Spying Case Against Robin Raphel Fizzles; AG Lynch’s “Houston, We Have a Problem” Moment

Posted: 2:05 am EDT


We blogged about the Robin Raphel case in September (see The Murky Robin Raphel Case 10 Months On, Remains Murky … Why?.

In November 2014, we also blogged this: Robin Raphel, Presumption of Innocence and Tin Can Phones for Pak Officials.

On October 10, the NYTimes reported that officials apparently now say that the spying investigation has all but fizzled. This leaves the Justice Department to decide whether to prosecute Ms. Raphel for the far less serious charge of keeping classified information in her home.

The fallout from the investigation has in the meantime seriously damaged Ms. Raphel’s reputation, built over decades in some of the world’s most volatile countries.

If the Justice Department declines to file spying charges, as several officials said they expected, it will be the latest example of American law enforcement agencies bringing an espionage investigation into the public eye, only to see it dissipate under further scrutiny. Last month, the Justice Department dropped charges against a Temple University physicist who had been accused of sharing sensitive information with China. In May, prosecutors dropped all charges against a government hydrologist who had been under investigation for espionage.
Some American investigators remain suspicious of Ms. Raphel and are loath to abandon the case entirely. Even if the government cannot mount a case for outright spying, they are pushing for a felony charge related to the classified information in her home.







In the case of Xiaoxing Xi, the Temple university professor and head of the school’s physics department, federal authorities handling the case were said to have misunderstood key parts of the science behind the professor’s work.  Mr. Xi’s lawyer said, “We found what appeared to be some fundamental mistakes and misunderstandings about the science and technology involved here.” The federal officials handling the Xi case did not know the science but went ahead and indicted him anyway.

Are we going to hear soon that the federal officials handling the Raphel case also made some fundamental mistakes and misunderstanding of the diplomatic tradecraft?  At least two of these officials leaked the probe to the news media even if no charges were filed against Ambassador Raphel.

This  was not a harmless leak. She lost her security clearance, and her job at the State Department without ever being charged of any crime. And in the court of social media, just the news that she is reportedly the subject of a spying investigation is enough to get her attacked and pilloried for treason. Perhaps, the most disturbing part in the report is that the authorities appear to have no case against her for spying, so now they’re considering slapping her with a felony charge under the Espionage Act.

Now, why would they do that?

Perhaps to save face and never having to admit that federal authorities made a mistake or lack an understanding of international statecraft? They could say —  see, we got something out of a year’s worth of investigation, so it was not completely useless.

Or perhaps because American investigators still viewed Ambassador Raphel’s relationships with deep suspicion?

Because, obviously, “deep suspicion” is now the bar for an espionage charge?

We should note that the hydrologist, Sherry Chen was cleared of spying charges but was notified in September that she will be fired by the National Weather Service for many of the same reasons the USG originally prosecuted her. Xiaoxing Xi of Temple University had been charged with “four counts of wire fraud in the case involving the development of a pocket heater for magnesium diboride thin films.” The USG asked to dismiss the case without prejudice, meaning it could be revived, according to philly.com.

Unlike the Chen and Xi cases, Raphel was never charged and was not afforded the right to defend herself in the court of law.  What we have in one case may have been a misunderstanding, a second case, may well have been a mistake, but a third case is certainly, a trend.

This is AG Loretta Lynch’s  “Houston, we have a problem” moment.


FASTC Hard Skills Training Center: “Who owes who favors?”

Posted: 12:19 am EDT


On September 9, the House Oversight and Government Reform Committee (HOGR) held a hearing to examine the efforts to ensure the safety of U.S. personnel and assets in northern Mexico and along the U.S.-Mexican border (see HOGR Hearing: Violence on the Border, Keeping U.S. Personnel Safe).  There were questions about danger pay, security, local guard pay, planned facilities, hardship posts, staffing and yes, a congressman did suggest that we close our consulates in Mexico.

During the hearing, one congressman also showed up to beat up DS A/S Gregory Starr about the FASTC hard skills training center set to be built at Fort Pickett. The congressman from Georgia, Earl L. “Buddy” Carter (GA-1)wanted to know why the OMB has not released its report on this politically contentious project that has been going on for years.  Um… probably because it’s not Diplomatic Security’s report to release? What the congressman from Georgia probably really want to ask is why the heck is the State Department building a training facility  in Fort Pickett, VA, didn’t everybody know that FLETC in Glynco, GA is the best facility there is?  We did not see the representatives from the VA delegation, probably because this was a hearing related to border posts.  Not sure, the congressman was really interested in the answers to the questions he asked. He told Mr. Starr to “go back and compare the two sites.” We wonder how many times Diplomatic Security has to go back and compare these two sites. Until all the congressional delegates are happy with it?  Did he ask other questions about the border posts? Must have missed that.

The Skeptical Bureaucrat recently did a piece on the FASTC:

To review the situation, the administration wishes to construct a Foreign Affairs Security Training Center (FASTC) that would consolidate ‘hard skills’ training by the State Department and its partners at Fort Pickett in southside Virginia. Some members of Congress are trying to stop the project, ostensibly on grounds of economic efficiency, and would require the State Department to use the Federal Law Enforcement Training Center (FLETC) in Georgia for hard skills training. Both sides are currently awaiting the public release of a General Accountability Organization (GAO) report that evaluates the business case for building FASTC at Fort Pickett.

This week the Progress-Index, a local newspaper in the Fort Pickett area, interviewed and quoted a senior Diplomatic Security Service official for an article about the political impasse over FASTC. Well, hum, that’s interesting. I presume the senior official had gotten official clearance to make those remarks. I further presume that State gets to review the expected GAO report before it goes public. Putting 2 + 2 together, I wonder whether DS is signalling with the interview that it knows the GAO will support building FASTC at Fort Pickett?

Here’s the article, Report could speed up diplomatic training center at Fort Pickett:

State Department officials are hoping a soon-to-be released report will help end wrangling in Congress that has delayed construction on a diplomatic security training center at a National Guard base in Virginia.

Construction on the first phase of the facility at Fort Pickett, just over the Dinwiddie County border, was set to begin Aug. 1 with a completion date set for 2019. State Department officials have put that work on hold while they respond to Congressional requests for information.

The State Department stands by its selection of Fort Pickett, saying its proximity to Washington, D.C., and rural location would allow it to conduct around-the-clock military-style training. The site is also within driving distance of Marine bases in Virginia and North Carolina that State Department personnel train with, as well as Navy special warfare forces that are stationed in Virginia Beach.

Stephen Dietz, executive director of the State Department’s bureau of diplomatic security, said the Marines have told him that they can’t afford to travel to Georgia for State Department training. He said the cost estimates for the southeastern Georgia site [FLETC} only have to do with construction, and don’t include operation, maintenance or travel costs for State Department, military or intelligence agency personnel. 

Read TSB’s  Possible Tip-Off About FASTC Hard Skills Training Center at Fort Pickett?

The report cited by TSB also has a quotable quote from Mayor Billy Coleburn of Blackstone, Virginia who has been looking forward to as many as 10,000 people coming through for State Department training each year:

“If you’re banking your hopes on common sense and consensus in Washington, D.C., you stay up late at night worrying,” said Mayor Billy Coleburn. “Who owes who favors? Who gets browbeaten behind the scenes. Those are things we can only imagine — what happens in smoke-filled rooms in Washington, D.C?”

