U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

66–825 PDF 2011

S. HRG. 111–1001 

OVERSIGHT OF THE FEDERAL BUREAU OF 

INVESTIGATION 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

JULY 28, 2010 

Serial No. J–111–103 

Printed for the use of the Committee on the Judiciary 

( 

(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

ARLEN SPECTER, Pennsylvania 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

EDWARD E. KAUFMAN, Delaware 

AL FRANKEN, Minnesota 

JEFF SESSIONS, Alabama 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

BRIAN BENCZKOWSKI, Republican Chief Counsel 

(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont .................... 1 

prepared statement .......................................................................................... 90 

Sessions, Hon. Jeff, a U.S. Senator from the State of Alabama .......................... 3 

WITNESSES 

Mueller, Robert S., III, Director, Federal Bureau of Investigation, U.S. Department of Justice, Washington, DC ................................................................ 5 

QUESTIONS AND ANSWERS 

Responses of Robert S. Mueller, III, to questions submitted by Senators 

Feinstein, Feingold, Durbin, Whitehouse, Kaufman, Franken, Sessions, 

Grassley and Kyl .................................................................................................. 44 

SUBMISSIONS FOR THE RECORD 

Mueller, Robert S., III, Director, Federal Bureau of Investigation, U.S. Department of Justice, Washington, DC: 

Correction of Misstatement ............................................................................. 92 

Responses from March 5, 2008, FBI Oversight Hearing ............................... 94 

(1) 

OVERSIGHT OF THE FEDERAL BUREAU OF 

INVESTIGATION 

WEDNESDAY, JULY 28, 2010 

U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Committee met, pursuant to notice, at 10:01 a.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Patrick J. Leahy, 

Chairman of the Committee, presiding. 

Present: Senators Leahy, Kohl, Feinstein, Specter, Schumer, 

Durbin, Cardin, Whitehouse, Klobuchar, Kaufman, Franken, Sessions, Hatch, Grassley, and Kyl. 

OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. 

SENATOR FROM THE STATE OF VERMONT 

Chairman LEAHY. Good morning, everyone. I came out and I 

thought that Senator Sessions was out here, but it is your white 

hair I saw. But I understand he is on his way, and I am going to 

begin, and he will be recognized when he gets here. 

The Judiciary Committee today hears from Director Robert 

Mueller of the FBI for the fourth time this Congress. We held two 

FBI oversight hearings last year, and the Director appeared earlier 

this year to testify about national security issues. I welcome him 

back to the Committee. 

I would note the Director, the same as with his predecessor, has 

always been available anytime I have called or had questions. We 

have done briefings on both unclassified and classified matters, and 

I appreciate that and I appreciate his candor in responding. I wish 

I could talk about some of the things he has responded, but they 

were highly classified so I will not. But I just want to note for the 

record I appreciate his candor in that. 

Oversight is one of our most important responsibilities, and this 

Committee has taken it very seriously. Along with regular appearances from Director Mueller, the Committee has held multiple 

oversight hearings with Attorney General Holder, oversight hearings with Homeland Security Secretary Napolitano, the heads of 

key components of the Justice Department, and other senior executive branch officials. And the FBI, of course, has a critical mission 

in law enforcement and national security. And the Director has 

been very open in his efforts to balance the efforts in law enforcement while maintaining the values and the freedoms that we hold 

dear as Americans. He has worked to close the longstanding gaps 

in responses to written questions, inquiries, and document requests 

from this Committee. We always want more work on that, but the 

2 

increased openness and responsiveness from the FBI helps the Bureau and Congress do their jobs more effectively. I would say that 

is helpful both as a member of this Committee and as a member 

of the Appropriations Committee. 

I appreciate that they has shown signs recently of real progress 

on issues vital to this Committee and to the country. Obviously, national security and counterterrorism are central to the FBI’s mission. It has been heartening to see in recent months a series of important arrests of those who would do this country harm, and, Director Mueller, I appreciate your briefings you have given me on 

those arrests. 

But, also, last week the FBI announced the arrest of Zachary 

Chesser, an American who sought to join a terrorist organization 

in Somalia. Now, we see the headlines of arresting him, but what 

it does not show is the months and months of work, some of the 

finest investigative work I have seen, of FBI agents, and I hope you 

will compliment those agents who have followed him for months. 

It appears from court documents and public statements that in 

this case the system worked as it should. Mr. Chesser was watched 

carefully through court-approved surveillance, was placed on the 

no-fly list, and was arrested as he tried to fly to Africa. Cases like 

these reinforce my conviction that criminal investigations and prosecutions are vital weapons in our national security arsenal. 

In this Congress, we have made great strides toward more effective fraud prevention and enforcement. I worked hard with Senator 

Grassley, Senator Kaufman, and others to pass the Fraud Enforcement and Recovery Act, the most expansive anti-fraud legislation 

in more than a decade. I was pleased when the President signed 

it into law last spring. I know Senator Kaufman was, too. 

That important legislation added resources and statutory tools 

for effective prevention, detection, and enforcement of mortgage 

fraud and financial fraud. The same bipartisan group of Senators 

worked hard this year to ensure that the landmark health care reform legislation included new tools for cracking down on health 

care fraud, and that the historic Wall Street reform legislation the 

President just signed included key measures to strengthen enforcement of securities fraud and bank fraud. 

I am glad to see that the FBI has been taking full advantage of 

this heightened support for and focus on fraud enforcement. This 

spring, the Attorney General told Congress that, in part as a result 

of the recently passed legislation, the FBI has more than doubled 

the number of agents investigating fraud, but that also reflects 

from the top, from the Director of the FBI, what he feels. 

Since 2007, the Justice Department’s health care fraud strike 

forces have sent more than 205 defendants to prison. They have 

significantly deterred Medicare fraud. That is one of the things 

that I know Senator Grassley and I have looked at very closely. 

And earlier this month, the Department charged 92 defendants 

with cheating the Medicare system of more than $251 million in 

the largest health care fraud sting ever. Senator Sessions and I, as 

former prosecutors, know that the way you deter some of these 

things is to deter them, actually lock them up. I congratulate the 

Director for the FBI’s central role in these investigations. I hope 

they remain committed to that. 

3 

Combating corruption has long been another important priority 

for the FBI. I was very disappointed that the Supreme Court last 

month undermined these efforts by siding with Enron executive 

Jeffrey Skilling and greatly limiting a statute, passed with bipartisan support, vital to Federal efforts to crack down on corruption 

and fraud. And I have already spoken with the Director and hope 

he will work with us on both sides of the aisle to see if we can fix 

that statute to give him the tools he needs. 

I am heartened to see that the FBI’s statistics continue to show 

reductions in violent crime nationwide despite the painful recession. I commend them on their work in combating violent crime. 

But I also hope that Congress continues to supply and does supply 

the kind of resources you need to combat crime. It is one thing to 

say we will put the laws on the books and increase the penalties, 

but if we do not give you agents to go out and catch the people, 

it does not do much good. 

Areas of major concern remain, of course. I know the FBI is continuing to struggle with efforts to modernize its technology and information-sharing systems. The Sentinel program, there will be 

questions about that because of the great concern I have expressed 

to you privately. 

I was distressed to learn that the FBI has felt it necessary to 

suspend work orders and essentially start over yet again. I am glad 

to see you are taking control of it, but I am sorry we have gotten 

to that point. And I have also discussed with the Director the press 

reports this morning about widespread allegations of cheating on 

a test that is meant to ensure that FBI agents understand the limits of their investigative authorities, and I know the Director—it 

seems these stories always break the night before you are about to 

testify, but it will give us something—we want to make the hearing 

interesting for you, Director. 

I thank you for returning. I also thank the hard-working men 

and women of the FBI. You have stated publicly your pride in 

these agents, but you have also told me privately the same. It is 

not something you just say in public. You say it privately, too, the 

pride you have in the men and women of the Bureau. I share that 

price. 

Senator Sessions. 

STATEMENT OF HON. JEFF SESSIONS, A U.S. SENATOR FROM 

THE STATE OF ALABAMA 

Senator SESSIONS. Thank you, Mr. Chairman. It is great to have 

Director Mueller, who is one of our Government’s finest public 

servants, I think. But I do not think he would claim to be perfect, 

and the fabulous FBI is not perfect either, and we need to insist 

that we do all we can to assist you in making that great agency 

better than it is. 

I would just say first this Government is spending money in 

ways we have never comprehended before. The last two budgets 

that passed this Congress increased domestic spending about 17 

percent in each agency. That does not count the $800 billion stimulus package that is moving grant money out all over the country, 

and I continue to hear problems of fraud and abuse in that area. 

4 

In addition, the Government has assumed greater control than 

ever in the history of the world over our health care system, and 

it is going to cost the American people money. And it has got to 

be managed correctly. 

I am concerned about that. We have got to have increased and 

more effective oversight over Federal spending as it grows, if for no 

other reason than it is growing in real terms. And so we need to 

focus more on that. 

I was disappointed to see in general FBI fraud statistics are 

down. I do not think that is an acceptable trend in light of the 

American people’s concern over waste, fraud, and abuse in the Federal Government. 

Also, Mr. Director, I was a bit taken aback that we just got yesterday, perhaps, the answers to the written questions that I posed 

concerning the policy of the FBI when they arrest a terrorist, 

whether or not they will be presumptively a civilian defendant, if 

charged, or whether or not they would be handled by a military 

commission presumptively. And it appears that it remains the policy of this administration—I do not know what position you have 

personally taken, but the administration and the Department of 

Justice has apparently continued to pursue the view that these individuals, if arrested, like the Christmas Day bomber, are presumed to be tried in Federal civilian court, which means they are 

entitled to a prompt appearance before a magistrate, as you noted 

in your answers, given Miranda warnings, given pre-trial discovery, and given speedy trial rights; whereas, if they are treated 

as an enemy combatant, someone who has been arrested in the 

same way that German soldiers may have been arrested at the 

Battle of the Bulge, they are not brought before a judge, they are 

not given Miranda warnings. They are held until the war is over 

or there is some other reason for them to be released. And if these 

individuals have violated the rules of war, they by history and common sense can be tried by a military commission, without having 

to do so promptly or on the schedule according to the procedures 

that the Defense Department feels are legitimate. 

So I think the presumption needs to be that persons coming from 

al Qaeda or other terrorist organizations should be held in military 

custody; and if at some point it is decided it might be better to try 

them in civilian courts, the courts have approved that process. 

Also, we have had some situations in which individuals are making phone calls in my State indicating that Federal grant money 

is available, that you can apply for it if you send some group 

money. It appears to be a fraud scheme, and I would like to talk 

to you about that. 

Thank you, Mr. Chairman. I appreciate you having the FBI Director. We all admire him and admire the FBI, and we look forward to working together to make it better. 

Chairman LEAHY. Thank you. 

Robert Mueller became the sixth Director of the Federal Bureau 

of Investigation on September 4, 2001. He had, tragically and horribly, a baptism of fire just a few days later on 9/11. But prior to 

that, he was U.S. Attorney for the Northern District of California. 

We have at least two former U.S. Attorneys on this Committee— 

Senator Sessions and Senator Whitehouse. 

5 

The Director began his career at the Justice Department by 

working for 12 years in the U.S. Attorney’s Office of the Northern 

District of California, chief of that office’s Criminal Division, Assistant U.S. Attorney in Boston, and later as the Assistant Attorney 

General in charge of the Department’s Criminal Division. He has 

his undergraduate degree from Princeton, master’s degree from 

New York University, served in the Marines for 3 years in Vietnam, and then earned his law degree from the University of Virginia Law School. 

Director Mueller, the floor is yours. 

STATEMENT OF THE HONORABLE ROBERT S. MUELLER, III, 

DIRECTOR, FEDERAL BUREAU OF INVESTIGATION, U.S. DEPARTMENT OF JUSTICE, WASHINGTON, D.C. 

Mr. MUELLER. Let me start by thanking you. Good morning 

Chairman Leahy, Ranking Member Sessions and Members of the 

Committee. Thank you for the opportunity to appear before the 

Committee today. I am extraordinarily proud of the work that our 

people do. 

I also suppose I should thank you for making the hearing interesting this morning. Also, I want to thank Ranking Member Sessions for holding this hearing as well. 

Since the Committee’s last oversight hearing, the FBI has faced 

an extraordinary range of national security and criminal threats. 

These threats underscore the complexity and the breadth of the 

FBI’s mission to protect the Nation in a post-9/11 world. Let me 

highlight, if I could, a few examples for you this morning. 

Over the past year, al Qaeda and its affiliates remain committed 

to conducting attacks inside the United States as well as against 

our military and against civilians overseas. 

Last September, the FBI disrupted the al Qaeda plot of 

Najibullah Zazi and others who were planning to attack the New 

York subway system. 

In December, Umar Farouk Abdulmutallab attempted to bomb 

Northwest Airlines Flight 253 on Christmas Day, an attack directed by al Qaeda in the Arabian Peninsula. 

And in May of this year, Faisal Shahzad attempted to detonate 

a car bomb in Times Square, an attack linked to support from TTP. 

And earlier this month, al-Shabaab took credit for detonating 

two bombs in the Uganda capital of Kampala, killing more than 70 

people, including an American. 

Homegrown and ‘‘lone wolf’’ extremists also continue to pose a serious threat, as we saw with the attempted bombings of an office 

tower in Dallas and a Federal building in Springfield. 

Combating threats like these requires the FBI to continue improving our intelligence and our investigative efforts, as well as 

working closely with our intelligence and law enforcement partners, both here and abroad. 

The counterintelligence threat to the United States continues to 

persist, as we saw with the recent arrest of a network of Russian 

spies. Foreign adversaries, however, do not rely exclusively on such 

traditional agent networks. They increasingly employ non-traditional collectors—such as students, visiting scientists, businessVerDate Nov 24 2008 09:56 Jul 07, 2011 Jkt 066825 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66825.TXT SJUD1 PsN: CMORC
6 

men—as well as cyber-based tools to target and penetrate United 

States institutions. 

Turning to the cyber threat, the cyber threat cuts across our national security and criminal programs. To date, terrorists have not 

yet used the Internet to launch a full-scale cyber attack, but al 

Qaeda and its affiliates have created a potent online presence. Extremists are not limiting their use of the Internet to recruitment; 

they are also using it to incite terrorism. 

