A LINE IN THE SAND: COUNTERING CRIME, VIOLENCE AND TERROR AT THE

SOUTHWEST BORDER

A MAJORITY REPORT

BY THE

UNITED STATES HOUSE COMMITTEE ON HOMELAND SECURITY SUBCOMMITTEE ON OVERSIGHT, INVESTIGATIONS, AND

MANAGEMENT REPRESENTATIVE MICHAEL T. McCAUL, CHAIRMAN

ONE HUNDRED TWELFTH CONGRESS SECOND SESSION

NOVEMBER 2012

WASHINGTON, D.C.

T ABLE O F C ONT E NT S Executive Summary …………………………………………………………………………………………………………………….. 2 I. The Threats: Why Addressing Border Security Remains So Urgent ……………………………………………….. 4

A. The Continued Threat of Terrorist Infiltration ………………………………………………………………………… 4 The Increasing Importance of the Southwest Border to Terrorist Organizations ………………………….. 4 Recent Incidents of Concern ………………………………………………………………………………………………….. 5

B. The Growing Influence of Iran and Hezbollah in Latin America ………………………………………………… 7 Hezbollah Presence in Latin America ………………………………………………………………………………………. 7 Iranian Presence in Latin America ………………………………………………………………………………………… 11 Implications for United States National Security …………………………………………………………………….. 13

C. Evolving Transnational Criminal Threat along the Southwest Border ……………………………………… 15 Mexican Drug Cartel Underpinnings to Transnational Organized Crime …………………………………….. 15 The Increasing Involvement of Gangs in Transnational Criminal Activity …………………………………… 16 The Diversified Threat of Transnational Criminal Organizations ……………………………………………….. 17 Corruption of Public Officials ……………………………………………………………………………………………….. 21 Tunnels, Ultralights and Semi-Submersibles: The Evolving Methods of Smuggling ……………………… 22

D. The Increasing Threat from Spillover Violence ……………………………………………………………………… 23 Spillover Violence against Civilians ……………………………………………………………………………………….. 24 Spillover Violence against Law Enforcement ………………………………………………………………………….. 24 Kidnappings: The Spillover Crime Hiding in Plain Sight…………………………………………………………….. 26 The Debate over Spillover Violence ………………………………………………………………………………………. 28

E. Illegal Alien Crimes against U.S. Citizens ………………………………………………………………………………. 29 The Impact of Illegal Immigration on Public Safety and Good Public Order ……………………………….. 29 Criminal Aliens in Jails and Prisons ……………………………………………………………………………………….. 30 Examples of Crimes Involving Illegal Aliens ……………………………………………………………………………. 31

II. Confronting the Threats: Current Enforcement Initiatives …………………………………………………………. 32 A. Mexico Declares War on the Drug Cartels ……………………………………………………………………………. 32

The Current Cartel Landscape ………………………………………………………………………………………………. 32 The Beginnings of Conflict …………………………………………………………………………………………………… 34 The Brutal Violence of the War on Cartels …………………………………………………………………………….. 35 The Criminal Diversification of the Cartels …………………………………………………………………………….. 37 The Sinaloa, La Familia Michoacána and Gulf Cartels Unite to Take on the Zetas ……………………….. 38 Cartel Violence, Insurgency and a Failed State ……………………………………………………………………….. 39 The Future of the Conflict ……………………………………………………………………………………………………. 40

B. Texas Border Security Initiatives …………………………………………………………………………………………. 41 C. Federal Border Security Efforts ……………………………………………………………………………………………. 42

The Secure Border Initiative ………………………………………………………………………………………………… 42 The Merida Initiative …………………………………………………………………………………………………………… 43 The Border Enforcement Security Task Forces ……………………………………………………………………….. 44 National Guard Assistance on the Border ………………………………………………………………………………. 45 The DHS Accountability Act of 2012 ……………………………………………………………………………………… 46

III. Conclusion: Recommendations for Moving Forward with Border Security ………………………………… 46 Major Findings ………………………………………………………………………………………………………………………….. 49 Appendix A: Subcommittee Chairman McCaul Letter to National Security Advisor on Congressional Delegation Findings …………………………………………………………………………………………………………………… 50

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E XE C U T I VE S U M M ARY

The first edition of A Line in the Sand, released in 2006, (hereafter “first edition”) exposed the

rising threat of Mexican drug cartels and the vulnerabilities of our porous Southwest border. The

horrific violence perpetrated by Mexican drug cartels continues to grow and, in many cases

documented in this report, spills into the United States. The cartels now have a presence in more

than 1,000 U.S. cities and dominate the wholesale illicit drug trade by controlling the movement

of most of the foreign-produced drug supply across the Southwest border.1 This report

documents the increased operational control of the cartels inside the United States, their strategy

to move illegal drugs, and the bloody turf wars that have taken place between rival cartels, as

they struggle to control valuable trafficking corridors. Collectively, Mexican Drug Trafficking Organizations (DTO) maintain firm control of drug and human smuggling routes across the U.S.-

Mexico border creating safe entry for anyone willing to pay the price. The U.S. Department of

Homeland Security, in its most recent assessment, asserts it can control only 44 percent of our

border with Mexico.2

Terrorism remains a serious threat to the security of the United States. The Congressional

Research Service reports that between September 2001 and September 2012, there have been 59

homegrown violent jihadist plots within the United States. Of growing concern and potentially a

more violent threat to American citizens is the enhanced ability of Middle East terrorist

organizations, aided by their relationships and growing presence in the Western Hemisphere, to

exploit the Southwest border to enter the United States undetected. This second edition

emphasizes America’s ever-present threat from Middle East terrorist networks, their increasing

presence in Latin America, and the growing relationship with Mexican DTOs to exploit paths

into the United States.

During the period of May 2009 through July 2011, federal law enforcement made 29 arrests for

violent terrorist plots against the United States, most with ties to terror networks or Muslim

extremist groups in the Middle East. The vast majority of the suspects had either connections to

special interest countries, including those deemed as state sponsors of terrorism or were

radicalized by terrorist groups such as al Qaeda. American-born al Qaeda Imam Anwar al

Awlaki, killed in 2011, was personally responsible for radicalizing scores of Muslim extremists

around the world. The list includes American-born U.S. Army Major Nidal Hassan, the accused

Fort Hood gunman; “underwear bomber” Umar Faruk Abdulmutallab; and Barry Bujol of

Hempstead, TX, convicted of providing material support to al Qaeda in the Arabian Peninsula. In

several documented cases, al Awlaki moved his followers to commit “jihad” against the United

States. These instances, combined with recent events involving the Qods Forces, the terrorist

arm of the Iranian Revolutionary Guard Corps, and Hezbollah, serve as a stark reminder the

United States remains in the crosshairs of terrorist organizations and their associates.

1 Department of Justice, National Drug Intelligence Center, National Drug Threat Assessment for 2011. 2 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Securing our Borders – Operational Control and the Path Forward, 112th Cong. 15 February 2011. (Written testimony of Richard M. Stana, Director, Homeland Security and Justice Issues, Government Accountability Office).

3

In May of 2012, the Los Angeles Times reported that intelligence gleaned from the 2011 raid on

Osama bin Laden’s compound indicated the world’s most wanted terrorist sought to use

operatives with valid Mexican passports who could illegally cross into the United States to

conduct terror operations.3 The story elaborated that bin Laden recognized the importance of al

Qaeda operatives blending in with American society but felt that those with U.S. citizenship who

then attacked the United States would be violating Islamic law. Of equal concern is the

possibility to smuggle materials, including uranium, which can be safely assembled on U.S. soil

into a weapon of mass destruction.

Further, the standoff with Iran over its nuclear program, and the uncertainty of whether Israel

might attack Iran drawing the United States into a confrontation, only heightens concern that Iran

or its agents would attempt to exploit the porous Southwest border for retaliation.

Confronting the threat at the Southwest border has

a broader meaning today than it did six years ago.

As this report explains, the United States tightened

security at airports and land ports of entry in the

wake of the September 11, 2001 terrorist attacks,

but the U.S.-Mexico border is an obvious weak link

in the chain. Criminal elements could migrate down

this path of least resistance, and with them the

terrorists who continue to seek our destruction. The

federal government must meet the challenge to secure America’s unlocked back door from the

dual threat of drug cartels and terrorist organizations who are lined up, and working together, to

enter.

One of the central criticisms made by the 9/11 Commission regarding the September 11, 2001

terrorist attacks was a failure of imagination in piecing together the threat picture from al-Qaeda

before it was too late. Recognizing and proactively confronting threats has presented a perennial

challenge to our country. In the case of the Cuban missile crisis, we failed to deal with the

Soviet threat before it resulted in a full-blown crisis that threatened nuclear war. Now we are

faced with a new threat in Latin America that comes from the growing collaborations between

Iran, Venezuela, Hezbollah and transnational criminal organizations. Similar to the Cuban

missile crisis, the evidence to compel action exists; the only question is whether we possess the

imagination to connect the dots before another disaster strikes. The intent of this report is to

present that evidence, not to incite anxiety, but rather to reinvigorate vigilance towards our

Southwest border and beyond to the threats we face in Latin America.

3 “Bin Laden apparently sought operative with valid Mexican passport”, The Los Angeles Times, May 2, 2012.

In May of 2012, the Los Angeles Times

reported that intelligence gleaned from the

2011 raid on Osama bin Laden’s compound indicated the world’s most

wanted terrorist sought to use operatives

with valid Mexican passports who could

illegally cross into the United States to

conduct terror operations.

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I . T HE T H RE AT S : WHY A DD RE S S I NG BO RDE R S E C U RI T Y RE M AI N S S O U R G E NT

A. T HE CONTINUE D THREA T OF TERRO RIST INF ILT RATIO N

The first edition discussed numerous concerns regarding the vulnerability of the Southwest

border to infiltration by terrorist organizations. Though there have been many improvements in

our border security since that time, these concerns still largely persist.

U.S. Government officials who are directly responsible for our national security continue to

affirm the vulnerability. In August 2007 former Director of National Intelligence Mike

McConnell stated that not only have terrorists used the Southwest border to enter the United

States but that they will inevitably continue to do so as long as it is an available possibility.4 In a

July 2012 hearing before the full U.S. House of Representatives Committee on Homeland

Security, DHS Secretary Janet Napolitano confirmed that terrorists have crossed the Southwest

border with the intent to harm the American people.5

Additionally, the U.S. Border Patrol regularly apprehends aliens from the 35 “special interest”

countries “designated by our intelligence community as countries that could export individuals

that could bring harm to our country in the way of terrorism.”6 From Fiscal Years 2006 to 2011,

there were 1,918 apprehensions of these special interest aliens at our Southwest border.7

THE INCREASING IMPORTANCE OF THE SOUTHWEST BORDER TO TERRORIST ORGANIZATIONS

The September 11th

terrorist attacks demonstrated

with catastrophic clarity the deficiencies in the

process of preventing terrorists from entering the

United States. After all, the nineteen 9/11 hijackers

did not sneak into our country surreptitiously in the

remote Arizona desert but rather entered in plain sight at international airports as visiting

students or tourists using visas that had been obtained fraudulently.8

As part of a strategy to constrain the international travel of terrorists, the 9/11 Commission

recommended that a computer system be developed which would identify foreign travelers and

check them against terrorist and criminal databases.9 This recommendation was realized in

4 Transcript: Debate on the Foreign Intelligence Surveillance Act, Chris Roberts with the El Paso Times, August 22, 2007, http://www.elpasotimes.com/news/ci_6685679 5 Edwin Mora, “Napolitano: Terrorist Enter U.S. from Mexico ‘From Time to Time’,” CNSNews.com, July 30, 2012. 6 U.S. Border Patrol memorandum OBP 50/8b-P, November 1, 2004. 7 Information provided by Congressional Research Service 8 The 9/11 Commission Report 9 Id.

Experts believe the Southwest border has

now become the greatest threat of terrorist

infiltration into the United States.

5

January of 2004 when the United States Visitor and Immigrant Status Indicator Technology (US-

VISIT) system began deployment at our ports of entry. US-VISIT scans the fingerprints of

foreign visitors and checks them against numerous criminal and intelligence databases to include

enemy combatants captured on the battlefield.

Besides US-VISIT, there is also much greater scrutiny of individuals seeking a visa to travel to

the United States. Now Immigration and Customs Enforcement (ICE) special agents work side-

by-side with State Department employees at strategic foreign posts helping them screen visa

applicants to weed out criminals and terrorists before they even attempt to travel to our shores.

As part of their strategy for attack, terrorists analyze the defenses of their target and plan

accordingly.10

Just as increased air marshals, reinforced cockpit doors and armed pilots have

forever changed the proposition of hijacking a commercial airliner, the aforementioned security

measures have made conventional travel by terrorists much more risky. Sophisticated terror

networks like al-Qaeda and Hezbollah are well aware of this and would surely consider

alternative methods of travel in order to increase their chances for success.

This is why experts believe the Southwest border has now become the greatest threat of terrorist

infiltration into the United States.11

Terrorists know they do not need a visa to illegally cross the

Southwest border and that US-VISIT is nowhere to be found miles away from a port of entry.

They also know that there are well-established criminal networks along the Southwest border

that are very successful at smuggling humans and weapons.12

This gives terrorists once again a

high level of surety that they can surreptitiously plan elaborate and expensive attacks that may

take years to execute and require a long-term presence inside the United States.

RECENT INCIDENTS OF CONCERN The apprehension of Said Jaziri

On January 11, 2011, Border Patrol agents working in a rural area of eastern San Diego County,

California encountered Said Jaziri in the trunk of a vehicle as he was in the process of being

smuggled across the Southwest border. Jaziri told patrol agents that he had flown from Tunisia

to Mexico by way of Spain, Guatemala, El Salvador and Belize. Jaziri eventually found his way

to Tijuana where he paid a human smuggling operation $5,000 to get him across the Southwest

border and to a safe place anywhere in the United States.13

Jaziri is a citizen of Tunisia which is one of the special interest countries that have been

designated as potential sources of terrorism. In 2007, Jaziri was deported from Canada for not

disclosing on his refugee application that while in France he had been convicted and deported for

10 Todd Steinmetz, “Mitigating the Exploitation of U.S. Borders by Jihadists and Criminal Organizations,” Journal of Strategic Security, Volume 4 Issue 3 2011. 11 The Weaponization of Immigration, by Cato, Center for Immigration Studies, February 2008 12 Congress, Senate, Select Committee on Intelligence, Current and Projected National Security Threats to the United States, 109th Cong. 16 February 2005 (Written statement of Admiral James Loy, Deputy Secretary, U.S. Department of Homeland Security). 13 Criminal Complaint, U.S. v Kenneth Robert Lawler, et al, United States District Court for the Southern District of California, Case Number 3:11-cr-00378-H

6

assaulting an individual whom he believed to be a less-devout Muslim.14

In 2006, Jaziri called

for the death of Danish cartoonist Kurt Westergaard over cartoon depictions of the Prophet

Mohammed that Jaziri considered to be blasphemous.15

The Ahmed Dhakane Human Smuggling Operation

On April 29, 2011, Ahmed Muhammed Dhakane was convicted in the United States District

Court for the Western District of Texas for making false statements while seeking asylum in the

United States. Dhakane, a citizen of Somalia, another special interest country, failed to disclose

to DHS officials that he was affiliated with the Somali organizations al-Barakat and Al-Ittihad

Al-Islami (AIAI) which have been placed on the Specially Designated Global Terrorists list by

the U.S. Department of Treasury.16

During the investigation, Dhakane told law enforcement agents that he ran a large-scale

smuggling operation out of Brazil that specialized in smuggling East Africans into the United

States. Dhakane also told investigators that he had made as much as $75,000 in one day by

smuggling Somalis and had smuggled or attempted to smuggle several AIAI-affiliated Somalis

into the United States.17

The prosecution’s sentencing memorandum specifically described three Somalis that were

successfully smuggled into the United States whom Dhakane knew to be supporters or operatives

of AIAI and of the Somali terrorist organization Harakat Shabaab al-Mujahidin (al-Shabaab).