We can’t imagine those things. Nope.

What we’ve learned from this hearing is that Congress is really worried about the security of U.S. diplomatic personnel overseas. Until it’s not.

So far, it has not been able to get its act together on a project that’s the center of a long standing tug-of-war between politicians. For sure, there will be another hearing. And another. And another.

It certainly is interesting to watch these congressional hearings where our elected reps demonstrate their deep understanding of the issues bubbling with barely hidden agendas. Can we please start sending these folks to Crash and Bang training?  Also, Channel 9 has Survivor Matamoros Nuevo Laredo, all 9 square miles of the city you’re allowed to go  is also accessible on Channel 9, any volunteers?

Anybody out there know what’s happening to the GAO report?


US Embassy Budapest Issues Alert on Railway Station, Silent on Refugee/Migration Crisis on Doorstep

Posted: 6:37 pm EDT


The UNCHR in Budapest, Hungary writes that — an angry confrontation between police and refugees on a blocked train just outside Budapest; a makeshift camp of stranded Syrians, Afghans and others at the capital’s main railway station; more than 2,000 refugees crossing into the country from Serbia each day the contours of Europe’s refugee and migration crisis are growing and shifting.  It describes the concourse in front of the main Keleti train station in Budapest as resembling a sad, makeshift campsite. “More than 2,000 people slept there overnight, a few in small tents, some with blankets and air mattresses, many on the cement floor covered in nothing but their clothes.”







On September 3, the U.S. Embassy in Hungary issued an alert concerning the migrants at the the Keleti Railway Station. This is about the only statement we could locate concerning the refugee crisis in its host country:

The U.S. Embassy advises all U.S. citizens in Hungary to be alert when traveling through the Keleti Railway Station (Palyaudvar).  Increasing numbers of migrants in and around the station have resulted in large crowds in public spaces.  Although these crowds have occasionally confronted police, demonstrations have been peaceful, and the presence of migrants has not led to a rise in crime, violent or otherwise.  However, even demonstrations intended to be peaceful can turn confrontational and escalate into violence.  You should avoid areas of demonstrations, and exercise caution if in the vicinity of any large gatherings, protests, or demonstrations. Rail passengers should be prepared to show their passports to be admitted to the trains and platforms.  Rail traffic to and from the station has been subject to significant delays.  In some cases, departures have been cancelled.

On the same day when Hungary was accused of inhumane treatment of refugees, Embassy Budapest tweeted this:


A couple of weeks earlier, the U.S. Ambassador to Hungary Colleen Bell toured Hungary’s majestic caves:


An FB commenter writes to Embassy Budapest:

Ambassador Bell, by not speaking against Hungary’s regressive and inhuman actions on refugees you are proving all the charges that you are an ineffective diplomat and mere window dressing. Perhaps you should join Donald Trump’s campaign. Hungary needs to become the great country she could be, not revert to her infamous policies of the 20th Century.

Two days ago, this photo shocked the world:

On September 3, the State Department spox tweeted this:

The latest from Embassy Budapest today is learning more about programs that support the conservation of culture, urging,  “Follow !”

On Facebook, there is a ‪#‎USAfridayQUIZ‬.

That’s all.


State Dept’s Wibbly Wobbly Jello Stance on Use of Private Email, Also Gummy Jello on Prostitution

Posted: 1:38 am EDT


We’ve added to our timeline of the Clinton Email saga (see Clinton Email Controversy Needs Its Own Cable Channel, For Now, a Timeline).

On August 24, 2015, State Dept. Spokesman John Kirby told CNN:  “At The Time, When She Was Secretary Of State, There Was No Prohibition To Her Use Of A Private Email.” Below is the video clip with Mr. Kirby.

Okay, then. Would somebody please get the State Department to sort something out. If there was no prohibition on then Secretary Clinton’s use of a private email, why, oh, why did the OIG inspectors dinged the then ambassador to Kenya, Scott Gration for using commercial email back in 2012? (See OIG inspection of US Embassy Kenya, 2012).

Screen Shot 2015-08-25

Oh, and here’s a more recent one dated August 25, 2015. The OIG inspection of U.S. Embassy Japan (pdf) says this:

In the course of its inspection, OIG received reports concerning embassy staff use of private email accounts to conduct official business. On the basis of these reports, OIG’s Office of Evaluations and Special Projects conducted a review and confirmed that senior embassy staff, including the Ambassador, used personal email accounts to send and receive messages containing official business. In addition, OIG identified instances where emails labeled Sensitive but Unclassified6 were sent from, or received by, personal email accounts.

OIG has previously reported on the risks associated with using commercial email for official Government business. Such risks include data loss, hacking, phishing, and spoofing of email accounts, as well as inadequate protections for personally identifiable information. Department policy is that employees generally should not use private email accounts (for example, Gmail, AOL, Yahoo, and so forth) for official business.7 Employees are also expected to use approved, secure methods to transmit Sensitive but Unclassified information when available and practical.8

OIG report referenced two cables, we’ve inserted the hyperlinks publicly available online: 11 STATE 65111 and 14 STATE 128030 and 12 FAM 544.3, which has been in the rules book, at least since 2005:

12 FAM 544.3 Electronic Transmission Via the Internet  (updated November 4, 2005)

“It is the Department’s general policy that normal day-to-day operations be conducted on an authorized [Automated Information System], which has the proper level of security control to provide nonrepudiation, authentication and encryption, to ensure confidentiality, integrity, and availability of the resident information.”

This section of the FAM was put together by the Office of Information Security (DS/SI/IS) under the Bureau of Diplomatic Security, one of the multiple bureaus that report to the Under Secretary for Management.

Either the somebodies were asleep at the switch, as the cliché goes, or somebody at the State Department gave authorization to the Clinton private server as an Automated Information System.

In any case, the State Department’s stance on the application of regulations on the use of private and/or commercial email is, not wobbly jello on just this one subject or on just this instance.


dancing jello gummy bears

On October 16, 2014, State/OIG released its Review of Selected Internal Investigations Conducted by the Bureau of Diplomatic Security. This review arose out of a 2012 OIG inspection of the Department of State (Department) Bureau of Diplomatic Security (DS). At that time, OIG inspectors were informed of allegations of undue influence and favoritism related to the handling of a number of internal investigations by the DS internal investigations unit. The allegations initially related to eight, high-profile, internal investigations. (See State/OIG Releases Investigation on CBS News Allegations: Prostitution as “Management Issues” Unless It’s NotCBS News: Possible State Dept Cover-Ups on Sex, Drugs, Hookers — Why the “Missing Firewall” Was a Big Deal).

One of those eight cases relate to an allegation of soliciting a prostitute.

The Foreign Affairs Manual (FAM) provides that disciplinary action may be taken against persons who engage in behavior, such as soliciting prostitutes, that would cause the U.S. Government to be held in opprobrium were it to become public.1

In May 2011, DS was alerted to suspicions by the security staff at a U.S. embassy that the U.S. Ambassador solicited a prostitute in a public park near the embassy. DS assigned an agent from its internal investigations unit to conduct a preliminary inquiry. However, 2 days later, the agent was directed to stop further inquiry because of a decision by senior Department officials to treat the matter as a “management issue.” The Ambassador was recalled to Washington and, in June 2011, met with the Under Secretary of State for Management and the then Chief of Staff and Counselor to the Secretary of State. At the meeting, the Ambassador denied the allegations and was then permitted to return to post. The Department took no further action affecting the Ambassador.

