Global Security and Investigations
Global Security and International Liaison 23
Postal Security Action Group 24
Interpol 24
Partnership with the Mexican Postal Service 25
Global Investigations 25
Europol 26
Mail Theft and Violent Crime
Mail Theft 27
Homicides, Assaults, and Threats 31
Robberies 32
Burglaries 33
Dangerous Mail
Biological or Chemical Hazards in the Mail 34
Field-Screening Equipmen
t for Unidentified Substances 35
Explosive Devices in the Mail 35
Homeland Security Initiatives 37
National Preparedness 39
Child Exploitation via the Mail 42
Consumer Education, Fraud Prevention, and Congressional Liaison 44
Forensic Laboratory Services 47
Technical Services 49
Office of Counsel 52
Investigative Requirements and Solutions 53
Criminal Statistics for FY 2007 56
A Message from the Chief Postal Inspector
January 2008
I am pleased to present the 2007 Annual Report of Investigations of the United States Postal Inspection Service, the law enforcement, crime prevention, and security arm of the U.S. Postal Service. The report is intended to address our key stakeholders: the United States Postal Service, the Postal Service Board of Governors, members of Congress, and the American public.
U.S. Postal Inspectors across the country safeguard more than 212 billion pieces of mail each year. They protect postal employees, postal facilities, postal
assets, and millions of postal customers. In FY 2007, Postal Inspectors arrested more than 9,000 suspects for crimes involving the mail or against the U.S. Postal Service.
The Postal Service reorganized its office of National Preparedness in FY 2007 and placed it under the U.S. Postal Inspection Service. Responsibilities for the newly restructured office include incident management, infrastructure protection, aviation mail security, preparedness for public health, and emergency performance measurement-all key activities in preparing for, responding to, and assisting with recovery from major incidents affecting postal operations and employees, and in some instances, American citizens.
Significant achievements by the agency's newly expanded Global Security and Investigations group over the past fiscal year included the Global Counterfeit Initiative. Formed to protect the integrity of postal money orders and other financial instruments targeted by overseas criminals, the in
itiative resulted in the largest seizure of counterfeit checks and money orders in Postal Inspection Service history. Between January and August 2007, Postal Inspectors and other agents seized from the mail more than 540,000 counterfeit checks and postal money orders valued at more than $2.1 billion. Group staff coordinated a task force of more than 200 Postal Inspectors, officials from other U.S. law enforcement agencies, and authorities from international law enforcement agencies in Canada, Nigeria, the United Kingdom, and the Netherlands.
While the global criminal investigation of counterfeit financial documents continued, the Postal Inspection Service simultaneously launched a massive fraud-prevention campaign of TV and print ads, a consumer-awareness video, and public presentations by Postal Inspectors and consumer advocates across the country to ensure that Americans understood the danger of cashing checks-which often prove to be fraudulent-for strangers. The campaig
n Web site, www.FakeChecks.org, has received more than 43 million hits since its debut.
Postal Inspectors use screening equipment and threat-assessment protocols to check mail and mail facilities for suspected unidentified substances. They determine whether the substances are hazardous and could pose a threat to postal employees, customers, or facilities. In FY 2007, Postal Inspectors responded to 3,049 reports of potential incidents, none of which were deemed hazardous. Their efforts have dramatically reduced the number of unnecessary postal facility evacuations by 14 percent from the same period last year. This translated to reductions in lost workhours, in delayed mail, and in operating costs associated with evacuations.
The Postal Inspection Service's role in helping assure the safety of postal employees and the security of mail and postal assets remains one of its highest priorities. Approximately 40 percent of Postal Inspectors' arrests in FY 2007 related to mail th
eft-a total of 3,608 suspects. Mail fraud investigations also yielded significant results: Postal Inspectors arrested 1,236 mail fraud suspects and responded to more than 27,000 consumer fraud complaints.
Long regarded as international leaders in the fight against child pornography, Postal Inspectors in FY 2007 arrested 155 suspects, identified and stopped 54 child molesters, and rescued 52 children from sexual abuse as part of the agency's continuing efforts to rid the U.S. Mail of child pornography. To keep the mail free of dangerous and illegal drugs, Postal Inspectors arrested 860 suspects for drug trafficking and money laundering via the mail.
