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International OrganizedCrime

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1By Bruce B. Ohr

International Organized Crime Center . . . . . . . . . . . . . . . . . . . . . . . . 2By John DiStasio

The Focus of the FBI's Organized Crime Program . . . . . . . . . . . . . . . 6By WK Williams

The FBI's Legal Attache (Legat) Program . . . . . . . . . . . . . . . . . . . . . . 8By Susan M. Curtis and Joyce McClelland

International Aspects of Criminal Immigration Enforcement . . . . . 14By Michael Surgalla and Arthur Norton

The International Prisoner Transfer Program . . . . . . . . . . . . . . . . . 21By Paula A. Wolff

Disclosure of Law Enforcement Information to the IntelligenceCommunity Pursuant to the Patriot Act . . . . . . . . . . . . . . . . . . . . . . . 27

By J. Kenneth Lowrie

Investigating Financial Crime Emanating from Russia: A Russianand an American Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

By Vitor Filippov and Jennifer Shasky

The Russian Connection: Sex Trafficking into the United States andWhat the United States and Russia Are Doing About It . . . . . . . . . . 39

By Thomas Firestone

Balkan Organized Crime: The Emerging Threat . . . . . . . . . . . . . . . 42By Clint Williamson

The Budapest Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49By Thomas V. Fuentes

September 2003Volume 51Number 5

United StatesDepartment of JusticeExecutive Office for

United States AttorneysOffice of Legal Education

Washington, DC20535

Guy A. LewisDirector

Contributors’ opinions andstatements should not be

considered an endorsement byEOUSA for any policy, program,

or service.

The United States Attorneys’Bulletin is published pursuant to

28 CFR § 0.22(b).

The United States Attorneys’Bulletin is published bi-monthly

by the Executive Office for UnitedStates Attorneys, Office of Legal

Education, 1620 Pendleton Street,Columbia, South Carolina 29201.

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Send address changes to Editor,United States Attorneys’ Bulletin,Office of Legal Education, 1620

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reading_room/foiamanuals.html

Send article submissions toManaging Editor, United StatesAttorneys’ Bulletin,National Advocacy Center,Office of Legal Educat ion,1620 Pendleton Street,Columbia, SC 29201.

In This Issue

Table of Contents Cont'dReform of United Kingdom Extradition Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

By Raj Joshi and Brian Gibbins

Classified Information and International Investigations: A Warning . . . . . . . . . . . . . . . . . 56By Miriam Banks

Sample Rico Indictment: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57By Robert D. Dalton

Sample Rico Indictment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60By Robert D. Dalton

Extradition and Mutual Legal Assistance Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68By Thomas G. Snow

Points of Contact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

SEPTEMBER 2003 UNITED STATES ATTORNEYS' BUL LET IN 1

IntroductionBruce G. Ohr, ChiefOrganized Crime andRacketeering SectionCriminal Division

Organized crime has gone multinational. It issophisticated, violent, and is coming to a city nearyou. The past two decades have witnessed anunprecedented rise in the power and reach ofinternational criminal enterprises, representing notonly the dark side of globalization, but also asignificant threat to economic and politicalstability in many countries around the world. New"mafias" from Russia, China, the Balkans, VietNam, Eastern Europe, and many other areas, havelearned the benefits of international finance, easyinternational travel, and instantaneous wire andelectronic communications. As a consequence,criminal enterprises operate worldwide networksengaged in every flavor of corruption and fraud,trafficking in drugs, persons, weapons, and othercontraband, while hidden behind layers of frontcompanies and offshore bank accounts. Thespecter of organized criminals teaming up withinternational terrorists adds a particularlyfrightening element to this picture.

As the world's most important market andprize destination for immigrants, the United Stateslong ago lost any immunity it might have hadfrom the depredations of these criminalorganizations. While cases have been madeagainst so-called "emerging" organized crimegroups for many years, the last five years haveseen a rapid rise in the scale and sophistication ofcriminal schemes across the country, executed byincreasingly professional criminals. At a timewhen law enforcement personnel and budgets areeffectively frozen or being cut in the area oforganized crime, we find ourselves scrambling tomaster new areas and shoulder heavier burdens toprosecute larger international cases.

This issue of the UNITED STATES ATTORNEYS'BUL LETIN attempts to give you a snapshot of awork in progress as we struggle to understand thenew enemies and learn how to use new tools inour fight against international organized crime.The contributors–prosecutors and agents,Americans and foreign partners–bring a widerange of international and organized crimefighting experience to bear on these problems, andoffer valuable suggestions on prosecuting cases inthis new criminal environment. One of the mostimportant pieces of advice in this issue is how youcan use the power and flexibility of the RacketeerInfluenced and Corrupt Organizations (RICO)statute against these elusive organizations. Myhope is that you will read something in this issuethat strikes a chord, pick up a few new tricks, andget interested in pursuing the next potentialinternational case that comes across your desk.

The Organized Crime and RacketeeringSection is dedicated to making these types ofcases work, and we will be happy to give youwhatever support and advice you need in yournext case–or we will team up with you to putthese guys away.�

ABOUT THE AUTHOR

�Bruce G. Ohr has served as the Chief of theOrganized Crime and Racketeering Section,Department of Justice, since February 1999. From1991 to 1999, he was an Assistant United StatesAttorney in the U.S. Attorney's Office for theSouthern District of New York, and was Chief ofthe Violent Gangs Unit in that office from 1998 to1999. Mr. Ohr was an associate at the SanFrancisco law firm of Orrick, Herrington &Sutcliffe from 1988 through 1991. a

2 UNITED STATES ATTORNEYS' BUL LET IN SEPTEMBER 2003

International Organized Crime CenterJohn DiStasioUnit ChiefInternational Organized Crime CenterFBI Headquarters

The International Organized Crime Center(IOCC), was recently established at FBIHeadquarters in Washington, DC for the purposeof enhancing the FBI's ability to identify anddismantle global criminal enterprises whoseactivities and influence threaten United Statesinterests at home and abroad. The creation of theIOCC represents the FBI's continuingcommitment to the investigation of all organizedcriminal activity which affects the United States,regardless of its origin. The twenty-first centuryhas ushered in a new era for organized crime.Organized crime groups, we now know, haveexpanded their operations on the internationalscene to an unprecedented degree. In some cases,such as in the Balkans, governments and nationalinstitutions have been co-opted and corrupted bythese groups. In the Russian Federation and Italy,political and business leaders have beenassassinated by individuals associated withorganized crime. Recently, the Prime Minister ofSerbia, who had pledged to fight corruption andorganized crime, was murdered in Belgrade bywhat Serbian law enforcement figures describedas criminal elements. Soon after, a prominentmember of the Russian Duma, a strong proponentof rule of law issues, was assassinated in Moscowand organized crime elements are suspected. InAfghanistan, where efforts are underway todecrease acreage devoted to the production of theheroin poppy, the Minister responsible for thisprogram was recently murdered.

International organized crime threatens thenational security of the United States in a varietyof ways. The globalization of commerce andbanking, along with mass migration andinternational political/economic turmoil, hasbrought with it additional avenues for criminalprofiteering. Organized crime (OC) groups havecompromised politicians and business leaders invarious post-Communist nations and are usingthese connections to intimidate the populace andextract profits from the economy. This sameeconomy involves United States market share,welcomes United States foreign aid, and invitesUnited States investment and tourism. In somecases, these groups have penetrated and co-opted

national intelligence and military organizations,and in so doing have had an extraordinarilyadverse impact upon foreign relations andregional stability. The ability of OC groups todestabilize entire regions, both politically andeconomically, is growing. Narcotics traffickers,for example, are amassing greater wealth andpower worldwide, and are increasingly morelikely to incite political unrest and economicsubversion in Latin America, Central Asia, andSouthwest and Southeast Asia. This directlyaffects both United States national security anddomestic tranquility.

International organized crime seriouslythreatens the home front, especially in our largercities where criminal aliens prey upon, and findrefuge within, their own large, amorphous, ethniccommunities. Organized crime investigationswithin the FBI have long revealed an upwardtrend in the number of cases reflecting aninternational nexus. FBI Special Agents andprosecutors are routinely traveling worldwide insupport of these investigations and have becomeincreasingly more reliant upon foreign sources ofevidence and witness testimony. Further, theUnited States Bureau of Prisons advises that thenumber of foreign born inmates incarcerated forracketeering types of offenses is on the rise. Thisnumber includes an increasingly larger proportionof illegal aliens from the Balkans, Central Europe,and Asia.

This situation demands a coordinatedresponse from law enforcement and intelligenceagencies in the United States and overseas. TheIOCC is intended to provide a focal point forthese efforts through intensive collection andanalysis of criminal intelligence gathered from allsources worldwide. In conjunction with FBI LegalAttaches (Legats), the IOCC seeks to coordinateinvestigative and intelligence gathering activitiesbetween the FBI and law enforcement agenciesoverseas. Since close coordination and liaisonwith the federal law enforcement and intelligencecommunity is absolutely essential, representativesfrom these agencies will be invited to participatein, contribute to, and profit from, this endeavor.Indeed, active and substantive participation bythese agencies is critical to the long-term successof the IOCC, which depends upon bothinteragency and international cooperation.


The IOCC is presently being staffed withexperienced analysts, most of whom possessadvanced degrees in fields germane tointernational issues and transnational criminalactivity. Most have been previously employedwithin the intelligence or defense community. Inthe near future, four experienced SupervisorySpecial Agents, (SSAs) will be reporting to theCenter. In order to address the global nature ofthis problem, the IOCC has been divided into twounits, and, when fully staffed, each unit willcontain a Unit Chief, four SSAs, and twelveAnalysts. Responsibility for geographic regionswill be divided between the two units.

The IOCC's mission is threefold:

• to serve as the coordination point forUnited States resources dedicated toinvestigation and intelligence gatheringregarding international OC groups;

• to identify and assess the structure andcriminal portfolio of those international OCgroups deemed to pose a threat toUnited States interests; and

• to establish policy and procedures designed tocoordinate and support domestic andextraterritorial investigative activities aimed atthe disruption, dismantlement, andprosecution of international OC groups andenterprises.

The IOCC will focus upon Eurasian,Italian/Sicilian, Asian, African, Latin American,and Middle Eastern criminal enterprises whichhave a demonstrated nexus to the United States.Long-established and newly-emerging organizedcrime groups and enterprises will be prioritized indirect proportion to the threat they represent. Withthe active participation of foreign and domesticlaw enforcement and intelligence agencies,strategic and tactical issues related to internationalorganized crime activity, such as moneylaundering trends, transnational weaponssmuggling, trafficking in women and children,large scale financial fraud, and narcoticstrafficking, will be routinely reviewed andevaluated. Analytical results will be disseminatedwithin the federal law enforcement andintelligence community and, when appropriate,will be furnished to state, local, and foreignjurisdictions. Emphasis will naturally be uponsupporting and expanding those pendingUnited States investigations that reflect a clearconnection to foreign criminal organizations.Strategic analysis will be oriented towardidentifying short and long-term trends and issues

in international organized crime and identifyingemerging individuals and organizations.

The IOCC is currently experimenting withnumerous analytical models and techniques and isalso studying information processingmethodologies utilized by other law enforcementagencies, as well as by the private sector.Integrated databases will be established over timeand are intended to be as comprehensive asprevailing technology will allow. IOCC SSAs andAnalysts will work directly with the field, FBILegats, and our law enforcement counterpartsoverseas in support of selected investigations andanalytical projects. Selected investigations will beprioritized in close consultation with the field,based upon the nature of the threat represented bythe targeted OC group. Analytical projects willfocus upon those international OC groups deemedmost threatening and most likely to affectUnited States interests.

Whenever appropriate, analytical productsgenerated by the IOCC will also be furnished toour law enforcement counterparts overseas. Sincewe seek to maintain a reciprocal and mutuallybeneficial relationship with foreign lawenforcement agencies for purposes of criminalintelligence sharing, the IOCC anticipates theexchange of a significant volume of information.As in the past, this sharing process is intended todevelop bilateral and multilateral investigativeinitiatives and to encourage the exchange ofactionable criminal intelligence and evidentiarymaterials on a regular basis. As is apparent, this isan ambitious objective which will require mucheffort and a great deal of patient relationshipdevelopment, both at home and abroad. Numerousproblems must be overcome, not the least ofwhich are those related to the vast differences instructure and mission among foreign lawenforcement agencies. Our Legats deal with thisparticular issue on a daily basis, and will provideinvaluable guidance and assistance in dealing withour foreign counterparts.

Federal law enforcement agencies in theUnited States have enjoyed a long period ofsuccessful liaison with law enforcementorganizations overseas. Drug EnforcementAdministration (DEA) Country Attachés andSpecial Agents are stationed worldwide. Theyhave provided much needed leadership, support,and training, to dozens of countries involved inthe counternarcotics effort, particularly in LatinAmerica and Southeast Asia. The FBI's Legatsnetwork is currently undergoing a significantexpansion in both number of offices andpersonnel assigned. United States Customs and


Immigration and Naturalization Service (INS)personnel have similarly, and successfully,established themselves overseas, while theUnited States Secret Service is also represented atseveral United States embassies abroad. Each andevery United States embassy houses SpecialAgents from the Bureau of Diplomatic Security.Criminal investigators from the United StatesAgency for International Development are not farbehind. The reach of United States lawenforcement is long and the potential forinformation/intelligence gathering is enormous.United States law enforcement representatives arepresent at the headquarters of Interpol at Lyon,France, and they are also working closely withEuropol. The IOCC intends to systematically tapinto this vast resource in order to maintain anaccurate and ongoing picture of internationalorganized crime activity.

In the vast majority of cases, United Stateslaw enforcement has enjoyed excellentcooperation from its counterparts overseas. This isreflected in the growing number of jointinvestigations now underway around the world. Infact, many types of investigations, especiallythose involving organized crime and narcotics inthe international arena, have engendered asignificant level of interdependence betweenUnited States and foreign law enforcementagencies. Certain high-profile organized crimeinvestigations could not have been successfullyconcluded without significant contributions fromour overseas counterparts. These long establishedrelationships of trust and confidence will be aninvaluable asset to IOCC operations.

Unfortunately, numerous repressive,developing, or impoverished nations in the worldtoday have police forces and judiciaries sufferingfrom high levels of corruption. In certain areas ofthe world, the rule of law is either weak ornonexistent. This situation can pose seriousimpediments to cooperation and significantchallenges for the IOCC. Since our organizedcrime investigations involve our mostsophisticated investigative techniques and ourmost sensitive sources, extreme care must beexercised with regard to any disclosures. This isespecially problematic when dealing with foreignpolice agencies which are known or suspected ofbeing widely corrupted. In such cases, prospectsfor meaningful cooperation are slim and possiblynot worth the risk of compromise. CertainUnited States investigations with an overseasnexus, for example, may involve OC figures whooccupy public office, are prominent in business orindustry, or who are otherwise influential within a

given country. These factors will, of course, becarefully evaluated. Decisions regarding thedissemination or solicitation of criminalintelligence, in a given matter, will be closelycoordinated with those close to the investigation.The IOCC will remain extremely vigilant in thisregard.

In addition, the interests of advanced nationswith close ties to the United States may, at times,not be compatible with United States interests.Therefore, each and every element of criminalintelligence sharing with foreign police agencieswill be carefully measured on a reciprocalrisk/reward basis. The vital interests of pendinginvestigations will always remain paramount inthis process.

IOCC efforts will focus also uponexamination of the nexus between internationalorganized crime and international terroristactivities. This timely and important issuewarrants close and continuing scrutiny. It isvirtually certain that, in some cases, structurallinks exist between international organized crimeand terrorist activity. The IOCC believes that, dueto ever decreasing funding sources and decliningstate sponsorship, it is increasingly likely thatterrorist groups will turn to traditional criminalactivity in order to finance operations. This viewis shared by many in the law enforcement andintelligence community. Moreover, duringdetainee debriefings in Guantanamo Bay andelsewhere, it became apparent that many of theseindividuals were involved in criminal activityprior to their recruitment into their respectiveterrorist organizations. Further, the Taliban'sinvolvement in international drug trafficking haslong been known to law enforcement, as have thenarcotics trafficking activities of various terroristsgroups in Latin America and Southeast Asia.

In addition to drug trafficking, terroristorganizations have been known to participate inalien and contraband smuggling, large scalefinancial institution fraud, production offraudulent documents, illegal weapons andmilitary equipment acquisition, extortion in theform of demands for tribute payments, moneylaundering, tax evasion, robbery, and kidnaping.These activities share the same long-establishedsmuggling routes and networks of corrupt customsofficials. Colombian and Filipino terroristorganizations have been regularly involved inkidnaping for ransom activity, while criminalenterprises of Middle Eastern origin appear tohave been especially active in contrabandsmuggling, credit card fraud, financial fraud,


money laundering, and weapons smuggling.Indeed, the above noted criminal activities can, insome cases, be considered as "signature" criminalviolations common to both international organizedcrime and terrorist activity.

Currently, the IOCC is focusing on a varietyof international OC issues and groups, andassessments are underway to identify andprioritize the most threatening organized crimegroups and criminal enterprises. Emerging BalkanOC groups are of increasing interest, especiallythose originating in Albania and Kosovo. EthnicAlbanians emigrated in vast numbers during the1990s and now represent a significant presencethroughout Western Europe, Canada, and theUnited States. As of 2000, an estimated 500,000ethnic Albanian émigrés resided in theUnited States and Canada, 400,000 in Germany,and 30,000 in Great Britain. While the vastmajority of newly arriving émigrés are honest,hardworking individuals in pursuit of a better lifefor themselves and their families, a small numberare intent on simply transplanting their criminallifestyles.

Emerging Albanian OC groups present aformidable challenge for Special Agents andprosecutors. Tribal, clannish, and paramilitary,these organizations rival La Costa Nostra (LCN)at the height of its power and influence in terms oftheir cohesive structure, secrecy, and penchant forviolence. Research recently conducted by theLCN/Balkan Organized Crime Unit at FBIHeadquarters revealed that, within the past tenyears, approximately 3,659 Albanian-bornindividuals were arrested in the United States.Crimes included a variety of offenses rangingfrom spousal abuse to murder. Lately, however,these offenses have reflected a significant increasein traditional racketeering activity such as illegalgambling, prostitution, and extortion. In theUnited States and Europe, Albanian criminalgroups are also heavily involved in bankrobberies, automobile theft, and theft frominterstate shipments, that is, activities that arereminiscent of the LCN early in its criminalevolution. In New York City, Albanian OCgroups are occupying territory formerly controlledby long-established, but recently weakened, LCNgroups.

These organizations are also heavily involvedin worldwide narcotics trafficking, especiallyheroin. During the past five years, Albanian OCgroups have come to dominate the heroin tradethroughout Europe. European law enforcementofficials advise that more than 80% of the heroinavailable on the European market has, at some

point, been smuggled through the Balkan States.In Germany, Switzerland, Austria, and theScandinavian countries, it is estimated thatapproximately 70% of the heroin market iscontrolled by Albanian OC groups. Further, themajority of these heroin shipments originate inAfghanistan and Central Asia, suggesting theexistence of extremely dangerous criminalalliances. It is clear that the Albaniannarcotrafficking networks have become sopowerful and extensive as to rival long establishedTurkish and Sicilian networks.

Albanian OC groups have always workedclosely with Italian OC figures, particularly in thedrug trafficking arena where they have providedcouriers and maritime smuggling routes across theAdriatic Sea. Large Albanian communities havebeen established in Southern Italy where naturallinkages have been formed with the CalabrianMafia and the Sacra Corona Unita. The IOCC, inconjunction with the Organized Crime Section ofFBI Headquarters, is working closely with Italianlaw enforcement officials in sharing sharplyfocused criminal intelligence on this issue and onItalian/Sicilian organized crime matters in general.

Despite rumors of their demise, LCNcontinues to represent a serious organized crimeproblem within the United States and Canada.Strenuous efforts to dismantle these organizationshave long been underway and significant progressis being made. Recent FBI investigations haveconfirmed linkages between United States LCNfigures and their counterparts in Sicily and Italywhere safe houses have been established andwhere pliable bankers have been identified andco-opted. High-ranking LCN figures in theUnited States have been voicing a great deal offrustration over perceived lapses of disciplinewithin their ranks and have sought new recruitsand criminal expertise from Sicily and the Italianmainland. In addition, individuals affiliated withthe Camorra and `Ndrangheta, two Italian OCgroups active in Italy and elsewhere in SouthernEurope, have surfaced in the United States andCanada. IOCC resources are being devoted tosupporting pending investigations in this areawherever an international nexus has beenestablished.

IOCC resources have also been assigned tosupport Eurasian OC investigations and IOCCpersonnel are presently on the ground inBudapest, Hungary in support of theFBI/Hungarian National Police Organized CrimeTask Force. Several Russia-based organized crimegroups, associates of which are active in theUnited States and internationally, are of interest to


the IOCC and are the focus of analytical projects.The IOCC is also supporting several pendinginvestigations targeting Asian and Mexicancriminal enterprises active in the United Statesand Canada. In addition to the narcoticstrafficking component, these investigations reflectextensive alien smuggling and money launderingactivity.

Threats posed by international organizedcrime will not diminish in the near future. Allindications suggest exactly the opposite willhappen. The IOCC represents a concerted effort tointegrate and coordinate law enforcement andintelligence community resources in order to moreeffectively address this growing global problem.United States law enforcement agencies, at everylevel, have shown themselves to be especiallyskillful in conducting highly complex, long-term,and sophisticated organized crime investigations,both at home and abroad. When possible andwhen appropriate, domestic investigations with aninternational nexus should be expanded to includeforeign-based subjects. The IOCC intends toactively assist in that process.�

ABOUT THE AUTHOR

�John J. DiStasio is currently assigned to theInternational Organized Crime Center at FBIHeadquarters as Unit Chief. Previous to thisassignment, Mr. DiStasio served in the FBI's NewYork Division where he supervised an organizedcrime squad that targeted La Cosa Nostraoperations in the greater New York City area.a

The Focus of the FBI's OrganizedCrime ProgramWK Williams Chief, Organized Crime Section (OCS)Criminal Investigative DivisionFederal Bureau of Investigation

Reports of the demise of the FBI's OrganizedCrime Program (OCP) have been greatlyexaggerated. To the contrary, the FBI is still fullyengaged in combating organized crime groups thataffect American society, whether they be nationalorganizations or transnational enterprises.

As a result of the events of September 11,2001(9/11), the FBI continues to undergosignificant change and reorganization to improveits ability to respond to the challenge of terrorismand other issues. The Director's restructuring andrealignment of priorities to improve services, andprotect the American people, will have no long-term negative effects on the work of the OCP.Moreover, the OCP has not suffered anysignificant loss of resources. When a major eventsuch as 9/11 occurs, all available resources of theFBI must be harnessed to address that emergency.This will, of course, disrupt and delay some

ongoing investigations and prevent or hold inabeyance the initiation of some newinvestigations. This interruption and diversion ofresources is necessary to address more urgentnational security matters.

What was not affected by 9/11 was the FBI'scommitment and dedication to aggressivelycombat the efforts of transnational nationalorganizations and criminal enterprises that pose athreat to America's economy, its national security,and its citizens. Investigations have taken placeduring the past two years against members andassociates of La Cosa Nostra (LCN), ItalianOrganized Crime (IOC), and Russian and Asianorganizations, that have resulted in successfulprosecution and convictions. For the first timeever, all heads of the major LCN families areincarcerated at the same time. These successeswere possible because there was never a loss offocus on the importance of combating thenegative influences and effects of organized crimeon the daily lives of Americans, even during thisvery difficult period in American history with itsrenewed and appropriate focus oncounterterrorism matters.


Looking ahead, the OCP will continue tofocus its efforts on transnational nationalorganizations and criminal enterprises whosecriminal activities pose a threat to theUnited States. The FBI will direct its OCPresources toward four distinct groups oftransnational national organizations, or criminalenterprises: 1) traditional, well-entrenchedorganizations such as the La Cosa Nostra andItalian Organized Crime; 2) Eurasianorganizations that have emerged since the fall ofthe Soviet Union; 3) Asian Criminal enterprises,and 4) African Criminal Enterprises. Emergingfrom within the aforementioned organizations isthe specter of Albanian organized crime figures.The FBI OCP will direct specific intelligencegathering and investigative strategies towardAlbanian organized crime in an effort to preventthe establishment of a firm foothold within theUnited States. A second reason for concern is thedeveloping relationship and interaction betweenAlbanian organized crime groups and some LCNfamilies. Additionally, several foreign lawenforcement and intelligence entities haveexpressed concern about the presence of Albanianorganized crime in their countries and its nexus tothe United States.

In order to combat the emerging criminalactivity of Albanian organized crime and othertransnational national organizations and criminalenterprises, the OCS will enhance intelligencesharing with foreign counterparts whereappropriate and permissible by law, and wherethere exists a nexus to the United States.Additionally, there will be an effort to identifycommon investigative targets and initiate jointinvestigations with foreign counterparts.

Undeniably, transnational national organizedcrime is an immediate and increasing concern ofdomestic and international law enforcement andintelligence communities. Therefore, it isimportant to establish and maintain effectiveliaison relationships and working partnershipswith domestic law enforcement counterparts andprosecutors. It is equally important to establishand maintain effective liaison and partnershipswith foreign counterparts where the leadership ordirection of transnational criminal enterprises areforeign-based. Without this valuable liaison andpartnership, the investigation stops at the bordersand allows the criminal enterprise to gain anadvantage by exploiting these boundaries. Ourefforts to pursue and maintain positiverelationships will be to deny criminal enterprisesthis advantage.

The focus and mission of the OCP is thedisruption and ultimate dismantlement oftransnational, national organizations, and criminalenterprises that pose the greatest threat toAmerican society. This will be accomplishedthrough sustained, coordinated investigations, theutilization of criminal and civil provisions of theRacketeering Influenced and CorruptOrganizations (RICO) statute, and the use ofsophisticated investigative techniques.

Finally, the focus on transnational nationalorganizations, and criminal enterprises will becharacterized by vitality and passion. Alltechniques and tools available under the law willbe used to thwart such criminal activities. We willengage our foreign counterparts to shareintelligence and seek opportunities for jointinvestigations. Additionally, the OCP will focuson increasing multi-division and multi-districtinvestigations in a coordinated effort to dismantletransnational national organizations and criminalenterprises. The OCS looks forward to working inpartnership with the prosecutors and Departmentof Justice attorneys in this endeavor.�

ABOUT THE AUTHOR

�WK Williams has been Chief of the FBI's OCSsince January 2003. Mr. Williams was theAssistant Special Agent in Charge of theJacksonville Division from 2000 to 2003. He hasserved two tours at FBI Headquarters.Additionally, he served in the Las Vegas and SanFrancisco Divisions, where he worked traditionalorganized crime, gang investigations, and servedas an undercover agent. In the San DiegoDivision, he supervised a drug squad targetingMexican and Colombian Drug Cartels, from 1995to 1997.a


The FBI's Legal Attache (Legat)ProgramSusan M. CurtisSpecial Agent (Ret.)FBI Headquarters

Joyce McClellandAnalyst, Office of International OperationsFBI Headquarters

I. Legat history

In 1939, President Franklin D. Rooseveltplaced the responsibility for investigatingespionage, sabotage, and other subversiveactivities, with the Federal Bureau ofInvestigation (FBI), the Military Intelligenceservice of the War Department (MID), and OtherNaval Intelligence (ONI). A Presidential Directivedesignated the FBI as responsible for coordinatingand disseminating intelligence and securityinformation to other federal agencies, and on June24, 1940, the Special Intelligence Service (SIS)was established. In connection with the SIS, theBureau dispatched Special Agents (SAs) tovarious countries throughout the WesternHemisphere, primarily for intelligence gatheringpurposes. In 1941, the U.S. Ambassador toColombia requested the assignment of a SA to theU.S. Embassy in Bogota. Bogota proved to be theforerunner of what eventually became the FBI'sLegal Attache Program. In 1942, SAs assigned toU.S. embassies were carried on the diplomaticroster and given the tile of Legal Attaché by theState Department. As the need for intelligenceinformation pertaining to World War IIdiminished, SAs assigned to posts in Europe,Canada, and Latin America, began acting in aliaison and/or training capacity.

In 1947, the SIS closed its offices and turnedover its work, jurisdiction, and files, to the newlyestablished Central Intelligence Group, presentlyknown as the Central Intelligence Agency. At thistime, the FBI's Legal Attaches continued tomaintain liaison with foreign police, intelligenceagencies, and offices in other U.S. agencies.

Over the next few decades, the Legal AttacheOffice became a permanent presence in many U.S.Embassies, with openings and closings of LegatOffices as investigative demands and crime trendschanged.

The following offices were opened prior toFiscal Year (FY) 1991:

• Bangkok

• Berlin

• Bern

• Bogota

• Bridgetown

• Brussels

• Canberra

• Hong Kong

• London

• Madrid

• Manila

• Mexico City

• Ottawa

• Panama City

• Paris

• Rome

• Tokyo

From FY 1992 to the present, the FBI morethan doubled the number of Legat offices and itsstaffing levels serving abroad.

The following offices were opened during theyears 1992 through 2002:

• 1992 - Athens, Caracas, and Vienna;

• 1994 - Moscow and Santiago;

• 1996 - Cairo, Islamabad, and Tel Aviv;

• 1997 - Buenos Aires, Kiev, Pretoria, Riyadh,Tallinn, and Warsaw;

• 1999 - Ankara, Brasilia, Copenhagen, andLagos;

• 2000 - Almaty, Bucharest, New Delhi,Prague, Seoul, and Singapore;

• 2001 - Amman, Nairobi, and Santo Domingo;and

• 2002 - Beijing


Using the successes produced in all fields ofinternational crime and counterterrorism, theLegat offices, working in conjunction with FBIdomestic offices and the host nation counterparts,continued its expansion plan. By the end of FY2002, the FBI had forty-five Legal AttacheOffices worldwide and a Liaison Office in Miami,providing coverage for over 200 countries,territories, and island nations. The FBI's processfor opening Legat offices and allocating resourcesis based on comprehensive planning, whichidentifies criminal activity in the United Stateswith a nexus to a foreign country. In addition,each office is established through mutualagreement with the host country and is situated inthe U.S. Embassy or U.S. Consulate in thatcountry.

