    could smuggle these precious metals to Colombia and resell them to
    refiners in exchange for "clean" cash. According to the charges, the
    jewelers willingly accepted some \$1 million in drug funds from
    undercover agents. They also offered to smelt the gold into small
    objects, such as belt buckles, screws, and wrenches, in order to
    facilitate the smuggling of these goods to Colombia

-   **Money Laundering Through the Banking Industry** -- On November 27,
    2002, a Manhattan bank pleaded guilty to a three-count information
    charging it with failure to file required reports on \$123 million
    in suspicious cash deposits, failure to implement an anti-money
    laundering program, and helping to "structure" \$76 million in bulk
    cash deposits. The event marked the first time that a U.S. bank had
    ever pled guilty to the first two charges. The plea came as a result
    of a four-year investigation by ICE's El Dorado Task Force in New
    York. The investigation disclosed that this bank had become a bank
    of choice for criminal organizations seeking to conceal their
    illicit financial activities from the government. One drug money
    laundering organization made \$46 million worth of cash deposits at
    the bank. In many cases, members of the organization literally
    brought duffel bags full of cash into the bank for deposit.
    According to details of the plea agreement, the bank almost never
    filed the required reports on such deposits, which were promptly
    wired to locations in Latin America. The cash deposits were so large
    that bank tellers complained to managers about having to count the
    cash during their lunch breaks. Another example of the bank's
    disregard for anti-laundering laws occurred when it opened new
    accounts for an individual whose account at the bank had just been
    frozen by the government for money laundering activity. The
    individual promptly began structuring cash deposits into his new
    account. Once again, the bank failed to file any of the required
    reports on these structured cash deposits. As part of its guilty
    plea, the Manhattan bank agreed to pay a \$4 million fine.

-   **Black Market Peso Exchange** -- In March 1997, ICE agents launched
    an undercover investigation into a Colombian drug smuggling / money
    laundering organization. Over the next two years, undercover ICE
    agents posed as money launderers for this organization. Agents
    routinely picked up drug cash from employees of this organization in
    various U.S. cities, and deposited these funds into undercover bank
    accounts. The Colombian organization then instructed the agents to
    wire these drug funds to specified bank accounts around the globe.
    As it turned out, many of these accounts belonged to major U.S.
    companies. In one example, undercover agents were ordered by the
    Colombian organization to pick up a suitcase full of drug cash in
    New York. They next day, they were ordered by the organization to
    wire transfer \$335,800 of these funds, in five separate payments,
    to an account belonging to a major U.S. company. ICE agents later
    determined that these wire transfers (of drug proceeds) to the U.S.
    company constituted partial payment for a helicopter that the
    company was exporting to Colombia. The investigation further
    revealed that this U.S. company had received a total of 31 different
    wire transfers from individuals completely unrelated to the buyer as
    payment for the \$1.5 million helicopter. In July 1999, ICE agents
    froze the funds they had wired to this company's account, as well as
    funds they had wired to the accounts of many other U.S. companies,
    on grounds that the monies constituted drug proceeds. The
    investigation revealed that many of these U.S. companies had been
    paid in drug money for products that they were exporting to
    Colombia. Ultimately, in August 2000, the helicopter in question was
    seized in Panama on grounds that it had been paid for with drug
    money. The case highlighted how U.S. firms can become entangled in
    the Black Market Peso Exchange, a vast trade-based money laundering
    system that frequently results in major U.S. companies being paid in
    drug money for their exports. On an annual basis, an estimated \$5
    billion worth of drug funds are laundered through the Black Market
    Peso Exchange. The Black Market Peso Exchange operates in the
    following manner. Colombian cartels accumulate vast sums of cash
    from drug sales in major U.S. cities. The cartels then sell these
    U.S.-based drug dollars to Colombian money brokers and, in return,
    receive "clean" pesos in Colombia. The money brokers then place
    these dollars into the U.S. banking system through a variety of
    methods and offer them for sale to Colombian importers. After
    receiving pesos from the Colombian importers, the money brokers
    route the drug dollars to U.S. firms to pay for goods ordered by the
    Colombian importers. Ultimately, American firms receive payment in
    drug dollars for goods they ship to Colombian importers. **(See
    Graphic)**