The cyber threats also target Internet businesses, as we saw 

with the Google intrusion earlier this year. Internet fraud and 

identity theft remain a growing problem, as the Internet Crime 

Complaint Center, IC3, reported a 22-percent increase in complaints this year, with more than 330,000 involving more than 

$550 million in losses. 

The Internet has also become a platform for the theft of intellectual property around the world. Last week, a 2-year joint investigation by FBI, Spanish, and Slovenian authorities led to the arrest 

of individuals responsible for the creation of the Mariposa botnet, 

a vast network of more than 8 million remote-controlled computers 

worldwide. Using a computer virus known as the butterfly bot, 

criminals stole credit card and bank card information and launched 

denial-of-service attacks. In the last 2 years, the software used to 

create the Mariposa botnet was sold to hundreds of other criminals, 

making it one of the most notorious in the world. 

These cyber intrusions, thefts, and frauds undermine the integrity of the Internet and the businesses that they rely on. They also 

threaten the privacy and pocketbooks of all who use the Internet. 

I should also mention that finding and punishing those who use 

the Internet to conduct sexual exploitation always remains among 

our highest priorities. 

Let me spend a moment discussing our efforts against financial 

crimes. Over the past year, the impact of large-scale financial 

crimes has grown. In the wake of the financial crisis, the FBI continues to uncover major frauds in the thousands of cases we have 

under investigation, cases such as the Petters $3.9 billion in Minnesota yielded convictions and stiff sentences for top-level executives. In June, the former chairman of a securities firm was 

charged with a $1.9 billion fraud that contributed to the failure of 

Colonial Bank. And this month, the former CEO of Capitol Investments was charged in an $880 million Ponzi scheme. 

The focus on health care fraud is no less important. As, Mr. 

Chairman, you pointed out, 2 weeks ago the Medicare strike forces 

in Miami, Baton Rouge, Brooklyn, Houston, and Detroit announced 

charges against 94 individuals for more than $251 million in false 

claims to Federal health care programs. These fraud schemes continue to plague the health care system, including fraudulent billing 

for home health care, durable medical equipment, and HIV infusion 

treatments. The number of pending FBI health care fraud investigations has grown steadily and now stands at more than 2,500 

cases. 

Let me turn for a moment to information technology in the Bureau, a subject to which you alluded. 

The FBI has continued to improve and upgrade our information 

technology. In the past 18 months, the FBI has rebuilt many of our 

7 

computer networking systems, deploying the next-generation network to over 800 locations worldwide and providing 45 times greater backbone bandwidth. 

The FBI is also replacing our computer work stations with the 

next-generation workplace which will provide state-of-the-art voice 

over Internet, desktop videoconferencing, and Web collaboration 

tools for every one of our FBI users. And the FBI has now deployed 

more than 26,000 BlackBerrys to its workforce, including recent 

upgrades that allow direct access to databases like NCIC. 

Turning to Sentinel, starting this week the FBI is deploying 

phase two to all of our offices across the country. Phase two enhances Sentinel’s capabilities for the thousands of FBI employees 

and supervisors who already use it each day. As you pointed out, 

this last spring we issued a partial stop-work order on phases three 

and four in order to ensure that phase two was completed successfully. Given the delays associated with the completion of phase two, 

we are examining ways to reduce costs and limit our reliance on 

contractors to keep the project within its budget. Currently the FBI 

is consulting with industry experts to evaluate our plan to finish 

Sentinel. 

In closing, as the Committee knows, the FBI faces a new budget 

climate in the coming year. Along with all other agencies, we are 

being asked to reduce costs and eliminate redundancies wherever 

possible, which we will make every effort so to do. 

To conclude, I appreciate the opportunity to discuss the FBI’s recent work responding to the complex and the far-ranging threats 

we face today. I also want to thank the Committee for your continued support of the FBI in its mission, and, of course, I would be 

happy to answer any questions that you might have. 

[The prepared statement of Mr. Mueller appears as a submission 

for the record.] 

Chairman LEAHY. Thank you very much, and I appreciate that. 

The Washington Post ran a series last week on the extraordinary 

growth of the intelligence community since September 11, 2001, 

and the terrorist attacks. But they also highlighted the increased 

reliance on private contractors. I talked with you briefly about this 

yesterday, but as you know, I am very concerned about sensitive 

national security work being done by for-profit companies rather 

than being done by public officials. And I was worried about all the 

overlapping use of private contractors that article or series of articles came up with. 

Now, aside from foreign language translators and information 

technology workers, how do the intelligence components of the FBI 

use contractors? How much of your intelligence work is comprised 

of contractors? I should note that series showed that you have a lot 

less contracting companies in the National Security Agency or the 

Department of Homeland Security or the Department of Defense. 

Please go ahead, sir. 

Mr. MUELLER. We, of course, use contractors. We for several 

years now have undertaken to reduce our reliance on contractors. 

One of the areas that you mentioned is the IT arena, for instance. 

We have built up our in-house capabilities, which will enable us, 

I believe, to do some of the work that traditionally has been done 

by contractors. 

8 

But to give you an example of the use of contractors, we have a 

Weapons of Mass Destruction—WMD—Division. There are periods 

where we need particular expertise to gain knowledge in an area 

in which someone outside will have the expertise and we do not 

have the expertise in place. So we will bring a contractor on for a 

period of time, whether it be in the nuclear arena or the biological 

arena or the chemical arena, for a period of time to help us establish a program. That is an example in, I guess you would call it, 

the intelligence arena where we use contractors. 

But we are sensitive to the fact that there are discrete areas 

where, as you pointed out, whether it is language translations, that 

contractors have a role. There are other areas where the work 

should be done in-house, and we are scrutinizing that. 

Chairman LEAHY. Given your druthers, would you prefer inhouse to contractors? 

Mr. MUELLER. Given my druthers, I would prefer in-house, both 

for the savings as well as developing the core capabilities. 

Chairman LEAHY. The press reported this morning that the Inspector General of the Department of Justice is investigating 

whether FBI agents across the Nation cheated on a mandatory test 

on the FBI’s Domestic Investigations and Operations Guidelines, 

the DIOG. This has been a source of concern. I along with a number of other Senators on this Committee had to really wrestle with 

former Attorney General Mukasey for months just to obtain a copy 

of this. Once we read it, many expressed fear that this broad authorization of domestic investigative techniques had the potential 

to encourage racial profiling. The FBI assured the Congress that 

the test that agents take and the content of DIOG would ensure 

that agents are fully trained on not only the scope but the limitations of the FBI’s authority. 

Now, we learned last year that a small number of agents were 

accused of cheating on the test. That is what I was told. I was 

amazed when I went online this morning to find from press accounts that cheating was reportedly more widespread. 

What is the scope of the investigation? How many agents are involved? What steps have you taken to make sure this does not happen again? 

Mr. MUELLER. Let me start, if I could, because your question addresses a number of issues that were raised. 

First of all, in terms of the guidelines, the new Attorney General 

guidelines, the point that should be made at the outset is that we 

do not, the FBI does not target persons or groups based on race, 

ethnicity, or religion. That is at the heart of those guidelines. And 

that is what we teach each of our personnel. 

After the guidelines were signed into place by the Attorney General, we undertook a substantial education program for our agents, 

having developed the DIOG, and all of our agents and much of our 

other personnel went through that training, more than 16 hours of 

training. 

There was a test given a year ago. It was an open-book test. The 

parameters were that you could use what materials you wanted to, 

it was open book, but you should not get help from another person. 

9 

Early on, we in the Bureau had allegations that those procedures 

were not followed in particular instances. We investigated those instances and took appropriate action. 

The Inspector General has taken over that investigation and has 

indicated that there are additional personnel that did not abide by 

those procedures. We do not have all the specifics, and we are expecting a letter from the IG pointing out other occasions where 

there were abuses and the procedures were not followed with recommendations, and we will follow those recommendations. 

In the meantime, however, it is quite obviously my concern that 

all of our personnel understand the parameters in which we are to 

work. I am confident that the training and the testing and the continuous training we have has put our workplace—or our people in 

a position to fully know and understand the opportunities but also 

the limitations of what we can do. There are various levels of review. 

I will tell you one other statistic. After the training was completed and the test taken, the incidence of errors in the paperwork 

was reduced by 80 percent. And so I do believe that our workforce 

absolutely understands what can be investigated, how it must be 

investigated, what predication is necessary for a particular investigation in this day and age. 

Chairman LEAHY. How many agents were involved in cheating 

on the test? 

Mr. MUELLER. At this point I do not know. I do not have the report from the IG. 

Chairman LEAHY. Do you have any idea? 

Mr. MUELLER. I have got a general idea, but I do not know how 

many, and I am not certain the IG knows how many either. He has 

pointed out instances orally to me where there may be persons in 

a particular office where it was widespread, and it may be attributable to a lack of understanding and confusion about the procedures. 

Chairman LEAHY. We will be asking the IG these questions. 

I do have one last one. A year from now, when we have a hearing, what will you be able to tell us about Sentinel? And where will 

we be with Sentinel then? I mean, you have wrestled with this. We 

have wrestled with this whole question of the computer system of 

the FBI. We have seen fits and starts. Where will we be a year 

from now? 

Mr. MUELLER. Well, a year from now we certainly, I believe, will 

have successfully completed phase two. We ought to complete that 

at the latest this fall. Phase two is the heart of the system. It puts 

on agents’ desktops a case management system. My expectation is 

that—from what I hear from around the country, it is work successfully. When I issued the initial partial stop order, it was because I was not satisfied that we had eliminated all of the coding 

errors that may be there, and I was not satisfied as to the 

scalability. 

After engaging in three pilot projects that were successfull, we 

ran that out this week, and the heart of the system is in place. 

The additional capabilities that we were seeking in phase three 

and four, we are looking to determine how best to go forward and 

obtain those capabilities. We have employed experts from outside 

10 

the Bureau to look at it, and my hope and expectation is that we 

will be able to deploy many if not all of those capabilities given two 

factors: one, the enhancement in technology since this contract was 

initially issued 5 years ago; and, second, our ability to use our own 

staff for much of the development here on in, which goes to the 

building up of that IT staff and less reliance on contractors. We 

have built up our own IT staff. We benefit from technology advances. We ought to be able to make a substantial savings on 

phases three and four. 

Chairman LEAHY. Please keep us posted on that because I think 

there has been bipartisan concern on this, and it is justifiable. 

Mr. MUELLER. I understand. 

Chairman LEAHY. Senator Sessions. 

Senator SESSIONS. Mr. Chairman, I would yield my time to Senator Grassley, who works very hard in this Congress to protect the 

Treasury of the United States, and I know he has some questions 

to ask, so I would yield to him at this time. 

Senator GRASSLEY. I am going to continue where the Chairman 

just left off on Sentinel. In March, I wrote to you after learning the 

FBI issued a stop-work order to the prime contractor, Lockheed 

Martin. The reply I received indicated that this was temporary and 

would help assure delivery of phase two by this summer. 

Just last week, I wrote you a letter here again about the new 

stop-work order. I have yet to receive a response, but the FBI 

issued a press release saying phase two was not anticipated, as you 

just said, by—well, at least the press release said by the fall of 

2010. I understand that phase two was released to the field just 

this week, but that may not be final until fall. 

I find all of this uncertainty in a major procurement very concerning. We have not been getting answers from the FBI about the 

projected cost or timeline on finishing the program. I am concerned 

that the uncertainty is a signal that the FBI will be unsuccessful 

in finishing Sentinel. I know you just said the opposite to the 

Chairman. This project was scheduled to be finished December 

2009 at a cost of no more than $451 million. In a lot of correspondences we have had on this issue, the word keeps popping up about 

we are negotiating, we are negotiating, we are negotiating. And 

you wonder how much negotiation goes on when $451 million is involved. 

The timeline is a bust. The Inspector General noted that the FBI 

does not have a current schedule or cost estimate for completing 

the project. I asked for these estimates in March, and the FBI said 

it was negotiating with Lockheed Martin. There was no indication 

when we would get these projections. That is unacceptable because 

the American taxpayers deserve answers given the ballooning Federal deficit and endless delays in the program. 

Based upon negotiations with Lockheed Martin, how much longer 

will it take to complete the Sentinel system? When will it be finished? In May, the Washington Post reported that you believe Sentinel will be done be 2011. Do you still believe that that date is accurate? 

Mr. MUELLER. You covered a lot there, Senator. If I might, I will 

start off by saying, as you pointed out, when I issued the partial 

stop-work order—I think it was in March—I indicated at that point 

11 

in time that we wanted to do pilots in order to assure the feasibility, viability, and scalability of the system that upon success of 

those pilots that phase two would be deployed this summer. And 

as I said before and as I told you what happened, it is being deployed, and it should be deployed by—certainly the deployment 

should be finished by the end of this summer. 

We broke this project up into phases so we could look at each 

phase, learn lessons from each phase, so that we would not be 

bound by one overarching contract but could go and accept the 

project piecemeal. I am actually pleased that the heart of the program phase two is now on agents’ desks and a case management 

system is there. 

Augmenting that will be additional forms and additional capabilities, we have to look at both the budget and the timeframe 

down the road and determine how much of that work can or should 

be done by the contractors, how much of that work can and should 

be done by ourselves, given the new technology. And as we finish 

phase two, that will be what we are looking at in the next 3 

months. 

So I cannot at this juncture right now give you hard figures, but 

we have endeavored both for you in this Committee and other committees to keep you apprised of everything that happens in the 

course of our developing this software package. 

Senator GRASSLEY. So you are saying you cannot give us a date, 

if it will be done by 2011? 

Mr. MUELLER. Not until we have additional information based on 

what we have found to be both problems and successes in phase 

two. It is exactly what we did when phase one was completed in, 

I think it was, 2007. We went back, looked at the areas in which 

we were successful and looked at those areas where we failed and 

adjusted. We will do that again. 

Senator GRASSLEY. Has Lockheed Martin provided a cost estimate to finish Sentinel? How much more will the taxpayers have 

to pay? Is it hundreds of millions of dollars, tens of millions of dollars? Can you tell us if the cost is going to exceed $1 billion? 

Mr. MUELLER. Certainly it would not exceed $1 billion, but I can 

tell you, as you pointed out, there was an overarching budget for 

this project. We hope to stay within that budget. There are ongoing 

negotiations, but I am mindful of the necessity of maximizing the 

products that we get and minimizing the cost to the taxpayer, 

which is why, as I say, we are looking at alternative capabilities 

and with less reliance on contractors who can prove to be more expensive than if you could do it yourself in-house. 

