FBI Director Robert S.
Mueller, III Before the Senate Judiciary Committee - Oversight of the
Federal Bureau of Investigation
May 17, 2012
Good morning, Chairman Leahy, Ranking Member Grassley, and members of
the committee. Thank you for the opportunity to appear before the
Committee today and for your continued support of the men and women of
As you know, the Bureau has undergone unprecedented transformation in
recent years. Since the attacks of September 11th, we have refocused our
efforts to address and prevent emerging terrorist threats. The terrorist
threat is more diverse than it was 10 years ago, but today, we in the
FBI are better prepared to meet that threat.
We still confront traditional espionage and work diligently to prevent
foreign intelligence agents from gaining our nation’s political,
military or economic secrets.
We also face increasingly complex threats to our nation’s cyber
security. Nation-state actors, sophisticated organized crime groups, and
hackers for hire are stealing intelligence and national security data,
as well as trade secrets and valuable research from America’s companies,
universities, and government agencies. These cyber threats are also a
risk for our nation’s critical infrastructure.
Yet national security is not our only concern, as we remain committed to
our criminal programs. In the economic arena, investment fraud, mortgage
fraud, securities fraud and health care fraud have harmed the world’s
financial system and victimized investors, homeowners, and taxpayers.
And although crime rates may be down nationwide, gang violence still
plagues many neighborhoods, and our communities continue to confront
violent crime, crimes against children, and threats from transnational
As national security and criminal threats continue to evolve, so too
must the FBI change to counter those threats. We must continue to use
intelligence and investigative techniques to find and stop criminals and
terrorists before they act. As we face greater challenges, we in the
Bureau are relying on our law enforcement and private sector partners
more than ever before.
The FBI remains firmly committed to carrying out our mission while
protecting the civil liberties of the citizens we serve.
Counterterrorism remains our top priority.
In the past decade, al Qaeda has become decentralized, but the group
remains committed to high-profile attacks against the West. We confirmed
this with records seized from Osama bin Laden’s compound just over a
year ago, as well as the recent conviction of an al Qaeda operative
plotting to conduct coordinated suicide bombings in the New York City
Al Qaeda affiliates and adherents, especially al Qaeda in the Arabian
Peninsula (AQAP), currently represent the top counterterrorism threat to
the nation. These groups have attempted several attacks in and on the
United States, including the failed Christmas Day airline bombing in
2009, and the attempted bombing of U.S.-bound cargo planes in October of
We also remain concerned about the threat from homegrown violent
extremists. Over the last two years, we have seen increased activity
among extremist individuals. These individuals have no typical profile;
their experiences and motives are often distinct. But they are
increasingly savvy and willing to act alone, which makes them difficult
to find and to stop.
For example, in February 2012, the FBI arrested Amine El Khalifi, a
29-year-old Moroccan immigrant, for allegedly attempting to detonate a
bomb in a suicide attack on the U.S. Capitol. According to court
documents, Khalifi believed he was conducting the terrorist attack on
behalf of al Qaeda, although he was not directly affiliated with any
Another example is the case of Rezwan Ferdaus, a 26-year-old U.S.
citizen and graduate student residing in Ashland, Massachusetts. Last
fall, Ferdaus allegedly planned to use unmanned, remote-controlled
aircraft to attack locations in Washington, D.C., including the U.S.
Capitol and the Pentagon. Ferdaus was influenced by radical websites
advocating violent extremism, among other things, and had expressed
admiration for al Qaeda’s leaders, but was not directly affiliated with
any group. He had allegedly become extremist on his own, making his
activities much more difficult to detect. Ferdaus is currently awaiting
trial in the United States District Court for the District of
Much like every other multi-national organization, terrorist groups are
using the Internet to grow their business and to connect with
like-minded individuals. Al Qaeda uses online chat rooms and web sites
to recruit and radicalize followers to commit acts of terrorism. AQAP
has produced a full-color, English language online magazine. Cases such
as these illustrate why we in the Intelligence Community must continue
to enhance our intelligence capabilities and to share information to
ensure that critical information gets to the right people—before any
harm is done. The FISA Amendments Act (FAA), allows the intelligence
community to collect vital information about international terrorists
and other important targets overseas while providing a robust protection
for the civil liberties and privacy of Americans. I join the Attorney
General and the Director of National Intelligence in urging Congress to
reauthorize this authority before it expires at the end of this year.