## Selected Financial Investigations by

## The Bureau of Immigration and Customs Enforcement (ICE)

## Since March 1, 2003

-   **11 Charged in Baby Formula Theft Scheme That Sent Funds to Middle
    East** -- On June 20, a federal grand jury in Dallas returned three
    indictments charging 11 individuals with felony violations relating
    to an organized theft scheme in north Texas that routed its proceeds
    to the Middle East. The charges resulted from a joint investigation
    by ICE and the Fort Worth Police Department, with assistance from
    other law enforcement agencies. The probe revealed that a retail
    theft organization in north Texas purchased stolen baby formula and
    other products, then resold these stolen products to wholesalers
    around the United States. Millions of dollars in proceeds from this
    scheme were allegedly routed to Jordan, Egypt, and Palestinian
    Territories.

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-   **6 Arrested for Illegally Transmitting \$70 Million to Pakistan**
    -- On June 17, agents from ICE and the IRS arrested six individuals
    on charges of illegally transferring roughly \$70 million to
    Pakistan via unlicensed money transmittal businesses in New York and
    New Jersey. Agents from ICE and the IRS also executed three search
    warrants, seizing \$57,000 in currency and many boxes of evidence.

-   **Guilty Plea in Wire Transfer Scheme that Routed \$12 Million to
    Iraq** -- On June 12, Hussein AlShafei, an individual in Washington
    state, pleaded guilty to a federal money laundering charge in
    connection with the illegal transfer of more than \$12 million to
    Iraq. The ICE investigation revealed that AlShafei employed a
    nationwide network of money transfer agents who collected funds for
    AlShafei to illegally transfer to Iraq, via Jordan, the United Arab
    Emirates, and other nations.

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-   **31 Charged with Laundering Millions Through Wire Remitting Firms**
    \-- On June 5, a federal grand jury in New York charged 31
    individuals with money laundering violations as a result of an
    ICE/El Dorado Task Force investigation which disclosed that several
    money remitting businesses in the New York metropolitan area were
    illegally wiring millions of dollars worth of drug funds to
    Colombia.

-   **11 Charged in Laundering Scheme Involving Purchase and Resale of
    Gold** \-- On June 5, ICE agents arrested 11 individuals in New York
    who had been charged money laundering as a result of an ICE/El
    Dorado Task Force probe which found that Manhattan jewelry stores
    were helping Colombian drug cartels launder millions through the
    purchase, smuggling, and resale of gold. In many cases, the jewelry
    store owners smelted the gold into small objects to facilitate
    international smuggling. ICE seized \$860,000 in U.S. currency,
    gold, and diamonds in the raids.

-   **\$5.4 Million in Texas Lottery Winnings Forfeited --** On June 4,
    a federal jury in Texas determined that \$5.4 million worth of Texas
    lottery winnings by Jose Betancourt would be forfeited to the
    government. An ICE investigation had disclosed that Betancourt, a
    convicted narcotics trafficker, had purchased the winning lottery
    ticket with drug proceeds. Betancourt was assessed an additional
    \$76,000 penalty.

-   **Credit Card Fraud Proceeds Routed to Lebanon**-- On June 4, a
    federal grand jury in the District of Massachusetts charged four
    individuals with conspiracy, credit card and access device fraud
    violations after an ICE investigation revealed that the individuals
    were exporting to Lebanon non-bearer checks and gift cards purchased
    with the proceeds of a complex credit card fraud scheme.

-   **Guilty Plea in Scheme to Illegally Wire \$5 Million Abroad** -- On
    May 28, Ahmed Abdu, a Sudanese national, pleaded guilty in New York
    to charges that he conspired to operate an unlicensed money
    transmitting business that wired more than \$5 million abroad.
    During this prosecution, ICE agents utilized Section 319 of the
    Patriot Act to seize funds from five interbank accounts of foreign
    banks. This represented the first time this law enforcement tool had
    been used in the Southern District of New York.

-   **Alternate Remittance Network Charged with Illegally Sending \$32
    Million Abroad \--** On May 21, federal prosecutors in New York
    unsealed charges against nine individuals accused of participating
    in an unlicensed money transmittal business that had transmitted
    more than \$32 million abroad since January 2001. The ICE
    investigation also disclosed that members and associates of this
    business were involved in a large-scale document fraud scheme
    involving the creation of fake driver's licenses and the
    falsification of Indian passports to smuggle illegal aliens into the
    United States.

