David Cohen

DOJ Corporate Settlement Dealer Takes Over at FinCEN

In February, here’s what Jennifer Shasky Calvery said in testimony before a House Subcommittee.

These staggering amounts of money in the hands of some of the worst criminal elements create a terrifyingly vicious cycle – money enables [the crooks] to corrupt the economic and political systems in which they operate, thereby allowing them to consolidate and expand their power and influence, which gives rise to more opportunity to commit crime and generate revenue.

Mind you, I’m cherry picking a quote from testimony about Transnational Crime Organizations. But it shows the blindness DOJ (and the Administration generally) have had as they try to repurpose their counter-terrorism tools to combat transnational crime: to some extent, what’s true of drug cartels is also true of the banks that have escaped prosecution even while doing as much damage as the drug cartels.

And yet we never get around to prosecuting our own transnational criminal organizations, the banks.

It’s worth keeping in mind, now that Shasky Calvery takes over at Treasury’s FinCEN, the part of the Agency that makes sure corporations are complying with reporting requirements of suspected financial crimes.

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On the Press Release Sanctions against Hezbollah

I have never doubted that Hezbollah and/or Iran could be behind the attack in Israeli tourists in Burgas, Bulgaria. Certainly, it is one of the few attacks blamed on one or the other in the last year that exhibited the competence we expect from Hezbollah.

That said, I’ve been struck by the vary careful insistence on the part of both Dianne Feinstein and John Brennan that they have seen no proof to link Hezbollah or Iran to the attack.

Israeli intelligence sources claiming to protect the very secret intelligence they are leaking have offered this claim as evidence.

Israeli intelligence has evidence of many telephone calls between Lebanon and Burgas in the two months before the bombing, according to a senior government official who spoke on the condition of anonymity because the information is classified, with the volume intensifying in the three days leading up to it.

But they are no more prepared to expose the details of their counterintelligence work publicly than the attackers are to claim responsibility. “We know the sources in Lebanon,” though not the identity of those on the other end in Bulgaria, the official said. “They shouldn’t know that we know the numbers in Lebanon.”

Nevertheless, in spite of the fact that it was otherwise sourced to press reports, this laughable press conference announcing the What’s-Old-Is-New sanctions against Hezbollah on Friday made no mention of the new claim; it discussed the ties between Hezbollah and Burgas this way:

And we are working to assess the facts and with our partners to discover who was responsible. And although the investigation continues, and we are not in a position to make a statement about responsibility, the attack does resemble Hezbollah’s plotting earlier this year.

They didn’t mention the calls–or even the A1 cutout report of the calls–at all.

Which is notable given that at least four journalists at the press conference asked what was new behind the sanctions on Hezbollah. Josh Rogin summarizes the absurdity of imposing sanctions on a group that is already under sanctions that have the same effect.

The Cable asked both officials if designating Hezbollah for sanctions, which freezes the group’s U.S.-based assets and bars Americans from doing business with Hezbollah, has any added concrete effect if done twice. They said the added effect is in the court of public opinion.

“It will put the group in a more difficult situation, and, I think, will make them think long and hard before they continue this campaign in which the Syrian people are being brutalized. So we do see very concrete benefits coming from this designation,” said Benjamin. “Whether they will be in the area of financial sanctions or not remains to be seen, but in terms of casting a bright light on what the group is doing, I think that’s vitally important.”

So the Treasury Department doesn’t have to actually do anything to enforce the new designation it wasn’t doing already, and Hezbollah doesn’t feel any additional direct pain.

In any case, this is what we’ve come to. Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen admits that these sanctions are about exposing a purportedly new role from a terrorist organization that has pretty much played the role of supporting Syria for decades.

But the purpose of our designations, whether it’s the Hezbollah action today or any of our other designations under our authorities, is not solely focused on the immediate financial impact, but as Ambassador Benjamin just expressed, to expose the activity of the party that is being designated for the conduct that has led to the designation.

And yet–even as Adam Entous refuted the government’s claims based on WSJ’s reporting–the government refuses to offer no more than press reports.

I really can’t give you any greater detail than what we’ve put forward in the press release and in my statement this afternoon about the activities of Hezbollah in Syria.

[snip]

This is not a matter of idle speculation or press reports.

[snip]

I was just going to say, look, we’re obviously very sensitive here to issues of sources and methods and we’re not going to divulge anything that shouldn’t be divulged.

[snip]

I think we have put out as much detail as we are able to put out with respect to Hezbollah’s activity in Syria.

Our war by vacuous press release, all justified in the guise of protecting sources and methods, is rapidly losing all credibility.

It feels like the Iraq War campaign again.

Did Treasury Fire Jim Freis for Showing that Banksters Are a Bigger Problem than Terrorists?

As I noted earlier, a few weeks ago Treasury fired the head of FinCEN, Jim Freis. (FinCEN makes sure that financial institutions report whatever evidence of potential crimes they’re seeing.)

American Banker reported that Treasury wanted “additional focus on international areas such as terrorist financing,” and less focus on “other financial crimes such as mortgage fraud.”

