Russian Cybercriminal Gets 14 Years in $50M Fraud Case

Roman Valeryevich Seleznev (alias “Track2,” “Bulba” and “Ncux”) was sentenced by federal judges in the Northern District of Georgia and in the District of Nevada for his role in an online marketplace that traded in identity theft and credit card fraud. He pled guilty to racketeering and conspiracy to commit bank fraud.

A Russian national was sentenced on Thursday for his role in an online marketplace that traded in identity theft and credit card fraud, costing its victims over $50 million in damages. Roman Valeryevich Seleznev (alias “Track2,” “Bulba” and “Ncux”) was sentenced by federal judges in the Northern District of Georgia and in the District of Nevada after pleading guilty to racketeering and conspiracy to commit bank fraud, according to a statement by the Department of Justice. He was ordered to pay a restitution of over $53 million.

Selznev admitted to being involved in an online criminal marketplace Carder.su, which in his own admission, was an “Internet-based, international criminal enterprise whose members trafficked in compromised credit card account data and counterfeit identifications and committed identity theft, bank fraud, and computer crimes,” according to the DOJ. Selznev also ran his own automated website where he sold compromised credit card account data and counterfeit I.D.s. The website did so much business that customers could “search for the particular type of credit card information they wanted to buy, add the number of accounts they wished to purchase to their “shopping cart” and upon check out, download the purchased credit card information.” Payments were deducted from an account funded through L.R., an online digital currency payment system. Last year, Selznev was sentenced to 27 years for his role in a scheme to “hack into point-of-sale computers to steal and sell credit card numbers to the criminal underworld.”

from https://thecrimereport.org

Governments ‘Underestimate’ Threat of Counterfeit Drugs: Study

Fake medications have grown to a $431 billion market since 2000, affecting nearly two billion people worldwide, but governments have failed to address the dangers they pose to unwitting patients, according to a report in the Review of Business & Finance Studies.

Counterfeit drugs have ballooned into a $431 billion market since 2000, affecting nearly two billion people worldwide, but governments have underestimated the dangers they pose to unwitting patients, according to a report in the Review of Business & Finance Studies.

Often hard even for licensed distributors to detect, fake medications have flooded markets of both developed and underdeveloped countries as a consequence of high medical costs, corruption, and weak or nonexistent legislative measures to contain them—and the threat is likely to get worse unless authorities develop “harsher sanctions,” said the report, published online this month.

“Each year, about 100,000 million people worldwide may succumb to these fraudulent medicines,” the report said. “Counterfeit pharmaceuticals sometimes contain chalk, brick dust, paint, and even pesticides. Some of them even contain the remains of human fetuses. Others contain no active ingredients at all.”

However, authorities around the world have done little to curb the trade, charge the authors of the study, Brian Gurney, Gary Amundson and Salem L. Boumediene, all of Montana State University Billings.

“Governments seem to underestimate the importance of the issue,” the study said.

The authors cite figures from the World Health Organization (WHO), showing an estimated 100,000 deaths per year in Africa linked to counterfeit drugs; and from the London-based International Policy Network (IPN), attributing 700,000 fatalities annually to fake malaria and tuberculosis medicines.

See also: Enforcement Can’t Stop Fake Chinese Drugs: Report

The underground pharma market is a lucrative business for a range of international crime groups, including post-Soviet mafia, Colombian drug cartels, Chinese triads, and Mexican drug gangs, Hezbollah and Al-Qaida are also believed to be involved.

However, the authors note, licensed pharmacists, private entrepreneurs and state officials throughout the world have been identified as “facilitators” of the trade.

According to the study, counterfeit drugs currently account for approximately 30 percent of the medicines distributed in developing African nations. During a nine-month period in 2012, China exported $1.5 billion worth of medical products to Africa which in some cases had few or no active ingredients at all.

Control of the trade is complicated by the fact that an increasing number of fake pharma products are marketed online, said the authors.

Online outlets called “rogue pharmacies”—most of them located outside the U.S.—distribute drugs to consumers without a prescription, and “are harder to track by regulatory bodies because they are not registered anywhere,” said the study.

“Given the light penalties and the time lag for regulators or law enforcement to shut down these Internet websites, operators simply take down the website and relocate to another region of the country or perhaps to another country,” the study said.

“From a business perspective, this is merely a relocation of a distribution center. “

A recent study, cited by the authors, found nearly 10,000 websites out of compliance with U.S. federal and state regulations, of which 2,274 have physical addresses located outside the U.S. and 3,708 maintain servers in foreign countries.

Moreover, criminal organizations have discovered that there is less risk and penalties associated with counterfeit pharmaceuticals than with human trafficking and illegal drugs. Just 1,300 people worldwide were arrested over the past five years.

Combating the trade will require both the use of more sophisticated technology to detect counterfeit drugs in shipments and stronger enforcement of laws already on the books, wrote the authors.

“Illegal drug dealers face a harsher sentence compared to medicine counterfeiters,” the study said. “The government has to make it clear that they are not facing a few months of incarceration but more like a couple of years.”

But equally important is to address the root causes of why people turn to fake pharmaceuticals, the authors said.

“One of the major reasons is poverty,” said the study. “People hold on to the tiniest bit of hope, which, in this case is what usually hurts them more.

“But (fake medication) is the only alternative they can afford, without having a prescription. If medical care (were) cheaper, no one would look into buying a medicine that can possible hurt them in any way, and usually hurts them more.”

The full report can be downloaded here.

This summary was produced by Brian Edsall, a news intern with TCR. Readers’ comments are welcome.

from https://thecrimereport.org

Why White-Collar Crime is a Growth Industry

In a new book, Michigan criminologist Gregg Barak warns that the failure to effectively regulate multinational corporations allows corporate chicanery to flourish on a global scale.

Critics of the business world lament that crimes “of the street” are much more aggressively prosecuted and punished than crimes “of the suite,” but Gregg Barak, professor of criminology and criminal justice at Eastern Michigan University and author or editor of 20 books, believes the problem goes deeper.

In his new book Unchecked Corporate Power, Barak argues that governments’ abdication of their responsibility to effectively regulate multinational corporations has enabled white-collar chicanery to flourish on a global scale. In a chat with Nancy Bilyeau, Deputy Editor of The Crime Report, Barak discusses why he believes there’s little chance of policymakers taking action in the near future, the connection between corporate crime and climate change, and how the Harvey Weinstein sexual harassment scandal illustrates the impunity of powerful CEOs.

 The Crime Report: Fewer criminologists are doing work on white-collar crime than on other crime sectors, and less work is being published in academic journals. Is this a factor in elite players presently being “unchecked”?

Gregg Barak: Interestingly, in my “White Collar Crime” class this semester, more than one student has asked me the exact same question. In a very indirect kind of way, the lack of investigation by criminologists of multinational corporate crime compared to their investigation of street or index crimes does contribute to the impunity of these acts and omissions, or to the normalization or routinization of these crimes. Certainly, if the field of criminology were paying due diligence to these crimes, there would be more attention given to them However, that also imagines that public policy on crime and crime control, whether in the suite or the street, is in fact responding to evidence-based research on the matter—which I believe is not the case, generally speaking.

Gregg BarakTCR: How long has “state- routinized crime” committed by multinational corporations been at the unchecked level it is at now? 

 GB: Actually, the track record of checking multinational corporate misbehavior has for the most part always been beyond incrimination, so at the present time, it is pretty much business crime as usual.

TCR: Is there anything you can single out as bringing us to a fever pitch on this?

 GB: While fundamentally these crimes are related to the contradictions in global capitalism, the one condition that I think stands out in relation to the present state of crisis has to do with global warming and climate change.

For example, in the not-too-distant future, overcoming or succumbing to corporate and multinational pollution—from ecocide to global shortages of water to fracking to electronic waste disposal and so on—in the context of climate change and the need to abandon our dependency on harmful fossil fuels, regardless of the bottom-line profits that will disappear, or else face the possibility of human extinction, speaks to the necessity of reconstructing or reconstituting what corporations are as legal entities.

Replacing an unencumbered, privately controlled capitalism, and capitalist state, with an environmentally and democratically controlled public capitalism, and capitalist state, no longer driven by the irrational and unsustainable exponential growth of capital and consumption, is at the heart of the contradictory relations in both the routinization of licit and illicit behaviors of multinational corporations as well as capitalist states’ routinization of the noncriminal responses to these crimes.