The FBI has authority to open Legat Officesin the United Arab Emirates, Georgia, Malaysia,Morocco, and Yemen, in the coming year.

II. Law enforcement initiative

There are three key elements to the FBI'sinternational law enforcement initiative.

• The FBI must have an active overseaspresence that fosters the establishment ofeffective working relationships with foreignlaw enforcement agencies. There is a well-documented history of Legal Attaches whohave drawn upon their investigativeexperiences and backgrounds and enlisted thecooperation of foreign law enforcement oninnumerable cases, which led to the arrest ofmany U.S. fugitives and the solving of seriousU.S. crimes.

• Training foreign law enforcement officers inboth basic and advanced investigativetechniques and principles is a powerful toolfor promoting cooperation. For decades, theFBI's National Academy Program has fosteredcomity with international, state, and local lawenforcement agencies.

• Institution building is necessary to helpestablish and foster the rule of law in newlydemocratic republics. Establishing a rule oflaw promotes greater confidence of thecitizens and stability in these newgovernments. Fostering the development ofdemocratic principles in these countries willnot only protect the United States' interestsand citizens in those countries, but also bringstability to regions which have been fraughtwith strife throughout history.

III. Legal Attache Program

The 126 Special Agents and seventy-fourprofessional support employees assigned to theLegat offices work in support of the FBI'sdomestic law enforcement mission. It is theresponsibility of the Legal Attache to pursueinternational aspects of the FBI's investigativemandates through established liaison withprincipal law enforcement andintelligence/security services in foreign countries,and to provide a prompt and continuous exchangeof information with foreign law enforcement andintelligence agencies.

Since September 11, 2001, the FBI hasreorganized to effectively meet the challenges ofthe nation's war on terrorism. In May 2002, FBIDirector Mueller established ten priorities for theFBI. The Legat Program actively supports theFBI's top two priorities: protect the United Statesfrom terrorist attacks, and protect theUnited States against foreign intelligenceoperations and espionage. International terrorismand counterintelligence matters are the highestpriority of most of the FBI's forty-five Legatoffices. The Legat Program represents a vitalcomponent in the FBI's counterterrorism efforts. Itis primarily through the Legat Program that theFBI coordinates investigative efforts and sharesinformation with international law enforcementand intelligence partners.

A Legat presence throughout the world hasenhanced the FBI's ability to bring investigativeresources to bear quickly in the aftermath ofterrorist acts. Legats assist in the investigations ofterrorist acts under U.S. extraterritorialjurisdiction and international law, coordinate withforeign authorities to arrange rendition ofterrorists, and provide investigative assistance toforeign law enforcement organizations asrequested. For example, in response to the eventsof September 11, 2001, Legat offices facilitatedthe rapid deployment of approximately 700 FBIpersonnel overseas. Legats also assisted in theinvestigation of the October 2002 shooting of U.S.AID Officer Laurence Foley in Amman, thebombing earlier this year of a disco in Bali, andthe recent bombing of the airport at Davo City inthe Philippines where twenty-one people werekilled, including one American.

The FBI has also provided a steady stream ofTemporary Duty (TDY) Agents and supportpersonnel to the most active Legat offices, with asmany as eighty individuals circulating among FBILegat offices at any given time.


Each Legat is the FBI Director's personalrepresentative in the foreign country where he/sheresides or where he/she has regionalresponsibilities. Their job is to respond to theFBI's domestic and extraterritorial investigativeneeds as effectively as possible. Since FBI agentsdo not have traditional law enforcement powersoverseas, they must rely upon strong, reciprocalpartnerships with their foreign counterparts.Legats are responsible for building theserelationships on behalf of all FBI agents. Byfocusing on one country or several nations in agiven area, Legats are able to maintain regular,often face-to-face contact with foreign officials,and to thoroughly familiarize themselves with theinvestigative practices and protocols of theirassigned countries. These efforts are critical tocultivating and facilitating timely support for theBureau's overseas investigations. Though Legatsspend a majority of their time pursuing leads foragents in the United States, they strengthen bondswith foreign authorities by sharing informationand offering FBI assistance in cases that may havea nexus to this country.

Extraterritorial operations by the FBI arelimited to investigations and inquiries concerningalleged criminal activity which impacts, orpotentially impacts, the United States or a personprotected by U.S. law. Types of internationalcriminal activities include terrorism; organizedcrime; financial fraud and economic crime; moneylaundering; kidnaping/extortion; childpornography; and computer intrusions. FBIAgents do not have arrest powers, subpoenapowers, or the authority to conduct investigationsin other countries without the approval of the hostcountry. The FBI has the obligation to ensure thatall investigations are conducted in a mannerwhich respects the sovereignty of the country inwhich it is being conducted and thus, effectiveliaison is essential. All operations conductedoverseas are done in strict accordance with theU.S. State Department Chief of Missions'directives and the guidelines promulgated by theAttorney General regarding overseas lawenforcement activities.

Investigations in foreign countries areconducted through host country liaison contactsdeveloped and maintained by the Legat. Each hostcountry determines the kinds of investigativeactivity which can be conducted independently bya Legat. Many host governments permit theinformal exchange of police-to-police information(record checks, public record acquisition) betweenLegat and local law enforcement, but forbid more

involved investigation, such as interviews ofindividuals.

Investigative assistance from a foreigncountry may be obtained through letters rogatoryor a mutual legal assistance treaty (MLAT)request. Letters rogatory are the customarymethod of obtaining assistance from overseas inthe absence of a treaty or other agreement. A letterrogatory is a request from a judge in theUnited States to a judicial officer in a foreigncountry asking for compulsion of testimonial,documentary, or other evidence, or effectingservice of process. Letters rogatory generallyinclude background information, the facts of thecase, an articulation of the assistance requested,the text of the statutes, and a promise ofreciprocity. Such letters are prepared by the U.S.Attorney's Office and the U.S. Department ofJustice's Office of International Affairs incoordination with the FBI field office, FBIHeadquarters, and the appropriate Legat. TheUnited States has entered into an increasingnumber of MLATs, which have the force of law,and define the obligation to provide assistance, thescope of assistance, and the contents of therequests with specific countries. The MLATsshorten the letter rogatory process and provide adirect, formal procedure for making and receivingrequests between justice ministries. As a generalrule, any type of investigative assistance whichwould require a compulsory process toaccomplish in the United States (federal grandjury subpoena, search warrant, court order) mustbe sought employing a letter rogatory or MLATrequest.

All FBI field offices have sought Legatassistance in covering investigative requests, withthe largest portion coming from majormetropolitan offices. More than 80 percent of thecurrent case load handled by the Legats is indirect support of domestic FBI investigations,covering not only leads, but organizing the arrestand extradition of wanted criminals to theUnited States. International extradition is theformal process by which a person found in onecountry is surrendered to another country for trialor punishment. The process is regulated by treatyand conducted between the U.S. Government andthe government of a foreign country. It differsconsiderably from interstate extradition orinterstate rendition. Extradition, in most instances,may be granted only pursuant to a treaty.Responsibility for extradition matters lies with theDepartment of Justice (Department) and theDepartment of State. Legats cannot execute arrestsin foreign countries.


The forty-five Legat offices are supported bythe Office of International Operations (OIO) atFBI Headquarters (FBIHQ). The mission of theOIO is to provide a centralized and criticallyessential infrastructure to support the Legats. Asmentioned earlier, Legats are the principalelement in the FBI's overall internationalcounterterrorism and anticrime mission, and theOIO provides FBIHQ-based operationalinvestigative analysis, training, budget, personnel,and facilities support mechanisms. This centrallylocated and managed entity enables the Legats,working with and through their foreigncounterparts, to detect and disrupt internationalcrime and terrorism organizations. This ultimatelyprevents the victimization of U.S. citizens andinterests, both domestically and abroad, byterrorist groups. By centralizing the FBI'sInternational Program, the FBI provides a singlepoint of contact for all FBI missions, initiatives,and investigations abroad supported by andthrough the Legat Program. The OIO is comprisedof the following:

• International Operations Units I and II whichare responsible for Legat operations inEurope/Africa and the WesternHemisphere/Asia respectively;

• the International Operations AdministrativeUnit which handles all administrative supportfor the Legat offices, including personnel,housing, transportation, and training ofpersonnel; and

• the Protocol Affairs Unit which is responsiblefor all official foreign dignitaries who visitFBI Headquarters and its executivemanagement, as well as the Director's Office.The Protocol Affairs Unit is also responsiblefor obtaining required diplomatic and officialpassports and visas to facilitate the foreigntravel of all FBI personnel.

IV. International training programs

Training foreign law enforcement officers isparticularly critical to combating internationalcrime. It provides an opportunity for FBIpersonnel to cultivate relationships with foreignlaw enforcement officials that can be utilized byboth parties in the pursuit of international criminalinvestigations. To date, the FBI has trainedapproximately 50,000 law enforcement andjudicial officers representing 150 countries.

Legal Attaches help identify suitablecandidates among their foreign police contacts toattend the FBI's National Academy program.Thereafter, mid-level managers from state, local,and foreign police agencies receive training at the

FBI Academy in Quantico, Virginia. Graduates ofthe National Academy form a collegial nationaland international network. Approximately 10percent of each class comes from overseas. LegalAttaches maintain close contact with foreigngraduates of the National Academy, seeing themregularly, holding regional retraining sessionsannually, and routinely dealing with them oncases/matters of mutual interest.

Through a program and concept of in-countrytraining, the FBI conducts one and two-weekschools, which are designed to meet a country'sparticular training needs. The schools concentrateon subjects such as basic and advanced policeoperations, technical skills, ethics, and internalpolice controls. Senior FBI agents serve asinstructors, bringing their knowledge andexpertise to these programs. These trainingprograms enable foreign police entities to advancetheir abilities to investigate matters such as moneylaundering, bombings, bank fraud, fugitives, drugtrafficking, and crime scene investigation.

Under the auspices of the Department ofState's Antiterrorism Training Assistanceprogram, and working with the Department ofDefense, the FBI has also developed three trainingcourses which attempt to counter threats ofconcern to the United States. These three coursesinclude: Major Case Management, TerrorismCrime Scene Management, and the CriminalJustice Executive Forum. Each two-week courseprovides senior level law enforcement officialswith leadership management, and organizationalconcepts and experiences, that are critical to thedirection of national law enforcement agenciesand to the coordination of multiagency crisismanagement and strategy.

Both the United States trainers and foreignlaw enforcement students benefit from theseprograms. Using case studies based on currentinvestigations, the FBI demonstrates effective andprincipled law enforcement techniques. In return,the FBI receives valuable information fromforeign police officers who are intimately familiarwith the criminal organizations that the FBI isinvestigating. Finally, law enforcement trainingprovides an extremely cost-effective method ofopening channels of communication thatdramatically extend the number and scope of theFBI's international contacts.

V. International Law Enforcement Academ ies(ILEA)/initiatives

The ILEA Budapest (Hungary) was opened inApril 1995 under the leadership and supervisionof the FBI. Modeled afer the FBI's National


Academy, the ILEA Budapest is a full servicepolice training academy designed to assist thenewly independent states of the former SovietUnion. The Academy offers a core eight-weekmanagement course, five times per year, andnumerous specialty courses throughout the year.There are three or four countries participating atany given time. Since its inception, ILEABudapest has trained 1,879 students from overtwenty-five countries in the eight-weekmanagement course, and an additional 6,748students from over twenty-six countries in thespecialty courses.

The ILEA Bangkok (Thailand) opened inJune 1999 under the leadership of the DrugEnforcement Administration. The FBI providesinstructional support within the six-week corecurriculum. The ILEA Gaborone (Botswana) isunder the leadership of the Federal LawEnforcement Training Center. The FBI providesinstructional support to ILEA Gaborone in thefollowing areas: counterterrorism, publiccorruption, intelligence analysis, criminalinvestigative techniques, and forensics.

The OIO provides leadership and support forother international crime control initiatives, suchas the following:

• Southeast European Cooperative Initiative(SECI): SECI is a U.S. initiated plan toaddress post-Cold War issues in EasternEurope. It is a mini-Marshall Plan for CentralEurope and the Balkans that recognizes a hostof problems facing the region, includingtransborder crime and trafficking in humanbeings. The twelve countries included in SECIare Albania, Bosnia and Herzegovina,Bulgaria, Croatia, Greece, Hungary,Macedonia, Moldova, Romania, Slovenia,Turkey, and Yugoslavia (Serbia andMontenegro).

The FBI has been involved in SECI since1998 when the Bureau was formally requestedby the Department of State (DOS) to provideassistance and expertise in the development ofanticrime task forces throughout the SECIregion. At its inception, one agent wasassigned to assist in the development of thecenter and its regional task forces. Since thattime, the FBI has expanded its manpower andremains committed to this worthwhileinitiative, concentrating primarily in the areaof human trafficking.

In October 2000, the SECI AntiCrime Center(SECI Center) was established in Bucharest,

Romania, to address transborder crime,primarily organized crime, drugs, andtrafficking in humans. The SECI Centerserves as a clearinghouse for information andintelligence sharing for SECI, and is staffedby an elected management team derived fromlaw enforcement officials from each of thetwelve member countries, as well as observersfrom the United States and Western Europe(Great Britain, Italy, Germany, and Austria).It further contains leadership, management,and administrative elements, as well as liaisonofficers (police and customs) from each of thetwelve countries. Additionally, an observer orliaison officer, from the (nonmember)United States and supporting Western Europecountries are present at the Center. Interpoland the World Customs Organization arepermanent observers.

• Budapest Project: This was initiated as acoordinated effort between the Governmentsof the United States and Hungary to addressthe increasing threat of Eurasian organizedcrime in Russia and Central/Eastern Europe. Itis focused on specific, ongoing cases andintelligence gathering in cooperation with theHungarian National Police. To date, theproject has enjoyed success with the arrests ofat least four subjects, and the targeting ofmembers of organized crime affiliated withthe Semion M ogilevich Organization based inMoscow.

• Linchpin Initiative: In May 1999, OperationLinchpin was established to facilitate thesharing of information and operational leads,both domestic and foreign, between the lawenforcement and intelligence community.Linchpin focuses on significant internationalcriminal groups, for example, Eurasian,Italian, and Asian organized crime. Severallaw enforcement and intelligence agencies,including the FBI, are involved in sharingintelligence at regularly scheduled Linchpinmeetings.

• Project Millennium: The FBI, along withlaw enforcement agencies from twenty-threecountries, have provided Interpol with thenames and profiles of thousands of Eurasianorganized crime subjects in order to establisha worldwide database that allows participatingcountries to cross-reference and coordinateleads involving Russian and Eastern Europeanorganized crime members.

• United States–Mexico Fugitive Initiative:An initiative with the FBI, the Department,


and the Mexican government, designed toimprove procedures for obtaining provisionalarrest warrants for fugitives that have fled tothe United States from Mexico.

• United States–Canada InternationalFugitive Initiative: The Department, FBI,United States M arshals Service (USMS),Royal Canadian Mounted Police (RCMP),Toronto Police Service, and Immigration andNaturalization Service (INS) exchangeintelligence and improve efficiency inlocating/apprehending fugitives who flee tothe United States from Canada and to Canadafrom the United States.

• The International Securities andComm odities Working Group: This Groupwas established to bring together individuals,primarily Legats and their counterparts, whodeal with international markets, to discussways to effectively coordinate investigationsrelative to the United States and internationalfinancial markets.

• Plan Colombia: The Department and the FBIare assisting Colombia in developing acomprehensive program to investigatekidnaping. This program will include theestablishment of a Colombian lawenforcement task force consisting of speciallytrained investigators. When appropriate, thetask force will work closely with the FBI,particularly in cases involving U.S. nationals.The Department has also tasked the FBI withimplementing a comprehensive traininginitiative designed to train law enforcementand military personnel from Colombia inantikidnaping investigative methods andprocedures.

• Canadian Eagle: This is a joint initiativebetween the Canadian law enforcementagencies and the FBI, which targetsunscrupulous Canadian telemarketersvictimizing citizens of the United States,particularly the elderly. The FBI has placedtwo agents in Montreal, one agent inVancouver and one agent in Toronto to workwith the RCM P and other police agencies toidentify, investigate, and prosecute theseindividuals.

• The High Intensity Financial Crimes AreaTask Force (HIFCAs): This task force is acongressionally mandated approach toaddressing complex and egregious moneylaundering conspiracies in a task forceenvironment. HIFCAs have been establishedin the New York/Newark, Los Angeles, San

Juan, Phoenix, El Paso, and San AntonioDivisions. Applications for designation havebeen made by the San Francisco and ChicagoDivisions.

• International Outlaw Motorcycle GangInvestigators Alliance: Michigan area FBI,RCMP, and U.S. law enforcement agenciescoordinate investigations, exchangeintelligence, and analyze trends regardingmotorcycle gangs and their criminal activities.

• Interpol Project Rockers: With respect toOutlaw Motorcycle Gangs (OMG), the FBI'sCriminal Investigation Division, through theViolent Crimes and Major Offenders Section(VCM OS), Safe Streets and Gang Unit(SSGU), participates in the Interpol ProjectRockers Annual Conference and takes part inthe Project Rockers Steering Committee.Representatives from Europe, Australia, andCanada also participate. The goal of themeetings centers on efforts to evaluate andstrengthen the international cooperationbetween the countries that are affected bycriminal activities of OMGs and theirmembers.

• Project Stocar: This is an FBI/CriminalJustice Information Services/Interpol initiativeto share and exchange data regardinginternational vehicle theft.

VI. Statute additions due to an increase ininternational crime

The passage of additional statutes byCongress has led to greater responsibilities for theFBI and provides us with the legal justification forour presence overseas. Some of the recentadditions include:

Title 18 U.S.C. §§

• 1589, 1590, 1591, 1592 Trafficking inPersons;

• 2339C Prohibitions Against the Financing ofTerrorism (Suppression of theFinancing of Terrorism ConventionImplementation Act of 2002);

• 2332f Bombings of Places of Public Use,Government Facilities PublicTransportation Systems andInfrastructure Facilities (TerroristBombings ConventionImplementation Act of 2002);

• 1993 Terrorist Attacks and Other Acts ofViolence Against MassTransportation Systems (USA PatriotAct 2001);


• 2339 Harboring or Concealing Terrorists(USA Patriot Act 2001);

• 175B Biological Weapons; Select Agents(USA Patriot Act 2001);

• 2339A Providing Material Support toTerrorism (Antiterrorism andEffective Death Penalty Act of 1996);

• 2339B Providing Material Support orResources to Designated ForeignTerrorist Organizations (Antiterrorismand Effective Death Penalty Act of1996);

• 2332C Use of Chemical Weapons(Antiterrorism and Effective DeathPenalty Act of 1996);

• 956 Conspiracy to Kill, Maim, or InjurePersons or Damage Property in aForeign Country (Antiterrorism andEffective Death Penalty Act of 1996);

• 32 Aircraft Sabotage;

• 37 Violence at International Airports;

• 1119 Foreign Murder of US Nationals;

• 1204 International Parental Kidnaping;

• 2280 Violence against Maritime Navigation(Violent Crime Control and LawEnforcement Act of 1994);

• 2281 Violence against Fixed MaritimePlatforms (Violent Crime Control andLaw Enforcement Act of 1994).

Title 49 U.S.C. §§

• 46502 Air Piracy;

• 46504 Interference with Flight CrewMembers and Attendants;

• 46505 Carrying a Weapon or Explosive onan Aircraft;

• 46507 False Information and Threats.

Title 31 U.S.C. §

• 5332 Bulk cash smuggling into or out ofthe United States (USA Patriot Act2001)�

ABOUT THE AUTHORS:

�Susan M. Curtis recently retired from the FBIafter serving twenty-seven years, including morethan sixteen years of international experience. Inaddition to serving at FBI Headquarters, Mrs.Curtis served as Legal Attache in Canberra,Australia for three years.

�Joyce McClelland has been with the FBI forover seventeen years. She has been an Analyst inthe Office of International Operations for over sixyears with an emphasis on Eastern Europeancriminal activities, and a focus on humantrafficking.a

International Aspects of CriminalImmigration Enforcement

Michael SurgallaCriminal Division, Domestic Security SectionUnited States Department of Justice

Arthur NortonCriminal Division, Domestic Security SectionUnited States Department of Justice

I. Introduction

A Taiwanese "snakehead" (slang for aliensmuggler) brings boatloads of undocumentedmigrants from China to Guatemala, holding them

hostage before arranging further passage to Texas.An Iranian national based in Ecuador smugglesMiddle Easterners into the United States by air,using stolen European passports. A Salvadoransmuggling organization trucks hundreds ofCentral Americans, including many youngchildren, across three countries under harshconditions en route to California.

These are examples of the types ofinternational smuggling organizations that targetthe United States as a favored destination ofillegal aliens. Organized alien smuggling threatensto undermine the sovereignty and security of


transit and destination countries alike. Frequently,the health and safety of migrants are threatened aswell. The phenomenon of international aliensmuggling also poses complex challenges to thelaw enforcement and intelligence communities.

The purpose of this article is threefold:

• to highlight alien smuggling as a national lawenforcement priority;

• to describe interagency and internationalcooperation in the context of maritimeinterdiction and immigration-relatedinvestigations; and

• to present an overview of the structure andimmigration-related work of the new DomesticSecurity Section within the Criminal Division.

II. Alien smuggling as a national lawenforcem ent priority

Prior to the 1990s, prosecution of aliensmuggling and other immigration offenses was notperceived, on a national level, to be a high lawenforcement priority. Criminal enforcement ofimmigration laws took a back seat to otherconcerns, including organized crime andracketeering, narcotics, public corruption, andwhite collar crime. Mass migration incidentsinvolving Cuba and Haiti, for example, the 1980Cuban "Mariel Boatlift," created majorimmigration enforcement problems, but wereregarded mainly as civil or administrative innature.

A series of high-profile, maritime aliensmuggling episodes involving migrants from thePeople's Republic of China, however, captured theattention of both the government and the generalpublic. Between 1991 and mid-1993, maritimesmuggling incidents involving Chinese migrantsgave rise to at least a dozen federal criminalprosecutions. Perhaps the incident that focused theDepartment of Justice's (Department) attention onalien smuggling as a major criminal lawenforcement problem was the June 6, 1993 tragedyin which the M/V Golden Venture, carryingapproximately 300 illegal Chinese migrants, ranaground near a beach in Queens, New York. Tenmigrants drowned as they attempted to swimashore. One day later, in a separate incident, NewYork City police rescued thirteen illegal migrantsfrom China who were being held captive bysuspected gang members, pending payment ofsmuggling fees.

Our experience with the Chinese boat casessuggested that the character of alien smuggling hadchanged. Once regarded as the province of small-time criminal entrepreneurs, alien smuggling had

become a significant organized criminal activitythat generated enormous sums of money withlittle risk to smugglers. It became apparent thatstronger laws were needed to increase penaltiesand provide adequate investigative andprosecutorial tools to combat this conduct. Overseveral years, the Department sought, andCongress enacted, legislation that significantlyenhances our ability to enforce criminalimmigration laws.

The statutory maximum penalties for aliensmuggling, passport fraud, visa fraud, and relatedoffenses were increased. In addition, theUnited States Sentencing Commission increasedthe Guidelines applicable to these offenses. Aliensmuggling-related offenses were added to the listof crimes for which court-authorized interceptionof wire, oral, or electronic communications maybe obtained. (18 U.S.C. § 2516). The same crimeswere added to the list of Racketeer Influenced andCorrupt Organizations (RICO) predicate offenses.(18 U.S.C. § 1961(1)). These offenses also comewithin the definition of specified unlawful activity(SUA) for purposes of the money launderingstatute. (18 U.S.C. § 1956). Moreover, theseoffenses are now within the scope of the civil andcriminal forfeiture statutes. (18 U.S.C. §§ 981,982). Finally, in connection with undercoverinvestigations, Congress increased authority to usecertain practices, including operating businesses.(8 U.S.C. § 1363a).

Since 9/11, there has been increasedrecognition that immigration issues are part of thefight against terrorism, both in terms of usingimmigration prosecutions as a tool againstsuspected terrorists and, more broadly, in terms ofensuring that United States authorities know whois entering the country. As part of the ongoingpost-9/11 review, laws, practices, and policies, arebeing reevaluated.

Further, as will be discussed more specificallyin the context of particular investigations, othercountries are increasingly willing to cooperatewith the United States in immigration-relatedinvestigations and prosecutions. Informal methodsof bilateral law enforcement cooperation,including information sharing, targeting,investigating, and expelling wanted persons to theUnited States, and permitting United States lawenforcement to operate undercover in foreignterritory, have led to the disruption or dismantlingof a large number of smuggling organizations.Formal cooperation, including the availability ofextradition for alien smuggling and relatedoffenses, is increasing as well.


III. Interagency and international cooperation

A. Framework for international cooperation

The negative impact caused by organized aliensmuggling is not unique to the United Statesexperience. Other destination countries, amongthem Canada, Australia, the United Kingdom, andItaly, have identified alien smuggling as a potentialthreat to their national security. Many countriesthat are used by smuggling organizations primarilyas transit points have become alarmed as well.Enlisting cooperation from a third category ofcountries, the so-called "sending states," to combatinternational alien smuggling is proving to be moredifficult. Certain sending states reap significantfinancial benefits from emigration through theremittance of money by their nationals livingabroad. Other countries use emigration as apolitical safety valve. Some of the countries thattraditionally have not seen illegal migration innegative terms, however, are becoming cognizantof the problems caused by smugglingorganizations, including corruption, erosion of therule of law, and physical harm to migrants.

In November 2000, the United Nationsconcluded an important new multilateral lawenforcement treaty. The United NationsConvention against Transnational Organized Crime(TOC) is designed to promote internationalcooperation by defining terms such as "organizedcriminal group," and requiring parties tocriminalize certain conduct. Specifically, partiesmust criminalize participation in an organizedcriminal group, money laundering, corruption, andobstruction of justice.

TOC has three optional protocols:

• For purposes of this article, the pertinentinstrument is the "Protocol against theSmuggling of Migrants by Land, Sea and Air"(Smuggling Protocol).

• A second protocol concerns trafficking inpersons, a related, but separate form ofcriminal activity generally involving force,fraud, or coercion.

• The third protocol deals with firearmstrafficking. (The United States has signed themain convention and the protocols onsmuggling and trafficking, but has not signedthe firearms protocol.)

The TOC become activated ninety days afterthe fortieth country has deposited its ratificationwith the United Nations. The Smuggling Protocolalso requires forty ratifications, but cannot enterinto force prior to the effective date of the main

convention. (Presently, approximately thirty-threecountries have ratified or acceded to the mainconvention, and approximately twenty-one havedone so with respect to the Smuggling Protocol.)

The Smuggling Protocol is significant in thatit will require parties to criminalize aliensmuggling, document fraud, and related conduct,at least insofar as such acts are committed for gainby organized criminal groups. In conjunction withthe main convention, the Smuggling Protocolshould bolster longstanding efforts by theUnited States to encourage other countries toextradite fugitives who are accused of aliensmuggling and related offenses. For more than adecade, the United States Government has soughtto ensure that immigration crimes and relatedoffenses, such as document fraud, are deemed tobe extraditable offenses under new bilateralextradition treaties. In addition, the SmugglingProtocol will provide an international frameworkfor cooperation in combating the smuggling ofmigrants by sea.

B. The United States approach to maritim einterdiction of illegal aliens

For many years, aliens from Cuba, Haiti, theDominican Republic, the Bahamas, and otherCarribean countries, have used maritimesmuggling routes to enter the United Statesillegally. Increasingly, aliens from other parts ofthe world have been availing themselves of thesame smuggling routes and services. The primarydestinations for these smuggling activities havebeen, and continue to be, south Florida, PuertoRico, and the United States Virgin Islands.

With the proliferation of the smuggling ofChinese nationals in the early 1990s, the preferreddestinations included ports on both the east andwest coasts of the United States, as well as Hawaiiand Guam. On June 18, 1993, just twelve daysafter the M/V Golden Venture episode, thegovernment's policy with respect to the problemof alien smuggling was addressed by aPresidential Directive.

Presidential Decision Directive 9 (PDD-9)noted that the recent increase in Asian criminalsyndicate smuggling of Chinese nationals illegallyinto the United States is a matter of seriousconcern. Accordingly, the following aliensmuggling policy was adopted and, to asubstantial degree, this policy remains in effecttoday.

The U.S. government will take the necessarymeasures to preempt, interdict and deter aliensmuggling into the U.S. Our efforts will focus


on disrupting and dismantling the criminalnetworks which traffic in illegal aliens. We willdeal with the problem at its source, in transit,at our borders and within the U.S. We willattempt to interdict and hold smuggled aliensas far as possible from the U.S. border and torepatriate them when appropriate. We willseek tougher criminal penalties both at homeand abroad for alien smugglers. We will seekto process smuggled aliens as quickly aspossible. At the same time, we will alsoattempt to ensure that smuggled aliens detainedas a result of U.S. enforcement actions,whether in the U.S. or abroad, are fairlyassessed and/or screened by appropriateauthorities to ensure protection of bonafiderefugees. (emphasis added)

WEEKLY COMP. PRES. DOC., Alien Smuggling,(June 1993).

