Haro flightline sport sixty sixty one

Postmodern global terrorist groups engage sovereign nations asymmetrically with prolonged, sustained campaigns driven by ideology. Increasingly, transnational criminal organizations operate with sophistication previously only found in multinational corporations. Unfortunately, both of these entities can now effectively hide and morph, keeping law enforcement and intelligence agencies in the dark and on the run.

Perhaps more disturbing is the fact that al Qaeda, Hezbollah, FARC, drug cartels, and increasingly violent gangs—as well as domestic groups such as the Sovereign Citizens—are now joining forces. Despite differing ideologies, they are threatening us in new and provocative ways. The Terrorist-Criminal Nexus: An Alliance of International Drug Cartels, Organized Crime, and Terror Groups frames this complex issue using current research and real-world examples of how these entities are sharing knowledge, training, tactics, and—in increasing frequency—joining forces.

Providing policy makers, security strategists, law enforcement and intelligence agents, and students with new evidence of this growing threat, this book:

• Examines current and future threats from international and domestic criminal and terror groups

• Identifies specific instances in which these groups are working together or in parallel to achieve their goals

• Discusses the “lifeblood” of modern organizations—the money trail • Describes how nefarious groups leverage both traditional funding

methods and e-commerce to raise, store, move, and launder money • Explores the social networking phenomenon and reveals how it is the

perfect clandestine platform for spying, communicating, recruiting, and spreading propaganda

• Investigates emergent tactics such as the use of human shields, and the targeting of first responders, schools, hospitals, and churches

This text reveals the often disregarded, misunderstood, or downplayed nexus threat to the United States. Proving definitively that such liaisons exist, the book provides a thought-provoking new look at the complexity and phenomena of the terrorist-criminal nexus.

The Terrorist- Criminal Nexus

Jennifer L. HestermanISBN: 978-1-4665-5761-1 9 781466 557611

90000

An Alliance of International Drug Cartels, Organized Crime, and Terror Groups

H esterm

an The Terrorist-Crim

inal N exus

w w w . c r c p r e s s . c o m

www.crcpress.com

K15479

Homeland Security/Terrorism

The Terrorist- Criminal Nexus

An Alliance of International Drug Cartels, Organized Crime, and Terror Groups

The Terrorist- Criminal Nexus

Jennifer L. Hesterman

An Alliance of International Drug Cartels, Organized Crime, and Terror Groups

CRC Press Taylor & Francis Group 6000 Broken Sound Parkway NW, Suite 300 Boca Raton, FL 33487-2742

© 2013 by Taylor & Francis Group, LLC CRC Press is an imprint of Taylor & Francis Group, an Informa business

No claim to original U.S. Government works Version Date: 20130220

International Standard Book Number-13: 978-1-4665-5762-8 (eBook - PDF)

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© 2010 Taylor & Francis Group, LLC

Contents

Preface xv

About the Author xxi

Chapter 1 A Poisonous Brew 1 References 5

Chapter 2 Transnational Organized Crime: The Dark Side of Globalization 7 Multinational Corporate Sophistication 8

Transnational Organized Crime on the Rise 9

Scoping the TOC Challenge 10

Eurasian Transnational Crime: Size, Wealth, Reach 11

Italian Transnational Crime: Not Your Grandfather’s Mafia 13

Baltic Transnational Crime: Emergent and Deadly 17

Asian Transnational Crime: Sophisticated and Multicultural 18

African Criminal Enterprises: Internet Savvy and Vast 20

Emerging Area of Concern: North Korea 22

Fighting Transnational Crime Overseas … and within Our Borders 23

Palermo Convention: First Strike on TOC 24

National Strategy to Combat Transnational Organized Crime 25

Agencies and Methods 28

INL 28

DOJ 29

FBI 30

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Major Areas of Concern, Progress, and Lessons Learned 32

Counternarcotics 32

Human Trafficking 35

Money Laundering 37

Corruption 38

Lessons Learned 39

References 40

Chapter 3 Postmodern Terrorist Groups 43

Postmodern Organizational Theory: The Rise of Modern Terrorism and Groups 45

Genesis of Postmodern Groups and Thinking 45

Upstream Thinking 46

Epistemology 47

Deconstruction 47

Deconstruction’s Danger 48

Postmodern Organizational Theory 48

Neo-Marxist Organizational Theory 49

Diagnostic Tools of Postmodernism 51

Systems Theory 51

Environmental Theory 52

Symbolic Theory 53

Postmodern Theory and the Rise of Modern Terrorism 53

Final Thoughts on Postmodernism 54

Modern Terrorism’s Roots 55

What Is Terrorism? 55

Terrorism’s Target 56

The New Anatomy of a Terrorist Group 57

Life Cycle Study 58

Terrorist Group Members 60

Behavior 60

Motivation 61

Culture 62

Environment 63

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How Terrorist Groups End 64

International Terrorist Groups: The “Big 3” 66

Al Qaeda and Affiliates 66

The Ideology 67

Rise of bin Laden and al Qaeda 68

Emergent al Qaeda 69

AQAP or Ansar al-Sharia 69

Other Al Qaeda Splinter Groups 70

Bin Laden Speaks 72

Al Qaeda’s New Goals and Tactics 73

Al Qaeda and Nexus 73

Hezbollah 75

Unique Structure 76

Methodology and Objectives 76

Primary Area of Operations 77

Tactical Depth and Breadth 77

Political Acumen 78

Leveraging the Community 78

Strong Leadership 79

Active and Deadly 79

Global Operations 80

Latin America 80

Nexus Concern: Venezuela 80

West Coast of Africa 82

Europe 83

Iraq 83

Canada 83

United States 84

U.S. Response 85

FARC 85

Colombia: A Sophisticated, Transnational Narco-State 86

Final Thoughts 87

References 88

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Chapter 4 Domestic Terrorism and the Homegrown Threat 93

History of Domestic Terrorism in the United States 94

The Twenty-First Century and the Rising Tide of Domestic Extremism 99

Right-Wing Extremism 100

Militias 102

Sovereign Citizens 103

Left-Wing 106

Anarchists 106

Single-Issue or Special-Interest Terrorism 110

The Earth Liberation Front (ELF) 110

Animal Liberation Front (ALF) 110

Homegrown Terror 113

Rehabilitation and the Domestic Terrorist 115

Jihadist Defined 116

Recidivism 116

Terrorist Recidivism 116

Counterradicalization Efforts 117

Inside the Saudi Program 117

Possible Solutions in the Homeland 119

The Lone Wolf 120

Gangs: Evolving and Collaborating 122

MS-13—Moving toward 3G2 123

History 124

Structure 124

Operational Activities 124

Adaptable and Morphing 124

Sophistication 124

Internationalization 124

Rival Gang 125

Outlaw Motorcycle Gangs (OMGs) 126

Prison Gangs 126

Special Concern: Gangs and the Military 127

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The Way Ahead 127

References 128

Chapter 5 Drug-Trafficking Organizations Go Global 133 The Battle in Mexico 133

Ideology: Money 134

Tactic: Brutal Violence 135

Goals: Money, Power, Control 138

Major DTOs Impacting the United States 138

Nuevo Cartel de Juárez 138

Gulf Cartel/New Federation 139

Sinaloa Cartel 139

Beltran Leyva Organization (BLO) 140

Tijuana/Arellano Felix Organization (AFO) 140

La Familia Michoacana (LFM) 141

Special Concern: Los Zetas 141

Zeta Tactics 142

Increasing Reach in the United States 144

Interaction with Dark Networks 147

Nexus with Gangs 147

Criminal Activity Expanding 148

Savvy Propaganda Campaigns 148

DTOs Cross the Border: Cartels in the Heartland 149

LE Operations against DTOs in the United States 150

Operation Dark Angel 152

Project Delirium 152

Project Deliverance 153

Project Xcellerator 153

Project Reckoning 153

Nexus Area: Terrorists, SIAs, and DTOs 154

Corruption at the Border: Opening the Gates 157

DTOs: Foreign Terrorist Organizations? 159

Final Thoughts 160

References 161

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Chapter 6 Traditional Terrorist and Criminal Financing Methods: Adapting for Success 165