TCR: What role do the media play in the lack of public awareness of unchecked corporate power?

GB: Let me just say that the major online newspapers in the U.S., including The New York Times, Wall Street Journal, Washington Post, Financial Times, Bloomberg, etc., do cover, report on, reveal and expose much of the unchecked corporate power in this world. There are those economic and business journalists that have and are connecting the dots. However, they are a minority of reporters and are up against a larger narrative, if you will, like the myth of Too Big To Fail, for example.

As for the lack of public awareness, I would say that they are not paying attention. If the public hasn’t figured it out after the implosion of Wall Street and the Organize Wall Street movement, after the ongoing high-end securities and financial frauds that have continued unfettered to the present day, and after Supreme Court decisions like Citizens v. United, I do not know what it will take.

TCR: In the last presidential election Wall Street’s unchecked financial power got a lot of attention. A year later, do you hear these debates continuing? 

GB: I would say that there are discussions in the world of academia, in many online blogs, and in posted electronic mailings like nakedcapitalism, but less so in the mainstream media. Certainly, if folks are running for office and bring up neoliberal policy, it will be debated. After all, it is these policies that constitute most of our current crisis and facilitate unchecked corporate power. They need to be abandoned unless we want things to continue to decline.

TCR: Is there any hope for the creation of an international apparatus of regulatory control? 

Barak

Gregg Barak

GB: In the short term, I do not believe so. In the long term, if we do not come up with some kind of democratically based apparatus of international and regulatory control of these ways of conducting business as usual, then it is highly unlikely that unchecked corporate power will wane in the future.

TCR: Do you see a possibility that federal prosecutors will return to pursuing difficult and prolonged cases such as Enron instead of negotiating fines?

GB: I do not see any indication of that, especially with the current administration. A first step for that to occur would require the creation of a Corporate Fraud Division within the U.S. Department of Justice.

TCR: I realize that a producer of independent films is not in the same category as the executives of multinational corporations, but I was struck by a parallel in the Harvey Weinstein case—of his ability to ward off criminal investigations of sexual harassment through a compliant press and corporate partner enabling—and some of what you outline in your book. Do you agree?

 GB: In a way there are similarities, because these are mostly extremely wealthy and powerful men. The sexual abusers at Fox News had a lot of power over those people around them and there’s the fact that they have the money to settle, settle, settle, over and over, for their habitual misdeeds and to avoid the criminal law.

Nancy Bilyeau is Deputy Editor (Digital Services) of The Crime Report. She welcomes readers’ comments.

from https://thecrimereport.org

Can America’s Air Safety Watchdogs Police Aviation Fraud?

A whistleblower’s unsuccessful attempts to prod an investigation of defective airline parts manufactured in China underlines charges by senior aviation specialists that federal air safety authorities and law enforcement are failing when it comes to tackling an emerging global threat from counterfeiters, according to a TCR investigation.

A tide of defective and possibly counterfeit airplane parts has been making its way into U.S. aircraft unreported and unchecked, according to senior aviation specialists and whistleblower attorneys.

Earlier this spring, a government audit of the Federal Aviation Administration (FAA)—the agency responsible for ensuring airline safety—said the FAA had consistently failed to alert federal law enforcement authorities about suspect parts installed in U.S. airplanes.

The scathing audit by the Department of Transportation’s Office of the Inspector General (OIG)—the first one in 20 years—also charged the agency had closed investigations without ensuring that counterfeit and improperly manufactured parts (SUPs) were removed.

The FAA has since pledged to comply with the audit recommendations. But interviews with former FAA inspectors and other experts raise questions about whether federal law enforcement authorities can cope with the threat posed by a global aviation parts manufacturing industry that has spread to emerging markets like China and India, where many of the fake or defective parts identified in investigations have originated.

The safety threat posed by fraudulent parts is likely to increase unless federal authorities become more aggressive in combating it, the experts told The Crime Report.

 “We’re outsourcing so much work into those regions (that) the propensity for risk increases exponentially,” said Michael Dreikorn, a former FAA safety inspector who helped set up the agency’s first Suspected Unapproved Parts (SUP) program in the 1990s.

Some argue that an equally serious problem is a laissez-faire culture in which the agency effectively allows the commercial aviation industry to police itself.

Whenever the FAA suspects fraud, under its own guidelines, it is required to refer the case to federal law enforcement authorities.

“However, the FAA is loathe to actually refer people for criminal enforcement,” said Mary Schiavo, a former Inspector General of the Department of Transportation (DOT).“They just don’t do it.”

Agency officials respond that the FAA’s current oversight program assures the safety of the American flying public.

Hundreds of defective “single point of failure” parts from China were installed in Boeing 777 spoilers. Photo by Christian Junker via Flickr

“In rare instances where the FAA determines SUPs have entered the system, we issue corrective measures that mandate timely action by affected owners and operators,” the FAA said in an emailed response to The Crime Report’s questions.

The Trials of a Whistleblower

But a Crime Report investigation suggests that despite the sharp rebuke by the OIG earlier this year of FAA practices, ongoing attempts by a Chinese whistleblower to warn both authorities of a potential grave risk to the flying public continues to fall on deaf ears.

In 2016, a supply chain manager at Moog, a U.S. aerospace company that supplies flight control systems to Boeing, alerted the Federal Aviation Administration (FAA) that he had discovered a Chinese subcontractor was producing improperly manufactured parts.

According to an FAA report obtained by The Crime Report, the agency investigated, but found no evidence of a violation.

Unsatisfied, the whistleblower, Chaosheng Shi, asked for a re-investigation.

During the second investigation, the regional FAA inspector found evidence that improperly manufactured parts had been installed in commercial Boeing 777s around the globe. The same subcontractor, according to the report, had outsourced other critical parts to an unapproved supplier.

What’s more, the subcontractor had fabricated production records.

Under the FAA’s own guidelines, when the agency finds evidence of “suspected unapproved parts” (SUPs), it is supposed to refer them to federal law enforcement agencies for a full examination.

But that didn’t happen.

Instead, despite the evidence produced during the second investigation, the FAA concluded that “all corrective actions have been taken. No further action is required.”

‘Accounting Error’

Regarding Shi’s suspicion that the subcontractor was using substitute, sub-standard raw materials, FAA accepted the company’s explanation that it was an “accounting error.”

FAA’s investigation relied entirely on Moog’s internal probe into the suspected counterfeiting. But by the time Moog performed its inspection, claimed Shi, the parts that it tested were no longer representative of the batch that had been installed on aircraft a year earlier.

These parts are still in the air today, installed in wing flaps that control descent and speed for safe landing.

As if this weren’t chilling enough, they are what’s known in the industry as “single-point-of-failure” parts—meaning that if they fail, the whole system fails.

According to Shi, as many as 500 commercial airplanes could be affected.

The Moog case illustrates what some experts say is a worrying failure of oversight by the agency tasked with ensuring the safety of commercial airplanes in the U.S., as well as law enforcement agencies that investigate and prosecute unapproved parts fraud.

Some experts cite a relationship between the airline industry, FAA, and congressional oversight committees that has grown too cozy.

While people within the industry insist that manufacturers have a self-interest in keeping the flying public safe, veteran aviation experts are telling a different story—one in which unreported defective parts invade the supply chain unchecked, with no repercussions.

While it is not the FAA’s role to investigate criminal matters, the agency acts as a gatekeeper, deciding which cases are referred to law enforcement. For cases involving commercial aircraft, the Department of Transportation’s Inspector General gets involved, often working with special agents from the FBI. For military aircraft, the Department of Defense, and the Defense Criminal Investigative Service step in.

Some say the FAA is, in effect, enabling an end-run around potential criminal investigations by withholding these types of allegations from investigators.

“If the FAA is not sharing the information with law enforcement, [offenders] are not going to get indicted, because most of the time law enforcement is not going to know about it,” said Ken Gardner, a retired FAA safety inspector who now teaches certification courses for the agency.

Criminal prosecutions against airplane manufacturers are rare; instead, victims and their families have taken to civil courts to pursue false claims and wrongful death suits. Under federal regulations, installing counterfeit or improperly manufactured parts isn’t a crime unless you’ve done it knowingly. The same goes for falsifying records.

