DEA Congressional Testimony
March 22, 2007

Statement Of
The Honorable Karen P. Tandy, Administrator
Drug Enforcement Administration
Before The
United States House Of Representatives
Committee On Appropriations
Subcommittee On Commerce, Justice, Science
And Related Agencies

photo - caption belowChairman Mollohan, Ranking Member Frelinghuysen, and Members of the Subcommittee:

Good afternoon, and thank you for inviting me to testify on behalf of the President’s Fiscal Year (FY) 2008 Budget request for the Drug Enforcement Administration (DEA). I have had the pleasure of working closely with some of you over the last four years. To those Members who are new to this panel, I welcome the opportunity to share the DEA story and to express my appreciation to you in advance for supporting the courageous men and women of the DEA.

I am privileged to lead a worldwide drug law enforcement organization of more than 10,000 people, including over 700 people stationed in 62 countries. DEA employs a time-tested, multi-front strategy to fight global drug traffickers that are motivated solely by the desire for profit – profits that are generated by human misery. We must battle these well-organized, highly sophisticated organizations at every juncture: from the cultivation or manufacturing stage, through the transit zones to final distribution in our nation’s communities; and, finally, we must be there when they launder the proceeds of their operations.

The criminals we investigate are located throughout the world and we search them out wherever they are: in both hemispheres and increasingly in the ever-expanding realm of the Internet. We attack the economic basis of the drug trade and reduce the diversion of licit drugs. We support counter-terrorism activities, assist our state and local law enforcement partners, and serve as an information resource for states and local communities to help them reduce the demand for illicit drugs.

The support that this Committee provides allows us to work toward making America’s neighborhoods safe and drug-free, and for that, we at DEA are very grateful.

I would like to begin my testimony by sharing two pieces of good news with the Committee: First, teenage drug use is down; and second, DEA is hitting the world’s drug traffickers harder than ever before.

Teenage Drug Use is Down

In 2002, the President set ambitious goals to reduce drug use: a 10 percent reduction over two years and a 25 percent reduction over five years. We have exceeded the first goal: drug use by young people is down 11 percent. And the second goal has nearly been reached: since 2001, overall illicit drug use among teens has declined by 23 percent. This data, released in December 2006 by the National Institute on Drug Abuse (NIDA) means that 840,000 fewer teenagers have been damaged by the corrosive effect of drugs.

Some specifics from the SAMSHA report include: marijuana use among teenagers has dropped by 25 percent since 2001; methamphetamine use by teenagers is down by 50 percent since 2001; ecstasy use by 8 th graders decreased by 61 percent and dropped by 54 percent for 10 th and 12 th graders since 2001; cocaine use among high school seniors declined by 55 percent between 1986 and 2006; steroid use by teenagers decreased by 20 percent; LSD use fell by 60 percent for 8 th graders, by 53 percent among 10 th graders, and by 74 percent among high school seniors.

Mr. Chairman and Members of the Subcommittee, DEA works 24/7 to enforce our country’s federal drug laws. Aggressive enforcement not only limits supply and increases the price of drugs, it provides a deterrent effect that may contribute to the decline in drug use. We who fight very hard to keep the poisonous chemicals from reaching young people see the statistics I just cited as a very positive trend. We hope it represents a fundamental and lasting downward shift in illicit drug use among young Americans.

Enforcement Successes over the Last 12 Months

I would also like to share with you some of DEA’s most significant accomplishments during the past year. First I will highlight some individual cases, and then discuss the underlying strategies that led to such successful operations. Finally, in an attachment to my statement I provide an overview of the leading drug threats facing the United States and some additional examples of DEA’s work against each of these threats.