According to the memorandum, Dhakane cautioned that each of these individuals is ready to die

for their cause and would fight against the United States if the jihad moved from overseas to the

U.S. mainland.18

The Anthony Joseph Tracy Human Smuggling Operation

On June 4, 2010, Anthony Joseph Tracy was convicted in the United States District Court for the

Eastern District of Virginia for Conspiracy to Induce Aliens to Enter the United States. During

the investigation leading up to the prosecution, Tracy told investigators that he had helped

approximately 272 Somalis enter the United States illegally.19

Tracy accomplished this via his travel agency located in Kenya. With the assistance of corrupt

Cuban Embassy employees, Tracy would procure visas so these Somalis could travel to Cuba.

14 Nathan Max, “Detained Tunisian cleric previously deported from Canada and France,” San Diego Union Tribune, January 27, 2011. 15 Controversial Muslim cleric caught being smuggled into U.S. over Mexico border, The Daily Mail, January 28, 2011, http://www.dailymail.co.uk/news/article-1351385/Controversial-Muslim-cleric-caught-smuggled-U-S-Mexico-border.html 16 Government’s Sentencing Memorandum, U.S. v. Ahmed Muhammed Dhakane, United States District Court for the Western District of Texas, San Antonio Division, Case Number 5:10-cr-00194-XR 17 Id. 18 Id. 19 Affidavit in Support of Criminal Complaint, U.S. v. Anthony Joseph Tracy, United States District Court for the Eastern District of Virginia, Case Number 1:10-cr-00122-LMB

7

From there the Somalis would make their way to Belize and then Mexico in order to cross

illegally into the United States. 20

When asked by investigators if he had ever helped members of al-Shabaab illegally enter the

United States, Tracy answered that members of al-Shabaab had indeed asked for his assistance

but that he declined to help them. In spite of this denial, investigators discovered an ominous

email message from Tracy where he wrote: “…i helped a lot of Somalis and most are good but

there are some who are bad and i leave them to ALLAH…”21

B. T HE GRO WING IN FLU ENCE OF I RAN A ND HEZ BOLL AH IN LATIN AMER ICA

In 2006, the Subcommittee reported on the

presence of both Iran and Hezbollah in Latin

America. Since then, that presence has

continued to grow with Iran now having

embassies in 11 Latin American countries that

include Bolivia, Chile, Colombia, Nicaragua and

Uruguay.22

This unsettling trend was the reason for a

Subcommittee-led Congressional Delegation to

Latin America in August 2012. The Delegation

traveled to Mexico, Colombia, Paraguay,

Argentina, as well as the Tri-Border Area (TBA)

of Brazil, Paraguay and Argentina, for a first-

hand assessment of the increasing threat posed

by Iran and Hezbollah in Latin America. After

conferring with U.S. officials, foreign leaders and other experts within these countries, the

Subcommittee has concluded that Iran and Hezbollah pose a threat to the entire Western

Hemisphere including the United States and our Southwest border. For the specific findings and

recommendations to the White House National Security Advisor of the Congressional

Delegation, see Appendix A of this report.

HEZBOLLAH PRESENCE IN LATIN AMERICA

The presence of Hezbollah in Latin America is partially explained by the large Lebanese

diaspora in South America. In general, Hezbollah enjoys support by many in the Lebanese

world community in part because of the numerous social programs it provides in Lebanon that

include schools, hospitals, utilities and welfare.23

With over eight million immigrants and

20 Statement of Facts, U.S. v Anthony Joseph Tracy, United States District Court for the Eastern District of Virginia, Case Number 1:10-cr-00122-LMB 21 Affidavit in Support of Criminal Complaint, U.S. v. Anthony Joseph Tracy, United States District Court for the Eastern District of Virginia, Case Number 1:10-cr-00122-LMB 22 Martin Arostegui, “Iran Tries to Gain Sway in Latin America,” The Wall Street Journal, December 6, 2011. 23 Poll Finds Overwhelming Majorities in Lebanon Support Hezbollah, Distrust U.S., August 2, 2006; http://www.worldpublicopinion.org/pipa/articles/brmiddleeastnafricara/236.php

Congressional Delegation in Buenos Ares

meeting with Leaders of the Argentine

Israelite Mutual Association whose office was

bombed in 1994 by Iranian/Hezbollah

terrorists.

8

descendants in Brazil and Argentina alone, South America

is home to the largest Lebanese population in the world.24

Given these dynamics, it is understandable why South

America would become such a large base of operations for

Hezbollah.

Hezbollah remains especially active in the TBA.25

With

an estimated $12 billion a year in illegal commerce, the

TBA is the center of the largest underground economy in

the Western Hemisphere.26

Financial crimes are a

specialty of the area and include intellectual property

fraud, counterfeiting, money laundering and smuggling.

Moreover, lax customs enforcement in the area allows

these crimes to continue largely unabated from one

country to the other.27

The TBA has been described as one

of the most lucrative sources of revenue for Hezbollah

outside of state sponsorship.28

The evidence to suggest Hezbollah is actively involved in

the trafficking of South American cocaine to fund its

operations is mounting as well. In 2008, U.S. and Colombian authorities dismantled a cocaine-

smuggling and money-laundering organization that allegedly helped fund Hezbollah operations.

Dubbed Operation Titan, the enforcement effort uncovered a money laundering operation that is

suspected of laundering hundreds of millions of dollars of cocaine proceeds a year and paying 12

percent of those profits to Hezbollah.29

Operation Titan has led to more than 130 arrests and the

seizure of $23 million.30

One of those arrests was of Chekri Mahmoud Harb (also known as

“Taliban” or “Tali”) who is a Lebanese national suspected of being a kingpin of the operation.

In 2010, Harb pled guilty to conspiracy to manufacture and distribute five kilograms or more of

cocaine knowing the drugs would ultimately be smuggled into the United States.31

In another example, the Treasury Department’s Office of Foreign Assets Control (OFAC) has

listed Ayman “Junior” Joumaa, a Lebanese national and Hezbollah supporter, as a Specially

Designated Narcotics Trafficker based upon his involvement in the transportation, distribution

and sale of multi-ton shipments of cocaine from South America along with the laundering of

hundreds of millions of dollars of cocaine proceeds from Europe and the Middle East.32

24 http://www.maronitefoundation.org/lebanesediaspora.html 25 Pablo Gato and Robert Windrem, “Hezbollah Builds a Western Base,” msnbc.com, May 9, 2007. 26 “In Paraguay, Piracy Bleeds U.S. Profits, Aids Terrorists,” cnbc.com, October 4, 2007. 27 Id. 28 Id. 29 Chris Kraul and Sebastian Rotella, “Colombia drug ring may link to Hezbollah,” The Seattle Times, October 25, 2008. 30 Id. 31 U.S. v Chekri Mahmoud Harb, US District Court for the Southern District of Florida, Case#1:08-cr-20285-FAM 32 http://www.treasury.gov/press-center/press-releases/Pages/tg1035.aspx

Hezbollah mosque (high rise) in Tri –

Border Area of Brazil, Paraguay, and

Argentina.

9

Federal prosecutors in Virginia also charged Joumaa

for conspiracy to distribute cocaine and money

laundering charges. The indictment alleges Joumaa

shipped thousands of kilograms of Colombian cocaine

to the United States via Guatemala, Honduras and

Mexico. Specifically mentioned in the indictment

was 85,000 kilograms of cocaine that was sold to the Los Zetas drug cartel from 2005 to 2007.33

The indictment further substantiates the established relationship between Hezbollah, a proxy for

Iran, and Mexican drug cartels, which control secured smuggling routes into the United States.

This nexus potentially provides Iranian operatives with undetected access into the United States.

Joumaa allegedly laundered in excess of $250 million of cocaine proceeds from sales in the

United States, Mexico, Central America, West Africa and Europe. Joumaa would typically

receive these proceeds in Mexico as bulk cash deliveries. Once the proceeds were laundered,

they would be paid out in Venezuelan or Colombian currency to the cocaine suppliers in

Colombia. Joumaa’s fee for laundering the currency would vary from eight to 14 percent.34

A recent civil complaint filed by the U.S. Department of Justice states that Joumaa relied heavily

upon the Lebanese Canadian Bank (LCB) and the Lebanese exchange houses Hassan Ayash

Exchange Company (Hassan) and Ellissa Holding (Ellissa) to conduct the money laundering

operation described above.35

The complaint also alleges these businesses partnered with

Hezbollah in various other money laundering schemes. One such scheme involved LCB

allowing Hezbollah-related entities to conduct transactions as large as $260,000 per day without

disclosing any information about the transaction.36

According to the 2011 State Department Country Reports on Terrorism, the Barakat Network in

the TBA is another example of drug money being funneled to Hezbollah. Although the total

amount of money being sent to Hezbollah is difficult to determine, the Barakat Network

provided, and perhaps still provides, a sizeable amount of the money sent annually from the TBA

to finance Hezbollah and its operations around the world.

Another scheme that took place from 2007 to early 2011 involved LCB, Hassan and Ellissa

transferring at least $329 million of illicit proceeds to the United States for the purchase of used

cars through 30 car dealerships that typically had no assets other than the bank accounts which

received the overseas wire transfers. Once in receipt of the wired funds, these dealerships would

purchase used vehicles and ship them to West Africa to be sold. The cash proceeds would then

make their way to Lebanon under the security of Hezbollah and its illegitimate money transfer

systems.37

33 U.S. v Ayman Joumaa, US District Court for the Eastern District of Virginina, Case#1:11-cr-00560-TSE 34 Id. 35 Press Release, U.S. Attorney’s Office for the Southern District of New York, December 15, 2011. 36 Id. 37 Id.

The indictment further substantiates the

established relationship between Hezbollah,

a proxy for Iran, and Mexican drug cartels,

which control secured smuggling routes

into the United States.

10

Hezbollah has also involved itself in the trafficking of weapons, which fuels the violence so

intrinsic to drug trafficking and terrorism in Latin America. On July 6, 2009, Jamal Yousef, also

known as Talal Hassan Ghantou, was indicted in New York City on federal narco-terrorism

conspiracy charges. According to the unsealed indictment, Yousef is a former member of the

Syrian military and an international arms trafficker who was attempting to make a weapons-for-

cocaine deal with the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed

Forces of Colombia or FARC).38

What Yousef did not know was that he was actually negotiating with an undercover operative of

the Drug Enforcement Administration who was posing as a representative of the FARC. Yousef

had agreed to provide the FARC military-grade weapons that included 100 AR-15 and 100 M-16

assault rifles, 10 M-60 machine guns, C-4 explosives, 2,500 hand grenades and rocket-propelled

grenades. In exchange for the weapons, the FARC was to deliver 938 kilograms of cocaine to

Yousef.39

While negotiations progressed, Yousef stated that the weapons had been stolen from Iraq and

were being stored in Mexico by Yousef’s cousin who is an active member of Hezbollah. To

establish their bona fides for the trade, Yousef’s cousin videotaped the weapons cache on

location in Mexico. Towards the completion of the transaction, it was learned that the weapons

cache was actually larger than had been first reported. The deal was amended to include the

additional weapons in exchange for 7,000 to 8,000 more kilograms of cocaine that would be

delivered to the coast of Honduras.40

The transaction was never completed because Yousef was arrested and imprisoned in Honduras

on separate charges beforehand. In August 2009, Yousef was extradited to New York where he

awaits trial.

38 U.S. v. Jamal Yousef, U.S. District Court for the Southern District of New York, Case# 1:08-cr-01213-JFK 39 Id. 40 Id.

Cocaine lab example in Colombia. As shown above, harmful materials, such as gasoline, battery acid and

cement are often used to process cocaine.

11

IRANIAN PRESENCE IN LATIN AMERICA

The explanation for Iranian presence in Latin America begins with its symbiotic relationship

with Hezbollah.41

United in their dedication to the destruction of Israel, Iran has helped

Hezbollah grow from a small group of untrained guerrillas into what is arguably the most highly

trained, organized and equipped terrorist organization in the world.42

In return, Hezbollah has

served as an ideal proxy for Iranian military force – particularly against Israel – which affords

Iran plausible deniability diplomatically.43

Hence wherever Hezbollah is entrenched, Iran will be

as well and vice-versa.

The primary reason for Iran’s increasing presence and influence in Latin America is based on its

growing ideological and economic relationship with Venezuela. Ideologically speaking, both

regimes share a mutual enmity of what they perceive as the imperialist agenda of the United

States.44

Economically speaking, the two countries have partnered together in an attempt to

survive and thrive despite being ostracized in varying degrees from the official economy and its

financial and trade systems.45

On the latter score one would be hard pressed to find a country that has been more successful at

overcoming sanctions and embargoes levied by the United States and international community

than Iran. In spite of ever-increasing economic constraints dating back to the Carter

Administration, Iran has managed to fight an eight year war with Iraq, become the world’s

biggest sponsor of terrorism, vigorously pursued its own nuclear program and become the prime

destabilizing factor in the Middle East.46

This impressive adaptability relies in no small part on Iran’s creativity in exploiting

unscrupulous businesses, criminal networks and other corrupt regimes for economic survival.

For rogue leaders like Venezuela President Hugo Chavez, who see embargoes and sanctions as

just another manifestation of American oppression and imperialism, Iran has become their

champion and welcomed ally.47

This sentiment has developed into a cooperative understanding

that, to the extent they can be successful at overcoming economic sanctions and creating their

41 Congress, House, Committee on Homeland Security Subcommittee on Counterterrorism and Intelligence, Hezbollah in Latin America – Implications for U.S. Homeland Security, 112th Cong. 7 July 2011 (Written testimony of Ambassador Roger F. Noriega, Visiting Fellow, American Enterprise Institute for Public Policy Research). 42 Congress, Senate, Foreign Relations Subcommittee on Near Eastern and South and Central Asian Affairs, Assessing the Strength of Hezbollah, 111th Cong. 8 June 2010 (Written statement of Ambassador Jeffrey D. Feltman, Asst. Secretary of State for Near Eastern Affairs and Ambassador Daniel Benjamin, Coordinator for Counterterrorism). 43 Congress, Senate, Foreign Relations Subcommittee on Near Eastern and South and Central Asian Affairs, Assessing the Strength of Hezbollah, 111th Cong. 8 June 2010 (Written statement of Ryan C. Croker, Dean and Executive Professor, George Bush School of Government and Public Service, Texas A&M University). 44 “Iran and Venezuela deepen ‘strategic alliance’,” BBC News, October 20, 2010. 45 Center for Strategic & International Studies, How Iran Could Snub Sanctions in the Americas, by Douglas Farah, January 11, 2012. 46 Interview by Subcommittee Staff with ICE Homeland Security Investigations personnel (June 28, 2012). 47 Hooman Majd, The Ayatollah Begs to Differ, the Paradox of Modern Iran, (New York: Anchor Books, 2009).