The Bureau itself has established a Countering Violent Extremism (CVE)
Office within the National Security Branch (NSB) to improve our
effectiveness in empowering our state, local, and community partners to
assist in this effort. The duties and goals of this office include
developing a better understanding of, and countering the threat of,
violent extremism in the United States, strengthening community
partnerships and providing to state and local officials and to community
leaders unclassified briefings regarding the threat of extremism,
addressing CVE-related operational and mission-support needs, including
investigations, analysis, and training, and coordinating Bureau
interests with regard to CVE matters with those of other agencies to
ensure U.S. government efforts are aligned.
We still confront traditional espionage—spies working under diplomatic
cover, or even posing as ordinary citizens.
Today’s spies are also students, researchers, businesspeople, or
operators of “front companies.” And they seek not only state secrets,
but trade secrets, research and development, intellectual property, and
insider information from the federal government, U.S. corporations, and
Consider the recent case of Stewart David Nozette, a scientist who once
worked for the Department of Energy, the Department of Defense, NASA,
and the National Space Council. He was sentenced in March to 13 years in
prison for attempted espionage, conspiracy to defraud the United States,
and tax evasion after providing classified information to an undercover
FBI agent whom he believed to be an Israeli intelligence officer.
In another case, Hanjuan Jin, a former software engineer at Motorola,
Inc., was found guilty in February on charges of stealing the company’s
trade secrets. She was stopped by U.S. Customs officials in February
2007 at Chicago’s O’Hare International Airport with more than 1,000
electronic and paper proprietary documents from Motorola. She was
attempting to travel on a one-way ticket to China. Authorities also
recovered multiple classified Chinese military documents that described
telecommunication projects for the Chinese military.
In another case, 36-year DuPont employee, Tze Chao, pled guilty in March
to providing trade secrets concerning DuPont’s proprietary titanium
dioxide manufacturing process to companies controlled by the Chinese
government. He admitted providing information he understood to be secret
to DuPont and not available to the public. He faces up to 15 years in
prison and a $500,000 fine plus restitution.
These cases illustrate the growing scope of the “insider threat”—when
employees use their legitimate access to steal secrets for the benefit
of another company or country.
The counterintelligence threat is quickly becoming cyber-based. So much
sensitive data is stored on computer networks, our adversaries often
find it as effective, or even more effective, to steal vital strategic
and economic information through cyber intrusions, rather than through
more traditional human spies.
The cyber threat has evolved significantly over the past decade. Indeed,
we anticipate that cyber security may become our highest priority in the
Foreign cyber spies have become increasingly adept at exploiting
weaknesses in our computer networks. Once inside, they can exfiltrate
important government and military information, as well as valuable
commercial data—information that can compromise national security as
well as improve the competitive advantage of state-owned companies.
Unlike state-sponsored intruders, hackers for profit do not seek
information for political power; rather they seek information for sale
to the highest bidder. Some of these once-isolated hackers have joined
forces to create criminal syndicates. Organized crime in cyber space
offers a higher profit with a lower probability of being identified and
Additionally, hackers and hacktivist groups such as Anonymous and
LulzSec are pioneering their own forms of digital anarchy.
The end result of these developments is that we are losing data, money,
ideas, and innovation. And as citizens, we are increasingly vulnerable
to losing our personal information.
We in the FBI have built up an expertise to address these threats, both
here at home and abroad.
We have approximately 70 cyber squads across our 56 field offices, with
more than 1,000 specially trained agents, analysts, and forensic
specialists. The FBI also has 63 legal attaché offices that cover the
globe. Together with our international counterparts, we are sharing
information and coordinating investigations. We have special agents
embedded with police departments in Romania, Estonia, Ukraine, and the
Netherlands, working to identify emerging trends and key players.
Here at home, the National Cyber Investigative Joint Task Force brings
together 20 law enforcement, military, and intelligence agencies to
investigate current and predict future attacks. With our partners at
DOD, DHS, CIA, and the NSA, we are targeting the cyber threats that face
our nation. The task force operates through Threat Focus
Cells—specialized groups of agents, officers, and analysts that are
focused on particular threats, such as botnets.