Senator GRASSLEY. In March, the FBI said it spent over $25 million on phase three, which is now indefinitely delayed. Is that 

money lost and gone forever? Or will the FBI recoup those monies 

from the contractor? 

Mr. MUELLER. That will go into our evaluation of where we go 

with phases three and four. As I pointed out before, we engaged in 

an incremental development process so that we could adjust 

throughout the contract. 

One of the, I think, striking differences from what we had not 

accomplished before is the fact that we have a case management 

system that is now working for the Bureau. 

12 

Senator GRASSLEY. Does the FBI plan to continue working with 

Lockheed Martin? Or are you going to consider hiring another contractor to complete phase three and four? And while you are answering that, does the FBI believe that it has gotten a good deal 

from the money on Sentinel so far? 

Mr. MUELLER. We have a case management system through the 

Sentinel development process that we never had before. With regard to the extent to which we continue to work with Lockheed 

Martin, I do believe we will continue to work with Lockheed Martin, but we still have to iron out exactly what the roles will be and 

the amount of money that we want to expend through the contractor and the amount of money we want to expend in-house to 

continue development. 

Senator GRASSLEY. The FBI has issued over 39 contract modifications. However, that number is deceptive as phase two had 160 

change orders rolled inside of those modifications. Does the FBI 

know what it wants? Or is the FBI passing up a good system in 

order to just try to have a perfect one? 

Mr. MUELLER. I think what you point to is an issue everyone who 

develops software packages has to wrestle with. Over a 5-year period, our mission has changed to a certain extent. Our necessities 

have changed. Things like the Attorney General’s guidelines have 

changed. Our processes have changed, which requires us—if you 

lock in the requirements in 2004 in order to issue the contract, 

things are going to change between 2004 and 2010. And while 

there have been modifications, I think they are relatively minor 

modifications, and not the principal contributor to whatever delays 

there have been. 

But you have to take that into stride, and you have to have a 

balance, on the one hand, of making the system work for your people, and on the other hand, staying within the requirements and 

the cost estimates and time estimates that you contracted to 4 or 

5 years ago. And that is what we wrestle with. 

Chairman LEAHY. Thank you. 

Senator Kohl, then Senator Sessions. 

Senator KOHL. Director Mueller, last week’s Washington Post series on the growth of our intelligence efforts highlighted the tendency of both Congress and intelligence agencies to respond to terrorist threats by expanding programs and hiring more analysts. 

Since 9/11, the FBI has been expanding to meet its counterintelligence mission within the United States. However, we all know 

that bigger is not always better. Many intelligence officials seem to 

agree. In that article, Defense Secretary Gates said that he plans 

to review the Department of Defense for programs in terms of 

waste. Similarly, CIA Director Leon Panetta said that he is looking 

at ways to reduce the CIA’s spending, describing the current level 

as ‘‘unsustainable.’’ 

Has the FBI done a thorough review for waste overlap and redundancy? Or do you have plans to do so? And how do you decide 

when more resources are needed or when it may be appropriate to 

scale back? 

Mr. MUELLER. We have for a couple of years now looked at the 

contractor’s program from a variety of perspectives: first of all, 

knowing and having a handle on all the contractors you have in an 

13 

organization. And I think we have a very good handle on the number of contractors that we have and the jobs that they are performing. 

We have in certain areas, particularly in areas like counterterrorism, sought to reduce the number of contractors, and we have 

recently adopted additional programs to give incentives to our leaders within the Bureau to reduce the number of contractors. 

I will tell you that when it comes to the intelligence work that 

we do, it is performed generally by agents who I would call the collectors as well as analysts. We have hired since 2001 over 2,000 analysts in-house, not relying on contractors but our own in-house analysts that have come with substantial educational backgrounds 

and many with experience in other agencies, to address the need 

to bring on people in the intelligence arena. 

That being said, there is still more that we can do, and we are 

looking at each of the job series and providing incentives to managers to reduce the number of contractors, to minimize them, and 

to eliminate whatever overlap there may be. 

Senator KOHL. The entire intelligence system has expanded rapidly, as you know. By the end of 2001, 24 new organizations had 

been created, and dozens more are added each and every year. 

Over the past 9 years, existing intelligence organizations and agencies have more than doubled in size. 

Director Mueller, you became the FBI Director just before 9/11. 

You have seen firsthand the massive expansion of our counterterrorism efforts since it began. In your view, should there be more 

than an agency-by-agency review? Should there be a large-scale 

comprehensive review of this growth since 9/11 to assess its effectiveness? 

Mr. MUELLER. I am familiar with the Washington Post articles, 

and I, of course, would participate in and would be open to any 

suggestions from any entity that provided a review to the intelligence community. I am not certain it would affect us dramatically. We have a distinct and I think very important role to play 

in addressing terrorism within the United States. And I do believe 

that we have resources adequate to that task now, but we have had 

to take those resources from other priorities within the organization. 

I am probably not the best person to ask as to whether or not 

there should be an overarching review. I am comfortable with what 

we have done, and I would leave the decision as to whether there 

ought to be an overarching review to others who are more familiar 

with the work of areas of the intelligence community with which 

I am not familiar. 

Senator KOHL. With respect to the possibility of an overall review 

would you support an independent commission? Or should the review come from within the intelligence community? 

Mr. MUELLER. I am not certain that there is a necessity for a 

new commission. To the extent that there needs to be elimination 

of overlap, a coordination of response, I think we do a pretty darn 

good job now in the terrorism arena. That does not mean that there 

are not areas that we could look at, but I do believe that the Office 

of the Director of National Intelligence has that as one of its mandates, and that is to look for areas of overlap and address those 

14 

areas. In my experience, that has happened in the past, and my 

expectation is it will happen in the future. 

Senator KOHL. Director Mueller, the Justice Department Inspector General released a report in June concluding that none of the 

agencies within the Department, with the exception of the FBI, 

have operational plans in place to respond to a terrorist attack involving a weapon of mass destruction. The Inspector General described the rest of the Justice Department as ‘‘uncoordinated and 

fragmented’’ and finding that the Department’s critical incident response plan has not been updated since 1996, and it is completely 

unprepared to coordinate Federal law enforcement response activities if called upon to ensure the public safety. 

Director Mueller, we are pleased that the FBI has taken adequate steps to respond to a WMD attack. Are you working with 

other components of the Justice Department to ensure that they, 

too, become adequately prepared? 

Mr. MUELLER. Well, the credit for all of that goes to our WMD 

Division and the leadership there, and, of course, our leadership 

has offered to, and I believe will, assist other components of the 

Department to learn from the lessons that we have had to learn 

ourselves. 

Senator KOHL. Are you working with these other departments? 

Mr. MUELLER. I would have to get back to you specifically on 

what we are doing. I know we are working with the Deputy Attorney General’s office to provide our expertise to the other agencies, 

and how we are doing that and what particular methods are used, 

I am not familiar. I have to get back to you on that. 

Senator KOHL. Director Mueller, as you know, the threat of fraud 

facing seniors is growing and evolving. Criminals are expanding 

their targeting techniques from traditional telephone calls and 

mass mailings to online scams, and seniors continue to be scammed 

out of their lifetime savings. According to a 2009 report by the 

MetLife Mature Market Institute, the annual financial loss by victims of senior financial abuse is estimated to be at least $2.6 billion. 

Senator Gillibrand and I have introduced a bill, the Senior Financial Empowerment Act, S. 3494, that would require the FTC to 

partner with the FBI to disseminate information about mail, telemarketing, and Internet fraud targeting seniors to seniors and 

their families or caregivers, local law enforcement, and advocacy 

organizations that work to protect seniors from fraud. 

Are you familiar with the legislation? And if you are, do you support it? 

Mr. MUELLER. I am generally familiar with the fact of the legislation. I cannot speak for—the Department of Justice has to issue 

opinion letters and the like, but I do believe for ourselves, even 

without the legislation, it is important for us, whenever we come 

across a particular fraudulent scheme that addresses the elderly, 

to not only address it by investigating, indicting, and convicting the 

persons responsible for that scheme, but alerting others around the 

country, other task forces about that scheme. And we have a regular procession of intelligence reports that we push out that alert 

others in the community, whether it be the health care community 

or the law enforcement community, to what we have found in one 

15 

area of the country to alert others in other areas of the country to 

accomplish that. And to the extent that there is legislation that 

supports that, we would be supportive. 

Senator KOHL. I would appreciate it if you would take a look at 

our legislation and let me know if I could have your support on it. 

Mr. MUELLER. Yes, sir. 

Senator KOHL. Thank you so much. 

Senator Sessions, we now call upon you. 

Senator SESSIONS. Thank you, Senator Kohl. 

Director Mueller, to follow up on the discussion we have had previously concerning how terrorists should be treated when they are 

arrested in the United States, you responded to Senator Hatch 

that, pursuant to HSPD–5—what is that, HSPD–5? Is that a—— 

Mr. MUELLER. It is a directive from the President that gives us 

certain authorities. 

Senator SESSIONS. All right. The Attorney General—I am quoting 

here from your answer—‘‘has the lead responsibility for terrorism 

acts committed in the United States.’’ 

First let me just say that is a bit odd if we were attacked by an 

army enemy. I do not think that would be the case. 

But continuing, ‘‘Consistent with that responsibility, the FBI will 

respond to the scene of any such attempted terrorist attack and 

will conduct an appropriate investigation in compliance with the 

Attorney General’s guidelines for domestic FBI operations.’’ And 

then you say, ‘‘The FBI has no legal authority to proceed against 

a terrorism suspect who is arrested within the United States in 

any venue other than an Article III court.’’ 

That is civilian, normal Federal court. 

‘‘There have been only two instances in 2001 in which civilians 

were arrested that were placed in military custody for some period 

of time.’’ 

You do not mean to say by that that you could not participate 

in the arrest and if it is clear that the individual is a terrorist connected to al Qaeda, that they cannot be turned over to the military 

for prosecution, are you? 

Mr. MUELLER. No, I am not. I do not mean to say that. 

Senator SESSIONS. If you are involved in that arrest of this terrorist, can you not proceed with the assumption they will be turned 

over? Or do you have to follow all the rules and regulations that 

the FBI must follow when they arrest a normal American criminal? 

Mr. MUELLER. Well, our authority is derived, I believe, from Title 

18 and others that authorize us to make arrests pursuant to certain criminal statutes, and it is somewhat limited in that regard. 

That does not mean that the President cannot direct that we turn 

an individual over to a military commission and military court, and 

that has happened in the past. But in—— 

Senator SESSIONS. Does it take Presidential authority to make 

that decision? 

Mr. MUELLER. Pardon me? 

Senator SESSIONS. Does the President himself have to make that 

decision? Can’t he set a policy or regulation that would allow that 

decision to be made? 

Mr. MUELLER. That went a little bit beyond my constitutional 

depth, and that is the type of question in my mind that should be 

16 

answered by the Office of Legal Counsel. But for us, we can do the 

arrest. We do it pursuant to certain authorities. But then a determination can be made by the President that it go elsewhere. 

Senator SESSIONS. Well, normally you would give Miranda in less 

than 50 minutes—you waited 50 minutes, and I hope and believe 

you probably had a basis to wait that long, but it is pushing the 

limit. Under normal situations the Miranda has to be given immediately if you ask questions of the defendant once they are placed 

into custody. 

So I am worried about this whole process. It is not working logically to me, and some say, well, they could confess after being 

given Miranda and they could plea bargain or something if they 

are taken through the civilian courts. But there is much more ability for the U.S. Government in dealing with an unlawful enemy 

combatant, a terrorist attacking the United States, it seems to me, 

if that individual is placed into military custody where they belong 

if they are an enemy combatant. Aren’t I correct about that? 

Mr. MUELLER. We have had this discussion, I know, Senator, and 

I am every bit as interested in and concerned that we get intelligence as soon as possible with regard to other potential attacks. 

And even in the case of Abdulmutallab, who came into Detroit, utilizing the Quarles exception, he was interviewed for a period of 

time by our agents without Miranda warnings. 

In each of the instances that have reached the newspapers recently, there has been a variety of positions taken early on as 

whether to Mirandize or not. In each case, we have gotten the intelligence we have needed. So—— 

Senator SESSIONS. I do not think—that is not impressive to me. 

I am not worried about what has happened anecdotally in some individual case. Clearly the policy, in my judgment, would be better 

if you took the other view and they were presumptively held by 

military custody. And it does appear to me that Homeland Security 

Directive HSPD–5, signed in 2003 assigned the Attorney General 

the lead responsibility to investigate this, and that you are following Department of Justice policy in this regard. If that policy 

is to be changed, you do not have the authority to do that. Is that 

correct? That would have to be done by the President or the Attorney General? 

Mr. MUELLER. We would follow the policies as set by the Attorney General pursuant to the policies, legal policies set by the President. We do believe the President has the authority to make the 

decision as to where an individual will be tried. 

Senator SESSIONS. So that is where the responsibility lies, with 

the President of the United States, and they are persisting in an 

unwise policy, in my view, that cannot be justified. But that is another matter. We will continue to pursue that. 

Let me ask you about fraud filings. In 2003, bank embezzlement 

cases under the FBI enforcement were 395 case filings; in 2008, 

186. Bank institutional embezzlement cases were 44 in 2003, 37 in 

2008. Financial institution fraud was 916 in 2003, 524 in 2008. 

SEC-related fraud was 118 in 2003, 66 in 2008. Bankruptcy fraud, 

which is Federal court, nobody else investigates bankruptcy fraud 

except the FBI—perhaps the Secret Service on occasion—was 92 

17 

only in 2003 and dropped to 52 in 2008. You and I have talked 

about bankruptcy fraud cases before. 

It seems to me that these represent a very, very serious decline 

in fraud enforcement at a time we have had major problems with 

banks failing, allegations of misconduct and fraud out there. What 

is happening to cause such a decline in prosecutions? 

Mr. MUELLER. At the outset, I would have to look at those figures. Some of them do not seem accurate to me. But putting that 

aside, that is part of the picture. 

After September 11th, we had to prioritize. One of the areas we 

prioritized is the focus on larger white-collar criminal cases. We 

could not take the bank teller cases. We could not take the smaller 

embezzlement cases. And the numbers inevitably went down as a 

result. 