As the primary maritime law enforcementagency, the United States Coast Guard hasresponsibility for enforcing immigration laws atsea. The Coast Guard conducts patrols andcoordinates with other components of theDepartment of Homeland Security (DHS), theDepartment, other federal agencies, and foreigncountries, to interdict undocumented migrants atsea before they reach the United States, itsterritories, and possessions.

Because migrant interdiction at sea mayadversely affect foreign relations, interdictionoperations often require consultation withinterested federal agencies. Such interagencyconsultations are conducted pursuant to anotherPresidential Directive (January 19, 1978), and aregenerally referred to as the "PD-27 process." Thisprocess imposes procedures on federal agencies fordealing with various types of nonmilitary incidentsthat could have an adverse effect on United Statesforeign relations. Typically, these situationsconcern foreign-flagged vessels involved in alienor drug smuggling. In practice, the PD-27 processinvolves interagency telephone conferencesconvened at the agency headquarters level forproposing courses of action, and obtaininginteragency concurrence and coordination.WEEKLY COMP. PRES. DOC., Procedures forDealing with Non-military Incidents (Jan. 1978).

Maritime migrant smuggling often involvesforeign-flagged vessels that are overcrowded andunseaworthy. In these situations, the Coast Guard'sinitial intervention may be necessary simply toensure migrant safety. If the available facts indicatethat a violation of our immigration laws isoccurring, the Coast Guard, through the PD-27process, will seek interagency consensus on a

course of action. Typically, the first step willinvolve a diplomatic approach to the flag country,seeking authority to board the vessel andinvestigate.

If flag-country authorization is obtained, and adetermination made that the vessel is involved inalien smuggling, the resulting course of actionwill depend on the particular circumstances ineach case. For example, is the flag state willingand able to accept responsibility for the vessel andthe migrants? Can the vessel be diverted to a thirdcountry from which the migrants can berepatriated to their countries of origin? Have anyof the migrants expressed protection concerns soas to require preliminary screening interviews byasylum officers? Has there been a violation of ourimmigration laws that merits prosecution?

The decision whether to pursue a criminalprosecution often depends on investigativeinterviews conducted by government immigrationofficers and attorneys on board the smugglingvessel or in foreign countries. These interviewsidentify the targets of the investigation anddetermine which migrants may be suitable to bebrought into the United States as materialwitnesses. When a decision to prosecute is made,venue for the offense often is governed by 18U.S.C. § 3238 (offenses not committed in anydistrict). In some cases, the district where thedefendant is first brought will control. In others,venue will be in the District of Columbia.

C. International investigative resources

One difficulty often encountered ininternational smuggling and document fraudinvestigations is that the major targets may resideoutside the United States. Complicating mattersfurther is the fact that even large-scale aliensmugglers tend to operate through loose networksof affiliates that rarely fit traditional hierarchicalmodels of organized crime.

In order to develop prosecutable criminalcases against principals in international aliensmuggling organizations, the United States musthave an effective investigative capability invarious parts of the world. Prosecutors should beaware of the investigative resources that areavailable for this purpose. Exact capabilities willvary by country, but United States lawenforcement agents and prosecutors stationed atUnited States embassies and consulates often haveexcellent working relationships with theircounterparts. Frequently, United States lawenforcement personnel posted abroad can obtaininformation or evidence informally. If formalmutual assistance is needed, for example, if the


evidence was not obtained in an admissible form,the information or evidence gathered informallymay provide the basis for drafting a formal request.

Circumstances and practices differ fromcountry to country. Consult the Office ofInternational Affairs (OIA) for specific adviceregarding informal and formal mutual legalassistance, as well as issues regarding extraditionand possible alternatives to extradition.

Department of Homeland Security

On March 1, 2003, the Immigration andNaturalization Service (INS) was abolished and itsfunctions were transferred to the Department ofHomeland Security (DHS). The former INSfunctions have been generally divided among threenew bureaus:

• the Bureau of Immigration and CustomsEnforcement (ICE);

• the Bureau of Customs and Border Protection(CBP); and

• the Bureau of Citizenship and ImmigrationServices (CIS).

At publication time, DHS is in the process ofmaking organizational and policy decisionsconcerning its allocation of overseas resources.Please note, however, that ICE is primarilyresponsible for investigating criminal violations ofthe Immigration and Nationality Act and relatedprovisions of the United States Code. Presently,DHS has three primary international offices,located in Mexico City, Rome, and Bangkok. Eachof these offices operate several satellite offices thathave enforcement/investigative capability.

Currently, the Mexico City office operatessatellite offices in Mexico, Guatemala, Ecuador,Cuba, Jamaica, Peru, Panama, Haiti, El Salvador,and Honduras. The Rome office supervises satelliteoffices in Turkey, Greece, Denmark, Germany,Pakistan, South Africa, the United Kingdom,Spain, Russia, Kenya, India, and Austria. Satelliteoffices for the Bangkok District are located inChina, Vietnam, Hong Kong, the Philippines,Korea, and Singapore.

Bureau of Diplomatic Security

The Bureau of Diplomatic Security (DS) is thesecurity and law enforcement arm of theDepartment of State. One of its components is theDiplomatic Security Service. Special Agents of DShave concurrent investigative jurisdiction withrespect to passport and visa fraud offenses. Eachyear, DS investigates more than 4,000 passport andvisa fraud violations around the world. Many of

these investigations are related to other crimes,such as drug trafficking, international organizedcrime, alien smuggling, and other seriousoffenses.

Federal Bureau of Investigation

Of course, the FBI also has an extensivesystem of Legal Attachés (Legats), who arelocated at United States diplomatic poststhroughout the world. The FBI is most involved insmuggling and other immigration investigationsthat appear to relate to national security andorganized crime.

IV. Domestic Security Section

The Domestic Security Section (DSS) is thenewest of the Criminal Division's componentsections. DSS was established in November 2002,and was assigned the functions of the formerAlien Smuggling Task Force (ASTF), a CriminalDivision entity that was created by the AttorneyGeneral in February 2000 for the purpose ofensuring that the Department took acomprehensive approach to the problem of aliensmuggling. DSS also was assigned supervisoryresponsibility for the federal violent crime andimmigration crime statutes that previously wereassigned to the Terrorism and Violent CrimeSection (TVCS). (The remaining part of TVCSwas then renamed the Counter Terrorism Section,to reflect its mission concerning terrorism-relatedinvestigations, prosecutions, and policy.)

The merger of the Criminal D ivision'sresponsibilities for immigration crimes and federalviolent crimes into a single section permits DSS tofocus on investigations, prosecutions, and policyissues, that have a direct bearing on the domesticsecurity of the United States. (DSS responsibilityconcerning violent crimes unrelated toimmigration is beyond the scope of this article.)

With respect to alien smuggling, DSS isinvolved in policy, operational, and trainingmatters. The section works with all pertinentcomponents of the Department, as well as otherExecutive Branch agencies, including theDepartment of Homeland Security, the NationalSecurity Counsel, the Department of State, andthe intelligence community. DSS also provides acentral point of contact for United StatesAttorneys' Offices (USAOs) that handle aliensmuggling cases. The section provides legaladvice, coordinates multidistrict cases, acts asliaison between USAOs and other parts of thegovernment, litigates cases on its own, andprovides litigation assistance to USAOs inappropriate cases, and within resource limits.


DSS' responsibility with respect to immigrationenforcement has a significant interagency andinternational dimension. For example, DSS servesas the cochair of the Interagency Working Groupon Smuggling and Trafficking (IWG) under theauspices of the National Security Council. TheIWG, in turn, has worked with enforcement andintelligence agencies on various projects, includingefforts against major alien smugglers residingabroad.

In the aftermath of the 9/11 terrorist attacks,DSS has worked with USAOs, INS and itssuccessor agencies at DHS, the FBI, theUnited States Coast Guard, and the intelligencecommunity in an effort to identify and targetorganizations and networks that smuggle aliensdeemed to present special security threats to theUnited States.

Some recent cases that DSS has prosecutedjointly with various USAOs are described below.

United States v. Feng, Crim. No. H-01-544 (S.D.Tx. 2001)

Feng Kan-Yen, a/k/a Kenny Feng, was aTaiwanese snakehead whose organization assistedin smuggling United States-bound, undocumentedChinese migrants to Latin America by boat. Feng,in affiliation with other smugglers, transportedmigrants from China to the coast of Guatemala,where the human cargo would be offloaded andheld in Guatemalan safe houses pending paymentof smuggling fees. Those who paid the demandedfee would be referred to other smugglers whospecialized in overland travel to the United States.Those who did not pay risked murkier fates.

For example, the family of one female migrantpaid $15,000 to have her smuggled into theUnited States. In 1998, upon her arrival inGuatemala, the woman learned that her fee hadskyrocketed to $40,000. Feng held the woman inGuatemala for more than fifteen months. When shestill could not pay the higher fee, she was sold toMexican smugglers, who brought her into Texas.From there, she was delivered to anotherTaiwanese smuggler named Chen Yung M ing. Stillunable to pay the full $40,000, the woman learnedthat she was to be sold yet again, this time tosmugglers in New York City.

In June 1999, in Houston, the victim broke herback while attempting to escape through a secondstory window. Her cooperation from a hospital bedquickly led to the arrest of Chen Yung Ming andtwo cohorts, who were indicted on charges of aliensmuggling and hostage taking. Chen Yung Mingwas convicted of hostage taking and sentenced totwenty-seven years, while his two codefendants

were convicted of alien smuggling and receivedlesser sentences.

The investigation continued and ultimatelyFeng Kan-Yen was expelled by El Salvador, oneof several countries in which he resided. Feng wasarrested in Houston, and in 2001, pled guilty toconspiracy to commit hostage-taking.

United States v. Jose Delgado-Garcia, Crim. No.02-293-01 (D.D.C. 2003)

In May 2003, four Ecuadorian nationals wereconvicted for their roles as crewmen on the JoseAlexander II, a fishing vessel of Ecuadorianregistry. Spotted by a United States Navyhelicopter, the vessel was intercepted ininternational waters by the United States CoastGuard on June 10, 2002, while transportingalmost 200 undocumented Ecuadorian migrants.The migrants were being smuggled to theUnited States, for which each had paid a fee of upto $8,500.

The vessel was dangerously overcrowded andthere were no medical supplies or lifesavingequipment on board. The food and water availableto its passengers were insufficient for the journey.Passengers had access to one toilet, and conditionson the boat during its fifteen days at sea quicklybecame unsanitary. Witnesses described perilousencounters at sea that instilled fear and near panicamong the passengers. On one occasion, a hugewhale circled their overcrowded and unstablevessel several times. Near the Galapagos Islands,the captain scared off approaching pirates byfiring his gun.

When located, the boat was en route to alocation off the coast of Guatemala to rendezvouswith smaller vessels that were supposed totransport the migrants to Guatemalan territory.From there, the migrants were to be picked up byother associates of the smuggling operation, inorder to continue their journey over land throughMexico to the United States. The captain of thevessel, Jose Delgado-Garcia, received amandatory minimum sentence of five years. Histhree codefendants, who cooperated, receivedlesser sentences.

United States v. Assadi, 223 F. Supp. 2d 208(D.D.C. 2002)

Iranian national Mohammed Hussein Assadiwas convicted in October 2002 of conspiracy tocommit alien smuggling and encouraging orinducing aliens to come to the United States.Assadi's specialty was arranging the smuggling ofaliens from the Middle East through LatinAmerica into the United States via commercial


airline flights. Assadi's organization would obtainstolen, photo-substituted European passports foruse by his customers. Often, these passports hadbeen issued by countries whose nationals did notrequire United States entry visas. W hen necessary,Assadi would go so far as to alter the appearanceand mannerisms of his customers to make themappear more European.

Like many alien smugglers, Assadi usedbribery to ensure that local airport and immigrationofficials did not prevent the departure of hiscustomers aboard flights to the United States. Thealiens were instructed by Assadi to destroy traveldocuments during flight, to make themselvesknown to immigration officials upon arrival in theUnited States, and to make an immediate requestfor asylum. Assadi exploited the commonknowledge that lack of sufficient detention spacewould result in the release of most of his clientsduring the asylum review process, therebyachieving his objective of getting them into thecountry.

As a result of good intelligence andcooperation between the United States and foreignauthorities, Assadi was arrested and ultimatelyexpelled by Colombia to Iran. During a scheduledstop in Miami, he was arrested in connection withthe indictment that had been filed earlier that day.

United States v. Parada Campos, Crim. No. 02-305 (D.D.C. 2003)

Berta Rosa Parada Campos headed an aliensmuggling organization that operated in a numberof countries, including her native El Salvador. TheCampos organization moved hundreds of aliens,including many children, from Central America tothe United States. Most of her customers were fromEl Salvador, Honduras, and Guatemala. Theorganization would transport aliens in stages, fromEl Salvador to Guatemala, from Guatemala toMexico, and finally from Mexico to theUnited States.

The typical smuggling fee was $5,000 perperson. Aliens were transported in various types ofmotor vehicles under dangerous conditions, oftenwith inadequate food or water. Further, theorganization smuggled large numbers ofunaccompanied minors, some as young as fiveyears old. Ultimately, as a result of cooperationbetween the United States and several CentralAmerican countries, Campos and her keyassociates were detained in Central America andthe United States. Some members of theorganization were expelled from the arrestingcountry and then arrested in the United States.

Cooperation between countries continued duringthe investigation and prosecution, includingtaking measures to protect threatened witnesses.Ultimately, Campos and several coconspiratorspled guilty in the United States to alien smugglingand related charges. El Salvador is continuing toprosecute remaining members of the organizationof whom we could not obtain custody.

V. Conclusion

In recent years, the fight against organizedinternational alien smuggling has emerged as anational law enforcement priority. The terroristattacks of 9/11 underscored the need to redoubleefforts to secure our borders. Many countriesother than the United States have recognizedsimilar needs, and there are ongoing efforts toimprove international cooperation against aliensmuggling and related offenses. As part of thepost-9/11 reorganization of the Department ofJustice, the Criminal Division has created theDomestic Security Section. Part of the DSSmission is to coordinate the Department's effortsto combat alien smuggling and related crimes.

Alien smuggling networks are, by definition,international in scope. Wherever possible, weshould attack all parts of the network, not justthose parts operating in the United States. TheDomestic Security Section stands ready to providea range of assistance, including assisting withinformal requests for information or contacts thatmight help a particular case, providing legalanalysis, or providing litigation assistance inappropriate situations. DSS also is eager to hearany suggestions, problems, or successes,encountered by United States Attorneys'Offices.�

ABOUT THE AUTHORS

�Michael Surgalla has been an attorney with theimmigration component of the Domestic SecuritySection (formerly, the Alien Smuggling TaskForce) since 2000. He has worked for theDepartment of Justice since 1987, serving first asa trial attorney in the New York District of theImmigration and Naturalization Service. In 1989,he joined the Criminal Division’s Office ofInternational Affairs, where he specialized inAsian organized crime matters and participated inthe negotiation of seven law enforcement treatiesand executive agreements.

�Arthur Norton has been employed by theDepartment of Justice since 1970. From 1970 to1974, he was a Special Agent with the FBI. Since


1974, he has worked as an attorney in theDepartment’s Criminal Division. Currently, he isassigned to the Criminal Division’s DomesticSecurity Section.a

The International Prisoner TransferProgramPaula A. WolffChief, International Prisoner Transfer UnitOffice of Enforcement OperationsUnited States Department of Justice

I. Introduction

The International Prisoner Transfer Programhas been in existence since 1976, however, itremains a program about which most federalprosecutors have little understanding. This articlewill provide an overview of the program,including its history, rationale, and benefits;discuss how the transfer determination is made,including the criteria that the Department ofJustice (the Department) uses when making atransfer determination; set forth how thetransferred sentence is administered in thereceiving country; and discuss the role of federalprosecutors in the transfer program.

II. What is the International Prisoner TransferProgram?

The International Prisoner Transfer Programpermits the United States and its treaty partners toreturn a foreign national, who is sentenced andimprisoned in their country, to the prisoner's homecountry to serve the time remaining on hissentence. Ten separate treaties, as well as federalimplementing legislation, 18 U.S.C. §§ 4100-4115, provide the legal authority for the program.See USAM §§ 9-35.010, 9-35.100; CriminalResource Manual §§ 731-740. For additionalinformation, see http://www.usdoj.gov/criminal/oeo.

The transfer program works in two directions.First, a country may receive its national from aforeign country which has convicted andsentenced the national for committing a criminaloffense. Second, and this is the type of transfer ofmost interest to United States Attorneys' offices(USAOs), a country may return foreign nationals

who have been convicted and sentenced for acrime to their home country to serve theirsentences. The country sending or transferring theforeign national is referred to as the "sentencingcountry," whereas the country receiving theprisoner and administering the transferred sentenceis referred to as the "receiving" or "administeringcountry."

The transfer program was initiated inNovember 1976, after the bilateral Treaty on theExecution of Penal Sentences between theUnited States and Mexico entered into force.Treaty on the Execution of Penal Sentences, Nov.25, 1967, U.S.-Mex., 28 U.S.T. 7399. Sincesigning the Mexican Treaty, the United States hasentered into bilateral prisoner transfer treaties withseven other countries and has acceded to twomultilateral conventions, the Council of EuropeConvention on the Transfer of Sentenced Persons(the COE Convention), and the Inter-AmericanConvention on Serving Criminal SentencesAbroad (the OAS Convention). In addition to theUnited States, fifty-one countries are parties to theCOE Convention. The United States also hastransfer treaty relationships with the governmentsof Hong Kong, the Marshall Islands, the FederatedStates of Micronesia, and the Republic of Palau. Intotal, the United States has a prisoner transferrelationship with over sixty countries. Although itis unlikely that the United States will enter intoany new bilateral prisoner transfer treaties, it isalmost certain that, in the future, additionalcountries will accede to the COE and OASConventions, thereby increasing the number ofcountries with which the United States has atransfer treaty relationship.

Most of the prisoners the United States hastransferred to foreign countries have beenconvicted in federal courts. It is these cases inwhich the USAOs have an interest. States can anddo participate in the transfer program, although not


as actively as the Department would like.Currently, all states, except Delaware, havelegislation that permits them to transfer foreignnationals to their home country. When a foreignnational is in a state prison, he must first obtain theapproval of the state before his application can bereviewed and approved by the FederalGovernment.

III. Benefits of the International PrisonerTransfer Program

A question frequently raised about the transferprogram focuses on the motivation for theUnited States to participate in the program.Skeptics wonder what benefit the United Statesrealizes by transferring a criminal, who hasviolated United States laws, to his home countryand, conversely, why the United States wouldwant to receive Americans from a foreigngovernment when they have committed seriouscrimes in those countries.

The United States first considered enteringinto prisoner transfer treaties in the early 1970s.This was in response to reports that someAmericans imprisoned abroad had been convictedin unfair judicial proceedings or had beensubjected to torture and inhumane conditionswhile confined in a foreign prison. TheUnited States, likes most other countries, isprotective of its citizens and is concerned aboutpoor or unfair treatment accorded its nationals inother countries. As the United States began toexplore the prisoner transfer option, it recognizedthat genuine rehabilitation and eventualreintegration of a prisoner into his home societywere much more likely to occur when the prisonerserved his sentence in his own country where hewould be near his family, friends, and a familiarculture. In addition, the United States realized thatthe imprisonment of foreign nationals created asignificant administrative burden on its prison staffby requiring the prisons to adapt their practicesand procedures to prisoners having differinglanguages, customs, cultural backgrounds, anddietary requirements. The United States believedthat prisoner transfer could reduce this burden.Moreover, the United States recognized thatconfining the nationals of another country createddiplomatic tension with the foreign country andthat returning the foreign national to his homecountry would reduce this tension.

As the United States began to participate in theprisoner transfer process, it also recognized thatthere were two other significant benefits to theprogram. Normally, after a foreign nationalcompletes the service of a sentence in the

United States, he is referred to the Immigrationand Naturalization Service (INS) for deportation orremoval proceedings. Frequently, after theremoval order has been issued, such prisoners arereturned to their home country, withoutnotification to the home country of their arrival,and without providing the home country with anypertinent information about the individual, such asthe specifics of the criminal conduct in which theindividual engaged or any continuing risks that theindividual might pose. As a result, the homecountry often knows nothing about the personreleased into its midst and, thus, is unable to takeprecautionary steps to ensure the safety of itspopulace or to assist the former prisoner withreceiving necessary medical or rehabilitativeassistance, or with his reintegration into its society.

In many instances, therefore, prisoner transferis preferable to traditional removal. When aprisoner is transferred, the United States providesthe receiving country with detailed informationabout the prisoner, including official accounts ofthe criminal conduct committed. Unlike theremoval of a former prisoner, a transferredprisoner is placed directly in the custody of lawenforcement officials from the receiving country.This transfer procedure permits the receivingcountry to monitor the activities, address anytreatment or rehabilitative needs, assist in theeventual reintegration of the prisoner into society,and take appropriate steps to protect society fromthe prisoner. This last benefit is particularlysignificant for certain types of repeat or predatoryoffenders, such as sexual offenders. Manycountries, such as Canada, have systems tomonitor these offenders, and to provide notice tocommunities when such an offender is living intheir neighborhood.

Although not a factor motivating thenegotiation of the transfer treaties, theUnited States recognizes that these agreementsalso create an economic benefit to the both FederalGovernment and the state governmentsparticipating in the transfer program, by reducingthe number of prisoners confined within theirprisons. Over twenty-seven percent of all federalprisoners are foreign nationals and states also havesignificant foreign populations. It is veryexpensive to imprison an individual. On thefederal level, the average yearly cost forimprisoning one prisoner is over $22,000. Somestates, such as California, incur even higher annualcosts. For every prisoner transferred, the federal orstate government recognizes a savings equal to thecost of imprisoning that person for the periodremaining on the sentence.


IV. The administration of the TransferProgram and the m aking of the transferdecision

Title 18 U.S.C. § 4102 authorizes theAttorney General to act as the central authority forthe international prisoner program. The AttorneyGeneral has delegated his authority to the Office ofEnforcement Operations (OEO) in the CriminalDivision. 18 U.S.C.§ 4102; 28 C.F.R. §§ 0.64-1,0.64-2. Within OEO, the International PrisonerTransfer Unit (IPTU) is responsible for the dailyadministration of the program. IPTU also receivesconsiderable assistance from the Federal Bureau ofPrisons (BOP) in various stages of the transferprocess.

The workload of the IPTU continues toincrease each year. For example, in Fiscal Year2002, the IPTU processed 1600 transferapplications and transferred 455 prisoners. Ofthese applications, the Department approved 609applications and denied 915 applications. Theremaining 76 applications were withdrawn. Themajority of these applications came from foreignnationals who committed drug offenses. Althoughmost of the transfer requests came from Mexicannationals, a significant number of requests camefrom nationals from other countries, especiallyCanada and the Netherlands. The number oftransfer applications is expected to increasesignificantly due to the continual addition of newtransfer treaty partners, and the new state transfercases that are expected as a result of the IPTU'saggressive state outreach program.

Under the international prisoner transferprogram, a prisoner does not have a "right" totransfer to his home country, nor can thesentencing country force the prisoner to transfer.Indeed, transfer is discretionary and requires theconsent of the sentencing country, the receivingcountry, and, perhaps most critically, the consentof the prisoner. Although the United Statesapproves virtually all transfer applicationssubmitted by Americans imprisoned abroad, itapproves less than fifty percent of all transferapplications submitted by foreign nationals. Theoverall approval rate is lowered significantly bythe large number of Mexican nationals who applyfor transfer. The lower approval rate for Mexicannationals is attributed to two main factors. First,the transfer treaty with Mexico prohibits thetransfer of domiciliaries and many Mexicannationals satisfy the treaty domiciliary test byhaving lived in the United States for over fiveyears. Second, the United States knows thatMexico applies a number of restrictivecriteria–most notably, that the remaining sentence

cannot exceed five years–and will deny applicantswho do not satisfy these criteria.

Each transfer application presents a unique setof facts that must be evaluated on its individualmerits. For the Department to approve a transferapplication, it must first determine that the casesatisfies the requirements of the applicable treatyand federal implementing legislation. See 18U.S.C. §§ 4100-4115. The basic requirements thatmust be satisfied by all successful applicants are asfollows:

• The prisoner must be convicted and sentenced;

• The prisoner, sentencing country, andreceiving country must consent to the transfer;

• The prisoner must be a national of thereceiving country;

• A minimum period of time must be remainingon the sentence, typically at least six months;

• The judgment and conviction must be finalwith no pending appeals or collateral attacks;

• No charges or detainers may be pendingagainst the prisoner in the sentencing country;and

• Dual criminality must exist (the crime ofconviction must also be a crime in thereceiving country).

Depending on the applicable treaty, there may alsobe additional requirements.

In addition to the treaty and statutoryrequirements, the IPTU has developed a set ofguidelines that assists in the evaluation of eachtransfer request. These guidelines focus on fourbroad areas, with the first being the likelihood ofsocial rehabilitation. One of the major goals of thetransfer program is to return the prisoner to hishome environment where, hopefully, there isfamilial and peer support, for in this typeenvironment the prisoner has the best chance ofsuccessful rehabilitation and reintegration intosociety. In addition, since most foreign nationalprisoners are deported when they are released fromcustody, it may not make sense to allow them toremain in a foreign prison where they must adjustto a society different from the one to which theywill ultimately be deported. To assess thelikelihood of social rehabilitation of the prisoner,the IPTU examines various factors that include:

• the strength of the prisoner's family and othersocial ties to the sentencing and receivingcountries;

• whether the prisoner accepted responsibilityfor his criminal conduct;


• cooperation with law enforcement;

• the criminal history of the prisoner;

• the seriousness of the offense;

• the role of the prisoner in the offense;

• the presence of aggravating and mitigatingcircumstances; and

• the prisoner's remaining criminal ties to thesentencing and receiving countries.

Thus, a first time offender who had a minor role ina criminal offense and has strong family and socialties in the receiving country is a much strongertransfer candidate than a career offender who hasfamily in the United States and has lived here formany years.

The second focus of the guidelines, and one ofparticular interest to the USAOs, is on lawenforcement concerns. These include:

• the seriousness of the offense, including ifpublic sensibilities would be offended by thetransfer;

• any public policy issues that would beimplicated by the transfer;

• the possibility that the transfer would facilitatethe prisoner's renewed association with hiscriminal associates in his home country;

• possible sentencing disparity in the homecountry (of greatest concern for the mostserious offenses);

• whether law enforcement or the prosecutorneed the prisoner for pending or future trials,investigations, or debriefings; and

• the existence of unpaid fines, assessments, andrestitution.

The third major concern that is examined isthe likelihood that the prisoner will return to theUnited States. Allowing a foreign national to servehis remaining sentence in his home country makessense only if the prisoner will remain in his owncountry after release. A fundamental reason for thetransfer is the belief that rehabilitation is mostlikely to occur in the prisoner's home environment,an objective that would not be realized if theprisoner returned to the sentencing country. Anumber of factors are considered in making thisdetermination, including:

• the strength of the prisoner's ties to theUnited States;

• the strength of the prisoner's ties to his homecountry;

• the location of the prisoner's family;

• previous deportations and illegal entries; and

• previous prisoner transfers.

With respect to this last factor, it is the policy ofthe Department to deny all transfer requests if theprisoner participated in a previous prisonertransfer.

The final concern, which arises infrequently, iswhether the transfer presents any serioushumanitarian concerns. Such concerns typicallyinvolve the terminal illness of the prisoner or aclose family member. Although humanitarianconcerns are never viewed in isolation, it ispossible that when compelling humanitarianconcerns are present, a transfer will be grantedunless outweighed by other negative variables.

V. Administration of the sentence in the foreigncountry

When a prisoner is transferred, theresponsibility for administering the sentencebelongs exclusively to the receiving country. Thesentencing country, however, retains the power tomodify or vacate the sentence, including the powerto grant a pardon. Under most of the treaties, thereceiving country will continue the enforcement ofthe transferred sentence. Such continuedenforcement will be executed under the laws andregulations of the receiving country, including anyprovisions for the reduction of the term ofconfinement by parole, conditional release, good-time release, or otherwise. The United StatesParole Commission determines the projectedrelease date for the sentences of all returningAmericans. Under the French and Turkish bilateraltreaties and the COE Convention, the receivingcountry has the additional option of converting thesentence, through either a judicial oradministrative procedure, into its own sentence.When a sentence is converted, the receivingcountry substitutes the penalty under its own lawsfor a similar offense. The receiving country,however, is bound by the findings of facts insofaras they appear from the judgment, and it cannotconvert a prison term into a fine or lengthen theprison term. Only a few countries have elected toconvert transferred sentences.

Some erroneously assume that when asentence is transferred, the prisoner will alwaysserve the same period of time in prison in his homecountry that he would serve if he remained in theUnited States. As a practical matter, however, theactual time that the transferred prisoner spends inprison in the receiving country may be less than he


would have served in the sentencing country. Thisdisparity appears most often in transfers to Canadaand many European countries, especially in drugcases. Information provided to the Departmentindicates that most transferred Mexican nationalsare serving sentences which closely approximatethe sentences they would have served had theyremained in the United States. Furthermore, due torecent changes in Mexican law, Mexican prisonerswho have committed drug offenses frequentlydiscover that, because of the difference in prisoncredits awarded, they will spend a longer period oftime in custody in a Mexican prison than if theyhad remained in the United States.