OIG found that, based on the limited evidence collected by DS, the suspected misconduct by the Ambassador was not substantiated. DS management told OIG, in 2013, that the preliminary inquiry was appropriately halted because no further investigation was possible. OIG concluded, however, that additional evidence, confirming or refuting the suspected misconduct, could have been collected. For example, before the preliminary inquiry was halted, only one of multiple potential witnesses on the embassy’s security staff had been interviewed. Additionally, DS never interviewed the Ambassador and did not follow its usual investigative protocol of assigning an investigative case number to the matter or opening and keeping investigative case files.

Department officials offered different justifications for handling the matter as a “management issue,” and they did not create or retain any record to justify their handling of it in that manner. In addition, OIG did not discover any guidance on what factors should be considered, or processes should be followed, in making a “management issue” determination, nor did OIG discover any records documenting management’s handling of the matter once the determination was made.

The Under Secretary of State for Management told OIG that he decided to handle the suspected incident as a “management issue” based on a disciplinary provision in the FAM that he had employed on prior occasions to address allegations of misconduct by Chiefs of Mission. The provision, applicable to Chiefs of Mission and other senior officials, states that when “exceptional circumstances” exist, the Under Secretary need not refer the suspected misconduct to OIG or DS for further investigation (as is otherwise required).2 In this instance, the Under Secretary cited as “exceptional circumstances” the fact that the Ambassador worked overseas.3

DS managers told OIG that they viewed the Ambassador’s suspected misconduct as a “management issue” based on another FAM disciplinary provision applicable to lower-ranking employees. The provision permits treating misconduct allegations as a “management issue” when they are “relatively minor.”4 DS managers told OIG that they considered the allegations “relatively minor” and not involving criminal violations.

Office of the Legal Adviser staff told OIG that the FAM’s disciplinary provisions do not apply to Ambassadors who, as in this instance, are political appointees and are not members of the Foreign Service or the Civil Service.5

OIG questions the differing justifications offered and recommends that the Department promulgate clear and consistent protocols and procedures for the handling of allegations involving misconduct by Chiefs of Mission and other senior officials. Doing so should minimize the risk of (1) actual or perceived undue influence and favoritism and (2) disparate treatment between higher and lower-ranking officials suspected of misconduct.6 In addition, OIG concludes that the Under Secretary’s application of the “exceptional circumstances” provision to remove matters from DS and OIG review could impair OIG’s independence and unduly limit DS’s and OIG’s abilities to investigate alleged misconduct by Chiefs of Mission and other senior Department officials.

In the SBU report provided to Congress and the Department, OIG cited an additional factor considered by the Under Secretary—namely, that the Ambassador’s suspected misconduct (solicitation of prostitution) was not a crime in the host country. However, after the SBU report was issued, the Under Secretary advised OIG that that factor did not affect his decision to treat the matter as a “management issue” and that he cited it in a different context. This does not change any of OIG’s findings or conclusions in this matter. 

After the SBU report was issued, the Under Secretary of State for Management advised OIG that he disagrees with the Office of the Legal Adviser interpretation, citing the provisions in the Foreign Service Act of 1980 which designate Chiefs of Mission appointed by the President as members of the Foreign Service. See Foreign Service Act of 1980, §§ 103(1) & 302(a)(1) (22 USC §§ 3903(1) & 3942(a)(1)). 

During the course of that review, State/OIG said it discovered some evidence of disparity in DS’s handling of allegations involving prostitution. Between 2009 and 2011, DS investigated 13 prostitution-related cases involving lower-ranking officials.

The OIG apparently, found no evidence that any of those inquiries were halted and treated as “management issues.”


Also, have you heard?  Apparently, DEA now has an updated “etiquette” training for its agents overseas.

That’s all.

Is there a diplomatic way to request that the responsible folks at the State Department culture some real backbone in a petri-dish?

No, no, not jello backbone, please!


What’s Next For Former FSO Michael Sestak, Plus Some Unanswered Questions

Posted: 2:05 pm EDT


On August 14, 2015, former FSO Michael T. Sestak was sentenced to 64 months imprisonment for receiving over $3 million in bribes in exchange for visas at the U.S. Consulate General in Ho Chi Minh City, Vietnam.

The Preliminary Consent Order of Forfeiture filed in the District Court of Columbia includes forfeiture of a) “any property, real or personal, which constitutes or is derived from proceeds traceable to the offense;” and  b) “a money judgment equal to the value of any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.”

The consent order identifies 1) any and all funds and securities seized from Scottrade Account #XXXX001S, held in the name of Anhdao Thuy Nguyen (“Scottrade Account”); and 2) $198,199.13 seized from the Department of Treasury from the Treasury Suspense Account under Seizure Number 38l30010—O1 (“Treasury Account”); and 3) a money judgment in the amount of at least $6,021,440.58, for which the defendant (Sestak) is jointly and severally liable with any co-conspirators ordered to pay a forfeiture money judgment as a result of a conviction for either offense.

In the plea agreement, Sestak agreed to sell nine properties in Thailand and that the proceeds would be paid to the United
States to satisfy a portion of the money judgment entered against him. The consent order also notes that “upon entry of a forfeiture order, Fed. R. Crim. P. 32.2(b)(3) authorizes the Attorney General or a designee to conduct any discovery the Court considers proper in identifying, locating, or disposing of property subject to forfeiture.”

In a pre-sentencing filing,  Mr. Sestak requested that any term of incarceration occur in a Camp-level facility. Specifically, at FCI Miami or if that’s not available, FCI Pensacola.  Defense justification is based on Sestak’s “lack of criminal history, the non-violent nature of the crimes, his cooperation with the Government, his lifetime of public service, his age, education, and status as a trustee during his pretrial confinement at Northern Neck Regional Jail.”‘

We had a chance to ask a few questions from his lawyer, Gray Broughton; we wanted to know where will be the location of his incarceration.

“The Bureau of Prisons will ultimately make a determination as to where Mr. Sestak is incarcerated,” said Mr. Broughton.  The defense lawyer again cited the nonviolent nature of the crimes and Mr. Sestak’s “clean criminal history.”  Mr. Sestak should be housed in a lower security level facility, according to his lawyer and that his prior employment with the U.S. Marshal will be taken into consideration by the Bureau of Prison.
We asked about the plea deals received by Sestak and main co-conspirator Bihn Vo.   Sestak’s lawyer believed the government made the best deal it could:

Mr. Sestak received a sentence of 64 months – 32 months less than codefendant Binh Vo, who received a sentence of 96 months. The Government will end up getting roughly $5M from Binh Vo – the $3M it already seized and the $2M he has agreed to pay in the next year. Binh Vo’s money (and his wife) are all currently outside of the U.S., so the U.S. doesn’t have any control over either. It made the best deal it felt it could with Binh Vo.