12

own economy, Iran and Venezuela can continue to pursue their ideological agendas beyond the

reproach of their Western first-world oppressors.

In their efforts to achieve this independence, neither Iran nor Venezuela has ignored the

pecuniary and political benefits of participating in the illicit drug trade. For example, Iranian

Revolutionary Guard Corps (IRGC) General Gholamreza Baghbani has been working in

conjunction with the Taliban to oversee the trafficking of opium and heroin from Afghanistan

through Iran in order to generate revenue to support Hezbollah.48

General Baghbani is a commander in the IRGC Qods Force which is the Iranian Special Forces

unit that works closely with Hezbollah in conducting terror operations throughout the world.

In a similar fashion to Iran’s ideological relationship with Hezbollah, Venezuela and the FARC

often work together in the trafficking of cocaine for mutual benefit. Numerous Venezuela

government officials have been designated by the OFAC as providing assistance to the FARC in

the trafficking of cocaine and the purchasing of weapons.49

In addition to participating in

cocaine trafficking, Venezuela affords the FARC respite from United States and Colombian

pursuit via safe havens within the country.50

Venezuela extends this assistance in part because the socialist regime of Hugo Chavez aligns

well ideologically with the FARC’s Marxist underpinnings. Pragmatically speaking, Venezuela

provides support to the FARC insurgency because it believes it helps mitigate the perceived

threat of United States intervention in the region.51

The FARC in turn has provided reciprocal

support of the Chavez regime by such actions as training pro-Chavez militants and assassinating

anti-Chavez politicians within Venezuela.52

Given their own individual propensities in the trafficking of illicit drugs to further ideological

interests, it should come as no surprise that the activity is so intrinsic to the ongoing Venezuelan-

Iranian enterprise in Latin America.53

Each country brings valuable infrastructure to drug

trafficking that can be used to help expand and supply a worldwide cocaine market. Assets such

as state-owned airlines, shipping companies, airports and sea ports can operate beyond the

watchful eyes of the legitimate world.

This can be seen in the regularly scheduled flights between Caracas and Tehran that continue

despite Venezuelan-owned Conviasa Airlines’ claims they ended in September 2010.54

Even

though it was described as a regular commercial flight, there was no means by which to purchase

48 U.S. Treasury IDs Iran General as Drug Kingpin; March 11, 2012; http://www.worldnewstribune.com/2012/03/11/u-s-treasury-ids-iran-general-as-drug-kingpin/ 49 “US Sanctions Venezuelans for Alleged FARC Links,” BBC News, September 8, 2011. 50 “Colombia: Rebels Attack Troops From Venezuela,” The New York Times, May 21 2012. 51 Simon Romero, “Venezuela Asked Colombian Rebels to Kill Opposition Figures, Analysis Shows,” The New York Times, May 10, 2011. 52 Id. 53 Congress, House, Committee on Foreign Affairs, Ahmadinejad’s Tour of Tyrants and Iran’s Agenda in the Western Hemisphere, 112th Cong. 2 February 2012 (Written testimony of Norman A. Bailey, PhD, President, Institute for Global Economic Growth). 54 Subcommittee Staff interview with Ambassador Roger F. Noriega, Visiting Fellow, American Enterprise Institute for Public Policy Research (August 15, 2012).

13

a ticket to travel onboard. Moreover, the flight would depart Caracas from a secluded non-public

terminal without the normal manifests associated with legitimate air commerce.55

Another example that also illustrates the ingenuity of Iran in circumventing international

sanctions involves the Islamic Republic of Iran Shipping Lines (IRISL), which is responsible for

moving almost one-third of Iran’s imports and exports. The IRISL has been under OFAC

economic sanction since September 2008 for providing logistical services to Iran’s Ministry of

Defense and Armed Forces Logistics.56

In order to stay one step ahead of OFAC and United Nations regulatory efforts, the IRISL

regularly reflags and changes the owners of its ships. Between September 2008 and February

2012, there were 878 changes to the IRISL fleet including 157 name changes, 94 changes of flag,

122 changes of operator and 127 changes of registered ownership. This simple tactic has

allowed Iran to continue shipping goods to and from Venezuela and all over the world despite

the best efforts of the international community to prevent it.57

Being able to control major modes of transportation that operate from one safe port to another

beyond the watchful eyes of legitimate immigration and customs authorities is a fundamental

advantage that is very difficult to counter. While Iran and Venezuela may be much more

interested in using this advantage for commercial, military and nuclear purposes, there is no

reason to doubt they would use it in the trafficking of drugs to finance covert terrorist activities

for themselves and their allies.

IMPLICATIONS FOR UNITED STATES NATIONAL SECURITY

Iran and Hezbollah have been involved in the underworld of Latin America long enough to

become intimately familiar with all of its inhabitants and capitalize on their capabilities. Former

DEA executive Michael Braun has an interesting way of describing this dynamic:

“…If you want to visualize ungoverned space or a permissive environment, I tell

people to simply think of the bar scene in the first “Star Wars” movie. Operatives

from FTOs (foreign terrorist organizations) and DTOs (drug trafficking

organizations) are frequenting the same shady bars, the same seedy hotels and

the same sweaty brothels in a growing number of areas around the world. And

what else are they doing? Based upon over 37 years in the law enforcement and

security sectors, you can mark my word that they are most assuredly talking

business and sharing lessons learned.”58

55 Ed Barnes, “Venezuela Cancels Round-Trip ‘Terror Flight’ to Syria and Iran,” Fox News, September 14, 2010. 56 U.S. Department of the Treasury Press Center, Major Iranian Shipping Company Designated for Proliferation Activity, September 10, 2008. 57 Rachel Armstrong, Stephen Grey and Himanshu Ojha, “Special Report: Iran’s cat-and-mouse game on sanctions,” February 15, 2012. 58 Congress, House, Committee on Foreign Affairs, Ahmadinejad’s Tour of Tyrants and Iran’s Agenda in the Western Hemisphere, 112th Cong. (February 2, 2012) (Written statement of Michael A. Braun, Managing Partner, Spectre Group International, LLC)

14

Braun says as Europe's demand for cocaine continues to grow and TCO's operate in West

and North Africa to establish infrastructure to move the drugs:

"These bad guys (cartels) are now routinely coming in very close contact with the

likes of Hezbollah, Hamas, Al Qaeda, who are vying for the same money, the

same turf and same dollars. It's really a nightmare scenario. And my point being

is if anyone thinks for a moment that Hezbollah and Qods Force, the masters at

leveraging and exploiting existing elicit infrastructures globally, are not going to

focus on our southwest border and use that as perhaps a spring board in

attacking our country then they just don't understand how the real underworld

works."59

Iran attempted to leverage this capability in October 2011 with the foiled plot to assassinate the

Saudi Ambassador to the United States. According to a federal arrest complaint filed in New

York City, the Qods Force attempted to hire a drug cartel (identified by other sources as the Los

Zetas) to assassinate Saudi Ambassador Adel al-Jubeir for a fee of $1.5 million. The terror

attack was to take place at a popular restaurant in Washington, D.C. without regard to collateral

deaths or damage.60

The Qods Force made this solicitation because it knows drug traffickers are willing to undertake

such criminal activity in exchange for money. Moreover, if this terror attack had been

successful, the Qods Force intended to use the Los Zetas for other attacks in the future.61

Had it

not been for a DEA informant posing as the Los Zetas operative, this attack could have very well

taken place.

It has been suggested that this assassination was directed by the Iranian government in retaliation

for a Saudi-led military intervention in Bahrain against an Iranian-backed Shiite Muslim majority

that was protesting a Saudi-backed Sunni Muslim minority government.62

There are also

indications that Iranian Supreme Leader Ayatollah Khamenei has ordered the Qods Force to

intensify terror attacks against the United States and other Western countries for supporting the

ousting of Syrian President and Iranian ally Bashar al-Assad.63

How all of this plays into the Iranian nuclear threat leaves troubling possibilities for the U.S. and

our ally Israel. We know that Hezbollah has a significant presence in the United States that

59 Congress, House, Committee on Homeland Security Hearing, “Iran, Hezbollah, and the Threat to the Homeland.”, 112

th Congress, March 21, 2012

60 U.S. v. Manssor Arbabsiar and Gholam Shakuri; U.S. District Court for the Southern District of New York, Case# 1:11-cr-00897-JFK 61 Id. 62 Congress, Joint Committee, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management and the Subcommittee on Counterterrorism and Intelligence of the U.S. House Committee on Homeland Security, Iranian Terror Operations on American Soil, 112th Cong. 26 October 2011 (Prepared Statement of Dr. Matthew Levitt, Director, Stein Program on Counterterrorism and Intelligence, The Washington Institute for Near East Policy). 63Con Coughlin, “Iran’s supreme leader orders fresh terror attacks on West,” The Telegraph, August 22, 2012.

15

could be utilized in terror attacks intended to deter our

efforts to curtail Iran’s nuclear program.64

For this

same reason, Israelis in the United States and around

the world have gone on high alert to prevent a repeat of

deadly Hezbollah terror attacks against Israeli facilities

that occurred in Argentina in 1992 and 1994.

These increasingly hostile actions taken by the Iranian government would be alarming enough

without Iran and Hezbollah having well-established bases of operations in Latin America. While

Latin American bases serve as a finance mechanism for Hezbollah, it is believed the ability

exists to turn operational if the need arises. There is no doubt that the enemy is at our doorstep

and we must do something about it now. While a very aggressive foreign policy to counteract

these threats is in order, we must not forget that a secure Southwest border is always our first and

last line of defense.

C. E VOL VING TRA NSNATIONA L CRIMIN A L TH REAT ALONG T HE SOUT HWE ST BORDE R

MEXICAN DRUG CARTEL UNDERPINNINGS TO TRANSNATIONAL ORGANIZED CRIME

The first edition discussed the emerging power and influence of the Mexican drug cartels along

the Southwest border. The report elaborated on the increasing cooperation between the drug

cartels and prison and street gangs in the United States to facilitate the trafficking and sale of

illicit drugs along with the enforcement of remunerations. Those cartels diversified into other

areas of criminality such as human smuggling and arms trafficking.

Since the issuance of the first edition, these evolving criminal phenomena have caused many

experts and law enforcement professionals to place greater emphasis on a holistic analysis of the

crime occurring across the Southwest border. That approach created an increased understanding

that virtually all crimes exploiting our borders rely on interconnected illicit pathways and

criminal organizations.65

There has also been greater emphasis on using more precise terms to describe these criminal

organizations. Even the term “drug cartel” is now considered somewhat of a misnomer because

these organizations are not engaged in the sort of cooperative price-fixing and product regulation

64 Congress, House, Committee of Homeland Security, See Iran, Hezbollah and the Threat to the Homeland, 112th Cong. (March 21, 2012). 65 Congress, Senate, Committee on Homeland Security and Governmental Affairs Ad Hoc Subcommittee on Disaster Recovery and Intergovernmental Affairs, Exploring Drug Gangs’ Ever Evolving Tactics to Penetrate the Border and the Federal Government’s Efforts to Stop Them, 112th Cong. 31 March 2010 (Written statement of Executive Associate Director James A. Dinkins, Homeland Security Investigations, U.S. Immigration and Customs Enforcement).

While Latin American bases serve as a

finance mechanism for Hezbollah, it is

believed the ability exists to turn

operational if the need arises.

16

behaviors that are indicative of a traditional cartel.66

It is now considered more technically

precise to characterize these organized criminal enterprises as drug trafficking organizations

(DTO) or, in the truly accurate and broader sense, as transnational criminal organizations (TCO).

To give some sense of the compounding effect of thinking in the broad terms of TCOs versus

DTOs, consider the following: It has been said that the influence of Mexican DTOs is now felt in

every region in the United States and in at least 230 U.S. cities – an increase of 180 cities from

2006.67

According to the National Drug Intelligence Center, Mexican TCOs were operating in

more than one thousand U.S. cities in every region of the country in 2009 and 2010.68

By

considering the full breadth of criminal activity undertaken by Mexican TCOs in the United

States, one can see that their influence is much greater than previously thought.69

Mexican cartels dominate the TCO hierarchy because of their command over the illicit drug

market in the United States that has been estimated to be worth $64 billion a year.70

The cartels

are also involved in the global illicit drug economy that is estimated to be worth $322 billion a

year.71

This economic power provides the necessary resources for the cartels to exert ruthless

control over the smuggling corridors (i.e. illicit pathways or “plazas”) that are critical to the

operation of every subordinate TCO that wishes to commit crimes across the Southwest border.

THE INCREASING INVOLVEMENT OF GANGS IN TRANSNATIONAL CRIMINAL ACTIVITY

Central to the success of the transnational criminal enterprise is the continued business

relationship with gangs on either side of the border. On the U.S. side, the cartels are increasing

their connection to gangs in order to gain greater control over the retail drug market.72

These

alliances are also beginning to transcend ethnic, ideological and geographic boundaries. For

example, outlaw motorcycle gangs and white supremacist groups are beginning to partner with

the cartels in order to mutually benefit financially from increased retail distribution in the United

States.73

66 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management, On the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Arizona Attorney General Thomas C. Horne). 67 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management On the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Amy E. Pope, Deputy Chief of Staff and Counselor to the Assistant Attorney General Criminal Division, U.S. Department of Justice). 68 Department of Justice, National Drug Intelligence Center, National Drug Threat Assessment for 2011. 69 To maintain the ease of conventions, generally this report will use the term “cartel” to refer to Mexican DTOs and TCOs unless specifically necessary. 70 Office of National Drug Control Policy, 2002 National Drug Control Strategy. 71 Thematic Debate of the 66th Session of the United Nations General Assembly on Drugs and Crime as a Threat to Development, 26 June 2012, http://www.un.org/en/ga/president/66/Issues/drugs/drugs-crime.shtml 72 Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, 8 June 2012 73 Federal Bureau of Investigation, 2011National Gang Assessment.

17

In Mexico, gangs have become proxy soldiers for the fight to control smuggling plazas. The

Barrio Azteca (BA) gang has aligned itself with the Juarez/Vicente Carillo-Fuentes organization

to help repel encroachments into its plaza by the Sinaloa cartel.74

The BA has been classified by

the State of Texas as a Tier 1 gang because of its association with Mexican cartels and high

levels of transnational criminal activity.75

It is a particularly violent gang that was involved in

the March 2010 murder of U.S. Consular employee Leslie Enriquez and her husband Arthur

Redelfs in Juarez, Mexico. BA members that have been brought to justice for these senseless

murders of innocent people have explained it simply as an opportunity for the gang to further its

racketeering activities and standing as a criminal organization.76

THE DIVERSIFIED THREAT OF TRANSNATIONAL CRIMINAL ORGANIZATIONS Human Trafficking and Smuggling

In the original report, the Subcommittee highlighted one of the more well-known criminal

diversifications by the cartels into the realm of human trafficking and smuggling. Human

smuggling involves the facilitation, transportation or illegal entry across an international border

74 Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, 8 June 2012 75 Texas Department of Public Safety, Texas Fusion Center, Intelligence and Counterterrorism Division, Texas Gang Threat Assessment 2011. 76 Department of Justice, Juarez Drug Cartel Pleads Guilty to Charges Related to U.S. Consulate Murders and Is Sentenced to Life in Prison, 5 April 2012 (press release).