Funding Terror 166

Earning, Moving, Storing 167

Tactics 167

Earn 168

Move 168

Store 168

Earning 169

Charities 169

Designation 169

Zakat 172

Commodities Smuggling and Organized Retail Crime 173

Intellectual Property Crime (IPC) 175

Identity Theft 179

Other Fund-Raising Methods 183

Mortgage Fraud: Emergent Earning Method 184

Moving 186

A Paper Chase in a Paperless World: Informal Value Transfer Systems 186

Hawala 188

Storing, Earning, and Moving 189

Precious Metals and Diamonds 189

Money Laundering 192

Fronts, Shells, and Offshores 194

Bulk Cash Smuggling 196

E-gambling and E-gaming: Emergent Money-Laundering Concerns 197

E-gambling 197

E-gaming 198

The Way Forward 200

References 200

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Chapter 7 Terrorists and Criminal Exploitation of E-commerce: Following the Money Just Got Tougher 205

New Payment Methods Defined 206

Typologies and Concerns 207

Use of a Third Party 207

Person-to-person (P2P) Transactions 208

Lack of Human Interaction and Oversight 208

NPM Financing 209

Nonbanks 210

Internet-Based Nonbanks 211

The MSB 212

Methods of Using MSBs to Move Money 213

Digital Currency Exchange Systems 215

Prepaid Access Cards 219

Limited-Purpose/Closed-Loop Cards 220

Multipurpose/Open-Loop Cards 221

E-purse or Stored-Value Cards (SVCs) 223

Devices with Stored Value 224

Auction and Bulletin Board Websites 228

Auction Sites 229

Auction Site Intellectual Property Theft (IPT) 230

P2P Websites 232

Digital Precious Metals 235

E-dinar 237

The Battle Ahead 239

References 240

Chapter 8 Exploitation of Social Networking and the Internet 243

The Internet: A Twenty-First-Century Black Swan 244

Rise of Social Networking: Are We Users … or Targets? 245

The Mind as a Battlefield: The War of Ideology 247

Shifting the Cognitive Center of Gravity 247

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Preying on Maslow’s Needs: Affiliation 248

Social Cognitive Theory at Play 249

Marketing Ideology and Fear 250

Hizb-ut-Tahrir (HuT) 250

Exploitation by Other Groups 253

Looking through a New Lens at Social Networking 254

Second Life 254

LinkedIn 256

Facebook 258

YouTube 260

Hidden Messages on the Web 260

Enter Hackers and Cyber Vigilantes 262

th3j35t3r and th3raptor 264

Other Notable Vigilantes 265

The Way Ahead 268

References 270

Chapter 9 Sharing Tactics 273

Drug-Trafficking Organizations and Terrorist Group Interface 275

Tunnels 275

Bombs 276

IRA Inc. 278

Hezbollah and Hamas: Partnering for Success 280

IEDs, Fertilizer, and Sticky Bombs 280

IEDs 281

Fertilizer 282

Sticky Bombs 282

First Response and the Threat of Secondary Devices 283

Use of Human Shields by Terror Groups on the Rise 285

Hamas 285

LTTE 286

Asymmetric Threats 286

WMD 288

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Final Thoughts 291

References 291

Chapter 10 Conclusions about the Nexus and Thoughts on Resiliency and the Way Forward 295 Resiliency as a Weapon 298

Glossary 301

Appendix: List of Foreign Terrorist Organizations 313

Current List of Designated Foreign Terrorist Organizations 313

Identification 314

Designation 315

Legal Criteria for Designation under Section 219 of the INA as Amended 316

Legal Ramifications of Designation 316

Other Effects of Designation 317

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Preface

September 11, 2001 began as all others, with a morning office meeting to discuss the daily schedule and downing a few cups of coffee to fuel the way ahead. I was an Air Force lieutenant colonel, stationed at Seymour- Johnson Air Force Base, North Carolina, an Air Combat Command base with several squadrons of F-15E fighter aircraft and thousands of mili- tary personnel and their families. We were gathered around the office television to watch live video of the “aircraft accident” in New York City and the increasingly thick smoke pouring out of the North Tower of the World Trade Center. At 9:03 A.M., a collective gasp filled the room as we witnessed the second aircraft impacting the South Tower. The mood immediately shifted from concern to horror as we realized our coun- try was under attack. And I instantly knew from years of research and study: the attacker was unmistakably al Qaeda.

Suddenly, I was in the unexpected position of trying to secure a major military installation and its panicked residents from an enemy with unknown intentions and capabilities. In the command center, my stunned colleagues and I watched the Defense Readiness Condition change to DEFCON 3, the highest level since the Cuban Missile Crisis in 1962. The Pentagon, which I had just left three months earlier, was attacked and burning. I had to suppress thoughts and concerns about my E-ring office and my many colleagues in danger or possibly dying. With more hijacked aircraft airborne, our jets were immediately loaded with weapons and crews put on alert. My husband, then a colonel, com- manded the fleet of fighter aircraft and crew members; he had to make sure his pilots were prepared to shoot down a civilian airliner on com- mand, something they had never trained for or considered a remote possibility prior to this fateful morning. We soon received the order to launch, and I could hear the aircraft thundering into the skies to fly Combat Air Patrol sorties over major east coast cities to guard from further attacks.

My job at the helm of the Emergency Operations Center was cha- otic for the next thirty-six hours. As the installation gates were locked down, we had children (including our young daughter) outside the fence in

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community schools and worried parents who were trying to get to them. Landlines and cellular phone networks crashed, and our most reliable way to communicate was through handheld radios, known as “bricks” for their cumbersome bulk. I ordered the communications squadron to break into deployment kits and access every other storage area on base to harvest bricks, batteries, and charging stations for commanders and first responders. Upon wise counsel from a staff member, I immediately executed a long standing contingency contract to withdraw bottled water from the base commissary for safekeeping in case the installation became a self-sustaining island. Sure enough, within hours, the grocery store was inundated with base employees and family members who understandably stripped the shelves of basic essentials. My security forces defenders estab- lished Force Protection Delta posture, emptying the base armory of battle gear, M-16s and service revolvers. Snipers and counter snipers took posi- tions around the base to protect us from attack. As I watched the surreal situation unfold, I remember thinking that the hundreds of mundane exer- cises endured during our careers were paying off: we were a calm, precise, well-oiled machine during the most intense stress of our young lives.

As I executed seven binders of emergency checklists, my team was faced with several unanticipated threats, starting with the escape of an inmate from a minimum security federal prison on base. A convict with an “interesting” background had taken advantage of the 9/11 morning confusion to jump the base fence; a quick check of records revealed he routinely participated in work details all over the base, in unclassified facilities and along the flight line, mowing grass, picking up trash and likely interacting with base personnel. The standard operating proce- dure was to put up search helos, however the state police were denied flight clearance due to the national emergency. Instead, we implemented a coordinated ground search with local sheriffs, but without further intelligence about the 9/11 attackers, we were flying blind: the prisoner’s intimate knowledge of our base and possible intentions were of extreme concern. A few hours later, an FBI agent from a local office requested a secure phone call with our military federal agents residing in the base Air Force Office of Special Investigations (AFOSI). We listened with sur- prise as his staff described ongoing surveillance operations and suspi- cious activities within the state and at nearby facilities, some frequented by military personnel. The most worrisome call came later in the day, from a local military retiree whose daughter was in an arranged mar- riage with a Middle Eastern citizen, both residing near the base. His son- in-law, who had visited our base on many occasions including during airshows, had unexpectedly left the U.S for a “country of interest” in the days prior to 9/11. We later learned the man had remote connections to the 9/11 attack planners; however, our contacts at the embassy overseas

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were unable to lay eyes on him. In light of these potential external dan- gers, the base was suddenly not the “island” it had always seemed. I also learned to operate within a new realm, that of ambiguity and the “inescapable unknowables.”

Thankfully, no threats to the installation materialized in the coming days, and eventually our attention shifted from protecting the homeland to taking the battle to the enemy. Sworn to protect our country from ene- mies foreign and domestic, we were anxious to leverage years of combat training and enter the fight of our lives to eradicate the threat. Indeed, in the intervening time since 9/11, our country has taken the fight to terror- ists around the globe. Yet, after 11 years, trillions of dollars, and most importantly, the thousands of young, promising lives lost in battle, the terrorist threat remains.