We were also interested in the duration of the sentence. By our calculation, Mr. Sestak would be almost 50 by the time he completes his sentence.  Mr. Broughton, however, told us that “assuming good behavior, Mr. Sestak would serve 85% of the sentence.” He will reportedly also get credit for the 27 months he has been in jail since his arrest, towards his sentence. We’re not sure if he’ll get credit for the full 27 months. But if that’s the case, and if our math is correct, he’d be out between 2-3 years.

We asked what happened to the 500 visa applicants that Mr. Sestak had issued visas to in Vietnam. And if Mr. Sestak was asked to help track or account for the applicants who paid bribes for their visas. Mr. Broughton said, “I don’t know what happened to the visa applicants. I am not aware of any efforts by the US Government in that regard.”

Mr. Broughton also released the following statement after the sentencing:

Michael Sestak received a fair, well-reasoned sentence today. The Court had the unenviable task of taking a multitude of opposing factors into consideration in devising Mr. Sestak’s sentence. 

As counsel for the U.S. Government readily admitted during Mr. Sestak’s sentencing hearing, Binh Vo was the mastermind of the visa fraud conspiracy. Binh Vo also had the largest pecuniary gain and will likely have millions of dollars waiting for him upon his release – along with his wife Alice Nguyen, who was able to avoid prosecution as a result of Binh Vo’s plea agreement. The Court appeared to appreciate that a sentence greater than or equal to Binh Vo’s sentence of 8 years would be fundamentally unjust for Michael Sestak, even though the U.S. Sentencing Guidelines recommended a sentence of approximately 20 years.
What made things difficult for the Court in determining an appropriate sentence is that Mr. Sestak was an essential component to the conspiracy and a public servant who had taken an oath of loyalty to his Country. It was Mr. Sestak’s status as a public official and the theory that would-be criminals will think twice before committing similar crimes that caused the Court to sentence Michael Sestak to something greater than time served.
Ultimately, the Court balanced these countervailing factors by issuing a sentence of 64 months – 32 months less than codefendant Binh Vo, who received a sentence of 96 months.
Michael Sestak is a good man who made made a huge mistake. Even after his release from prison, Mr. Sestak’s actions – and the shame that follows – will haunt him forever.


With the case concluded for all charged co-conspirators, we thought we’d asked the State Department what systemic changes had Consular Affairs instituted at USCG Ho Chi Minh City and worldwide following the Sestak incident.

The State Department, on background says this:

The Bureau of Consular Affairs takes all allegations of malfeasance seriously and continually works to improve its operations. Following any detection of vulnerabilities, CA works to improve management controls and guidance to the field. After the incident in Ho Chi Minh City, the management controls at post were comprehensively reviewed to determine what improvements could be made to their processes. As a matter of policy, we do not discuss the specifics of internal management controls.

Most of the Sestak visa cases were allegedly previous refusals. If true, we don’t quite understand how one officer could overturn so many visa refusals and issue close to 500 visas without red flags, if consular management controls worked as they should.  We wanted to know what consequences will there be for supervisors, embassy senior officials and principal officers who fail to do their required oversight on visas. And by the way, what about those who also do not follow the worldwide visa referral policy, particularly, Front Office occupants? The State Department would only say this:

As a matter of policy we do not discuss specific internal personnel actions. Protecting the integrity of the U.S. visa is a top priority of the U.S. government. We have zero tolerance for malfeasance. We work closely with our law enforcement partners to vigorously investigate all allegations of visa fraud. When substantiated, we seek to prosecute and punish those involved to the fullest extent of the law.

We imagined that the Bureau of Consular Affair’s Consular Integrity Division would be tasked with reviewing procedures and lessons learned on what went wrong in the Sestak case. We wanted to know if that’s the case and wanted to ask questions from the office tasked with the responsibility of minimizing a repeat of the Sestak case. Here is the official response:

The Consular Integrity Division regularly reviews incidents of malfeasance or impropriety and makes recommendations for procedural changes to reduce vulnerabilities and updates training materials for adjudicators and managers based on the lessons learned, including the case in Ho Chi Minh City. The Consular Integrity Division also does reports on the management controls at overseas posts, as well as reports that review global management controls issues, which inform CA leadership about any issues of concern.

No can do.  So far, we’ve only learned that the CID reviewed incidents of malfeasance including the Sestak case but it doesn’t tell us if it did a specific report on HCMC and what systemic changes, if any, were actually made.

We tried again. With a different question: According to in country reports, USCG Ho Chi Minh City received a letter from a jilted man in central Vietnam that helped DS crack the Sestak case. ConGen Ho Chi Minh City is one of the few consular posts that actually has a Regional Security Officer-Investigator, dedicated to visa investigations. If this case started with this reportedly jilted lover, the question then becomes how come neither the RSO-I or the internal consular management controls did not trip up the FSO accused in this case? If there was no anonymous source, would the authorities have discovered what was right under their noses?

As a matter of policy, we do not discuss the details of investigations. Protecting the integrity of the U.S. visa is a top priority of the U.S. government. We continually work to improve its operations, both in the field and here in Washington DC.

Ugh! Sestak was charged in May 2013. In July that year, the State Department told Fox News it was reviewing thoroughly alleged “improprieties” regarding a consular official in Guyana allegedly trading visas for money and possibly sex. In another article in 2014,  former Peace Corps, Dan Lavin,  said, “The State Department makes millions off of the poorest people in the world just by selling them the opportunity to fill out the application.” He also made the following allegation: “There are people at the embassy who can get you a visa,” Lavin said. “If you’re a Sierra Leonean, you go to a man called a ‘broker’; you then pay that ‘broker’ $10,000 and he personally gives that money to someone at the embassy who in turn gets you a visa.”  Apparently,  when asked about the accusations, a spokesperson at the U.S. embassy in Freetown declined to comment.

In any case, we also wanted to know if there were systemic changes with the State Department’s RSO-I program and how they support consular sections worldwide? Or to put it another way, we were interested on any changes Diplomatic Security had implemented in the aftermath of the Sestak case. Here is the amazing grace response, still on background:

It is the mission of DS special agents assigned as Assistant Regional Security Officer-Investigators (ARSO-I) to find fraud in the countries where they serve.

Sigh, we know that already. We thought we’d also ask about those 489 Vietnamese who got their visas under this scheme. What happened to them? Did Diplomatic Security, DHS or some other agency tracked them down?

The Bureau of Consular Affairs conducted a review of visas issued by Mr. Sestak. The Department revoked those visas that were improperly issued. If the visa holder had already travelled to the United States on the improperly issued visa, the Department of State notified the Department of Homeland Security so that agency could take action as appropriate.

We don’t know how many “improperly issued” visas were revoked. All 489?

We don’t know how many of those able to travel to the U.S. were apprehended and/or deported to Vietnam.

Frankly, we don’t really know what happened to the 489 Vietnamese nationals who paid money to get visas.

Calvin Godfrey who covered this case from Vietnam writes:

State Department investigators managed to track down and interrogate a few, though they wouldn’t say how many. The Washington DC office of the US Immigration and Customs Enforcement Agency didn’t respond to a list of questions about their efforts to track them down.

We also don’t know how much was the total proceed from this illegal enterprise. The USG talks about $9.7 million but one of the co-conspirators in an email, talked $20 million. Below via Thanh Nien News:

Prosecutors only put the gang on the hook for a $9.7 million — a “conservative estimate” they came up with by multiplying $20,000 by 489. Statement written by Hong Vo the middle of the illicit ten-month visa auction:

“I can’t believe Binh has pretty much made over $20m with this business,” she wrote to her sister, identified only as Conspirator A.V. “Slow days… are like 3 clients… and that’s like 160k-180.”