As you have seen and all of us have been through in the last 2 

to 3 years, we have a mortgage fraud crisis, we have a securities 

fraud crisis, and we have a corporate fraud crisis. We have focused 

on those cases where there are multi-million dollars at stake, 

where the investors have lost millions if not billions of dollars, and 

that has been the focus. 

Inevitably when you focus on the larger cases, the smaller cases 

will not be there to give you the numbers you had before. But I am 

comfortable that we prioritized appropriately. 

Senator SESSIONS. Well, I am not comfortable with the decline in 

prosecutions, so I am going to look to find out more about that. I 

have heard that spin from FBI Directors and the Department of 

Justice for 30 years—25 at least—that we are working bigger 

cases, that is why the numbers are down. Haven’t you heard that? 

Mr. MUELLER. Well, we have both heard it, but I can tell you at 

this time it is true. And I will tell you that—you look at the cases, 

you look at the indictments, you look at the Petters investigation 

that was successfully prosecuted in Minneapolis, where something 

in excess of $1 billion was lost to the investors. That is the type 

of case we are bringing, and successfully bringing. 

Senator SESSIONS. Thank you, Mr. Chairman. 

Chairman LEAHY. And the quarter of a billion dollar one that I 

mentioned earlier. 

Senator Cardin. 

Senator CARDIN. Well, thank you, Mr. Chairman. 

Director Mueller, once again welcome to our Committee, and 

thank you very much for your service to our country. We very 

much appreciate that. 

I want to follow up first on two questions that were asked, one 

by Senator Sessions and one by Senator Kohl. Senator Sessions’ 

question to you, I want to make sure we get the full answer, because I believe you were saying that in regards to someone who is 

apprehended, you are confident that the current policy allows you 

to interrogate to get—to do your best job to get information to protect the safety of the people of this Nation, whether it is someone 

who is doing terrorist activities or criminal activities, that there is 

enough flexibility in this policy in regards to the exceptions under 

the Miranda rights, or the other options that are available in evidence to bring criminal matters or go to military tribunals, that the 

18 

current policy allows you to question to get information that you 

believe is critically important to the safety of Americans. 

Mr. MUELLER. I do believe that we effectively handle terrorism 

cases in the United States, both from the perspective of investigation and at the appropriate time, after we have developed maximum intelligence, arresting and then participating in the prosecution of individuals. I also believe that we do an effective job of interrogating, questioning individuals once they are detained here in 

the United States. In those circumstances where it is appropriate 

because the individual has information perhaps relating to other 

terrorist attacks to take advantage of the Quarles exception and do 

extensive questioning on that particular issue before we Mirandize 

an individual, and that at the appropriate time Mirandize that individual so that whatever is said afterwards can then be used in 

the prosecution. 

Senator CARDIN. I thank you for that answer, and, of course, the 

Miranda rights concern information obtained. You can obtain information from other sources. There may have been statements made 

before. There may have been other evidence available to deal with 

criminal convictions. 

Mr. MUELLER. Correct. 

Senator CARDIN. Following up on Senator Kohl’s point dealing 

with the IG’s report—which was very complimentary of the FBI as 

it relates to preparations against attacks with weapons of mass destruction. Next week, the Subcommittee that I chair, the Subcommittee on Terrorism and Homeland Security, is going to hold 

a hearing on this subject. Senator Kyl has asked us to do this. He 

is the Ranking Republican Member of this Subcommittee. And I 

would like, if you could—it may require you to get back to us, but 

you commented very briefly about what lessons you have learned 

that could be helpful to other agencies under Department of Justice. 

It looks like that you have taken this issue very seriously. You 

have designated a key person for a response, and you are prepared 

to do everything you can to prevent an attack, but also to be prepared to deal with threats that may be here. 

Now, working in the Nation’s capital, we are the epicenter of concern about those types of attacks. I represent the State of Maryland. The counties that are close by are almost in the bull’s-eye 

area. So we are very interested in making sure that the lessons 

that you have learned in the FBI are not only shared but implemented by other agencies in the Department of Justice to make 

sure we are as prepared as we can be against this threat against 

America. 

Mr. MUELLER. We have not forgotten the lessons of the anthrax 

attacks many years ago and have to assume—not that there is any 

threat currently, but that we have to be prepared to address it, not 

just in the Nation’s capital but around the country. 

And so our program required the establishment of a particular 

division that was dedicated to this in all of its various aspects— 

nuclear, biological, radiological—but also around the country training individuals and additional persons to both investigate and respond to such attacks. 

19 

So our program is not just headquarters-centric. It is throughout 

the United States, including, quite obviously, in Maryland. And we 

have capably trained individuals who are responsible for both the 

investigation and responses in every one of our 56 field offices 

around the country. It is those how we have organized any lessons 

that we have learned in terms of how you best maximize that organization that we are hopefully passing on to others who have certain responsibilities in the field as well. 

Senator CARDIN. Well, we thank you for that, and we look forward to working with you in our Subcommittee as we try to get 

even better at preparation for these types of threats. So thank you 

on that. 

During our discussions on the hate crimes legislation, we talked 

a great deal about the Federal Government working with local governments in cooperation. Local governments today are having a 

very difficult time with their budgets. I am sure you are aware of 

that, and we have seen that locally in our State where there is concern as to whether there are the resources that go after different 

types of criminal activities. Gang activity seems to be on the rise 

in some parts of my State and in other States around the Nation. 

Can you just share with us what steps you are taking to work 

with local governments to deal with the concerns that the current 

economic crisis and budget problems are having on effective law 

enforcement? 

Mr. MUELLER. I have two areas in which we attempt to address 

this. First, in the wake of the legislation, training, providing training programs to State and local law enforcement about what the 

Federal law is and how we would work with them to investigate 

hate crimes; sensitizing them to law, and we have done that 

around the country in many jurisdictions. 

Second, one of the deficiencies is the reporting of hate crimes, 

and we encourage throughout the country to our various field offices the reporting of hate crimes so that we have an accurate view 

of what is happening across the country. Those are two areas in 

which we have followed up. 

Senator CARDIN. Well, thank you. The last point, I just want to 

compliment you. In your written statement, you deal with the Civil 

Rights Unit’s work, and you bring up the Danziger Bridge episode, 

which I think was the right steps taken by the FBI. I just would 

encourage you in regards to the civil rights issues to keep a focus 

on this. We are concerned, again, about the rise of specific cases 

that are being brought. The trafficking issue that you mention in 

your report, we have seen some increased activity in trafficking, 

that I would just encourage you to give the highest attention of 

your agency. 

Mr. MUELLER. Yes, sir. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you very much. 

Senator Hatch. 

Senator HATCH. Thank you, Mr. Chairman. 

Welcome. Good to see you again, Mr. Director. We appreciate the 

work that you do, and all of you at the FBI I have been very appreVerDate Nov 24 2008 09:56 Jul 07, 2011 Jkt 066825 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\66825.TXT SJUD1 PsN: CMORC
20 

ciative of over all these years of watching what you do, and you do 

a great job. 

Let me turn your attention to criminal gangs. Specifically, I want 

to discuss MS–13. Now, the FBI has previously described MS–13 

as the most dangerous gang in America. MS–13 traces its origin to 

El Salvador. Ultimately they reached Los Angeles and now have an 

estimated 10,000 members in, I think, at least 33 States. They 

stockpile and traffic in weapons. They have a business model that 

brings in revenue through extortion and shakedowns of merchants 

for ‘‘protection fees.’’ 

A Mexican drug-trafficking organization identified as the Sinaloa 

cartel has contracted out to MS–13 for a wide variety of illegal activities. Now, that activity includes drug smuggling and illegal 

alien smuggling. Recently Arizona State law enforcement sources 

believe that an MS–13 member might have murdered Arizona 

rancher Robert Krentz. MS–13 is the example of why securing the 

border, combined with a tough and coordinated law enforcement 

approach is badly needed. 

In 2006, the only documented Federal informant to provide insight into this organization, Brenda Paz, was brutally murdered by 

MS–13 in Virginia. One of her MS–13 attackers had previously 

been deported after he was arrested for a stabbing that he committed in Florida. 

For several years now, I have been working with the distinguished Senator from California, Senator Feinstein, to get comprehensive and tough gang legislation passed into law, anti-gang 

legislation. This enforcement legislation includes prevention and 

strict penalties to dismantle not only MS–13 but any criminal 

gang. Now, I am well aware that the FBI has a national task force 

focused on MS–13. 

Now, to the extent possible, could you give us an update on FBI 

activities and investigations directed at MS–13? 

Mr. MUELLER. Senator, as you rightly and appropriately point 

out, MS–13, a longstanding gang out of initially Los Angeles, generally El Salvadoran, has spread its tentacles throughout the 

United States over the last 10 years. We currently have over 190 

task forces around the country that address gangs, violent criminal 

enterprises, with over 2,200 agents that are working this. 

More particular to MS–13, we have an entity here at headquarters that monitors it and develops intelligence on that gang. 

But perhaps more importantly, we have a task force down in El 

Salvador, individuals working with our El Salvadoran counterparts 

to address MS–13, because you do find that MS–13 members travel 

back and forth—not necessarily at will, but very easily—between 

the United States and El Salvador. 

We also have a fingerprint initiative that we have had for a number of years that focuses on MS–13 that we are operating with our 

counterparts in El Salvador. We also know that there are elements 

of MS–13 in Guatemala, Honduras, and in Mexico. And our legal 

attache offices work with our counterparts in each of those countries to share intelligence and coordinate takedowns of the elements of MS–13. 

It is one of our highest priorities when we look at criminal enterprises, gangs, and violent crime. 

21 

Senator HATCH. Thank you for that summary. 

Mr. Director, our Nation’s cyber defenses are vulnerable, and action must be taken quickly to address the threats that our networks and critical infrastructure are faced with every day. Last 

week, President Obama’s nominee to be the next Director of National Intelligence, General James Clapper, praised the concept of 

establishing a national cyber center and a director responsible for 

organizing the Government’s defense against these cyber threats. 

This cyber director would be modeled after the Director of National 

Intelligence, and he would coordinate the Government’s cyber defense, threat analysis, response coordination, and information sharing. 

Like the National Counterterrorism Center, the new cyber center 

would collocate representatives from across the Government from 

both law enforcement and the intelligence community. Importantly, 

this center would not be based in any one department or agency, 

so it would be in a good position to see across the entire spectrum 

of Government defensive cyber activities without getting caught up 

in the various turf battles. 

Now, based on your experiences with deconfliction and sharing 

information within the intelligence community and law enforcement, what benefits do you see from creating a national cyber center and a director position based on these models? And what contributions do you believe the FBI could make to this type of a center, especially with respect to counterintelligence and cyber expertise? 

Mr. MUELLER. I do think the concept of a cyber center makes 

some sense, but I can tell you that I believe the building blocks are 

already in place for that. The recent establishment of a Cyber Command under the military will, in my mind, bring together a great 

deal of expertise under Keith Alexander, General Keith Alexander, 

on the intelligence and the military side of the house. On the domestic side of the house, we already have the National Cyber Investigative Joint Task Force, which is a stand-alone task force with 

anywhere from 14 to 17 contributing agencies whose sole purpose 

is to identify particular threats, whether it be a botnet or a denialof-service attack, and determine the attribution of that particular 

attack, understanding that it can come from a State, it can come 

from individuals associated with a State entity, or it can come from 

an organized crime group, or, last, it could come from that high 

school student that is living across the street. 

The National Cyber Investigative Task Force has been very successful in addressing these threats, bringing together these individuals. Expanding that, that which has already been successful, I 

think fits into the model that you are suggesting, and I would welcome each of the members and their staff to come and take a tour 

of that task force and see the type of work that they are doing. I 

think it will be illuminating. But I do think it is one of those building blocks that is there that can be expanded to fit the role that 

you suggested. 

Senator HATCH. Well, thank you so much, and thanks for your 

service. 

Mr. Chairman, my time is up. 

Chairman LEAHY. Thank you very much. 

22 

Senator Whitehouse, please go ahead, sir. 

Senator WHITEHOUSE. Director, let me join my colleagues in 

thanking for your service. You have been one of the constants over 

the years in our national security team and in the Department of 

Justice team, and it is a pleasure to have you back. 

I serve with Senator Hatch on the Intelligence Committee, along 

with our Chairman who is here, Senator Feinstein, and the issue 

of cybersecurity is one that is very much at the forefront of the Intelligence Committee’s concerns right now. The President’s nominee for Director of National Intelligence, General Clapper, was before us the other day for his confirmation hearing, and he indicated 

in his listing of the major threats that he perceived, No. 1 on his 

list was cybersecurity, cyber attack. You have described it in your 

testimony today as an ever increasing wave, and you mentioned 

that reported cyber offenses have seen a year-to-year increase of 22 

percent. 

What I would like to ask you about is your take on the extent 

to which you feel that the reported offenses provide an accurate 

snapshot of our Nation’s vulnerability to cyber attack, and if you 

could carve out your answer into two separate pieces, I would appreciate it. The first would be where the victim is actually witting 

that they have been a victim of a cyber attack, but say for competitive business reasons they would rather not report it and have all 

their competitors pick up the phone to their clients and say, ‘‘If you 

want to come to a more secure brokerage, try us. We are not in the 

newspapers as the victims of a cyber attack.’’ 

The second, particularly in the intellectual property area, is 

American companies that are not even aware that they are the victims of theft of their intellectual property, that they are being raided without being witting of the fact that often foreign interests are 

just siphoning out their intellectual property and using it against 

them for competitive purposes. 

In the wake of those two concerns, do you think that the reported 

offenses are the bulk of our risk, a small subset of it? What is your 

take on how the reported offenses fit into the larger picture of our 

cyber vulnerability? 

Mr. MUELLER. From my perspective, if you look at IC3 and the 

types of referrals that are made to IC3, they probably do not include some of the more important, such as the Google intrusion 

would be an example of it. And what you advert to in terms of the 

reporting or failure to report is something that has been a problem 

over the years. I spent some time in Silicon Valley as a prosecutor 

there. One of the biggest challenges we had is to explain to companies that they need to report it to us in order to assure that others 

do not face the same fate, whether it be a denial-of-service attack 

or a botnet attack or what have you, and that we have to operate 

together. 

Not all companies agree to that for the reason that you said. It 

can reduce the value of the stock tomorrow if it looks like some of 

their clients’ names and data has been put on the Internet. 