-   **\$21 Million Fine Against Individual Who Defrauded Elderly
    Investors --** On May 6, an individual was sentenced in Cleveland to
    nine years federal imprisonment and ordered to pay \$21 million
    restitution. Best had pleaded guilty to money laundering wire fraud,
    and conspiracy to commit securities fraud as a result of his
    involvement in an organization that defrauded elderly investors of
    more than \$41 million.

-   **Guilty Plea in \$12 Million Counterfeit Check Scheme --** On April
    19, Omar Shishani pleaded guilty in Detroit to possessing \$12
    million worth of counterfeit checks. Shishani was arrested in July
    2002 at the Detroit Metropolitan Airport after arriving on a flight
    from Indonesia. Subsequent investigation by ICE and the Secret
    Service linked Shishani to two other violators who have been
    indicted for conspiracy to distribute and/or manufacture counterfeit
    securities.

-   **\$33 Million Illegally Funneled to Pakistan** -- On March 20,
    2003, ICE agents and FBI agents in New York arrested 4 individuals,
    seized \$71,400, and executed multiple bank seizure warrants in
    connection with an investigation into a Pakistani money remittance
    business called Manhattan Foreign Exchange. The 18-month ICE/FBI
    probe revealed that Manhattan Foreign Exchange moved more than \$33
    million to Pakistan during a three-year period, much of which
    constituted proceeds of illegal activity. The joint investigation
    also revealed that associates of this business sold fake (U.S.,
    Pakistani, Canadian, and British) passports and travel documents.

**[Selected United States Secret Service]{.underline}**

**[Financial Crimes and Financial Infrastructure
Investigations]{.underline}**

**[Since March 1, 2003]{.underline}**

-   **Suspect Arrested in \$800,000 Identity Theft Ring -** On June 27,
    U.S. Secret Service agents arrested an individual suspected of being
    the mastermind behind counterfeit credit card/identity theft ring in
    the Detroit area. Working in conjunction with the Detroit Metro
    Identity Fraud Task Force, agents identified the individual -- known
    by the alias "Frank" -- as the person behind the operation, which
    involved the skimming of credit card numbers from area retailer and
    the production of counterfeit credit cards and false identification
    cards. In the last four years, the suspect and his associates are
    responsible for nearly \$800,000 in losses to area merchants.

-   **Two Indicted and Arrested for Stealing Millions of Dollars Worth
    of Satellite TV Transmissions--** Secret Service agents from the
    Detroit Field Office recently arrested two individuals indicted of
    conspiracy charges stemming from the sale and manufacture of illegal
    decryption devices. The suspects sold \$127,000 worth the devices
    used to intercept Direct TV Satellite Signals over the internet.
    Direct TV estimates the losses to exceed several million dollars as
    a result of stolen transmissions. Agents also seized 1,300
    decryption devices either assembled or in the assembly stage.

-   **Million-Dollar Credit Card Fraud Scheme Stopped** -- On June 26,
    Agents of the Houston Field Office arrested two individuals for
    violation of 18 USC 1029 - Access Device Fraud and 18 USC 371
    Conspiracy to commit Access Device Fraud. The suspects had conspired
    to commit numerous types of credit fraud to include instant credit
    fraud, account takeover, re-encoding credit cards, identity theft
    and the production of counterfeit identification. They had committed
    these crimes continuously over a period of two years, netting nearly
    \$1 million. Information was obtained through one of the suspects,
    who worked in the billing department of a local doctor's office and
    would provide copies of credit card receipts. To date, 828 credit
    card account numbers have been uncovered by agents investigating the
    case, though it is believed that over 2,000 credit card numbers may
    have been obtained.

-   **"Cash Money Boys" Arrested for Counterfeit Commercial Checks -** A
    leaders of a Detroit area fraud ring, known as the "Cash Money
    Boys," were arrested by the Secret Service after the discovery of
    more than 100 commercial checks from six different local banks.
    Known losses in the case exceed \$1.3 million and 11 federal arrests
    and 2 federal arrest warrants have resulted from the case.