But experts allege that the FAA’s lax attitudes allows the manufacturers to shrug away what little scrutiny they might face with a simple response: We didn’t know.

“Sadly, I’ve heard this many, many times,” said Schiavo, the former DOT Inspector General. “There are so many whistleblowers out of Boeing. But the FAA says ‘Boeing looked at it, and they found it not to be a problem,’ and they pretty much rubber stamp [it].

“They don’t make Boeing go and inspect all the planes. And I suppose a lot of these are out in the hands of end-users now. It’s pretty typical.”

Dreikorn, the former FAA inspector, concurs.

“The fact of the matter is, as a result of this whistleblower’s actions, we know of 273 nonconforming parts installed in the spoilers of Boeing 777 aircraft,” he said. “We are expected to rely on analysis and testing from the very companies that caused the problem.

“Trust must be earned, and the FAA’s aircraft certification office in Seattle has shown itself incompetent in ensuring the largest airplane manufacturer in the U.S. is capable of controlling its suppliers.”

Dreikorn added: “I rest no easier simply because the FAA says I should.”

Asked by The Crime Report to examine the FAA’s report on Shi’s complaint, another former safety inspector, who asked that his identity be withheld, said, “This investigation should have also involved the DOT Office of Inspector General for falsification of production records which are required documentation.”

The inspector was particularly concerned about the hundreds of critical parts that were installed in wing flaps that did not undergo stress relief or proper hydrogen relief treatment (baking).

“Carbon embrittlement is a big concern due to the fact that turbulence can change the normal stress loads that can cause a catastrophic failure,” he told The Crime Report. “The FAA should have followed up with Boeing to gain information of their notice to customers who had those parts installed on their aircraft.”

But the defective parts never even made it onto the FAA’s Unapproved Parts Notification database, which issues warnings to aircraft owners, operators, manufacturers, maintenance organizations, and parts suppliers about potential risks.

The notifications system is also accessible to the public.

Boeing provided the following response to The Crime Report:

The safety of the flying public is our primary concern, and any allegation related to safety is thoroughly investigated. In late 2016 the U.S. Federal Aviation Administration investigated several allegations related to Moog Aerospace and confirmed two were substantiated.

Moog, working with Boeing, had already assessed these two issues and taken all necessary corrective actions. The FAA investigation confirmed that no further corrective action was required.

We refer additional questions to the FAA and Moog.

Failing Grades

The May 30 audit by the OIG found that the FAA had consistently violated a 2004 agreement with six federal law enforcement agencies to share reports and investigations about possible defective parts.

“As a result,” the OIG concluded after its two-year review of the agency, “the FAA cannot accurately account for the number of SUPs or track safety-related trends to share with senior FAA management and Federal law enforcement agencies about the risks posed by unapproved parts.”

In response to the audit, the FAA finally did share data with law enforcement authorities on allegedly substandard or counterfeit airplane parts– many of which are currently in use by commercial jetliners flying today.

But the whistleblower’s story also raises questions about whether federal law enforcement is sufficiently aggressive in monitoring possible counterfeiters.

The OIG, which has the authority to conduct criminal investigations, confirmed to The Crime Report that it received Shi’s complaint and had decided not to investigate. But it would not explain on what grounds his complaint was rejected.

The FAA’s defenders argue that the commercial aviation industry itself is better equipped to monitor suspected unapproved parts and remove them if necessary—a laissez-faire approach which they say ensures airline safety.

“Certificate holders (FAA-approved aviation businesses) must protect themselves and their work with or without government help,” said a spokesperson for the Aeronautical Repair Station Association (ARSA), a global trade association for the civil aviation maintenance industry.

“This responsibility is what keeps flying the safest form of transportation.”

Meanwhile, in response to a request from The Crime Report, the FAA issued the following official statement:

The FAA oversees the design and production of hundreds of millions of aviation products and parts each year. More than two decades ago, the agency developed an enhanced Suspected Unapproved Parts (SUP) program, which resulted in a marked decrease in SUP cases. In rare instances where the FAA determines SUPs have entered the system, we issue corrective measures that mandate timely action by affected owners and operators.

FAA inspectors perform follow-up surveillance of all corrective actions that aircraft owners and operators, and aircraft manufacturers and parts manufacturers, take in response to SUP cases.

In Shi’s case, however, the FAA closed out the investigation without reporting the defective parts as ‘suspect.’

Vigilant in the 1990s

Things weren’t always so lax.

The 1990s saw a more aggressive enforcement period following the 1989 crash of Partnair Flight 394, which killed all 55 people on board, and was blamed on defective counterfeit parts and substandard maintenance.

During Mary Schiavo’s six-year tenure as Inspector General, her office led investigations that resulted in over 150 convictions for fraudulent parts.

“There are a few people still in jail as a result of that,” said former FAA inspector Dreikorn, whose SUP team included several FBI agents who led raids on fabricators of unapproved parts.

But the program was disbanded in 2007.

Gardner, who teaches FAA certification courses (including unapproved parts training) at JDA Aviation Technology Solutions, there are fewer agents assigned to the OIG these days, and they are spread thin across all crimes involving transportation.

“If it’s something that’s not going to draw a lot of attention, and it’s not really a safety issue, they’ll just kind of leave it up to the FAA to deal with it,” added Gardner, who also trains law enforcement how to spot counterfeits and falsified records.

But according to independent experts and whistleblowers, law enforcement lacks the expertise to determine what might be a safety threat, and instead has to rely on the industry itself.

Gardner, like Dreikorn, says the risks have escalated in recent years as aviation manufacturers increasingly outsource to developing markets.

“We know there’s a lot of counterfeit parts coming out of China,” he told The Crime Report.

“There’s a lot of Sikorsky [owned by Lockheed Martin] parts, and the problem is, they have the companies over here send all the data, the drawings and specifications and everything for the parts to be made at other facilities in China as a supplier.

“But they don’t stop there. Because they figure there’s money in it, they can actually manufacture other parts and send them over here with false documentation.”

Shi’s case adds a troubling new dimension to the problem of overseas quality control. Last month, a judge denied him U.S. whistleblower protection because he worked in Shanghai.

Nevertheless, ARSA, the aeronautical repair group, argues that companies outside the U.S. have an equal interest in avoiding fake or fraudulent manufacturers.

“A good repair station won’t risk business on risky parts,” the ARSA spokesperson told The Crime Report, noting that non-U.S. firms have access to the FAA’s database, which “allows certificate holders to help ‘police’ the flow of parts with questionable origins or paperwork.”

Some aviation experts point out, however, that the current system fails to account for human nature.

Mike Danko, a civil attorney and pilot who uncovered the role of an unapproved part in a deadly 2014 plane crash, cites what he says is the “well-known” example that “a pilot is never criminally prosecuted unless he is drunk—it doesn’t matter how stupid, reckless he is, or how many people are injured—[and] because that’s so well known, there’s a small group of renegade pilots who say, ‘this is easy—either I’m not going to get the license, or my license is revoked, I don’t care.

“I’m going to continue to fly because—what happens if I get caught?’”

The audit’s findings underline the charges by many of the outside experts interviewed for this article that the FAA itself is in need of an overhaul.

Even if FAA inspectors were inclined to be more aggressive, they currently don’t have the technical skills to perform physical examinations to determine if there is a safety risk.

“The FAA really defers to Boeing expertise,” said Mary Schiavo, noting that the agency even allows the company to self-certify its aircraft.

“The FAA doesn’t have the expertise to match talent with Boeing.” (Boeing has contended in federal court that it is a “representative” of the FAA).

“It’s a paperwork chase,” added Mike Danko, the former pilot. “It’s not quality control, or quality assurance. As a general rule it’s just a record-keeping inquiry.”

Are Our Planes Safe?

Has the FAA’s current approach to counterfeit parts increased the safety risks for the thousands of passengers who fly U.S. jetliners every month?

The FAA and its defenders say it hasn’t.

But last year, after compiling and analyzing National Transportation Safety Board (NTSB) reports, the NBC Bay Area Investigative Unit found that “unapproved parts” had played a role in close to two dozen airplane crashes in the U.S. since 2010, resulting in seven fatalities and 18 injuries.