Attacking the Economic Basis of the Drug Trade

Successes include:

  • Indicting 50 leaders of a designated Colombian foreign terrorist organization on charges of importing more than $25 billion worth of cocaine into the United States. This represents more than 60 percent of the cocaine entering the country.
  • Dismantling the Cali Cartel of Colombia, which is responsible for the export of multi-ton maritime shipments of cocaine to the United States. High ranking cartel members were sentenced in 2006, with resulting forfeitures of more than $300 million. During the 1990s, the cartel was one of the world’s most powerful criminal organizations, estimated at one time to be responsible for up to 80 percent of the cocaine smuggled into the United States.
  • Arresting more than 400 individuals nationwide, following a 20-month, DEA-led investigation into a Mexican drug syndicate and its U.S.-based distribution cells. The investigation has resulted in the seizure of approximately $45.2 million in U.S. currency, 27,229 pounds of marijuana, 9,512 pounds of cocaine, 705 pounds of methamphetamine, 227 pounds of pure methamphetamine or “ice”, 11 pounds of heroin, $6.1 million in property and assets, and 100 weapons and 94 vehicles.
  • Arresting a Canadian international money manager who, subsequently, was indicted for conspiracy to launder $1 billion in proceeds from narcotics trafficking and securities and bank fraud.
  • Dismantling a Brazilian CPOT (Consolidated Priority Organization Target – the world’s “Most Wanted” drug trafficking and money laundering organizations) that was responsible for smuggling into the United States more than 15 tons of cocaine each month from Colombia. The dismantlement resulted in 100 arrests and the seizure of 52 tons of cocaine and nearly $70 million in assets, including three islands off the coast of Panama.
  • Extraditing a Colombian drug kingpin to the United States who had been indicted for importing cocaine and heroin worth an estimated $100 million.

  • Dismantling a Canadian-based trafficking organization that smuggled more than $5 million worth of Ecstasy from Canada into the United States.

  • Arresting 26 members of a Colombian organization that laundered millions of Colombian dollars through the Black Market Peso Exchange. As part of the operation, more than $10 million in drug proceeds and $6.5 million in cocaine, heroin, and marijuana were seized.

  • Arresting three Colombian traffickers who laundered $3 million in proceeds that were derived from cocaine distribution rings that operated internationally in Colombia, Mexico, and Europe.

Reducing the Diversion of Licit Drugs

Successes include:

  • Immediately suspending the DEA registrations of 13 pharmacies that used their DEA registrations to fill controlled substances orders for rogue Internet pharmacies. Eight of the 13 suspensions were issued in February 2007. The pharmacies suspended were responsible for distributing more than 75 million dosage units of controlled substances in 2006, the vast majority of which was distributed based on invalid prescriptions originating with rogue Internet pharmacy websites. Ten of the pharmacies together purchased 45 million dosage units of hydrocodone, which is 64 times the amount ten average pharmacies would annually dispense.
  • Overseeing the largest steroid enforcement operation in U.S. history. On December 14, 2005, Operation Gear Grinder resulted in the arrest of five individuals who were responsible for importing anabolic steroids into the United States. This international investigation targeted the eight largest anabolic steroid manufacturing companies in Mexico, including three of the world’s largest that conducted their sales via the Internet. Nearly 82 per cent of the steroids seized and analyzed in 2003 are of Mexican origin and the majority of this 82 per cent originated from the eight companies charged in Operation Gear Grinder.
  • Arresting four individuals in Miami, Florida, who have been charged with the nationwide Internet distribution of large quantities of Schedule III and Schedule IV controlled substances. Sales exceeded $200 million over a three-year period. The investigation included the seizure of $817,000 in cash, $4.2 million worth of property, two automobiles, and one marine vessel.
  • Indicting 11 individuals and an Atlanta-based company on charges of mail fraud, distribution of controlled substances, and the introduction of adulterated and misbranded drugs. The defendants allegedly manufactured millions of pills – approximately 24 different drugs – that were marketed through Internet “spam” advertisements. In addition to the forfeiture of numerous properties, automobiles and bank accounts, the indictment is seeking a monetary judgment of not less than $19.8 million.
  • Arresting five individuals in the Chicago, Illinois area, as part of an operation involving the illegal Internet distribution of prescription drugs and anabolic steroids. The diversion scheme included the wire transfers of thousands of dollars, and the Internet distribution of thousands of dosage units of controlled substances lacking valid prescriptions.