Although it is possible that some transferredprisoners may serve less time in prison, such aresult is neither unexpected nor inconsistent withthe goals of the transfer program. TheUnited States and its treaty partners recognized atthe time they entered into these internationalagreements that the administration of the sentenceby the receiving country, which involves criminallaws unique to that country, could result in theprisoner serving less prison time than if heremained in the sentencing country. These samecountries, however, were willing to accept thisresult in return for the ability to have their foreignnationals transferred. It is important to realize thatit is not unusual for a returning American to serveless time in an American prison than he wouldhave served if he had remained incarcerated in thesentencing country. Thus, it would place theUnited States in an awkward diplomatic positionto accept this benefit for its citizens, yet object to atransfer of a foreign national because he mightexperience a similarly beneficial sentencingoutcome.

VI. Role of the United States Attorneys' officesin the Transfer Program

Generally, the USAO may be faced withissues surrounding the prisoner transfer program attwo distinct phases of the criminal process. Theissue of possible prisoner transfer may arise duringplea negotiations or, most commonly, at thepostsentencing phase of the case when the transferapplication is being processed. It is notuncommon, during plea negotiations, for a foreignnational to ask the USAO to guarantee that he willbe transferred in return for a guilty plea. Becausethe discretion to grant or deny transfer requests isvested in the Attorney General, the USAO doesnot have the power to make this promise. TheUSAO, however, can represent that it will supportthe application or that it will not oppose theapplication. See USAM § 9-35.100.

The second occasion when USAOinvolvement in the transfer program may arise isduring the processing of the transfer application.To ensure a thorough, fair, and principled reviewof each application, the IPTU collects andevaluates pertinent information from varioussources, including input from law enforcementagencies. Among the most important informationthat the IPTU collects for each case are commentsfrom the prosecuting USAO. Soon after receivingthe case, an IPTU analyst will fax an inquiry sheetto the USAO seeking its views on the requestedtransfer, and asking if there are any pendingappeals or collateral attacks. The form alsoprovides space for comments and the USAO isalways free to submit additional documentation tosupport its views. As noted by former AssistantAttorney General Michael Chertoff, it is criticalthat the USAO provide timely responses to theseinquiries. See Memorandum to all USAOs, datedAugust 7, 2002, from Michael Chertoff, AssistantAttorney General. The IPTU, recognizing thestrong interest that the USAOs have in the casesthey have prosecuted, carefully reviews allcomments that the USAOs submit, and considersthese comments to be critical information inrendering its transfer decision.

Over the years, many USAOs have providedthoughtful and informative responses to IPTUinquiries. The IPTU considers legitimate lawenforcement concerns raised by USAOs veryseriously, and in most situations, these concernswill cause denial of the transfer request. Problemsarise, however, when the USAO fails to providecase-specific reasons for opposing the transfer, andinstead registers only generic complaints about theprogram. Such complaints typically express ageneral dislike of the program, a belief that theprisoner should serve his sentence in theUnited States, an unsupported belief that theprisoner will return to the United States andcommit a new offense, a concern that the prisonerwill serve a shorter term in the foreign country, ora distrust of the integrity of the foreign prisonsystem.

As discussed above, standing alone, the factthat the prisoner may serve less time in a foreignprison does not usually justify denying a transferrequest. Nor are concerns about the integrity of theprison systems of our treaty partners a basis todeny a transfer request. Since the majority of thetransfer requests come from M exican inmates,some USAOs have voiced concerns about theintegrity of the Mexican prison system. Although,problems have existed in the Mexican criminaljustice system, the current government has takensubstantial steps to combat and reduce corruption.


From the information available to the Department,there appears to be little or no support tosubstantiate the view that transferred prisoners areable to buy or negotiate a lesser sentence inMexico. To reduce the potential for corruption,Mexico generally limits its transfer approvals tolow security, first-time offenders who are fromlow-to-middle socioeconomic class, and who haveno connection to a drug cartel or organized crime.Mexico has instituted this policy because itbelieves that such inmates, due to their lack ofresources and connections, are less likely to be inthe position to take advantage of any corruptionexisting in the system.

The Department has little information thatwould substantiate the belief that a transferredprisoner will return to the United States andcommit new crimes. It has been our experiencethat offenders who are transferred to distantlocales, especially to countries in Europe or Asia,are unlikely to reappear in the United Statesfollowing their release from confinement abroad.Although there is no guarantee against recidivismfor any category of offender, the possibility that aforeign national will return to the United Statesfollowing completed service of sentence at aprison in his home country can be greatlyminimized by ensuring that inmates obtainremoval orders from United States immigrationjudges prior to transfer, and by limiting approvalsto those candidates who have strong family ties totheir home countries and who have minimal or noprior criminal records. The IPTU, in conjunctionwith the INS, ensures that all Mexican nationalshave a removal order before their transfer toMexico.

Finally, a blanket policy of objecting totransfer without a substantial basis to do so wouldbe inconsistent with the treaty obligations of theUnited States. The treaties and conventionsgoverning the transfer of prisoners express aforeign policy determination of the United Statesthat prisoner transfer should be available to foreignnations incarcerated here, just as it should beavailable to American nationals incarceratedabroad.

VII. Conclusion

The United States has participated in theInternational Prisoner Transfer Program for overtwenty-five years during which time qualifiedforeign nationals have been returned to their homecountries to serve their remaining sentences. Asmore countries accede to the two existing prisonertransfer conventions, and as states within theUnited States become more active participants inthe program, it is expected that the number oftransferred foreign nationals will increase.Although transfer is not appropriate for allinmates, the prisoner transfer program does offersignificant rehabilitative, law enforcement, anddiplomatic benefits in many cases.�

ABOUT THE AUTHOR

�Paula A. Wolff has been Chief of theInternational Prisoner Transfer Unit in theCriminal Division of the United States Departmentof Justice since September 2000. She was a TrialAttorney in the Terrorism and Violent CrimeSection from 1996 to 2000, and in the GeneralLitigation and Advice Section from 1986 to 1996,where she was Acting Deputy Chief from 1994-1996.a


Disclosure of Law EnforcementInformation to the IntelligenceCommunity Pursuant to the PatriotActJ. Kenneth Lowrie, Deputy ChiefOrganized Crime and Racketeering SectionCriminal Division

Prior to the enactment of the USA PATRIOTAct, formally, the Uniting and StrengtheningAmerica by Providing Appropriate Tools toIntercept and Obstruct Terrorism of 2001, Pub L.No. 107-56, 115 Stat. 272, there were numerousbarriers to the sharing of information between thelaw enforcement and intelligence communities.With the enactment of the PATRIOT Act and theHomeland Security Act of 2002, however, therules for sharing information between the lawenforcement and intelligence communities havebeen substantially modified and relaxed.

Of particular importance to federal prosecutorsare Sections 203 and 905 of the PATRIOT Act.Section 203 permits disclosure, by any federalinvestigative or law enforcement officer orattorney for the government, of any "foreignintelligence information" obtained during thecourse of a criminal investigation, to any otherfederal law enforcement, intelligence, protective,immigration, national defense, or national securityofficial, to assist the receiving official in theperformance of his or her duties. Section 905makes mandatory the expeditious disclosure offoreign intelligence information obtained duringthe course of a criminal investigation. Themandatory disclosure pursuant to Section 905 issubject to certain guidelines which werepromulgated by the Attorney General onSeptember 23, 2002. Copies of those guidelinescan be obtained by contacting the PublicationsUnit, Office of Legal Education in Columbia,South Carolina.

These changes are of particular importance tofederal prosecutors when dealing with informationrelating to matters occurring before a grand jury,which are subject to the secrecy requirement ofFed. R. Crim. P. 6(e), or to the special provisionsrelating to the disclosure of evidence obtainedthrough the interception of communicationspursuant to Title III of the Omnibus Crime Control

and Safe Streets Act of 1968, as amended (18U.S.C. § 2517). The investigation of casesinvolving international organized crime willalmost always yield evidence that fits within thedefinition of "foreign intelligence orcounterintelligence information," as that term isdefined in Section 3 of the National Security Actof 1947 (50 U.S.C.§ 401(a)), or "foreignintelligence information," as defined in Fed. R.Crim. P. 6(e)(D)(iii) or 18 U.S.C. § 2510(19).Consequently, when engaged in an investigationinvolving international organized crime, AUSAsand Department of Justice (Department) attorneysshould remain alert to the development of suchinformation. In the usual case, disclosure of TitleIII and other information obtained during thecourse of a criminal investigation to theintelligence community will be accomplished bythe investigative agencies.

Disclosure of grand jury information,however, will always involve a federal prosecutor.Before any disclosure of grand jury information,AUSAs and Department attorneys should seek thelatest advice regarding not only what constitutes"foreign intelligence information" to be disclosedto the intelligence community, but also theprocedures for such disclosure. If the prosecutionrelates to international organized crime,government attorneys should consult with amember of the Organized Crime and RacketeeringSection (OCRS) whose responsibilities involveinternational matters. Those OCRS attorneysresponsible for international matters are listedelsewhere in this material under OCRS contactnumbers.

With regard to the disclosure of mattersoccurring before the grand jury to the intelligencecommunity, Fed. R. Crim. P. 6(e)(D)(ii) requiresthat within a reasonable time after the disclosurethe court be notified, under seal, of the disclosureand the "departments, agencies, or entities" towhich the disclosure was made. It is not requiredthat the court be notified of the identities ofintelligence community persons to whomdisclosure is made. Indeed, disclosure of the


identities of such persons would be highlyinappropriate. Whenever such a notice is filed withthe court, a copy of the notice should be sent toJack Geise, Associate Director of the Office ofEnforcement Operations of the Criminal Division.

Please note that the foregoing is not meant asan all-inclusive notice or instruction. Rather, it ismeant to alert the reader to changes that maysignificantly affect the prosecutor's course ofaction in international investigations. M oreover, itis strongly advised that any government attorneyinvolved in an international organized crime casecontact an OCRS International Program attorneyregarding the procedures to be followed in theapplication of the PATRIOT Act before anydisclosure of grand jury material to the intelligencecommunity.�

ABOUT THE AUTHOR

�J. Kenneth Lowrie has been an attorney withthe Department of Justice since 1969. He is aformer member of Organized Crime Strike ForceUnits in St. Louis, Missouri and Chicago, Illinoisand a former Assistant U.S. Attorney for theEastern District of Michigan and the NorthernDistrict of Illinois. a

Investigating Financial CrimeEmanating from Russia: A Russianand an American PerspectiveVitor Filippov, Colonel (Retired)Special Regional Police Office of the RussianFar East

Jennifer ShaskyTrial AttorneyOrganized Crime and Racketeering Section

I. Introduction

What began as an attempt by a Russianinvestigator and an American prosecutor to write ajoint article on investigating financial crimeemanating from Russia quickly became somethingquite different, perhaps something more insightfulthan the originally intended subject matter. Itbecame readily apparent that the differences in ourpolitical and economic histories bring vastlydifferent perspectives on what constitutes afinancial crime. It was also apparent thatunderstanding these differences was an essentialfirst step to effective communication on the topic.

To highlight the differences in perspective,this article has been divided into two sections. Thefirst section contains the perspective of ViktorFilippov who, until his recent retirement, was aColonel in the Russian MVD (a national lawenforcement agency similar to the FBI). His officewas located in the Russian Far East, in the city of

Khabarovsk. Colonel Filippov offers his thoughtson both financial crime emanating from Russiaand law enforcement cooperation between Russiaand the United States. The second section of thearticle contains my perspective, that of a U.S.prosecutor, on the same issues.

II. A Russian perspective:

Since the beginning of the 1990s, considerablechanges have occurred in the Russian economy,the primary feature of which has beendevelopment of international trade. Under theSoviet system, only state-owned organizationswere allowed to engage in international trade, andthere were many state bureaucracies regulatingwhich ones could do so. In the early 1990s,however, changes in Russian legislation relaxedthese rules and Russian businessmen began toestablish ties with foreign companies.

Additional political and economic changes ledto the situation today in which Russianbusinessmen and companies have access to freemarket societies around the world, making itpossible to open accounts at foreign banks,establish foreign corporations, purchase foreignreal estate, and so on. Almost immediately, theseemerging possibilities were exploited by organizedcrime groups and corrupt public officials.


Further complicating an already unstablesituation was the fact that great attention was paidto dismantling the old, repressive law enforcementsystem of the Soviet days, including radicallychanging the Criminal and Criminal ProcedureCodes. Russian legislation could not keep pacewith the rapid and simultaneous transformations ofboth the economy and Russian law enforcementagencies. As might be expected, criminals werequick to exploit the situation and manipulateloopholes in the law for their own enrichment.Russian law enforcement agencies (primarily theGeneral Procuracy, MVD, and Tax Police) havespent the last decade trying to deal with the falloutfrom these changes and, in the process, haveaccumulated considerable experience investigatingcriminal cases involving international trade andthe flight of criminal proceeds from Russia toother countries.

III. Common methods for getting criminalproceeds out of Russia

A. Importation schemes

It is important to note that, under Russian law,both banks and the government organizationknown as the Currency Control Agency, arerequired to regulate currency transfers abroad. Abusinessman who wants to import goods intoRussia must go to a bank with a signed importcontract and notify the bank that he would like topurchase goods from his partner abroad. The bankis required by law to provide a copy of the contractto the Currency Control Agency (failure to do socan result in a fine or revocation of the bank'slicense). Upon receiving the contract from thebusinessman, the bank will send the requisitefunds abroad. Within three months, according tothe Currency Control Law, the businessman mustbring customs documents to the Currency ControlAgency proving either that he received theimported goods, or that his money was returned tothe Russian bank. Failing to produce suchdocuments is a violation of Article 193 of theRussian Criminal Code (Failure to ReturnCurrency from Abroad) and is punishable by amaximum of three years imprisonment.

Yet, despite the possibility of criminalprosecution under Article 193, importationschemes are the most common method for illegallytransferring funds out of Russia. These schemes,simple in theory, work as follows:

A Russian businessman, or one of his friendsor relatives, establishes a front company in aforeign country, preferably the United States. Thefront company will play the part of the U.S.partner. To further disguise his intentions, the

Russian businessman might hire a U.S. citizenwho is willing to play the part of the president ofthe U.S. company. This individual is typicallysomeone who emigrated from the Soviet Unionand obtained U.S. citizenship some years ago. TheRussian businessman then creates a bogus contractbetween his Russian firm and the purported U.S.partner, indicating that he intends to import items,such as food, clothing, or medicine, from theUnited States. He presents the bogus contract tothe bank, a copy of which is forwarded to theCurrency Control Agency, and the bank then sendsthe specified currency abroad. The Russianbusinessman never presents the bank with customsdocuments indicating that he received the goodsfrom abroad. After 180 days have passed, theCurrency Control Agency will send an inquiry tothe bank. Upon learning that the bank has neitherreceived the requisite customs documentation, northe return of the funds, the Currency ControlAgency refers the matter to the MVD forinvestigation. The Russian businessman makes aformal report to the MVD indicating that he madea mistake in entering into a partnership with theU.S. partner. He states that the U.S. partner tookthe Russian businessman's money without everdelivering the agreed upon goods. Moreover, hereports, he cannot possibly recover his money ashe has no leverage over the crooked U.S. partner.So, by this simple ruse, the Russian businessmantransfers funds to a bank account in theUnited States over which either he or trustedassociates have access.

The cases investigated by Russian lawenforcement agencies have revealed that thisscheme is used primarily to transport funds earnedby criminal activity. In using the scheme, Russiancriminals exploit the fact that neither Russian lawenforcement nor the Currency Control Agency hasthe ability to determine whether a purported U.S.company and its owners actually exist.

To further evade Russian law enforcement,individuals who commit such financial schemestypically follow the criminal proceeds andemigrate to the United States. For example, in onecase pursued by my former office, a Russiancitizen was investigated for criminal tax violationsand an embezzlement scheme involving fraudulentbookkeeping. As the investigation proceeded, theindividual feared he would be arrested. Inresponse, he established a front company in theUnited States and signed a bogus import contractfor the delivery of food to the Russian Far East. Hethen transferred approximately $1 million to theUnited States and fled Russia. Thereafter, heobtained a green card to remain in theUnited States. This case involves an unfortunate


and common scenario in Russia in whichbusinessmen seek employment with the intent toembezzle as much money as possible from theiremployer before fleeing abroad.

This scheme has also been used by corruptpublic officials who, as part of their official duties,are responsible for allotting funds to purchaseforeign goods. In these cases, the public officialuses trusted associates to establish front companiesin the United States. The public official thencauses the transfer of funds to the United Statesunder the guise of purchasing goods from the U.S.company for importation into Russia. Of course,the corrupt official simply embezzles the funds.One of the more notorious examples involved theembezzlement of public funds by a deputygovernor of one of the Russian Far East territories.This official caused more than $1 million to betransferred to the United States using this scheme.He then emigrated to the United States and,according to a local Russian newspaper, purchaseda villa in the Los Angeles area, a photograph ofwhich was pictured in the article.

B. Fraudulent loans

Another related scheme involves obtaining aloan from a bank, claiming that the funds will beused to pay for goods to be imported into Russia.These borrowers have no intention of paying backthe loan to the bank. Likewise, the bank employeeresponsible for extending the loan knows it willnever be repaid. This is because the bankemployee is usually involved in the scheme fromthe very beginning, and receives a kickback for hisor her participation. The borrower, in themeantime, typically follows the money andemigrates abroad. Often, the borrower is part of acriminal group. Once the borrower emigrates, heestablishes various front companies and bankaccounts to be used by the group for additionalfraud schemes. These groups are able to obtainconsiderable sums of money through such serialactivity.

C. Re-exportation

This is an import-export scheme that typicallyinvolves oil exportation. Here, a Russianbusinessman establishes a Russian firm under theguise that it will be used to export oil. The firmthen rents a tanker for oil delivery and obtains therequisite customs documents indicating the oil willbe exported. A tanker loaded with oil leaves aRussian port as if it is sailing to a foreign port.Instead, the vessel sails to another Russian portand the captain presents fraudulent customsdocuments indicating that the oil is being imported

into Russia. The purported buyer of this oil (whois acting in concert with the Russian firm and thecaptain) is then permitted to transfer funds to aforeign bank to pay for the oil. By using thisscheme, the perpetrators are able to send moneyabroad and provide the requisite documents to thebank and Currency Control Agency indicating thatoil was delivered to Russia, and thereby avoid anyreferrals from the Currency Control Agency to theMVD.

In one such scheme, Russian law enforcementinvestigated a series of cases in which firmsestablished in the Russian city of Vladivostokwere pretending to transport oil to South Korea. Infact, the firms' tankers changed course at sea andwent to the Russian city of Kamchatka. Thecaptains displayed fraudulent customs documentsindicating that the oil had been bought in SouthKorea by a Kamchatka company. Theinvestigation revealed that in furtherance of thisscheme, the perpetrators sent funds, via banks inSingapore and Switzerland, to a U.S. bankaccount. The primary difficulty for investigators inthis case was obtaining the U.S. bank records. Therecords did not arrive within the allottedinvestigative period, under Russian law, and whenthey did arrive were not in a form admissible inRussian courts. As a result, the suspects went free.

D. Transferring money abroad using creditcards

Often, a person transfers criminally derivedfunds out of Russia by merely placing those fundsin a Russian bank and then withdrawing themabroad, using a credit card. Under Russia's moneylaundering law, an individual may only take$10,000 out of the country when he goes abroadand must complete a customs document at the timeof departure indicating the amount being taken. Byusing a credit card, however, the individual canillegally evade this reporting requirement, passingquietly through customs with merely a credit cardin his pocket.

This activity might be uncovered with the aidof a provision in Russia's money laundering lawobligating Russian banks to report deposits ofmore than 600,000 rubles (approximately $19,000)to the Financial Monitoring Committee (similar toFinCen in the United States) as suspicious activity.However, crucial time is often lost in these cases.A criminal typically opens a credit card accountthe day before he flees abroad. By transferringmoney, via the credit card, he is able toimmediately establish a bank account in the newcountry. In the meantime, the FinancialMonitoring Committee must first obtain a report of


suspicious activity from the bank. Once theFinancial Monitoring Committee examines theinformation, it is forwarded to the MVD becausethe Financial Monitoring Committee does not havecriminal investigators. To obtain foreignassistance, the regional office of the ForeignMonitoring Committee must go through itsheadquarters. This means, for instance, that the FarEast Regional Monitoring Committee is notpermitted to communicate directly with FinCen orU.S. prosecutors' offices on the West Coast, butmust first go through Moscow. As a result, thereare many cases in which individuals have beenable to transport considerable sums of criminalproceeds abroad before Russian law enforcementarrives on the scene.

E. Bogus charitable funds

Another method used to transfer illegalproceeds abroad is for a group of Russianbusinessmen to establish a bogus charitable fundin the United States, as well as a U.S. bankaccount. Once established, the businessmen, wholive in the same Russian territory (politicaljurisdiction), make regular charitable contributionsto the fund. Then, when the fund accumulates afair amount of capital, a high-ranking publicofficial from their territory is announced to be thecharity's "Man of the Year" and is awarded a largesum from the charitable fund. In other words, thebusinessmen pay a bribe to the public official andthe funds are already conveniently located outsidethe country in a U.S. bank account.

IV. Russian criminals prefer the United States

Why do Russian criminals prefer to use theUnited States to perpetrate their crimes and whydo they prefer to flee to the United Statesafterwards? From my perspective and experience,there are some important reasons for thisphenomenon.

The primary reason Russian criminals preferthe United States is because they know Russianand U.S. law enforcement agencies do noteffectively exchange information. This is partlydue to the distrust that is a legacy of the Cold Warand partly due to the overly bureaucraticmechanisms in both countries for sending andreceiving information.

For example, the MVD, when investigating acriminal case in the Russian Far East, must sendrequests for foreign assistance to the GeneralProcuracy, International Department, in Moscow,as many as nine time zones away. The request issent to the U.S. Department of Justice, Office ofInternational Affairs, in Washington, DC, and thento the relevant U.S. investigator or prosecutor. It is

usually fourteen months between the time aquestion is first asked and an answer is received.This is a serious problem for Russian investigatorswho, under Russian law, have on average onlythree to six months to complete an investigation orterminate it. Even when a Russian investigatorreceives an answer from his U.S. colleagues, itoften does not contain enough information and hehas to send another request. Often, theinvestigation ends before the Russian investigatorcan obtain the requisite evidence from theUnited States. As a result, as noted above, thereare cases in which the charges had to be dismissedand the accused went free.

Another problem is that the United States andRussian legal systems differ on issues of bothsubstantive and procedural criminal law. As aresult, each side faces difficulties making requestsof the other that are both understood and capableof being fulfilled. For example, Russia and theUnited States have different proceduresconcerning witness interviews. Under Russian law,a Russian investigator can conduct a witnessinterview only after a Russian criminal case hasbeen opened, or if he receives a formal requestunder the mutual legal assistance treaty (MLAT).Consequently, an informal request for mutual legalassistance (such as a request from the FBI LegalAttaché) must provide a basis for the investigatorto initiate a Russian criminal case, or there mustalready be a Russian case open. Otherwise, theinvestigator can only ask the witness to voluntarilywrite a statement, in his own words, to be passedto the United States. It often seems that U.S.prosecutors do not realize this difference inprocedural law when making requests to Russia.

Compounding the problem is the fact thatthere is no agreement between Russia and theUnited States for extradition. As a result, themajority of Russian criminals consider theUnited States a paradise. After committing crimesin Russia, they can go to the United States and bebeyond the reach of Russian law enforcement.Many of them, once escaping to the United States,continue to engage in fraud schemes with theirfriends and relatives back in Russia and continueto use U.S. banks as cover. Moreover, once theyobtain U.S. citizenship, it is easier for them travelto other countries and organize more complicatedfraud schemes, using several jurisdictions, toconceal their activities.

Oftentimes, when Russian prosecutors or lawenforcement agents send requests to theUnited States asking for assistance, the accusedtells U.S. law enforcement that he is being pursuedby Russian organized crime groups, corrupt public


officials, or corrupt law enforcement officials. Theaccused claims that the Russian law enforcementrequest is an attempt to further these aims. He orshe then seeks political asylum in theUnited States, claiming to be an honestbusinessperson. In doing so, the accused purposelyexploits prejudices that are a legacy of the ColdWar.

V. Obtaining assistance from Russia

Under the terms of the MLAT, it is mandatoryfor the Russian government to provide publicinformation to U.S. prosecutors and investigators.On the other hand, production of nonpublicinformation is discretionary.

One type of publicly available information inRussia is the information that corporations andother legal entities provide to the RussianGovernment as part of the mandatory registrationprocess. Specifically, this information includes thename, address, and telephone number of the legalentity; the nature of the business activity; thenames of the officers; and any arrest record of theofficers. It includes information about legalentities established in the United States by Russiancitizens because Russian citizens have a duty toregister such entities with the RussianGovernment. Similarly, information aboutcompleted criminal cases is also publicly availablein Russia. Such information includes identifyinginformation for the defendants, description of thecommitted crime(s), criminal links, and thesentence imposed by the court.

Law enforcement agencies maintain additionalinformation on suspected criminals that typicallyis not publicly available. U.S. prosecutors andinvestigators may be able to obtain thisinformation, but its production is discretionaryunder the terms of the MLAT. The informationincludes the criminal record of a particularindividual; the names and other identifyinginformation of his relatives and friends; thecriminal group with which he is associated;description of real estate and other expensive itemsowned; and the name(s) of Russian lawenforcement agencies that may have informationon the individual.

Sometimes, U.S. prosecutors send requests toRussia asking whether a certain specifiedindividual is a member of an organized crimegroup or involved in corruption. As in theUnited States, the terms organized crime orcorruption are not legal designations although theyare used in common parlance, official speeches,and both academic and newspaper articles. Over

the last ten years, there have been some attempts toinclude them in the law, but such attempts havebeen unsuccessful. Therefore, having receivedsuch inquiries from the United States, Russianinvestigators do not know how to respond and mayeven be prohibited from doing so. Russian lawenforcement agencies, however, are not prohibitedfrom detailing an individual's criminal history,from identifying whether the individual was partof a criminal group (as opposed to an organizedcrime group), or from identifying the membershipof the group.

VI. An American perspective

This portion of the article both supplementsand responds to the matters raised by ColonelFilippov. It sets forth reasons financial crimeemanating from Russia can be a U.S. problem;provides additional information why Russiansmight choose to send criminal proceeds to theUnited States; discusses other schemes forconcealing proceeds sent to the United States;briefly mentions some of the U.S. statutes thatmight apply to this conduct; and, finally, addressesthe issue of cooperation with Russia.

VII. Criminal proceeds from Russia as a U.S.problem

Unfortunately for the United States, criminalproceeds from Russia tend to bring crime withthem. As Colonel Filippov notes, Russiancriminals often send money to the United States,emigrate here, and then continue to perpetrate newcross-border fraud schemes with associates inRussia. Both the original transfer of criminalproceeds to the United States, and any additionalcross-border activity likely violate U.S. laws, suchas money laundering, the transfer of stolenproperty, and wire fraud, become a U.S. lawenforcement problem.

The investigation and prosecution of theseviolations of U.S. law serves the vital interests ofevery federal judicial district, even though muchof the underlying criminal activity may haveoccurred in Russia. For instance, the moneylaundering laws protect the integrity of the U.S.financial system and discourage corruption offinancial-services providers. Similarly, lawsprohibiting the transfer of stolen propertydiscourage criminals from fleeing to theUnited States with their stolen property.Consequently, the prosecution of such cases notonly prevents the defendant from establishing afoothold for continued criminal activity in theprosecuting district, but also is a powerful


deterrent against future criminal activity in theUnited States.

Investigation and prosecution of these crimesalso serve the national interests of theUnited States. Such prosecutions demonstrate thecountry's commitment to serving as a responsiblemember of the international community by notallowing the United States to be a haven forcriminals. It also gives the United States leveragein requesting reciprocity from Russia on similarcases. Finally, these prosecutions discouragecriminals from fleeing to the United States withhuge sums of criminally-derived money, whichcan be used to corrupt our public officials, lawenforcement officials, and government andindustry regulators.

VIII. Reasons Russians send criminal proceedsto the United States

Individuals sending criminal proceeds out ofRussia use the air of legitimacy provided by theUnited States to conceal the money's illegal origin.They know that money sent to offshore havens,such as the Isle of Mann, or high crimejurisdictions, such as Colombia, attracts additionallaw enforcement and regulatory scrutiny. To avoidthis unwanted scrutiny, money movers sendcriminal proceeds to countries with active foreigntrade and reputable financial systems like theUnited States. After all, a law enforcement officialis less likely to question a Russian import contractwith a U.S. company than the same contract with acompany in the Isle of Mann.

Thus, to achieve an air of legitimacy, moneymovers often use the United States as a temporarydestination for criminal proceeds that theyultimately intend to send to offshore havens orother suspicious locales. For example, a moneymover might wire transfer criminal proceeds fromRussia to a bank account in the United States withthe intent it remain there for a short time. Themoney mover would then transfer the criminalproceeds to his desired locale, such as the Isle ofMann. In this scenario, the receiving bank on theIsle of Mann is unlikely to find funds originatingfrom the United States suspicious. Likewise, aRussian law enforcement official is less likely toquestion a money transfer from Russia to theUnited States than a transfer to the Isle of Mann,particularly if the money mover provides theofficial with an import contract. By inserting oneextra wire transfer through the United States, themoney mover gives the proceeds an air oflegitimacy, and creates an extra layer between themoney and its original source.

IX. Additional schemes for moving criminalproceeds to the United States

A. Import and export schemes

Import and export schemes, also referred to asoverinvoicing and underinvoicing schemes, are themost popular method for moving money out ofRussia. Since at least the late 1970s, Soviet andthen Russian, officials have used import/exportschemes extensively to profit personally fromRussia's vast supply of raw materials. Over theyears these schemes have spread so that they cannow be found in trades of a wide variety ofcommodities, perpetrated by both governmentofficials and private entrepreneurs. One attractiveattribute of these schemes is their relativesimplicity.

