The FBI does the jobs no one else can do and the ones no one else wants to do. Corrupt police can have a devastating impact on a community because they erode faith in the rule of law. Yet some state attorney generals have historically been loath to take on such cases, in large part because they set them at odds with law-enforcement agencies they have deal with on a regular basis. We went after police corruption time and again during my years as director, in my old stomping grounds in West New York and in dozens of other police departments all across the nation. As with crime generally, the crimes committed by police officers are often linked with the trade in illicit drugs. Roughly half of all the convictions won in FBI-led police corruption cases during my time as director involved drug-related offenses.
We took on corrupt politicians, too, like former Louisiana governor Edwin Edwards. Edwards was the very definition of a charming rogue. The agents working the case all liked him, as did the voters of Louisiana. He’d been elected to four terms as governor, three of them consecutive. Edwards’s political career took a slight setback in the mid-1980s when he was indicted for fraud and racketeering. After a hung jury in the first trial, Edwards was acquitted of the charges in 1986. He regained the governor’s office in the early ’90s and resumed his old habit of using it for personal gain. Along with his son and several other associates, he extorted millions of dollars from people seeking licenses to set up riverboat casinos in the state’s waters. Among those to appear against him was Edward DeBartolo Jr., the former owner of the San Francisco 49ers, who testified that Edwards hit him up for $400,000 for a license, plus a 1 percent interest in the casino once it was up and running. In the end, a a jury of Edwards’s peers agreed with the government’s case and the ex-governor was sentenced to ten years in prison. Only the FBI could successfully pursue such a case.
Before the September 11, 2001, attacks on the World Trade Center and Pentagon, the largest single area of responsibility for the Bureau was white-collar crime, an all-purpose phrase that covers a multitude of sins. One of the most frustrating of all crimes in that broad category was the one involving trade secrets, frustrating because so much money was at stake and because existing laws were so inadequate to the task. Oftentimes, the cases involved a former employee trying to make off with some corporation’s intellectual property. We nabbed a onetime contractor for Gillette who had stolen trade secrets related to the development of a new razor, a potential loss to Gillette of hundreds of millions of dollars. But in a surprising number of cases, foreign governments, many of them our putative allies and friends, specifically instructed their intelligence services to go after and secure trade secrets that would give their own companies a decided advantage over American competitors. (Good espionage can drive the research and development budget down to near zero.) Targets included pharmaceutical formulas, enzymes, computing software and applications—billions of dollars of intellectual property in the aggregate, not to mention the loss of jobs from the lost revenues and the forfeiture of American leadership in critical areas of technology.
In all, we identified about forty-three nations that were so instructing their security services and, in most cases, using their own U.S. embassies as bases of operation. The People’s Republic of China surprised no one, but some of our closest allies bordered on the shocking.
Just as shocking were the antiquated laws we had at our disposal. For hundreds of years, trade-secret laws belonged to the states. If someone stole the plans for your better spinning wheel or improved mousetrap, you could sue them in state court, or the state could prosecute, but federal entities were almost powerless to intervene. That might have made sense in a preglobal business environment, but in an economy where foreign governments were among the biggest perpetrators, it hamstrung us to no end.
We tried to get around the matter by invoking a variety of federal statutes—mail fraud, wire fraud, and the like—but the fit was sloppy at best. In one case, in Massachusetts, we charged a group of intellectual-property thieves with the transportation of stolen goods in interstate commerce, a crime to be sure and one for which we had jurisdiction, but a stretch all the same. The judge read the statute; looked at our case; reminded us that the law applied to goods, not ideas; and threw us out of court. Rightly so, I think.
Finally, we drafted a new trade-secrets statute at the FBI; ran it by the Justice Department, which was fine with the idea, and the White House, which didn’t give us much support. We called the bill the Economic Espionage Act and took it to Congress. That’s exactly what it was—spying meant to gain an economic advantage, not a military one—but the State Department was appalled at the name. You can’t call it “espionage,” they screamed; ambassadors all around town will be rushing for their smelling salts. Let’s make it the Economic Security Act instead. But we held our ground, and the statute passed—a landmark federal trade-secrets law that has gone a long way toward protecting American commerce from foreign spies.
Health-care fraud, antitrust cases, bank fraud, and embezzlement—they all routinely consume tens of thousands of agent hours, with trillions of dollars hanging in the balance.
By the mid-1990s, the FBI was estimating that health-care fraud and other abuses were costing consumers on the order of $100 billion annually, a staggering figure, yet just as had been the case with trade secrets, there was no pertinent federal legislation governing a broad set of relevant crimes. Congress, as it frequently does, had fallen way behind the curve. Again, we were using outmoded laws—the interstate transportation of stolen property statute and others—to bring cases against a whole new class of crime and criminals. We needed new legislation, new funding and manpower, new forfeiture and civil-fine provisions. Again, it was the FBI that drafted the necessary new criminal provisions for the Health Insurance Portability and Accountability Act of 1996, and we didn’t waste any time in taking advantage. Health-care convictions jumped more than threefold between 1992 and 1997. Eleven physicians in San Diego pled guilty to conspiring to commit medical fraud against insurance companies. Another eleven doctors in New York were charged with taking kickbacks in exchange for Medicare referrals for equipment and other services. In Miami, we indicted seven doctors, a dozen nurses, and twenty other people on similar schemes. SmithKline Beecham Clinical Laboratories Inc. paid the government $325 million to settle charges that it had filed false federal claims. Damon Clinical Laboratories paid $119 million; the Laboratory Corporation of America, $187 million in criminal fines and a civil settlement. And on and on it went.