Working With State and Local Law Enforcement Organizations

Successes include:

  • Dismantling the largest marijuana-laced candy manufacturing organization in the western United States. The five-month investigation resulted in the arrest of the organization’s leader, and the seizure of more than 4,000 marijuana plants, $100,000 in U.S. currency, three firearms, and hundreds of marijuana-laced food products. The marijuana-laced products, packaged to mimic legitimate food products, included labels such as “Buddafingers,” “Munchy Way,” and “Pot Tarts.” The items were packaged in large boxes for distribution to cannabis clubs throughout the West Coast and over the Internet.
  • Working with the St. Paul, Minnesota Police Department on an operation that resulted in the arrest of 26 individuals associated with the Latin Kings street gang. The arrests, one of the largest drug takedowns in Minnesota history, were based on narcotics and firearms conspiracy violations and the possession and distribution of methamphetamine, cocaine, and marijuana.
  • Working with the New York City Police Department on an operation that resulted in the arrest of 20 individuals involved in a Panama/U.S heroin drug smuggling operation. The smuggling was carried out by dozens of “swallowers” who were paid a fee plus reimbursements for airfare and hotel expenses. Over three kilograms of heroin were seized in the New York City area, and $300,000 in wire transfer receipts was recovered.
  • Working with Seattle, Washington area law enforcement agencies on an operation that targeted violent methamphetamine traffickers, resulted in the arrests of 38 individuals. The investigation netted the seizure of methamphetamine, marijuana, cocaine, crack cocaine, oxycodone, eight weapons, and 10 vehicles.
  • Working with St. Louis, Missouri area law enforcement agencies on an operation that resulted in the indictment of 30 individuals on charges of distributing approximately 50 kilograms of cocaine with a street value of $1 million.

The accomplishments just listed are impressive on their own. But, they are the result of a carefully planned strategy that guides DEA operations around the world.

Attacking the Drug Syndicates: Significantly reducing the supply of illicit drugs is attainable if we disrupt or dismantle the drug trafficking and money laundering organizations that are primarily responsible for supplying them. At DEA, we refer to this approach as priority targeting. By using intelligence that we meticulously gather to identify the syndicates and coordinating our investigations against all levels of the drug and money supply chain, we are able to focus on the most important links in the supply chain.

We are proud of our successes. In FY 2006, 85 percent (39 of 46) of the leaders of the most wanted international drug organizations (Consolidated Priority Organization Targets – CPOTs) were indicted and 37 percent (17) were arrested. Terrorist-linked Priority Target Organization investigations increased by 16 percent, comparing FY 2005 investigations (82) to FY 2006 investigations (95). Furthermore, between Fiscal Years 2003 and 2006, 13 drug organizations with terrorist links were disrupted and 20 were dismantled.

Attacking the Economic Basis of the Drug Trade: As a federal prosecutor, I saw firsthand the importance and value of stripping drug traffickers of their revenue. It works. I brought that experience with me when I came to DEA and shortly thereafter developed a five-year revenue denial plan. In the first two years, DEA has denied more than $3.5 billion through the seizures of both assets and drugs. This total amount exceeds the goal for the first two years of the plan by $1 billion. The $1.6 billion denied in FY 2006, includes $1.1 billion in total assets and cash seized. With regard to high-value cash seizures (those over $1 million), 63 were made in FY 2006, which represents a 44 percent increase since FY 2004. DEA’s Money Trail Initiative, launched in 2005, is a financial crime strategy that focuses on identifying and disrupting the flow of money back to the sources of drug supply, thereby crippling the ability of criminals to operate. In 2006, Money Trail operations resulted in more than 400 arrests and the seizure of approximately 10,000 kilograms of cocaine, 60,000 kilograms of marijuana, 9 kilograms of heroin, approximately 300 pounds of methamphetamine, more than 60 dosage units of MDMA, 250 vehicles, approximately 80 weapons, $65 million U.S. currency, and $14.6 million in other assets. Our FY 2006 financial investigations of Priority Target Organizations (PTO) increased by 28 percent over FY 2005 (117 active cases in FY 2005; 150 active cases in FY 2006). The number of financial investigation cases in FY 2006 that led to the disruption of a PTO increased by 100 percent over FY 2005 (9 cases in FY 2005; 18 cases in FY 2006). The number of financial investigation cases in FY 2006 that led to the dismantlement of a PTO increased by 138 percent over FY 2005 (8 cases in FY 2005; 19 cases in FY 2006).