Then there’s the individual who purportedly started this ball rolling in Vietnam. Below excerpted from Thanh Nien News:

The State Department was quick to crow over Vo’s sentencing, but it remains deeply disingenuous about how this case came about and what it means.

“This case demonstrates Diplomatic Security’s unwavering commitment to investigating visa fraud and ensuring that those who commit this crime are brought to justice,” crowed Bill Miller, the head of the Diplomatic Security Service (DSS) in a press release generated to mark Vo’s sentencing.

The problem there is that the whole case didn’t come about through careful oversight; it came about because a sad sack from Central Vietnam loaned his pregnant wife $20,000 to buy a US visa from Sestak and the Vos. Instead of coming home with their baby boy, she disappeared, married another man and blabbed about it on Facebook. The sad sack wrote rambling letters to the President and the State Department’s OIG trying to get his wife and money back.

That Vietnamese informant reportedly is a recipient of threats from some of the Sestak visa applicants. Poor sod. So, now, one of the co-conspirators got 7 months, another 16 months, Sestak got 5 years, Vo got 8 years,  one alleged co-conspirator was never charged, and we don’t know what happened to close to 500 visa applicants. Also, the USG gets less than half the $20 million alleged gains. It looks like, at least Vo, will not be flipping burgers when he gets out of prison.

Now life goes on.

The Purposeful and Targeted Cultivation of a Relationship with a Consular Officer

Posted: 1:04 am EDT


Former FSO Michael T. Sestak was arrested in Thailand on May 7, 2013. He was initially arraigned on September 13, 2013 and pled guilty on November 6, 2013.  He is scheduled to be sentenced on August 14 before Judge John D. Bates at the U.S. District Court of the District of Columbia. The USG is recommending (#303) that Mr. Sestak be sentenced to a term of 84 months of incarceration followed by 3 years of supervised release.

The USG in its memorandum in aid of sentencing writes:

The U.S. State Department is dedicated to administering its visa programs fairly and without graft or corruption. SESTAK and his co-conspirators damaged the reputation of the U.S. State Department by tainting the process and likely preventing deserving applicants from obtaining visas.

This was not a momentary lapse in judgment for any of the conspirators, including SESTAK. This was a sophisticated scheme that exploited a system and made millions of dollars after months of careful planning and substantial efforts to cover their tracks.
SESTAK has provided substantial assistance to the government from the time of his initial detention on May 9, 2013. On that date, the defendant waived his Miranda rights and agreed to be interviewed. During this initial interview, the defendant acknowledged his guilt and provided investigators with information regarding the conspiracy, including details about how the scheme actually operated and how the proceeds were laundered and moved out of Vietnam. While SESTAK was somewhat naïve and uninformed about the full extent of the conspiracy and the deep involvement of Binh Vo’s family members, he never minimized his own critical role in the scheme.

Mr. Sestak’s lawyer, Gray B. Broughton in his court filing argues that as of August 14, 2015, Mr. Sestak will have already forfeited over twenty-seven (27) months of his liberty in facilities designed for short-term detention and that a thirty-three (33) month sentence will serve as adequate punishment. “As a result of his indictment and conviction, Michael lost his job with the State Department and will never again be able to work in a similar capacity in public service. Even worse than the incarceration and job loss is Michael Sestak’s loss of reputation. The amount of shame and contrition that Michael Sestak continues to carry with him cannot be overstated. The loss of one’s profession and reputation is a severe punishment that serves the retributive goals of sentencing.” 

We will keep tabs on the sentencing set for Friday morning. Meanwhile, below is an excerpt from the court filing which is instructive, particularly, the emails exchanged by some of the conspirators.  If you’re a consular officer and somebody wants to make you an “honorary” brother, or sister, some other pretend relative, or fairy godparent, you gotta run as fast and as far away as possible!

This is what a purposeful and targeted cultivation of a relationship with a consular officer overseas looks like.  Note that this is an excerpt from the defense filing:

When Michael arrived in Vietnam, he had hit a personal low. Michael had become dissatisfied working for the State Department and had contemplated resigning at the end of his assignment to Poland. Michael had witnessed others being promoted who he believed were less deserving than he was. To make matters worse, Michael’s involvement in the fruitless search for WMD throughout Iraq shook his previously unwavering trust in the United States Government.
Most significantly, when Michael arrived in Vietnam, his personal life was totally unfulfilling. Within his first year assigned to Vietnam, Michael turned 40. Michael was unmarried, had no children, and no serious prospects for finding someone to share life together.  One aspect of being a Foreign Service Officer was that Michael changed countries every two years, usually coming back to Washington D.C. for several months in between for training. In both Spain and Poland, Michael had a girlfriend that he met towards the end of his tour. Unable to further develop these relationships in such a short amount of time, Michael arrived at his next assignment unaccompanied. It was during these transitions that Michael began to question the meaning of life and finding true happiness.
It was during this time and with this personal baggage that Michael first met Binh Vo. They met at Michael’s very first Consulate event in Vietnam in August 2010. Binh Vo and a Vietnamese businessman approached Michael and started talking. Binh Vo and Michael were approximately the same age; similarly, Binh Vo was American and well-educated.
Binh Vo slowly became Michael’s closest confident. Their friendship developed to the point where they met almost daily for meals or coffee. Binh Vo introduced Michael to his siblings, who went out of their way to include Michael in “family-only” functions. Binh Vo’s siblings referred to Michael as an honorary “Vo” brother. This circle of new-found friends constituted roughly 80% of Michael’s social activity in Vietnam. As described above, Michael was unable to develop any real friendships with American employees at the Consulate and he didn’t really have any Vietnamese friends; the few Vietnamese men that Michael met who ran in the same circles would ultimately harass Michael for visa “favors.” For the first year and four months of Michael’s time in Vietnam, Binh Vo was the only single male with whom he could communicate and socialize without reporting requirements because Binh Vo was American. Additionally, Binh Vo was always available, had a comparable level of education, and didn’t ask any favors.

Michael felt very fortunate to have stumbled upon a great relationship with Binh Vo and his family. Michael was unaware that Binh Vo and his family had targeted Michael from the onset and that every coffee, meal, family dinner, and drink was an orchestrated, results-driven event with the end goal of executing Binh Vo’s scheme to fraudulently sell non-immigrant visas to Vietnamese citizens.

As the Government stated in its sentencing memorandum for Binh Vo, Binh Vo “purposefully cultivated a relationship with Sestak in order to recruit him to approve visas for the conspiracy.” Government Mem., Doc. 289 at 8. Binh Vo exploited the weakness that Michael tried to hide, but some easily saw.

The Government’s sentencing memorandum illustrates how Binh Vo and his family preyed on Michael’s weakness and transformed him from a law-abiding officer and government official into a willing participant of the Vo’s scheme to enrich themselves:

The defendant [Binh Vo] orchestrated the visa fraud conspiracy from beginning to end. During the summer of 2011, according to electronic communications between the defendant [Binh Vo]’s sister and another co-conspirator, [Binh Vo] cultivated a relationship with [Michael] Sestak in order to get Sestak to approve visas for their family and acquaintances.