Every speech I give, I make a point of saying we have got to do 

this together, you have got to report, and I know there are certain 

statutes that are being contemplated that would mandate the reporting. And so—— 

23 

Senator WHITEHOUSE. Do you agree that the underreporting of 

this particular crime or act of piracy, or whatever you want to call 

it, act of espionage, is a problem that merits attention? 

Mr. MUELLER. Yes. And what they do not know also is there are 

statutes that allow us to maintain the privacy of their intellectual 

property when they come to us to identify an attack, and it is partially an issue of education, but also encouragement and giving 

them an incentive to report in order to up those statistics. And I 

am not sure that those are reflected in the uptick of statistics that 

we see from IC3. 

When it comes to intellectual property and the theft of intellectual property, it is rampant, and that is an understatement. And 

we, of course, have to prioritize. We received an additional 31 

agents back in 2009 for this particular area. We have deployed 

them to four cities where we think they can make a maximum contribution. But we look for the larger cases or the more important 

cases, an example being—— 

Senator WHITEHOUSE. Let me interrupt you just for 1 second for 

a question for the record. I do not want to take your time on it 

right now, but I would like to see a deployment diagram of where 

your resources are deployed and to what purposes in the cyber protection area, if I may have that as a written question for the 

record. Thank you. 

Mr. MUELLER. Happy to provide that. 

[The information referred to appears under questions and answers.] 

Mr. MUELLER. The only other point I was going to make is we 

do have to prioritize. For instance, when it comes to health and 

safety, if there are counterfeit airplane or aircraft parts out there, 

that is something that has the additional element of being a threat 

to the public that makes it the priority. 

Senator WHITEHOUSE. Yes. Well, ‘‘rampant’’ as an understatement I think is a good way to describe it, and I appreciate that you 

described it that way. 

Let me turn to the question of civil remedies in this area. The 

Microsoft company recently did a very effective civil action against 

the Waledac botnet and was able to, through the service providers, 

interrupt the command-and-control functions of the botnet and 

more or less shut it down. 

In the event that the Department of Justice determines that a 

civil remedy, particularly where attribution might be a problem, is 

a more effective way of limiting the country’s exposure than a 

criminal prosecution, is the FBI, nevertheless, prepared to dedicate 

agents and resources to supporting a civil investigation and potentially civil orders that would eliminate access for miscreants to our 

cyber network? 

Mr. MUELLER. Well, I would tentatively say yes, depending on 

the case and the circumstances. I mean, there is so much work out 

there on the criminal arena that has to be done that we would 

focus, quite obviously, on those cases where we can put somebody 

in jail for that activity so they cannot do it again. 

Senator WHITEHOUSE. But you do not feel you need new authorities? It is a priority question. 

Mr. MUELLER. No, we would not need new authorities. 

24 

Senator WHITEHOUSE. All right. Last, to follow up more on Senator Hatch’s question, the issue of how the executive branch manages and administers its response to the cyber threat that we are 

facing is one that has been raised in dozens of pieces of legislation, 

and there are many different proposals. And I would urge you on 

behalf of the administration to take a position as soon as you can 

on how you would like to see it done, because every day there is 

a new proposal legislatively for how this should be done. Ultimately it is the executive branch that is going to have to implement, and the sooner the executive branch joins this debate in a 

meaningful way, the better off I think we will all be. 

Mr. MUELLER. I will do that, although I would reiterate that if 

I look at our piece of it in terms of attribution for attacks, which 

we by necessity cannot do alone but must to with other agencies, 

I believe we have built a very strong platform that could be extended in the National Cyber Investigative Task Force. 

Senator WHITEHOUSE. I agree. 

I thank the Chairman. 

Chairman LEAHY. Thank you. 

Senator Kyl. 

Senator KYL. Thank you, Mr. Chairman. 

Director Mueller, I apologize for not being here for your testimony and for the other questions, but I did want to ask you a little 

bit about the High-value Detainee Interrogation Group, or HIG, 

and I understand that that has not been covered yet in questions. 

Mr. MUELLER. It has not. 

Senator KYL. Actually, the first question is: What is the status 

of it? And then I will have a second question as a follow-up to that. 

Mr. MUELLER. Well, prior to its formal establishment in, I guess, 

the beginning of this year, the spring of this year, the concept had 

been utilized both overseas and within the United States, and by 

that I mean having a group of individuals available when an individual comes into the custody of either the military or some other 

counterparty agency or, indeed, with the United States custody in 

our custody, putting together teams that have both interrogation 

expertise, just in how you do it, but teams or participants that are 

familiar with the background of the individual, thoroughly familiar, 

thoroughly familiar with the subject matter, so that in the course 

of doing an interrogation you have not just from the FBI but from 

a number of contributing agencies the best in the way of expertise. 

We have used that concept before the HIG was formally established. Right now I would have to get back to you as to how many 

people we have on board, but we have basically three components: 

one looks at the area of interrogation, the best practices and the 

like; one looks at training across the board; and the other one looks 

at how we operationally support interrogations around the world. 

Senator KYL. Well, let me be a little more specific. My understanding is that it is under the direction—or the quotation here is 

‘‘run by the FBI’’—and headed by an FBI employee with two deputies, one from CIA and one from the Defense Department. Is that 

correct? 

Mr. MUELLER. That is correct. 

Senator KYL. It is also reported that there are three regional 

teams, locations not discussed, and I do not know that we need to 

25 

know how many teams there are or where they are. Could you just 

discuss that generally as to how quickly they could get to locations 

to perform their responsibilities quickly? 

Mr. MUELLER. Well, if you anticipate the detention of somebody, 

it enables you to put the team together in anticipation of that detention. All too often what happens is somebody is detained, you 

did it by exceptional work by the intelligence community or otherwise, and so you very quickly have to put together the teams. 

We have anticipated in various areas of the world that we may 

be called upon to put in a team, and so we have already lined up 

areas of expertise that would be available on a moment’s notice 

should somebody be detained in that particular area of the world 

where we have got substantial concern. 

Senator KYL. So the idea is to be able to respond very quickly 

with all of the expertise that is needed regardless of where in the 

world it might be. 

Mr. MUELLER. Yes. 

Senator KYL. And does that include the United States? 

Mr. MUELLER. Yes. 

Senator KYL. I recall there was some question about whether or 

not the HIG was intended to apply to interrogations in the United 

States. Admiral Blair expressed concern that it had not been properly set up to do that, but it has been now. Is that correct? 

Mr. MUELLER. Within the United States, it would be ourselves 

generally that would conduct the interrogations, and we would 

make use of that capability and have made use of that capability 

already. 

Senator KYL. Well, when you say ‘‘that capability,’’ do you mean 

also Defense and CIA personnel with their access to their information sources that would be relevant to the interrogation? 

Mr. MUELLER. Yes. 

Senator KYL. So it is not just the FBI. 

Mr. MUELLER. No. In each of the interrogations beginning, I 

think, back with the interviews with Headley in Chicago, you 

would have teams from across the intelligence community that 

would be participating in the interrogation, not necessarily asking 

the particular questions, although there have been occasions where 

it is not FBI agents who are asking the questions, but participating 

in that process. 

Senator KYL. Right. What would you say is the primary—I am 

sure there are two or three goals here, but what is the primary 

goal of having the HIG? 

Mr. MUELLER. I think it is twofold: the principal and essential 

goal is to gather as much intelligence as fast as possible that would 

prevent additional attacks; secondarily, to the extent possible to in 

the course of that intelligence obtain information that perhaps may 

be used as evidence in order to detain or lock up somebody else 

who may have been complicit. And, last, to the extent that there 

needs to be additional information that would assure the continued 

incarceration of that person, to make certain that you obtain that 

as well. But I do want to emphasize the principal priority is to 

gather intelligence to prevent future terrorist attacks. 

26 

Senator KYL. As to the third goal there, that could incorporate 

considerations, legal considerations relative to providing Miranda 

rights, for example? 

Mr. MUELLER. Yes. 

Senator KYL. Because of the need to have evidence that could, in 

fact, be used to detain the individual further or prosecute the individual. 

Mr. MUELLER. Yes. 

Senator KYL. But the first goal would not require that. 

Mr. MUELLER. That is correct. 

Senator KYL. And I have forgotten now what the second one was. 

I apologize. Repeat that again. 

Mr. MUELLER. The second one was to gather information that 

will enable you to detain somebody else. 

Senator KYL. Yes, further intelligence gathering, right. I got it. 

OK. 

And just a final question here on this news of the release of thousands and thousands of e-mails, classified documents on a website. 

Is the FBI involved in an investigation there? And what do you anticipate the action of the Government would be relative to prosecution of both the individuals who provided the information and those 

who might have been involved in the dissemination of the information? 

Mr. MUELLER. We are currently supporting the DOD investigation into that leak, and to the extent that DOD needs our assistance or we can be of help, we are providing that support at this 

juncture. I cannot say as to where that particular investigation will 

lead. 

Senator KYL. OK. Just a final thing, back on the HIG again, if 

there is anything that you want to provide to us to more fully explain exactly how it is set up, that which we can easily discuss in 

public, to give us a more complete picture of exactly how it is set 

up, what it is intended to do, how it is going to operate and so on, 

who is involved, if you could provide that to the Committee, I think 

it would be very appreciated. 

Mr. MUELLER. I would be happy to provide a briefing by the head 

of the HIG in which he can answer those questions you have and 

respond to any questions you might—— 

Senator KYL. Well, you responded very fully. I am not suggesting 

that you did not. I was just saying if you want to have—— 

Mr. MUELLER. No, he can do a better job in terms of fleshing out 

the details. 

Senator KYL. All right. Great. Thank you, Director. 

Chairman LEAHY. Thank you. 

Obviously, on issues like this, anytime you would like to arrange 

especially the kind of briefings we have to do over in the SCIF, we 

are always happy to do that. 

Senator Kaufman. 

Senator KAUFMAN. Thank you, Mr. Chairman. 

Thank you, Director Mueller, for being here, and thank you for 

your service, and I agree with everyone else. You are one standard, 

bright, consistent star that we know we can always turn to. I appreciate it. 

27 

Listen, Senator Sessions as usual raised some good questions 

about fraud and about the reduction in fraud from what we had 

earlier in the year, but I think a lot of what we discussed at the 

time just to confirm, when we passed the FERA, the Fraud Enforcement Recovery Act, that what happened here was that after 

September 11th, we moved a lot of FBI agents over to cover terrorism. In essence, we never backfilled those slots. Is that a pretty 

fair statement of what happened? 

Mr. MUELLER. That is correct. 

Senator KAUFMAN. And so that really when we went with the 

FERA Act, which had broad support, that is really -one of the objectives of the FERA Act was to try to go after fraud enforcement, 

get more FBI agents, get more prosecutors so that we could actually get back to the levels of fraud investigation and prosecution 

that we had early in the 21st century. Is that fair to say, too? 

Mr. MUELLER. Well, yes, I would say that—again, I go back to 

what you noted. We have not been able to replace those that we 

moved over to counterterrorism in the wake of September 11th. 

But I will also say that we were doing a number of smaller cases 

that were distractions in terms of what we should have been focused on and pushing cases, white-collar criminal cases—anybody 

that has been a prosecutor knows that they take a long time to do, 

and you have to push them and push them and push them. And 

so the focus has been on prioritization as well. 

Senator KAUFMAN. Right. And really it is a lot—the example I 

have used in the past is it is a lot like drug dealers. I mean, you 

can pick up a lot of drug dealers that have a small amount of 

drugs. Really what we are after is the drug kingpins. So what we 

would like to do is encourage you to go after the more complex 

cases, and especially in the fraud area where you have folks who— 

as has been stated in this Committee by witnesses, they cover their 

tracks a lot better than drug dealers cover their tracks, that while 

they are doing this, if you are involved in fraud, complex fraud of 

the kind we are talking about, they do a much better job of, as they 

go along, cleaning up after themselves so it makes it difficult for 

them to be prosecuted. We can find them, but then prosecuting 

them is a problem. And, second, they have access to some of the 

very best legal help in the country. 

Mr. MUELLER. Yes, my admonition to my people, my suggestions 

to prosecutors is in some sense to treat white-collar criminal cases 

or handle them the same way you do drug cases; that is, identify 

the persons who conducted the wrong doing, gain the cooperation 

of one or more, and move up the line. Also, to utilize techniques 

that we have not necessarily used in the white-collar crime arena 

in the past, and that is Title 3s so that you can utilize many of 

those techniques that we traditionally have used against organized 

crime, against drug cartels and the like in the white-collar arena. 

Senator KAUFMAN. We have had oversight hearings that included 

Lanny Breuer, who is the head of the Criminal Division, and folks 

from the FBI to talk about the idea of moving the more complex 

cases and using the very things that you have talked about. Correct? 

Mr. MUELLER. Correct. 

28 

Senator KAUFMAN. Good. Can you tell us in securities fraud, 

which is one of the concerns that I have had in terms of—I think 

there is a lot of upset about what happened in the great securities 

meltdown, the loss of jobs, and the people losing their homes, the 

incredible difficulty people were faced with. And I think one of the 

examples, again, when we passed the Fraud Enforcement Recovery 

Act was to let people know that there is only one level of justice 

in this country, whether you are very, very wealthy and have a 

strong, complex legal team or whether you are someone else. 

So where does securities fraud fit in terms of the priorities when 

you are trying to deal with fraud? 

Mr. MUELLER. It is one of the top five priorities. White-collar is 

the No. 4 priority for us. And it is high there. We have almost 180 

agents working solely on securities fraud as opposed to corporate 

fraud or mortgage fraud. And we currently have over 1,500 cases. 

We have had a number of, I think, successful prosecutions, the Petters prosecution out of Minnesota being one of them, the Galleon 

ongoing investigation in New York, and others where we have 

made a substantial impact. 

If you look in terms of Ponzi schemes, quite obviously Madoff 

comes to mind, and there are others who are also spending substantial years in jail as a result of their fraudulent activities. 

Senator KAUFMAN. And Galleon is a wonderful example of what 

you said earlier where someone came forward; you found someone 

who would testify and used them as a way to develop the case. 

Mr. MUELLER. Yes. 

Senator KAUFMAN. Last year, in November, President Obama set 

up the Financial Fraud Enforcement Task Force with the FBI as 

a member. How has the task force been doing? 