Forging International Partnerships – Mexico: Experience has shown that strong international partnerships are vital in the drug law enforcement arena. A robust U.S./Mexico partnership, for example, is key if we are to reduce significantly the flow of drugs to the United States from Mexico, and halt the smuggling of the millions of pounds of bulk cash into Mexico that were generated from the sale of billions of dollars worth of illicit drugs in the United States. The 2007 National Drug Threat Assessment, which is prepared by the Justice’s National Drug Intelligence Center, states that “The Southwest Border remains a serious area of concern for U.S. drug money laundering.” Furthermore, the assessment states that “Mexican and Colombian DTOs together generate, remove, and launder between $8.3 billion and $24.9 billion in wholesale distribution proceeds from Mexico-produced marijuana, methamphetamine, and heroin and South American cocaine and heroin annually.” Working with the Mexican and Colombian governments will help address this major problem. In May 2006, the Attorney General unveiled a strategy to combat methamphetamine that calls for joint DEA/Mexico initiatives including: establishing specialized methamphetamine enforcement teams on either side of the border; developing a list for targeting the Most Wanted chemical and drug trafficking organizations; donating refurbished DEA clandestine laboratory enforcement trucks to Mexico for specialized enforcement teams’ use. Since the launch of the strategy, over 2,100 Mexican police officers have been trained to improve their methamphetamine trafficking investigative and enforcement skills.

The U.S./Mexico partnership has already begun paying dividends. In August 2006, Mexican authorities seized a large-scale clandestine methamphetamine laboratory. The seizure netted 100 kilograms of finished methamphetamine, 3,000 liters of various solvents and chemicals, and four barrels of iodine. Due to its size and production capability, the laboratory is classified as a “super lab”. More recently, a DEA-trained unit of Mexican police officers discovered an operational super methamphetamine laboratory in December 2006, that, based on the amount of equipment, chemicals and resources discovered, is likely the largest laboratory to be found in Mexico to date.

With regard to major arrests, a DEA-led Organized Crime Drug Enforcement Task Force (OCDETF) investigation led to the August 2006 apprehension of the leader of a Mexican narcotics trafficking organization that, over the past decade, has flooded our country with hundreds of tons of cocaine and marijuana, as well as very large quantities of methamphetamine and heroin. The leader, Francisco Javier Arellano-Felix, and one of his lieutenants, Manuel Arturo Villarrel-Heredia, have been charged with racketeering, drug trafficking, and money laundering offenses, and if convicted will be eligible for the death penalty.

The January 2007 extradition of 15 violent Mexican criminals, including the leaders from all four of Mexico’s major drug cartels, was a watershed event in the annals of U.S./Mexico relations. The extraditions mark the reversal of a long-standing Mexican government policy of not extraditing jailed citizens until the sentences handed down by Mexican courts had been served. One of the extradited kingpins commanded a drug cartel considered to be among the most brutal and powerful in the world. He directed the smuggling of between four and six tons of cocaine per month over the U.S. border. It is a drug law enforcement development of enormous significance, and we view it as major progress on more than one front.

Forging International Partnerships – Afghanistan: Combating the world-wide threat posed by heroin production in Afghanistan is a major challenge. A flourishing narcotics trade further weakens an already fragile country, and it must be attacked aggressively. For our part, DEA and the government of Afghanistan have formed a partnership with the goal of developing and expanding the capabilities of its law enforcement community. Our five Foreign-deployed Advisory and Support Teams advise, train, and mentor their Afghan counterparts in the National Interdiction Unit of the Counter Narcotics Police – Afghanistan. This program supplements our Kabul Country Office as well as “Operation Containment”, a successful DEA initiative that was launched post September 11, 2001. It emphasizes coordination and information-sharing among 18 countries. Its aim is to choke the flow of drugs, precursor chemicals, and money into and out of Afghanistan. Mr. Chairman and Members of the Subcommittee, we are seeing results from taking a regional, multi-national enforcement approach to a threat with worldwide implications. Over the last two years, Operation Containment has resulted in the seizure of approximately 17 metric tons of heroin, more than 170 metric tons of marijuana, and nearly 300 opium-to-heroin conversion laboratories. Additionally, more than 900 suspects have been arrested, and of those arrests, four of the six Most Wanted Operation Containment targets are now incarcerated. Moreover, intelligence developed by DEA in conjunction with other agencies has helped to thwart rocket and Improvised Explosive Device attacks on Afghan and coalition forces in Afghanistan. The 2006 convictions and sentencing of three major Afghan traffickers are yet another important byproduct of the DEA/Afghanistan partnership.