Together with our intelligence community and law enforcement agency
partners, we are making progress toward defeating the threat—through our
use of human sources, technical surveillance, and computer science.
Last April, with our private sector and law enforcement partners, the
FBI dismantled the Coreflood botnet. This botnet infected an estimated
two million computers with malware that enabled hackers to seize control
of the privately owned computers to steal personal and financial
With court approval, the FBI seized domain names and re-routed the
botnet to FBI-controlled servers. The servers directed the zombie
computers to stop the Coreflood software, preventing potential harm to
hundreds of thousands of users.
In another case, last fall we worked with NASA’s Inspector General and
our partners in Estonia, Denmark, Germany, and the Netherlands to shut
down a criminal network operated by an Estonian company by the name of
The investigation, called Operation Ghost Click, targeted a ring of
criminals who manipulated Internet “click” advertising. They redirected
users from legitimate advertising sites to their own advertisements and
generated more than $14 million in illegal fees. This “click” scheme
impacted more than 100 countries and infected four million computers,
half a million of which were here in the United States.
We seized and disabled rogue servers, froze the defendants’ bank
accounts, and replaced the rogue servers with legitimate ones to
minimize service disruptions. With our Estonian partners, we arrested
and charged six Estonian nationals for their participation in the
Together with our partners at DHS and the National Cyber-Forensics
Training Alliance, we are using intelligence to create an operational
picture of the cyber threat to identify patterns and players, to link
cases and criminals.
We must continue to share information with our partners in law
enforcement, in the intelligence community, and in the private sector.
We also must segregate mission-centric data from routine information. We
must incorporate layers of protection and layers of access to critical
information. And when there is a compromise, we must limit the data that
can be gleaned from it.
Attribution is critical to determining whether an attack on a U.S.
company is perpetrated by a state actor, an organized criminal group, or
a teenage hacker down the block. We can use the ability to attribute an
attack to a specific attacker to help deter future attacks.
We cannot simply minimize vulnerabilities and deal with the
consequences. Collectively, we can improve cyber security and lower
costs with systems designed to catch threat actors, rather than simply
to withstand them.
We have witnessed an increase in financial fraud in recent years,
including mortgage fraud, health care fraud, and securities fraud.
The FBI and its partners continue to pinpoint the most egregious
offenders of mortgage fraud. At the end of last year, the FBI had nearly
2,600 mortgage fraud investigations nationwide—and a majority, over 70
percent, of these cases included losses greater than $1 million.
With the collapse of the housing market, we have seen an increase in
schemes aimed at distressed homeowners, such as loan modification scams
and phony foreclosure rescues. So- called “rescue services” claim they
can expose errors by lenders that might allow owners to keep their
homes. In reality, they are just a clever way to lure nervous consumers
into giving up sensitive personal information and paying thousands of
dollars in fees for false hopes. Indeed, in some cases, these criminals
convince homeowners to sign away the deeds to their homes.
Other criminals preyed on investors’ hopes of cashing in before the
housing bubble burst. In March, 61-year-old Andrew Williams, Jr., of
Hollywood, Florida, was sentenced to 150 years in prison for his role in
a $78 million mortgage fraud scheme. Through the scheme, Williams
promised to pay off homeowners’ mortgages in five to seven years
following an initial investment of $55,000. Unfortunately for investors,
this was no more than a Ponzi scheme. Those who paid the fee and joined
the “Dream Homes Program” later found that there was no money left to
fund their mortgage payments.
The FBI has made mortgage fraud a top priority, because we recognize its
negative impact on homeowners, neighborhoods, and our nation’s economy.
Over the past four years, we have nearly tripled the number of special
agents investigating mortgage fraud. Our agents and analysts are using
intelligence, surveillance, computer analysis, and undercover operations
to identify emerging trends and to find the key players behind
large-scale mortgage fraud.