Mr. MUELLER. The task force meets periodically, but its main 

thrust is to assure that we have at the same table periodically the 

individuals who are responsible in addressing fraud and to assure 

that we are working together. 

For instance, one of the items that has been important to us is 

to assure that when records are subpoenaed by either the SEC or 

the prosecutor or come into the hands of the FBI, that we put those 

records in a data base that is searchable by each of our agencies 

as opposed to having to replicate different data bases when the 

case moves from agency to agency. And so not only a case that 

went through the SEC and through the FBI goes to the prosecutor, 

we are all working off the same data base of documents, which 

makes it much easier to investigate and a heck of a lot easier to 

prosecute. 

Senator KAUFMAN. Great. And mortgage fraud, you have done a 

great job, and you had some really great successes in terms of dealing with brokers and the mortgage fraud. And I met with your 

folks in Los Angeles and other places, in Las Vegas, where there 

is that kind of—tell me a little bit how you move upstream from 

that. I mean, a lot of these mortgages were put together into mortgage-backed securities, residential mortgage-backed securities and 

the credit default swaps. That was one of the things that kind of 

drove the whole thing, as Senator Levin’s Permanent Subcommittee on Investigations pointed out, was one of the key things. 

29 

How do you move upstream to go after the folks on Wall Street 

who were involved in the mortgage fraud? 

Mr. MUELLER. Well, there are two levels. Certainly on the local 

level, where you have, say, an assessor, a buyer, a seller, a real estate broker, you focus on one of them to explain the scheme and 

provide the evidence that you need. 

It is more difficult when mortgages are packaged and then sold 

as various investment vehicles to show knowledge on the part of 

those who are handling those investment vehicles as they pass 

hand to hand. But, again, it is a combination of obtaining the email traffic, which often is very, very helpful, obtaining witnesses 

and in some circumstances utilizing a Title 3 wire to obtain evidence. 

Senator KAUFMAN. I just want to tell you, thank you for your testimony and for your service. I just want to say those complex cases, 

I know they take a lot of time and effort, and I know that it is easier to maybe get the mortgage brokers’ cases. But I just would encourage you to not go after the numbers but to go after the key 

cases, because I think that as I travel around the country and 

around Delaware, that is the thing that people are really upset 

about. Let us get some of these folks in these complex cases and 

put them behind bars. So thank you again. 

Thank you, Mr. Chairman. 

Chairman LEAHY. Thank you. Again, thank you for your work on 

the fraud legislation. You were, of course, a lead sponsor of that, 

and I think you shared my pride the day the President signed it. 

We have talked about this before, the fact that—the selective 

cases, have some people who actually get hit hard, go to jail, you 

get a deterrent effect on it. 

Senator Franken, you have been here patiently. Please go ahead, 

sir. 

Senator FRANKEN. Thank you, Mr. Chairman. 

Director, I share everyone’s view. You have been—thank you for 

your service, and not just as Director of the FBI, which you have 

done stalwart, very effective work for now almost—well, 9 years, 9– 

1/2, but for all your service to this Nation. 

I want to follow up on mortgage fraud and what Senator Kaufman was talking about and just get some kind of idea of what we 

are talking about here. You were talking about schemes with assessors and those kinds of things. In Minnesota, we are No. 2 in sameday house flips where someone buys and sells a home in 1 day, in 

the same day. And this often indicates some type of fraud is going 

on. 

Is that a pretty common—what is going on there? 

Mr. MUELLER. Well, actually about maybe a year ago, I had an 

opportunity to visit Minneapolis and talk about this particular 

area. I was looking at maps where there are swaths of territory 

that have gone way downhill as a result of mortgage fraud. Whether it be Minneapolis or elsewhere, data bases that show us that 

there are properties being flipped within 24 hours gives us an idea 

as to where to look. And so we utilize the data bases such as you 

have noted to put together a picture of persons who may be involved in a number of transactions in which there are one-day flips. 

And from there we will expand the investigation and determine 

30 

what is the common denominator in these one-day flips, and then 

we will follow up the investigation to determine who else was involved in what often—most times turns out to be some sort of 

scheme that is being perpetrated by a real estate broker, an assessor or somebody else in the—— 

Senator FRANKEN. So whether they are underassessing it and 

someone buys it and then overassesses it and sells it, or what—— 

Mr. MUELLER. There are a number of particular schemes that 

they can use. Generally the role of the assessor is to assess it higher than it is worth so that you get an increased mortgage, and so 

that the mortgage pays for the property; whereas, the seller or others believe that there is a downpayment being made, and so the 

whole property is being supported by the bank without the collateral that ultimately would make the bank whole. 

Senator FRANKEN. What type of mortgage fraud is the most common? Are we still unraveling stuff from the predatory lending that 

was happening, you know, 4 and 5 and 6 and 7—— 

Mr. MUELLER. Yes. The answer is today we have over 3,000 

cases, approximately 360 agents that are working on those cases. 

There are pockets in the country that have been hurt more than 

others, Las Vegas, Central Valley of California, just to mention 

two; but Phoenix and other cities have had—well, I would say had 

substantial issues with regard to mortgage fraud. In those cases, 

we put in place a task force. We will bring in the State and locals 

to participate on that task force. We have an inventory of mortgage 

fraud cases, and we will go down each of those cases and determine 

which ones we can pursue and which ones the State and locals can 

pursue, perhaps the State government, and try to work through 

that inventory to address each of them that has come to our attention. 

Senator FRANKEN. Thank you. I also want to thank you for the 

Petters conviction. I know Senator Klobuchar and I want to thank 

you for that. 

I want to get to a whole different subject. Over the last several 

years, we have heard a lot of speculation about what kinds of interrogation techniques work to draw out the best and most reliable information. And I want to ask you, from your experience as FBI Director—you started just the week before 9/11—what kinds of interrogation techniques do you think work best when dealing with terrorist suspects? Which kinds of techniques yield the most helpful 

and reliable information? 

Mr. MUELLER. I did not have the opportunity to spend time as 

an agent myself doing interrogations. I was a prosecutor, and you 

could say that some of the questioning that you do falls in that category. But I rely on the experts within the Bureau, and the longstanding Bureau practice, we focus on rapport building—rapport 

building with the obtaining of collaboration—corroboration, I 

should say, corroboration with regard to whatever statement is 

being given. And that has been our practice for any number of 

years, and that is the practice we have followed over the last 10 

years and presumably will be the practice we follow in the future. 

Senator FRANKEN. Because I think some Americans, you know, 

question the use of so-called enhanced interrogation techniques, 

and I think they are—hopefully they are history. Do we get more 

31 

reliable information from the kind of questioning the FBI has done 

or from the enhanced—from your judgment? 

Mr. MUELLER. I am not certain that I am a person who can be 

definitive. All I can say is that we find our techniques very effective, and we do believe we get reliable information, but it is a combination of information that you obtain, knowing a great deal about 

the individual, having corroborating evidence to know that what 

you are getting is the truth, and it is a process—not just a process 

of questioning, but a process of developing rapport, developing information, and taking it step by step to assure that you are getting 

all that that person has, or to the extent that you can, and that 

it is accurate information. 

Senator FRANKEN. My time is up, and I will submit in writing 

a question about trafficking from Indian reservations. The last time 

I did ask you about that, and I want to thank you for following up 

with me on it. I appreciate your work in that regard. 

[The information referred to appears as a submission for the 

record.] 

Senator FRANKEN. Thank you, Mr. Chairman. 

Senator WHITEHOUSE. We turn now to Senator Specter. 

Senator SPECTER. Thank you, Mr. Chairman. 

Director Mueller, I join my colleagues and again welcome you 

here. 

Mr. MUELLER. Thank you, Senator. 

Senator SPECTER. As part of the Judiciary Committee’s oversight 

of the FBI, I have inquired about the investigation of former Congressman Curt Weldon where there was a search-and-seizure operation at the home of his daughter a few weeks before his reelection 

effort in 2006. And the television cameras arrived before the FBI 

arrived with the search-and-seizure warrant, and the consequence 

was that Congressman Weldon was defeated. And the FBI conducted an investigation as to the leak, and four representatives of 

the Department of Justice had contacts with the news media. None 

was polygraphed, and there was not an effort made to pursue the 

source of the leak as intensity as you do in national security cases. 

My first question is: Is it the customary practice of the FBI to 

give polygraph examinations to people who have had known contacts with the news media in a situation like this? 

Mr. MUELLER. I am not familiar with the case in which there is 

a relatively large universe of persons who may have disclosed the 

information where we would do polygraphs across the board. I am 

familiar with situations in which we may have a suspect—— 

Senator SPECTER. I am not asking about polygraphs across the 

board. I am asking about four DOJ people who had known contacts 

with the media. 

Mr. MUELLER. I do not have—I am not familiar with the circumstance where we would have done polygraphs—required polygraphs of four individuals. 

Senator SPECTER. So you say it is not the FBI policy to polygraph. 

Mr. MUELLER. It is not. It is used on a case-by-case basis. 

Senator SPECTER. The briefing that I had, the briefers told me 

that on a matter of this sort, the issue is not pursued with the 

same intensity as in national security. For example, there were no 

32 

questions asked of the newspaper reporters who published stories 

in McClatchy and in the Washington Post. Why not? 

Mr. MUELLER. I am not certain that is the case. I know you were 

briefed by attorneys from the Department of Justice, and I am not 

certain what the rationale would be for not asking them questions. 

I would be, I think, surprised if they answered those questions, but 

certainly the questions generally are and should be asked. 

Senator SPECTER. Well, I wrote to you about this matter on July 

22nd, so there has not been a whole lot of time. I infer you have 

not seen the letter. 

Mr. MUELLER. No, I have seen the letter, sir, and I have looked 

at the letter, and many of the questions are—I think there were 

three questions you asked there, and I do believe the questions 

really are those to be answered by the Department of Justice who 

was handling the prosecution. Your question, for instance, about 

why we did not press and subpoena the reporters really goes to a 

determination in the Department of Justice where there is a balancing that takes place as to whether or not you do that. 

Senator SPECTER. Well, the investigation on the FBI leak was 

conducted by the FBI, wasn’t it? 

Mr. MUELLER. I believe we did undertake an internal investigation, yes. But the overarching investigation, the criminal investigation, was conducted by the U.S. Attorney. 

Senator SPECTER. Is it a crime to leak? 

Mr. MUELLER. It certainly can be, yes. 

Senator SPECTER. Well, was it in this case? 

Mr. MUELLER. I would have to go back and look at the facts and 

circumstances. 

Senator SPECTER. Well, it is a game of ping-pong. It took a long 

time to play this game, about 4 years so far. But when you have 

a Member of Congress involved, you have a very sensitive matter. 

The briefers told me that this matter was not investigated by pursuing the sources with the intensity that sources are sometimes 

pursued. It depends upon the importance of the investigation. If it 

is a key national security interest, then the sources are pursued, 

even to the extent of a contempt citation. 

You and I have differences of opinion as to the shield law which 

I have proposed and which has not yet been acted on. But as long 

as you have procedures for pursuing sources, I believe this is the 

kind of a case where sources ought to be pursued, that it is a very, 

very serious matter, like a national security matter. And I say that 

because of the separation of powers. Congress has the oversight responsibility to investigate the FBI, and the FBI appropriately has 

the responsibility to investigate Members of Congress if there are 

allegations of bribery, for example. 

But it seems to me that where you have separation of powers 

and you have the chilling effect that an FBI investigation has on 

a Member of Congress like Curt Weldon, it ought to be handled 

with the greatest intensity possible to pursue the sources if you 

can. 

Would you disagree with that? 

Mr. MUELLER. Senator, I think we are on the same page, and I 

would venture to say in a case such as this, the agents who were 

handling would very much want to have pursued the sources. One 

33 

of the ways to pursue the sources is to ask the persons who published the pieces or the persons who triggered that. 

As you are well aware, there is a process that you go through in 

the Department of Justice to gain approval to even contact a person in the media who may have developed source information and 

taken some action on it. 

Senator SPECTER. Well, my time is up, but that was not done, 

and the briefers told me they did not even question the cameras 

that arrived. That was news to them. Would you take another look 

at those issues, Mr. Director? 

Mr. MUELLER. Yes, sir. 

Senator SPECTER. One more comment, Mr. Chairman. I will not 

be too much longer. I asked the briefers if the investigation was 

over, and I was not surprised that they did not tell me. I am not 

going to ask you a question. I am just going to state the proposition. 

It seems to me that when years have passed, people under investigation ought to be told if the investigation is over, and I know you 

have a policy of not doing that. And it seems to me—and I used 

to be in this line of work, so I understand the investigation—you 

do not tell people it is over because it may not be over. Well, it may 

not be over if new information is acquired, but if there are no undeveloped leads outstanding, it seems to me that the FBI ought to tell 

people that it is over so the Sword of Damocles is gone. And if 

something new comes up, they can always start it again. 

Do you disagree with that approach? 

Mr. MUELLER. No. What I would say is that it is not necessarily 

us, it is the prosecutors that make the determination when the investigation is closed, and there is a procedure in the Department 

of Justice for a defense attorney to ask whether or not their client 

remains a subject or target of an investigation. And in most cases, 

the Department will respond, either affirmatively or negatively to 

that letter. But there is a process that is in place to accomplish 

what you are alluding to. 

Senator SPECTER. Thank you. 

Senator WHITEHOUSE. We will now recognize Senator Klobuchar, 

followed by Senator Durbin, and I believe Senator Kohl would like 

to have a brief second round, and with time permitting, we will 

then go to Senator Kohl unless other people intervene for their first 

round. 

Senator Klobuchar. 

Did I say ‘‘Kohl? ’’ Kyl. Senator Jon Kyl of Arizona. My apologies. 

Senator KLOBUCHAR. Thank you very much, Mr. Chairman, and 

thank you, Director Mueller. It is good to see you again. 

I wanted to start out by commending your agents for the great 

work they did on that Tom Petters case. I think people were very 

focused, understandably, on the Madoff case, but this was the second biggest one in the country, an unbelievable loss of money in 

our State with so many people, including nonprofits that had invested, and it was very complicated. And it was an enormous victory, and everyone was prosecuted. So I want to thank you for that. 

Mr. MUELLER. Thank you, ma’am. 

Senator KLOBUCHAR. I know the top priority, as many people 

have talked about, is the work that needs to be done and continues 

34 

to be done with terrorist threats in this country. But I wanted to 

focus on something I know Senator Whitehouse talked about a little, and that is, cyber crime and cybersecurity, which is not only 

necessary for our national security, but also to the economic and 

physical security of ordinary Americans. 