As I conclude the discussion of international partnerships, I want to add a few words about the International Drug Enforcement Conference (IDEC). As you may know, this global forum was established in 1983, to bring together high-level drug law enforcement officials from throughout the Western Hemisphere. Its purpose is to share drug-related information and to develop a coordinated approach to law enforcement efforts against international drug organizations. As the DEA Administrator, I am the Co-President of the IDEC. In May 2006, I had the pleasure of addressing the conference’s 24 th gathering, which has grown to include representatives from 76 countries located in both hemispheres. Seven countries became new members in 2006: Afghanistan, Indonesia, Malaysia, New Zealand, Poland, South Africa, and the United Kingdom. The 2006 IDEC was a great opportunity to discuss our respective challenges and frustrations and to talk about how we could build on our accomplishments through even stronger multi-lateral partnerships that are beneficial to all parties.

Fighting Methamphetamine – A Drug of Special Concern: Before I begin a discussion of our FY 2008 budget request, I would like to take a minute to talk about a drug of special concern to many Members of Congress: methamphetamine.

As I mentioned in my opening comments, a 50 percent decline in methamphetamine use by teenagers since 2001, as reported by NIDA in December 2006, is a dramatic and much-welcomed development. At the same time, this deadly drug remains a problem. DEA takes a comprehensive approach to fighting the drug – domestic and international enforcement and precursor chemical control, the identification and cleanup of large and small toxic laboratories, and an aggressive attack on the money flow. In FY 2006, DEA spent an estimated $217 million for methamphetamine-related activities. This included approximately $196 million for methamphetamine investigations and $21 million for clean-up, safety, and training programs. DEA also provided clandestine laboratory training to more than 1,000 state and local law enforcement officers during FY 2006.

Implementing The Combat Methamphetamine Epidemic Act of 2005: The provisions of the law aimed at the domestic and international regulation of precursor chemicals make it possible to place reasonable, common sense limitations on the availability of the products used in the manufacturing of methamphetamine. Sales at the retail level are controlled through such measures as keeping products stored in locked containers, requiring face-to-face sales and photograph identification, establishing additional record-keeping requirements for mail-order sales, and requiring producers of Scheduled Listed Chemical Products to make annual estimates of the quantities of the products needed for legitimate use. These domestic regulatory requirements, coupled with the enforcement actions being taken by states should lead to a decline in the number of domestic operational clandestine laboratories. Limiting sales at the wholesale level is another important part of the equation. Under the law, foreign distributors are required to disclose all known information to the importer on the chain of distribution of such chemicals from the manufacturer to the importer. Furthermore, the State Department is required to identify annually the five largest exporting and importing countries of Scheduled Listed Chemical Products, and DEA is given the authority to issue importation prohibition orders. Taken together, these actions are expected to help greatly on the international regulatory side. Effective methamphetamine enforcement calls for a balanced approach that addresses the drug law enforcement issues, while ensuring the availability of an adequate supply of controlled substances to meet consumers’ legitimate medical needs.

Despite the Accomplishments, the Challenges Remain

Mr. Chairman and Members of the Subcommittee, DEA carefully manages the resources Congress provides to ensure we wring every penny out of every dollar you give us. And while we are proud of our many accomplishments, we never lose sight of the fact that drug abuse remains a very serious problem facing our country. The most recent data available from the federal Centers for Disease Control and Prevention sadly reveals that in 2004, 30,711 Americans died from drug abuse. This is almost 2,000 more deaths than occurred in 2003.