Despite our efforts, the radical Islamic ideology has spread like wild- fire, ignited by globalization and technological advances in the infor- mation, financing, and social networking realms. Al Qaeda is the most feared organization, but other international terrorist groups are poised to endanger our country, whether through direct engagement or circu- itously through trafficking or financial corruption. Many of our chal- lenges at home are also fed by modernized transnational crime, which, despite our countering efforts, is on the rise. Anarchy resulting from the end of the Cold War led to a boom in transnational crimes and groups involved operate with a level of sophistication previously only found in multinational corporations, exacerbating the problem. Hezbollah, Hamas, FARC, drug cartels, and increasingly violent gangs and domes- tic groups such as the Sovereign Citizens are threatening us in new, pro- vocative ways and now joining forces despite differing ideologies.

I have spent more than two decades leading organizations. Some were the high performing, well-oiled machine I worked with on 9/11. Others were dysfunctional and dying. The size, type, and business of an organization are virtually irrelevant as to whether it fails or succeeds. All organizations share the basics: structure, culture, and environment. They all have customers, stakeholders, and products. Activities are the same—recruiting, retention, planning, and execution. Organizations are populated by human beings, all of whom are driven by the same basic instincts and needs. In fact, the rise of modern terrorist and criminal groups can be predicted when viewed through the lens of foundational organizational and sociological theories. Furthermore, viewing the life- cycles of the groups and how they start, thrive, and terminate is extraor- dinarily helpful when discussing mitigation and engagement. It may be quite possible to inject game changers at the micro level that force groups to alter course and even implode from the inside – without ever firing a shot in anger or losing a life.

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Perhaps the most powerful statement in the 9/11 Commission report comes from Chapter 11 and is entitled “Foresight–And Hindsight,” as the committee cites a lack of imagination as a root cause of the two worst attacks in our country, Pearl Harbor and 9/11. Certainly, any study of the terror-criminal nexus requires a fusion of imagination, “dot con- necting” intuition, and corroborated, foundational evidence. As such, this book synthesizes more than 350 sources, including congressional testimony, subpoenas, scholarly studies, and historical documents. My objective was to academically frame the nexus issue, providing policy makers, strategists, operators, and students both new evidence and a different perspective for their planning and research efforts.

In the following chapters, we will explore current and future threats from international and domestic groups, and identify specific instances in which they are working together or in parallel to achieve goals. The money trail is increasingly the “lifeblood” of modern organizations, and this work examines how nefarious groups are leveraging both tra- ditional funding methods and e-commerce to raise, store, move, and launder money. An exploration of the social networking phenomenon will reveal how it is the perfect clandestine platform for spying, com- municating, recruiting, and spreading propaganda. Finally, this work investigates emergent tactics such as the use of human shields, and the targeting of first responders, schools, hospitals, and churches; the enemy doesn’t play by our rules, creating a dangerous blindspot that must be addressed.

I would like to thank the many colleagues, friends and family mem- bers who supported my efforts to produce this book. Numerous federal agents, state, and local law enforcement officers, intelligence analysts, and military personnel spoke with me off record, not to provide spe- cific information, but to lend validation and context to the nexus chal- lenges. They truly added a “voice” to this work and I appreciate their intense dedication to keeping us safe, despite being under resourced and overtasked. I would like to convey special thanks to a former student, Mark Manshack, a veteran law enforcement officer in Texas and mem- ber of my “brain trust” who gave great insight into the expanding pres- ence of cartels in his state. Sadly, as I put the finishing touches on the manuscript, Mark called with distressing news: his best friend, Deputy Brandon Nielsen, and his partner were killed in an ambush in La Place, Louisiana by a group of heavily armed Sovereign Citizens. Between them, the deputies leave behind six children and a grieving community. The La Place case is explored in Chapter 4, and serves as a reminder of both the importance of information sharing between agencies and the need for enhanced emergent threats training for our frontline defenders. Our new reality is that Americans will kill fellow citizens in the name of

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many things, be it faith, guns, drugs, money, or ideology. Loyalty to fac- tion now transcends loyalty to nation; undeniably this is a hard concept to grasp, but we must prepare and be resilient.

On the work front, a special thank you to Alex Anyse and Tae Kim at the MASY Group and to Chris Graham, the editor of the Counter Terrorist magazine, for your friendship and ongoing support of my myr- iad endeavors. Also, I would like to thank my doctoral cohort colleagues and friends, Lisa Greenhill, John DiGennaro, and Aaron Clevenger for their encouragement and good humor. You wouldn’t let me abandon my studies during the juggling of this book project with school, and for that, I am forever grateful. Also, I owe a large debt of gratitude to my patient and extraordinary editors at Taylor and Francis, Mark Listewnik, Prudy Taylor Board, and Stephanie Morkert.

I would like to give special appreciation to my family for their love and support. My parents, Lloyd and Barbara Whitnack, bestowed both a great work ethic and the belief that anything is possible. Thank you to my brother, Matt Whitnack, for a lifetime of friendship. Much appre- ciation and love to my wonderful family, husband, John and daughter, Sarah for always supporting my dreams. Finally, thanks to my office companion and good-natured Lab, Hunter, for somehow always know- ing when I needed to take a walk in the park for fresh air and perspective.

You all inspire me to be a better person and to live each day richly and without regret.

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About the Author

Colonel (Ret.) Jennifer L. Hesterman was commissioned in 1986 as a graduate of Air Force ROTC at Penn State University. During her twenty- one-year career, she served three Pentagon tours and commanded multiple units in the field. Her last assignment was Vice Commander, 316th Wing at Andrews Air Force Base, Maryland, the home of Air Force One. She was responsible for installation security, force support, and the 1st Helicopter Squadron, and regularly greeted the President

and other heads of state on the ramp. Her decorations include the Legion of Merit and the Meritorious Service Medal with five oak leaf clusters.

Colonel Hesterman is a doctoral candidate at Benedictine University where she is completing her dissertation regarding espionage on our college campuses. She also holds master’s degrees from Johns Hopkins University and Air University. In 2003, she was a National Defense Fellow at the Center for Strategic and International Studies in Washington, DC, where she immersed herself in a year-long study of the nexus between organized crime and international terrorism. Her resulting book won the 2004 Air Force research prize and was published by AU Press. Colonel Hesterman is also a 2006 alumnus of the Harvard Senior Executive Fellows program. Since her retirement in 2007, Jenni has worked as a cleared professional for The MASY Group, a global intelligence firm, and was a full-time instructor and then director of the national and homeland security pro- grams at American Military University. She is a contributing editor for The Counter Terrorist magazine and a guest lecturer for federal and state law enforcement agencies.

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C H A P T E R 1 A Poisonous Brew

While organized crime is not a new phenomenon today, some govern- ments find their authority besieged at home and their foreign policy interests imperiled abroad. Drug trafficking, links between drug traf- fickers and terrorists, smuggling of illegal aliens, massive financial and bank fraud, arms smuggling, potential involvement in the theft and sale of nuclear material, political intimidation, and corruption all con- stitute a poisonous brew— a mixture potentially as deadly as what we faced during the Cold War.

—R. James Woolsey Former director, CIA1

Al Qaeda works with the Mafia. The Mafia works with outlaw motor- cycle gangs. Biker gangs work with white supremacists. Surprised?

Ten years ago, when I wrote my first book on this subject, the num- ber of experts who would acknowledge that a nexus may exist between terrorists and criminals could be counted on one hand. In fact, Mr. Woolsey’s chapter-opening statement was made in 1994, long before most people heard of al Qaeda, human trafficking, and loose nukes. Unfortunately, the “poisonous brew” is becoming more toxic with time. Transnational organized crime is escalating, the cartels are global and undeterred, and the list of State Department Foreign Terrorist Organizations continues to grow.

Transnational crime is a growing U.S. national security concern, and it threatens us in new, provoking ways. For example, Americans for- merly viewed drug use as a law enforcement or health issue. Only very recently has drug trafficking been established as a global crime with a corresponding national security threat. A lesser known and understood example of a growing transnational threat reaching our borders is human trafficking. When a boat filled with women and children leaves the shores of a distant country, delivering them to a life of enslavement and unimaginable abuse, we obviously feel compelled to engage out of moral obligation and belief that human dignity must be upheld and protected.