The majority of the crashes either took place in U.S. airspace or involved U.S. aircraft under FAA jurisdiction, according to an NBC reporter, minus one or two overseas cases referred to the FAA that involved forged FAA tags.

Independent aviation experts think this number may actually be much higher. However, the NTSB refuses to release information on its investigations of major catastrophes that have happened overseas, even when they involved a U.S. manufacturer.

When Danko investigated the 2009 Cessna crash that killed Dr. Ken Gottlieb, he found that an unapproved part had jammed during takeoff, and that Gottlieb’s mechanic had faked an inspection just days earlier. A civil jury awarded Gottlieb’s family over $10 million dollars.

Afterwards, said Danko, “I asked the FAA to investigate. They investigated and found basically no specific violation of any regulation. And that mechanic still has his license.”

As for any criminal investigation, “law enforcement is virtually never interested,” said Danko.

That holds true in Shi’s whistleblower case.

For the past two years, his dogged attempts to alert the OIG, both directly, and through the fraud hotline, have come to nothing. The OIG’s official reply: “We Anticipate No Further Action From Our Office Regarding This Matter And Thank You For Bringing This Information To Our Attention.”

Chaosheng Shi (center). Warren Johnson (left), former president of Moog Aircraft Group, shakes hands with Li Jian of New HongJi (right). 2015. Photo courtesy Chaosheng Shi

New HongJi, the Chinese company that was found to have produced defective parts and falsified records, continues to manufacture Moog parts for installation onto Boeing military and commercial aircraft. Aircraft Group of Moog, Inc, holds the certificate for these parts— meaning the case falls within U.S. jurisdiction.

“You can explain away an accounting error,” said former FAA inspector Dreikorn.

“But when you have that coupled with forged documents— it means there is no reliability in the system, and then everything that comes out of the system is as far as I’m concerned, suspect.”

Appeal to an Irrelevant Authority

An FAA investigation—which the OIG audit shows to be unreliable—can also make or break a fraud case.

Take the 11-year, $4.8 billion false claims suit against Boeing and Ducommun for defrauding the U.S. government, which was thrown out on appeal in 2016. The lawsuit claimed that Boeing used off-spec parts in 737 Next Generation aircraft that it sold to the U.S. military (P-8 Poseidon), and then produced false documentation to cover it up.

The judge made his determination based on the fact that Boeing and the FAA both disagreed with the whistleblowers as to how the manufacturing specifications could be interpreted. Because of this wiggle room, intent could not be proven.

“We know it was willful, because after they ‘discovered’ it, they then went back to the company that was making the defective parts, or the non-conforming parts, and they cut a side-deal with them authorizing them to continue doing it in exchange for some price concessions,” William Skepnek, a whistleblower attorney who worked on the case for over a decade, told The Crime Report.

But, he added: “Because the FAA didn’t make a finding, then I guess reasonable minds can differ, and if reasonable minds can differ, well than you can’t prove intent…. which is of course not the law.”

“I don’t think there ever was a criminal investigation. There was a DCIS investigator who was assigned to the case. And the DCIS investigator simply handed it off to FAA, and accepted what FAA did, and did no investigation on his own.”

Skepnek’s team started digging into the case, and “we found that the DCIS investigator had no knowledge of aircraft parts.”

“So there literally was no independent criminal investigation.”

The FAA, in turn, accepted Boeing’s own internal investigation into the matter, said Skepnek. According to Dreikorn, who was engaged as an expert witness by the whistleblowers: “I was able to independently determine that, yeah, Boeing had done some wrongdoing, they had covered it up, and the FAA at the local level was in cahoots.

“And I took it all the way up to the Associate Administrator, and she killed it.”

Skepnek continued: “Ultimately, the federal judge in Wichita determined that because the FAA hadn’t done anything about it, then that meant that the FAA found it was all good.”

The 10th Circuit Court of Appeals also sided with the opinion of Boeing engineers and the FAA.

It might be surprising to the average person that the agency tasked with aviation safety doesn’t perform physical inspections and investigations itself. But according to Dreikorn, most judges are unaware of the fact .

“They think that the FAA is infallible. I’ve stood in front of many state and federal judges, and told them that the FAA system is flawed, and they wouldn’t accept it,” he said.

“And as a lone expert, how can I stand up to the FAA?”

The two aviation experts, an engineer, and a former NTSB crash investigator working with Skepnek on the whistleblower case believe that several Boeing 737 Next Generation crashes remain unexplained.

“What our guys said was, and we actually submitted this to the FAA, the real weak spots were in front of and behind the wings. And there are at least 3 or 4 crashes, hard landings, that should have been tolerated, but the fuselage came apart— with some deaths.

And there were a couple of airplanes that came apart in the sky, and nobody lived through that. These were all Next Generations,” said Skepnek.

Dreikorn said he’s been pushing for the National Transportation Safety Board to look into secondary failures for years, which are often more fatal than the primary cause for the accident. “You can’t always prevent the causing event— but make the survivability better.”

“There needs to be more transparency in the industry with these investigations, because they get put under a federal order of stealth— nobody gets to see what’s going on. And even afterwards, it’s under protective order.”

Dreikorn’s FOIA requests to the NTSB for information on crash investigations in Jamaica, Colombia, Kenya, and Ethiopia were all rejected.

“And the reality is, this is taxpayer money, these are our products, the taxpayers’, they should have a right to see what’s going on and be able to get [data]— whether they’re from the media or academia— to look at this stuff so we can understand what’s going on.

“Are our employees, our government employees, working in the best interest of the taxpayers?”

Republican Congressman Peter DeFazio of Oregon, ranking member of the House Transportation Subcommittee, who requested the original OIG audit, told The Crime Report that he was concerned that FAA’s Suspected Unapproved Parts Program “had not been reviewed in more than 20 years.”

“Eliminating the serious risk posed by unapproved aircraft parts is a critical safety matter that must be dealt with,” he said, adding that the Inspector General’s findings “confirm the need for improved tracking of suspected parts by the FAA and continued congressional oversight of the SUPs program.”

Weakening Federal Regulation

That task may now get harder under an administration determined to reduce federal regulation.

DeFazio has been leading a fight in the House against a bill that would privatize the agency’s air traffic control system and remove over 30,000 federal employees from the federal payroll. The bill was rejected by the Senate on Tuesday, and must go to a floor vote before the September 30 deadline for FAA reauthorization.

In the meantime, the FAA Rulemaking Advisory Committee has recommended rolling back several aviation safety standards earlier this month, including those governing pilot training.

Dreikorn believes that change has to begin with the agency’s leadership, noting that the FAA’s new Associate Administrator for Aviation Safety, Ali Bahrami, was plucked straight from an aviation industry lobbying position in June. He was director of the Aerospace Industry Association, and prior to that, he worked at Boeing.

“Until there’s a decision within the organization to behave differently, until the leadership holds the entire organization accountable to perform as they should for public safety, nothing’s going to happen,” he said.

Victoria Mckenzie is deputy editor of The Crime Report. She welcomes readers’ comments.

from https://thecrimereport.org

Enforcement Can’t Stop Fake Chinese Drugs: Report

China is the world’s largest supplier of counterfeit pharmaceuticals and ingredients, and the source of 79% of all counterfeit drugs seized in the U.S. But enforcement-based solutions are complicated by the lack of cooperation from Beijing, according to a forthcoming paper in the Columbia Science and Technology Law Review.

No amount of enforcement can stop the torrent of fake drugs and active pharmaceutical ingredients (APIs) coming from China, says the author of a paper forthcoming in the Columbia Science and Technology Law Review.

China is the world’s largest supplier of counterfeit pharmaceuticals and APIs, and the source of 79% of all counterfeit drugs seized in the U.S., according to the United States-China Economic and Security Review Commission. In recent years, Fentanyl flows from China have fueled opioid deaths, overdoses and addiction across the U.S.

Daniel Chow, a professor of international trade law, writes that enforcement-based solutions to the counterfeit drug problem– from seizures to prosecutions– face way too many obstacles to be effective. These include a lack of cooperation from the Chinese government, and the common use of Free Trade Zones to obscure a product’s origin.