Compounding the loss of lives is the damage from increased crime and violence, the powerful grip of addiction, lower productivity in the workforce, child abuse and neglect, environmental danger, and the grief of lost promise. Taken together, the effect of these human tragedies eclipses even the very tragic impact of terrorism. And so, while we realize our country faces tight budget times, we are here today to ask you to give us a few more tools, a few more resources, so we can do a little more to drive illegal drugs from our shores.

Fiscal Year 2008 Budget Request

For FY 2008, DEA is requesting $2.4 billion ($1.8 billion under the Salary and Expenses Account, $239 million under the Diversion Control Fee Account, and $389 million for OCDETF activities and other reimbursable agreements). A total of 10,239 positions, of which 4,811 are Special Agent positions, are requested from these funding sources. This request represents an increase of $110 million over the FY 2007 President’s Budget, and was developed with the goal of advancing DEA’s enforcement strategy in the most efficient and effective manner. It was developed through a planning process of several months duration, calling upon the knowledge, talent, and skills of many DEA professionals with years of experience in drug law enforcement. Under the Salary and Expenses Account, the FY 2008 request would provide funding for three initiatives. Fee Account collections would fund companion initiatives in the diversion control program.

Salaries and Expenses Account

DEA is requesting $39.3 million to expand activities in three key areas:

1. Southwest Border and Methamphetamine Enforcement Initiative ($29.2 million and 8 positions).

DEA is an active participant in the Southwest Border Initiative, a cooperative effort launched in 1994 by federal law enforcement agencies to combat the threat posed by Mexico-based trafficking groups operating along the southwest border. The Southwest Border and Methamphetamine Enforcement Initiative that DEA is proposing would complement the 1994 initiative in an area of the country recognized as the principal arrival zone for most illicit drugs smuggled into the United States, as well as the predominant staging area for the subsequent distribution of these drugs throughout the country. With regard to methamphetamine alone, current drug and lab seizure data suggests that approximately 80 percent of the methamphetamine used in the United States originates from larger laboratories operated by Mexican-based organizations on both sides of the border. The data also suggests that the remaining approximately 20 percent consumed is produced in small toxic labs. DEA’s Southwest Border and Methamphetamine Enforcement Initiative would help DEA step up the fight on both sides of the border through increases in our aviation assets, and improvements in our surveillance and communications systems and data collection and analysis capabilities.

Some specifics: $15.4 million would be used to purchase, among other things, three helicopters, each equipped with a High Definition camera for complex aerial surveillance activities in support of our major investigations. An additional $3.4 million would fund operational expenses and equipment purchases needed for providing communications coverage of remote areas along the border. Also requested is $3.4 million and two positions to design, develop and implement an advanced digital imagery program for capturing and storing facial and other identifiable images for drug trafficking organizations investigations. To purchase advanced satellite telephone and maritime tracking devices, and sensor and audio/video surveillance equipment, which often act as a force multiplier, DEA is requesting a total of $5.1 million. The El Paso Intelligence Center (EPIC) developed Operation Gatekeeper to research, analyze, and report information on the Mexican drug trafficking organizations that control entry corridors along the border. To expand this important operation, DEA is requesting $612,000 and six positions. And to expand its information sharing capabilities, EPIC is requesting $3.4 million to develop the capacity to share digital images with its Federal, State and local law enforcement partners.

2. Counterterrorism and Intelligence Sharing Initiative ($7.1 million and 7 positions).

In 2006, after a 25-year hiatus, DEA’s Office of National Security Intelligence (NN) was designated a member of the Intelligence Community (IC). While the designation does not grant new authorities to DEA, it does formalize the long-standing relationship between DEA and the IC and allows DEA and other IC members to work on issues of national security interest in an integrated fashion. With over 33 years of operational experience in the foreign arena and the largest U.S. law enforcement presence abroad, DEA has made and will continue to make many unique contributions, not only in drug law enforcement, but also in the interest of national security. For example, with over 5,000 confidential sources, DEA possesses substantial human intelligence capabilities. Additionally, the number of criminal intercepts made by DEA in 2006 is 77 percent greater than the number of criminal wiretaps made by all other federal law enforcement agencies combined.