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Consider that 18,000 to 20,000 of these human beings are delivered annually by criminals to the United States and forced into labor or pros- titution; trafficking becomes an obvious and direct threat to the fabric of our society. Unbeknownst to many, our National Security Strategy con- tains a goal entitled “Champion Aspirations for Human Dignity,” which ties human trafficking to our nation’s safety and prosperity. Factor ter- rorists and their use of established drug- and human-trafficking routes in and around our country into the equation, and these issues take on new and pressing significance.

Despite economic woes at home, our government continues to spend billions of dollars to help other countries identify and battle their transna- tional crimes issues, all of which impact our national security. Globally, drug-trafficking routes are robust and plenty; the ghastly business of human trafficking is flourishing; and money is laundered in amounts and ways never before imagined. Many resource-constrained countries strug- gle to deal with their role in this epidemic and are attempting to contain it. Others are corrupt and choose to look the other way, or worse, benefit from illicit activity. Bad actors are smart; they prey on nations in turmoil where the rule of law is weak and leadership lacking. Many nation-states are on the brink of thriving or failing, and their fate depends either on us … or on the help of organized crime and terrorists. Therefore we must engage. History also reveals that failing countries are like dominoes; they lead to failing regions, an even greater threat to our national security.

In the last decade, after eradicating al Qaeda’s base in Afghanistan we watched the group franchise and scatter throughout the Middle East and Africa. Bound by ideology, and despite the death of leader Osama bin Laden and others, radical Islamists continue undaunted on their mis- sion of establishing the caliphate under Sharia law. They envision the Islamist flag flying over world capitals, including ours. Besides radical ideology, what fuels these terrorist groups? How can they continue to operate with such abandon despite our efforts and those of our allies to fight a global war on terror? One answer is the corresponding rise in transnational crime. Another is the ability to leverage unexpected and emergent funding methods such as mortgage fraud and the e-gaming industry. Additionally, exploitation of the unpatrolled, uncontrolled Internet has allowed terrorist groups unrestrained recruitment, morale- boosting, and propaganda campaigns.

As this book reveals, the nexus exists. The executive branch of our government is so troubled about the partnering of terrorists and criminals that they issued a strongly worded document in July 2011 entitled Strategy to Combat Transnational Organized Crime: Addressing Converging Threats to National Security. The White House, acknowledging the nexus, stated, “Terrorists and insurgents increasingly are turning to crim- inal networks to generate funding and acquire logistical support.”2

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Groups with dissimilar ideologies are working together to further their goals. They are also copying successful tactics, learning from each other’s mistakes, and at the very least operating in the same physical or virtual “space.” To fully grasp the complex issue of the nexus, we must first investigate root causes and the environment contributing to its rise and persistence.

Transnational criminal groups now have sophisticated business models that parallel legitimate corporations. Feeding on globalization and advances in communications and logistics technology, modern transnational crime is more expansive, far deadlier, and extremely dif- ficult to eradicate. Adding further context to the issue is an overview of international agencies involved, methods used, and lessons learned in the fight against transnational crime, all of which should be simultane- ously applied to the global war on terror.

The discussion of the rise of postmodern terrorist groups is deeply rooted in the soft sciences; a fusion of psychology, sociology, and orga- nizational development and behavioral theory allows insight into many of the vexing “whys” about the terrorism phenomenon. Viewing the life cycle of terrorist groups yields a new solution set for engagement and an intuitive understanding as to why and when they liaise with actors espousing dissimilar ideologies. The “Big Three” international terror- ist groups that most threaten the homeland, al Qaeda, Hezbollah, and FARC, are morphing in structure and changing strategy and tactics. Understanding their new goals and methodology is important for policy makers, strategic planners, and operators alike.

Domestic terrorism from right-wing, left-wing, and single-issue groups remains a great concern for our law enforcement agencies. The growing propensity of these organizations and their members to “act out” and to step up and engage law enforcement is alarming. The radi- calization of Americans continues, with several successful attacks and more than fifty thwarted in our country since 9/11. Lacking a rehabili- tation program, we have no way of ensuring that jihadists who serve their prison sentence and return to society will not go back to their old ways … with a vengeance. The threat of the lone wolf, already embedded in society and acting alone with unyielding determination, is extremely worrisome. Factor in an unprecedented increase in hate groups and gangs in our country, and the domestic terrorism picture is quite grim with resource-constrained law enforcement agencies struggling to juggle myriad challenges.

Drug-trafficking organizations are flourishing south (and north) of our border with Mexico. Now operating in the United States, cartels are using gangs to move product and are attempting to corrupt border patrol officers to open lanes for moving people, drugs, and potentially worse into our nation. The Los Zetas cartel provides the most vexing

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threat, as a paramilitary organization with the tactical knowledge and equipment of a small army. Two questions are posed for the reader’s con- sideration: Are the Mexican cartels a U.S national security risk, or have we overblown the threat? Is their activity in the United States terroristic or merely criminal in nature?

The lifeblood of any nefarious group is money. For criminal organi- zations and cartels, money is the motivation, with a side goal of corrup- tion and influencing the political process in their favor to keep profits flowing. However, for terrorist groups, the driver is the religious ide- ology, extreme and even apocalyptic. Financing operations off of law enforcement’s radar is critical, and the cost to move and train people, as well as procure material, is rising. For all groups, earning, moving, storing, and laundering are critical, whether “dirty” money that must be cleaned or “clean” money that will become dirty when funding a terror operation. Many traditional avenues of financing that funded the 9/11 attacks have been under intense scrutiny, such as charitable giving; therefore, terror groups are increasingly turning to intellectual property crime, counterfeit goods, and physical precious metals as ways to deal with money issues. The e-commerce boom has presented other oppor- tunities such as e-gambling, digital precious metals, e-gaming, anony- mous fronts and offshores, and the use of gift cards and e-banks to move money outside the regulated banking sector.

Money is a precious resource to terror groups, but if ideology is their center of gravity, then people are perhaps an even greater com- modity. The rise of social networking as a “Black Swan” is explored, and viewing the mind as the battlefield provides a framework for discus- sion regarding exploitation of Facebook, Twitter, YouTube, and virtual worlds such as Second Life. The use of steganography, combined with networking sites, provides a unique opportunity for clandestine commu- nication between groups and their followers. A provocative discussion regarding patriot hackers and cyber vigilantes gives insight into citizens as combatants and their rights to engage the enemy.

Finally, investigation of the sharing and copying of tactics between groups, and emergent threats to first responders rounds out the discus- sion regarding the nexus of groups, their surprising commonalities, and how they will and do work together to further their goals. The modern terrorist threat is asymmetric, and as such, countering it requires an asymmetric approach.

Material regarding nexus activities is typically buried in court docu- ments, obscure government press releases, and articles printed in the for- eign press that often do not appear domestically. Through the synthesis of hundreds of sources, this body of work attempts to pull together a compendium of information regarding the nexus, answering the ques- tions who, why, and how for the reader. The material will appeal to

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policy makers, strategic planners, operators, as well as citizens with an interest in our national security and emergent challenges who want to be force multipliers in this fight.

The overarching goal is less armchair speculation and a more practi- cal, informed view of the persistence of transnational criminals, cartels, and terrorists and their impact on our future.

REFERENCES

1. Cilluffo, Frank J., and Linnea R. Raine. Global Organized Crime: The New Empire of Evil. Washington, DC: Center for Strategic & International Studies, 1994.

2. The White House. Strategy to Combat Transnational Organized Crime: Addressing Converging Threats to National Security. http:// www.whitehouse.gov/sites/default/files/Strategy_to_Combat_ Transnational_Organized_Crime_July_2011.pdf.

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C H A P T E R 2 Transnational

Organized Crime The Dark Side of Globalization

Transnational crime will be a defining issue of the 21st century for policymakers—as defining as the Cold War was for the 20th century and colonialism was for the 19th. Terrorists and transnational crime groups will proliferate because these crime groups are major beneficia- ries of globalization. They take advantage of increased travel, trade, rapid money movements, telecommunications and computer links, and are well positioned for growth.