We all know that the Internet is a powerful tool, but in the 

wrong hands, it can also be a powerful tool the other way, for not 

good reasons. And my concern is that the predators have become 

more sophisticated than the laws that we have on the books, and 

I am going to use—one example is a bill that I am introducing in 

the next few days, a bipartisan bill on the stalker bill, and this is 

called the Stalking Act of 2010. It has already passed the House. 

We did an event yesterday with Erin Andrews, the ESPN reporter 

who was videotaped by a Peeping Tom who reversed the peephole 

in the door and then got that video out on the Internet of her 

changing clothes, and it went everywhere. And she is maybe a celebrity, but there are so many other people, including people in my 

own State, that have been victimized by this one guy, ended a relationship on the Internet, and he ended it and he was mad at the 

woman so he put all of her personal identification information and 

her children on porn websites asking people to rape their kids. He 

was convicted and sentenced. 

So what I would like to know—I hope that the FBI will be supportive of this bill that we have or be helpful in getting it done. 

But I want to know, Do you think that there is a need to modernize 

our criminal laws to keep pace with the new technologies? That is 

something we do in this bill. And are there particular areas that 

you think Congress should be focusing on when we look at some 

of the modernization of our statutes that needs to take place to 

keep up with these predators and also white-collar criminals that 

are using the Internet? 

Mr. MUELLER. Let me start by saying I understand that the bill 

that you are suggesting will identify particular conduct and then 

have strong penalties for engaging in that conduct. Not being familiar with the bill myself and deferring to Justice for the opinions 

letter, nonetheless this is something that is badly needed. I venture 

to say in 10 years much of the discussion at a hearing like today, 

maybe 80 percent of it will revolve around the Internet and cyber 

as opposed to maybe 20 percent of it now. And our laws are antiquated in the sense that they were developed to address conduct 

or equipment such as telephones and telephone lines and the like, 

and there is a great need to update them to continue to give us the 

authorities that we need to do our work, but utilizing the new modalities in order to accomplish that. 

Senator KLOBUCHAR. We look forward to working with you on 

that, you know, even beyond the stalker issues. And in your testimony, you actually discuss the cyber attack on Google late last 

year, and this attack I believe highlights the growing security risk 

that we have in this country, which is cyber attacks that could actually potentially cripple our infrastructure. We are not here talking about, you know, one stalker out there in a hotel room. Here 

we are talking about actual threats to our national security and 

our infrastructure. 

35 

What is the FBI going to do to address these kinds of threats? 

And what should we be doing here in Congress? 

Mr. MUELLER. The task force that I alluded to before, the computer task force that we have with 14 or 15 other agencies is a very 

good first step in my mind. And as I said before, particularly when 

it becomes necessary to protect our infrastructure, there are lessons within the Federal Government that can be learned from persons in the Cyber Command, for instance, that are applicable to 

protecting the Government across the board, whether it be Congress or the Supreme Court or the various Government agencies. 

The more difficult problem becomes the dot-com and the networks that are not subject to legislation necessarily, but need as 

well to be protected because so much of our financial information 

goes out over these particular Internet wires. And to the extent 

that we can identify, isolate, and protect the backbone cyber structures of the United States, we need to do that. But then the next 

level is protecting businesses who utilize dot-com and the like as 

opposed to dot-gov, dot-mil, and the Government areas. 

We play a role in protecting the Government and determining 

the attribution of particular attacks. We would want to see that 

role expanded. But we do not necessarily play the role. DHS plays 

a role in protecting the Internet apart from the dot-gov, dot-mil, 

and the rest of the governmental structure. 

Senator KLOBUCHAR. Now public-private partnership is vital to 

the development of a comprehensive, innovative solution that improves and expands our Nation’s capabilities and keep us ahead of 

these emerging threats. I am convinced of that from my work as 

a prosecutor that a lot of this was being able to work with private 

entities who are controlling some of this data. 

What is the Department doing to work with the private sector? 

And what more can we do to create incentives for private businesses and institutions to work with Government on cybersecurity 

issues? 

Mr. MUELLER. We have got a number of initiatives to do just 

that. Out in Pittsburgh, working with Carnegie Mellon and others, 

we established partnerships that enable us to exchange information on the latest worms, viruses, attacks, and the like. We have 

a wide-ranging group of individuals whom we consult with and who 

alert us to new things that are happening. 

But I will say in the same breath that you to a certain extent 

have to be careful. You cannot have the private entities acting as 

an agent of the United States. On the one hand, you need the expertise and the cooperation, the collegiality; but on the other hand, 

when it comes to doing and conducting investigations, it needs to 

be the Government and not fall into a role where private industry 

is working so closely with Government that it becomes an agent of 

the Government. And so it is just a cautionary tale. 

Senator KLOBUCHAR. How about a BP issue? You do not have to 

answer that. 

So I understand that, but I also think the expertise—somehow 

we have to get that expertise and use it, because I just think that 

we are at the tip of the iceberg with some of these things we are 

seeing recently that have happened, and we look forward to working with the Department on improving our laws, both with the 

36 

stalker one I mentioned, but in a much bigger way with security 

issues. So thank you very much. 

Mr. MUELLER. Thank you. 

Senator WHITEHOUSE. Senator Durbin. 

Senator DURBIN. Director Mueller, good to see you again. 

Mr. MUELLER. Sir. 

Senator DURBIN. About 6 weeks ago, I attended a funeral in Chicago. It was a young Chicago police officer named Thomas 

Wortham, 30 years old. He had served in Iraq. An extraordinary 

young African American with a great life ahead of him. Gunned 

down in front of his home, in front of his father’s home. His father, 

a retired policeman. They were armed as security would require 

and as their jobs required, and still he was shot down and killed. 

Last week, Michael Bailey, another Chicago policeman, left his 

detail guarding Mayor Daley and went home and at 6:30 in the 

morning was polishing off his new Buick that he could not wait to 

drive around when he retired in just a few weeks, and a man came 

up and shot and killed him. 

We have lost three policemen in Chicago in the last 2 months. 

The gun crime there is sadly aggravated by the hot weather. Just 

terrible the loss of life that we are experiencing. 

There has been an exchange between the mayor of Chicago and 

Robert Grant, your Special Agent in Charge, whom I know and respect very much. And I think at the end of the day it reflected the 

frustration they both feel. Everybody is trying everything they can 

think of. And my request to you is: Can you help us in finding 

some new ways to go after the illegal guns in Chicago, the violence 

on our street? Is there something the FBI can do to help us in the 

city? 

Mr. MUELLER. I am familiar with all three of those instances. I 

called Jody Weis, who is the chief of police, after the third one, not 

only with my condolences but also with is there anything more that 

we can do. Rob Grant is one of our best, most effective, and most 

longstanding Special Agents in Charge who feels deeply about the 

necessity for reducing the violence in Chicago. 

We have tried across the country a variety of techniques. My belief is that in Chicago we have tried just about every one of them. 

Rob Grant is on the cutting edge of utilizing whatever intelligence 

we can gather to try to focus on the shooters and put them behind 

bars. I will again go back and have a discussion with him. I believe 

he is in town, but have yet another discussion with him. 

We have added resources, I know, in the office there to address 

this, but in comparison to the extent of the problem, it is inadequate. And so we will do what we can. 

Senator DURBIN. If you will tell me what you need, I will do everything in my power in the Appropriations Committee to help. It 

is just heart-breaking. And as Thomas Wortham’s father said to everyone in Chicago, ‘‘If they will shoot us down in uniform as policemen, armed, they will kill anybody.’’ And that is the feeling many 

of us have, that we have to really do much more to try to bring 

this under control. 

I in the past have been complimentary of you and the efforts of 

the FBI since 9/11 to deal with the Arab and Muslim population 

in America. I thanked you, commended you for making it clear that 

37 

we are not casting a wide net and saying that those of Arab descent or those of the Muslim faith are necessarily to be suspect; 

and also to suggest, as you have before this Committee, that the 

cooperation of Arab Americans and Muslim Americans is critical to 

bringing in the information. We need the intelligence. We need to 

stop future acts of terrorism. 

There has been a recent article in the New York Times which 

questioned the current situation at the FBI. It was entitled, ‘‘Muslims say FBI tactics sow anger and fear.’’ 

The terrorism expert David Schanzer said, ‘‘This is a national security issue. It is absolutely vital that the FBI and the Muslim 

American communities clear the air and figure out how to work together.’’ And Michael Rolince, a former FBI counterterrorism official, said, ‘‘There are some people in the Bureau who believe as I 

do: The relationship with the Muslim community is crucial and 

must be developed with consistency. And there are those who 

don’t.’’ 

One of the things that is still being debated, or at least considered for change, were some guidelines handed down by former Attorney General Mukasey concerning the assessments of innocent 

Americans, whether there is a suspicion of wrongdoing, and this is 

a source of concern in the urban Muslin community. 

Now, I know the new Attorney General, Eric Holder, pledged 

that he would review these Mukasey guidelines. Are you familiar 

with this Domestic Investigations and Operations Guide, DIOG? 

Mr. MUELLER. Yes, absolutely. 

Senator DURBIN. And it is my understanding it is unclassified? 

Mr. MUELLER. It is unclassified; however, we have withheld certain portions of it from publication because it would give individuals an insight into how we operate. But I will say as we develop 

these guidelines—we fully briefed Congress. Congress has seen the 

guidelines. 

Senator DURBIN. What Members of Congress? 

Mr. MUELLER. Judiciary Committee when the guidelines were 

being developed, we had extensive meetings with staff of the Judiciary Committee. We had suggestions as to how to change the 

guidelines from the Judiciary Committee, both Judiciary Committees in developing these guidelines. 

Senator DURBIN. Did you provide a copy to the Senate Judiciary 

Committee? 

Mr. MUELLER. I believe we did. 

You have seen a copy. You have seen copies. 

Senator DURBIN. OK. We do not have a copy. I imagine that is 

the difference here. The question is whether we get a chance to review it. 

Let me ask you this: Is there a requirement of suspicion of 

wrongdoing before there is surveillance of an individual or surveillance of a location? 

Mr. MUELLER. Yes. 

Senator DURBIN. All right. And so merely the fact that it is of 

a certain religious sect or ethnic group is not enough. 

Mr. MUELLER. That in and of itself is not enough. There has to 

be something more. 

38 

Let me just allude to one thing you said about the relationship 

with the Muslim community. I think it has maintained its positive 

note throughout. There are segments in the Muslim community 

that do not necessarily want the relationship to work out. But in 

every one of our 56 field offices, we have since September 12, 2001, 

had outreach to the Muslim community. And if you walk around 

and you talk to individuals in the Muslim community, the leaders 

in the Muslim community, you talk to our Special Agents in 

Charge, I think almost one of you will find that the relationships 

are very good. 

Now, there are distinct pockets where they do not want to see 

that relationship succeed, but I believe that that relationship has 

grown and improved and that the Muslim community understands 

that it is not just the FBI that is responsible for keeping this country safe, but all Americans, including the Americans who happen 

to be Muslim. 

The last point I would make is that the guidelines—we work 

with the new administration day in and day out in our investigations that are administered according to these guidelines. I believe 

they are effective. I think they are appropriate, and I think they 

are the appropriate balance between civil liberties on the one hand 

and giving us the tools we need to protect the American public 

against terrorist attacks. 

Senator DURBIN. My time is up, but if I could just say in closing, 

for 8 or 9 years you and I have had an ongoing dialog about the 

new computer technology at the FBI. There have been some ups 

and some notable downs, and I know there is a new Inspector General’s report about your Sentinel system, and I will send you some 

written questions and follow up—— 

Mr. MUELLER. And I would be happy to sit down and brief you 

on where we are and where we are going. 

Senator DURBIN. Thank you very much. 

Mr. MUELLER. Yes, sir. 

[The information referred to appears as a submission for the 

record.] 

Senator WHITEHOUSE. Thank you. 

Senator Kyl, I know this is the second round and you will be 

going ahead of Senator Schumer, but he has said that if you will 

be brief, he is more than happy to accommodate you. 

Senator KYL. Thank you very much. I just had two questions. 

One is a follow-up on—and thank you, Senator Schumer. One is a 

follow-up on the HIG. 

I had reference to a letter dated February 3rd of this year to Senator McConnell relating to the Northwest Airlines Christmas 

bombing event and related policies of the Department of Justice 

and the FBI. And with regard to interrogation, there is one paragraph in here that I thought might conflict with what you said 

about the three goals with respect to the HIG, whether abroad or 

in the United States, and I just wanted you to be able to clarify 

that. 

In this letter, you say, and I quote, ‘‘The FBI’s current Miranda 

policy, adopted during the prior administration, provides explicitly 

that within the United States Miranda warnings are required to be 

given prior to custodial interviews.’’ 

39 

Now, there is a footnote right there which describes the Quarles 

exception in cases—and it is quoting, ‘‘The warning and waiver of 

rights is not required when questions which are reasonably 

prompted by a concern for public safety are asked,’’ and then you 

give an example. 

But the reality is that the HIG interrogation about potential future terrorism plots or plans do not really and easily fall within the 

Quarles exception in many cases because it is not a matter of—an 

immediate matter of public safety. Is that not correct? And so could 

you describe what the policy is with respect to the Miranda warning in domestic HIG interrogations? 

Mr. MUELLER. Well, I think the fact that it is in a footnote—it 

probably should be elevated because we have adjusted it to address 

terrorist cases. Originally the Quarles exception, as I think you 

know, is related to a robbery and was much more discreet. There 

has been no elaboration on the extent of the Quarles exception, 

and, consequently, in bringing that over and adjusting to the terrorism arena, there is a breadth of interrogation that inevitably 

would take place that goes well beyond what happened on that particular day on that particular plane, which legitimately in my mind 

falls within the Quarles exception. 

I can tell you that in the wake of the Christmas Day bombing, 

for instance, we have educated our workforce, including the SACs, 

in terms of the Quarles exception so that it is on everybody’s mind 

that when somebody is detained here in the United States, you 

have an opportunity to spend what time is necessary to gather the 

information on potential threats. 

What triggered this was what happened on December 25th with 

253 coming in from Amsterdam. In that particular case, as I know 

you are aware, the agents determined that they needed to interrogate Abdulmutallab immediately without Miranda warnings to obtain exactly that kind of information. There may be some disagreement as to how far you go, but in the terrorism context, I am comfortable that we will be asking the questions that are necessary to 

the public safety. 