An Overview Of The United States Intelligence Community – 2007, which was prepared by the Office of the Director of National Intelligence, states that “DEA/NN’s membership in the Community helps optimize the overall U.S. government counter narcotics interdiction and security effort and furthers creative collaboration between the many organizations involved in countering the threats from narcotics trafficking, human smuggling/trafficking, immigration crimes, and global terrorism.” Furthermore, based on available intelligence, there is clear evidence that drug profits are being used to facilitate acts of terrorism and violence. These acts undermine democratic governance and respect for the rule of law, as well as destabilize regional security in countries such as Afghanistan, Colombia, Mexico, Venezuela, and the tri-border area.

The DEA and the IC have a long history of collaborating for purposes of identifying and disrupting illegal drug trafficking. The Counterterrorism and Intelligence Sharing Initiative would bolster those collaborations, allow DEA to enhance its classified information technology (IT) infrastructure, provide start-up funding and positions for studying and analyzing emerging as well as established coca and opium poppy growing regions, and provide resources for DEA to continue its participation in Justice’s anti-gang activities.

Some specifics: $6 million would ensure that DEA’s classified IT backbone, MERLIN, would be upgraded in every DEA office every four years. Regularly scheduled upgrades would make certain that DEA’s IC component has the secure communications infrastructure that is critical to communicating classified IC requests to both domestic and foreign DEA field offices. Presently, DEA is in a precarious situation as it relates to the continued viability of MERLIN. In previous years, requests for operations and maintenance enhancement funding have been denied, with the result that much of our MERLIN equipment is five or six years old and in danger of serious failure. If we are to meet our IC commitments and exploit our intelligence capabilities against transnational threats, DEA must have an infrastructure that makes that possible. Six positions and $950,000 are requested to study regions of the world where coca and poppy are grown to determine the amount of finished cocaine and heroin that can be produced from a given quantity of plant material. Finally, one position and $204,000 is requested so DEA may assign one Special Agent to the Department’s National Gang Targeting, Enforcement, and Coordination Center, which takes part in and coordinates investigations and prosecutions, and develops enforcement and prevention strategies to combat gang violence in this country.

3. Online Investigations Initiative ($3 million).

Drug traffickers are increasingly turning to the Internet to widen their reach and strengthen their criminal enterprises. State-of-the-art Internet investigative technologies are an essential tool if DEA is to attack the command and control communications of organizations, particularly those that operate across jurisdictional boundaries at the regional, national, and international levels. To achieve our objectives, DEA must acquire tailored Internet intercept solutions, arrange for permanent Internet connectivity between DEA’s field divisions and the major Internet Service Providers, and purchase needed hardware for computer forensics purposes. With these purchases, DEA could greatly improve the quality, effectiveness, and timeliness of our investigations of these traffickers.

Some specifics: $1 million would be used to develop intercept solutions to counter traffickers who use Yahoo, Hotmail and other electronic mail accounts, as well as advanced Internet communications, wireless handheld devices, instant messaging services, and encrypted electronic mail. $1.5 million is requested to connect DEA field divisions to major Internet Service Providers by means of a secure, dedicated network. The total cost for these connections is $3 million, half of which is requested under the Salaries and Expenses Account and half would be covered by Diversion Control Fee Account to step up our investigations of illegal online pharmacies. Finally, DEA is requesting $520,000 to purchase computer hardware that is designed to aid forensic professionals with recovering and examining data more quickly and from numerous electronic devices.  

Diversion and Control Fee Account (DCFA)

DEA’s FY 2008 request includes $239 million under the DCFA, a $27.1 million increase over FY 2007.