We also work closely with the Department of Housing and Urban
Development’s Office of Inspector General, U.S. Postal Inspectors, the
IRS, the FDIC, SIGTARP, the U.S. Trustee Program, the Federal Housing
Finance Agency’s Office of Inspector General, the Federal Trade
Commission, and the Secret Service, as well as with state and local law
Health Care Fraud
Health care spending currently makes up about 18 percent of our nation’s
total economy and continues to rise. These large amounts of money
present an attractive target for criminals—so much so that we lose tens
of billions of dollars each year to health care fraud.
In February, the Medicare Fraud Strike Force—a partnership between the
Department of Justice and the Department of Health and Human
Services—broke up the largest alleged home health care fraud scheme ever
Dr. Jacques Roy, the owner of Medistat Group Associates in the Dallas
area, was arrested along with several others for allegedly billing
nearly $375 million in fraudulent Medicare and Medicaid claims for home
health care services. Between January 2006 and November 2011, Medistat
had more purported patients than any other medical practice in the
United States—including more than 11,000 patients from more than 500
home health agencies.
Since their inception in March 2007, Medicare Fraud Strike Force
operations have charged more than 1,300 individuals who collectively
have falsely billed the Medicare program for more than $4 billion.
Recently, a nationwide takedown by Medicare Fraud Strike Force
operations in seven cities resulted in charges against 107 individuals,
including doctors, nurses and other licensed medical professionals, for
their alleged participation in Medicare fraud schemes involving
approximately $452 million in false billing.
Health care fraud is not a victimless crime. Every person who pays for
health care benefits, every business that pays higher insurance costs to
cover their employees, and every taxpayer who funds Medicare, is a
As health care spending continues to rise, the FBI will use every tool
we have to ensure our health care dollars are used to care for the
sick—not to line the pockets of criminals.
Corporate and Securities Fraud
Another area where our investigations have increased substantially in
recent years is in corporate and securities fraud. Since September 2008,
we have seen a 49 percent increase in these cases to more than 2,600
One of our largest insider trading cases centered on the Galleon Group,
a $7 billion hedge fund based in New York. Using evidence obtained
through court-approved wiretaps, attorneys and corporate insiders at
several Fortune 500 companies were convicted of leaking proprietary
information. The owner of the Galleon Group was convicted of multiple
counts of securities fraud and sentenced in October to 11 years in
prison—the longest sentence ever for insider trading. And in March 2012,
Allen Stanford, former chairman of the board of Stanford International
Bank, was convicted on wire, mail and other fraud charges for
orchestrating a $7 billion investment fraud scheme.
As financial crimes such as these become more sophisticated, so too must
the FBI. In addition to devoting more agents and analysts, we
established a Forensic Accountant Program three years ago. Under this
program we have hired nearly 250 forensic accountants who are trained to
catch financial criminals.
Three years ago, we also established the FBI’s Financial Intelligence
Center to strengthen our financial intelligence collection and analysis.
The center coordinates with FBI field offices to complement their
resources and to identify emerging economic threats.
In 2010, the FBI began embedding special agents at the SEC, which allows
us to see tips about securities fraud as they come into the SEC’s
complaint center. This, in turn, enables us to identify fraud trends
more quickly and to push intelligence to our field offices so that they
can begin criminal investigations where appropriate.
The most recent Uniform Crime Report (UCR) indicates violent crime
continues to fall. However, for some cities and towns across the nation,
violent crime—including gang activity—continues to pose a real problem.
Gangs have become more sophisticated. They have expanded their
operations from street violence and drug trafficking to alien smuggling,
identity theft, and mortgage fraud. Our Violent Crime, Violent Gang/Safe
Streets, and Safe Trails Task Forces target major groups operating as
criminal enterprises – high-level groups engaged in patterns of
racketeering. This allows us to identify senior leadership and to
develop enterprise-based prosecutions.
The FBI is also working to ensure crimes are being reported accurately.
In collaboration with our state and local partners, the UCR program
recently adopted a new, more inclusive definition of rape, which more
accurately reflects current state laws defining the crime. This change
will provide better data for our law enforcement partners in their
efforts to respond to violent crimes. The Bureau is also beginning to
look for ways to increase the accuracy and utility of the UCR more
generally. These plans include collaborating within DOJ and the law
enforcement community to increase the usage of the National Incident
Based Reporting System (NIBRS) which is part of the UCR. Increased
coverage of incident based reporting will lead to a more detailed and
meaningful picture of crime in America.