Using the export of vodka from Russia to theUnited States as an example, an export (or under-invoicing) scheme would work as follows. TheRussian exporter agrees to sell 100,000 bottles ofvodka to the U.S. importer at a price of $20 perbottle of which $5 will go to Mr. X and $15 willgo to the Russian export company. Two contractsare then created for the transaction. The firstcontract is accurate and reflects that the U.S.company will import 100,000 bottles of vodkapaying $15 per bottle to the Russian exportcompany plus an additional $5 per bottle to Mr. X.A second contract is then created for presentationto Russian customs and tax officials and/orshareholders in the Russian export company. Itstates that 100,000 bottles of vodka will be sold tothe U.S. import company for $15 per bottle anddoes not mention the $5 per bottle to go to Mr. X.The Russian export company sends the vodka tothe United States and in return the U.S. companypays $1.5 million to the Russian export companyand $500,000 into the foreign bank account of Mr.X.

An import (or overinvoicing) scheme is theflip side of the export scheme and would work asfollows. A Russian importer agrees to buy 100,000cartons of cigarettes from a U.S. exporter for $15per carton. The Russian importer and U.S. exporteralso agree that an additional $5 per carton will bepaid by the Russian importer to Mr. X. Onceagain, two contracts are created for the singletransaction. The first contract is accurate and statesthat the Russian importer will buy 100,000 cartonsof cigarettes and pay $20 per carton, $15 of whichwill go to the U.S. exporter and $5 of which willgo to Mr. X. The second contract states that theRussian importer will buy 100,000 cartons ofcigarettes at $20 per carton and does not furtherdelineate the transaction. The Russian importertakes the second contract to his bank and on the


basis of this contract is authorized to send $2million abroad to the U.S. exporter. The U.S.exporter then sends $500,000 to Mr. X as specifiedin the first contract.

In a real export or import scheme, Mr. Xwould likely be a Russian government official whowas bribed to authorize the trade, a director of theRussian import-export company who isembezzling proceeds from his own company, or aRussian organized crime group that controls theRussian import-export company.

Given the important role of barter in theRussian commodities trade during both the Sovietand post-Soviet periods, it is not surprising to learnthat import and export schemes are also used toexploit the barter system. An example of an importscheme within the barter system is alleged in theindictment of the former Prime Minister ofUkraine, Pavel Lazarenko. United States v. PavelIvanovich Lazarenko , Docket No: CR 00-0284-MJJ, Second Superseding Indictment (N.D. Cal.,July 19, 2001). The indictment alleges that thehard currency proceeds from the sale of metalproducts and raw materials exported from Ukraine,which were meant to be used to purchase cattle fora government-owned farm in Ukraine, known asthe Naukovy State Farm, were used to purchasethe cattle, but at a fraudulently overvalued price.

The indictment states that over a two-yearperiod approximately $38 million in proceedsfrom the sale of metals and raw materials weredeposited into the account of a Netherlands dairycompany which was to supply the cattle.Approximately $13 million of the proceeds wereused to purchase cattle and other supplies for theNaukovy State Farm. The rest of the money wassent from the account of the Netherlands dairycompany to accounts under the control ofLazarenko and his cronies. In order to concealtheir activities, members of Naukovy State Farmand the Netherlands dairy company falsifiedcontracts, substantially overvaluing the cattlesupplied to Naukovy State Farm. As a result, itappeared that all of the $38 million in metals andraw material proceeds were used to purchase cattlefor Naukovy State Farm, a simple import scheme.

One of the vulnerabilities of import and exportschemes, from a detection standpoint, is the needfor two different contracts. There is always a riskthat the real contract will be given to lawenforcement authorities, thereby revealing thescheme. One way that money movers haveminimized this risk is to install a non-Russianmiddleman company. Using the examples above, aRussian exporter would sell vodka to the

middleman company for $15 per bottle and themiddleman company would sell it to the U.S.importer for $20. The $5 difference would accrueto the middleman company which is really an alterego of Mr. X (this is also known as transferpricing). Under this scenario, there are still twodifferent contracts but now there are three parties.One contract is between the Russian company andthe middleman company. The other contract isbetween the middleman company and the U.S.company. The middleman and Russian companiescan claim that the funds remaining with themiddleman company are its legitimate fees forconducting the trade. The U.S. company canclaim, truthfully or otherwise, that it did not knowthe nature of the relationship between the Russianand the middleman companies.

One additional method in which import andexport transactions are used to illicitly movemoney involves the nonfulfillment or untimelyfulfillment clauses in the import/export contract.Here, a clause is entered in the contract in whichthe Russian party agrees to pay exorbitant penaltyfees for nonfulfillment or late fulfillment of itscontractual obligations. The Russian party thenpurposely fails to fulfill its contractual obligationswithin the time specified and pays the penalty tothe other foreign party. The penalty money is thenforwarded to the bank account of the intendedbeneficiary.

B. Fictitious services schemes

A fictitious services (also known as intangibleservices) scheme exploits the ambiguity ofintangible services, such as marketing, consulting,insurance, or legal advice, and the difficulty inverifying their fair price. It can be a stand-alonescheme or one part of a larger import or exportscheme.

For example, in a simple stand-alone scheme,a Russian criminal wanting to move illegalproceeds out of Russia might pretend to purchasean intangible service, such as consulting, from aU.S. company. The U.S. consulting companywould actually be a front company and an alterego of the Russian criminal, so that payments forthe purported consulting services are actuallypayments into a U.S. bank account he/she controls.

Alternatively, a fictitious services schemecould be combined with one of the export orimport schemes delineated above. Under thisscenario, a Russian exporter might sell 100,000bottles of vodka to a middleman company for $15per bottle ($1.5 million total). The middlemancompany then sells the 100,000 bottles of vodka to


a U.S. importer for $20 per bottle ($2 million).The middleman company now has $500,000. Toprovide the Russian government and shareholderswith a seemingly legitimate reason for theexpenditure of the $500,000, the middlemancompany would claim that it was paid $100,000for putting together the trade; $200,000 went toABC Marketing for an advertising campaignconducted in the United States on behalf of thevodka exporter; $150,000 went to XYZ Law Firmfor legal counseling; and $50,000 went to 123Consulting for consultation provided oninternational trade issues. In reality, none of theseservices would have been performed, but theirintangible nature makes this difficult to verify. Themiddleman company is able to provide shamcontracts, invoices, and other paperwork, to give itan air of legitimacy. In actuality, all of the above-named firms would be front companies establishedin offshore zones that have favorable incorporationand bank secrecy laws making it difficult, if notimpossible, to establish the true beneficiary of thefunds sent to each firm.

Such schemes can be, and are employed in awide variety of circumstances from the simple tothe sophisticated. The common feature among allfictitious services schemes is that the services areostensibly provided to an individual or company inRussia (the place where the money is currentlylocated) by an individual or company locatedoutside Russia (in the desired destination for themoney).

C. Exorbitant interest rate schemes

Another scheme for moving criminal proceedsout of Russia is the exorbitant interest rate scheme.Here, the individual who wants to move moneyout of Russia (debtor) obtains a loan from aforeign individual or entity (creditor). As with theimport and export schemes, there are two contractsfor the same loan. One contract governs the actualloan terms and the other contract is a phony set ofpaperwork containing an inflated interest rate. Thedebtor presents the phony contract to a Russianbank and government officials as justification forsending the inflated sum of money abroad. Oncethe money is sent to the creditor, it refunds thedifference between the actual interest rate and theinflated interest rate to the debtor by sending therefund to the debtor's foreign bank account.

This scheme can be used for various purposes.A Russian company manager might use it toembezzle funds from his own company. A Russiancompany might use the scheme to pay bribes into agovernment official's foreign bank account. Anorganized crime group might use the loanpayments as a means to send criminal proceeds

abroad. An individual might use the schememerely as a mechanism to move legally earnedincome abroad.

As with import and export schemes, theperpetrator of an exorbitant interest rate schememay insert a middleman between the debtor andcreditor so that the creditor does not have theappearance of complicity in the scheme. Thiswould be especially important if the creditor is alegitimate U.S. or Western European bank.

X. U.S. criminal laws that may apply

U.S. criminal laws are implicated by theschemes discussed in this article. Althoughdeciding which laws apply to a particular case willdepend on the facts of the case, some statutes toconsider include the following:

A. National Stolen Property Act (18 U.S.C.§§ 2314-15)

The National Stolen Property Act prohibits thetransportation and receipt of money obtained bytheft or fraud in interstate or foreign commerce.See 18 U.S.C.A . §§ 2314 and 2315. Thisprohibition includes money obtained by fraud ortheft in a foreign country which is then brought tothe United States. See e.g., United States v.Braverman, 376 F.2d 249 (2d Cir. 1967);United States v. Rabin, 316 F.2d 564 (7th Cir.1963). U.S. prosecutors have used the NationalStolen Property Act to charge individuals for someof the money movement schemes described herein.For example, the United States has charged formerUkrainian Prime Minister, Pavel Lazarenko, withviolations of § 2314 for sending money to theUnited States that he obtained via import schemes.United States v. Pavel Ivanovich Lazarenko ,Docket No: CR 00-0284-MJJ, Second SupersedingIndictment (N.D. Cal. July 19, 2001).

B. Wire Fraud (18 U.S.C. § 1343)

The wire fraud statute prohibits the use of wirecommunications in interstate or foreign commercein furtherance of a fraud scheme. See 18 U.S.C.A.§ 1343. The jurisdictional element of a wire fraudoffense would be met if the count charges a wirecommunication (monetary wire transfer, fax,telephone call) between the United States and aforeign country. See United States v. Kim, 246F.3d 186, 188 (2d Cir. 2001) (U.S. citizen engagesin foreign fraud furthered by wires into or out ofthe United States); United States v. Goldberg, 830F.2d 459, 464 (3d Cir. 1987) (telephone call fromUnited States to Canada causes transfer of fraudproceeds from Canada to Bahamas); United Statesv. Gilboe, 684 F.2d 235, 237-38 (2d Cir. 1982)(non-resident alien uses wires into and out of the


United States to perpetrate fraud and obtainproceeds of fraud). The wire fraud victim can belocated outside the United States and can even be aforeign government. United States v. Trapilo, 130F.3d 547, 551 (2d Cir. 1997). Accordingly, thewire fraud statute is a valuable tool to consider incontemplating transfers of criminal proceeds fromRussia to the United States.

C. Federal Money Laundering Statutes (18U.S.C. §§ 1956-57, 1960)

Sections 1956 and 1957 of the federal moneylaundering statutes prohibit financial transactionswith funds derived from certain specified unlawfulactivity (SUA), listed in Section 1956. Most of theenumerated SUA's are U.S. offenses. The SUA'salso include, however, certain foreign offensesfound in § 1956(c)(7)(B), which may be used in amoney laundering charge if the financialtransaction occurs, in whole or in part, in theUnited States. This list of foreign predicateoffenses was expanded in 2001 with the enactmentof the USA PATRIOT Act. One of these newforeign predicate offenses that might apply to acase involving funds from Russia is found insubsection (B)(iv): "bribery of a public official, orthe misappropriation, theft, or embezzlement ofpublic funds by or for the benefit of a publicofficial." Pub. L. No. 107-56, 115 Stat. 272.

Section 1960 of the federal money launderingstatutes prohibits the operation of unlicensedmoney transmitting businesses. The definition ofmoney transmitting includes monetary wiretransfers on behalf of the public. It contemplatesthe scenario confronted in the Bank of New Yorkcase. In that case, Lucy Edwards, a Bank of NewYork employee, and Peter Berlin, her husband,pled guilty to a conspiracy to violate Section 1960.United States v. Peter Berlin Docket No: CR 99-914 (S.D.N.Y. February 16, 2000). In doing so,they admitted their role in helping two Russianbanks conduct unauthorized and unregulatedbanking operations in the United States. The twoRussian banks made repeated monetary wiretransfers (totaling more than $7 billion) throughthree Bank of New York accounts. Edwards andBerlin conceded that the purpose of the wiretransfers was to launder money and operate aback-channel method for secretly transferringfunds into and out of Russia. Since they had neverreceived a license to operate such a business, theypled guilty to the conspiracy charge.

The Bank of New York case is noteworthybecause investigators in other districts havenoticed similar wire transfer patterns in their localbanks, and because changes to Section 1960 have

made such cases easier to prosecute. The USAPATRIOT Act amended Section 1960 to relax thescienter requirement so that it is no longernecessary to prove that the defendant knew of thelicensing requirement or that it is illegal to operatea money transmitting business without one. It alsoadded a new offense in subsection (b)(1)(C),prohibiting the operation of money transmittingbusinesses known to involve funds derived from acriminal offense or funds intended to promoteunlawful activity. These changes, together withnew implementing regulations issued by FinCENin 2002, will make it easier for prosecutors topursue these cases.

D. Som e additional statutes

A prosecutor confronted with one of thesecases should also consider the following additionalstatutes: 15 U.S.C. § 78dd-1 (Foreign CorruptPractices Act); 18 U.S.C. § 545 (Smuggling goodsinto the U.S.) and other customs offenses; 18U.S.C. § 1001 (False statements); 18 U.S.C.§ 1341 (M ail fraud); and, tax offenses.

XI. Effective cooperation with Russia

Transnational financial crimes are difficultenough to investigate and prosecute withoutinvolving a non-English speaking foreign countrywith whom we have had a difficult and complexrelationship for more than eighty years. Thefollowing tips may be useful in promotingcooperation with Russia.

A. Do not be distracted by differences ineconom ic and political principles

Colonel Filipov's perspective exposed the factthat the Russian viewpoint on sending fundsabroad is quite different from the U.S. viewpoint.Russia still has several regulations restricting thefree movement of capital. In other words, Russiancitizens cannot just send funds abroad if they wishto do so. First, they must have a reason, such as acontract for importing goods. Then, their reasonmust be substantiated to the government withdocumentary evidence.

This notion of limiting economic free will isso contrary to the capitalist notion of the efficiencyof free markets and the cultural values thatAmericans have built around this principle, that itis easy to lose focus on Colonel Filippov's point.That is, the schemes described by ColonelFilippov are being used by corrupt public officialsand criminal groups in Russia to transfer criminalproceeds (proceeds of bribery, extortion,embezzlement, fraud, theft) to the United States.Thereafter, the criminals flee to the United States.


They then help their friends and relatives in Russiasend their criminally derived funds to theUnited States.

It is important that U.S. prosecutors not allowtheir differences in political and economicviewpoints to cloud their judgment in determiningwhether there is a viable U.S. prosecution. Afterall, a case that a Russian prosecutor might chargeas a failure to return currency from abroad, aviolation of Article 193 of the Russian CriminalCode, might involve violations of the U.S. statutesprohibiting international transportation of stolenproperty, wire fraud, or money laundering.

B. Focus on facts, not characterizations

Characterizations of facts often lead tocommunication problems. For instance, if aRussian prosecutor describes an episode as a"failure to return currency from abroad," he riskslosing the attention of his U.S. counterpart. If aU.S. prosecutor describes an episode as "organizedcrime" or "corruption," he risks alienating hisRussian counterpart.

Such communication failures seem to berelated more to mutual bias, suspicion, and culturaldifferences, than anything else. The cure is tofocus on the facts of a particular case and avoidlegal characterizations. Often, thesecharacterizations do not translate between legalsystems. Also, note that the expressions"organized crime" and "corruption" are politicallycharged. Russia has been accused of being acriminal state full of organized crime andcorruption, an accusation about which its peopleare sensitive. In these cases, it is important toavoid characterizations and focus on the particularfacts of the case.

C. Keep in mind the Russian perspective onmutual legal assistance

Colonel Filippov's perspective demonstratesthe feelings a U.S. prosecutor may confront in aRussian counterpart on the issue of mutual legalassistance. It is not uncommon to meet a Russianinvestigator who states that either one of his cases,or his colleague's cases, was dismissed becauseassistance from the United States did not arrive intime. As might be expected, these individuals arenot particularly receptive to U.S. requests forassistance or complaints about inadequateassistance from Russia. Consequently, U.S.investigators and prosecutors should be preparedto deal with this issue in their interactions withRussian counterparts.

Indeed, the mutual legal assistancerelationship between Russia and the United States

is complicated. Both sides have experiencedfrustrations. Both sides have elements of theircooperation that could improve. Primarily,however, the relationship is complicated by thedifficult political relationship between ourcountries. Political issues unrelated to a particularcase or even the administration of justice can, anddo, interfere with cooperation at times.

The best way to avoid problems is to consultthose who know the most about the presentpolitical currents and the status of cooperation atany particular time: for example, U.S. lawenforcement officials (attachés) stationed at theU.S. Embassy in Moscow; the U.S. Department ofJustice, Office of International Affairs (OIA),located in Washington, D.C.; and the U.S.Department of Justice, Resident Legal Advisor,stationed at the U.S. Embassy in Moscow.

The Federal Bureau of Investigation, theBureau of Immigration and Customs Enforcement,and the Drug Enforcement Administration, eachhave an attaché stationed at the Embassy whofunctions as liaison with local law enforcementagencies. They can initiate contact with theirRussian counterparts and provide invaluableadvice on how best to proceed in obtaininginvestigative cooperation. They may even be ableto obtain some of the publicly availableinformation, mentioned by Colonel Filippov,without the need for a mutual legal assistancerequest. Keep in mind that each of the federal lawenforcement agencies represented at the U.S.Embassy has its own separate counterpart on theRussian side, as well as its own uniquerelationship with each counterpart. Thus, it may behelpful to involve the attaché from more than oneagency.

If you will need evidence from Russia for trial,contact OIA as soon as possible. The OIAattorneys can advise you on the format for requeststo Russia under the Mutual Legal AssistanceTreaty. Be prepared to wait several months for aresponse to an MLAT request.

D. Consider the alternatives to extradition

The United States does not have an extraditiontreaty with Russia. Even if an extradition treatywere to be negotiated, Russia is prohibited fromextraditing its own citizens under the terms of theRussian Constitution. There are, however,alternatives to extradition worth considering.

First, it is possible for INTERPOL to issue ared notice for a U.S. subject. The red notice willalert law enforcement officials around the worldthat the United States has an outstanding arrestwarrant for the subject. Information on red notices


is available to a variety of law enforcementofficials and, most significantly, to those stationedat border and immigration checkpoints.Additionally, several countries recognize the rednotice as a legitimate arrest warrant and will arrestU.S. subjects, allowing the United States toinstitute extradition proceedings. Although, Russiawill not extradite a subject to the United States,another country may. Therefore, if the U.S. subjectdecides to leave Russia and travel to a thirdcountry, the red notice could be invaluable. Tolearn more on how to obtain a red notice, contactINTERPOL-USNCB, which houses individualsdetailed from all of the major federal criminalinvestigative agencies, in Washington, DC.

Second, under Russian law, the Russiangovernment can prosecute Russian citizens whocommit crimes in the United States. In fact,Russian prosecutors can use evidence from theUnited States to do so. This means that, if asubject flees to Russia and there is little reason tobelieve the subject will ever leave Russia, it maystill be possible to obtain a prosecution. OIA andthe Department Resident Legal Advisor have beenworking closely with the Russian GeneralProcuracy to develop procedures for referring suchcases to Russia. Contact OIA to learn more aboutthis option.

E. Rem ember the path has already been forged

Several U.S. investigators and prosecutorshave investigated financial crime emanating fromRussia, dealt with their Russian counterparts, andsuccessfully prosecuted cases. They are a greatresource for information. Among other things,they can introduce you to their contacts, providenames of expert witnesses, and sampleindictments. Contact the Organized Crime andRacketeering Section for assistance in findinginvestigators and prosecutors who have workedsimilar cases.

Useful Contact Numbers

Organized Crime & Racketeering Section202-514-3594

Office of International Affairs202-514-0000

INTERPOL-USNCB202-616-9000

Office of FBI Legal Attaché, Moscow011-7-095-728-5020

Office of Customs Attaché, Moscow011-7-095-728-5215

Office of DEA Country Attaché, Moscow

011-7-095-728-5218

DOJ Resident Legal Advisor, Moscow011-7-095-728-5357

XII. Conclusion

Since the early 1990s, financial crimeemanating from Russia has been a problemplaguing our financial system. We can expect theproblem to become more entrenched as newgroups of Russian criminals emigrate to theUnited States to aid their associates in Russia incommitting financial crimes. With the experiencegained by U.S. investigators and prosecutors overthe last decade, it is now time to make a concertedeffort in this area so that the United States is nolonger a favorite destination for Russian criminalsand their proceeds.�

ABOUT THE AUTHORS

�Vitor Filippov is a retired colonel of theRussian MVD with more than twenty years ofservice. He spent eleven of his years in the MVDwith the Special Regional Police Office (RUBOP)of the Russian Far East, which was an elite officededicated to the investigation of organized crime.Before retiring in 2002, Colonel Filippov was theChief of the International Section at the RUBOP.In this capacity, he supervised transnationalcriminal investigations and communication withforeign law enforcement agencies. He is a memberof the Russian Criminologist Association, haspublished articles in Russia on a variety ofcriminology topics, and most recently hasspecialized in studying the money launderingactivities of Russian organized crime groups.

�Jennifer J. Shasky is a Trial Attorney in theOrganized Crime & Racketeering Section of theCriminal Division, where she focuses ontransnational crime. Her casework has includedseveral matters involving transnational financialcrime emanating from Russia, the countries of theformer Soviet Union, and countries considered tobe offshore havens. Ms. Shasky has extensiveexperience in the region. Prior to joining theOrganized Crime & Racketeering Section, shespent her time in the Criminal Division workingon criminal justice reform projects with Russianprosecutors and MVD officials.a


The Russian Connection: SexTrafficking into the United States and What the United States and RussiaAre Doing About ItThomas FirestoneAssistant United States AttorneyEastern District of New YorkDetailed as Department of Justice Resident LegalAdvisor and Deputy Chief, Law EnforcementSectionUnited States Embassy, Moscow, Russia

I. Introduction

In January 2002, the United States Embassy inMoscow received a letter about an upcomingAmerican production of Nikolai Gogol's "TheMarriage." The letter was from Lev Trakhtenberg,who identified himself as the President of aUnited States based entertainment company thathad produced more than twenty shows in theUnited States and was hosting a Russian dramagroup in its upcoming United States tour. To thisend, Trakhtenberg asked the Embassy's ConsularSection to expedite the processing of visas for allmembers of the drama group. The letter seemedinnocent enough, but according to a recentindictment, it was actually part of a scheme byRussian gangsters to import sex slaves into theUnited States.

The phenomenon of Russian-speaking womenworking as prostitutes overseas has become socommon that prostitutes are simply called"Natashas" in many countries. Many of them wereseduced by false promises of high-paying work inthe West, Middle East, and in rich Asian countries,only to find themselves trapped in involuntary sexslavery once they arrived. According to annualState Department reports, both Russia and theUnited States are involved in this tragic slavetrade, Russia as a major source country, and theUnited States as a major destination-country forhuman trafficking.

Over the last few years, the United States andRussia have made significant efforts to combat thisproblem. Russia has made legislative attempts tocriminalize trafficking and the United States hasvigorously prosecuted Russian traffickingorganizations pursuant to the Violence AgainstWomen and Trafficking Victims Protection Act in

2000 (the 2000 Act). The 2000 Act facilitates theprosecution of trafficking cases through severalmeasures, including the creation of newtrafficking-related crimes with enhanced penalties,and the establishment of new visa classificationsenabling trafficking victims to avoid deportationand to assist law enforcement in the identificationand prosecution of traffickers.

This article examines three United Statesprosecutions of Russian trafficking organizations.Broader lessons about the mechanisms used bytraffickers to coerce their victims into slavery, andthe instruments used by Russian and American lawenforcement to cooperate in their prosecution, aredrawn from these cases. The article furtherdiscusses Russian legislative efforts to address theproblem (with United States technical assistance)and explores the implications of such legislationfor future prosecutorial cooperation.

A. United States v. Virchenko, No. A01-013 CR(D. Ak. Feb. 22, 2001)

The first United States case successfullyprosecuted under the 2000 Act was United Statesv. Virchenko. According to court documents,Virchenko worked as a dance instructor in theRussian region of Krasnodar and lured hisunwitting students into becoming traffickingvictims by inviting them to perform traditionalRussian folk dances at a nonexistent festival in theUnited States called "Russian Winter in Alaska."Several young students accepted. Virchenko'sAmerican associate meanwhile persuaded theAnchorage Mayor's Office to issue officialinvitations to Virchenko and his students. Upontheir arrival in the United States, Virchenko lockedthe students in a room in a remote location.Virchenko and his associates took their passportsand told them that the festival had closed, but thatthey still owed him travel costs of $1,500. He toldthem that the only way to repay him was bydancing nude in a strip club. Isolated, withoutmoney, travel documents, or knowledge of theEnglish language, the women had no choice but toagree. Eventually they were rescued by theImmigration and Naturalization Service (INS).


Pursuant to the United States-Russian MutualLegal Assistance Agreement (MLAA) and theassistance of the Department of Justice's(Department) Office of International Affairs(OIA), American law enforcement officialstraveled to Russia to interview witnesses andcollect evidence, which they used to successfullyprosecute Virchenko and his accomplices. In 2001,Virchenko was sentenced to thirty monthsincarceration.

The Virchenko case presents one model of atrafficking scheme–a limited conspiracy usingdeception to recruit women from a poor area, thenforcing them into involuntary labor in the sexindustry by taking advantage of their dependenceand cultural isolation in the destination country.

B. United States v. Gufield, No. 98 CR. 435 (E.D.N. Y. Mar. 31, 1998), aff'd 242 F.3d 268 (2d Cir.2000)

A different kind of trafficking scheme isevident in the case of United States v. Gufield. TheGufield/Kutsenko "Brigade" was anextraordinarily violent gang that operated in NewYork City in 1997 and 1998. At its height, theBrigade consisted of approximately fifteenmembers and associates, most of them emigrèsfrom the former Soviet Union, who maintainedties with New York's traditional La Cosa Nostra(LCN) families. Under the leadership of bossDmitri Gufield, the Brigade engaged in a widevariety of criminal activity, including kidnaping,arson, forced debt-collection, extortion, and fraud.According to testimony, however, Gufield's maingoal was to import hundreds of women from theformer Soviet Union and corner the market onprostitution in New York City.

Gufield's trafficking scheme was relativelysimple. He and his confederates bought womenfrom criminals in the former Soviet Union andsmuggled them into the United States using black-market travel documents. Once in theUnited States, victims were locked in a Brooklynbasement and threatened and beaten unless theyworked as prostitutes. They were also told thattheir relatives in the former Soviet Union would beharmed if they resisted.

The scheme was foiled when the FBI arrestedmembers of the gang for unrelated crimes. Twomembers cooperated and revealed all the gang'scriminal activity, including the trafficking scheme(which was halted before it reached the massiveproportions envisioned by Gufield). Because thecase was prosecuted prior to the passage of the2000 Trafficking Act, the members of the Brigade

were indicted for a number of trafficking-relatedcrimes, including kidnaping, extortion, and MannAct violations, but not for trafficking per se.Eventually, all pled guilty. Gufield himself wassentenced to twenty years incarceration, whileother gang members received lesser sentences.

In contrast to the scheme in Virchenko, whichrelied primarily on deception, the Gufield caseoffers an example of a diversified criminalenterprise relying on ties to organized crime toobtain women and illegal travel documents for exitfrom the source country, and on violence andthreats to control the women in the destinationcountry.

C. United States v. Trakhtenberg, No. 02-CR-638(D.N.J., Filed Aug. 20, 2002)

Somewhere between Gufield and Virchenko isthe Trakhtenberg case, which is, at the time of thiswriting, being prosecuted in the District of NewJersey. According to court documents,Trakhtenberg and his coconspirators recruitedvictims through ads placed in a local newspaper inthe Russian city of Voronezh. The ads offeredhigh-paying work in New York strip clubs, butspecifically stated that no sex would be involved.As a cover for the operation, Trakhtenberg and hisassociates created phony entertainment companiesin the United States and phony theatricalcompanies in Russia. The American companiesthen issued formal invitations to the Russiancompanies, which were used to obtainUnited States visas in Russia. Before departing forthe United States, the recruiters made the womenprovide them with the names and addresses oftheir relatives in Russia "in case of emergency."

Once the women arrived in the United States,the defendants took their documents and lockedthe women in an apartment guarded by anorganized crime associate. The defendants took thewomen to work at a strip club every day and tookmost of their earnings as well, which, they said,were being passed on to their organized crimeassociates in Russia. The women were warned thatefforts to escape or refusal to surrender theirearnings would result in harm to their families inRussia.

Thus, the Trakhtenberg case presents a thirdmodel of a Russian trafficking organization. As inVirchenko, but in contrast to Gufield, thetraffickers appear to have limited their criminalactivity to trafficking and were not part of adiversified criminal organization. As in Virchenko,to recruit their victims, they relied on deception ofwomen in a poor area of Russia. In contrast to


Virchenko, but like Gufield, they had connectionsto organized crime and used these connections tointimidate their victims into working as sex slaves.

These three cases are typical and collectivelyreveal Russian trafficking by a wide range ofcriminal organizations employing variousrecruiting and enslavement techniques, rangingfrom elaborate deception to crude violence.Because the nature of trafficking enterprises isfluid and varied, effective antitraffickinglegislation must address this variety of structure,organization, and technique.

II. Russian legislation

Since October 2002, the Russian governmenthas been engaged in an ambitious effort to addressRussia's trafficking problem by drafting criminallegislation that will give investigators andprosecutors the necessary legal tools to combat it.This effort is more significant than the passage ofthe 2000 Act because, absent a specificantitrafficking law, Russian investigators lack thepower to initiate an investigation, protecttrafficking victims, or maintain statistics reflectingthe frequency of trafficking. Draft legislation,however, which is expected to be adopted beforethe end of 2003, would remedy this situation.

