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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)

This book contains information obtained from authentic and highly regarded sources. Reasonable efforts have been made to publish reliable data and information, but the author and publisher cannot assume responsibility for the validity of all materials or the consequences of their use. The authors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission to publish in this form has not been obtained. If any copyright material has not been acknowledged please write and let us know so we may rectify in any future reprint.

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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.