Under the aegis of Operation Broker Bust, we brought charges against twenty-seven real-estate professionals, including mortgage brokers and accountants, who were securing mortgage loans with false information provided to lending institutions. Under Operation Rogue Brokers, we won indictments against twenty-five investment brokers who were defrauding their clients. Operation Checkmaster, targeted against check and credit-card fraud and counterfeiting, has won hundreds of indictments, arrests, and convictions.
In one of the greatests examples of individual initiative and persistence I was to witness during my eight years as director, two FBI agents working out of our small regional office in Decatur, Illinois, caught the scent of a price-fixing scheme at Archer Daniels Midland Company and wouldn’t let it go.
The office seemed almost too small to undertake such a gigantic criminal case. There were other duties and responsibilities that had to be seen to. Moreover, ADM had a powerful national presence. Not only was it then the forty-eighth largest publicly held company in America, it also sponsored This Week with David Brinkley and was a major political donor. Some of ADM’s principal beneficiaries were among the most powerful political brokers in Washington.
In spite of everything, these two remarkable agents, Brian Shepard and Bob Herndon, spent more than two years gathering evidence that ADM had conspired with Japanese and Korean companies to fix the price and volume of a feed additive for livestock. With help from their fellow Decatur agents and from the Bureau’s Atlanta a
nd San Francisco divisions, they were also able to make the case that ADM had engaged in price fixing in high-fructose corn syrup and in citric acid. By the time the matter ended up in my office, the case was backed up by more than a hundred audio and video recordings of the conspirators planning to evade existing laws. In the end, Archer Daniels Midland paid more than $100 million in criminal fines for violations of the Sherman Antitrust Act and an additional $300 million in civil fines—again, benchmark figures. In 1998, an Illinois court found three former executives of the company guilty on one count each of violating the antitrust provisions. Had these dedicated agents not been so determined to see justice done, I doubt that we ever would have gotten there. FBI agents—even just two of them—can make a difference.
Ever since agents were empowered back in the 1930s to carry guns and cross state lines, bank theft—whether by fraud or embezzlement, or by blasting the vault door off its hinges—has been one of the Bureau’s key responsibilities. Bad guys go where the money is, and banks exist to warehouse the stuff. In a global economy, though, banks have even greater criminal utility. We ran down a series of New York City banks that were being used to illegally funnel billions upon billions of dollars out of the former Soviet Union. Thanks to computers, you don’t even have to show up at a bank anymore to rob it. In one celebrated case, Vladimir Levin, a Russian computer expert based in St. Petersburg, and a gang of associates used stolen passwords and identification numbers and an off-the-shelf PC to transfer $10.4 million from Citibank into their own accounts strewn all over the world. Eventually, after Levin was arrested in London and extradited to the U.S., all but $400,000 of the money was recovered by the FBI.
Another Russian, Alexey Ivanov, used a stolen credit card to open an account with a San Diego-based Internet service provider, then hacked his way into a Los Angeles e-bank and two credit-card processing companies. When he was indicted on fifteen criminal counts relating to the scheme, Ivanov already had trials pending in two states on similar charges. Hacker crooks are like vampires; you have to drive a stake through their heart to slow them down. And even then you better keep some cloves of garlic hanging around your neck.
When I set up the FBI academy in Budapest, I insisted that computer training be a significant part of the program. IBM responded by generously donating an entire classroom dedicated to teaching police from around the world about computer crime—a tremendous boon for law-enforcement agencies everywhere because computer crime is a borderless phenomenon. Japanese crime syndicates have used Russian hackers to blast their way into police databases so they can monitor efforts to rein them in. In Italy, the Mafia and associates hacked their way into one bank’s computer network and diverted more than $100 million in European Union aid to mob accounts. Michael Bloomberg was two years shy of becoming mayor of New York City when two guys from Kazakhstan tried to extort money from him by threatening to expose security holes on his Internet-based financial news service. The FBI stopped them and made the case.
To combat such crimes and the potential threat they posed to vital national interests, we set up the Computer Investigations and Infrastructure Threat Assessment Center in 1996 and two years later folded that into the National Infrastructure Protection Center, also located within the FBI. We worked to beef up the relevant statutes, and we worked mightily to augment and enhance our own expertise. Even then, though, it sometimes didn’t do any good. Nearing the end of the Clinton administration, we had a series of cases in which young teenage hackers were crashing the computing systems of U.S. Internet-based companies. Among those responsible, we learned, was a fourteen-year-old Canadian boy, but that’s where the trail ended. In Canada, what he had done wasn’t a crime. We couldn’t even interview the young man about it because of his age.