At the heart of the bill is the new crime of"trafficking in persons," defined as "recruitment,transportation, transfer, receipt, harboring,extortion, blackmail, fraud, abuse of the conditionsof vulnerability of the victim, corruption in theform of payments, benefits, and also abuse oftrust" with the goal of "exploitation of a humanbeing." As in a case like Gufield, involvingorganized crime, the statute carries a maximumpenalty of life imprisonment. The law alsocontains several provisions designed to capturetrafficking schemes in which proof of the meansdescribed above may be lacking or difficult toobtain. For example, almost every traffickingscheme involves confiscation of victims' traveldocuments to prevent their escape. Many schemesalso involve use of false documents in sourcecountries. The draft legislation criminalizes boththe destruction and theft of identity documents, aswell as their creation and alteration for purposes oftrafficking. To prevent traffickers from usingconfidential information about victims' families tointimidate them, as in Trakhtenberg , the law alsocriminalizes the disclosure of victims' confidentialinformation. The law contains provisions relatingto debt bondage, slave labor, recruitment intoprostitution, trafficking in minors, the use ofblackmail, and drug dependency, to coerce aperson into performing sexual acts, as well asseparate articles relating to victim and witness

protection. Collectively, these provisions willprovide Russian investigators and prosecutors withthe tools they need to combat human trafficking.How well they use them can only be determinedonce the law is passed and implemented.

III. United States-Russian mutual assistance incombating trafficking

Just as the crime of trafficking requires closecooperation between criminals in source anddestination countries, combating it requiresequally close international cooperation betweenlaw enforcement agencies. As in the Virchenkocase, Russian investigators have helped Americanprosecutors collect the evidence necessary toprosecute traffickers. Equally significant, theUnited States has aided Russia's current legislativeeffort. Specifically, the State Department's Bureauof International Narcotics and Law Enforcement(INL) has provided most of the political andfinancial support for the legislative project, whilethe Department's Office of Overseas ProsecutorialDevelopment, Assistance and Training (OPDAT)has provided much of the legal expertise. As theDepartment's Resident Legal Adviser in Russiaduring the period in which the legislation wasdrafted, I worked closely with the Duma WorkingGroup and offered assistance in developing thedraft law and plan implementation strategies. As aresult of these efforts, the State Department, in itsannual 2003 AntiTrafficking Report, officiallyupgraded Russia's status from "Tier III" (definedas countries making no significant efforts tocomply with minimum international antitraffickingstandards) to "Tier II" (defined as countriesmaking significant efforts to comply with thosestandards). This upgrading had great significancefor Russia because, absent a presidential waiver,the 2000 Act mandates the termination ofUnited States nonhumanitarian, nontrade-relatedassistance to countries on Tier III as of the date ofthe 2003 Report. In Russia's case, the amount ofUnited States assistance is well over$100,000,000.

The anticipated passage and implementation ofRussia's antitrafficking legislation will also helpUnited States law enforcement combat trafficking.The Mutual Legal Assistance Treaty (MLAT)between the United States and Russia, whichsupplanted the earlier MLAA, contains a provisionthat allows the requested state (Russia) to refuseassistance if the crime being investigated by therequesting state (United States) is not also a crimein the requested state. The criminalization oftrafficking in Russia will provide United Statesprosecutors with a solid basis for seeking legalassistance from their Russian counterparts in these


cases. It also will provide United Statesprosecutors with a basis for asking Russia toprosecute traffickers who cannot be extradited tothe United States due to the absence of anextradition treaty. (Russian law specificallyprovides for the prosecution, in Russia, of Russiannationals who commit crimes in a foreign country,if the foreign country makes an appropriaterequest). Finally, if the law passes, Russian lawenforcement will begin to investigate andprosecute trafficking organizations. Pursuant to theMLAT, United States law enforcement, throughOIA, will be able to obtain all of the evidencegathered by the Russians in a form that isadmissible in United States courts.

United States-Russian cooperation in the areaof combating trafficking provides an idealexample of the ways in which source anddestination countries can work to cut offtrafficking at its source. If such cooperative effortsdo not continue and expand, then humantrafficking certainly will.�

ABOUT THE AUTHOR

�Thomas Firestone is an Assistant United StatesAttorney in the Organized Crime and RacketeeringSection, United States Attorney's Office for theEastern District of New York. In this capacity, hehas focused on the investigation and prosecutionof Russian organized crime cases. Since May2002, he has been on detail as the Department ofJustice Resident Legal Adviser at the United StatesEmbassy in Moscow, where he also serves asDeputy Chief of the Embassy's Law EnforcementSection.a

Balkan Organized Crime: TheEmerging ThreatClint WilliamsonSenior Adviser to the Iraqi Ministry of JusticeBaghdad, IraqDirector of Transnational Crime IssuesNational Security Council

I. Introduction

In April 2001, I returned to the Department ofJustice Criminal Division after spending sevenyears as a Trial Attorney at the InternationalCriminal Tribunal for the former Yugoslavia(ICTY) in The Hague, Netherlands. During mytime at the ICTY, I supervised investigations ofwar crimes committed throughout the formerYugoslavia, but my primary focus was on crimeslinked to Slobodan Milosevic and the Serbianleadership in Belgrade. During the course of theseinvestigations, I met with hundreds of individualswho could shed light on the chain of command andthe inner workings of the Milosevic government.These included military officers, political officials,intelligence agents, diplomats, and many otherswho were, in one way or another, linked to theregime.

In the strange world of Milosevic’s Serbia,politics, military operations, police activities, andorganized criminality, were so intertwined that itwas often impossible to separate them. As Ideveloped information on war crimes, I was alsoable to glean much information on organizedcrime in the region and those who were involved. Iworked closely with intelligence and lawenforcement agencies all over Europe on warcrimes matters and, invariably, the issue of Balkanorganized crime came up. I found that lawenforcement agencies were becoming increasinglyconcerned about the specter of Balkan crimegroups and the effects that they were having intheir respective countries.

By the time I left the ICTY, it is fair to say thatBalkan organized crime (OC) groups werecontrolling prostitution, drug trafficking, extortionrackets, and contraband smuggling networks, in anumber of northern and western Europeancountries. Once they took control of these criminalactivities, they introduced a degree of violencewhich had previously not been seen in most ofthese states. Naturally, security services all over


Europe took notice and tried to understand howthis had occurred in such a short period of time.

II. The changing character of Balkan organizedcrime

During the last twenty-five years ofcommunist Yugoslavia’s existence (1965-1990),its citizens were able to travel rather freely–theonly communist state in which this was the case.As a result, hundreds of thousands of Yugoslavswent to western and northern Europe seeking jobs.Over time, large Yugoslav émigré communitieswere established throughout Europe. As is the casewith any ethnic or national group, most were law-abiding. However, some started engaging incriminal activity. The fact that most Yugoslavsretained homes in Yugoslavia, stayed in closecontact with friends and family there, and traveledback and forth, made it relatively easy for crimegroups to establish networks that stretched fromYugoslavia through most of Western Europe.

From the outset, many of these crime groupsoperated with the countenance, or even activesupport, of the Yugoslav state security services.Cooperation between the two took many forms.One of the most disturbing was the practice ofcontracting criminals to kill enemies of thegovernment who lived abroad. In fact, the manwho became the undisputed "crime boss" inBelgrade in the late-1990s rose to prominencedoing just that. A more routine cooperativepractice involved the security agencies facilitatingthe flow of drugs or weapons through Yugoslaviato crime groups for sale in Western Europe. Aslong as the crime groups in Yugoslavia gave thesecurity services their cut of the money, theauthorities were willing to turn a blind eye to whatthey did elsewhere. They could even justify thearrangement as being in the national interestbecause it created disorder and undermined thedemocratic states where the groups operated.

Until the early 1990's, the make-up of BalkanOC groups largely mirrored the ethnic make-up ofthe former Yugoslavia. There were Serbs,Montenegrins, Croats, Bosnians, Macedonians,and Albanians, with Serbs being the mostprominent players. In part, this was due to the factthat the Serbs predominated in the securityservices and protection by those services wascrucial to crime groups operating across theYugoslav borders.

As the ethnic divides in Yugoslavia began tomanifest themselves, crime groups tended to splitalong ethnic lines as well. When war broke out inYugoslavia in 1991, it was a boon for thecriminals, and although they were divided along

ethnic lines, they still tended to work togetherwhere money was to be made. Tremendousamounts of money were made by trafficking inweapons, smuggling gasoline or cigarettes, or byparticipating in paramilitary groups which robbed,raped, and murdered innocent civilians. The long-standing relationship between Serbian crimegroups and Serbian state security was fullyexploited by Milosevic and his coterie. Theyreleased convicted criminals from prisons,incorporated them into paramilitary groups, armedthem with automatic weapons, and turned themloose on civilian populations in Croatia andBosnia, and later in Kosovo. By using commoncriminals, they hoped to establish a certain degreeof deniability and distance between themselvesand the crimes. It was a slippery slope, though,which effectively resulted in the criminalization ofthe entire Milosevic regime. Criminalizationbecame complete when economic sanctions wereimposed and smuggling became the order of theday.

The governments in Croatia and Bosnia alsoemployed criminal groups in their military efforts,but to a much lesser degree, and it never had theall-encompassing effect that it did in Serbia.Although Croatian and Bosnian crime groupsprofited from the war, they never rose to theheights, outside their countries, that the Serbgroups did, simply because they did not enjoy thesame level of state sponsorship.

With so much money at stake and with thefreedom to act with virtual impunity, the Serbiancriminals became increasingly violent. The murderrate in Belgrade rose rapidly and almost everymonth, one prominent criminal or another wasshot in assassination style killings–almost all ofwhich have remained unsolved for years.Government officials were also among the victims,including a former President of Serbia, theMinister of Defense, the head of the nationalairline, and the chief of the uniformed nationalpolice (who had been a key link between thesecurity services and the OC groups). In a numberof the cases, there were credible allegations thatthe victim was involved in the murky mix oforganized criminality, official corruption, and war-time atrocities.

These two factors, the money to be made in war-time Serbia and the internecine fighting betweencriminals, caused Serb criminals to stay largelyfocused on Serbia itself. The result was that theircrime organizations in Amsterdam, Antwerp,Hamburg, and other cities, suffered. By the timeSlobodan Milosevic fell from power in October2000, the Serbian organized crime presence


outside Serbia was significantly diminished. Manyof its most prominent leaders, such as ZeljkoRaznatovic, aka "Arkan" (mentioned earlier as thehit-man who became Belgrade's crime boss), weredead. The new leaders, and their governmentpatrons, were too busy making money andprotecting their political interests in Serbia to paymuch attention to the rest of Europe.

Into this void stepped the Albanians.Although ethnic Albanians from Kosovo andMacedonia had been able to travel abroad underTito, those from Albania proper had been trappedin the most isolated state in Europe, ruled by aparanoid Stalinist government. Only after the fallof communism in Albania in 1991 were they ableto leave. Between 1991 and 2000, thousands ofthem left and they were joined by the thousandswho fled Kosovo in the years leading up to the1999 war. The result was that the population ofAlbanian émigré communities mushroomedthroughout Western Europe.

Those in OC groups were initially able totake advantage of the shift in drug traffickingroutes south from Serbia into Albania. This shiftcame about because of the wars going on in therest of Yugoslavia. While the conflict raged inCroatia and Bosnia, the traditional smugglingroutes that went from Serbia through thosecountries were not predictable enough.Consequently, drugs originating in Central Asiaand/or Turkey started being transported throughAlbania instead. With relatives or associates backhome in Albania, the Albanian crime groups inWestern Europe were able to establish a secure,reliable trafficking network.

The true emergence of Albanians as thedominant ethnic crime group in Western Europe,though, coincided with two cycles of lawlessnessin Albania and Kosovo respectively. The firstevent was the complete breakdown of civilauthority in Albania in 1997. In the ensuing periodof anarchy, virtually all of the military arsenalswere looted, resulting in thousands of automaticweapons being "liberated." This created anunimaginable market for weapons trafficking. Thesecond event was the war in Kosovo in 1998 and1999. Huge smuggling networks were set up tosupport ethnic Albanian fighters and tremendousamounts of money were funneled in clandestineways to the cause. Some organized criminalgroups, as had been the case in Serbia, weretransformed, part and parcel, into paramilitarygroups. Thus, they were in a prime position tobenefit from the lawlessness, and again, as inSerbia, they were able to cloak themselves in the

flag as patriots who had fought valiantly for theirethnic brethren. This gave them a legitimacy as"freedom fighters" which they exploited to thefullest. These factors provided them theopportunity to strengthen their power in Albania,Kosovo, and Macedonia, and also to enhance theirpositions wherever there were significant Albanianémigré communities throughout Western Europe.

Before long, prostitution and extortion rackets,drug networks, and cigarette smuggling, whichhad largely been the province of Serb criminals,came under the control of Albanians. In city aftercity in Western Europe, the authorities beganexpressing concerns about the rapid rise ofAlbanian OC. In my last year and a half at theICTY, government officials in a number of statesrepeatedly compared the rise of Albanian OC tothe rise of Russian OC which occurred a few yearsearlier. They differentiated the two by saying thatwhile the Russians had been extremely violent athome (in the former Soviet Union), the high levelsof violence had not been exported to the rest ofEurope. The Albanians, though, had introduced adegree of violence and ruthlessness which hadnever been seen in most of the European countries.

Since the Albanian OC presence manifesteditself in every European country where there was asignificant émigré population, those involved withthe issue began to question whether the same thingwould occur in the United States. Like Europeancountries, the United States has also seen a hugeinflux of Albanian émigrés, many of whom hadentered the country as refugees or asylum seekersduring the 1990s. Additionally, ethnic Albaniansin the United States provided substantial financialsupport to the Albanians fighting in Kosovo, and abrigade of the Kosovo Liberation Army (KLA)actually was composed primarily of Albaniansfrom the New York area. In Europe, the linksestablished between émigré groups and the KLAwere exploited by organized crime groups after thewar, so it was reasonable to expect that similardevelopments might materialize in theUnited States.

When I returned to the United States from TheHague in April 2001, I had a number of meetingswith senior officials in the Criminal Division todiscuss the possible emerging threat of Balkan–particularly Albanian–organized crime. Theleadership in the Criminal Division and at theOrganized Crime and Racketeering Section(OCRS) were very interested in getting a clearerpicture of how serious the threat actually was andwith creating a plan to preempt it before it reachedthe United States. I was tasked with preparing a


comprehensive interagency threat assessment onBalkan OC. I started work on this in the summerof 2001, but the work was interrupted first by theattacks of September 11 and then by my posting toKosovo.

My move to Kosovo resulted from the NATOgovernments' rising concerns regarding the state oflawlessness in the province. It appeared thatAlbanian OC groups had come to dominate life inKosovo. In practical terms, this meant that itwould be extremely difficult for a stable situationto be established in the province and, therefore,NATO troops would have to be committed for anindefinite period. There was a strong consensuswithin NATO to bring in a careerprosecutor–preferably with a solid background inthe region–to head up the Department of Justicefor the United Nations Mission in Kosovo(UNMIK). I accepted the post in October 2001.Although Kosovo is a province of Serbia, it haseffectively been a UN protectorate since the end ofthe 1999 war and UNMIK has run the governmentthroughout this period. Thus, as Director of theDepartment of Justice, I served as the AttorneyGeneral of the province, overseeing the courts, theprosecutors' offices, and the prison system, amongother things. I was given tremendous latitude toaddress crime issues, largely because of the verybroad mandate under which the United Nationsand NATO operate in Kosovo.

One of the problems I encountered upon myarrival was that the UNM IK Department of Justicehad no strategy in place for dealing with theorganized crime problem, nor had it everundertaken any large-scale prosecutions oforganized crime figures. In short, the Departmentemployed a reactive approach instead of aproactive one. If organized crime figures werearrested for a criminal offense, they might beprosecuted, but the prosecutions took place inisolation as opposed to being part of a coordinatedeffort to attack the problem.

I immediately sought to make the Departmentmuch more proactive. One of the first steps was toestablish a close working relationship with theKosovo Force (KFOR), the NATO peacekeepingforces deployed in the province. With over 32,000troops and a huge intelligence network in a placethe size of Connecticut, KFOR was an invaluablesource of information. They had eyes and earseverywhere and could immediately identify theworst of the organized crime figures in any city ortown. They had a vested interest in seeingsomething done about organized crime andbecame enthusiastic partners in my efforts.

Prior to my arrival, two specialized units hadbeen established within UNMIK Police to addressorganized crime–the Kosovo Organized CrimeBureau (KOCB) and the Central Intelligence Unit(CIU). There was no prosecutorial counterpart,though, so I set up the Sensitive Information andOperations Unit (SIOU) within the Department ofJustice. Michael Dittoe, an AUSA from Miami, ledthe office and supervised sensitive investigations(organized crime, terrorism, cross-borderinsurgency cases, etc.), provided expertise in thesefields to international prosecutors, and served asthe main interlocutor with intelligence services.SIOU soon eclipsed the specialized police units asthe driving force behind OC investigations andprosecutions.

Another office that made a huge impact infighting organized crime was the JudicialInspection Unit (JIU). Unlike the United States,the judges in Kosovo, as well as the prosecutors,fell under the authority of the Department ofJustice. The vast majority of theses jurists wereKosovars (either Albanian or Serbian) andtremendous pressure was exerted on them whendealing with sensitive cases. In some cases, thepressure came in the form of threats, but moreoften it was in the form of financial inducements.By empowering the JIU to aggressively investigateall allegations of judicial or prosecutorialimpropriety, we were able to send a strong signalto jurists that corruption would not be tolerated.This had a huge effect on the public as well andthey showed a new willingness to report improperbehavior.

Although these steps influenced the behavior oflocal judges and prosecutors in a positive way, itdid nothing to diminish the risks faced by themwhen handling cases against high-level OCfigures. As a result, most of these cases had to behandled by international judges and prosecutors(IJPs). Over the last year, we were able to doublethe number of IJPs. Although they were originallyintroduced into Kosovo to handle inter-ethniccases, by mid-2002 the bulk of their casesinvolved organized crime. By utilizing them in thisway, we were able to bring significantprosecutorial weight against the leading OCfigures.

Several months after I arrived in Kosovo, wewere able to enact a regulation allowing for the useof covert measures (wiretapping, videosurveillance, etc.). The use of these lawenforcement tools had previously been prohibited,so this regulation was a big step forward inaddressing organized crime. Unfortunately,acquiring the equipment and technical backing


necessary to use these tools was slow in coming.Thus, I was only able to see marginal benefitsfrom the passage of this regulation during mytenure. In the long run, however, the ability to usecovert measures should make a significant impact.

All of these steps, and others such as creatinga witness protection program, facilitatedprosecutions against some of the leading OCfigures in Kosovo. We used the "Al Caponeapproach" and basically prosecuted them for anycrimes to which they could be linked. The goalwas to get them off the streets for as long aspossible and to show that the authorities were incontrol. Simply by arresting and bringing theminto courtrooms, we were able to pierce the veil ofimpunity that most Kosovars believed surroundedthem. This caused more witnesses to come forwardand others, who had previously been unwilling tocooperate, to re-think their positions. Cases thatwere brought initially for war crimes were laterexpanded to include public corruption andracketeering charges. By the end of 2002, we hadinitiated prosecutions against a number of theleading OC figures in Kosovo, including the onepreeminent crime boss.

Although significant progress was made, thesituation in Kosovo is still far from good. After thefirst arrests, large demonstrations occurred sincethe defendants were once again portrayed as"freedom fighters." While these public protestsdied down quickly, those linked to organizedcrime did everything they could to create a climateof fear and turmoil, in an effort to make ituntenable for the Department to pursue otherprosecutions. Threats against witnesses werecommonplace, attempts were made on some oftheir lives, and in a few truly tragic cases witnesseswere killed. Nevertheless, the prosecutions havegone forward and more cases have been brought.Just as it was in the United States, it will be a long,difficult fight to get organized crime under control.

Kosovo is unique to a certain degree. Sincethe international community (UN and NATO) hasexclusive responsibility for public security, it hasbeen relatively easy to institute reforms there. Theneed for similar steps in other Balkan states is justas pressing, but the governments in those countrieshave enjoyed varying degrees of success in theirefforts to combat organized crime. During mytenure in Kosovo, I met frequently with mycounterparts (Ministers of Justice and Interior) inneighboring states. Most of them recognized thescale of the problem they were confronting andwanted desperately to do something about it. Insome cases they did not know what to do, in others

they knew but were unable to enact the neededreforms, and in a few cases they were actually ableto take meaningful steps which had a positiveimpact.

The one place where officials were unwilling toacknowledge the scale of the problem was inSerbia proper. While Serbian OC groups lost someof their influence outside the Balkans, their powerin Serbia remained undiminished. The groups wereso confident of their power that they assassinatedPrime Minister Zoran Djindjic on March 12, 2003and hoped to take outright control of thegovernment. Finally, after years of complacencyand complicity with organized crime groups, theoutrage generated by this act left the governmentfeeling empowered enough to directly take on thecriminal gangs.

This has largely been accomplished through thedeclaration of a state of emergency which hasgiven the government sweeping police powers.Thousands have been arrested including theDeputy State Prosecutor (who admitted to beingpaid off by OC groups), the former Chief of Staffof the Army, the former Chief of State Security,and numerous other policemen, judges, andprosecutors, as well as the criminal gang membersthemselves. The elite police unit responsible forfighting terrorism and organized crime has beendisbanded as evidence showed that it wasinextricably linked with the biggest OC group, andthat some of its officers even participated inDjindjic's assassination. It would be fair to say thatin the last two months, more has beenaccomplished in Serbia in terms of tacklingcriminality than was accomplished in the pastthree years.

People in Serbia, and observers in other parts ofthe world, have been shocked at the extent towhich organized crime permeated Serbian statestructures. Its presence has undermined anytransformation to a truly democratic andfunctioning state, and although Serbia was perhapsthe most glaring example of criminality run amok,organized crime still poses a threat to varyingdegrees in all of the Balkan states. To get it undercontrol will require continued engagement in theBalkans by the international community,something which is far from certain as attention isdiverted to other crisis spots like Afghanistan andIraq. As long as OC groups are allowed to operatewith impunity there, the threat will exist elsewherein Europe, and perhaps in the United States aswell.


III. Balkan organized crime in the United States

It is difficult to determine how serious theBalkan OC threat actually is in the United States.When I started working on the threat assessment in2001, I found that there were a large number ofcases involving Albanian perpetrators across thecountry. In a number of these cases, the suspectshad committed crimes in a manner consistent withorganized crime groups. At that point, though,there was little analysis of the links betweenindividuals and groups except in New York, andeven there the analysis was limited.

One fact emerged very quickly and that wasthe difficulty law enforcement authorities have hadin penetrating Albanian OC groups. Invariably thesuspects refused to cooperate. One agent in NewYork told me that "these guys will take ten yearswithout blinking an eye rather than say anythingagainst their cohorts." Likewise, a shortage oftranslators and difficulty in finding translators whodid not know the suspects led to a paucity ofquality Title III intercepts. As a result, relativelylittle intelligence was accumulated on the make-upor modus operandi of the Albanian groups.

By 2001, we were starting to see somedisturbing trends. Up until that point, Albaniancrime "groups" were almost always synonymouswith family groups. What we began observing wasa newfound willingness of family-based crimegroups to include outsiders if they had a specialexpertise that no one in the family possessed. Thisshowed that the groups were becoming moreprofessional and ambitious, no longer wanting tosee limitations placed on their activities simplybecause of the limitations of family members'skills. As this occurred, Albanians startedbranching out from signature crimes, such as bankburglaries, and started moving into other arenas.

We also began seeing an increased degree ofcooperation between Albanian OC groups andLCN groups, particularly in New York. Albanians,who had traditionally worked as "muscle" for theLCN families, began taking on more meaningfulroles, and they started appearing as equal partnerswith LCN groups in certain criminal enterprises. Inseveral instances, they have even gone intocompetition with the LCN families, taking overextortion and gambling rackets formerly controlledby the LCN. Significantly, they have done thiswith relatively little resistance from the LCN whohave been unwilling to fight them. We have alsoseen Albanian OC cases in places like Dallas,Detroit, Phoenix, and even Alaska. There is nodoubt that Balkan groups are reaching out to newareas and new types of criminal activity.

In an effort to accurately gauge the extent of theproblem, work on the threat assessment that wasinterrupted in late-2001 has been reinitiated. Aftermy posting to Kosovo and subsequent move to theNational Security Council, this has been taken upby OCRS and the FBI Headquarters OrganizedCrime Unit, both of which have started profilingcases involving Albanian perpetrators across thecountry. They have already compiled atremendous amount of information and begun tostudy links between individuals and groupsoperating around the United States. Additionally,the Criminal Division and FBI have increasedcontacts with intelligence and law enforcementauthorities in Europe in an effort to determinelinks between groups operating here and thoseoperating overseas.

IV. The way ahead

Balkan OC has not reached the epidemicproportions in North America that it has in Europe,but there are growing signs that it is becomingmore of a factor in the United States. To prevent itfrom becoming as entrenched here as it is inEurope, the Department and local law enforcementagencies have to aggressively address the problem.

The first component of the strategy in fightingBalkan OC is to identify linked individuals andgroups. In numerous instances, law enforcementofficials have not recognized that they are dealingwith Balkan OC figures when they have madearrests and even when they have carried throughwith prosecutions. Many have been unaware of theBalkan OC phenomenon which, until recently, wasconfined primarily to the Northeast. On occasion,investigators and prosecutors who were notfamiliar with Albanian or Serbian names havefailed to connect their defendants with othersoperating in the same group and in the same area.

Work that is underway on the threat assessmentshould go a long way to elucidating the extent ofthe problem in the United States. Key to thesuccess of this effort is the input from prosecutorsand agents across the country. They must beattentive to Balkan OC activity in the same waythat they are to LCN, Russian, or Asian OCactivity. W hen they encounter cases potentiallyinvolving Balkan OC, they need to ensure thatinformation is channeled through the OCRS andFBI designated points of contact (Trial AttorneyGavin Corn and S/SA Vadim Thomas). Not onlydoes this assist OCRS and FBI HQ in compilinginformation on the scale of the problem, it opensthe door for AUSAs and agents in the field to getinformation and to determine if their defendantsare linked to groups elsewhere in the United Statesor overseas.


In regard to the latter, the contact establishedwith intelligence and law enforcement agenciesoverseas has already produced dividends. Theinformation sharing arrangement that is in placewill facilitate identifications of individuals linkedto overseas groups and allow for coordinatedinvestigations and/or prosecutions in multiplejurisdictions. This is extremely important and is avital component of any plan to attack the problem.Balkan OC groups have expanded so quickly, andmembers have moved around so frequently, thatthe only way to successfully go after them is tomake sure that they are not able to use borders andchanges in jurisdiction as a means of evadingjustice.

As part of the fight against Balkan OC, theU.S. Government has joined with Europeangovernments in a wide-ranging initiative involvingthe European Union and the world's eight mostinfluential democracies known as G-8. I attendedthe initial meeting on the issue along with DAAGBruce Swartz, OCRS Chief Bruce Ohr, and StateDepartment representatives, in London inNovember 2002. At this meeting, it wasuniversally agreed that there had to be bettercommunication between police and prosecutors incountries where Balkan OC is a problem. TheDepartment has been working hard to do this on abilateral basis with several governments such asthe United Kingdom and France, but a wide-ranging multilateral effort still has not becomereality. This meeting, although a solid first step inthat direction, must be followed by concreteactions.

Finally, still more needs to be done to attackBalkan OC at its roots in the Balkan countries.Innovative steps such as placing Americanprosecutors to head the Department of Justice inKosovo (I was succeeded in the post in February2003 by former OCRS Chief Paul Coffey), havehad some positive effects. Whatever good that hascome from this however, has primarily beenlimited to Kosovo–a significant but still small part

of the problem. Ultimately, the regionalgovernments themselves will have to bring theproblem within their respective states undercontrol. In the countries where the problem isworse, the post-communist judicial systems arerelatively immature and corruption within thegovernments is widespread. In these countries thegovernments are eager to get outside help. Theywelcome advisers and training programs and areactively seeking more engagement with theUnited States and the European Union. It is in allof our interests to engage them and to doeverything we can to assist them. We have to gointo this with our eyes open. Most Balkangovernments are plagued with corruption, but wecannot afford to let that alone dissuade us. Thestakes are too high, both for us and our Europeanallies, to turn our backs on the Balkans.

The views and opinions expressed in this articleare those of the author alone and do notnecessarily reflect the position of the NationalSecurity Council or the Executive Office of thePresident.�

ABOUT THE AUTHOR

�Clint Williamson is currently serving as theSenior Adviser to the Iraqi Ministry of Justice inBaghdad. His permanent position is as the Directorof Transnational Crime Issues at the NationalSecurity Council in W ashington. Prior to hisposting at the White House, he served for one year(2001-2002) as the Director of the Department ofJustice in UN-administered Kosovo. From 1994 to2001, he was a trial Attorney at the InternationalCriminal Tribunal for Yugoslavia in The Hague,Netherlands. He went to The Hague from theOrganized Crime and Racketeering Section of theU.S. Department of Justice Criminal Divisionwhere he worked from 1992 to 1994.a


The Budapest ProjectThomas V. FuentesSpecial Agent in Charge Indianapolis DivisionFederal Bureau of Investigation

The Budapest Project was initiated to addressthe increasing threat of Eurasian Organized Crimein Russia and Central/Eastern Europe. Through1998 and 1999, meetings took place betweenofficials of the Hungarian National Police (HNP)and the Organized Crime Section of the FBI. InApril 2000, an FBI agent, who would act as aliaison and have access to HNP Headquarters, wasassigned to the United States Embassy inBudapest. The initial objective of the Project wasto focus on specific ongoing cases. Intelligencegathering, in cooperation with HNP, causedproject members to provide information andassistance to FBI field divisions on a routine basis.The Project has provided a mutually beneficialmechanism whereby the HNP has been able tocurtail the influx of criminal activity across itsborders, and it has aided the FBI in stemming theencroachment of Eurasian Organized Crime intothe United States.