Human Trafficking Zones through Latin America to the Southwest Border.

Courtesy of ICF International’s 2006 report to National Institute of Justice, U.S. Department of Justice

18

of persons who are willing participants in the process. Once the smuggling process is complete,

all involved parties are free to go on their way with no further obligation.

Human trafficking involves the same logistical considerations, but the individuals being moved

are not willing participants and are usually the object of further criminal exploitation like

involuntary servitude or forced prostitution. To get a global sense of the problem of trafficking

in persons, the U.S. Government estimates that worldwide 600,000 to 800,000 people are

trafficked across international borders each year.77

The cartels have availed themselves to a Latin

American human trafficking industry specializing in

sexual exploitation that has been estimated to generate

$16 billion annually.78

A recent study estimated that

each year approximately 25,600 females from the

source countries of Colombia, Venezuela, Ecuador, Peru, El Salvador, Guatemala, Nicaragua

and Mexico are trafficked across the U.S. Southwest border for the purpose of sexual

exploitation.79

This same study estimated that each year 46,849 males and females from the same

source countries are trafficked across the U.S. Southwest border for forced labor.80

Money Laundering

In 1986, the Money Laundering Control Act was enacted which made it illegal to conceal the

proceeds of organized crime activities and/or to use those proceeds to further criminal activity.

According to George Friedman, CEO and Chief Intelligence Officer of Stratfor, U.S.-Mexico

cross-border trade as a result of illegal drugs is about $40 billion a year—over 11 percent of total

exports.81

With higher profit margins than other products, illegal drugs have an important impact

on the Mexican economy making the stakes even higher. Organized crime and law enforcement

have played a game of one-upmanship, with the criminals devising creative ways to hide, move

and utilize illicit proceeds and with law enforcement identifying, disrupting and dismantling

those methods.

One example of this emerged with the recent indictment of several leaders of the Los Zetas drug

cartel on charges of money laundering related to a horse racing operation in the United States.

The first step in this particular scheme involved the bulk cash smuggling of proceeds from drug

sales in the U.S. into Mexico. The Zetas allegedly used these funds to either promote the

continued distribution of drugs or to purchase, train, breed and race quarter horses in order to

help disguise the true origin of the money. Three of these businesses were owned by Jose

77 Congressional Research Service, Trafficking in Persons: U.S. Policy and Issues for Congress, by Alison Siskin and Liana Sun Wyler, 23 December 2010. 78 Id. 79 Estimating Human Trafficking into the United States: Development of a Methodology, by Heather J. Clawson, Mary Layne and Kevonne Small, Caliber, December 2006. 80 Id. 81 George Friedman, “Mexico’s Strategy,” Stratfor, August 22, 2012.

Each year approximately 25,600

females… are trafficked across the U.S.

Southwest border for the purpose of

sexual exploitation.

19

Trevino-Morales, who is the brother of Zetas kingpins Miguel Angel Trevino-Morales, and

Oscar Omar Trevino-Morales.82

The above indictment also alleged that from 2008 to May 2012, these businesses spent

approximately $5.4 million of drug money to purchase 69 horses. During that time

approximately $850,000 of ill-gotten money was purportedly used to train and maintain the

horses. At least $435,000 of legitimate prize money was comingled in bank accounts with drug

proceeds to help disguise the illicit funds. Horses were also sold at artificially high prices to co-

conspirators to help foster the perception of legitimate business income.

Bulk Cash Smuggling

Bulk cash smuggling is the process of physically moving hidden amounts of money in excess of

$10,000 into or outside of the United States with no intention to declare the money to the U.S.

government. Despite all of the sophisticated money laundering methods that exist, bulk cash

smuggling remains the primary method drug cartels use to move their illicit proceeds across the

border into Mexico. While U.S. law enforcement was able to seize $138 million of bulk cash

shipments in Fiscal Year 2009, it is a fraction of the $18 billion to $39 billion that the DEA

estimates makes it into Mexico each year.83

Weapons smuggling

The Mexican government’s war on the cartels has sparked extreme violence, which has in turn

created a huge demand by the cartels for weapons and ammunition. Plenty of organized crime

rings – to include the cartels themselves – have gone into the business of providing a constant

stream of weapons flowing south out of the United States into the hands of these ruthless

criminals.84

In 2007, the U.S. Bureau of Alcohol, Tobacco and Firearms (ATF) started Project Gunrunner in

an effort to stem the flow of guns heading south into Mexico. Part of the operation included the

expansion of ATF’s eTrace program to make it available to Mexican law enforcement. From

2007 through 2011, there were 99,691 firearms submitted for tracing by Mexican investigators.

Out of those traces, 68,161 firearms (68.4%) were determined to have come from the United

States. 85

The ATF is quick to point out, however, that the above weapons – or any weapons submitted for

tracing whether they are in the United States or Mexico – should not be considered

representative of the larger universe of all firearms used by criminals.86

We have no way of

82 Indictment, U.S. v Miguel Angel Trevino Morales, U.S. District Court for the Western District of Texas, Austin Division, Criminal Case Number A-12-CR-210-SS 83 James C. McKinley, Jr. and Marc Lacey, “Along U.S. – Mexico Border, a Torrent of Illicit Cash”, New York Times, December 25, 2009. 84 White House, Office of National Drug Control Policy, National Southwest Border Counternarcotics Strategy for 2011. 85 Subcommittee staff meeting with the ATF Office of Strategic Intelligence and Information, March 12, 2012 86 Id.

20

knowing the total number of weapons being used by the cartels or from where they originate. In

fact, there are indications that the military-grade weaponry used by the cartels originates from

countries such as China, South Korea or the numerous countries in Latin America that have been

the venue of so many paramilitary insurgencies.87

Intellectual Property Rights Theft

Intellectual property is a product of the intellect that has commercial value, including

copyrighted property such as literary and artistic works, and ideational property, such as patents,

appellations or origin, business methods and industrial processes.88

Intellectual Property Rights

(IPR) theft is becoming an increasingly lucrative business for TCOs and transnational gangs.

The La Familia Michoacána cartel is said to earn $2.4 million per day selling counterfeit goods

and may be operating in the United States.89

The Zetas are heavily involved in IPR theft in the United States as well.90

In Mexico the Zetas

have taken over retail shops in order to sell their pirated movies and music. One merchant who

had his market confiscated by the Zetas explained his acquiescence to his new bosses as “these

are people you do not say no to”.91

In June 2012, the Mexican federal police accused a top Zetas

official of receiving approximately $20 million in illicit proceeds from IPR theft.92

Organized Retail Theft

According to the FBI, Mexican criminal groups are participating in an organized retail theft

industry that costs the United States about $30 billion a year. Organized retail theft is considered

a “gateway” crime that has the potential to lead to other larger criminal schemes, such as money

laundering or even terrorism.93

Mexican retail theft rings are known to operate as deep into the U.S. interior as San Francisco,

Salt Lake City and Denver. At least one Mexican retail theft ring in particular would purchase

stolen credit card numbers from what was suspected to be the Russian mafia.94

The theft ring

would then use these fraudulent credit cards to purchase laptop computers, designer handbags,

clothing, and sunglasses from legitimate retailers in various U.S. cities. Many of these stolen

goods were ultimately smuggled into Mexico and sold to generate the theft ring’s revenue.

87 Scott Stewart, “Mexico’s Gun Supply and the 90 Percent Myth,” Stratford Global Intelligence, February 10, 2011. 88 http://www.thefreedictionary.com/intellectual+property 89 Intellectual Property Theft: Get Real, National Crime Prevention Council. 90 Id. 91 James C. McKinley, Jr. and Marc Lacey, “Along U.S. – Mexico Border, a Torrent of Illicit Cash”, New York Times, December 25, 2009. 92 Id. 93 Federal Bureau of Investigations, Organized Retail Theft, A $30 Billion-a-Year Industry, January 3, 2011, http://www.fbi.gov/news/stories/2011/january/retail_010311 94 Subcommittee staff interview of ICE Homeland Security Investigations personnel, June 26, 2012

21

CORRUPTION OF PUBLIC OFFICIALS

While it has been well known for many years that the cartels have used their massive financial

resources to exert a corrupting influence on public officials in Mexico, there is increasing

concern over their impact on U.S. officials. Since October 2004, 138 Customs and Border

Protection (CBP) officers and agents have been arrested or indicted on corruption-related

charges.95

There is also concern that the U.S. government is not resourced at the proper level to deal with

the challenges of this corruption. According to recent testimony by the Department of Homeland

Security (DHS) Office of Inspector General (OIG), there has been a 38 percent increase in

complaints against CBP officers since 2004.96

The OIG also testified that, despite this increase,

it only has 219 criminal investigators at its disposal to monitor the activities of over 225,000

employees throughout DHS.

The corrupting influence of the cartels has not been limited to federal law enforcement officers.

In 2011, an unbelievable breach of the public trust took place in Columbus, New Mexico when

the mayor, police chief, a city trustee and nine other individuals pled guilty to selling firearms –

mostly assault rifles – to Mexican drug cartels.97

In the approximate year and a half preceding

this report, nine Texas law enforcement officers have been charged with allowing guns or drugs

to cross the border.98

Dealing with public corruption has now become an integral part of the Southwest Border

Counternarcotics Strategy. The strategy involves increased training for law enforcement officers

and greater investigative and prosecutorial focus on combating corruption at all levels of

government.99

95 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, Department of Homeland Security: An Examination of Ethical Standards, 112th Cong. 17 May 2012 (Written statement of Thomas Winkowski, Acting Deputy Commissioner, U.S. Customs and Border Protection). 96 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management, Department of Homeland Security: An Examination of Ethical Standards, 112th Cong. 17 May 2012 (Written statement of Charles K. Edwards, Acting Inspector General, U.S. Department of Homeland Security). 97 Richard A. Serrano, “Corruption flows freely along U.S.-Mexico border,” Los Angeles Times, May 13, 2012. 98 Id. 99 White House, The Office of National Drug Control Policy, Southwest Border Counternarcotics Strategy 2011

22

TUNNELS, ULTRALIGHTS AND SEMI-SUBMERSIBLES: THE EVOLVING METHODS OF SMUGGLING

Smugglers are engaged in an endless process of devising creative methods to smuggle goods and

people across the Southwest border. One trend law enforcement is seeing more of is the use of

cross-border tunnels. Since June 2011, there have been 153 tunnel attempts discovered on the

Southwest border. Many of these tunnels have been highly sophisticated and have been built

with electricity, ventilation and rail systems to move cargo. Officials estimate that some of the

tunnels have cost more than $1 million to construct.100

According to law enforcement, smugglers have begun to use ultralight aircraft to help avoid

detection while moving contraband across the border. Different from a conventional aircraft,

ultralights resemble motorized hang gliders

that can carry a 250-pound payload of

drugs. In Fiscal Year 2010, there were 228

incursions into U.S. airspace by ultralight

aircraft which was almost double the

number of incidents from the previous

year.101

The cartels have reached a level of

financial capability to construct and operate

fully-submersible vessels to move cocaine

from South America to the coasts of

Mexico. Operating with a crew of four, these

semi-submersibles are capable of

100 Congress, Senate, Caucus on International Narcotics, Control Illegal Tunnels on the Southwest Border, 112th Cong. 15 June 2010 (Written statement of James A. Dinkins, Executive Associate Director, Homeland Security Investigations). 101 Richard Marosi, “Ultralight aircraft now ferrying drugs across U.S.-Mexico border”, Los Angeles Times, May 19, 2011.

(Left) Unknown tunnel under Southwest border.

Source: U.S. Immigration & Customs Enforcement

(Right) Tunnel under Southwest border near Calexico, CA. Source: U.S. Drug Enforcement Agency

A semi-submersible narco-trafficking vessel

Source: U.S. Coast Guard

23

transporting 10 metric tons of drugs 6,800 nautical miles. These vessels are very difficult for the

Coast Guard to detect with their existing capabilities. This is especially troubling given these

vessels have the range to reach near Los Angeles or Galveston and can transport people or

weapons that would pose serious threats to the national security of the United States.102

U.S. Coast Guard Rear Admiral William Lee testified before the House Homeland Security

Oversight, Investigations, and Management Subcommittee in June 2012 that semi-submersible

vessels are pushing the limits of aerial surveillance

and radar capabilities used to detect them. As DTOs

enhance their technology, tracking will be difficult

without help from U.S. Navy operations.

“As these organizations emerge into the fully

submersible technology, which we know they already

have the capability of doing, we have no method of

detecting them once they become subsurface.”

RADM Lee testified. “When the appropriate naval

resources are in that area of operations some of them

do have that capability.”103

D. THE INCREA SING THR E AT FROM SPI LLOVE R V IOLEN CE

The horrific uptick of violence in Mexico has indeed spilled over into the United States. The

FBI states on its website “The kidnappings, beatings, and murders that mark the extreme drug-

related violence of Mexican border cities such as Tijuana and Juarez have increasingly spilled

over the border.”104

The Texas Department of Public Safety (DPS) reports that 22 murders, 24

assaults, 15 shootings and five kidnappings in Texas took place directly at the hands of Mexican

cartels between January 2010 and April 2011. 105

As the examples below indicate, the violence is

not contained to ports of entry but has spread along the entire border. While the violence

escalates significantly in Mexico, it may continue to spill over into the United States. Steps need

to be taken to prevent an escalation of violence in the homeland.

102 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Border Security Threats to the Homeland: DHS’ Response to Innovative Tactics and Techniques, 112th Cong. 19 June 2012 (Written statement of Rear Admiral Charles Michel, Director, Joint Interagency Task Force South). 103 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, “U.S. – Caribbean Border: Open Road for Drug Traffickers and Terrorists”, 112th Cong. 21 June 2012 (Testimony of Rear Admiral William D. Lee, Deputy for Operations Policy). 104 On the Southwest Border, When Violence Hits Too Close to Home, August 12, 2010, https://www.fbi.gov/news/stories/2010/august/southwest-border3/border-violence 105 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management, On the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Steven C. McCraw, Director, Texas Department of Public Safety).

Semi-submersible narco-trafficking vessel seized

by authorities in Colombia.

24

SPILLOVER VIOLENCE AGAINST CIVILIANS

In addition to these official reports of spillover violence, a routine search of the Internet will

yield numerous press reports of violence along the Southwest Border:

In Chandler, Arizona, the decapitated body of Martin Alejandro Cota Monroy was found on the floor of an apartment with his severed head nearby. Cota Monroy, a member of

the Beltran-Leyva DTO, was murdered in retaliation for stealing 400 pounds of

marijuana and methamphetamine. A Chandler Police detective stated “This is the

message being sent: Not only are they going to kill you but they’re going to dismember

your body. And, ‘If you cross us, this is what happens’”. 106

In Douglas, Arizona, Robert N. Krentz, Jr is found shot to death on his own ranch after radioing his brother that he was helping someone whom he believed was an illegal alien.