In a Google chat dated June 1, 2011, co-defendant Hong Vo stated to an acquaintance:

[L]ast night we went out with this guy who works at the consulate — he’s the one that approves peoples visas… and he’s this single guy who wants to find someone to be wth [sic]… and my brother knows that – so he’s been trying to get this guy out and introduce him to people… so then later he can do him favors like … have him approve visas for people.

In an email dated June 1, 2011, co-defendant Hong Vo stated to her boyfriend:

This guy who works for the US consulate here came out and joined us for dinner. He’s the guy that approves Visas for Vietnamese people to go to the United States so he’s a really good connection to have. My brother plans on using him to get [a sister-in-law’s] Visa to go to the States so [the sister-in-law] will most likely travel back with me in August . . . he just likes to people watch — he does this with the consulate guy (Mike) and they check out girls.

In a Google chat dated June 27, 2011, co-defendant Hong Vo again discussed the sister-in-law referenced in the above paragraph.

I applied for her Visa … so her interview is July 13th … and i told the consulate guy … so he said he’ll pull her file … but now he knows our family … so he’s more trusting … but she’ll most likely get accepted this time … because Mike will pull up her file … and he considers Binh like his best friend.

In another Google chat dated June 27, 2011, co-defendant Hong Vo discussed Sestak:

I have to go out now… it’s freaking 11P and Binh forgot it was Mike’s birthday… this loser guy who works for the consulate but we have to go out because he’s going to help us get [the sister-in-law’s] visa ugh

The USG in its court filing says that “the conduct that led to the present charges appears to be significantly out of character for the defendant.” It has also credited Mr. Sestak for accepting responsibility for his actions and for expression of remorse:

As far as the government is aware, prior to these offenses SESTAK had an unblemished record first as a as a police officer, then a Deputy United States Marshal, a U.S. Naval Intelligence Officer, and finally as a U.S. Foreign Service Officer. The fact that he immediately accepted responsibility for his actions at the time of his initial detention and agreed to cooperate with the government from that day forward supports the government’s belief that the defendant is not a career criminal. The defendant’s cooperation has included numerous meetings and debriefings and significant assistance with the sale of the condominiums in Thailand that he purchased with the illegal proceeds from the scheme. Since the time of his initial detention in May 2013, the defendant has repeatedly expressed shame and genuine remorse for his actions.

Mr. Sestak faces 19-24 years in prison under federal sentencing guidelines. The USG is asking for 84 months or 7 years and three years of supervised release. Defense is asking for 33 months. We’ll have to wait until August 14 to hear Judge Bates’ decision.

We’ve posted a couple of the publicly available Sestak documents in the forum’s Document Dump for friends of the blog. Click here to login. It looks like all of Mr. Sestak’s cooperation with the government is related to the cases against the other conspirators and the disposal of properties purchased through illegal proceeds.  We want to know how can the next Sestak be prevented from happening; he maybe in the best position to answer that question. We’ve requested to do an interview with him after the sentencing.  Will keep you posted.


Daniel Rosen, State Dept Official Pleads Guilty to Stalking and Voyeurism Charges

Posted: 1:31 am EDT


In February 2015, we wrote about the arrest of a State/CT employee for alleged solicitation of a minor (see  State Dept’s Counterterrorism Official Arrested For Allegedly Soliciting Minor Online.

On March 16, WaPo reported that the same employee was arrested in the District and charged with taking videos of women through the windows of their homes.  According to the same report, Daniel Rosen’s security clearance had been revoked.  Before it was taken down, he indicated on his LinkedIn profile that he was the Director of Counterterrorism Plans, Programs and Policy at the State Department for over six years. As of February 25, the State Department telephone directly lists the Bureau of Counterterrorism’s Director for the Office of Programs and Policy located at 2509 as “vacant.”

On July 29, WUSA has the following update:

Daniel Rosen, 45, pleaded guilty to 11 charges of stalking and voyeurism on Wednesday in the Superior Court of the District of Columbia for incidents that happened between 2012 and 2014. According to law enforcement, he used his cell phone to record women in various stages of undress by aiming his cellular phone through their apartment windows in the areas of Mount Pleasant, the U Street Corridor, and Adams Morgan in Northwest D.C.
His attorney Bernard Grimm says Rosen is undergoing therapy and showed police the locations after they discovered the videos.

“Beyond shame, talk about a fall from grace here’s a guy who used to work at the State Department has a master’s degree and his life just spiraled out of control,” he said.

Rosen faces up to 11 years or a $11,000 fine when he is sentenced on October 9. Each of the counts of voyeurism and stalking carries a maximum penalty of one year and potential fines. He will be released and under home confinement, which will be very restricted, until his sentencing date.

WaPo citing an assistant U.S. attorney reports that Rosen’s filming stretched over a nearly three-year period, from early 2012 to late 2014, and that “he returned to some women’s homes as many as five times to film videos that, in some cases, lasted minutes.”

His case on soliciting a minor,  a separate charge,  continues in September.





“M” Writes Update to State Department Employees Regarding OPM Breach

Posted: 1:36 pm EDT


It took 18 days before I got my OPM notification on the PII breach. Nothing still on the reported background investigation breach. OPM says it will notify those individuals whose BI information may have been compromised “as soon as practicable.”  That might not happen until the end of July! The hub who previously worked for State and another agency has yet to get a single notification from OPM. We have gone ahead and put a fraud alert for everyone in the family. What’s next? At the rate this is going, will we soon need fraud alerts for the pets in our household? They have names and passports, and could be targeted for kidnapping, you guys!!

And yes, I’ve watched the multiple OPM hearings now, and no, I could not generate confidence for the OPM people handling this, no matter how hard I try. Click here for the timeline of the various breaches via nextgov.com, some never disclosed to the public.

Still waiting for the White House to do a Tina Fey:

you're all fired

via giphy.com

On June 25, the Under Secretary for Management, Patrick Kennedy sent a message to State Department employees regarding the OPM breach. There’s nothing new on this latest State update that we have not seen or heard previously except the detail from the National Counterintelligence and Security Center (NCSC) at http://www.ncsc.gov (pdf) on how to protect personal information from exploitation (a tad late for that, but anyways …) because Foreign Intelligence Services and/or cybercriminals could exploit the information and target you.

Wait, what did OPM say about families? “[W]e have no evidence to suggest that family members of employees were affected by the breach of personnel data.” 

Via the NCSC:

Screen Shot 2015-06-26

no kidding!

Screen Shot 2015-06-26

you don’t say!

Here is M’s message from June 25, 2015 to State employees. As far as we know, this is the first notification posted publicly online on this subject, which is  good as these incidents potentially affect not just current employees but prospective employees, former employees, retirees and family members.

Dear Colleagues,

I am writing to provide you an update on the recent cyber incidents at the U.S. Office of Personnel Management (OPM) which has just been received.

As we have recently shared, on June 4th, OPM announced an intrusion impacting personnel information of approximately four million current and former Federal employees. OPM is offering affected individuals credit monitoring services and identity theft insurance with CSID, a company that specializes in identity theft protection and fraud resolution. Additional information is available on the company’s website, https://www.csid.com/opm/ and by calling toll-free 844-777-2743 (international callers: call collect 512-327-0705). More information can also be found on OPM’s website: www.opm.gov.