Prescription drugs are diverted for abuse through doctors, pharmacies, thefts and robberies from manufacturers and distributors, and illegal Internet distributors. Throughout the United States, the non-medical use of prescription drugs continues at alarming rates. The 2005 National Survey on Drug Use and Health, released in September 2006 by SAMHSA, reports that an estimated 6.4 million Americans abuse prescription drugs, compared to 3.8 million in 2000 – a 68 percent increase over five years. Furthermore, they are the second most abused type of drugs – behind only marijuana. Particularly troubling is the data showing that nearly one out of every ten high school seniors abuses dangerous painkillers. Fueling this increase is the proliferation of illicit websites that make it possible, with one simple click, to purchase controlled substances. Furthermore, buying a medicinal product through an illegal Internet pharmacy exposes individuals who make these purchases to serious health risks.

DEA is actively pursuing those who divert pharmaceutical controlled substances. On the Internet and non-Internet sides combined, DEA initiated 1,840 criminal, complaint, and regulatory pharmaceutical investigations in FY 2006. 857 of those investigations targeted Schedule III-V pharmaceutical controlled substances, and 237 investigations targeted Schedule II pharmaceuticals. Between FY 2004 and FY 2006, DEA seized $55 million in cash, bank accounts, property, and computers in the course of its investigations, compared to $2.5 million in FY 2003. While we are pleased with our progress, it is imperative that DEA enhance its enforcement work in an area that poses such an immediate public safety threat.

Some specifics of our DCFA request: DEA is requesting $766,000 and seven positions to provide much-needed investigative support for our computer forensics teams. We estimate that online diversion cases will increase the workload of DEA attorneys assigned to these cases by 75 percent for the foreseeable future, and to prepare for this, DEA requests $495,000 and five attorney positions. DEA is requesting $337,000 and two positions (one Special Agent and one Diversion Investigator) to work with the Customs and Border Patrol in Long Beach, California to identify shipments of precursor chemicals from source countries that are destined for Mexico. Additionally, we are requesting $474,000 and one position (Foreign Diversion Investigator) to support existing DEA investigations in Panama City, Panama involving the smuggling of precursors moving through Panama. Finally, DEA has proposed that a new hybrid job series be established which contains the specialized diversion investigator equirements as well as full law enforcement authorities. The proposal, with an associated cost of $11.5 million, is now under review by the Office of Personnel Management (OPM). Current employees who are interested and eligible may apply. Those who do not apply will continue to perform compliance functions. Through attrition, we will arrive at the appropriate number of diversion investigators to sustain the compliance function. With OPM approval of the proposal, DEA will begin the conversion in FY 2007.  

Program Offsets

Included in the President’s Budget is one funding offset proposal: the elimination of the MET program (Mobile Enforcement Teams). This offset would achieve savings of $20.6 million in FY 2008.

Over the years, DEA has valued each and every opportunity to support state and local law enforcement organizations as they combat drug-related violent crimes in our nation’s cities and towns. Furthermore, as many of you know from experience in your own communities, our partnerships have yielded positive, and I hope, lasting results. At the same time, greater overall results are achieved when our focus is on targeting the drug trafficking organizations whose activities have the most significant impact on the drug problem in the United States as a whole.

While DEA’s field divisions will no longer deploy MET teams to local jurisdictions when we receive a deployment request, we will continue to provide law enforcement assistance to them whenever possible, including our vigorous training programs for state and local law enforcement officers. In FY 2006, DEA trained more than 41,000 officers. Also, during FY 2006, DEA led over 200 State and Local Task Forces, with an on board strength of 1,600 Special Agents and 2,100 Task Force Officers.  


Mr. Chairman, in closing, let me repeat that DEA works very hard to manage its resources and finances wisely and efficiently. Nevertheless, as our base budget has gradually eroded over time due to pay raise absorptions, rescissions and program reductions, we have been unable to maintain adequately our infrastructure or agent and support staffing at their previous levels. This has put us at an enforcement disadvantage. We must regain our financial footing. We must have the ability to sharpen and expand the enforcement tools and techniques that have helped us establish our drug enforcement leadership role. The budget before you today sets us on the path to regain that footing.

Mr. Chairman and Members of the Subcommittee let me assure you that although we are experiencing fiscal challenges, we at DEA never waver in our firm commitment to public service and public safety.

This concludes my remarks. I would now be happy to answer any questions you or the other members of the Committee may have.

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