Police follow fresh tracks from the crime scene back to the Mexico border. Neighboring

ranchers explain the area is seeing increasing numbers of armed drug smugglers and that

such an incident was “only a matter of time.”107

In Harris County, Texas in broad daylight, Los Zetas gunmen ambushed a tractor-trailer carrying a load of marijuana spraying its cab with bullets and killing the driver. Because

the truck was under constant law enforcement surveillance as part of a controlled

delivery, police immediately responded and a Harris County Sheriff’s deputy was

accidentally shot by friendly fire.108

In Hidalgo County, Texas a hand grenade was thrown into a crowded bar. The only thing preventing bloodshed was the fact the assailant neglected to remove a second safety pin

from the device. The use of hand grenades is a common practice in Mexican cartel

violence and this incident validates the fears of law enforcement that the tactic will

spread to the U.S. side of the border.109

SPILLOVER VIOLENCE AGAINST LAW ENFORCEMENT

U.S. Border Patrol agents continue to be subjected to

spillover violence. The first edition indicated that

violence against Border Patrol agents had increased

108 percent from 2004 to 2005. The DHS Office of

Inspector General (OIG) now reports that since 2007,

violence against Border Patrol agents has increased by 35 percent to include 13 deaths.110

106 Tim Steller, “Chandler cops: Cartel behind Oct. beheading,” Arizona Daily Star, March 5, 2011. 107 Randal C. Archibold, “Ranchers Alarmed by Killing Near Border,” The New York Times, April 4, 2010. 108 Dane Schiller, “Zeta soldiers launched Mexico-style attack in Harris County,” Houston Chronicle, November 23, 2011. 109 Jacques Billeaud, “ATF worries about Mexican cartel grenades coming into America,” Associated Press, August 3, 2009. 110 Department of Homeland Security, Office of Inspector General, Fiscal Year 2012 Annual Performance Plan.

Since 2007, violence against Border

Patrol agents has increased by 35%

to include 13 deaths.

25

Among these deaths was the murder of Border Patrol Agent Brian Terry. In December

2010, Patrol Agent Terry was shot in the Arizona desert by a group of illegal aliens. The

illegal aliens were carrying AK-47 assault weapons while Patrol Agent Terry was carrying

a less-than-lethal weapon designed to fire beanbags. The OIG used this incident to

highlight concerns that Border Patrol agent training, deployed weapons and rules of

engagement have not kept pace with the increased violence on the border.111

It was

eventually revealed that the weapons used to murder Patrol Agent Terry were linked to the

botched weapons smuggling investigation known as Operation Fast and Furious.112

Another incident involving the Border Patrol took place in March 2012 near Rio Grande

City, Texas. Border Patrol agents exchanged gunfire with men on the Mexico side of the

border after interdicting a $3 million load of marijuana being smuggled across the river.

When the load vehicle on the U.S. side attempted to run over the patrol agents, the agents

fired prompting the shootout with gunmen across the river. The gunfight occurred in an

area along the Rio Grande River that federal, state and local law enforcement say is

becoming an increasing threat.113

A Border Patrol agent who spoke anonymously has stated that assaults on patrol agents

have increased in recent years. The agent elaborated that the Border Patrol regularly fires

gunshots and deploys less-lethal weapons towards smugglers along the Rio Grande though

those incidents are rarely publicized. The agent explained this furtiveness by saying, “Part

of it is the keeping perception of safety”.114

Other law enforcement officers are facing spillover violence as well. The Texas

Department of Public Safety (DPS) reports that there have been 58 incidents of shots fired

at Texas lawmen by Mexican cartel operatives since 2009.115

On October 30, 2011, Hidalgo County Sheriff’s Deputy Hugo Rodriguez was shot while

responding to a reported kidnapping and drug deal. Operatives from the Gulf Cartel had

crossed into the United States and kidnapped two gang members in an effort to recover a

stolen load of marijuana. When Deputy Rodriguez pulled the operative’s pickup truck

over to investigate, the operatives opened fire with an assault rifle and a nine millimeter

pistol striking the deputy in the chest and leg.116

111 Id. 112 Congress, Joint Staff, House of Representatives Committee on Oversight and Government Reform and U.S. Senate Committee on the Judiciary, The Department of Justice’s Operation Fast and Furious: Fueling Cartel Violence, 112th Congress, July 26, 2011. 113 Lynn Brezosky, “Shootout erupts across the Rio Grande,” San Antonio Express – News, March 3, 2012. 114 Jared Taylor, “DPS list identifies spillover crimes in Texas; local officials dispute some cases,” The Monitor, May 28, 2011. 115 http://www.txdps.state.tx.us/PublicInformation/cartelCrimeStats.htm 116 “Hidalgo County sheriff labels shootout ‘spillover violence’,” Associated Press, November 2, 2011.

26

Texas DPS has reported that Hidalgo County is the center of spillover violence in Texas.117

In spite of this, Hidalgo County Sheriff Lupe Trevino has been perennially skeptical

towards the concept of spillover violence and to any claims thereof.118

After the above

incident with Deputy Rodriguez, Sheriff Trevino said the following:

“It started in Mexico, it had a violent confrontation in Mexico, that violent

confrontation was spilled over here. This is the very first one that we can actually

say, ‘Yes, here it is. It has happened,’”119

“Now there are more cartel members living in Texas, in the Valley, in the United

States. I’ll guarantee you there’s a ton of them,”120

The DPS also reports that since 2008, there have been 77 incidents of cartel operatives

throwing tire-deflating devices at pursuing law enforcement vehicles while evading

arrest.121

These devices have disabled both civilian and law enforcement vehicles posing

great risk to public safety. As a result, the use of such devices is now a third degree

felony in Texas.

KIDNAPPINGS: THE SPILLOVER CRIME HIDING IN PLAIN SIGHT

The threat of kidnapping is increasing

along the Southwest Border. As

stated earlier in this report,

kidnapping has become a major

element of criminal diversification for

the drug cartels. The Office of

National Drug Control Policy

(ONDCP) has stated that kidnappings,

primarily related to drug trafficking

and human smuggling, are a

significant threat along the Southwest

Border. The ONDCP elaborated that

52% of the FBI’s kidnapping caseload

for 2009 involved investigations with a

cross-border nexus.122

The FBI reports that from October

2008 to September 2009, there were 42 people kidnapped in McAllen, Texas, an increase

of 31 cases in McAllen from the previous year.123

Describing the increase, retired FBI

117 Jared Taylor, “DPS list identifies spillover crimes in Texas; local officials dispute some cases,” The Monitor, May 28, 2011. 118 “Hidalgo County sheriff labels shootout ‘spillover violence’,” Associated Press, November 2, 2011. 119 “Texas sheriff: Drug war violence spilling over,” Houston Chronicle, October 31, 2011 120 Id. 121 http://www.txdps.state.tx.us/PublicInformation/cartelCrimeStats.htm 122 White House, The Office of National Drug Control Policy, National Southwest Border Counternarcotics Strategy Implementation Update, 2010

Surveillance video image of Juan Cantu Kidnapping in

Penitas, TX.

Source: McAllen Monitor

27

Assistant Special Agent in Charge for the McAllen field office, John Johnson, said, “Fiscal

Year ‘09 was off the charts”. 124

Cross-border kidnappings were at one time largely relegated as a tool for revenge or

intimidation by the cartels.125

A good example of this is the kidnapping of Sergio Saucedo

which took place in Horizon City, Texas in 2009. Saucedo was abducted and then taken

across the border to Juarez where he was murdered and his hands cut off and placed on his

chest. The kidnapping and murder were in retaliation for Saucedo’s involvement in the

loss of a 670 pound load of marijuana to the Border Patrol in August 2009.126

Now transnational criminals have realized how easy and lucrative it is to kidnap people on

either side of the border and hold them for ransom.127

An example of this trend would be

the August 2012 kidnapping of 22 year-old Juan Cantu in Peñitas, Texas. Cantu was

abducted in broad daylight at his father’s tire shop by two men, one of whom is an illegal

alien suspected of being involved in at least one other kidnapping in the area. Cantu was

eventually released unharmed after his family paid his kidnappers approximately

$150,000. During the incident Cantu’s family refused to cooperate with the authorities and

even asked the sheriff’s office in writing to stay out of the affair. The family also waited a

day before informing law enforcement of Cantu’s safe return.128

Trans-border kidnapping and extortion have become so large and lucrative that private

businesses now specialize in negotiating ransoms in order to return abductees safe and

sound as quickly as possible.129

The U.S.-based companies in this business handle far

more cases in Mexico than anywhere else in the world and most of those cases are never

reported to law enforcement. 130

123 On the Southwest Border, When Violence Hits Too Close to Home, August 12, 2010, https://www.fbi.gov/news/stories/2010/august/southwest-border3/border-violence 124 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, On the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Sigifredo Gonzalez, Jr., Sheriff, Zapata County, Texas). 125 On the Southwest Border, When Violence Hits Too Close to Home, August 12, 2010, https://www.fbi.gov/news/stories/2010/august/southwest-border3/border-violence 126 Cindy Ramirez, “2nd man gets life for Horizon City kidnapping,” El Paso Times, July 16, 2011. 127 On the Southwest Border, When Violence Hits Too Close to Home, August 12, 2010, https://www.fbi.gov/news/stories/2010/august/southwest-border3/border-violence 128 Elizabeth Findell, “Sheriff: Kidnapping victim released after family pays ransom,” The Monitor, August 27, 2012. 129 Kidnap and ransom: negotiating lives for cash, by Peter Apps, Reuters, February 17, 2011 130 Nick Miroff, “As kidnappings for ransom surge in Mexico, victims’ families and employers turn to private U.S. firms instead of law enforcement,” The Washington Post, February26, 2011.

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THE DEBATE OVER SPILLOVER VIOLENCE

Skeptics of spillover violence often base their opinion on data from the FBI’s Uniform

Crime Report (UCR) that show violent crime rates in communities along the Southwest

Border are lower than the national average.131

There are numerous fallacies with relying

on UCR data to support the position that spillover violence is nonexistent. For one, the

UCR cannot report a crime that is never reported to law enforcement. Many citizens of

border communities do not report crimes for fear of reprisal.132

As stated in the prior

section, many if not most kidnappings go unreported to the authorities.

Regardless, even when kidnappings are reported to the FBI they do not impact the UCR

because kidnapping is not included in the report.133

This omission is critically important to

this debate. To use an analogy, if spillover violence were an iceberg, kidnappings would

comprise the vast majority and remain unseen below the waterline.

In addition to kidnapping, there are many other crimes not included in the UCR which are

indicators of spillover crime. DPS Director Steven C. McCraw explained this more

precisely in his testimony before the Subcommittee on May 11, 2011:

“For example, if we were to use only Index Crimes as reported through the FBI’s

Uniform Crime Reporting (UCR) system, it would not include essential variables

such as extortions, kidnappings, smuggling incidents, corruption, smuggling-related

trespassing and vandalism, arrests of aliens from countries with strong terrorist

networks, seizures of Cartel drugs, weapons and bulk cash on the ten major

smuggling corridors throughout Texas, Cartel command and control networks

operating in Texas, increases in Cartel-related gang activity, death squad members

living in Texas, Cartel-related killings of U.S. citizens in Mexico, Cartel-related

violence along the border directed at U.S. law enforcement and the recruitment of

Texas children in the border region to support Cartel operations on both sides of the

border.”134

131 Alan Gomez, Jack Gillum & Kevin Johnson, “U.S. border cities prove havens from Mexico’s drug violence,” USA Today, July 28, 2011 132 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, A Call to Action: Narco-Terrorism’s Threat to the Southern U.S. Border, 112th Cong. 14 October 2011 (Written testimony of Dr. Michael Vickers). 133Congressional Research Service, Southwest Border Violence: Issues in Identifying and Measuring Spillover Violence, R41075, January 25, 2011 134 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management, On the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Steven C. McCraw, Director, Texas Department of Public Safety).

29

Further, UCR data does not report whether violent crime is related to drug trafficking.

This makes it impossible to use the UCR to draw definite conclusions about spillover

violence.135

E. IL LEGAL AL IEN CRIM ES AGAI NST U.S. CITI ZEN S

As the first edition stated in 2006, not all illegal aliens are crossing into the United States to find

work. The simple fact is criminal aliens illegally cross the Southwest border right along with the

aliens who are looking for honest opportunities to better themselves and their families. This

means that as long as the border is not secure, we can always count on a certain percentage of

criminal aliens crossing it to commit crimes against U.S. citizens.

THE IMPACT OF ILLEGAL IMMIGRATION ON PUBLIC SAFETY AND GOOD PUBLIC ORDER

In 2007 the Bureau of Land Management conservatively estimated that 24 million pounds of

garbage had been left on public lands in Arizona by illegal aliens crossing into the United States.

One expert has stated that this litter will have a negative impact on Arizona’s landscape into the

21st century.

136

Illegal immigration and drug smuggling

have also helped to spread nonnative plants

and grasses to the Arizona desert which

compete for scarce water with the native

plant life. This along with the improperly-

tended cook and camp fires of illegal

immigrants has helped cause the threat of

wildfires to become a major concern in the

Southwest region of the country. 137

Illegal aliens have placed an enormous

burden on the U.S. healthcare system

which is already stretched thin. It is

estimated that 59 percent of the illegal

aliens in the United States do not have

health insurance.138

Because of this, many

aliens seek treatment in emergency rooms

which diminishes the capacity of hospitals

to respond to real medical emergencies.

135Congressional Research Service, Southwest Border Violence: Issues in Identifying and Measuring Spillover Violence, R41075, January 25, 2011. 136 Leo W. Banks, “Trashing Arizona – Illegal immigrants dump tons of waste in the wilderness every day – and it’s devastating the environment”, Tucson Weekly, April 2, 2009. 137 Id 138 Richard Wolf, “Rising healthcare costs put focus on illegal immigrants,” USA Today, January 22, 2008.

Illegal alien crossing in Arizona.