Notifications to individuals affected by this incident began on June 8th on a rolling basis through June 19th. However, it may take several days beyond June 19 for a notification to arrive by email or mail. If you have any questions about whether you were among those affected by the incident announced on June 4, you may call the toll free number above.

On June 12th, OPM announced a separate cyber intrusion affecting systems that contain information related to background investigations of current, former, and prospective Federal Government employees from across all branches of government, as well as other individuals for whom a Federal background investigation was conducted, including contractors. This incident remains under investigation by OPM, the Department of Homeland Security (DHS), and the Federal Bureau of Investigation (FBI). The investigators are working to determine the exact number and list of potentially affected individuals. We understand that many of you are concerned about this intrusion. As this is an ongoing investigation, please know that OPM is working to notify potentially affected individuals as soon as possible. The Department is working extensively with our interagency colleagues to determine the specific impact on State Department employees.

It is an important reminder that OPM discovered this incident as a result of the agency’s concerted and aggressive efforts to strengthen its cybersecurity capabilities and protect the security and integrity of the information entrusted to the agency. In addition, OPM continues to work with the Office of Management and Budget (OMB), the Department of Homeland Security, the FBI, and other elements of the Federal Government to enhance the security of its systems and to detect and thwart evolving and persistent cyber threats. As a result of the work by the interagency incident response team, we have confidence in the integrity of the OPM systems and continue to use them in the performance of OPM’s mission. OPM continues to process background investigations and carry out other functions on its networks.

Additionally, OMB has instructed Federal agencies to immediately take a number of steps to further protect Federal information and assets and improve the resilience of Federal networks. We are working with OMB to ensure we are enforcing the latest standards and tools to protect the security and interests of the State Department workforce.

We will continue to update you as we learn more about the cyber incidents at OPM. OPM is the definitive source for information on the recent cyber incidents. Please visit OPM’s website for regular updates on both incidents and for answers to frequently asked questions: www.opm.gov/cybersecurity. We are also interested in your feedback and questions on the incident and our communications. You can reach out to us at DG DIRECT (DGDirect@state.gov) with these comments.

State Department employees who want to learn additional information about the measures they can take to ensure the safety of their personal information can find resources at the National Counterintelligence and Security Center (NCSC) at http://www.ncsc.gov. The following are also some key reminders of the seriousness of cyber threats and of the importance of vigilance in protecting our systems and data.

Steps for Monitoring Your Identity and Financial Information

  • Monitor financial account statements and immediately report any suspicious or unusual activity to financial institutions.
  • Request a free credit report at www.AnnualCreditReport.com or by calling 1-877-322-8228. Consumers are entitled by law to one free credit report per year from each of the three major credit bureaus – Equifax®, Experian®, and TransUnion® – for a total of three reports every year. Contact information for the credit bureaus can be found on the Federal Trade Commission (FTC) website, www.ftc.gov.
  • Review resources provided on the FTC identity theft website, www.Identitytheft.gov. The FTC maintains a variety of consumer publications providing comprehensive information on computer intrusions and identity theft.
  • You may place a fraud alert on your credit file to let creditors know to contact you before opening a new account in your name. Simply call TransUnion® at 1-800-680-7289 to place this alert. TransUnion® will then notify the other two credit bureaus on your behalf.

Read in full here.


United States v. Al-Maliki: An FSO Saved These Victims, Then Testified Against Their Abuser

Posted: 3:06  am EDT
Updated: June 2, 8:23 am PDT


This is excerpted from the Opinion from the Court of Appeals for the Sixth Circuit, filed on May 27, 2015 concerning a case of a U.S. citizen found guilty of abusing his own children who are also U.S. citizens.  News reports are often loud when things go wrong, but never as loud when things go right.  We don’t often hear about these cases until they go to court and we almost never hear the role played by our consular officials when assisting the victims. An RSO was also involved in this case, but was unnamed in court documents. We understand that this official will be DCM at one of our embassies in the Middle East this summer.

The vice consul in this case is FSO Mark Goldrup. His name appeared on the Congressional Record in June 2009 for his consular officer appointment. We suspect but could not confirmed that he was on his first overseas assignment at US Embassy Damascus when he assisted these victims find safe shelter in Syria back in 2010. The prosecutor said that Mr. Goldrup “took the extraordinary step of keeping an American citizen away from his two citizen sons because he felt that he posed a danger to them.” The State Department’s recruitment slogan last year was Change the World, Join the Foreign Service.  Not sure about the world, but here is proof of one FSO who helped changed three lives, forever.

Malek M. Al Maliki was sentenced to 292 months on each of counts 1 & 2, to be served concurrently last year. He was remanded to the custody of the US Marshal. Supervised Release 10 years. This term consists of 10 years on each of counts 1 & 2, all such terms to run concurrently, with several conditions including Firearms and Dangerous Weapons Prohibition; DNA Collection; Mental Health Treatment; Minor Protection and Restriction Program; Sex Offender Registration and Notification Act. (United States of America v. Al Maliki; 1:13-cr-00121-SL-1).  The U.S. Court of Appeals for the Sixth District affirmed the lower courts decision on May 27, 2015 (Case No. 14-3386). Excerpt below:

McKEAGUE, Circuit Judge. A jury of his peers found Malek al-Maliki guilty of a heinous crime: sexually abusing his own two children, ages twelve and three. Al-Maliki challenges several aspects of his conviction and sentence. His constitutional challenge to his conviction is a close call, but it ultimately fails under plain-error review. The rest of his challenges fail as well. We affirm.

Iraq native Malek al-Maliki had his first child, John Doe #1, with Hinda al-Rhannai in 1998. Two years later, the couple had a civil marriage and al-Maliki (but not his wife) became a United States citizen. Their physical union did not last long. Although they remained legally married, the couple has been separated since 2000 or 2002. Despite the separation, they had one more child, John Doe #2, in 2007. Since around 2000, al-Maliki has lived alone on the west side of Cleveland, Ohio, and al-Rhannai has lived in Morocco and then Syria with the two sons.

Al-Maliki visited his family on a few occasions over the years. The United States claims that during one trip from August to November 2010, he sexually abused his two children (then ages twelve and three), violating 18 U.S.C. §§ 2423(c) and (e). A grand jury indicted him under that statute, which at the time punished any United States citizen “[1] who travels in foreign commerce, and [2] engages in any illicit sexual conduct,” which includes noncommercial sexual acts with a minor, or any attempts to do the same.

Al-Maliki denied all of the charges, and a trial began. The jury heard from Mark Goldrup, a vice consul at the U.S. Embassy in Damascus, Syria. He testified that he put al- Rhannai and her children in a safe shelter after al-Rhannai came to the embassy seeking assistance for injuries consistent with domestic abuse. The jury also heard from Department of Homeland Security Special Agent Gabriel Hagan. She testified that she observed the sons’ open affection toward their mother, but that al-Maliki insisted his wife abused the sons. She also  testified about a live interview she saw of John Doe #1, where the boy cried and hid his face while struggling to recount the sexual abuse (the “sin,” he called it) that he suffered.
Al-Maliki next challenges the admissibility of Goldrup’s testimony on two grounds: that his testimony included an improper hearsay statement, and that it included prejudicial statements about domestic violence. Nothing improper occurred.