While “counterfeit” technically means an exact replica of a product using its trademark, the term is more commonly used to variously refer to knock-offs, substitute or contaminated ingredients, and improperly sourced products.

The majority of counterfeit drugs on the market make use of a trademark without copying the ingredients, which is how counterfeiters turn a profit.

Besides knock-off drugs, China is also the largest global producer of counterfeit or substitute active pharmaceutical ingredients, or APIs, which wind up in medicines around the world.

A notorious example of this is the 2008 case of a blood-thinner made by Baxter International, which killed 81 people after being distributed to hospitals around the U.S. Baxter used a contaminated ingredient (herapin) that was later traced back to Chinese suppliers.

Enforcement Problems

Free trade zones, or FTZs, shield products from country-of-origin labeling, and are purposely used to hide the true origin of the goods. “In the FTZ, the goods can be finished, assembled or reassembled, and repackaged,” writes Chow.

Drugs originating from China can enter a FTZ in another country, such as Dubai, get repackaged, and re-labeled with a different country of origin.

Tracing the true provenance of APIs is expensive, time-consuming, and in some cases impossible, according to the report.

The other significant problem facing enforcement is the Chinese government itself: local governments in China are evaluated on their economic outputs and exports, and therefore “have an incentive to protect local industries, even if they are engaged in behavior of questionable legality.”

Central enforcement authorities tend even more toward protectionism. In the Baxter-herapin case, Chinese officials refused to disclose where the contaminated ingredient entered the supply chain, even though the information “was plainly available to central-level authorities.”

China’s Not Interested

“Why would central level authorities be willing to hide the locations of illegal factories that produce APIs or drugs that cause deaths to consumers in foreign countries?,” Chow asks.

“This type of government behavior might not seem likely to occur in the United States, but China has a much different political system. In China, the political realities are that even where there is clear wrongdoing, central and local level officials do not want to found responsible for a dereliction of duty that would compromise their own interests in maintaining their careers or their prospects of professional advancement.”

“The situation is quite different when the harms or even deaths occur in a distant foreign country outside the glare of the public and social media in China. In these cases, the Chinese public and media seem to show little interest or concern and the Chinese authorities do not feel compelled to act.”

China’s world-class “immense and complex” bureaucracy is also implicated in the report. Ultimately, however, the lack of government cooperation is a matter of political will, says Chao.

So far, there doesn’t seem to be an alternate to enforcement solutions. “For the foreseeable future, substandard drugs and APIs from chemical factories not subject to supervision by the [China Food and Drug Administration] seem likely to continue to pour unchecked into the international market.”

Three Major Problems Threatening Multi-National Pharmaceutical Companies Doing Business in China, by Daniel C.K. Chow, is forthcoming in the Columbia Science and Technology Law Review. This summary was prepared by TCR deputy editor Victoria Mckenzie. Readers’ comments are welcome.

from https://thecrimereport.org

Drugs, Gangs & Radical Islam in a Caribbean Paradise

U.S. policymakers have begun to focus on the security threats from Trinidad and Tobago, just off South America’s north coast. According to a new study, the island nation of 1.2 million is emerging as a narcotics shipping hub; and on a per capita basis, it has sent more foreign fighters to Iraq and Syria than anywhere else in the region.

Trinidad and Tobago, just off the north coast of South America, has the dubious distinction of being the country which has sent the greatest number of foreign terrorist fighters in the region to Iraq and Syria on a per capita basis.

And as the U.S. fights against narcotics flows, Trinidad and Tobago is playing an increasing role in transit routes for smuggling drugs to the U.S. and Europe through the Caribbean.

Trinidad and Tobago. Illustration by Rick McCharles via Flickr

Trinidad and Tobago, a tiny nation of 1.2 million people, straddles two islands: Trinidad, by far the larger of the two, is an industrial powerhouse and a financial center for the Eastern Caribbean, having leveraged significant offshore and onshore natural gas resources to build a major petrochemical industry, including a petroleum services sector that supports numerous projects in the surrounding region.

Tobago, often forgotten, including when people abbreviate the name of the country (to just “Trinidad”), is a beautiful island with an economy based on tourism and enjoys a degree of self-government.

Despite its small size, Trinidad and Tobago is one of the wealthiest, most economically developed, and most ethnically diverse countries in the region, with populations of African, Indian, Lebanese, Chinese, and European descent. Its diversity is both reinforced and complicated by its relatively open borders and its tradition of being a nation of immigrants, with significant recently arrived communities from Venezuela, China, Syria, and Africa.

Despite its high per capita GDP, Trinidad and Tobago has the highest incidence of violent crime in the Eastern Caribbean, with 463 homicides in 2016, approximately 35 per 100,000 residents. The country also has a significant gang problem and was the subject of an attempted coup in 1990 by the local radical Islamic group Jamaat al Muslimeen (JAM).

It also has the dubious fame of being the largest contributor in the region on a per capita basis of Islamic fighters to Iraq and Syria. Only diverse and quirky Trinidad and Tobago could have a group calling itself “Unruly Isis.”

Beyond the headline-capturing problem of the radicalized youth who have left Trinidad and Tobago to fight for ISIS, the principal symptoms of the malaise affecting the country are gangs, guns and drugs.

Yet endemic corruption is arguably the underlying problem that allows the cancer to spread. Indeed, in August 2017, Prime Minister Keith Rowley acknowledged corruption as the principal challenge facing his government.

Islam, Gangs and Youth

The present foreign-fighter problem must be understood in the context of the 1990 coup attempt by the JAM, and the convoluted interaction between Islam and gangs in giving purpose to a portion of the country’s alienated youth.

Trinidad and Tobago’s original Muslim population was of East Indian descent and lived fairly harmoniously with other parts of the population. The JAM, by contrast, had its origins in the marginalized afro-Trinidadian youth of slums such as Laventille.

Its leader, former police officer Lennox Philip (who converted to Islam and assumed the name Yasin Abu Bakr), built his movement on the alienation of such youth and the perceived widespread corruption that permeates Trini government and society.

Following the unsuccessful attempt to overthrow the state in 1990, and the government’s decision under duress to pardon the JAM leadership, the movement metastasized into multiple afro-Trinidadian youth gangs, ever more loosely connected with JAM founder Abu Bakr. Those groups interacted with numerous other small and medium-sized gangs concentrated in the urban East-West corridor in the north that extends to the western coast.

With respect to the approximately 150-175 persons who have left Trinidad to fight for ISIS in Iraq and Syria, the majority have not come directly from the JAM, nor do they attend its principal mosque in the Port of Spain suburb of St. James. Rather, most have their origins in the afro-Muslim gangs which have spun off from the JAM since 1990.

They attend or have been influenced by mosques with more extremist teachings, and in particular, mosques in Rio Claro, Carapo, and the Enterprise area. There is, nonetheless, still a connection between the JAM and the foreign fighters insofar as the leaders of the more radical mosques, including Nazim Muhammed of the Rio Claro mosque (from which the greatest number of presumed ISIS recruits have come), and Hassan Ali, head of the Carapo mosque, were part of the movement that led to the 1990 JAM coup attempt, and still maintain ties to the JAM and its leader Abu Bakr.

In another case, a JAM-affiliated leader from the Rio Claro mosque has left the mosque with a group of followers, and has reportedly set up a new temporary facility for prayer services and other activities more consistent with the group’s radical beliefs in a compound of makeshift tents in Diego Martin.

Despite some connections, in the context of Trinidad and Tobago as a democratic society with freedom of expression, the public discourse of Imams in radical mosques during prayer service does not necessarily violate the law. Similarly, at least one of the JAM mosque compounds has an obstacle course that could be used for paramilitary training. Yet such a facility is no more inherently threatening on paper than a rock climbing wall in a U.S. community center.

The state has, however, taken action when the activities of those mosques have violated the law. A case in point is the 2015 trial and conviction on murder charges of Rajaee Ali, the son of the leader of the Rio Claro mosque.

With respect to the foreign fighters, very few are known to have returned, yet little is known about those who have left. Trinidad and Tobago has a relatively strong anti-terrorism law, passed by parliament in 2005 and strengthened on three separate occasions since (2010, 2011, 2012, and 2014).