Source: Tucson Weekly, Leo Banks

30

Most of the bills for these emergency room visits end up being paid by the American taxpayer at

a cost of more than $4 billion a year.139

The smuggling of illegal aliens in vehicles along our highways poses a serious threat to public

safety. Smugglers typically load vehicles well beyond safe capacity and use only one driver so

that as many paying customers can be carried as possible. Despite the fact that smuggling routes

typically involve long distances, travelling breaks are kept to a minimum in order to minimize

the possibility of detection by the police. With only one driver having little rest, fatigue-related

crashes occur regularly and often with deadly results for the alien passengers and the traveling

public.140

Drunken driving within the illegal alien community is also a very serious public safety issue

facing our society. To gain some sense of the problem, in Fiscal Year 2011 ICE deported 35,927

aliens who had been convicted of intoxicated driving offenses.141

In 2007, police in Virginia

arrested illegal aliens 3,208 times for driving under the influence which made that offense the

second most common one among illegal aliens in the state.142

CRIMINAL ALIENS IN JAILS AND PRISONS

In March 2011, the Government Accountability Office (GAO) conducted a study on criminal

alien incarcerations in the United States. The GAO found that in Fiscal Year 2010, there were

about 55,000 criminal aliens incarcerated in the Federal prison system which was a seven percent

increase from Fiscal Year 2005.143

The GAO also found that in Fiscal Year 2009, there were

about 296,000 criminal aliens in state prisons and local jails which was a 35 percent increase

from Fiscal Year 2003.144

In each case, the majority of these criminal aliens were from

Mexico.145

According to Arizona Department of Corrections data from July 2012, there were 5,161 criminal

aliens incarcerated in Arizona, which accounted for 13 percent of the state’s prison population.146

Sixty-one percent of those criminal aliens were violent offenders convicted of crimes such as

139 Pete Winn, “While There Are About 12 Million Illegal Aliens in U.S. Today, CBO Estimates That Senate Health Reform Would Leave About 8 Million Illegals Uninsured,” CNS News, November 22, 2009. 140 Interview by Subcommittee Staff with Immigration and Customs Enforcement personnel (August 16, 2012). 141 Congress, House, Judiciary Committee Subcommittee on Immigration Policy and Enforcement, Hearing on the Scott Gardner Act: Detention of Illegal Aliens Arrested for Drunk Driving, 112th Cong. 7 March 2012 (Written statement of Jessica M. Vaughan, Director of Policy Studies, Center for Immigration Studies). 142 Id. 143 Government Accountability Office, Criminal Alien Statistics: Information on Incarcerations, Arrests and Costs, March 2011, GAO-11-187. 144 Id. 145 Id. 146 Arizona Department of Corrections, Corrections at a Glance, http://www.azcorrections.gov/adc/reports/CAG/CAGJul12.pdf

31

murder, rape, robbery, assault and kidnapping.147

California’s criminal alien prison population

has been estimated to be 19,000 out of an overall prison population of 140,000 inmates.148

EXAMPLES OF CRIMES INVOLVING ILLEGAL ALIENS

In July 2012, a pickup truck carrying 23 illegal aliens crashed as its driver fled pursuing lawmen near Houston, Texas. Less than 48 hours later, two more pickup trucks

overloaded with illegal aliens crashed while fleeing deputies in Matagorda County,

Texas. Sheriff’s Captain Mitch Irwin elaborated: “We have these weekly and daily.

There are a lot of them coming through”.149

On June 8, 2012, illegal alien Johoan Rodriguez was sentenced to 55 years in prison for running over and killing Houston police officer Kevin Will. Rodriguez, who had been

deported from the United States and illegally returned twice before this incident, had a

blood-alcohol level nearly three times the legal limit.150

In August 2010, illegally-present Mexican national Miguel Lopez-Fuentes was arrested in Colorado Springs for armed robbery. While attempting to flee, Lopez-Fuentes threw a

window air conditioning unit at deputies and resisted while being taken into custody.

Subsequent to his arrest it was determined that Lopez-Fuentes is wanted for murder in

Mexico.151

In May of 2012, Edwin Ramos was convicted in San Francisco Superior Court for the first-degree murders of Tony Bologna, Michael Bologna and Matthew Bologna. Ramos,

an El Salvadoran national and MS-13 gang member who is illegally present in the United

States, ambushed his victims by blocking their car with his before spraying them with

bullets. Ramos already had an established violent criminal history but had been shielded

from deportation by San Francisco’s “sanctuary city” policy.152

In July 2012, Mexican national and illegal alien Jose Perez-Sanchez was arrested in Miami, Florida for the stabbing death of Richard Vasallo. Perez-Sanchez had conspired

with Vasallo’s girlfriend Dianelis De La Caridad-Fonseca to commit the murder in

exchange for $600 and a sham marriage with De La Caridad-Fonseca so that Perez-

Sanchez could become a lawful permanent resident.153

147 Id. 148 “Editorial: Deport California’s illegal-alien convicts,” The Washington Times, May 24, 2011. 149 Dane Schiller and James Pinkerton, “Illegal immigrants in fatal truck crash were headed to Houston,” Houston Chronicle, July 24, 2012. 150 “Drunk-driving illegal immigrant sentenced to 55 years for killing Houston cop,” khou.com, June 8, 2012, http://www.khou.com/news/crime/Illegal-immigrant-sentenced-to-55-years-after-killing-officer-in-drunk-driving-incident-158151705.html# 151 “Officials: Robbery Arrest Nabs Illegal Alien and Wanted Murderer,” KKTV 11 News, August 9, 2010, http://www.kktv.com/home/headlines/100279769.html 152 Vivian Ho and Jaxon Van Derbeken, “Edwin Ramos guilty of killing SF man and his sons,” San Francisco Chronicle, May 10, 2012. 153 Dave Gibson, “Illegal alien charged in murder-for-hire scheme in Florida,” July 21, 2012.

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I I . C O N FR ONT I N G T HE T HRE AT S : C U R RE NT E N FO RC E M E NT I NI T I AT I VE S

A. MEXI CO DECLA R ES W A R ON THE DR UG CAR TEL S

Without question the most significant event to take

place since the issuance of the first edition has been

the war waged on the cartels by Mexico’s Felipe

Calderon Administration. This unprecedented

enforcement action by the Mexican government has

caused the once relatively stable drug cartel structure

and balance of power to devolve into a state of chaos. As of August 2012, 55,416 people in

Mexico have been tragically killed in the resulting violence.154

THE CURRENT CARTEL LANDSCAPE

While the current cartel landscape can only truly be described as fluid and unpredictable,

arguably seven major cartels compete against one another for hegemony: Sinaloa, Los Zetas,

Tijuana/Arellano-Felix Organization, Juarez/Carillo-Fuentes Organization, Beltran-Leyva

Organization, Gulf and La Familia Michoacána.155

Among these organizations the Sinaloa and

Los Zetas cartels are dominant.156

Los Zetas are the most lethal, increasingly using terrorist

tactics to maintain and grow their dominance in the drug trade. As other cartels continue to

challenge them, we will see the brutality escalate also.

As a general rule of thumb, the Sinaloa Cartel controls the western side of Mexico and operates

in 16 Mexican states.157

Its leader is Joaquin “El Chapo” Guzman-Loera, whom the U.S.

Treasury Department has deemed to be the world’s most powerful drug trafficker.158

Guzman

now holds the dubious distinction of having distributed more drugs than Pablo Escobar and the

Medellin Cartel did at the height of their operations in Colombia.159

Moreover, the Sinaloa

154 Matt Craze, “Mexico Drug-Related Deaths Totaled 1,345 in August, Milenio Says,” Bloomberg, September 1, 2012. 155 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, Is Merida Antiquated? Part Two: Updating US Policy to Counter Threats of Insurgency and Narco-Terrorism, 112th Cong. 4 October 2011 (Written statement of Rodney G. Benson, Assistant Administrator Chief of Intelligence, U.S. Drug Enforcement Administration). 156 “Polarization and Sustained Violence in Mexico’s Cartel War,” Stratfor Global Intelligence, January 24, 2012. Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, June 8, 2012. 157 Special Report: Mexico’s Zetas rewrite drug war in blood, by Ioan Grillo, Reuters, May 23, 2012 158 Department of the Treasury, Treasury Sanctions Three Drug Traffickers Tied to Mexican Drug Lord Chapo Guzman, Press Release, January 10, 2012, http://www.treasury.gov/press-center/press-releases/Pages/tg1392.aspx 159Patrick Radden Keefe, “Cocaine Incorporated,” The New York Times, June 15, 2012.

“We are facing true terrorists who have

surpassed not only the limits of the law

but basic common sense and respect for

life.” – President Calderon

33

Cartel has the greatest global reach of all the Mexican cartels with a presence in Europe, Asia

and Australia.160

The Zetas’ territory tends to encompass the eastern side of Mexico with operations in 17

Mexican states.161

At the time the original Subcommittee report was published, the Zetas were

simply an enforcement element for the Gulf Cartel whose core was composed of a group of

Mexican Army Airborne Special Forces soldiers that had deserted the military.

The tipping point in the balance of power came in 2007 when the Gulf Cartel’s leader Osiel

Cardenas was extradited to the United States.162

The Zetas quickly took advantage of the power

vacuum and moved into positions of leadership to overtake many of the Gulf Cartel’s plazas and

160 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management Is Merida Antiquated? Part Two: Updating US Policy to Counter Threats of Insurgency and Narco-Terrorism, 112th Cong. 4 October 2011 (Written statement of Rodney G. Benson, Assistant Administrator Chief of Intelligence, U.S. Drug Enforcement Administration). 161 Special Report: Mexico’s Zetas rewrite drug war in blood, by Ioan Grillo, Reuters, May 23, 2012. 162 Hal Brands, “Los Zetas: Inside Mexico’s Most Dangerous Drug Gang.” October 1, 2009, http://www.airpower .au.af.mil/apjinternational/apj-s/2009/3tri09/brandseng.htm

Map of DTO Areas of Dominant Influence in Mexico by DEA

Source: U.S. Drug Enforcement Agency

34

territories. The Zetas then combined criminal diversification with their notorious brutality to

expand their operations beyond the boundaries originally set by the Gulf Cartel.163

The first edition also described in gruesome detail the ruthlessness of the violence used by the

Zetas and they remain true to form today. In a more recent example that occurred on May 13,

2012, the beheaded bodies of 49 people were found off of a highway near the city of Monterrey,

Mexico. The corpses had been additionally mutilated with the hands and feet severed from the

body. Eight days later, Mexican authorities arrested Zetas operative Daniel “El Loco” Elizondo-

Ramirez in connection with the atrocity.164

THE BEGINNINGS OF CONFLICT

The underpinnings to this conflict begin with the historical relationship between the cartels and

the Mexican government. The Guadalajara cartel was the first of the large poly-drug trafficking

organizations that we typically associate with Mexican drug cartels. Founded by Miguel Angel

Felix-Gallardo also known as “El Padrino” (the Godfather), the Guadalajara cartel was among

the first to move Colombian cocaine through Mexico and into the United States.165

Eventually,

the Guadalajara cartel was split into multiple subordinates that roughly constitute the Tijuana,

Sinaloa, Juarez and Gulf cartels we know today.

These four cartels functioned relatively well together in part because of the lineal connection to

the Guadalajara cartel that was common amongst them. More importantly, this relative harmony

resulted from the cartels’ reliance on a Mexican government run by a single political party that

could be bribed into accommodating their operations. That political party was the Partido

Revolucionario Institucional (Institutional Revolutionary Party or PRI).

Prior to the year 2000, the PRI dominated Mexican politics essentially as the sole political party

in Mexico for 71 years. During that time, the cartels exploited this monopoly through bribing

government officials while minimizing the impact of cartel crime and violence on the Mexican

public at large. In exchange for these things, the government tended to avoid disrupting cartel

operations, served as a referee to settle cartel disputes and ensured that the cartels would have

access to the smuggling plazas.166

Under this stable arrangement, Mexican drug cartels were

able to grow into the threat they are today.

All of this began to unravel in the 1990s with the push for democratic reform in Mexico. Over

its many years in power, the PRI had developed a reputation for being a corrupt, unaccountable

163 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations, and Management, Is Merida Antiquated? Part Two: Updating US Policy to Counter Threats of Insurgency and Narco -Terrorism, 112th Cong. 4 October 2011 (Written statement of Rodney G. Benson, Assistant Administrator Chief of Intelligence, U.S. Drug Enforcement Administration). 164 Ioan Grillo, “Alleged perpetrator of mass beheadings in Mexico arrested.” Reuters, May 21, 2010. 165 Sylvia Longmire, Cartel, The Coming Invasion of Mexico’s Drug Wars, (New York: Palgrave MacMillan, 2011). 166 Los Zetas: Inside Mexico’s Most Dangerous Drug Gang, by Hal Brands, Ph.D.; October 1, 2009, http://www.airpower.au.af.mil/apjinternational/apj-s/2009/3tri09/brandseng.htm

35

and oppressive party and had even been called “the perfect dictatorship”.167

This provided the

impetus for political pluralism in Mexico, which increased the viability of other political parties

such as the Partido Accion Nacional (National Action Party or PAN) to compete at the federal

level.

With the PAN’s assumption of the presidency of Mexico beginning in 2000 and lasting through

2012, the cartels were put on notice that they could no longer count on a PRI monopoly that

would acquiesce to drug trafficking operations. The cartels realized the full breadth of this

change in December 2006 when President Felipe Calderon declared war on the cartels by

sending 6,500 Mexican federal police and military personnel to the State of Michoacán in an

enforcement action against the La Familia Michoacána cartel.168

THE BRUTAL VIOLENCE OF THE WAR ON CARTELS

Once the political change and war on the cartels were underway, all prior arrangements that had

once yielded peaceful cartel operations ceased to exist. With no recourse from the government,

the cartels have resorted to horrific levels of violence to resolve disputes, enact revenge and

assume territory. There is no better example of this than the battle between the Sinaloa and

Vicente Carillo-Fuentes cartels to control the border city of Juarez directly across from El Paso.

167 The Perfect Dictatorship, by Adriana Gonzalez, http://www.icdcprague.org/download/speeches/Adriana_Gonzalez.pdf 168 Operation Michoacán, Borderland Beat, July 14, 2010, http://www.borderlandbeat.com/2010/07/operation-michoacan.html

Organized Crime Killings in Mexico During 2011

Source: Congressional Research Service

36

Since 2008, more than 5,300 people have been killed in this conflict earning Juarez the dubious

title of most dangerous city in the world.169

A central tenet in Calderon’s strategy was the targeting of cartel principals or “kingpins” which

resulted in the capture or killing of 35 high-value cartel members between January 2010 and July

2011.170

In a sense, Mexico has been a victim of its own success. When a cartel’s kingpin is

arrested or killed it creates a power vacuum within the organization that other cartels can exploit.

Whether it’s someone in a sub-cartel group looking to assert leadership at a higher level or an

outside cartel looking to take over territory, removing cartel leaders has resulted in the bloody

and gruesome turf battles we regularly see in the news.

The cartels have not idly stood by while the government has waged its war against them. Taking

their direction from the ultimatum Plata o Plomo (Silver or Lead) that has been around since the

days of Pablo Escobar, the cartels were first able to bribe the government (i.e. with silver) in

order to conduct business. Now that the government has taken a stand for law and order, the

cartels have resorted to assassination of officials (i.e. the lead from bullets) to assert their

primacy over the government and the rule of law.

Since Calderon took office, 174

government officials – 83 of whom were

police chiefs – have been assassinated in

Mexico.171

The city of Nuevo Laredo has

suffered the murder of two police chiefs

with one killing happening within hours of

the chief taking office.172

From 2004

through 2011, 34 mayors of Mexican cities

were killed.173

In 2010, PRI gubernatorial

candidate for the state of Tamaulipas,

Rodolfo Torre-Cantu, was ambushed and

assassinated while campaigning.174

The rise in violence against government

officials has not been limited to those of the

Mexican Government. On February 15, 2011,

ICE Special Agents Jaime Zapata and Victor

169 Daniel Borunda, “Special Report: ‘Juarez deserves the title of most dangerous city in the world,” El Paso Times, June 7, 2010. 170Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, June 8, 2012. 171 174 Government Officials Killed in Six Years, 83 Were Police Chiefs, by Jorge Grande, Borderland Beat, September 13, 2011; http://www.borderlandbeat.com/2011/09/174-government-officals-killed-in-six.html 172 Dudley Althaus and Jason Buch, Nuevo Laredo police chief killed on street, Houston Chronicle, February 3, 2011. 173 Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, June 8, 2012. 174 “Gunfire kills gubernatorial candidate, 3 others in Mexico,” CNN, June 28, 2010.