—Louise I. Shelley1

The concept of transnational crime is not new. Drugs, money, and in- demand commodities have always been smuggled across borders and oceans, as criminals circumvent laws to enhance their illicit activity. For example, during the prohibition period in the United States, alcohol was illegally brought into the country from Mexico, Canada, and the Caribbean. Criminals and Mafia syndicates soon discovered that “boot- legging” was a far more profitable activity than extortion, prostitution, and gambling.

Early transnational crime was confined to regions, was not overly violent in nature, and consisted of small groups with a very orga- nized leadership structure. However, modern transnational crime is more expansive, far deadlier, and extremely difficult to eradicate due to a sophisticated, layered organizational structure, and “franchis- ing.” The vast threat posed by modern transnational organized crime to the political, economic, and social fabric of societies appeared in the mid-1990s. Contributing factors to its rise include globalization of business networks, lowered trade barriers, communication and techno- logical advances, and turmoil caused by the collapse of communism. A new class of actors emerged during this period, operating outside the

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traditional nation-state system, subsequently hindering our ability to apply diplomatic and economic pressure to compel nations to address their organized crime issues.

The situation is increasingly complex, and transnational orga- nized crime (TOC) is penetrating our society in new and dangerous ways. According to the National Security Council’s Strategy to Combat Transnational Organized Crime, TOC is a growing threat to national and international security.2 Grant D. Ashley, former assistant director of the Criminal Investigative Division at the Federal Bureau of Investigation (FBI), testified, “It is our belief that the international growth of these very dangerous, criminally diverse and organized groups and their emergence in the United States has caused a significant expansion of our crime problem.”3 Former attorney general Michael B. Mukasey further stated, “Organized crime threatens the economy, national security, and other interests of the United States.”4 Naturally, expansion of any type of criminal activity is of interest to law enforcement. However, these vast global enterprises are increasingly used as a vehicle by terrorists to move resources, recruit, raise capital, or simply spread their sphere of influ- ence, raising the stakes. The liaison of criminals and terrorists makes the proliferation of TOC a pressing national security concern; however, as with all modern threats and groups, engagement is not easy and success is elusive.

MULTINATIONAL CORPORATE SOPHISTICATION

While studying the nexus as senior defense fellow at the Center for Strategic and International Studies, a think tank in Washington, DC, I published my first book on the nexus topic. Transnational Crime and the Criminal-Terrorist Nexus: Synergies and Corporate Trends (AU Press, 1995) provides a detailed look at the sophistication of groups and serves as the basis for the following discussion. Although routinely underestimated, TOC syndicates are very sophisticated, act as networks, and pursue the same types of joint ventures and strategic alliances as legitimate multinational corporations. A multinational corporation (MNC) is defined as one operating on a worldwide scale, without ties to any specific nation or region. The global business environment is unique and multifaceted, requiring extra considerations. Due to the complex- ity of international operations, the right people (e.g., lawyers, accoun- tants, and subject-area experts) must be on the payroll. Analysis of the international customer base, product demand, and proper positioning of the product is necessary to maximize profit. The company must assess the cost of doing business and streamline staff and operational activi- ties, thus cutting overhead as much as possible. Any business must have

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good supply-chain management, from procurement to storage to prod- uct delivery; this process requires extra planning and an enhanced level of sophistication when applied to a global market. For example, under- standing international commerce laws and issues related to the operation of offshore businesses is a necessity. The company must acquire cultural knowledge of the countries involved in the transactions, including lan- guages, currencies, and business practices. Also, the corporate strategy must be in sync with these cultural nuances for success. Savvy business ventures are low risk and high return, and most are able to extract prof- its throughout the process. Finally, an MNC is able to leverage rapidly changing communication and transportation technology to stay viable.

The preceding could easily be a description of the Sinaloa drug cartel. Successful international criminal enterprises follow the same business plan and often work in parallel with unsuspecting legitimate corporations by using their business practices as a model. They maxi- mize profits and shift strategies as technology evolves, or when detected by law enforcement. The organizations are well resourced; most own and operate a variety of aircraft and boats, with skilled and highly paid operators at the helm. Sophisticated satellite phones and use of Global Positioning System equipment keeps criminals on the run and investiga- tors in the dark. Unfortunately for governments battling this issue, not only are transnational criminal networks harder to detect and infiltrate than ever, but despite their best efforts, business is booming.

TRANSNATIONAL ORGANIZED CRIME ON THE RISE

As opposed to terrorism, which is motivated by ideology, organized crime is motivated by money. Tracking the increased sophistication and scope of organized crime, the FBI’s definition of the activity has morphed and expanded in the last ten years. In 2003, it was defined as “a continuing criminal conspiracy having a firm organizational structure, and a con- spiracy fed by fear and corruption.”5 The 2012 definition is longer and more specific. The FBI now defines organized crime as “any group hav- ing some manner of a formalized structure and whose primary objective is to obtain money through illegal activities. Such groups maintain their position through the use of actual or threatened violence, corrupt pub- lic officials, graft, or extortion, and generally have a significant impact on the people in their locales, region, or the country as a whole.”6 The terms “organized crime” and “continuing criminal enterprise” (CCE) are often used interchangeably, although the laws vary slightly regarding the definition of criminal activity falling within the CCE realm. The FBI defines a criminal enterprise as “a group of individuals with an identi- fied hierarchy, or comparable structure, engaged in significant criminal

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activity. These organizations often engage in multiple criminal activities and have extensive supporting networks.”7 Although organized crime is typically associated with the Mafia or drug trafficking, it extends to any CCE such as money laundering, human trafficking, or white-collar crimes like insurance, mortgage, and prescription fraud.

There are other categories of crime. For instance, reactive crimes are violent or nonviolent crimes perpetrated by an individual or a small group, such as hate crimes or protests that turn violent. There are also crimes of opportunity, such as pickpocketing or a lone carjacking, in which the criminal targets the easiest mark or acts because of the target’s carelessness. Although any of the aforementioned methods could gener- ate resources, transnational criminal and global terrorist organizations are more likely to affiliate with a CCE with a proven track record of success, established and protected logistics lines, and the help of govern- ment officials who have been bribed, threatened, or corrupted.

Several factors contribute to the existence and proliferation of TOC originating, traversing, or committed in a country. One major consider- ation is available resources, including a desperate populace upon which to prey and a weak economy that will welcome profit from illegal activ- ity. Geographical and geological features often play a significant role, for instance the availability of fresh water and crops, or the presence of precious minerals. Border security and strength of the rule of law are critical, and will either repel or attract transnational criminal activity. A weak government invites penetration by organized crime, and the result- ing corruption further delegitimizes the country’s government. The pres- ence of terrorist groups in the region exacerbates crime problems across the spectrum, adding to existing instability.

The extent and global impact of transnational crime problem fully emerged in 2003 when State Department and FBI officials were called by Congress to testify regarding its alarming increase and mitigation efforts. Their prescient testimony, along with statements of other experts in the past ten years, provides unique insight into hotbeds of existing and emerging transnational crime.

SCOPING THE TOC CHALLENGE

When I began studying transnational crime ten years ago, the evolution from regionally contained networks to those with global reach was only beginning. Leaps in information, communication, and logistics technol- ogy contributed to the rise of syndicates with global reach, sophisticated operating methods, and fluid structures. TOCs can now “surveil the sur- veillers,” quickly closing business and moving elsewhere when detected by law enforcement. Remaining anonymous is now possible through the

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use of virtual offshores, legitimate business fronts, and other e-com- merce technology discussed in Chapter 7. Every nation’s culture and citi- zenry is now affected by this new brand of organized crime and must increasingly devote precious resources to combat its spread.

Eurasian Transnational Crime: Size, Wealth, Reach

According to the FBI, Eurasian organized crime (EOC) poses some of the greatest threats because of its size, wealth, and global reach.8 EOC is associated with Russia, Eastern and Central European countries, and the independent states formed after the fall of the Soviet Union. Although a victory for democracy, the demise of communism and the resulting leadership void caused great economic and social chaos allowing for the rise of many organized crime groups. Civil wars are still unresolved, and corruption is widespread. Massive criminal activity is destabilizing an area where nuclear weapons remain deployed, with rumors of “loose nukes” and a viable black market for nuclear material emerging from political upheaval in the region. Understandably, the national security implications of destabilization in this region are worrisome.