Three days before he was fired, FinCEN released this report, showing in aggregate what all of last year’s Suspicious Activity Reports revealed. It shows that among the SARs from depository institutions (which make up over half of all SARs), reports of terrorist financing and hacking (computer intrusion) are going down, while reports of behavior targeting consumers–mortgage and consumer loan fraud–are going up (though it notes the mortgage loan fraud reports are inflated because some date from years ago).

  • Reports of Terrorist Financing declined 14%, from 711 instances in 2010 to 609 for the same period in 2011.
  • The number of depository institution SARs identifying Mortgage Loan Fraud as a Characterization of Suspicious Activity continued to rise (up 30.6% in calendar year 2011). Quite markedly, Mortgage Loan Fraud is the only summary characterization that has experienced an increase every year since 1996, with the past two years (2010 and 2011) accounting for nearly 37% of all noted instances of this specific activity for the last decade. Note that depository institutions may submit Mortgage Loan Fraud SARs well past the actual date of the activity. This upward spike in mortgage fraud counts is in predominant part attributable to mortgage repurchase demands and special filings generated by several institutions.4
  • Of the eleven reportable suspicious activities that experienced decreases, none saw greater than Computer Intrusion, falling 21% in 2011 as compared to those filed in 2010. For the second year in a row, this drop is amongst the largest of any of the defined summary characterizations.
  • Though having experienced decreases in 2009 and 2010, the number of reports indicating Consumer Loan Fraud (in whole or part) significantly rose in 2011, up 127% from the prior year.

Such trends are similar to what the report shows in the securities and futures industries, with an even bigger drop in terrorist financing and big gains in futures fraud, embezzlement, and insider trading.

  • Embezzlement/Theft saw the second largest gain of any of the suspicious activities reported in SAR-SF filings, rising 38% in CY2011. However, of the 21 Types of Suspicious Activity listed, Futures Fraud saw the biggest rise (up 85%) for the same year, increasing from 20 instances in 2010 to 37 instances in 2011.
  • Likewise, Insider Trading (+34%) and Forgery (+19%) also experienced double-digit growth, making them the only two distinct activities that have continued to rise every year since 2003.
  • Of those activity types showing a decrease, Bribery/Gratuity (down 74%) and Terrorist Financing (down 59%) both saw a sizeable drop between 2010 and 2011, with the former down from 69 reported instances last year to just 18 in 2011 and the latter falling from 46 instances in 2010 to a low of 19 twelve months later.

Remember, SARs are not a reflection of what Freis demands (nevermind the fact he’s been on the job when things like terrorist financing were higher). Rather, this is what banks and securities firms self report, as mandated by law, about what they’re seeing in their own records.

Jim Freis showed that terrorism is getting better and bankster crimes are getting worse. And then Treasury fired him.

And the report from American Banker suggests that by replacing Freis, Treasury may intend to have FinCEN dictate what financial institutions prioritize. Which will mean terrorism–and not the crimes of banksters–will once again be the focus.

Fincen is likely to take a higher profile when it receives new leadership. In the immediate aftermath of the Sept. 11 attacks, Fincen was very active in dealing with bank regulatory matters, including helping to shape policy on anti-money laundering requirements. But the financial crisis largely pushed Fincen to the side and the agency focused on many of its other responsibilities. Treasury appears to want Fincen to take a larger role in terrorist financing activities and possibly reassert itself in the bank regulatory sphere. In past few years, banks have not had to focus on what Fincen’s agenda was. A more assertive Fincen changes the equation.

FinCEN offers one objective read of the relative prevalence of various forms of financial crime. And last year, it showed that banksters were a growing problem and terrorists a shrinking one.

And that message was so dangerous to the powers that be, it appears, Treasury decided to kill the messenger.

NYPD’s Spooks Didn’t Find Two of the Most Significant Terrorists to Attempt Attacks on NYC

The AP’s Goldman and Apuzzo have another blockbuster counterterrorism article, this time describing how the NYPD has built its own intelligence service to target Muslims. It’s long, but it’s worth reading the whole thing. Keep an eye out for these key details:

  • The program in part serves to overcome CIA failures to recruit a more diverse workforce
  • The NYPD borrowed some of their community mapping techniques from Israel’s efforts in the West Bank
  • The NYPD shreds documents to keep their community mapping program secret
  • The NYPD uses informants in mosques without predication, something the FBI claims it won’t do
  • The city looked for Pakistani cab drivers with fraudulent licenses as a way to recruit informants
  • The NYPD passed information to the CIA via unofficial channels
  • A top CIA operative is working at the NYPD, while still on the CIA’s payroll

As comprehensive as this story is, it leaves out two of the program’s most significant failures. The NYPD claims that this program is successful because NY hasn’t been attacked.

For [retired CIA officer David] Cohen [who pioneered this program], there was only one way to measure success: “They haven’t attacked us,” he said in a 2005 deposition. He said anything that was bad for terrorists was good for NYPD.

Granted, Cohen made that statement in 2005.