Vehicle driven by ICE Special Agent Jaime Zapata.

Source: ICE

37

Avilla were ambushed by Los Zetas gunmen while driving between Mexico City and Monterrey

on official business. Even though the vehicle the agents were driving bore U.S. diplomatic

license plates, the Zetas forced the vehicle over and sprayed it with gunfire killing Special Agent

Zapata and wounding Special Agent Avilla. More than two dozen Zetas members have been

arrested in connection with the murder including the gang’s third most senior leader Jesus Rejon-

Aguilar.175

THE CRIMINAL DIVERSIFICATION OF THE CARTELS

One of the more striking departures for the Mexican drug

cartels has been the diversification away from traditional

drug smuggling towards other criminal activities. For

many years we have heard about the diversification into

human smuggling. In addition, cartels have become

proficient at intellectual property theft, agriculture theft, kidnapping, extortion, hijacking cargo

and import/export fraud.176

In fact a huge diversification for the cartels has been the theft of petroleum from the state

petroleum company Petroleos Mexicanos. In many cases, the petroleum is sold to U.S. based

companies that are aware it has been stolen. In this racket, the Los Zetas benefit from a

geological windfall because part of their territory happens to include the oil-rich states of

Veracruz and Tamaulipas. This criminal enterprise has cost the Mexican people over $1

billion.177

The kidnapping and ransom aspect of this diversification is particularly nefarious for the

Mexican people. A recent Mexican congressional report states that kidnappings in the country

have increased 317 percent since 2005.178

Kidnappings for ransom have affected all levels of

society in Mexico and the cartels often abandon “codes of conduct” which results in violent

outcomes for the victims.179

The Zetas have become so entrenched in extorting businesses that the owners are finding it very

difficult to continue operating after paying kickbacks to the Zetas. 180

The Zetas along with

several other cartels are extorting the Mexican mining industry as well. The Mexican Attorney

General’s Office is investigating extortion threats against approximately 300 mining operations

175Jerry Seper, “Mexico’s top Zetas boss arrested in killing of U.S. agent,” The Washington Times, July 4, 2011. 176 Congress, House, Committee on Homeland Security Subcommittee on Oversight, Investigations and Management On, the Border and in the Line of Fire: US Law Enforcement, Homeland Security and Drug Cartel Violence, 112th Cong. 11 May 2011 (Written statement of Thomas C. Horne, Arizona Attorney General). 177 Steve Fainaru and William Booth, “Mexico’s drug cartels siphon liquid gold,” The Washington Post, December 13, 2009. 178 Nick Miroff, “As kidnappings for ransom surge in Mexico, victims’ families and employers turn to private U.S. firms instead of law enforcement,” The Washington Post, February 26, 2011. 179 Jason Beaubien. “Mexico’s drug war spawns wave of kidnappings,” NPR, August 26, 2010, http://www.npr.org/templates/story/story.php?storyId=129426547 180 Interview of federal law enforcement personnel by Subcommittee staff, July 13, 2012.

Even desperately poor children must

now pay a fee just to sell knickknacks

or wash car windows on the streets.

38

that are being pressured to pay between $11,000 and $37,000 per month to operate in that

particular cartel’s plaza.181

Extortion is big business in Mexico and like drug violence extends to innocent citizens, including

school teachers and students. In Acapulco, Mexico some schools were threatened that teachers

have until Oct. 1 to start handing over half of their pay. On the first day of school at La Patria es

Primero Elementary School, three men pretending to be parents entered the school and drew

guns on the teachers. They made off with money, school documents and a laptop. 182

THE SINALOA, LA FAMILIA MICHOACÁNA AND GULF CARTELS UNITE TO TAKE ON THE ZETAS

As previously stated, the cartel landscape can be unpredictably fluid, and there is no better

example of this than the recent unlikely alliance between the Sinaloa, La Familia Michoacána

and Gulf Cartels. In 2010, these three former belligerents aligned themselves with the New

Federation to counter the Zetas’ encroachment on their territories. As part of their strategy, the

New Federation appears to be waging a public relations campaign by highlighting the brutal

violence perpetrated by the Zetas against the Mexican public. In March 2010, the New

Federation posted a message on YouTube that summarized its position:

Without the “Z” you will live without fear….If you are a Zeta, run because the

MONSTER is coming…the new alliance have raised their weapons to f**k the

Zetas because they have undermined the drug trafficking business with their

kidnappings, extortions, etc. To sum it up, they don’t give a s**t about the

freedom and tranquility of the Mexican people.183

181 Edward Fox, “Mexico Mining Ops Pay Hefty Extortion Fees to Cartels,” In Sight, May 8, 2012, http://www.insightcrime.org/insight-latest-news/item/2595-mexico-mining-ops-pay-hefty-extortion-fees-to-cartels 182 Elisabeth Malkin, “As gangs move in on Mexico’s Schools, Teachers say Enough,” The New York Times, September 25, 2011.

183 Sylvia Longmire, Cartel, The Coming Invasion of Mexico’s Drug Wars, (New York:Palgrave MacMillan 2011)

Purported drug cartel members moments before being executed by another drug cartel.

Source: http://thecartelwar.blogspot.com

39

Whether they work together or separately, the New Federation has made good on the above

threats. In April 2012, the Sinaloa cartel struck in the heart of Zetas’ territory by displaying the

dismembered bodies of 14 Zetas in Nuevo Laredo. Accompanying the bodies was a “narco

message” to the public from Chapo Guzman that included a taunt to Zetas boss Miguel Trevino-

Morales (aka El Z-40):

To the citizens: We have started to rid Nuevo Laredo of the Zetas because we

want a city that is free and because we want the citizens to live in peace. We are

drug traffickers and we don’t mess with honest, hardworking people or local

businesses. We do not want anybody to pay protection money to these scums.

Therefore we consider anybody who pays extortion money traitors because they

help finance the Zetas. I am going to show these filthy Zetas how it’s done

Sinaloa style; without kidnapping and without extortion.

And this goes to el 40. You don’t scare me. I know you sent el H to dump those

heads here on my turf (Sinaloa) because you don’t have the balls to do it yourself.

Att. EL CHAPO

Don’t forget that I’m your daddy184

The Gulf cartel has exacted revenge against the Zetas as well. In June 2012 a video surfaced on

the Internet featuring five shirtless Zetas members with the letter “Z” painted on their chests.

The off-camera Gulf cartel interrogator prompts each man to state his name and admit that “Z-

40” (Miguel Trevino-Morales) had sent them. Gulf members then proceed to hack each man’s

head off with machetes. The gruesome event is believed to have taken place just six miles south

of the Southwest border.185

CARTEL VIOLENCE, INSURGENCY AND A FAILED STATE

The reaction of the Mexican cartels to the war against them has caused some to speculate about

the true nature of what is transpiring. In September 2010, U.S. Secretary of State Hillary Clinton

stated that cartel violence may be evolving into an insurgency.186

A recent report by General

Barry McCaffrey (Ret) and Major General Robert Scales (Ret) states that the conditions in

Mexico are “akin to the beginnings of a terrorist failed state.”187

If any of these experts above ever needed to make their argument, they would need look no

further than the Mexican city of Monterrey for a case study. In August 2011 five Zetas were

arrested for burning down a Monterrey casino that killed 52 patrons inside. One of the men

arrested told authorities the attack was in response to the casino’s refusal to pay protection

money.188

Cartel experts allege civilians were specifically attacked in order to make a bigger

184 The Cleansing by El Chapo in Zeta Turf, Borderland Beat, April 18, 2012. 185 Raisa Brunner, “Drug Cartel Rivals Behead Zetas on Camera,” ABC News, June 28, 2012. 186 Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, June 8, 2012. 187 Texas Border Security: A Strategic Military Assessment, by Barry R. McCaffrey and Robert H. Scales, PhD, Colgen LP, September 2011. 188 Tracy Wilkinson, “Mexico arrests 5 suspects in casino burning,” Los Angeles Times, August 30, 2011.

40

impact. President Calderon, describing the barbarity of the incident, said, “We are facing true

terrorists who have surpassed not only the limits of the law but basic common sense and respect

for life.”189

Black’s Law Dictionary defines terrorism as “The use or threat of violence to intimidate or cause

panic, esp. as a means of affecting political conduct.” In February 2012, the Zetas hung the

following message for the people of Mexico off of a bridge in Monterrey:

Even with the support of the United States, they cannot stop us, because here the

Zetas rule. The government must make a pact with us because if not we will have

to overthrow it and take power by force.190

It is axiomatic to say that a free press is essential to a democracy. In Mexico, 85 journalists have

been killed and 15 more have disappeared in the last decade.191

In January 2011, the New

Federation circulated a letter around Monterrey which threatened the press to stop spreading

“lies.”192

In September 2010, a Juarez newspaper editorial implored the cartels to make a truce

as the “de facto authorities” in the city.193

THE FUTURE OF THE CONFLICT

In July 2012, the citizens of Mexico elected Enrique Peña-Nieto to be their new president.

Because Peña-Nieto is affiliated with the PRI, there is concern that the Mexican government will

revert back to accommodating the cartels in exchange for peace and stability. Others worry that

the conflict itself has so fundamentally changed the rules that there is no going back to the old

days even if Peña-Nieto were inclined to do so.

In his expressed commitment to continue the fight for law and order, Peña-Nieto has taken many

positive steps. He has hired Colombian General Oscar Naranjo – who was instrumental in

combating Colombian cartels – as his security advisor. Peña-Nieto has also talked about using

intelligence and Special Forces to a greater degree in combating the cartels. Additionally, he has

even talked about reforming PEMEX [the nationalized oil giant].194

While this is welcomed

news, there should be no doubt that it has done nothing to shake the cartels’ resolve to continue

acting outside the bounds of civilized society. Given the escalatory nature of the violence of

recent history, we must be prepared for things to get worse before they get better.

189 Dudley Althaus, “Calderon: Casino killers ‘terrorists’” Houston Chronicle, August 26, 2011. 190 Ioan Grillo, “Special Report: Mexico’s Zetas rewrite drug war in blood,” Reuters, May 23, 2012. 191 Reporters Without Borders, http://en.rsf.org/mexico-noted-crime-reporter-victor-baez-16-06-2012,42805.html 192 “‘The New Federation’ Threatens Local Nuevo Leon Media”, Borderland Beat, January 6, 2011, http://www.borderlandbeat.com/2011/01/new-federation-threatens-local-nuevo.html 193 Congressional Research Service, Mexico’s Drug Trafficking Organizations: Source and Scope of the Rising Violence, by June S. Beittel, R41576, June 8, 2012. 194 Julian Aguilar, “Rep. McCaul: Immigration Reform Possible Next Session,” The Texas Tribune, November 8,

2012.

41

B. TEX AS BOR DER SECURIT Y I NITI ATI VES

The State of Texas continues to be a leader in the State and local effort to promote security on

the Southwest border. In 2006 the Subcommittee highlighted Operation Rio Grande which was a

collaborative effort between Texas and federal law enforcement agencies. By utilizing targeted

and high intensity operations of short duration, Operation Rio Grande was able to achieve a

reduction in crime within targeted border regions that was sustained even after the operations

ended.

Operation Rio Grande has since evolved into a new program titled Operation Border Star. Both

operations are similarly structured with six areas of operations along the border and Gulf of

Mexico coastline. Each of these sectors has its own Joint Operations Intelligence Center (JOIC)

where unified command for the sector is located. Each JOIC is led by a Texas Ranger lieutenant

and staffed by Texas Military Forces and personnel from participating law enforcement agencies.

The six JOICs report to the Border Security Operations Center which is located at Texas

Department of Public Safety headquarters in Austin, Texas.195

A very effective program within Operation Border Star has been the Drawbridge Project which

utilizes relatively simple and inexpensive surveillance technology to assist in policing the border

between ports of entry. Using remotely-operated wildlife viewing cameras that are

commercially available and cost about $300 per unit, the program provides actionable

information regarding illegal activity on the border to law enforcement. This surveillance

capability is also highly adaptable as criminals move their operations around to thwart law

enforcement detection. The project is expected to have more than 500 surveillance cameras

deployed by the end of 2012.196

From January to August of 2012, the Drawbridge Project has detected 8,165 suspected illegal

border crossings which have led to 3,344 apprehensions of illegal aliens and the seizure of

17,700 pounds of illegal drugs. Regarding deterrence, it is important to note that these detections

include instances of individuals retreating back into Mexico to avoid apprehension.197

One of the most important strategic goals of Operation Border Star is the fostering of

partnerships with homeland security and law enforcement authorities in New Mexico, Louisiana,

Arizona and California to improve information sharing and intelligence analysis concerning

security threats on the Southwest border. Towards this goal, the five border counties in New

Mexico are also participants in Operation Border Star. Texas is at the vanguard of innovative

and effective approaches to border security for State and local agencies. Because of this effort to

encourage the authorities in each of these states to participate in Operation Border Star, it is

strengthening border security.

195 For greater detail on Operation Border Star, see Texas Border Security: A Strategic Military Assessment, by Barry R. McCaffrey and Robert H. Scales, PhD, Colgen LP, September 2011 196 Texas DPS Press Release, http://www.txdps.state.tx.us/PublicInformation/operDrawbrdg.htm 197 Information provided by Texas DPS to Subcommittee Staff (August 27, 2012).

42

C. FEDE RA L BOR DE R SE C URI TY EFFO R TS

THE SECURE BORDER INITIATIVE

Since the issuance of the original report, the most important

effort for border security at the federal level has been the

Secure Border Initiative or SBI. Beginning in November

2005, SBI was intended to secure the borders of the United

States and reduce the number of illegal aliens crossing the

border by improving surveillance technologies, raising

staffing levels, increasing domestic enforcement of

immigration laws, and improving physical infrastructure on our borders.

The Border Patrol has almost doubled in size from approximately 11,000 patrol agents in 2006 to

21,370 in May 2012. This increase in patrol agents appears to have deterred illegal immigration

somewhat as apprehensions of illegal aliens decreased to 328,000 in 2011 which was the lowest

level since 1970.198

However, Congressional researchers caution that this data could be

misleading and does not account for other potential factors for decreased illegal immigration

such as the recent downturn in the U.S. economy.199

Despite this near doubling of Border Patrol personnel, border security remains a serious concern.

In a 2011 report, the GAO found that only 44 percent of the Southwest border was under

operational control which is defined by the Border Patrol having the ability to detect, respond,

and interdict illegal activity at the border or after entry into the United States.200

In October

2010, the Border Patrol stopped using operational control altogether as a measure of

effectiveness in favor of a new measurement called the Border Condition Index (BCI). Though

nearly two years have passed, the BCI has yet to be implemented while the Border Patrol uses

interim measurements which the GAO described as not informative of results and limiting in

oversight and accountability.201

The most controversial aspect of SBI has been the acquisition and deployment of surveillance

technologies for border enforcement. The billion dollar Secure Border Initiative-Network

(SBInet) was intended to be a “virtual border fence” using unattended ground sensors along with

198 Congress, House, Security Subcommittee on Border and Maritime Security, Measuring Border Security, 112th Cong. 8 May 2012 (Written statement of Marc R. Rosenblum, Specialist in Immigration Policy, Congressional Research Service). 199 Id. 200 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Securing our Borders – Operational Control and the Path Forward, 112th Cong. 15 February 2011 (Written testimony of Richard M. Stana, Director, Homeland Security and Justice Issues, Government Accountability Office). 201 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Measuring Border Security: U.S. Border Patrol’s New Strategic Plan and the Path Forward, 112th Cong. 8 May 2012 (Written testimony of Rebecca Gambler, Acting Director, Homeland Security and Justice Issues, Government Accountability Office).