The U.S. government is concerned about the unique blend of circum- stances in Eurasia. Terrorism, international organized crime, trafficking in persons and drugs, ethnic separatism, religious extremism, and cor- ruption are present and thriving. Corruption of government officials in Eurasian countries is a main concern and contributes to the proliferation of transnational crime in this region. Steven Pifer, former deputy assis- tant secretary of state in the Bureau of European and Eurasian Affairs, is an expert on how a vacuum in institutions and privatization led to corruption in the region. According to his assessment, after the fall of the Soviet Union, absent state resources or statutory structure, valuable state assets were privatized in “insider transactions.” Since property rights were uncertain and no court of law was available to settle dis- putes, savvy insiders and organized crime took advantage of the chaos to seize major companies, paying far less than their actual value. As small businesses began to form under Perestroika, criminals also took advan- tage of the lawless environment and moved in. Small-businesses owners often turned to gangsters to provide a krysha (roof) of protection, even- tually compelled to turn over control and capital to their benefactors. Accumulated capital was then used by criminal elements to take over large companies in the privatization process, giving them public status and ascension to political office.9 Within just a few years, the corruption problem was rampant in the region, with 4,000 organized crime groups in Russia alone. In February 1993, Boris Yeltsin, the first elected presi- dent of the Federation of Russian States, said: “Organized crime has

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become the No. 1 threat to Russia’s strategic interests and to national security. Corrupted structures on the highest level have no interest in reform.”10

According to the FBI, the Russian interior ministry estimates that more than one-half of the Russian economy, including significant por- tions of its vast energy and metallurgical sectors, is now controlled by organized crime. Experts believe that the wide range of criminal activ- ity engaged in by Russian organized crime groups exceeds in scale and economic impact the Cali Cartel at the height of its power.11 Powerful groups such as the Russian Mafia have defrauded newly formed govern- ments of billions of dollars and take large profits through tax-evasion schemes and using corrupt officials to embezzle government funds. Well connected and embedded in society, criminal groups in Russia effort- lessly use the country’s banks to illegally transfer billions out of the country annually. Finally, the proximity of one of the two major nar- cotics-trafficking routes, the golden crescent of Pakistan, Afghanistan, and Iran, puts Tajikistan, Uzbekistan, Kazakhstan, Turkmenistan, and Kyrgyzstan at the crossroads of the opiate trade to Europe and Russia.

In addition to a thriving drug trade, Eurasian countries are rife with human-trafficking violations. Men, women, and children are pro- cured from the region, transported, and sold for forced labor and sexual exploitation. Populations vulnerable to human trafficking are the poor and uneducated, and for criminals in the region, it is not only a high- profit venture but very low risk. Many Eurasian countries are lagging in instituting and enforcing laws to punish perpetrators of trafficking. In fact, of the Tier 2 watch list and Tier 3 noncompliant/no effort nations indicated in the 2011 report and covered later in this chapter, Eurasian countries are the leading offenders.12

Eurasian organized crime spread to the United States in the 1970s and 1980s with the arrival of more than 100,000 Soviet émigrés, known as “Refuseniks.” Mixed in with law-abiding people was a very small group of criminals known as Vory V Zakone or “thieves-in-law,” career criminals becoming the base of U.S. domestic Eurasian organized crime.13 The dissolution of the Soviet Union in 1991 brought thousands more émigrés fleeing social strife and dismal economic conditions. The exodus added to the existing Eurasian criminal enterprise in the United States.

Fraud is prevalent with these groups, which will latch on to any cri- sis and turn it into profit. Recent activities in the United States include mortgage fraud, money laundering, extortion, drug trafficking, auto theft, hostage taking, extortion of celebrities and sport figures, insurance (staged auto accidents), medical fraud, counterfeiting, credit card forg- ery, and murder. Eurasian crime in the United States is big business; in October, 2011, law enforcement officials arrested fifty-two individuals

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from an Armenian-American syndicate for health care fraud defrauding companies and their customers of more than 163 million U.S. dollars. For the first time in fifteen years, a “thief-in-law” was arrested on a fed- eral charge. However, Ukrainian Semion Mogilevich, one of the top ten fugitives wanted by the FBI, remains at large. Mogilevich’s organization, using a front operation outside of Philadelphia, bilked investors of nearly 150 million U.S. dollars. Mogilevich is also wanted on arms trafficking, prostitution, extortion, and murder-for-hire charges. Although once in custody in Russia, he was released by government officials, and he and members of his group have simply disappeared.

As illustrated, no crime is off limits to EOC groups, and the breadth and depth of their criminal activity is astounding. Understanding the roots and rise of Eurasian crime is important for international and national security purposes, and this historical example should be incor- porated in postconflict reconstruction and democratization planning. Rapidly establishing and enforcing the rule of law following governmen- tal upheaval is essential to prevent a void that soon becomes a haven for criminals and terrorists. Unfortunately, this scenario is now playing out in other countries and regions where ruling governments have been overthrown or challenged by the Arab Spring movement.

Italian Transnational Crime: Not Your Grandfather’s Mafia

The Italian criminal societies known collectively as the Mafia have existed since the 1800s and are now firmly entrenched in the political, social, and economic realms in Italy and around the world. Historically, the Mafia arose from four centuries of invasions in Italy and the people’s response was to become clans, relying on family ties instead of the ruling government for protection and justice. The clans morphed into a secret society of resistance, meant to protect allied families from invaders. The protectors, known as “men of honor,” were highly respected and revered in the community. Soon the clans fought each other for control and sought to expand their influence and power, becoming Mafias, or bodies of criminals. During the late 1800s and early 1900s, thousands of Sicilian Mafiosi entered the United States illegally, establishing the domestic Mafias persisting today. Surprisingly, New Orleans was the site of the first major Mafia incident in this country on October 15, 1890, when Police Superintendent David Hennessey was murdered execution- style. Law enforcement detained hundreds of Sicilians, and nineteen were indicted for the murder. However, a jury later acquitted the group, causing an outrage among the citizens of New Orleans; an organized lynch mob found and killed eleven of the nineteen defendants. Two were hanged, nine were shot, and the remaining eight escaped.14

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Through the years, various gang factions of the Mafia have ascended and attempted to take control, such as Al Capone’s syndicate in Chicago in the 1920s. Italian organized crime (IOC) groups currently active in the United States include La Cosa Nostra (LCN); the Camorra or Neapolitan Mafia; the ‘Ndrangheta or Calabrian Mafia; and the Sacra Corona Unita or United Sacred Crown. The FBI estimates that the four groups have approximately 25,000 core members and 250,000 affiliates worldwide, and experts estimate the Mafia’s worldwide criminal activity at more than $100 billion annually.15

In the United States, there are more than three thousand Mafia members and affiliates, with the largest presence centered in New York, southern New Jersey, and Philadelphia. Criminal activities are interna- tional, including collaboration with other international organized crime groups from all over the world, especially those involved in drug traf- ficking. The Mafia in Italy is extremely violent and has assassinated public officials and targeted law enforcement with car bombs and other incendiary devices. The Mafia in the United States is not as brazen, yet has plenty of blood on its hands and continues to wield influence with political figures and corporate leaders.

La Cosa Nostra (translated to “this thing of ours”) is the most persistent Mafia threat in our country. In 1946, LCN leader “Lucky” Luciano was convicted for running a prostitution ring in the United States and was deported. However, his return to Italy delivered a trans- national capability to the LCN, as he became the liaison between the two countries. LCN grew in power through the years; major threats now posed are drug trafficking and money laundering, but naturally the group is engaged in a broad spectrum of illegal activities including mur- der, extortion, corruption, gambling, labor racketeering, prostitution, and financial fraud. In January 2011, the largest coordinated arrest in FBI history netted 127 members of La Cosa Nostra in New York, New Jersey, and New England. More than thirty were “made” members of LCN, serving as underbosses, street bosses, and consiglieres, or close family advisors.16 Although a major blow to the U.S. arm of the orga- nization, the LCN operates with multinational corporate sophistication and will persist.