Senator KYL. That is very helpful, and I think it would be worthwhile to describe a little more fulsomely, to the extent that it is 

possible to do so, in these sort of hypothetical situations. But it is 

clear that you would need a broader interpretation of the Quarles 

exception in these terrorism cases, and, in effect, what you are saying is that you do interpret that exception in a broader context in 

trying to interrogate people about these terrorist threats. Is that 

correct? 

Mr. MUELLER. That is correct. 

Senator KYL. Yes, thank you. 

The other question I wanted to ask you has to do with the 

Lockerbie bomber, al-Megrahi. I was very impressed with the letter 

that you wrote to Scottish Justice Minister MacAskill when you 

learned of his released, and I just wanted to quote a little bit of 

it because I think it is quite appropriate. You said that his action 

in releasing Megrahi is ‘‘as inexplicable as is detrimental to the 

cause of justice. Indeed, your actions make a mockery of the rule 

of law. Your action gives comfort to terrorism around the world 

who now believe that, regardless of the quality of the investigation, 

40 

the conviction by a jury after the defendant is given all due process 

and sentence appropriate to the crime, the terrorist will be freed 

by one man’s exercise of compassion.’’ 

And you also went on to fault Scottish authorities for ‘‘never once 

having sought our’’—meaning the FBI’s—‘‘opinion, preferring to 

keep your own counsel and hiding behind opaque references to the 

need for compassion.’’ 

Also at the time, President Obama announced that he was surprised and disappointed and angry to learn of his release. 

But just last week, or maybe earlier this week, we learned that 

the State Department actually was consulted in advance, and, in 

fact, one Richard LeBaron, deputy head of the U.S. embassy in 

London, wrote to Scottish authorities on August 12th, just before 

Megrahi’s release, saying, and I quote, ‘‘We greatly appreciate the 

Scottish Government’s continued willingness to solicit the views of 

the United States and the families of its victims with respect to a 

decision on Megrahi’s transfer,’’ and then later, even offered qualified support for ‘‘conditional release on compassionate grounds.’’ 

When did you first learn of that State Department letter; do you 

know? 

Mr. MUELLER. When it was in the newspapers. 

Senator KYL. And was the FBI given an opportunity to weigh in 

or object prior to the letter being sent? 

Mr. MUELLER. I had conversations with the Attorney General beforehand. I do not think there was any question but of the position 

that the Bureau felt strongly about and the Department of Justice 

felt strongly about. I think it was a shock to everybody that the decision went the way it did. 

Senator KYL. I was very surprised, too, and that is why I do not 

quite understand how you could have the President being surprised 

and—what did he say?—surprised, disappointed, and angry, and 

have you say what you said, which I thought was very appropriate, 

and yet the State Department knew before then and acknowledged 

that it was being consulted. 

Can you explain or has there been an explanation subsequent to 

this that maybe you could make us aware of? 

Mr. MUELLER. No, and when, I think, I alluded to in the letter 

that we had not been consulted, I meant the investigators who had 

spent so much time. I was speaking for the FBI. We had spent a 

great deal of time with the families, investigating that case, with 

our colleagues overseas, and generally in such cases when you 

spend so much time on an investigation, those who conducted the 

investigation are queried as to what the disposition should be. That 

did not happen in this case. 

Senator KYL. Right. And it is clear in what you said; that is exactly what you meant. Thank you very much, Director. 

Senator WHITEHOUSE. Senator Schumer. 

Senator SCHUMER. Thank you, Mr. Chairman. And thank you for 

your service, Director Mueller. 

I am concerned a little bit about prepaid cell phones. It is too 

easy for both would-be and successful criminals to use cell phones, 

prepaid cell phones anonymously to accomplish their ends and 

evade detection. Recently Faisal Shahzad, the Times Square bomber, made use of a prepaid cell phone, among other things, to call 

41 

Pakistan, arrange the purchase of the Nissan Pathfinder that he 

rigged to kill as many people as he could on a busy Saturday night 

in Times Square. It was only because of a lucky break that authorities were able to trace him. 

The devices were also used to transmit information in the Galleon insider trading scheme, a different type of crime. Criminals of 

all types know they are anonymous and virtually untraceable. They 

can hide away from law enforcement’s appropriate reach. 

So here is my question: Does the anonymity of prepaid cell 

phones pose law enforcement problems in a variety of cases as 

these and other anecdotes suggest? 

Mr. MUELLER. Yes. 

Senator SCHUMER. Could you elaborate just a little bit? 

Mr. MUELLER. As you said, criminals, terrorists, persons who for 

whatever reason want to avoid detection, can use throwaway cell 

phones at will, which minimizes the capability we have to intercept 

those conversations that are often essential to a successful thwarting of an attack or—— 

Senator SCHUMER. I suppose as times goes on, more and more 

criminals are going to learn that this is sort of the way to go to 

avoid detection, particularly if they are in areas where there might 

be detection: terrorism, organized crime, financial crimes, things 

like that. 

Mr. MUELLER. Yes, sir. 

Senator SCHUMER. OK. So I have sponsored a bill—this is a nice 

bipartisan note with Senator Cornyn, my colleague on the Judiciary Committee—that would require purchasers of prepaid cell 

phones to present ID, just the same way that purchasers of monthly cell phone service have to do. The information would be kept by 

the wireless carrier who would retain it, with the same privacy protections that we have when we register for cell phones for 18 

months. 

Now, I know that you have to go to the great Justice Department 

to get the official OK on a piece of legislation, but would you agree 

that requiring prepaid cell phones would enable you to quickly and 

accurately investigate myriads of cases that involve prepaid cell 

phones as instrumentalities of crime? 

Mr. MUELLER. Yes. 

Senator SCHUMER. What is the most you can say about such legislation that Senator Cornyn—without getting yourself fired or 

anything like that? 

Mr. MUELLER. I think I can say that, without having seen the 

specifics of the statute, we would be very much supportive of that 

kind of reporting requirement, and it would be indispensable, goes 

too far, but essential to the success of a number of investigations 

and cases that we would have. 

Senator SCHUMER. Thank you. 

I would like to go, since I have a little more time here, to narcotics on the northern border. New York, of course, has a long border—peaceful, generally—with Canada. A few days ago, the FBI 

announced very positive results as part of Project Deliverance. This 

was involved with the Mexican border, drug-trafficking organizations in the U.S., and involved coordination—FBI, ICE, DEA. You 

42 

arrested thousands of individuals, seized about $154 million in currency. 

However, what is overlooked is that our northern border also 

faces a drug-trafficking epidemic, especially involving trafficking of 

different kinds of—some are the same, some are different—Ecstasy, 

marijuana, crystal meth. They have invaded our communities, particularly in upstate New York. 

So I have introduced legislation to try and get the Federal law 

enforcement agencies to develop a comprehensive northern border 

counternarcotics strategy. I am not asking you explicitly to support 

this legislation. I will quit while I am ahead. But do you think that 

we could benefit from such a strategy? And will the FBI work to 

try and bring a Project Deliverance effort to the northern border 

generally and New York specifically? How can we work together to 

make this a reality? It is becoming a more and more serious problem. 

Mr. MUELLER. Certainly the cooperation of Federal, State, and 

local entities along the border is essential to the safety of the border. To the extent that we can and should play a role, we definitely 

would play a role. I would be surprised if there is not already a 

strategy that one could buildupon. 

Senator SCHUMER. Exactly. There is some cooperation, and we 

have gotten a little more attention in the past, but we could use 

a lot more, as you said, and I would hope that you internally would 

importune the powers that be to do so, as I am doing externally. 

But I am glad you say it would be helpful in terms of stopping 

drugs and stuff like that. 

Final question, Internet fraud. You mentioned in your statement 

it is a growing concern for legitimate businesses. According to the 

Internet Crime Complaint Center, a partnership between the FBI, 

the White-Collar Crime Center, and the BJA, Bureau of Justice Assistance, a great many of these schemes, such as auction fraud, Nigerian 419 schemes, fraudulent high-yield investment programs are 

facilitated by, again, anonymous wire transfers that are hard to 

trace, almost impossible to reverse, and generally provide little or 

no fraud protection. 

Have wire transfers made the FBI’s job more difficult in going 

after fraudsters? What tools would help the FBI enforce the existing fraud laws in anonymous wire transfers while protecting consumer needs? And I will just give you one example and then you 

can answer the question. 

Earlier this month, the New York Times reported on Internet 

scammers setting up fake Web sites pretending to sell used cars. 

They got the money; there was no car. They used Moneygram. 

Moneygram said the money had been collected on June 12th, but 

then told law enforcement, ‘‘We are not responsible for third-party 

fraud,’’ and they would not even tell law enforcement—I am not 

sure if it was the FBI in this case, but in all likelihood, it probably 

was. They could not even tell them where the money was picked 

up unless you supplied a subpoena. 

What are you doing about these types of cases? What can Congress do to help the FBI and consumers protect themselves? 

Mr. MUELLER. Well, to the extent that we are notified either 

through the IC3 or otherwise, we will handle investigations or 

43 

work with State and local law enforcement to address a particular 

investigation. But it does not go to—that does not really answer 

your elemental question about what about anonymous wireless financial transfers. That is a growing concern throughout the world, 

not just the United States. 

The immediate response would be requiring passing legislation 

that would require the presentment of identification and keeping 

records that would be available pursuant to a subpoena down the 

road, in the same way that you suggest, doing that for throwaway 

cell phones. 

Senator SCHUMER. Right. 

Mr. MUELLER. The ability to obtain records of past transactions 

is absolutely essential, whatever the method of payment or communication. 

Senator SCHUMER. Well, it is legislation I am looking into, so I 

am glad you are positively disposed to at least exploring it. And, 

again, the one thing I would say before turning things over—my 

time is up. We are not expanding—or impinging on anyone’s privacy rights. These are the exact same privacy rights people have 

when they do give their names, and there are lots of safeguards 

that, in my judgment, have worked quite well over the years. 

Thank you, Mr. Chairman. 

Senator WHITEHOUSE. Thank you, Director. This brings the hearing to a close. The record of the hearing will remain open for a 

week for any additional materials that anybody wishes to submit. 

As always, your testimony is helpful and candid, and we appreciate 

you being here. 

Mr. MUELLER. Thank you. 

Senator WHITEHOUSE. The hearing is adjourned. 

[Whereupon, at 12:16 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.] 

44 


66825.001
45 


66825.002
46 


66825.003
47 


66825.004
48 


66825.005
49 


66825.006
50 


66825.007
51 


66825.008
52 


66825.009
53 


66825.010
54 


66825.011
55 


66825.012
56 


66825.013
57 


66825.014
58 


66825.015
59 


66825.016
60 


66825.017
61 


66825.018
62 


66825.019
63 


66825.020
64 


66825.021
65 


66825.022
66 


66825.023
67 


66825.024
68 


66825.025
69 


66825.026
70 


66825.027
71 


66825.028
72 


66825.029
73 


66825.030
74 


66825.031
75 


66825.032
76 


66825.033
77 


66825.034
78 


66825.035
79 


66825.036
80 


66825.037
81 


66825.038
82 


66825.039
83 


66825.040
84 


66825.041
85 


66825.042
86 


66825.043
87 


66825.044
88 


66825.045
89 


66825.046
90 


66825.047
91 


66825.048
92 


66825.049
93 


66825.050
94 


66825.051
95 


66825.052
96 


66825.053
97 


66825.054
98 


66825.055
99 


66825.056
100 


66825.057
101 


66825.058
102 


66825.059
103 


66825.060
104 


66825.061
105 


66825.062
106 


66825.063
107 


66825.064
108 


66825.065
109 


66825.066
110 


66825.067
111 


66825.068
112 


66825.069
113 


66825.070
114 


66825.071
115 


66825.072
116 


66825.073
117 


66825.074
118 


66825.075
119 


66825.076
120 


66825.077
121 


66825.078
122 


66825.079
123 


66825.080
124 


66825.081
125 


66825.082
126 


66825.083
127 


66825.084
128 


66825.085
129 


66825.086
130 


66825.087
131 


66825.088
132 


66825.089
133 


66825.090
134 


66825.091
135 


66825.092
136 


66825.093
137 


66825.094
138 


66825.095
139 


66825.096
140 


66825.097
141 


66825.098
142 


66825.099
143 


66825.100
144 


66825.101
145 


66825.102
146 


66825.103
147 


66825.104
148 


66825.105
149 


66825.106
150 


66825.107
151 


66825.108
152 


66825.109
153 


66825.110
154 


66825.111
155 


66825.112
156 


66825.113
157 


66825.114
158 


66825.115
159 


66825.116
160 


66825.117
161 


66825.118
162 


66825.119
163 


66825.120
164 


66825.121
165 


66825.122
166 


66825.123
167 


66825.124
168 


66825.125
169 


66825.126
170 


66825.127
171 


66825.128
172 


66825.129
173 


66825.130
174 


66825.131
175 


66825.132
176 


66825.133
177 


66825.134
178 


66825.135
179 


66825.136
180 


66825.137
181 


66825.138
182 


66825.139
183 


66825.140
184 


66825.141
185 


66825.142
186 


66825.143
187 


66825.144
188 


66825.145
189 


66825.146
190 


66825.147
191 


66825.148
192 


66825.149
193 


66825.150
194 


66825.151
195 


66825.152
196 


66825.153
197 


66825.154
198 


66825.155
199 


66825.156
200 


66825.157
201 


66825.158
202 


66825.159
203 


66825.160
204 


66825.161
205 


66825.162
206 


66825.163
207 


66825.164
208 


66825.165
209 


66825.166
210 


66825.167
211 


66825.168
212 


66825.169
213 


66825.170
214 


66825.171
215 


66825.172
216 


66825.173
217 


66825.174
218 


66825.175
219 


66825.176
220 


66825.177
221 


66825.178
222 


66825.179
223 


66825.180
224 


66825.181
225 


66825.182
226 


66825.183
227 


66825.184
228 


66825.185
229 


66825.186
230 


66825.187
231 


66825.188
232 


66825.189
233 


66825.190
234 


66825.191
235 


66825.192
236 


66825.193
237 


66825.194
238 


66825.195
239 


66825.196
240 


66825.197
241 

Æ 


66825.198