Despite this near doubling of Border

Patrol personnel…the GAO found

that only 44 percent of the Southwest

border was under operational

control.

43

fixed and mobile towers equipped with cameras and radars to detect movement across the

border. The information gathered by these devices would then be integrated and transmitted to

command posts for a real-time picture of activity taking place along the border.

Since its inception, SBInet had been plagued by technical problems, downgraded system

requirements, revised deadlines and cost overruns which have been exacerbated by DHS

mismanagement.202

DHS assures the Subcommittee that a new program will progress and

expand to other areas of the border only if independent, quantitative, science-based assessments

continue to justify its viability and cost-effectiveness. In spite of this reassurance, the GAO has

found that CBP does not have the information needed to fully support and implement the plan in

accordance with DHS and Office of Management and Budget guidance.203

This has raised

concerns that the Arizona Border Technology Plan will be nothing more than an expensive and

failed repeat of SBInet.

LEVERAGING DEPARTMENT OF DEFENSE TECHNOLOGIES ON THE SOUTHERN BORDER

DHS is currently using some Department of Defense (DOD) assets to help secure our border.

We need to continue to leverage these assets as we wind down our military presence in Iraq and

Afghanistan. The American taxpayer has already spent billions on research and development to

test, prove, and field this equipment. If we can use these assets at home it is far wiser than

shelving them in another warehouse to just become obsolete.

The Predator B is perhaps the best example of how DOD technology can be successfully used

along the border. It has literally revolutionized how we fight insurgents on the border between

Afghanistan and Pakistan. Officials at DHS rightly saw the potential for its use here at home

and now we have eight unmanned aerial vehicles patrolling the skies over the Northern, Southern

and Coastal borders.204

Aerostats are another surveillance platform that has been used

successfully in theater, and should be tested along the border.

It is important to continue monitoring progress on the border with these tested assets and make

sure the federal government is thinking broadly to ensure best practices in sharing federal

personnel and capabilities.

THE MERIDA INITIATIVE

In October of 2007, the U.S. and Mexico announced the Merida Initiative which is a multi-year

anticrime and counterdrug program for Mexico and Central America. Merida’s biggest objective

was to provide about $1.6 billion in funding for equipment and training for law enforcement and

the judiciary within Mexico and other included countries. It was also a call for all countries

202 Government Accountability Office, Secure Border Initiative, DHS Needs to Reconsider its Proposed Investment in Key Technology Program, GAO-10-340, May 2010. 203 Government Accountability Office, Arizona Border Surveillance Technology, More Information on Plans and Costs is Needed Before Proceeding, GAO-12-22, November 2011. 204 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, “Protecting the Homeland: How can DHS use DOD technology to Secure the Border?”, 112th Congress, November 15, 2011.

44

involved to internally address the problems that each country contributed to transnational crime

in the region. For the U.S., this largely meant addressing illicit drug demand and the smuggling

of firearms and drug proceeds into Mexico.205

The original Merida Initiative ended in 2010 and since then has been expanded in scope to create

a 21st Century border to facilitate efficient trade while increasing security. Also included was an

initiative to help areas hardest hit by Mexican drug cartel violence to rebuild into more resilient

communities.206

Merida has been administered primarily by the U.S. Department of State. Over $1.5 billion has

been appropriated but to date only a third of this money has been delivered. In 2010, the GAO

concluded that while some progress has been made towards Merida objectives, the State

Department lacks outcome-based measures that make it difficult to determine the program’s

success in both the long and short term.207

Despite the impact of Merida in recent years the long term results of fighting crime and reducing

drug trade remain unclear, especially once the resources for the Merida initiative have been

utilized.

THE BORDER ENFORCEMENT SECURITY TASK FORCES

Any plan to maximize border security must involve a combined effort from all law enforcement

agencies from the local, state and federal levels.208

The Border Enforcement Security Task Force

(BEST) program continues to be a shining example of what can be accomplished when law

enforcement agencies work together. Led by ICE’s Homeland Security Investigations, BEST is

composed of approximately 750 members from 100 law enforcement agencies and has expanded

to 32 teams.209

Since its inception in 2005 through July 2012, the BEST teams have achieved the

following results:

7,798 cases opened

9,124 criminal arrests

6,320 administrative arrests

205 Congressional Research Service, Merida Initiative for Mexico and Central America: Funding and Policy Issues, by Clare Ribando Seelke, R40135, August 21, 2009. 206 Congressional Research Service, U.S.-Mexican Security Cooperation: The Merida Initiative and Beyond, by Clare Ribando Seelke and Kristin M. Finklea, R41349, August 15, 2011. 207 Government Accountability Office, Merida Initiative: The United States has Provided Counternarcotics and Anticrime Support but Needs Better Performance Measures, July 2010. 208 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Stopping the Flow of Illicit Drugs in Arizona by Leveraging State, Local and Federal Information Sharing, 112th Cong. 21 May 2012. 209 Information provided by ICE Homeland Security Investigations to Subcommittee staff (August 27, 2012)

45

5,324 indictments

4,525 convictions

79,424 pounds of cocaine seized

1,288 pounds of heroin seized

848,263 pounds of marijuana seized

4,310 pounds of ecstasy seized

4,488 pounds of methamphetamine seized

13,546 weapons seized

2, 771,903 rounds of ammunition seized

3,675 vehicles seized

$109,824,841 in seized currency210

NATIONAL GUARD ASSISTANCE ON THE BORDER

The National Guard (NG) continues to provide assistance in the effort to secure the Southwest

border. The latest effort dubbed Operation Phalanx began in 2010 with 1,200 National

Guardsmen deployed to the border. In 2012, NG presence on the ground was reduced to just 300

soldiers. Coinciding with the troop drawdown was the deployment of Air National Guard

(ANG) helicopters and fixed-wing surveillance aircraft to supplement the operations of CBP’s

Office of Air and Marine (OAM).

While NG presence on the Southwest border is a positive effect on security, we are concerned

that their efforts have been unnecessarily constrained for fear of the perception that the border is

being militarized.211

We are also concerned that Department of Defense cuts will seriously

constrain the NG’s ability to fulfill its obligations to support the National Drug Control

Strategy.212

210 Id. 211Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Boots on the Ground or Eyes in the Sky: How Best to Utilize the National Guard to Achieve Operational Control : Hearing Before the U.S. House, 112th Cong. 17 April 2012 (Written testimony of Brian J. Lepore, Director, Defense Capabilities and Management Issues, Government Accountability Office). 212 Congress, House, Committee on Homeland Security Subcommittee on Border and Maritime Security, Boots on the Ground or Eyes in the Sky: How Best to Utilize the National Guard to Achieve Operational Control, 112th Cong. (April 17, 2012) (Written statement of Major General John Nichols, Adjutant General of Texas Military Forces).

46

The presence of ANG aircraft on the border has raised questions regarding the sustainability of

air support by OAM. The President’s Fiscal Year 2013 budget calls for a 13.5 percent decrease

in OAM’s budget in spite of the fact that ANG support is scheduled to end in December 2012.

Whether OAM can pick up the slack left by the ANG with a reduced budget remains an open and

troubling question.

Further, while the NG has grown to play a necessary role in securing the Southwest border, the

Guard is not a long-term solution.

THE DHS ACCOUNTABILITY ACT OF 2012

Over the course of the 112th

Congress, the Subcommittee has conducted eight hearings regarding

the efficacy of DHS management. The findings of these hearings along with those highlighted in

this report have raised questions as to whether the Department can effectively achieve its mission

of protecting the Homeland.213

As a result, the Subcommittee Chairman introduced the DHS Accountability Act of 2012 (H.R.

5913). This legislation will improve the efficiency and effectiveness of DHS management

through the recommendations of an independent advisory panel. This panel will be bipartisan

and composed of eight members: six members chosen from Congress and two members chosen

by the President. The panel will have the tools it needs to get to the bottom of any issue to

include the authority to convene hearings and issue subpoenas.

With an effective DHS management structure, problems such as poor planning, wasteful

spending and lack of program oversight will be much less likely to occur. The American people

can have greater confidence that their money is being spent wisely and as a result, will improve

their security.

I I I . C O NC LU S I ON : RE C OM M E N DA T I ONS FO R M OVI NG FO R WAR D WI T H B OR DE R S E C U RI T Y

We face a bold enemy on our Southwest border, and it will take continued perseverance and

willingness to defeat it. It can be done. The United States has made great strides in its border

security and we have seen much success in averting terror plots and suppressing transnational

criminal activity. However, with this recognition also comes a sobering realization that border

security is a continuously evolving process in which we must accept and counter new threats. As

long as there is a profit to be made selling illicit drugs or an ideology that is hostile to the

American way of life, there will always be criminals and terrorists looking to exploit weaknesses

in our border security.

213 See Initiatives Needed to Correct Weaknesses in the Department of Homeland Security’s Acquisition and Contracting Practices, Committee on Homeland Security, Subcommittee on Oversight, Investigations and Management, Representative Michael T. McCaul, Chairman, August 1, 2012.

47

As part of our ever-continuous vigilance, we must not overlook the importance of strengthening

the relationships with our fellow stakeholders in Latin America. Towards this end, the United

States has recently partnered with Guatemala to target illicit drug trafficking routes that run

through that country and along its coastal waters. Dubbed Plan Martillo (Operation Hammer),

the effort involves about 200 U.S. Marines along with the U.S. Navy, Coast Guard and federal

law enforcement.

Another encouraging turn of events towards this goal has been the decision by Mexican

President-elect Enrique Peña Nieto to tap the former head of the Colombian National Police,

General Oscar Naranjo, to be his security adviser. General Naranjo was instrumental in the

success of Plan Colombia and will bring a wealth of experience in the continued fight against

Mexican drug cartels. Nieto has also talked about using special forces and intelligence to deal

with the threat. Also encouraging, he has discussed reforming the nationalized oil giant

PEMEX. These are all very positive indicators for a new administration in Mexico.

Also crucial to further securing the Southwest border is the continued development and use of

Department of Defense technologies that have proven themselves in over 10 years of conflict.

During a 2011 Congressional Delegation to Iraq and Afghanistan, Subcommittee members spoke

with senior military leadership who agreed that deploying these proven capabilities along the

Southwest border would make effective use of them once they are no longer needed on the

battlefield. Not only will this make our border safer, but it will also provide additional civilian

employment opportunities to our returning warfighters and save taxpayers money by reusing

existing technology.

The Subcommittee provides the following recommendations for increased border security:

1. Increase the overall effectiveness, efficiency and accountability of the Department by

identifying deficiencies therein and developing corrective plans of action;

2. Consolidate homeland security oversight and consider and pass a yearly comprehensive DHS

authorization bill just as it does for the Department of Defense;

3. Develop an accurate and standardized definition of spillover violence that includes all relevant

crimes such as kidnapping that will be integral in official reports which gauge the level of border

security;

4. Designate the Mexican drug cartels and the Iranian Qods Force as Foreign Terrorist

Organizations so there is increased ability to counter their threat to national security;

5. Pursue foreign policy objectives which counter the growing presence of Iran and Hezbollah in

the Western Hemisphere;

6. Continue to build on the successes of combined law enforcement efforts like Operation Border

Star and the BEST Teams by creating incentives for inter-agency cooperation;

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7. Enhance U.S. support to Mexico and other Latin American countries via the Merida Initiative

as they continue to professionalize their law enforcement agencies and strengthen their judicial

systems;

8. Reduce the flow of guns and illicit currency from the U.S. into Mexico by strengthening

southbound inspections of cargo and increasing investigations of smuggling organizations;

9. Fully implement measures to reliably evaluate our progress in securing the border;

10. Minimize corruption within DHS through increased use of polygraph examinations and

increase the resources of the Inspector General, ICE Office of Professional Responsibility and

CBP Internal Affairs to a level commensurate with the problem and the size of the workforce;

and

11. Consider the cost and benefits of designating Border Patrol and Immigration and Customs

Enforcement officers as national security positions that require background investigations in

order to grant security clearances.

12. Continue leveraging DOD technology and assets to protect the border.

We can overcome the threat that pervades our Southwest border. This report gives us the

situational awareness we need to ensure that our country remains safe. We have the advantage

of knowing how certain ruthless actors, including terrorists, can hide amidst the chaos and

violence that exists on our southern border; how they can use the well-trod paths created by the

drug cartels to cross into our country; and how they hope to use those with Mexican passports to

enter the United States to launch a terrorist attack. Not only do we have the advantage of

knowing these plans and looking at the case studies, but we have real solutions to many of these

problems.

The United States has a long history of remaining strong in the face of serious threats to our

national security. We have never been without such challenges. A Line in the Sand illustrates in

bold detail the newest and evolving threat. And while it is presented as a caution, it also serves

to provide the path forward for our country. We will persevere in the face of the threat to our

Southwest border, but it will take the strength and fortitude that the people of this country are so

well known for. It will also take a Congress and executive branch willing to work together to

make the types of decisions necessary protect our great nation from this 21st century threat.

Together, we can do it.

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M a jo r Fi n d i n g s

 Although the United States tightened security at airports and land ports of entry in the wake of the September 11, 2001 terrorist attacks, the U.S.-Mexico border remains an

obvious weak link in the chain.

 Despite the near doubling of Border Patrol personnel, the Government Accountability Office found that only 44 percent of the Southwest border was under operational control.

 In 2012, National Guard presence on the Southwest border was reduced to 300 soldiers.

 Since October 2008, 138 Customs and Border Protection officers or agents have been arrested or indicted on corruption related charges.

 The Texas Department of Public Safety (DPS) reports that there have been 58 incidents of shots fired at Texas lawmen by Mexican cartel operatives since 2009.

 Experts believe the Southwest border has become the great threat of terrorist infiltration into the United States.

 Iran and Hezbollah have a growing presence in Latin America.

 Hezbollah has a significant presence in the United States that could be utilized in terror attacks intended to deter U.S. efforts to curtail Iran’s nuclear program.

 Latin America has become a money laundering and major fundraising center for Hezbollah.

 Hezbollah’s relationship with Mexican drug cartels, which control secured smuggling routes into the United States, is documented as early as 2005.

 If Iran’s assassination plot against the Saudi Arabian ambassador in Washington, D.C. had been successful, Iran’s Qods Force intended to use the Los Zetas drug cartel for other

attacks in the future.

The Homeland Security Subcommittee on Oversight, Investigations, and Management will

continue its oversight of these serious threats to our national security and continue its work with

DHS to implement reforms to improve border security.

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Ap p en d i x A: S u b c o mmi t t ee C h a i r ma n M c C a u l Let t er t o Na t i o n a l S e c u r i t y Ad vi s o r o n C o n g r es s i o na l Del eg a t i o n Fi n d i n g s