Transnational Organized Crime
We also continue to confront organized crime. Crime syndicates run
multi-national, multi-billion-dollar schemes—from human trafficking to
health care fraud, and from computer intrusions to intellectual property
These sophisticated enterprises operate both overseas and in the United
States, and include Russian, Asian, Italian, Balkan, Middle Eastern, and
African syndicates as well as Outlaw Motorcycle Gangs.
In the fall of 2010, an investigation by the FBI and its partners led to
the indictment and arrest of more than 70 members and associates of an
Armenian organized crime ring for their role in nearly $170 million in
fraudulent Medicare billings. This case included more than 160 phony
medical clinics. Some of the subjects opened bank accounts to receive
Medicare funds and submitted applications to Medicare to become Medicare
The annual cost of transnational organized crime to the U.S. economy is
estimated to be in the tens of billions of dollars. The effects of these
schemes filter down to everyday Americans, who pay more for gas, health
care, mortgages, clothes and food, not to mention the economic and
social harm that such criminal activity costs our nation as a whole.
But organized crime does more than just impact our economy. These groups
have the potential to infiltrate our businesses, and provide support to
hostile foreign powers.
No one department, agency, or country can fight organized crime on its
own—we must work with our partners to end this predatory environment. We
will continue to use all of our investigative tools, intelligence from
our sources, and the strength of our partnerships to stop organized
crime in the United States.
The FBI has squads dedicated to Eurasian Organized Crime investigations,
including in New York, San Francisco, Miami, Philadelphia, Newark, and
Chicago. Over the past decade, Asian criminal enterprises have evolved
into transnational and decentralized networks that focus on low-risk and
high-profit crimes. Chinese and Korean criminal networks across the
United States obtain, sell, and use fraudulent U.S. identification
documents to conduct a variety of financial crimes. The FBI is currently
expanding its focus to include West African and Southeast Asian
organized crime groups. The Bureau continues to share intelligence about
criminal groups with our federal and international partners, and to
combine resources and expertise to gain a full understanding of each
group. In furtherance of these efforts, the FBI participates in the
International Organized Crime Intelligence Operations Center. This
center is responsible for coordinating the efforts of nine federal law
enforcement agencies in combating non-drug transnational organized crime
networks. The FBI is also enhancing its ability to address transnational
criminal enterprises that operate along the Southwest Border and the
Caribbean. We have developed hybrid squads to target these groups, which
linked to U.S.-based gangs, cross-border drug trafficking, public
corruption, money laundering, and violent crime.
Crimes Against Children
The FBI remains vigilant in its efforts to keep children safe and to
find and stop child predators. Through our partnerships with state,
local, tribal, and international law enforcement, we are able to
investigate crimes that cross geographical and jurisdictional
boundaries. We are also able to share intelligence, resources, and
specialized skills to prevent child abductions.
Through our Child Abduction Rapid Deployment Teams, the Innocence Lost
National Initiative, the Office of Victim Assistance, and numerous
community outreach programs, the FBI and its partners are working to
make the world a safer place for our children.
Last month we added accused child pornographer Eric Justin Toth to the
FBI’s Ten Most Wanted Fugitive list. Toth, who also goes by the name
David Bussone, is a former private-school teacher and camp counselor who
taught here in Washington, D.C. He has been on the run since 2008, after
an FBI investigation revealed pornographic images on a camera in his
possession while at the D.C. private school. There is a reward of up to
$100,000 for information leading directly to Toth’s arrest.
Since its creation in 1950, the Top Ten list has been invaluable to the
FBI, helping us to capture some of the nation’s most dangerous
criminals. Of the 495 fugitives named to the list, 465 have been
apprehended or located. That level of success would not have been
possible without the strong support of the public, which has helped
capture 153 of the Top Ten fugitives.