The events that triggered the need for theBudapest Project arose from the collapse andfragmentation of the Soviet Union. Following thecollapse, organized crime exploded throughoutRussia, the new republics, and the EasternEuropean Bloc countries. By the mid-1990s, theMoscow-based Solntsevo group emerged as thelargest and most powerful Russian OrganizedCrime (ROC) group. In 1995, one of the strongestSolntsevo factions, led by Semion Mogilevich,established its headquarters in Budapest, Hungary.Budapest was attractive to such groups because,among other things, it maintained a stable,sophisticated banking system, as well as contactwith Western countries.

In May 1995, the G-8 held a ROC conferencein London, England, hosted by the NationalCriminal Intelligence Service. Officers of theRussian Ministry of the Interior (MVD) advisedthe attendees, which included delegates from theUnited States (FBI), Canada, France, Germany andItaly, of their assessment of ROC. The MVDidentified Mogilevich as the boss of more than 300criminal associates operating in more than thirtycountries in Europe, Asia, and North America.Their criminal activities included murder,extortion, trafficking in women for prostitution,smuggling, money laundering, bank and securities

fraud, and, in numerous countries, the corruptionof public officials.

After the G-8 meeting, I traveled to Moscowand received additional detailed briefings from theMVD and the Federal Security Service concerningROC groups. Our discussions covered, amongother things, Vyascheslav Ivankov, a Russian whohad been dispatched to the United States byMoscow ROC bosses to establish a criminalorganization structured similar to a La Cosa Nostrafamily. Ivankov was arrested by our New YorkOffice and was indicted in the Eastern District ofNew York. (In July 1996, he was convicted on allcharges, including those involving extortion andextortion conspiracy.)

During this period, ROC groups showed twofaces. They continued to engage in traditionalracketeering, i.e., extortion, trafficking inprostitution, etc. These street-corner thugs werevisible in Russian-speaking communities fromBrighton Beach in New York City to Budapest.Then, the ROC groups evolved, planning andcarrying out, for example, sophisticated financialcrimes committed through the penetration of theGlobal Financial Network and internationalsecurities markets. In 1997, our Philadelphia FieldOffice, in partnership with the Internal RevenueService, the Securities and Exchange Commission,and the U.S. Customs Service, initiated a securitiesfraud investigation in connection with YBMMagnex, a Budapest-based company run byMogilevech. This case became an organized crimematter when certain subjects were identified asbeing connected to ROC.

The FBI's strategy of relentless pursuit ofenterprise investigations, coupled with aggressiveDepartment of Justice Strike Force prosecution,resulted in not only the systematic decimation ofLa Cosa Nostra, but also prevented foreignorganized crime groups from establishing a strongcriminal base of operations in the United States.As a result, ROC bosses, such as Mogilevich,directed criminal operations against theUnited States from safe havens overseas.Consequently, it became imperative for theUnited States to adopt a new approach to bringabout broader cooperation in the international lawenforcement community, as well as a strategy forimplementing that approach that would benefit theUnited States and its international partners. In lightof the exigent circumstances and commonconcerns, Hungary seemed the place to start.


Initially, investigative assistance fromHungary was severely obstructed. Two EuropeanIntelligence Services advised us that the head ofthe Hungarian National Police Organized CrimeDirectorate was on Mogilevich's payroll.Fortunately, the government of Hungary wasaware of its growing internal ROC threat.

At this time, the Mogilevich organization hadtaken over street-level racketeering in Budapest.Russian women were illegally imported forprostitution. Black-leather-clad gangsterscommitted brazen extortions and other acts ofviolence against local citizens and visitors,including United States military personnel en routeto peace keeping duties in the Balkans.

In 1999 when the Hungarians requests forassistance from their European Union neighborswere refused, they turned to the FBI. Theyformally asked United States Ambassador Tufoand our Assistant Legal Attache (ALAT) MilesBurden for FBI organized crime agents to workwith them in Budapest. The FBI responded thatsuch a task force could only be possible if allcorrupt officers were removed, the FBI wasallowed to create a "vetted" team, the FBI agentswere authorized to carry arms, and the agents wereafforded diplomatic immunity.

ALAT Burden came to FBI Headquarterswith HNP General Isztvan Miko in November1999. General Miko wanted to convey a messagefrom the Prime Minister, the Minister of theInterior and his boss, the Director of the HNP. Headvised us that the corrupt HNP officers and theircommander had been fired, and that the ministerswanted to go forward with the creation of anFBI/HNP Organized Crime Task Force.

The following week the FBI met with theMinister of the Interior, Sander Pinter in Budapest.Also in attendance were HNP Director PeterOrban, United States Ambassador Peter Tufo, andALAT Burden. Minister Pinter and AmbassadorTufo agreed that the FBI agents would be indanger and should be armed. The agents wouldalso be afforded diplomatic status as SpecialAssistants to the Ambassador. It was agreed thattask force operations would be comanaged byGeneral Miko, the new head of the organizedcrime unit for the HNP, and myself as Chief of theFBI's Organized Crime Section, FBIHQ.

We agreed to identify four FBI agents to serveon a temporary-duty basis. The HNP would assignseven elite officers fluent in English to work aspartners. All investigative activity would includeat least one officer and one agent. Reporting would

comply with requirements for both agencies. Thetask force would be housed in HNP space. TheFBI would pay to remodel and install security, aswell as provide furniture, computers, officesupplies, and rental cars. Throughout thesenegotiations, the task force received exceptionalsupport from the State Department's Office ofInternational Narcotics and Law Enforcement.Ambassador Wendy Chamberlain arranged forsubstantial financial assistance to be dispersedthrough a site-fund created in the Embassy tosupport the task force.

The task force began operations on April 1,2000 and its presence was felt immediately. TheUkranian-born Mogilevich fled Budapest forMoscow and later obtained Russian citizenship.The Hungarians provided an additional 4,000documents pursuant to Mutual Legal AssistanceTreaty (MLAT) requests in connection with theYBM case. This enhanced assistance fromHungary enabled the prosecution team, led byStrike Force Chief Bob Courtney, Eastern Districtof Pennsylvania, to obtain indictments chargingfour subjects, including Mogilevich, with moneylaundering, securities fraud, and RICO conspiracy.

Significant accomplishments continue. Forexample, special agents assigned to Budapest havebeen able to establish a criminal intelligence basedeveloped from the perspective of Eastern Europerather than the United States. With Eastern Europeas the center of the intelligence base, agents canacquire evidence in direct, "real time." With thecooperation of the HNP, agents also have beenable to develop intelligence involving the ROCnetwork throughout Europe. This developmentfurther enhances the ability of the HNP to makecases and successfully prosecute organized crimein Hungary. It also allows agents, again with thecooperation of the HNP, to thwart the ROC beforeit reaches the United States.

Since its inception, the FBI/HNP Task Forcehas established itself as the most elite investigativeunit in Hungary. Members employ sophisticatedinvestigative techniques used by the FBI and otherinvestigative agencies. As a result, organizedcrime investigations have been initiatedthroughout the world, as well as in a number ofFBI Field Offices throughout the United States.The success of the Budapest Project hasencouraged others in law enforcement to seekexpansion of the concept to other countries.�


ABOUT THE AUTHOR

�Thomas V. Fuentes presently serves as SpecialAgent in Charge of the Indianapolis Division, withresponsibility for FBI operations in Indiana. Hisprevious posts include Chief of the FBI'sOrganized Crime Section (HQ), Assistant SpecialAgent in Charge of the San Francisco office,Supervisory Special Agent in Organized CrimeSection (HQ), and Special Agent and Supervisorof an Organized Crime Task Force Squad of theFBI Chicago Field Office.

Reform of United KingdomExtradition LawRaj JoshiHead of European and International DivisionCrown Prosecution Service of England and Wales

Brian GibbinsPolicy AdviserEuropean and International DivisionCrown Prosecution Service of England and Wales

I. Introduction

Several years ago one of the authors gave apresentation on English extradition law andprocedure to a group of examining magistratesfrom a European city which had originated adisproportionately high number of extraditionrequests to the United Kingdom. As soon as hebegan to speak, he was met with a chorus ofdiscontent with our system. It turned out that thesource of the ill feeling was one case that had beendismissed some five years previously. In fact,apart from the one failure, things seemed to beworking well between the two countries.

Two features of the failed case wereimportant; firstly it was high profile and secondlyit took a considerable amount of time, money andeffort, before it was finally dismissed.

It may surprise you to learn that extraditionrequests to the U.K. rarely fail. It's just that oursystem is relatively slow; whilst cases take anaverage eighteen months to process from arrest tosurrender, some take considerably longer. A well-funded fugitive can exploit the slowness of thesystem by a series of long drawn out appealswhich may cause the original prosecution to fail asthe memories of key witnesses fade. Since well-

funded defendants are often high profile, it isobvious how our system has achieved anundeservedly bad reputation among our extraditionpartners.

Things are about to change. The newExtradition Bill currently before Parliament, andlikely to enter force at the beginning of 2004, willintroduce changes as radical as the size of the Bill(213 clauses at the time of writing) suggests.

To fully understand those changes it is firstnecessary to explain, in outline, how the presentsystem works.

II. The current system

Extradition involves a mix of judicial andexecutive functions. The courts determine whetherthe fugitive is legally extraditable. However, it isthe Home Secretary who decides at the outsetwhether the courts should determine extraditabilityat all, and, if so, whether a fugitive who has beenheld extraditable, should in fact be returned to therequesting state.

The difficulty with this arrangement is that itcreates what has inaccurately been described as atwin-track appeal system. The development ofjudicial review jurisprudence means the fugitivemay not only appeal the judicial decision onextraditability but also seek judicial review of theHome Secretary's decision to return him. Veryoften, similar, if not identical, issues are raised inboth types of challenge, hence the soubriquet"twin track appeal." All this takes time. Not onlyare our appeal courts very busy, but the HomeSecretary has to go about his decisions extremelycarefully to ensure that they are not successfully


challenged by judicial review. This entails alengthy period before the surrender decisionduring which representations (sometimes runningto thousands of pages) from the fugitive have to beconsidered. When you bear in mind that thepreceding judicial stage allows challenges to theextradition on grounds such as dual criminality,double jeopardy, lapse of time, bad faith, trivialityand (in the case of countries outside the EuropeanConvention on Extradition 1957) admissibility ofthe evidence supporting the request, it's easy to seewhy the patience of our extradition partners iswearing a little thin.

III. Drivers for change

Impetus for the Extradition Bill derived from anumber of convergent key factors.

At the national level, concerns about theperceived failings of the current system had notgone unnoticed by the Home Office. It undertook areview of U.K. extradition law with a view toreplacing the current Extradition Act 1989. Theresults were published in March 2001 in The LawOn Extradition: A Review (available on the HomeOffice website. www.homeoffice.gov.uk/docs/extrabody.pdf).

At EU level, the Treaty of Amsterdam of 2ndOctober 1997 set the EU goal of establishing forits citizens "a high level of safety within an area offreedom, security and justice by developingcommon action among the Member States in thefields of police and judicial cooperation incriminal matters" (now embodied in Article 29 ofthe Treaty of the European Union). The facilitationof extradition between Member States wasidentified as one of the specific areas for suchcooperation (Article 31).

The European Council meeting at Tampere,Finland in October 1999 took matters further. Itdeclared that, in respect of persons who have beenfinally sentenced, formal extradition proceduresbetween Member States should be replaced bysimple transfer. In other cases, Member Stateswere exhorted to consider fast track extraditionprocedures.

On 13th June 2002, the European Councilconcluded a Framework Decision on the EuropeanArrest Warrant (EAW). Member States, includingthe U.K., are committed to implementing itsprovisions by midnight on 31st December 2003.

Outside Europe it also became clear that keyextradition partners were anxious to speed upextradition procedures. Most notably, on March31, 2003, a new extradition treaty was signed by

the United Kingdom and the United States. It nowawaits ratification by the United States Senate. Thekey features of the treaty are discussed in moredetail below.

In November 2002, the Commonwealthamended its extradition scheme (the LondonScheme for Extradition in the Commonwealth).The most significant change is the removal ofmember states' ability to refuse extradition on thegrounds that the fugitive is one of their nationals.Since the U.K. has always extradited its ownnationals, this change will affect us only in thecontext of extradition requests we send out.Nonetheless, it is an expression of how attitudesare changing globally.

IV. Extradition Bill: key changes

The Extradition Bill's herculean task is to drawall these different factors and schemes into onecoherent and overarching piece of legislation thatspeeds the process up while still protecting therights of the fugitive. How will it do it?

The Bill splits requesting countries into twogroups. EU countries, plus Iceland and Norway,are classed as Category 1 territories. Requestsfrom Category 1 territories are governed by Part 1of the Bill. All other countries with which we haveextradition arrangements (including the U.S.A.)are classed as Category 2 countries. Requests fromCategory 2 countries are governed by Part 2 of theBill. We will deal with the key features of eachPart in turn.

A. Part 1: Extraditions

Part 1 gives effect in U.K. law to the EuropeanUnion Framework Decision on the EuropeanArrest Warrant (the Framework Decision). TheEAW is a standardized extradition warrant,enforceable throughout EU member states withoutthe need to obtain a domestic arrest warrant in therequested country. Contrary to some wild claims inthe media, foreign officers will not be coming tothe U.K. and arresting people. It will mean,however, that U.K. officers in receipt of a validEAW will be able to arrest the subject of thewarrant without first having to obtain a domesticwarrant of arrest.

Unlike the current system, there will be noexecutive involvement in Part 1 extraditions. Thecourt will determine both legal liability toextradition and whether the fugitive should besurrendered.

Direct contact between judicial authorities isone of the underpinnings of the FrameworkDecision. This makes sense in the context of the


European civilian systems where extraditions aredealt with by investigating judges (jugesd'instruction). It means that diplomatic andadministrative middlemen (central authorities) canbe removed from the process of transmitting andreceiving requests. Unfortunately, it does notreadily translate into the U.K. common lawsystem. This is because our courts react toapplications by parties. They cannot act of theirown motion in the way that their continentalcounterparts can. Moreover, neither the courts northe Crown Prosecution Service (CPS) have powerto direct the police. The central authority functionwill therefore be retained, but will pass from theJudicial Cooperation Unit (JCU) at the HomeOffice to the National Criminal IntelligenceService (NCIS). NCIS will pass EAWs on to thearresting police forces and to CaseworkDirectorate of the CPS, which will act on behalf ofthe requesting authorities in the court proceedings.(Slightly different arrangements will apply inScotland and Northern Ireland). Notwithstandingthe necessity to retain the central authority, thepositioning of NCIS within the SchengenInformation System, its translation facilities, andround-the-clock coverage, mean that the spirit ofdirect communication (i.e., speed) will hopefullybe upheld. SIS is, in effect, a Europe-wide policecomputer capable of registering alerts forfugitives, missing persons and stolen goods. For itspart, CPS is looking to second (detail) a lawyer toNCIS to provide early advice. It is also looking toformalize its provision of out-of-hours advice toforeign states, which hitherto has been provided byindividual lawyers on a goodwill basis.

Authentication, that topic so beloved ofextradition lawyers, virtually disappears. Insteadof ministerial seals and signatures, a certificatefrom NCIS confirming that the EAW was receivedfrom a judicial authority believed to have thefunction of issuing such warrants will be all that isrequired.

Under the present system, there are nooverarching time limits governing the time takento process the fugitive from arrest to surrender.Article 17 of the Framework Decision obligesmember states to complete the process in sixtydays (extendable in "specific cases" to ninetydays), but there is no such provision in the Bill.The U.K. regards this as a national obligationrather than something to be enacted as a specificprovision in the Bill. The Bill does, however,provide that the extradition hearing must becommenced within twenty-one days of thefugitive's first appearance at court following arrest.It is anticipated that Rules of Court will impose

similar deadlines on the commencement of appealhearings.

Purists take the view that returns pursuant toan EAW are not extraditions in the traditionalsense but "surrenders." Whether or not that is acorrect construction of the Framework Decisionitself, it is clear that the EAW, as embodied in theExtradition Bill, is most definitely an extraditionprocess. The Bill refers throughout to"extradition." A substantial array of bars toextradition and possible challenges are retained,including double jeopardy, passage of time as wellas the fugitive's age, physical and mentalcondition. Significantly, the test of dualcriminality, however, is retained only for offencesthat do not fall within a comprehensive list set outin the Framework Decision.

Extradition Hearings for fugitives arrested inEngland and Wales will continue, in the shortterm, to be dealt with by specialist District Judgesat Bow Street Magistrates' Court in London, withappeals lying to the High Court and (with leave) tothe House of Lords. In the medium term, theGovernment is considering whether to devolvesome of the first instance work to a number ofregional court centers. Sensibly, from the outset ofthe new Act, fugitives arrested in Northern Irelandwill be dealt with from start to finish, in Belfast,rather than being brought to the mainland, as is thecase at present.

Perhaps the most significant change, however,is not contained in Part 1 at all; that is, the U.K.'simpending implementation of SIS. In theextradition context, it will be used as the mainvehicle for transmission of the EAW. It will meanthat if a fugitive is stopped for, say, speeding, roadtraffic officers will be able to arrest the fugitive onthe basis of the extradition alert and extraditionproceedings will be triggered. It is estimated thatby the time the U.K. "goes live" on SIS (scheduledfor the latter part of 2004), there will be in theregion of 17,000 extradition alerts on the system.Even if only a small proportion of these arelocated in the U.K., our courts are going to be verybusy indeed. Add to the mix an ever-expandingEuropean Union and improved technology atborder controls, such as passport swiping and irisrecognition, and you can see that extradition willbe very much to the forefront of the fight not justagainst international and organized crime, butcrime generally for some time to come.

B. Part 2: Extraditions

This is all very well, but where does that leaveour other extradition partners, most notably theUnited States?


Requests from Category 2 territories will bedivided into two groups; a general one requiringadmissible evidence of a prima facie case tosupport the extradition request, and one where aprima facie case will not be required in respect torequests from countries specified by Order inCouncil. The U.K. Government has not yetannounced which countries will be so specifiedalthough it is significant that Article 8 of the newU.S.-U.K. Treaty (see below) requires the U.S. toprovide only "a statement of facts of the offense."

The Judicial Co-Operation Unit at the HomeOffice will continue to act as the central authorityfor receipt of requests to the U.K. from Category 2territories. The Home Secretary, however, will notbe required to authorize court proceedings atpresent. Instead, provided the request contains astatement to the effect that the fugitive is accusedof the offence specified in the request or isunlawfully at large following conviction, and hasbeen made in the "approved way," the HomeSecretary will simply issue a certificate to thateffect. Hopefully, that will provide little scope forjudicial review challenge at this stage.

Direct contact between CPS CaseworkDirectorate and the relevant authorities in therequesting state is most certainly not precluded.Indeed, in the context of U.S.-U.K. extraditions, itis to be hoped that the excellent workingrelationship between Casework Directorate and theOffice of International Affairs, as well as U.S.Attorneys across the Union, continues to flourish.The recent appointments of Gareth Julian (CPS) asU.K. Liaison M agistrate in Washington and MaryTroland of the OIA to the U.S. Embassy inLondon, are a practical demonstration of ourcountries' joint commitment to that process. TheEuropean and International Division of CPS,which coordinates all the Service's activitiesrelating to cross-border, serious and organizedcrime, also has Liaison Magistrates stationed inParis, Rome, and Madrid.

Authentication is retained but in a watered-down form. For Category 2 territories generally,Clause 135 provides for the admissibility inextradition proceedings of "duly authenticateddocuments." A duly authenticated document is onewhich either "purports to be signed by a judge,magistrate, or other judicial authority" of therequesting territory, or purports to be authenticatedby the oath or affirmation of a witness. Similarrequirements are imposed under Article 9(a) of thenew Treaty.

V. Practical issues

A. What documentation will be required forU.S. requests to the United Kingdom? ForCategory 2 countries generally therequirem ents under Clause 77 are as follows:

• Particulars of the person whose extradition isrequested;

• Particulars of the offense specified in therequest;

• In the case of a person accused of an offense, awarrant for his arrest issued in the Category 2territory;

• In the case of a person alleged to beunlawfully at large after conviction of anoffence, a certificate issued in the Category 2territory of the conviction and (if he has beensentenced) of the sentence.

B. Requirements specific to U.S.-U.K.extraditions are set out in Article 8 of the newTreaty.

They are as follows:

• As accurate a description as possible of theperson sought, together with any otherinformation that would help establish identityand probable location;

• A statement of facts of the offense;

• The relevant text of the law(s) prescribingpunishment for the offence for whichextradition is requested;

• In accusation cases, a copy of the warrant ororder of arrest issued by a judge or othercompetent authority and a copy of thecharging document, if any; and

• In conviction cases, information that theperson sought is the person to whom thefinding of guilt refers, a copy of the judgementor memorandum of conviction (or if a copy isnot available, a statement by a judicialauthority that the person has been convicted),a copy of the sentence imposed and astatement establishing to what extent thesentence has been carried out, and in the caseof a person convicted in absentia , informationregarding the circumstances under which theperson was voluntarily absent from theproceedings.

The possible grounds for challenge remainlargely unaffected, that is, documentation, dualcriminality, double jeopardy, passage of time andthe fugitive's age, physical and mental condition.


The new U.S.-U.K. Treaty, however, makes asignificant advance on the topic of dualcriminality. Under the current arrangement,whether an offense is an extradition crime dependsupon its falling within a list of crimes derived fromthe Extradition Act 1870. Unsurprisingly, that listis out of date. Its inadequacies are aptlydemonstrated by the difficulties encounteredwhere U.S. requests to the U.K. are based on wirefraud offenses. There is no equivalent Englishoffense. Thus, given similar facts in the U.K., wewould probably prosecute for common lawconspiracy to defraud. Since conspiracy to defraudis not on the 1870 list, it is of no use in satisfyingthe dual criminality test. The new Treaty willreplace the list system definition with one basedon punishability. Article 2 provides that an offensewill be extraditable if the conduct on which theoffense is based is punishable in both countries bya minimum of one year's deprivation of liberty.

As with Part 1 cases, the extradition hearingfor fugitives arrested in England and Wales willtake place at Bow Street Magistrates Court beforea specialist District Judge who decides whether thefugitive is extraditable as a matter of law. If he soconcludes, the case will be sent to the HomeSecretary to make the decision on surrender.

Under Clause 92, the Home Secretary isprohibited from ordering return if he considers thatthe fugitive could be, will be, or has been,sentenced to death. This prohibition, however,does not apply if the Home Secretary receives awritten assurance that he considers to be adequatethat the death sentence will either not be imposed,or if imposed, not carried out. Similar provision iscontained in Article 7 of the new Treaty.

Appeals will lie against the decisions of boththe District Judge and the Home Secretary to theHigh Court and (with leave) to the House ofLords.

The Bill provides that, where the fugitive isprovisionally arrested, the full documents mustfollow within forty days unless a longer period isspecified by Order in Council. No such Order hasyet been drafted but it is worth noting that Article11 of the new U.S.-U.K. Treaty refers to sixtydays. The Bill also stipulates that the extraditionhearing must commence within two months ofeither the first hearing (if the arrest has taken placeafter the request has been received) or within twomonths of receipt of the request (in the case ofprovisional arrest). Regulations governing timelimits for the commencement of appeals have yetto be drafted.

VI. Conclusion

Will all this really make extradition from theU.K. easier and quicker? In short, yes, we think itwill. The removal of the list system definition ofextradition crime and evidential requirements inrespect to requests from the U.S. to the U.K., inparticular, will undoubtedly make things muchmore straightforward for those preparing requests,as well as for those steering them through U.K.courts. On the issue of whether the process will bequicker, much will depend, of course, upon theregulations governing the commencement ofappeal hearings and how proactive the courts are,not just in commencing hearings, but also inensuring that they conclude within a reasonabletime. Inevitably, new legislation means a flurry ofnew challenges, and it will be some time before wecan fully gauge the effectiveness of these reforms.

On a final note, you will be heartened to learnthat CPS European and International Division andthe Department of Justice are currently working ona joint training initiative to enable prosecutors onboth sides of the Atlantic to maximize the potentialof the new system in our common fight againstcross-border crime.

The views and opinions expressed in this articleare those of the authors alone and do notnecessarily reflect the position of the CrownProsecution Service or the Government of theUnited Kingdom.�

ABOUT THE AUTHORS

�Raj Joshi is Head of the European andInternational Division of the Crown ProsecutionService of England and Wales (EID). Raj joinedCPS in 1986. Following extensive caseworkexperience in CPS London, he was appointed headof EID in January 2000. Raj has been responsiblefor a series of initiatives aimed at generating closeralliances with our European and U.S. criminaljustice partners. These include negotiating andimplementing key liaison posts within the Frenchand Spanish Ministries of Justice and theUnited States Department of Justice. Rajfacilitated and held the position of Chair on theProject Board for the 7th International Associationof Prosecutors Conference held in September 2002in London.

Brian Gibbins is a Policy Advisor in EID. Hejointed CPS in 1989. Brian spent five yearsworking as a prosecutor at Area level beforetransferring to CPS Headquarters in London in1994. Since then he has specialized in a number offields, particularly extradition and mutual legalassistance. Brian joined EID as a Policy Adviser at


the beginning of 2002. He is a member of theHome Office Extradition Bill Working Group andhas been responsible for preparing the Service'scomments on the emerging legislation. He is alsoresponsible for managing a project to train CPSextradition specialists and staff in other key U.K.agencies on the provisions Bill and is closelyinvolved in the Service's preparations toimplement the new system.a

Classified Information andInternational Investigations: AWarning Miriam Banks, Assistant ChiefOrganized Crime and Racketeering Section

Recent well-publicized events–the war in Iraq,the selling or other misuse of classifiedinformation by our countrymen, requests from9/11 defendants for access to classifiedinformation–have made law enforcementpersonnel, and the general public, increasinglyaware of the exceedingly complicated andsensitive issues associated with classifiedinformation. When an investigation involvesclassified information, particularly internationalinvestigations which are likely to raise such issues,prosecutors should, as soon as possible, consultwith the Counterespionage Section or, if it is anorganized crime investigation, the OrganizedCrime and Racketeering Section.

For purposes of this brief advisory, classifiedinformation generally includes any information ormaterial deemed by the U.S. Government torequire protection against unauthorized disclosurefor reasons of national security. Naturally, if thecase involves classified information, theprosecutor must work closely with the intelligencecommunity. The process may be complex andlengthy.

The procedures addressing the issuesassociated with protecting classified information ina criminal case (when the competing interests ofdefendants and the need for national securityarise), are found in the Classified InformationProcedures Act (CIPA) at 18 U.S.C. App. 3(1980). The statute covers cases in which thegovernment will seek to introduce classified

information into evidence, as well as defendantrequests for disclosure of classified informationand the ensuing responsibilities of the court andprosecution team. Specifically, the statute providesfor: the assignment of a security officer who isresponsible for the physical security of theclassified information; protective orders;government ex parte discovery submissions; and,in camera pretrial hearings where the court makesdeterminations as to the admissibility, relevancyand use of classified information prior to trial inorder to prevent the public disclosure of classifiedinformation during the trial.

Part, or all, of the government's case may bedismissed if a judge orders disclosure of classifiedinformation and the intelligence communityrefuses to do so for reasons related to nationalsecurity. This alone should be a strong incentivefor the prosecution team to learn the law andapplicable procedures. Importantly, however, thestatute permits expedited interlocutory appeals, bythe United States, of orders imposing disclosure,sanctions for nondisclosure of classifiedinformation, or for the court's refusal of aprotective order sought by the United States toprevent disclosure.

The intended message here is that manyimportant investigations may involve issuesrelated to national security. It is imperative,therefore, that those of us who intend to prosecutesuch cases, seek guidance and assistance as soonas possible. Such help is available through DeputyChief Ron Roos of the Criminal D ivision'sCounterespionage Section ((202) 514-1211); or, ifthe investigation is one under the cognizance of


the Organized Crime and Racketeering Section,the prosecutor should also contact an OCRSInternational Program Attorney.

Please note that the foregoing is not meant asan all-inclusive notice or instruction on the use ornondisclosure of classified information. It is notmeant as a primer on the problems associated withinvestigations involving classified information.Rather, it is meant to increase the prosecutor'sawareness of prohibitions against disclosure ofclassified information, as well as the necessity andavailability of guidance.�

ABOUT THE AUTHOR

�Miriam Banks currently serves in theInternational Program of the Organized Crime andRacketeering Section (OCRS), which she joinedmore than thirteen years ago as a member of theSection’s newly-formed Litigation Unit. She laterserved as the assistant chief/supervisor of theSection’s RICO Unit. Before joining OCRS,Ms. Banks served as an Assistant United StatesAttorney for the Southern District of Georgia, andearlier as an Assistant Attorney General for theAttorney General of Tennessee, Criminal JusticeDivision.a

Sample Rico Indictment: IntroductionRobert C. DaltonTrial AttorneyOrganized Crime and Racketeering Section

Imaginative criminals operating in foreignjurisdictions have used a variety of methods toseek and obtain illicit profits from the Americaneconomy. The Racketeer Influenced and CorruptOrganizations Act (18 U.S.C. §§ 1961-1968)(RICO) can be a particularly effective tool for theprosecution of complex cases involving foreigndefendants because of its well-establishedadvantages regarding jurisdiction and venue. Asdescribed below, RICO’s jurisdictional reachincludes not only interstate but foreign commerce,and venue choices are liberal.