As with the rhetoric of Imams and the facilities in radical mosques, taking legal action against foreign fighters under Trinidad and Tobago’s 2005 terrorism act has been challenging because of the difficulty of proving, at the level required to achieve a criminal conviction, that an Islamic citizen traveling from Trinidad and Tobago to another Islamic country such as Turkey, is necessarily doing so with the intention to fight for ISIS.

Not only has the movement of foreign terrorist fighters from Trinidad and Tobago to the Middle East contributed to the problem of ISIS there, but their return presents risks of terrorist incidents in, or from, Trinidad and Tobago, and the rest of the region, with implications for the United States.

The recruitment of foreign fighters from the portion of Trinidad and Tobago’s gangs identifying themselves as “Islamic” is only one part of the corrosive situation of gangs in the country.

While the previously noted shared ancestry of the Islamic gangs always gave them a greater level of organizational cohesion than the others in the society, particularly after 1990, the interactions between the gangs, both in urban slums such as Laventille, and within the country’s prisons, forced the diverse universe of gangs into three groupings:

  • Islamic criminal gangs;
  • A more atomized set of non-Islamic groups sharing the same neighborhoods, referred to as “Rasta City;” and
  • “Independent” gangs, often away from the urban centers, or occupying territory around key logistics sites such as ports.

The latter grouping, sometimes because of their separation from the struggle between the Muslim gangs and other gangs in poor urban areas, tend to work with both in order to make money moving and selling drugs, or facilitating other types of illicit activities.

Sources of Revenue

By the end of 2015, the Trinidad and Tobago Police Service estimated there were 147 gangs, with 1,698 members, responsible for approximately 34% of all murders in the country.

The growth of the gangs, particularly in the north and west-urban corridor of the country, concentrated on the greater Port of Spain area, has been fueled in part by the role of the gangs in a range of revenue-producing activities.

One counter-intuitive source of activity for both Islamic and other gangs has been obtaining construction contracts, or otherwise obtaining employment in government infrastructure and social services programs.

Trinidad and Tobago Prime Minister Keith Rowley. Photo by Jim Mattis via Flickr

In response to the government’s efforts to provide economic opportunity in marginalized areas through the Unemployment Relief Program (URP) and Community Based Environmental Protection and Enhancement Program (CEPEP), the gangs have organized their own small businesses to win the contracts, and obliged outside companies to employ their members and others that they designate.

The ability of the gang leaders—either as the heads of the construction firms or neighborhood points of access for contractors—has allowed them to expand their hold over the communities by effectively determining who works, and by doling out the resources that come from the execution of the contracts. Instead of helping to reduce gang power and violence in marginalized neighborhoods, URP contracts for projects like box drains have arguably fueled bloody struggles between gangs to win them.

Beyond government projects, drug trafficking and local sales have been an important source of gang revenues. Although involvement in drugs theoretically violates the precepts of the Islamic faith, both the Rasta City gangs and those identifying themselves as “Islamic” have been involved in trafficking activities to some extent.

Nonetheless the nature of that involvement appears to differ among gangs, with some groups actively engaging in moving, selling and using drugs, and others “taxing” the trade through the area they control.

As with other powerful gangs in the region, gangs in Trinidad supply a degree of alternative governance in the area that they control. Through the previously noted exploitation of the URP and CPEP programs, the gangs have become de facto providers of employment.

Similarly, by making it too dangerous for representatives of the public utility services companies from entering the neighborhoods to cut off electricity and cable service to customers who don’t pay their bills, the gangs are perceived by some as helping community members maintain access to such services for free.

In the context of the perceived corruption and non-responsiveness of the legitimate authorities, gangs have imposed their own codes of justice on the neighborhood (in some cases in writing), and have become involved in resolving domestic disputes such as spousal abuse or helping parents deal with unruly children.

Gang leaders have also become involved in providing resources for community members on an individual basis, such as providing money for poor children to buy food or school books. In at least one case, the local gang boss in Beetham Estate Gardens reportedly throws a local Carnival (Mardi Gras) party for the neighborhood, so that its residents do not have to leave their neighborhood to celebrate.

For Trinidad and Tobago, the region and the U.S., the presence of criminal gangs decreases the areas over which the state has positive control, as well as indirectly weakens governance by depressing economic activity and advancing a culture of violence, which ultimately creates a space in which narcotrafficking and illicit networks impacting the United States can flourish.

As seen in this section, the gang culture is also directly tied to the foreign fighter threat, and thus the U.S. fight against terrorism.

Narcotrafficking

Although Trinidad has always been the major commercial airline and shipping hub for the Eastern and Southern Caribbean, its emergence as a major narcotrafficking hub is recent.

The increasing isolation of Venezuela and attention given to commercial and other vessels leaving it, have made it more attractive for narcotraffickers to move their product into Trinidad and launch it toward the United States from there. In addition, the ability to move drugs from Trinidad toward the United States by advancing island-to-island offers an alternative to taking a more direct route with more expensive and higher-profile boats. Trinidad has twelve widely dispersed small ports of entry, relatively unguarded, that facilitate the traffic.

Trinidad and Tobago’s relatively open borders, high levels of corruption and status as a regional center of finance and industry has facilitated its emerging role as a hub for drugs and other illicit activity. A small number of the numerous yachts which famously are moored in Chaguaramas to wait out the hurricane season are believed to be used to smuggle drugs to Europe and the U.S., leaving the Gulf of Paria free of drugs, then rendezvousing with narcotraffickers near the coast of Venezuela to load illicit cargo before continuing on to their final destination.

To some degree, drugs are hidden in Trinidad and Tobago’s commercial cargo as well, as illustrated by the January 2014 seizure in Norfolk, Virginia of 332 kilograms of liquid cocaine from Trinidad, concealed in cans labeled as orange juice, and the seizure by Canadian authorities in December 2015 of a similar shipment.

Yet either because of the lack of shipments, or the success of corruption in protecting drug shipments, authorities have yet to bring a case against a major narcotrafficking organization within Trinidad and Tobago itself. The last takedown of a great narco-boss in Trinidad and Tobago was the 1996 arrest of Nankissoon Boodram (“Dole Chadee”), and even then he was initially detained on a minor offense and convicted for murder, not drugs. The Trini government executed Chadee and eight other members of the gang during a four-day period in June 1999.

However, authorities have not yet even resolved the previously mentioned three-and-a-half year old case of the shipment of cocaine to the U.S. disguised as orange juice.

Experts consulted for this work make a loose distinction between a small number of actors who appear to be major transporters of cocaine through the region, and others more focused on the retail trade.

The former category includes Vaughn Mieres (“Sandman”) who is believed to control drug trafficking through the north coast, and Phillip Boodram (“The Boss,”), who is now in custody. They argue, however, that even such local facilitators are relatively minor actors in the movement of cocaine from source countries like Colombia through Venezuela to the United States and Europe.

From a U.S. perspective, narcotrafficking through Trinidad and Tobago not only directly contributes to the drug problem (although U.S. demand is still the major problem); like the gang threat, it also contributes to corruption and weak governance that facilitate the operation of illicit networks in the region, and the recruitment of foreign fighters.

The relatively high level of violence in Trinidad and Tobago and the relative power of the gangs to rob and intimidate have arguably been magnified by the large number of firearms in the country, with some three-quarters of murders involving the use of firearms, and gang members twice as likely as non-gang members to use firearms.

In the matter-of-fact words of one Trini security expert, “there is an oversupply of guns in the country relative to normal criminal needs.”

Trinidad security experts believe that firearms enter the country through the country’s commercial ports, Port of Spain and Port Point Lisas, hidden in commercial cargo, as well as from Venezuela.

Not only do Venezuelans cross the narrow stretch of water that separate the two nations to sell guns for needed food, medicine and other merchandise, but merchants from Trinidad reportedly travel to Venezuela to buy guns there. Although very few guns have been seized entering the country, 1,456 illegal arms of all types were collected by police in 2015 and 2016, due in part to a financial incentive program that the police have for such seizures.

While guns have generally been captured in small numbers, there have been a handful of larger seizures. In August 2010, for example, police found 18 high-powered rifles and other gear in the compound of Indian businessman and narcotrafficker Hafeez Karamath.

By contributing to the culture of violence in Trinidad and Tobago, the ready availability of firearms contributes to refugee flows and weakened governance throughout the region and threatens U.S. interests.