The FBI also maintains primary federal law enforcement authority to
investigate felony crimes on more than 200 Indian reservations
nationwide. Last year, the FBI handled approximately 2,900 Indian
Sexual assault and child sexual assault are two of the FBI’s
investigative priorities in Indian Country. Statistics indicate that
American Indians and Alaska Natives suffer violent crime at greater
rates than other Americans. Approximately 75 percent of all FBI Indian
Country investigations concern homicide, crimes against children, or
felony assaults. To address these threats, the FBI is deploying six new
investigators to Indian Country as part of the Department of Justice’s
broader effort to fight crime in tribal communities.
The FBI continues to work with tribes through the Tribal Law & Order Act
to help tribal governments better address the unique public safety
challenges and disproportionately high rates of violence and
victimization in tribal communities. The Act encourages the hiring of
additional law enforcement officers for Indian lands, enhances tribal
authority to prosecute and punish criminals, and provides the Bureau of
Indian Affairs and tribal police officers with greater access to law
The gang threat on Indian reservations also poses a concern for the FBI.
Currently, the FBI has 15 Safe Trails Task Forces focused on drugs,
gangs, and violent crimes in Indian Country. In addition, the FBI
continues its efforts to address the emerging threat from fraud and
other white-collar crimes committed against tribal gaming facilities.
As criminal and terrorist threats become more diverse and dangerous, the
role of technology becomes increasingly important to our efforts.
We are using technology to improve the way we collect, analyze, and
share information. In 2011, we debuted new technology for the FBI’s Next
Generation Identification System, which enables us to process
fingerprint transactions much faster and with increased accuracy. We are
also integrating isolated data sets throughout the Bureau, so that we
can search multiple databases more efficiently, and, in turn, pass along
relevant information to our partners.
Sentinel, the FBI’s new information and case management program, will
replace the outdated Automated Case Support System. Sentinel is
transforming the way the FBI does business by moving the Bureau from a
primarily paper-based case management system to an electronic
workflow-based management system of records. The system’s indexing
ability will allow users to extract names, dates, vehicles, addresses,
and other details, and to more efficiently share data with our law
We expect that Sentinel will be deployed to the field by the end of this
fiscal year, encompass all of its original design concept functionality
and come in at budget or below.
As technology advances, both at the FBI and throughout the nation, we
must ensure that our ability to obtain communications pursuant to court
order is not eroded. The increasingly mobile, complex, and varied nature
of communication has created a growing challenge to our ability to
conduct court-ordered electronic surveillance of criminals and
terrorists. Many communications providers are not required to build or
maintain intercept capabilities in their ever-changing networks. As a
result, they are too often not equipped to respond to information sought
pursuant to a lawful court order.
Because of this gap between technology and the law, law enforcement is
increasingly challenged in accessing the information it needs to protect
public safety and the evidence it needs to bring criminals to justice.
It is only by working together—within the law enforcement and
intelligence communities, and with our private sector partners—that we
will find a long-term solution to this growing problem. We must ensure
that the laws by which we operate keep pace with new threats and new
Civil Liberties/Rule of Law
Technology is one tool we use to stay one step ahead of those who would
do us harm. Yet as we evolve and update our investigative techniques and
use of technology to keep pace with today’s complex threat environment,
we always act within the confines of the rule of law and the safeguards
guaranteed by the Constitution. The world around us continues to change,
but our values must never change. Every FBI employee takes an oath
promising to uphold the rule of law and the United States Constitution.
I emphasize that it is not enough to catch the criminal; we must do so
while upholding civil rights. It is not enough to stop the terrorist; we
must do so while maintaining civil liberties. It is not enough to
prevent foreign nations from stealing our secrets; we must do so while
upholding the rule of law.
Following the rule of law and upholding civil liberties and civil
rights—these are not our burdens. These are what make all of us safer
and stronger. In the end, we will be judged not only by our ability to
keep Americans safe from crime and terrorism, but also by whether we
safeguard the liberties for which we are fighting and maintain the trust
of the American people.
Chairman Leahy and Ranking Member Grassley, I thank you for this
opportunity to discuss the FBI’s priorities and state of the Bureau as
it stands today. Mister Chairman, let me again acknowledge the
leadership that you and this committee have provided to the FBI. The
transformation the FBI has achieved over the past 10 years would not
have been possible without the support of Congress and the American
people. I would be happy to answer any questions that you may have.