Traditionally, criminal statutes are not givenextraterritorial application unless some misconductoccurred within the United States, as noted inUnited States v. Wright-Barker, 784 F.2d 161,166-68 (3d Cir. 1986)(citing Strassheim v. Dailey,221 U.S. 280, 285 (1911)). However, the mostrecent draft of the Restatement of the ForeignRelations Law of the United States asserts thatlaws can be applied extraterritorially when theironly nexus to the United States is an intendedeffect upon or within the United States.Restatement 3d of the Foreign Relations Law ofthe United States Section 402, cmt. D. (1987).Wright-Barker also noted the following fiveprinciples governing a sovereign's interest inexercising criminal jurisdiction:

1) territorial–within a country's territorialborders;

2) nationality–as applied to a country’s ownnationals, wherever located;

3) passive personality–as applied to those whocommit crimes against a country’s nationals,wherever located;

4) protective–applied to acts that have apotentially adverse effect on a country'ssecurity and governmental interests, wherevercommitted; and

5) universal–applied by any country to acts,wherever committed, regarded as heinouscrimes.

Wright-Barker, 784 F.2d at 167, n. 5.

U.S. courts have sustained extraterritorialapplication of the RICO statute involvingpredicate crimes committed on foreign soilconsistent with the principles enumerated above.For example, in United States v. Noriega, 746 F.Supp. 1506, 1512-17 (S.D. Fla. 1990), the districtcourt held that the RICO statute appliedextraterritorially to drug trafficking, evenregarding a defendant whose conduct occurredentirely outside the United States, becauseCongress intended that the RICO statute "be readexpansively as a means of attacking organizedcrime at every level" and "be liberally construed toeffectuate its remedial purpose." See alsoUnited States v. Vasquez-Velasco, 15 F.3d 833,839 (9th Cir. 1994) (applying 18 U.S.C. § 1959, acompanion statute to RICO, extraterritoriallywhere defendants participated in the murder ofAmerican citizens in Mexico who were mistakenfor DEA agents; extraterritorial application upheldwhere inherent powers of the United States, as


sovereign, are compromised or threatened, orwhere conduct gravely affects a substantialnumber of U.S. citizens).

Other aspects of RICO similarly reflectcongressional intent that the statute be appliedextraterritorially. For example, RICO's definitionof racketeering activity includes offenses typicallycommitted, in whole or in part, outside theUnited States (see, e.g., 8 U.S.C. § 1324proscribing alien smuggling and related offenses);18 U.S.C. § 1952 (proscribing interstate andforeign travel in aid of racketeering); and 18U.S.C. § 1958 (proscribing travel in interstate orforeign commerce or use of a facility in same)).

The RICO amendments enacted on October26, 200l, in conjunction with the USA PATRIOTAct, PUB L. NO. 107-56, 115 Stat. 272, made clearthat Congress intended the statute to applyextraterritorially with regard to certain offenses.Several of the newly-added RICO predicateoffenses are federal statutes that apply to criminalconduct occurring wholly outside theUnited States (see, e.g., 18 U.S.C. § 956(a)(1),prohibiting conspiracy to murder, kidnap, or maimpersons abroad; 18 U.S.C. § 2332, prohibitinghomicides or other violence occurring outside theUnited States against its nationals; and 18 U.S.C.§ 2332a, prohibiting the unlawful use of a weaponof mass destruction against a U.S. national whilesuch national is outside the United States).

Numerous venue decisions reflect RICO'spotential scope in application. Venue for RICOprosecutions is governed by 18 U.S.C. § 3237(a),permitting prosecution of a continuing offense "inany district in which such offense was begun,continued, or completed." See, e.g., United Statesv. Persico, 621 F. Supp. 842, 857-58 (S.D.N.Y.1985); United States v. Castellano, 610 F. Supp.1359, 1388 (S.D.N.Y. 1985) (venue proper in anydistrict where offense was begun, continued, orcompleted, even though virtually everyracketeering act occurred in another district). Thus,a RICO prosecution may be brought in any districtwhere some of the enterprise's criminal activityoccurred. See Fort Wayne Books v. Indiana, 489U.S. 46, 61 (1989) (under state RICO statutepatterned after federal RICO statute, there is norequirement that all acts of racketeering becommitted in the jurisdiction where prosecution isbrought; such a requirement "would essentiallyturn the RICO statute on its head: barring RICOprosecutions of large national enterprises thatcommit single predicate offenses in numerousjurisdictions"). The RICO charge may includeracketeering acts that occurred in districts other

than the district of venue, and if venue for theoverall charge is proper, it is not necessary thateach defendant participated in the conduct withinthe district of indictment. See Persico, 621 F.Supp. at 858 (holding that it makes no differencewhether any individual defendant was in thedistrict, as long as the government establishes thatthe defendant participated in an enterprise thatconducted illegal activities in the district).Moreover, venue for a RICO offense also lies inany district where the RICO enterprise conductedbusiness. Id.

The potential reach of these disparateprinciples should be apparent. Assuming thatforeign criminals have violated federal lawsamong the RICO predicate offenses enumerated in18 U.S.C. § 1961, and that an enterprise can eitherbe identified (such as a legal entity) or established(as an association-in-fact), RICO provides areadily-available and far-reaching means toprosecute such defendants in U.S. district courtsunder a single indictment. With jurisdiction andvenue established, RICO can serve to reachdefendants not otherwise within U.S. jurisdiction.For example, the money laundering statutes grantextraterritorial jurisdiction over foreign nationalsoutside the U.S. only in cases in which themisconduct occurs, at least in part, in theUnited States, and the transaction or series ofrelated transactions involves amounts exceeding$10,000. See 18 U.S.C. § 1956(f). Thus, a non-U.S. citizen conducting money launderingtransactions entirely outside the United States, oreven within the United States in amounts under$10,000, could not be charged in the U.S. under§ 1956 for those individual transactions. OCRShas concluded, however, that both of these sorts oftransactions may properly be included within aRICO charge as racketeering acts predicated on§ 1956 (or, under RICO conspiracy, as an overtact), if the money launderer is properly named as adefendant in a RICO charge brought within U.S.jurisdiction. This conclusion is consistent withgeneral extraterritorial principles regardingconspiracy. It is well-established that foreigndefendants are subject to U.S. jurisdiction forconspiracies committed, in part, in theUnited States. See, e.g., Dealy v. United States,152 U.S. 539, 546-47 (1894) ("if the conspiracywas entered into within the limits of theUnited States and the jurisdiction of the court, thecrime was then complete, and the subsequent overtact in pursuance thereof may have been doneanywhere").

This brief note is not intended as a fulldiscussion of the issue of extraterritorial


jurisdiction, and the Organized Crime andRacketeering Section (OCRS) will approve theextraterritorial use of the RICO statute only aftercareful and detailed consideration. For additionalinformation, including changes in law affectingapplication of the statute, contact the RICO Unit orOCRS attorney Frank Marine, Senior LitigationCounsel for the Criminal Division. It is our hopethat, after reading this issue of the UNITED STATES

ATTORNEYS' BUL LETIN , Assistant U.S. Attorneyswill appreciate RICO's potential usefulness incombating international organized crime. Towardthat end, OCRS offers the following fictitiousRICO and RICO conspiracy indictment as a briefillustration of RICO's application to internationalcriminality within United States jurisdiction. Itshould be noted that the indictment has beenedited for brevity and is not intended as a one-size-fits-all model charging instrument. AUSAs shouldrefer to OCRS' RICO Manual, as well as OCRS'model RICO pleadings, and the Office of LegalEducation (Publications Unit (803) 576-7657)) forindictment forms. Please note that any prosecutionof a criminal or civil RICO, as well as chargesunder Section 1959 (violent crime in aid ofracketeering), must be preapproved, and aproposed indictment or information must besubmitted to OCRS for review and approval atleast fifteen working days in advance of anycharges or plea agreement. Those interested inprosecuting a case under the RICO statute or itscompanion statute, 18 U.S.C. § 1959, shouldcontact the RICO Unit, Organized Crime andRacketeering Section, at (202) 514-1214, early inthe preindictment stage for guidance and currentlaw regarding the elements of these offenses.a

ABOUT THE AUTHOR

�Robert C. Dalton served as a U.S. MarineCorps judge advocate from 1982 until 1990, whenhe joined the U.S. Department of Justice AssetForfeiture Office. In 1994, he became an AssistantUnited States Attorney in the Eastern District ofTexas, specializing in asset forfeiture and moneylaundering prosecutions. He returned toWashington in 1999 as a trial attorney in theOrganized Crime and Racketeering Section.a


UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

UNITED STATES OF AMERICA

CRIMINAL NO. 03-1369(RCD) v.

MIKHAIL MOUSEKEVICH,

MINIKITA MOUSEKEVICH, Violations:

MORTIMER RATT 18 U.S.C. §1962(c),

FERDINAND RATT 18 U.S.C. § 1962(d)

Defendants.

I N D I C T M E N T

THE GRAND JURY CHARGES:COUNT ONE

(Violation of the Racketeer Influenced andCorrupt Organizations Act (RICO) – 18 U.S.C. § 1962(c))

The Enterprise

1. At various times relevant to this Indictment, MIKHAIL MOUSEKEVICH, MINIKITAMOUSEKEVICH, MORTIMER RATT, and FERDINAND RATT, the defendants, and others known andunknown, were owners, officers, employees, investors and associates of ChillOut, Inc., a corporationorganized and incorporated in the state of New York involved in the manufacture and sale of “dry ice”(frozen carbon dioxide) for commercial applications.

2. ChillOut, Inc., including its leadership, membership and associates, constituted an "enterprise," asdefined by Title 18, United States Code, Section 1961(4) (hereinafter "the enterprise"), that is, a group ofindividuals associated in fact. The enterprise constituted an ongoing organization whose membersfunctioned as a continuing unit for a common purpose of achieving the objectives of the enterprise. Thisenterprise was engaged in, and its activities affected, interstate and foreign commerce.

Purposes of the Enterprise

3. The purposes of the enterprise included the following:

a. Enriching the owners, operators, employees, and investors of the enterprise through, amongother things, mail fraud, wire fraud, securities fraud, and the laundering of the proceeds from theseoffenses in order to protect and conceal their wealth from detection by civil authorities and lawenforcement.

b. Preserving and protecting the power and profits of the enterprise through the use of falsereassurances to victims and the use of "lulling letters."


c. Promoting and enhancing the enterprise and its members' and associates' activities.

Roles of the Defendants

4. The defendants participated in the operation and management of the enterprise in the following rolesand capacities:

a.. MORTIMER RATT was president and 50% shareholder of ChillOut, Inc., who directed othermembers of the enterprise and its employees in carrying out unlawful and other activities in furtherance ofthe conduct of the enterprise’s affairs.

b. FERDINAND RATT was vice-president and 50% shareholder of ChillOut, Inc., who directedemployees of the enterprise in carrying out unlawful and other activities in furtherance of the conduct ofthe enterprise’s affairs.

c. At the direction of MORTIMER RATT and FERDINAND RATT, officers and leaders of theenterprise, MIKHAIL MOUSEKEVICH, and MINIKITA MOUSEKEVICH participated in unlawful andother activities in furtherance of the conduct of the enterprise’s affairs.

Means and Methods of the Enterprise

5. Among the means and methods by which the defendants and their associates conducted andparticipated in the conduct of the affairs of the enterprise were the following:

a. MORTIMER RATT and FERDINAND RATT operated ChillOut, Inc., ("ChillOut") a family-held company that produces dry ice for use in the shipment of food and other perishable items. Thecompany has operated the business in M oose Jaw, Saskatchewan, Canada since 1986. In an attempt toincrease revenues through diversification, MORTIMER RATT and FERDINAND RATT began rentingstorage units at the same address in 1996. MORTIMER RATT and FERDINAND RATT have never beenlicensed by any Canadian authority to provide any kind of undertaking services, mortuary services, orburial services.

b. Sometime during 1998, in an effort to increase revenues by consolidating ChillOut's diverseproducts and services, MORTIMER RATT and FERDINAND RATT created a scheme and artifice todefraud by offering the firm’s dry-ice capabilities and its storage facilities for the purpose of cryogenics,i.e., the practice of freezing deceased persons for purported future resuscitation. However, MORTIMERRATT and FERDINAND RATT never intended to provide any such services.

c. In furtherance of this scheme, MORTIMER RATT and FERDINAND RATT caused to beprinted thousands of brochures describing ChillOut as a “Leader In The Cryogenics Industry” andcontaining various enticements, including “Put Your Love On Ice” and “Why Put Grandma in the Cold,Cold Ground? Try Us Instead!” The brochures included a fee schedule for supposedly different levels ofcryogenics, including “Canadian Blast,” “South Pole Holiday” and “Arctic Special,” each with attendantstorage fees by the week, month, year, or decade. MORTIMER RATT and FERDINAND RATT alsocreated a similar brochure seeking investors to support purported “start up costs” associated with theventure.

d. MORTIMER RATT and FERDINAND RATT mailed, and caused to be mailed, these brochuresto hundreds of prospective clients and potential investors who were identified by purchasing mailing listsfrom nursing homes in the United States, including persons in the Southern District of New York. Inresponse to these mailings, various clients and investors mailed checks and money orders, all payable toChillOut, to the company’s mailing address in Moose Jaw, Saskatchewan.


e. In order to receive these proceeds and avoid detection of the scheme, MORTIMER RATT andFERDINAND RATT enlisted the assistance of their uncle, MIKHAIL MOUSEKEVICH, a former residentof the former Soviet republic of Laurelstan then living in Brooklyn, New York, whom they knew tolaunder money for various Russian organized crime groups. In concert with MORTIMER RATT andFERDINAND RATT, MIKHAIL MOUSEKEVICH first opened a bank account in the name of “FrozenChosen, Inc.” under MIKHAIL MOUSEKEVICH's signature authority at Big Apple Bank ("Big Apple")in Brooklyn, New York. MIKHAIL MOUSEKEVICH then arranged for his wife, MINIKITAMOUSEKEVICH, to open correspondent bank accounts in the name of "Frozen Chosen, Inc." ("FrozenChosen") under their individual signature authority at Slapshot Bank in Toronto, Canada ("Slapshot")andSun Beach Bank in the Grand Cayman Islands ("SunBeach").

f. MORTIMER RATT and FERDINAND RATT caused all funds received from cryogenicscustomers and potential investors to be forwarded to MIKHAIL MOUSEKEVICH for deposit in theChillOut account at Big Apple. MIKHAIL MOUSEKEVICH subsequently arranged the transfer of all ofthe deposited funds, in various amounts, to Frozen Chosen's accounts at Slapshot and SunBeach.MINIKITA MOUSEKEVICH subsequently arranged for all of these deposited funds to theMOUSEKEVICH's joint personal checking account at the First National Bank ("FNB") in Laurelstan. Halfof these deposits at FNB were later sent to MORTIMER RATT and FERDINAND RATT.

g. As the scheme and artifice to defraud began to generate revenues from investor-victims,MORTIMER RATT and FERDINAND RATT expanded the scheme and artifice to defraud by askingMIKHAIL MOUSEKEVICH and M INIKITA MOUSEKEVICH to take steps to induce U.S. securitiesregulators to register ChillOut, Inc. on the New York Stock Exchange ("NYSE") for the public sale ofChillOut shares, to be predicated on ChillOut's supposed status as a company offering cryogenics services.MIKHAIL MOUSEKEVICH and MINIKITA MOUSEKEVICH undertook the creation of false andwholly fictional records including a prospectus, accounting statements, balance sheets, and minutes ofmeetings to create the impression the ChillOut was a financially successful cryogenics company, when infact no such endeavor had ever been undertaken by any of the defendants.

h. It was further part of the scheme that MIKHAIL MOUSEKEVICH and MINIKITAMOUSEKEVICH caused a registration statement to be filed with the U.S. Securities and ExchangeCommission ("SEC") in or about January 2000, to register the stock of ChillOut for trading on over-the-counter markets in the United States. Further, in a application to secure a listing on the NYSE, thedefendants incorporated and included the false and deceptive representations submitted to the SECregarding the financial condition of the ChillOut, its business operations and its core business activity.

i. During February, 2000, MIKHAIL MOUSEKEVICH and MINIKITA MOUSEKEVICH,secured the listing of ChillOut stock on the NYSE by falsely and fraudulently representing, through thefraudulent prospectus dated January 2, 2000 and a listing application dated January 3, 2000 incorporatingthe prospectus, that Chill-Out was a growing, increasingly profitable cryogenics enterprise with a solidfinancial record of sales in the United States. The filings made by the defendants with the NYSEincorporated material misrepresentations and omissions regarding ChillOut's core business, assets, salesand revenues.

[NOTE: the detailed "scheme and artifice to defraud," normally required to satisfy fraud-related pleading requirements and merely summarized in the "Means and Methods" sectionabove, has been deleted due to space limitations]

The Racketeering Violation

6. From approximately 1998 through in or about March 2000, with both dates being approximate andinclusive, in the Southern District of New York and elsewhere, the defendants, MIKHAILMOUSEKEVICH, MINIKITA MOUSEKEVICH, MORTIMER RATT, and FERDINAND RATTtogether with others known and unknown to the grand jury, being persons employed by and associated


with the ChillOut, Inc. described above, an enterprise engaged in, and the activities of which affected,interstate and foreign commerce, unlawfully, and knowingly conducted and participated, directly andindirectly, in the conduct of the affairs of that enterprise through a pattern of racketeering activity, that is,through the commission of Racketeering Acts One through Five as set forth in paragraphs 7 through 11below.

Racketeering Act One -- Mail Fraud

7. On or about the dates listed below, MORTIMER RATT and FERDINAND RATT, for the purposeof executing the aforesaid scheme and artifice to defraud, and attempting to do so, did knowingly cause tobe delivered by the United States Postal Service, according to the directions thereon, the matters and thingsspecifically set forth in Racketeering Acts 1a and 1B, the commission of either one of which constitutesthe commission of Racketeering Act One:

RACKETEERINGACT

DATE DESCRIPTION OF LETTER ORTHING

1a On or about October 30,1999

ChillOut Cryogenics Contract executed byKay Davver and Check #1234, Acct.#A246-81012, Brooklyn, in the name ofKay Davver, in the amount of $25,000.00

1b On or aboutNovember 30, 1999

Check #1235, Acct. #A246-81012,Brooklyn Bank, in the name of KayDavver, in the amount of $75,000.00

Each in violation of 18 U.S.C. § 1341.

Racketeering Act Two -- Mail Fraud

8. On or about the dates listed below, MORTIMER RATT and FERDINAND RATT, in the SouthernDistrict of New York, for the purpose of executing the aforesaid scheme and artifice to defraud, didknowingly cause to be delivered by the United States Postal Service, according to the directions thereon,the matters and things specifically set forth in Racketeering Acts 2a and 2b, the commission of either oneof which constitutes the commission of Racketeering Act Two:

RACKETEERINGACT


2a On or about November10, 1999

ChillOut Cryogenics Contract executed byD.C. East and Check #3579, Acct. #B357-91113, Seattle Bank, in the name of D.C.East, in the amount of $50,000.00

2b On or aboutDecember 7, 1999

Check #1235, Acct. #A246-81012, TucsonBank, in the name of D.C. East, in theamount of $100,000.00

Each in violation of 18 U.S.C. § 1341.


Racketeering Act Three -- Mail Fraud

9. On or about the dates listed below, MORTIMER RATT and FERDINAND RATT, in the SouthernDistrict of New York, for the purpose of executing the aforesaid scheme and artifice to defraud, didknowingly cause to be delivered by the United States Postal Service, according to the directions thereon,the matters and things specifically set forth in Racketeering Act 3a:

RACKETEERINGACT


3a On or about December25, 1999

Check #3579, Acct. #B357-91113, LeftBank, in the name of Ted Boddy, in theamount of $500,000.00, bearing the note"for 500 shares ChillOut, Inc.

In violation of 18 U.S.C. § 1341.

Racketeering Act Four -- Money Laundering

10. On or about each of the dates listed below, in the Southern District of New York and elsewhere,the respective defendants named below did knowingly and willfully conduct financial transactionsaffecting interstate commerce, to wit, the movement of funds by wire, that is, a wire transfer in theamounts listed below, which involved the proceeds of specified unlawful activity, that is, mail fraud inviolation of 18 U.S.C. § 1341, knowing that the transactions were designed, in whole or in part, to concealand disguise the nature, location, source, ownership and control of the proceeds of that specified unlawfulactivity, and that while conducting and attempting to conduct such financial transaction knew that theproperty involved in the financial transaction, that is, the wire transfers, represented the proceeds of someform of unlawful activity, each transaction being in the amount set forth below, any one of whichconstitutes the commission of Racketeering Act Four:

RACKETEERINGACT

DEFENDANTS DESCRIPTION AMOUNT

4a MORTIMER RATT,FERDINAND RATT

Big Apple Bank wireorder #A567 dated11/1/99 to SlapshotBank

$25,000.00

4b MORTIMER RATT,FERDINAND RATT

Big Apple Bank wireorder #A678 dated12/1/99 to BeachfrontBank

$75,000.00

4c MORTIMER RATT,FERDINAND RATT

Big Apple Bank wireorder #A667 dated11/11/99 to SlapshotBank

$50,000.00


4d MORTIMER RATT,FERDINAND RATT

Big Apple Bank wireorder #A876 dated12/8/99 to BeachfrontBank

$100,000.00

4e MIKHAILMOUSEKEVICH

Slapshot Bank wireorder #R2D2 dated11/12/99 to FNBLaurelstan

$75,000.00

4f MINIKITAMOUSEKEVICH

Beachfront Bank wireorder #C3PO dated12/9/99 to FNBLaurelstan

$175,000.00

4g MORTIMER RATT,FERDINAND RATT

Big Apple Bank wireorder #L493 dated12/26/99 to SlapshotBank

$500,000.00

4h MINIKITAMOUSEKEVICH

Slapshot Bank wireorder #WOW777 dated12/9/99 to FNBLaurelstan

$500,000.00

Each in violation of Title 18, United States Code, Section 1956(a)(1)(A)(i).

All in violation of Title 18, United States Code, Section 1962(c).

Racketeering Act Five – Securities Fraud

11. From on or about June 7, 1999 to on or about November 30, 2001, in the Southern District of NewYork and elsewhere, the defendants, MIKHAIL MOUSEKEVICH, MINIKITA MOUSEKEVICH,MORTIMER RATT and FERDINAND RATT did, directly and indirectly, by the use of means andinstruments of transportation and communication in interstate commerce and the mails, knowingly andwillfully employ a device, scheme and artifice to defraud, obtain money and property by means ofomissions to state material facts necessary in order to make statements made, in the light of thecircumstances under which they were made, not misleading, and engage in transactions, practices andcourses of business which would and did operate as a fraud or deceit upon the purchaser in the offer andsale of securities, to wit: the common stock of ChillOut, Inc., as more fully described in paragraphs 5f and5g above, in violation of Title 15, United States Code, Sections 78j(b) and 78ff; Title 17, Code of FederalRegulations, Section 240.10b-5; and Title 18, United States Code, Section 2.

COUNT TWO

(Conspiracy to Violate of the Racketeer Influenced andCorrupt Organizations Act (RICO) – 18 U.S.C. § 1962(d))

12. Paragraphs 1 through 5 of Count One are hereby realleged and reincorporated as if fully set outherein.

13. From between 1999 through March 2000, both dates being approximate and inclusive, within theSouthern District of New York and elsewhere, the defendants MIKHAIL MOUSEKEVICH, MINIKITA


MOUSEKEVICH, MORTIMER RATT, and FERDINAND RATT, together with other persons known andunknown, being persons employed by and associated with ChillOut, Inc., an enterprise, which engaged in,and the activities of which affected, interstate and foreign commerce, knowingly and intentionallyconspired to violate 18 U.S.C. § 1962(c), that is, to conduct and participate, directly and indirectly, in theconduct of the affairs of that enterprise through a pattern of racketeering activity, as that term is defined by18 U.S.C. § 1961(1) and (5). The pattern of racketeering activity through which the defendants agreed toconduct the affairs of the enterprise consisted of the acts set forth in paragraphs 7 through 11 of Count Oneof this Indictment, which are incorporated as if fully set forth herein.

It was a further part of the conspiracy that each defendant agreed that a conspirator would commit atleast two acts of racketeering activity in the conduct of the affairs of the enterprise.

All in violation of Title 18, United States Code, Section 1962(d).

FORFEITURES

14. The allegations contained in Counts One and Two of this indictment are hereby realleged andincorporated as if fully set forth in this paragraph.

15. Pursuant to Rule 32.2, Fed. R. Crim. P., notice is hereby given that, pursuant to the provisions ofTitle 18, United States Code, Section 1963, regarding the offenses charged in Counts One or Two of thisindictment, the defendants MIKHAIL MOUSEKEVICH, MINIKITA MOUSEKEVICH, MORTIMERRATT, and FERDINAND RATT:

a. have interests which they acquired or maintained in violation of Title 18, United States Code,Section 1962, which interests are subject to forfeiture pursuant to Title 18, United States Code Section1963(a)(1);

b. have interests in, security of, claims against, or property or contractual rights affording them asource of influence over, the enterprise known and described in this superseding indictment as ChillOut,Inc., which the defendants MIKHAIL MOUSEKEVICH, MINIKITA MOUSEKEVICH, MORTIMERRATT, and FERDINAND RATT, have established, operated, controlled, conducted, and/or participated inthe conduct of, or conspired to do so, in violation of Title 18, United States Code, Sections 1962(c) and1962(d), which interests are subject to forfeiture pursuant to Title 18, United States Code, Section1963(a)(2);

c. have property constituting or derived from proceeds which they obtained directly or indirectlyfrom racketeering activity in violation of Title 18, United States Code, Section 1962, which property issubject to forfeiture pursuant to Title 18, United States Code, Section 1963(a)(3).

16. Pursuant to the provisions of Title 18, United States Code, Section 1963, upon conviction of eitherof the offenses charged in Counts One or Two of this superseding indictment, the defendants MIKHAILMOUSEKEVICH, MINIKITA MOUSEKEVICH, MORTIMER RATT, and FERDINAND RATT shallforfeit to the United States the following:

a. An amount of approximately $1,500,000 U.S. currency.

b. The premises and real property, together with its buildings, appurtenances, improvements,fixtures, attachments and easements, located at 115 Biscayne Avenue, Miami, Florida, described inthe land records of Dade County, Florida as Block 91, Lots 12, 13 and 17, held in the name ofFERDINAND RATT and MORTIMER RATT.


17. If, by any act or omission of the defendants MIKHAIL MOUSEKEVICH, MINIKITAMOUSEKEVICH, MORTIMER RATT, and FERDINAND RATT, any property identified as directlyforfeitable in paragraphs 15 and 16 above:

a. cannot be located upon the exercise of due diligence;b. has been transferred or sold to, or deposited with, a third person;c. has been placed beyond the jurisdiction of the Court;d. has been substantially diminished in value; ore. has been commingled with other property which cannot be subdivided without difficulty,

it is the intention of the United States, pursuant to Title 18, United States Code, Section 1963(m) to seekforfeiture of any other property of defendants MIKHAIL MOUSEKEVICH, MINIKITAMOUSEKEVICH, MORTIMER RATT, and FERDINAND RATT up to the value of such forfeitableproperty described in subparagraphs 16a-16b above.

FOREPERSONDated:


Extradition and Mutual LegalAssistance RequestsThomas G. Snow, Principal Deputy DirectorOffice of International Affairs

Matters related to extradition or Mutual Legal Assistance Treaty requests (MLATs) must be approvedby the Office of International Affairs (OIA) at (202) 514-0000 (Mary E. Warlow, Director). A number ofhelpful resources are offered by the Office of Legal Education, including Obtaining Evidence Abroad, ageneral guideline written by OIA Assistant Director Sara Criscitelli (ret.), FEDERAL NARCOTICS

PROSECUTIONS, Chapter 10, Office of Legal Education (1999), as well as numerous related articlesavailable in the UNITED STATES ATTORNEY’S BUL LETIN . .

In addition, See Thomas G. Snow, The Investigation and Prosecution of White Collar Crime:International Challenges and the Legal Tools Available to Address Them, WM. & MARY L. REV.(forthcoming 2003).�


Points of Contact, Organized Crime and Racketeering Section Bruce G. Ohr, Chief

Main Num ber (202 ) 514- 3594Strike Force Matters

Bruce G. Ohr, ChiefDouglas E. Crow, Principal Deputy ChiefP. Kevin Carwile, Deputy ChiefKenneth J. Lowrie, Deputy Chief

RICO Unit: (202) 514-1214Amy Chang Lee, Assistant ChiefAttorneys: Robert Dalton, Mervyn Hamburg, Melissa Marquez Oliver, David Stander,Catherine Weinstock

Labor Racketeering: (202) 514-3666Gerald Toner, Assistant ChiefAttorneys Vincent Falvo, Rebecca Kettelle-Pyne

Litigation Unit AttorneysChief Bruce G. Ohr, SupervisorTrial Attorneys: Gavin Corn, Marilyn Gainey, Gregory Lisa, David Malagold,Hallie Mitchell, Patrice Mulkern, Joshua Nesbitt, Thomas Ott, JenniferShasky (Eurasian), Cynthia Shepherd, Marty Woelfle

International ProgramBruce G. Ohr, ChiefKenneth J. Lowrie, Deputy Chief (Eurasian)Miriam Banks, Assistant Chief (Italy, CIPA)Jennifer Shasky, Trial Attorney (Eurasian, CIPA)Gavin Corn, Trial Attorney (Balkan)P. Kevin Carwile, Deputy Chief (Asian)

Senior Litigation CounselFrank J. Marine


NOTES

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