The Camorra or Neapolitan Mafia is based in Naples. The Camorra is the largest of the Italian organized crime groups, emerging from the 1970s “Camorra War,” which resulted in the deaths of 400 members of the Sicilian Mafia. Great opportunists, the Camorra made their primary fortune in reconstruction after an Italian earthquake in the region in 1980. They are also expert cigarette smugglers and participants in the gamut of other illegal activities. There are nearly 200 Camorra affiliates residing in the United States, many of whom arrived during the Camorra Wars.

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The ‘Ndrangheta or Calabrian Mafia is based in Calabria, Italy. The word Ndrangheta comes from the Greek meaning “loyalty.” The ‘Ndrangheta formed in the 1860s when a group of Sicilians was banished from their island by the Italian government and settled in Calabria, Italy, forming small criminal groups. There are currently at least 160 ‘Ndrangheta cells worldwide, with 6,000 members. The group specializes in kidnapping and political corruption, but also engages in drug trafficking, murder, bombings, counterfeiting, gambling, frauds, thefts, labor racketeering, loan-sharking, and alien smuggling. Cells are loosely connected family groups based on blood relationships and mar- riages. In the United States, there are an estimated 100 to 200 members and associates, primarily located in New York and Florida.

The Sacra Corona Unita, or United Sacred Crown, is based in the Puglia region of Italy, after emerging in the late 1980s from its roots as a prison gang. The Sacra Corona Unita consists of fifty clans with approximately 2,000 members worldwide and specializes in smuggling cigarettes, drugs, arms, and people. The organization also collects payoffs from other criminal groups for landing rights on the south- east coast of Italy, a natural gateway for smuggling to and from post- Communist countries like Croatia, Yugoslavia, and Albania. The Mafia group works with Balkan organized criminal groups, which engage in arms and cigarette smuggling and human trafficking.17 Very few Sacra Corona Unita members have been identified in the United States, although some individuals in Illinois, Florida, and New York have links to the organization.

IOC provides a perfect example of shifting ideology. Early Mafia godfathers stated they would never get into the drug-trafficking busi- ness or work with people of color. However, the organizations changed their philosophy in the name of making money and spreading power and influence. By leveraging new “business opportunities” through the years, the Mafia not only persists but remains an extremely powerful force at their base in Italy and many other countries. Similar to their activi- ties to bring alcohol to thirsty patrons during the prohibition, they now supply drugs and sex slaves with no moral restraint. During the global financial crisis, any prior successes with diminishing their strength were lost, as IOC gained stronger footing in their host country. IOC expert Antonio Roccuzzo states, “The mafia has enormous liquidity. It may be the only Italian ‘company’ without any cash problem.” Banks and at least 180,000 business owners in Italy turned to various IOC groups for loans during the financial crisis, with interest rates upwards of 120 percent. The full ramifications of these loans, made in desperation, have not yet been felt.18

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IN FOCUS: THE IMPACT OF LABOR RACKETEERING

Labor racketeering is the domination, manipulation, and control of a labor movement in order to affect related businesses and indus- tries. The resulting denial of workers’ rights is not only illegal but an affront to their constitutional rights. Economic loss due to increased labor costs is vast and undermines the fabric of free enterprise.

Why do criminal elements such as the Mafia target labor unions? The primary reason is their vast pension, welfare, and health funds. Consider that in the United States, there are approximately 75,000 union locals with 14 million members. In the mid-1980s, the Teamsters Union controlled more than 1,000 funds with total assets of more than $9 billion. Racketeers infiltrate unions by offering “sweetheart” contracts, offering to broker peaceful labor relations with management, or worse, by rigging union elections.

Labor racketeering has become one of La Cosa Nostra’s funda- mental sources of profit, national power, and influence. The rise of LCN’s involvement from small factories to our largest unions in our country was swift and stunning.

• In the late 1950s, a major U.S. Senate investigation found systemic racketeering in both the International Brotherhood of Teamsters and the Hotel Employees and Restaurant Employees International Union.

• In the early 1980s, former Gambino Family boss Paul Castellano was overheard saying, “Our job is to run the unions.”

• In 1986, the President’s Council on Organized Crime reported that five major unions, including the Teamsters and the Laborers International Union of North America, were dominated by organized crime.

New York, Buffalo, Chicago, Cleveland, Detroit, and Philadelphia are the primary hubs for unions, attracting racketeers and other criminal elements.

The FBI leverages the Racketeer Influenced and Corrupt Organization (RICO) Statute to infiltrate, gather evidence, and bring racketeers to justice. RICO allows law enforcement to engage the entire operation instead of individuals, who can be easily replaced in a vast organization such as the Mafia. For at least twenty years, the Teamsters union has been substantially controlled by LCN, with four of the last eight presidents indicted on criminal charges.

Source: FBI, http://www.fbi.gov/about-us/investigate/organizedcrime/ italian_ mafia/

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Baltic Transnational Crime: Emergent and Deadly

Balkan organized crime (BOC) describes activity originating from, or operating in, Albania, Bosnia-Herzegovina, Croatia, Kosovo, Macedonia, Serbia, Montenegro, Bulgaria, Greece, and Romania. Similar to Italian organized crime, BOC began as a familial or clan activity as a source of safety and protection during occupation of the Balkans by other countries in the fourteenth century and later. Communist rule led to contained, regional black-market activities in the Balkans; however, the collapse of communism allowed rapid worldwide expansion. Organized crime elements grew in scope, corrupting new rulers and allowing insti- tutions to expand power and profit. Leadership of BOC groups is decen- tralized and, similar to the Mafia, along family lines. European nations now recognize BOC as one of the greatest criminal threats they face; the enterprise controls upwards of 70 percent of the heroin market in some of the larger European nations, and they are rapidly taking over human smuggling, prostitution, and car-theft rings.

According to the State Department, terrorists and Islamic extremist groups have already exploited inadequate border security and institu- tional weaknesses in the Balkans. Middle Eastern charities identified as supporting terrorist activities are currently providing assistance to Islamic extremist groups in the region. Terrorists also exploit the region’s liberal asylum laws, open land borders, and weaknesses in their investi- gative, prosecutorial, and procedural processes while using these coun- tries as operational staging areas for international terrorist attacks.19 Albania and Kosovo lie at the heart of the Balkan route traversing the narcotics golden crescent. The Balkan route starts with the shipment of Afghan opiates through Pakistan and Iran, and into Turkey. The drugs are then shipped onward through the Balkans and into Western Europe, where they are distributed and consumed. This route is worth an esti- mated $400 billion a year and handles 80 percent of heroin destined for Europe. In 2010, an estimated seventy-five to eighty metric tons of heroin were trafficked to Western and Central Europe. The bulk of this drug, some sixty metric tons, was trafficked via the Balkan route.20

BOC activity has been detected in the United States since the mid- 1980s, at first in petty crimes like theft and burglary. Then, ethnic Albanians began partnering with LCN families in New York; however, as their communities and presence became more established, the groups expanded to lead and control their own organizations. At one point, after establishing presence and growing in power, the FBI believes that the Albanians challenged the LCN for control of some traditional crimi- nal activities in New York City. Balkan organized crime is an emerging threat in the United States, and although they don’t share the criminal sophistication of Eurasian or LCN groups, they have proven themselves

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capable of adapting to expanding and becoming involved in new activi- ties, such as mortgage fraud.21 Albanian organized crime groups in the United States have been involved in murders, bank and automated teller machine burglaries, passport and visa fraud, illegal gambling, weapons and narcotics trafficking, extortion, and mortgage fraud. Hallmarks of BOC activity are acts of extreme violence.22