-   **14 Arrested in \$10 Million Bank Fraud Case** - On June 18, the
    Secret Service Newark Field Office, working together with the FBI,
    U.S. Postal Inspection Service and the Hudson County Prosecutor\'s
    Office arrested 14 people involved in a bank fraud scheme. The
    suspects, using assumed or stolen identities, compromised bank
    accounts and then conspired to launder proceeds, using the funds as
    down payments on luxury homes in exclusive neighborhoods. With the
    assistance of collusive mortgage brokers and appraisers, the
    suspects then obtained first and second mortgages which exceeded the
    actual value of the properties, enabling the \"buyers\" to walk away
    with hundreds of thousands of dollars in cash at the closing. Also
    involved in this group is an individual who conspired to re-enact
    life insurance policies on terminally ill patients, in an effort to
    collect substantial benefits. Fifteen teams, made up of thirty law
    enforcement agencies, executed 25 search/arrest warrants, resulting
    in 13 individuals arrested in New Jersey, and one additional arrest
    in Philadelphia. The actual fraud loss is estimated at \$10,000,000.

-   **Colombian Counterfeit Plant Seized** -- On June 13, Secret Service
    agents joined Colombian police in executing five search warrants in
    the Cali area, including the seizure of a complete counterfeit
    manufacturing plant. Plates, negatives bearing images of CFT \$100
    Federal Reserve Notes, inks, machinery and printing paraphernalia
    were seized by Colombian National Police (DIJIN) officials, as was a
    total of \$30,000 in finished counterfeit \$100 notes. Eight people
    have been arrested in connection with this case.

-   **Wilmington Man Arrested for Wire Fraud and Money** Laundering --
    On June 13, Secret Service agents from the Wilmington, NC Resident
    Office arrested an individual after his indictment on charges of
    Wire Fraud and Money Laundering. This case originated when the
    Wilmington Resident Office was contacted by an investigator for an
    investment company who advised that he had discovered that one of
    their local account representatives was perpetrating fraud on his
    clients. The Secret Service investigation revealed that the suspect
    had established a not-for-profit account with the investment company
    in the name of a local church and then transferred thousands of
    shares of securities, held by one of his elderly clients, into his
    \"church\" account. The suspect then wrote checks on the \"church\"
    account and deposited them into various personal accounts, and used
    the proceeds to pay off debts and to purchase two homes. The
    indictment includes a criminal forfeiture count seeking forfeiture
    of up to \$845,747.62 in proceeds from this fraud. Actual fraud loss
    in this case is \$700,000 with a potential loss of \$1.5 million.

-   **\$6 Million Identity Theft Ring Busted** -- After a two-year joint
    investigation, on June 5, the Secret Service San Francisco Field
    Office and Berkeley Police arrested two individuals responsible for
    a nationwide counterfeiting and identity theft ring that resulted in
    nearly \$6 million in losses from thousands of victims. As part of
    the investigation, at least 65 local and federal law enforcement
    officers served 12 search warrants Thursday, including locations in
    Berkeley, Oakland, San Leandro, Richmond, Antioch, Vallejo and
    Stockton looking for evidence. Among the items seized were seized a
    large number of counterfeit \$100 traveler checks, counterfeit
    personal checks, personal identification cards, including driver\'s
    licenses, and thousands of \"personal profiles,\" which included
    names of probable victims, dates of birth, and Social Security and
    credit card numbers.

-   **Miami Agents Shut Down Credit Card/False ID Plant** - As part of a
    six month investigation, on May 29, Secret Service agents from the
    Miami Field Office arrested four Cuban nationals and seized a large
    scale Counterfeit credit card/False Identification plant in South
    Beach. The target of the investigation was charged with
    manufacturing counterfeit credit cards and false driver's licenses.
    A total of 314 counterfeit drivers licenses were, as well as a
    number of Social Security cards and INS Employment Authorization
    cards. Machines seized included card printers, two drivers license
    machines, a tipper, computers, an embosser, a manual embosser for
    logo's, and equipment to replicate credit card holograms.

-   **"Moors Nation" Members Arrested for Conspiracy** \-- On May 21,
    nine members of a group know as the \"Moors Nation\" were indicted
    in the District of New Jersey for violation of 18 USC 514
    (Fictitious Documents) and 18 USC 371 (Conspiracy). This group was
    responsible for passing over \$10 million dollars worth of
    fraudulent money orders that were purportedly issued by the
    Department of Transportation and Treasury. These fictitious money
    orders were used to purchase airline tickets, mortgages, car loans,
    personal loans and to pay debts. The arrests are a result of a joint
    two-and-a-half year investigation between the Secret Service, the
    Department of Transportation and the FBI.

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