Decline in Kidnapping

If there is one bright spot in the Trinidad criminal landscape, it is the drastic reduction in kidnappings, which have fallen from over 100 per year seven years ago, to less than ten per year today.

While part of the credit goes to the police anti-kidnapping unit, security experts from the country also credit the strong reaction of powerful interests, citing the case of the July 2002 kidnapping of the grandson of Lebanese businessman Anthony Sabga, after which a number of the people questioned by the police turned up dead.

Subsequently there were no further kidnappings of prominent Lebanese families.

Trinidad and Tobago’s social composition has also shifted from the arrival of a significant number of Venezuelans, Syrians and Chinese.

….With respect to Syrian immigrants, a large but ultimately unknown quantity of Syrians has arrived in the country as a result of the ongoing civil war, with their incorporation into Trinidadian society facilitated by the wealthy and close-knit community of Lebanese and Syrians who migrated in the 1940’s and whose numbers have increased since the Lebanese civil war of the 1970s.

While very little is known about them, the introduction of some potentially radicalized Syrian Muslims into an established community of 5,000, and into an environment with a radicalized afro-Muslim community, could raise uncertainties and risks.

Finally, Trinidad’s Chinese community has grown significantly in recent years, partly as a product of Chinese coming into the country via work visas associated with the boom in construction projects by PRC-based companies in the late 2000s.

….Some interviewed for this study also worry that recent incidents of violence against Chinese businesses reflects the entrance of a new Chinese mafia (triad) group into the country, or worry that the large number of perennially empty Chinese restaurants and shops, as well as gambling machines installed by Chinese businessmen in restaurants and shops across the country, are a vehicle for money laundering.

Experts noted the cash-intensive nature of the restaurants themselves, the gambling machines installed in both Chinese and other restaurants and stores across the country, a lottery run out of such stores based on the national lotto “Play Whe,” and the informal role of such establishments as informal money changing houses, buying U.S. dollars at a premium rate.

Trini security experts interviewed suggested that local narcotraffickers may use the gambling in such establishments to launder their own earnings. Yet those experts also unanimously acknowledged that authorities have almost no visibility into the Chinese community.

Overall, the flow of Venezuela, Chinese, and Syrian refugees through Trinidad and Tobago negatively impacts U.S. interests because it both strains the socioeconomic fiber of the countries involved and potentially facilitates illicit networks.

The difficulties in Trinidad and Tobago described in the preceding paragraphs have further has been compounded by the sustained contraction of the economy since 2014, caused in part by depressed oil prices.

The closure of the Arcelor Mittal plant in March 2016, with the layoff of 650 workers, although occurring for a complex array of reasons, is a high-profile example of the job losses that have occurred during the recession. While the evaporation of jobs in the formal sector has contributed to crime and violence, the government’s loss of tax revenues and royalty payments from the oil sector has reduced its resources to sustain police presence in troubled neighborhoods, and otherwise respond to the security challenge.

What Is To Be Done?

While the issue of foreign fighters from Trinidad and Tobago has drawn greater U.S. attention to the country, outside of the U.S. embassy team and other experts whose job is to follow and engage with the country, the scant attention paid to the country at the policy level has been focused primarily on the “foreign fighter” issue, and not the broader interrelated problems of narcotrafficking flows, gangs, migrants, guns and corruption that influence U.S. security in the region.

The interdependent problems in the country are not exclusive to Trinidad and Tobago, but are found to different degrees throughout the Caribbean and the region.

Understanding how to successfully work with the partner government of Trinidad and Tobago to tackle the interrelated challenges of foreign terrorist fighters, gangs, guns, drugs, and corruption is fundamental to strengthening governance across the region and, in the process, advancing U.S. strategic and security interests.

Reciprocally, the solutions that the U.S. finds in its engagement with Trinidad and Tobago may help to advance more effective engagement across the region.

The U.S. embassy team in the country has done a laudable job in the country with limited resources available. But the position of U.S. ambassador to Trinidad and Tobago has been vacant since Ambassador John Estrada left in January 2017. While the U.S. Security Cooperation Organization, operating from the embassy, has managed helpful training engagements and technical assistance programs, and has conducted important exercises such as Tradewinds, the U.S. Senior Defense Official in the country is operating with almost no support staff.

It also appears likely that security cooperation and other institution-building programs administered through the Department of State through the Caribbean Basin Security Initiative, could be cut significantly in the coming years.

To address the challenges outlined in this paper, the U.S. should consider the following:

  • Incorporate into a future version of the U.S. National Military Strategy and National Security Strategy, the strategic importance of stability and strong governance in the Caribbean, with respect to the vulnerability to the United States presented by violence, narcotrafficking, refugees, illicit networks, and the presence of adversarial extra hemispheric actors permitted by weak governance in the region;
  • Increase attention to U.S. engagement with Trinidad and Tobago, explicitly reflecting lessons learned regarding what works and does not work in the cooperative, multidimensional engagement against its challenges, with the eye to applying those lessons in other parts of the English-Speaking Caribbean, and the region more broadly;
  • Significantly expand funds allocated to Trinidad and Tobago for security cooperation programs, through both the Department of State and Department of Defense, including but not limited to CBSI programs;
  • In conjunction with such increases, allocate additional staff to the Security Cooperation Office to accommodate the effective administration of those programs; and
  • Make a priority the naming and confirmation of a new full-time ambassador to the country.

The strategic location of Trinidad and Tobago vis-à-vis Venezuela, the Caribbean, and regional oil reserves make the country of strategic importance to the United States.

Evan Ellis/courtesy GlobalAmericans

It is important that the U.S. not overlook the very serious problems occurring in its not-so-distant partner.

Evan Ellis, PhD, is Senior Non-Resident fellow at the Center for Strategic and International Studies, and a research professor of Latin American Studies. This is a condensed and slightly edited version of a paper published earlier this month in Global Americans. Click here for a complete copy of the paper. Readers’ comments are welcome.

from https://thecrimereport.org

Philippine President: Police Can Kill ‘Idiots’ Who Resist

President Rodrigo Duterte, whose deadly anti-drug campaign has faced intense international criticism, paused during a speech to tell a local police chief that it is his duty to “overcome the resistance” of any crime suspect. If he violently resists, Duterte said, “You are free to kill the idiots. That is my order to you.”

Philippine President Rodrigo Duterte told police on Monday they could kill “idiots” who violently resist arrest, two days after hundreds of people turned the funeral of a slain teenager into a protest against his deadly war on drugs, reports Reuters. Duterte broke off midway through a prepared speech at the Hero’s Cemetery on the outskirts of Manila and addressed impromptu comments to Jovie Espenido, the police chief of a town in the south where the mayor was killed in an anti-drugs raid. “Your duty requires you to overcome the resistance of the person you are arresting … (if) he resists, and it is a violent one … you are free to kill the idiots. That is my order to you,” Duterte told the chief.

Meanwhile, Duterte also met the parents of the schoolboy, 17-year-old Kian Loyd delos Santos, at the presidential palace in Manila on Monday, to assure them their son’s case would be handled fairly. Delos Santos’ mother, Lorenza, said she was confident the president would help quickly resolve the case. “He promised he would not allow those who have committed wrong to go unpunished,” the mother said in an interview posted online by Duterte’s communications office on a Facebook page after the meeting. Duterte unleashed the anti-drugs war after taking office in June last year following an election campaign in which he vowed to use deadly force to wipe out crime and drugs. Thousands of people have been killed.

from https://thecrimereport.org

Why Declaring ‘War’ on Mexican Drug Cartels Is a Bad Idea

Some analysts are pushing for armed U.S. intervention in Mexico’s battle with drug traffickers to curb the opioid epidemic. But a security expert warns it would undercut more sensible strategies of decriminalization and treatment—and cost more lives.

In a recent opinion piece for U.S. News & World Report, Matt Mayer proposed that Congress “declare war” on Mexican cartels in order to curb the growing number of fatal opiate overdoses of Americans.

It’s an incendiary proposal—and a dangerous one.

Not only would it be ineffective in countering cartels or reducing fatal overdoses in the U.S.; it would lead to lead to the murders of thousands more Mexican civilians, not to mention endanger the lives of American soldiers.