Asian Transnational Crime: Sophisticated and Multicultural

In the early 1900s, signs of Asian criminal enterprises emerged in the United States with the onset of criminally influenced Chinese groups, which thrived and expanded. Asian criminal enterprises have now been identified in more than fifty metropolitan areas and many other smaller communities. Groups are predominantly from East and Southeast Asia, including members of Chinese, Korean, Japanese, Thai, Filipino, and Cambodian, Laotian, and Vietnamese descent. However, other Asian criminal enterprises are now emerging as domestic and international threats, including groups from the South Pacific Island nations as well as organizations from Southwest Asia such as Pakistan, India, Afghanistan, Nepal, and Iran. These groups are described as very fluid and extremely mobile, easily adapting to changes and thus able to evade law enforce- ment. They are multilingual, can be highly sophisticated in their crimi- nal operations, and are well financed. Some groups have commercialized and commingled their criminal activities into business firms of various sizes, from small family-run operations to large corporations. The FBI also believes that the criminal conduct engaged in by Asian criminal enterprises includes not only traditional organized crime activities but human smuggling, technology theft, and intellectual property crime as well. A unique characteristic of Asian organized crime groups is their ability to elicit cooperation of other groups that cross ethnic and racial heritage lines. Maturing groups are now structuring their groups hierar- chically like corporations to be more competitive.23

An emergent area of concern in the region is the Malaysian straits, an area of considerable established and uncontrolled organized crime. The Indonesian archipelago is a series of 17,000 islands, a vast amount of territory to govern, to patrol, and in which to enforce the rule of law. Human trafficking is rampant in Indonesia, largely because of the tens of millions of people mired in poverty, corrupt governments, and little to no law enforcement capability. The region is subjected to sporadic vio- lence created by a handful of separatists grouping with gangsters engaged in weapons smuggling, money laundering, and drug trafficking. These criminal activities are fueling international terrorist activity. Previously, most terrorist activity in East Asia was related to domestic political

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disputes, but now the area is home to several lethal international terror- ist groups. Organizations with direct links to al Qaeda were discovered in 2001 in Malaysia and Singapore, and their activities, movements, and connections now traverse the entire region. The al Qaeda offshoot Jemaah Islamiyah (JI) is responsible for many large hotel and embassy bombings in the last decade, impacting the tourist market and affect- ing the region’s economy. The Abu Sayyaf Group (ASG) is an Islamic extremist organization in the Philippines allied with al Qaeda through Ramzi Yousef, the mastermind of the first World Trade Center bombing in 1993. Yousef is the nephew of Khalid Sheikh Mohammed, who was one of the principal architects of the 9/11 attacks. An ASG subsidiary, the Abu Haf al-Masri Brigades, emerged as a lethal new group, initiating hotel bombings in Malaysia and possibly executing the train bombings in Madrid. Although many of JI’s and ASG’s leaders have been arrested,

IN FOCUS: MACAU

The former Portuguese colony of Macau is worthy of close scru- tiny. Macau, consisting of two islands and a peninsula connected to mainland China, is one of two “special administrative regions” governed by the Chinese, the other being Hong Kong. The area is an offshore financial hub, with a free port, tax protection, and no foreign control of their financial schemes. Throw in a booming gambling market, with thirty-three casinos with annual profits of 52 billion U.S. dollars (as opposed to 1 to 2 billion U.S. dollars in Las Vegas), and Macau is a haven for shadowy groups seeking to make, store, and launder money. Gambling and gaming for profit is illegal in China; therefore, the Chinese people turn to one of two hundred “junket” companies to arrange their transportation to Macau and handle their gambling outlay and debt. These com- panies are heavily infiltrated by Chinese organized crime syndi- cates, who use kidnapping, extortion, and heavier-handed tactics on tourists to recover their money, often with a large commission attached. The Las Vegas Sands and Wynn Resort are heavily vested in Macau, with casinos earning far more than their austere counter- parts in Las Vegas. The website at http://www.casinoleaks-macau. com/ is hosted by the International Union of Operating Engineers (IUOE,) consisting of thousands of casino workers in Las Vegas who are concerned about what is happening in Macau and how the nefarious activity could undermine the credibility and stability of the U.S. gaming system. A repository of court documents and other material on the site provides a unique look into the criminal elements penetrating the Macau market.

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the groups remain on the Foreign Terrorist Organization designation list as worthy of watching. A final concern in the region is Islamic extrem- ists operating in and around western China, the Uighur Muslims. ETIM is a militant Uighur organization advocating creation of the indepen- dent Islamic state of East Turkestan in the Xinjiang region. The group has received training, equipment, and inspiration from al Qaeda, the Taliban, and others in Afghanistan. ETIM threatened the 2008 Summer Olympics in Beijing, yet there were no incidents.24

African Criminal Enterprises: Internet Savvy and Vast

African organized crime has been on the rise exponentially in the last ten years, fed by globalization and political and social unrest in the region. Economic conditions with failing or failed states have opened the door to corruption, and the leveraging of stable African countries has led to global expansion of formerly contained, regional crime.

The FBI reports that Nigerian criminal enterprises are the most con- siderable transnational threat, operating in more than eighty other coun- tries. Drug trafficking provides the most profit, as the country is a transit point for heroin between Southeast and Southwest Asia into Europe and the United States and cocaine from South America into Europe and South Africa. Ethnic Nigerians in India, Pakistan, and Thailand have access to 90 percent of the world’s heroin production and serve as operational con- duits, and money laundering from these activities is accomplished world- wide. Nigerian groups are skilled at financial frauds and schemes, which costs the United States alone an estimated 1 to 2 billion U.S. dollars each year. Leveraging the Internet, they are the masters of “419” schemes, e-mail correspondence indicating winning from lottery winnings or estates. A new sector of 419 activities includes virtual kidnapping fraud, where the recipient is notified of the abduction of a family member and asked to send their bank wire information to help secure their release. African criminal enterprises in the United States are also heavily engaged in identity theft and are most prevalent in Atlanta, Baltimore, Chicago, Dallas, Houston, Milwaukee, Newark, New York, and Washington, DC.25

A new concern in Africa concerns the mass killing of elephants to harvest ivory. In 2011, at least 25,000 elephants were slaughtered in Central Africa, with violence escalating between poachers and anti- poachers resulting in the death of hundreds. China, Thailand, and the Philippines are the countries with the greatest demand for ivory based on religious beliefs, among them many Catholics and Buddhists, that ivory honors God.26 The countries are paying exorbitant rates for the tusks, causing an elephant-killing frenzy on the continent. Ivory is moved

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IN FOCUS: THE LATIN AMERICA DRUG WAR EXPANDS TO WESTERN AFRICA

In 2009, the Department of Defense (DOD) took on a new role: countering the expanding drug trade in Western Africa. The FY 2009 defense authorization bill, House Resolution (H.R.) 5658, Section 1024, provided funding for counterdrug equipment in the republics of Ghana, Guinea-Bissau, and Senegal. The Senate Armed Services Committee voiced concern about the rapid growth of ille- gal drug trade in the region and directed the State Department and DOD to jointly prepare a region-wide, counterdrug plan for Africa, with a special emphasis on West Africa and the Maghreb.

Since 2003, 99 percent of all drugs seized in Africa have been found in the west. The volume seized has increased fivefold in the last few years. Agencies involved in counterdrug operations acknowledge that the situation in several West African countries is rapidly deteriorating. For instance, Ghana has become a significant transshipment point for illegal drugs, particularly cocaine from South America, and DOD has identified it as the “anchor coun- try” for emerging counternarcotics efforts through AFRICOM. Perhaps the greatest threat lies in Guinea-Bissau, which the UN has dubbed Africa’s first “narco-state.” With a landmass equal to the state of Maryland, Guinea-Bissau is one of the poorest coun- tries in the world, with two-thirds of its 1.5 million population liv- ing below the poverty line. The country is attractive to traffickers due to its unpatrolled coastline, numerous hidden bays, and close proximity to several other declining countries and their weak rule of law. In a country lacking a main source of electricity, the police force has no cars, no radios, and few weapons. The military is thought to be complicit in the drug trade; in 2008, two military personnel were detained along with a civilian in a vehicle carrying 635 kilos of cocaine. The army secured the soldiers’ release from prison and they were not charged.

Trafficking and unrest is not new to Guinea-Bissau; it was first known as the “Slave Coast” when African rulers prospered from the slave trade. After centuries of Portuguese rule, a paramilitary group emerged and, aided by arms and supplies from Cuba, Russia, and China, fought a protracted war to eventually win the coun- try’s independence in 1974. Years of unrest ensued; thousands of citizens who had fought alongside the Portuguese against the rebels were slaughtered and buried in unmarked graves. The country has subsequently faced bloody uprisings, conflicts, and even a complete