But, first of all, it’s no longer true that “they haven’t attacked us.” The Faisal Shahzad attempt last year may have been unsuccessful, but it is an example of an attack launched with international support.Yet neither the NYPD (nor, for that matter, the FBI) had any clue about Shahzad before he attacked.

That may be perfectly understandable for the NYPD. After all, Shahzad lived in Connecticut. He used a hawala (the guy who ran it just signed a plea deal), but that was in Long Island, not the City. So the few hints that Shahzad might attack were outside of NYPD’s jurisdiction. The AP article notes the NYPD’s spooks operate far outside of the city, but in any case, the failure to identify Shahzad shows how much will remain hidden even from the NYPD’s invasive approach.

The case of Najibullah Zazi is still more problematic.

The NYPD had infiltrated Zazi’s mosque in NY, which was the focus of his conspiracy. They even used the Imam there, Ahmad Wais Afzali, as an informant. Yet they appear to have had no advance warning that Zazi and two friends from NY were training for an attack (the FBI is reported to have gotten their first lead on Zazi from the Pakistanis).

In other words, all the activity described in the AP piece included Zazi’s immediate circle of associates. Yet that activity apparently failed to identify Zazi as a threat.

Even worse, the NYPD’s confidence in Afzali compromised the FBI’s case. After the FBI tipped of the NYPD, the NYPD tried to develop its own leads. That included showing Afzali a picture of Zazi, which led Afzali to call Zazi’s father and then Zazi himself to warn them of the investigation.

Media reports quoting anonymous FBI officials have suggested the NYPD botched the case when it showed a picture of Najibullah Zazi, the Denver shuttle-bus driver at the heart of the investigation, to Ahmed Afzali, a Queens Imam and sometime police informant. Afzali, the reports say, first called Zazi’s father Mohammed, then Najibullah himself, alerting them to the probe. The FBI, which had been monitoring the calls, was then forced to move immediately to arrest the Zazis — much sooner than it had planned.

[snip]

When Zazi traveled to New York ahead of the anniversary of 9/11, the FBI as a precaution alerted the NYPD. That’s when officers from the NYPD’s intelligence unit consulted Afzali. “It looks like they did this on their own initiative — they really trusted this Imam,” says the law-enforcement official. “But if they’d consulted with the bureau first, they’d have been told not to talk to anybody.”

The NYPD spoke to Afzali three times after they were tipped off to the investigation.

The NYPD’s freelancing apparently began when an Intelligence Division detective of its top secret Special Services Unit — identified in government documents as Dan Sirakowsky — telephoned Afzali on Sept. 10, a day before the eighth anniversary of the Trade Center attacks.

Afzali had been Sirakowsky’s confidential informant, or C.I., since 9/11.

Sirakowsky told Afzali the department needed to speak to him right away. Minutes after the phone call, a detective and a sergeant showed up at Afzali’s home with pictures of Zazi and three of his alleged accomplices.

According to [Afzali's lawyer] Kuby, Afzali recognized Zazi and two others. They had been students in Afzali’s mosque class years before. The police then asked Afzali to find out more about what the three were up to in the city.

In addition, it appears that the NYPD shared information on the Zazi investigation with cops who did not have clearance.

Four NYPD detectives have been hauled before a federal grand jury probing leaks of top-secret information about a terror plot to blow up city subways, sources told the Daily News.

[snip]

The inquiry is said to be focusing on leaks of sensitive information from the FBI-NYPD Joint Terrorism Task Force to cops who did not have clearance.

Some of the information ended up in the press.

(Read that entire article for a sense of how Ray Kelly has retaliated against those who might expose the abuses and failures of his intelligence division.)

In short, not only did this elite intelligence unit not find the one guy who has actually attacked NYC, but it significantly endangered the investigation into another terrorist who came close to attacking NYC.

Emptywheel Twitterverse
bmaz @dbaich @azcentral So, they planned a two hour long death process? Uh huh, sure. Charles Ryan just comes off as sick saying that.
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bmaz RT @HaroldItz: I love the idea of calling a 12 hour ceasefire a "humanitarian pause." After 12 hours they resume being inhuman. #Gaza #Isra
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bmaz @GregoryMcNeal @WSJ Neat story, but pretty stiff ticket for the watch
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bmaz @boubou_le_hibou @5150committee Yeah, well, uh.....what can I say?!?!
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bmaz @barrettmarson Funny, I almost pinged you to go have afternoon beer. Guess you were not here! @tomcollinsaz @goodyk
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bmaz Well, @dougducey commercial cravenly and dishonestly playing on the Brian Terry killing is simply disgusting+embarrassing to AZ.
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bmaz CIA Torture Freaks Concerned Nation May Treat Them Like The Torture Freaks They Are http://t.co/xs8rZcGK31
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bmaz RT @ZekeJohnsonAi: Ex @CIA head Tenet cooking up a strategy to discredit Senate report on torture. He should be doing it from jail. http://…
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bmaz @barrettmarson @goodyk Wait, who is that?
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bmaz RT @howappealing: "Pa. home sellers don't have to disclose murders, satanic rituals": http://t.co/ciDiTM4kyk has a report that... http://t.…
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July 2014
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