“Well,” I said when I found that out, “can we hire him, then?” But of course we couldn’t do that either. In the end, we were oftentimes being taught this end of the business by teens and even preteens from around the world.
Computers, the Web, the Internet, e-mail, instant messaging—they’re all great. They level the playing field: a simple PC and an Internet connection can give the poorest people on earth access to the same information available to a Ph.D. candidate at Harvard or the Sorbonne, Oxford, or MIT. Thanks to the World Wide Web, entrepreneurs have been able to launch a myriad of businesses with virtually no overhead and market their goods globally, not just locally. My guess, though, is that of all the criminal subsets of society that have benefited from the connectivity, none has benefited more than sexual predators. The Internet takes the lock off the door. Chat rooms let predators cozy up to the desks and bedrooms where kids are typing away on their keyboards.
Crimes against kids strike a special chord with me as they do with most people. You don’t have to spend much time talking with someone like John Walsh to appreciate the devastation that comes when a child is murdered or to admire his and Reve Walsh’s determination to turn their son Adam’s death into a better world for all children. Adam was six years old when he was abducted and brutally killed in Hollywood, Florida, in 1981. Out of that terrible experience and the news reports it generated came the Missing Children Act of 1982, the Missing Children’s Assistance Act of 1984, and the Adam Walsh Child Resource Center, which has since been merged with the National Center for Missing and Exploited Children (NCMEC), where Ernie Allen and John Rabun do a stellar job for all of us. As director I assigned agents to the center on a full-time basis. You do not have to spend a long time reading the history of Megan Kanka, the seven-year-old New Jersey girl raped and murdered by a two-time sex offender, to appreciate the need for the so-called Megan’s Laws at both the state and federal level that help to track and identify those who serially prey on children.
To me, the Internet posed an especially insidious threat to kids because it can be so easy for predators to use cyberspace to hide their identity while they slowly rope in their prey. Worse, as I looked around the Bureau, it became apparent to me that we weren’t doing nearly enough, or doing it the right way. Rather than go after Internet predators, we waited for state and local law-enforcement agencies to ask for our help, then sent agents out. To remedy matters and to insert ourselves more directly into the fight, we launched a program we called Innocent Images out of our Baltimore office. It wasn’t a huge undertaking, at least initially, just a couple of agents who would go into chat rooms posing as young teens to see what might happen. We weren’t after pornographers or casual perusers of the chat rooms, even ones who like to talk dirty to kids. Our main goal was to rope in what are called travelers, predators who after a few cyber chats want to meet a child in a mall or a motel. In too many instances, travelers had lured kids into sexual liaisons and far worse.
I’m not sure anymore what I expected Innocent Images to turn up by way of numbers, but whatever it was, it was insufficient to the reality. It was like happening upon some incredible trout stream never before visited. The fish just couldn’t stop taking the bait. The more people we put on the program, the more cases we made. A little publicity followed. Surely, I figured, word would get around, and the bait taking would slow down. But no.
I said as much one day to one of our young agents working the Internet for Innocent Images.
“This can’t last, can it?”
“Watch this,” she answered as she plunged into yet another chat room.
“Hi,” she typed in, “I’m Amy, I’m thirteen, and I’m lonely. Is anyone there?”
Within seconds, she had ten hits. Then she changed course dramatically.
“I’m not Amy,” she pecked in. “I’m a twenty-eight-year-old FBI agent.”
But that didn’t stop things for a moment.
“Yeah, right,” came the responses. “Where can I meet you?”
We were laughing watching the screen, but it wasn’t humorous in the least.
Soon we were franchising the program around the country, to our own field offices, naturally, but also to state and local law-enforcement
organizations that had heard about Innocent Images and wanted a version of their own. To pull the loose threads together, we also set up a Crimes Against Children coordinator in each of our major field offices. To this day, the program has never received a great deal of notice, but to me it’s law enforcement and the FBI at its best.
It simply is not possible to do a job like being the FBI director in normal business hours. Too much is going on. There are too many demands on your time, too many angles that have to be covered, but I was determined to lead as normal a life as I could—for myself and my family—under the circumstances.
When I wasn’t on the road, I’d generally wake up about 5:00 in the morning, throw on my sweat clothes, and take off jogging from the front door of our house out in Great Falls for about three miles. Afterward, I would shower and dress, then come down to the kitchen and make lunches for all the kids who were then headed to school. I was happy to do it—that hour of the morning was dead time for me, and I was giving Marilyn some much-needed assistance. But I also used my duty to slip little notes into the lunches: “Be sure to study for your Spanish exam this afternoon,” “Don’t forget to turn in your trip money,” that kind of thing.
The notes drove the kids crazy, but they must have made an impression because they still talk about them. Maybe they even learned something from the reminders and encouragements. Our oldest, Justin, is in his final year at the United States Naval Academy as I write; the next in line, Brendan, is studying filmmaking in California.
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