Hearsay. Goldrup’s challenged testimony included this out-of-court statement: “[Al- Rhannai] stated that she had been abused by [al-]Maliki.” R. 97 at 15. But that statement was not offered to prove the truth of the matter asserted (that al-Maliki had in fact abused his wife); it was offered “for the limited purpose of explaining why [Goldrup’s] government[al] investigation” began. United States v. Martin, 897 F.2d 1368, 1371 (6th Cir. 1990) (collecting cases). Two conclusions follow: It is not hearsay, Fed. R. Evid. 801(c), and the government did not violate the Confrontation Clause, Crawford v. Washington, 541 U.S. 36, 59–60 n.9 (2004).

Middle Eastern stereotype. Goldrup’s testimony also included this statement: “You wouldn’t expect a law enforcement response” for spousal abuse in Syria because “it’s culturally understood [there] that a man has a right to beat his wife.” R. 97 at 53. That statement, taken in context, was both relevant and not unduly prejudicial. It was relevant because it rebutted al- Maliki’s attack on Goldrup’s credibility for not reporting the spousal abuse to Syrian authorities. United States v. Chance, 306 F.3d 356, 385 (6th Cir. 2002); see United States v. Segines, 17 F.3d 847, 856 (6th Cir. 1994).

Read in full here(pdf). Warning: Some graphic entries.

On February 6, 2012, the U.S. Embassy Damascus suspended operations and is not open for normal consular services.


Conspired to Defraud Uncle Sam? Be Very Afraid. We’re Gonna Put You in Home Confinement!

Posted: 9:40 am EDT


Remember the USAID nonprofit contractor IRD? (See Dear USAID OIG — That Nonprofit Contractor Mess Really Needs a Fact Sheet). Well, here’s another one.  This is a case where the CEO of a major USAID contractor gets feather-slapped by the court.

A 2011 ranking of private USAID partners by devex.com lists LBG as the third largest USAID private-sector partner that has contracted some of the government’s largest post-conflict redevelopment projects in Iraq and Afghanistan. According to Bloomberg, Louis Berger International, a unit of Louis Berger Group, got about $736 million to modernize a power system and rehabilitate the Kajakai Dam in Afghanistan.  Whoa! We thought that dam only cost $305.5 million! Plus cost of fuel that  US taxpayers also had to shoulder.

What is missing from this announcement? How much was the total contracts that LBG received in the last 20 years? Who’s paying the independent monitor? And for heaven’s sake, what lessons are we sending to other reconstruction capitalists doing awesome work for love of god and country?


The former president, chief executive officer, and chairman of the board of a New Jersey-based international engineering consulting company was sentenced today to 12 months of home confinement and fined $4.5 million for conspiring to defraud the U.S. Agency for International Development (USAID) with respect to billions of dollars in contracts over a nearly 20-year period, U.S. Attorney Paul J. Fishman announced.

Derish Wolff, 79, of Bernardsville, New Jersey, previously pleaded guilty before U.S. District Judge Anne E. Thompson to a superseding information charging conspiracy to defraud the government with respect to claims. Judge Thompson imposed the sentence today in Trenton federal court.

According to documents filed in this case and statements made in court:

Wolff, the former president and CEO of Morristown, New Jersey-based Louis Berger Group Inc. (LBG), and the former chairman of LBG’s parent company, Berger Group Holdings Inc. (BGH), led a conspiracy to defraud USAID by billing the agency on so-called “cost-reimbursable” contracts – including hundreds of millions of dollars of contracts for reconstructive work in Iraq and Afghanistan – for LBG’s overhead and other indirect costs at falsely inflated rates.

USAID, an independent federal government agency that advances U.S. foreign policy by supporting economic growth, agriculture, trade, global health, democracy, and humanitarian assistance in developing countries, including countries destabilized by violent conflict, awarded LBG hundreds of millions of dollars in reconstruction contracts in Iraq and Afghanistan as well as in other nations. LBG calculated certain overhead rates and charged USAID and other federal agencies these rates on cost-reimbursable contracts, which enabled LBG to pass on their overhead costs to the agency in general proportion to how much labor LBG devoted to the government contracts.

From at least 1990 through July 2009, LBG, through Wolff and other former executives, intentionally overbilled USAID in connection with these cost-reimbursable contracts. The scheme to defraud the government was carried out by numerous LBG employees at the direction of Wolff.

Wolff targeted a particular overhead rate, irrespective of what the actual rate was, and ordered his subordinates to achieve that target rate through a variety of fraudulent means. From at least as early as 1990 through 2000, Wolff ordered LBG’s assistant controller to instruct the accounting department to pad its time sheets with hours ostensibly devoted to federal government projects when it had not actually worked on such projects.

At an LBG annual meeting in September 2001, Salvatore Pepe, who was then the controller and eventually became chief financial officer (CFO), presented a USAID overhead rate that was significantly below Wolff’s target. In response, Wolff denounced Pepe, called him an “assassin” of the overhead rate and ordered him to target a rate above 140 percent, meaning that for every dollar of labor devoted to a USAID contract, LBG would receive an additional $1.40 in overhead expenses supposedly incurred by LBG.

In response, Pepe and former controller Precy Pellettieri, with Wolff’s supervision, hatched a fraudulent scheme from 2003 through 2007 to systematically reclassify the work hours of LBG’s corporate employees, including high-ranking executives and employees in the general accounting division, to make it appear as if those employees worked on federal projects when they did not. At his plea hearing on Dec. 12, 2014, Wolff admitted that Pepe and Pellettieri, at Wolff’s direction, reclassified these hours without the employees’ knowledge and without investigating whether the employees had correctly accounted for their time, and at times did so over an employee’s objection.

In addition to padding employees’ work hours with fake hours supposedly devoted to USAID work, Wolff instructed his subordinates to charge all commonly shared overhead expenses, such as rent, at LBG’s Washington, D.C., office to an account created to capture USAID-related expenses, even though the D.C. office supported many projects unrelated to USAID or other federal government agencies.

On Nov. 5, 2010, Pepe and Pellettieri both pleaded guilty before then-U.S. Magistrate Judge Patty Shwartz to separate informations charging them with conspiring to defraud the government with respect to claims. Also on that date, LBG resolved criminal and civil fraud charges related to Wolff’s and others’ conduct. The components of the settlement included:

  • a Deferred Prosecution Agreement (DPA), pursuant to which the U.S. Attorney’s Office in New Jersey suspended prosecution of a criminal complaint charging LBG with a violation of the Major Fraud Statute; in exchange, LBG agreed, among other things, to pay $18.7 million in related criminal penalties; make full restitution to USAID; adopt effective standards of conduct, internal controls systems, and ethics training programs for employees; and employ an independent monitor who would evaluate and oversee the company’s compliance with the DPA for a two-year period;
  • a civil settlement that required the company to pay the government $50.6 million to resolve allegations that LBG violated the False Claims Act by charging inflated overhead rates that were used for invoicing on government contracts; and an administrative agreement between LBG and USAID, which was the primary victim of the fraudulent scheme.

In the settlement, the government took into consideration LBG’s cooperation with the investigation and the fact that those responsible for the wrongdoing were no longer associated with the company.

Click here for the original announcement (pdf).


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