The drug war in Mexico has already taken a deadly toll. Between 2006 and 2015, more than 100,000 people have died as a result of narcocrime-related incidents in Mexico—many of them innocent casualties not only of turf battles among trafficking cartels but of Mexican military operations against those cartels.

This year, Mexico is on track to record its highest number of homicides since official record keeping began in 1997. The first six months of 2017 have seen a total of 12,155 homicide cases opened.

Also of concern: Violence is spreading throughout Mexico. Where previously it was concentrated in a few areas, 27 of 32 Mexican states now report an increase in homicides.

The Mexican government’s increased reliance on the military to counter the spreading power of the cartels dates from 2007, when then-Mexican President Felipe Calderón more than doubled the number of personnel assigned to domestic security and counternarcotic operations from 20,000 to 50,000.

Although a parallel investment in local economic development, neighborhood revitalization and violence-prevention helped to reduce homicides in some Mexican states, several studies suggest that localities with joint military operations actually saw an increase in homicides.

The carnage continues. Current President Enrique Peña Nieto has continued the domestic military deployment even while conceding that military measures alone have done little to curb production or consumption of illicit drugs. Yet some of his military tactics have made things even worse. His strategy of targeting top cartel leaders may have led to even more widely dispersed violence by fueling internecine battles for leadership among the groups.

Mark Krupanski

A U.S. “hot war” in Mexico would not only double-down on such an ineffective and disastrous strategy, but put it on steroids.

Even leaving aside the challenge to international jurisprudence such a military intervention would present, it would add yet another point of conflict between the current U.S. administration and Mexican civil society, which is already incensed by Washington proposals to build a border wall and back out of the North American Free Trade Agreement .

And it’s a new military commitment that Americans hardly need. US military personnel are already engaged in intensive combat operations in at least five countries.

Mayer may not be concerned with the cost to Mexican society and civilians of a U.S. military intervention. His primary concern is curbing the high rate of fatal opiate overdoses in the United States. Nonetheless, U.S. military intervention in Mexico will not significantly reduce illegal drug consumption or overdose rates in the United States.

For proof, we need only look at the sustained U.S. military involvement, through “advisors” and equipment, in counternarcotic operations during the war on drugs in the 1980s and 1990s—an involvement that has had no substantial impact on demand and use reduction in our country.

There are better solutions. Anyone concerned about the opioid epidemic in the U.S., should support evidence-based harm reduction approaches. That includes greater distribution of naloxone to peers, opening drug consumption rooms, and addressing the underlying social and political factors, such as poverty, alienation and personal trauma, that drive addictive behavior.

Mexicans and other Latin American countries, such as Colombia, Costa Rica, and Uruguay have grown weary of the ineffective violence from the drug war and have supported public health-based approaches as well as drug decriminalization. In fact, Colombia, Guatemala, and Mexico united in bringing about a renewed debate on drug policy at the United Nations.

Medically supervised drug consumption rooms, for instance, exist in Canada, Europe and Australia. There are 74 in Europe alone. Such a facility in Vancouver, Canada, has had no fatal overdoses in its entire history.

Legal prescription of medical heroin has also proved useful for longtime users when other treatments have failed. Increasing access and distribution to naloxone, which is still opposed by some U.S. policymakers despite conclusive evidence that it reverses the effect of overdoses, can also have a more positive impact.

Decades of austerity measures and divestment from social safety net, economic opportunities, and health services have contributed to our current national opioid crisis.

Providing people with opportunities to earn incomes, and live in affordable housing can positively impact their health choices, including drug consumption. Reducing social and economic alienation and providing client-specific trauma-response may also help reduce drug demand.

The Mexican government is supportive of such measures. Policymakers who might be tempted by Mayer’s call to war should consider the evidence-based public policy recommendations issued under the newly launched “Instinto de Vida” (Instinct for Life) campaign, which seek to cut homicide rates in Latin America by 50%.

Our drug war has gone on for over 50 years. It hasn’t prevented the current crisis.

Opening a new, violent chapter in that war is unlikely to solve it.

Marc Krupanski is a program officer with the Public Health Program of the Open Society Foundations, where he leads the law enforcement and harm reduction portfolio. He has worked on law enforcement and security sector reform both domestically and internationally over the past 14 years. He welcomes comments from readers.

from https://thecrimereport.org

Violence Encroaches on Mexican Tourism Meccas

Violent crime is on the rise in the tourism hot spots of Cancun, Playa del Carmen and Tulum, jeopardizing a $20 billion-a-year business that attracts millions of American visitors.

USA Today reports that violent crime is encroaching on the Mexican tourism hot spots of Cancun, Playa del Carmen and Tulum, jeopardizing a $20 billion-a-year business that attracts millions of visitors lured by the white sand beaches, archaeological ruins and pulsing nightlife. Although the crime wave so far is mostly limited to areas outside the resorts where tourists stay, Cancun shows signs of following the ill-fated path of Acapulco. That city was once the granddaddy of Mexican tourist destinations, but now is one of country’s deadliest areas and no longer a mecca for international travelers.

Crime and violence between rival drug gangs has surged throughout Mexico, creeping into other popular destinations, such as Los Cabos on the southern tip of the Baja Peninsula. Homicides there are up 400 percent so far this year, underscored by the discovery of 14 bodies in a mass grave in June. The spike in violence comes as Mexico welcomed a record 35 million foreign visitors in 2016, up nearly 9 percent from the previous year. Tourism officials acknowledge the problems plaguing tourist towns: low wages, inadequate housing for workers and increased crime. Quintana Roo state, where Cancun is located, recorded 133 murders in the first six months of 2017, more than double the total for all of last year.

from https://thecrimereport.org

DEA Agents Pose as Guerrillas to Net Arms Trafficker

Faouzi Jaber, a 61-year-old Ivorian citizen, pleaded guilty this week in a case involving smuggling arms and drugs to Colombia’s FARC group. But the undercover tactics by U.S. agents raise questions about future drug-war strategies in Colombia.

A man from the Ivory Coast has pleaded guilty in a New York federal court to offering support to undercover DEA agents posing as members of Colombia‘s FARC guerrilla group.

The case involving Faouzi Jaber, a 61-year-old Ivorian citizen known by the alias “Excellence,” raises questions about the handling of similar operations in the future in light of the FARC‘s ongoing demobilization.

Faouzi Jaber. Photo courtesy InSight Crime

Jaber pleaded guilty on July 25 to conspiring to traffic arms and drugs in support of the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia – FARC) insurgency, which the United States considers a terrorist organization.

According to a press release from the U.S. prosecutor’s office, Jaber met multiple times with confidential sources working for the US Drug Enforcement Administration (DEA) who were posing as members of the FARC.

In those meetings, Jaber introduced the confidential sources to drug and arms traffickers, and promised to help the guerrilla group obtain weapons, smuggle drugs in Africa and launder money.

Jaber was arrested in April 2014 by local authorities in the Czech Republic acting on a US request for his capture and extradition.

Jaber is not the first international arms trafficker brought down by DEA operatives pretending to be members of the FARC.

Perhaps the most infamous example is the 2008 arrest in Thailand of Viktor Bout, the so-called “Merchant of Death” who was later convicted in the United States of conspiring to sell arms to DEA sources posing as FARC fighters.

More recently, a Romanian-born man named Flaviu Georgescu was convicted in the United States of participating in a weapons trafficking conspiracy following a similar set-up.

Although the tactic of posing as the FARC has helped the DEA capture a number of suspected international criminals, the agency will almost certainly have to find a new group to impersonate in these types of stings. The FARC, one of the world’s oldest and most famous guerrilla groups, signed a peace deal with the Colombian government last year and recently handed over its weapons to the United Nations.

However, the fact that the FARC is now effectively defunct as a guerrilla organization does not mean that the DEA will stop using confidential sources posing as criminals to execute sting operations.

In fact, this tactic—which has been criticized as a form of entrapment— has become a staple of the DEA’s pursuit of so-called “narco-terrorism” cases in Latin America and abroad.

Mike LaSusa is editor of InSight Crime. The Crime Report is pleased to publish this story in collaboration with InSight Crime. For the complete version, including related links, please click here. Readers’ comments are welcomed.

from https://thecrimereport.org