I am proud of our accomplishments this past fiscal year. I pledge to our stakeholders that we will continue to fulfill our mission to protect the U.S. Postal Service, secure the nation's mail system, and ensure public trust in the U.S. Mail.
Alexander Lazaroff
Introduction
As one of our country's oldest federal
law enforcement agencies, founded by Benjamin Franklin, the United States Postal Inspection Service has a long, proud, and successful
history of fighting criminals who attack our nation's postal system and misuse it to defraud, endanger, or otherwise threaten the American public. As the law enforcement, crime prevention, and security arm of the United States Postal Service, the U.S. Postal Inspection Service is a highly specialized, professional organization performing investigative and security functions essential to a stable and sound postal system.
Congress empowered the Postal Service "to investigate postal offenses and civil matters relating to the Postal Service." Through its security and enforcement functions, the Postal Inspection Service provides assurances to American businesses for the safe exchange of funds and securities through the U.S. Mail, to postal customers of the "sanctity of the seal" in transmitting correspondence and messages, and to postal employe
es of a safe work environment.
As the Chief Security Officer for the U.S. Postal Service, the Chief Postal Inspector is responsible for issuing instructions and regulations on security requirements. Further, through its new office of National Preparedness, the Postal Inspection Service provides emergency preparedness functions for the Postal Service.
As fact-finding and investigative agents, Postal Inspectors are federal law enforcement officers who carry firearms, make arrests, execute federal search warrants, and serve subpoenas. Postal Inspectors work closely with U.S. Attorneys, other law enforcement agencies, and local prosecutors to investigate postal cases and prepare them for court. Postal Inspectors are stationed throughout the United States, enforcing roughly 200 federal laws covering investigations of crimes that adversely affect or entail fraudulent use of the U.S. Mail and postal system.
To assist in carrying out its responsibilities, the Postal Inspection S
ervice maintains a Security Force of armed, uniformed Postal Police Officers who are assigned to critical postal facilities throughout the country. The officers provide perimeter security, escort high-value mail shipments, and perform other essential protective functions.
The Postal Inspection Service operates a National Forensic Laboratory at Dulles, VA. The lab is staffed with Forensic Scientists and Technical Specialists who assist Postal Inspectors in analyzing evidentiary material needed for identifying and tracking criminal suspects and in providing expert testimony for cases going to trial. A Forensic Computer Analyst also is assigned to each division location of the Postal Inspection Service.
The Postal Inspection Service's professional and technical employees, who include Forensic Specialists, Information Technology experts, Financial Analysts, and others, play a vital role in supporting the criminal investigative and security functions of the agency. They perform
a wide variety of tasks, including developing and upgrading information systems, providing forensic examinations of evidence, deploying electronic security and surveillance equipment, publishing policy guides for employees and consumer-awareness guides for customers, and facilitating direct communications with Congress, postal employees, and the public.
The Postal Inspection Service's national information technology infrastructure supports users at nearly 200 sites nationwide. Its offices are linked nationally via a private law enforcement network, with online connections to the Postal Service, the Department of Justice, the Department of Treasury, the National Crime Information Center, the National Law Enforcement Telecommunications System, and the Internet.
The Office of Counsel provides legal advice and services in support of Postal Inspection Service investigations, programs, and goals; processes requests for access to Postal Inspection Service records; and provides l
egal training to Postal Inspection Service personnel. Postal Inspector-Attorneys of the Counsel's office are supported by an administrative staff that includes a Paralegal, an Information Disclosure Specialist, three Information Disclosure Technicians, two Program Specialists, and a Secretary.
Charged with managing the Postal Inspection Service's internal and external communications, staff from the Communications Group issue news releases covering investigations or events of national interest and consumer publications designed to educate the public about fraudulent schemes with preventive and informational tips related to mail fraud and other mail-related crime. Group staff represent Postal Inspection Service interests on Capitol Hill and in cooperative activities with other government, law enforcement, and consumer agencies. Its Internet Web site provides weekly investigative news and fraud prevention tips. Postal customers may report suspected incidents of mail fraud, ide
ntity theft, and mail theft online at http://postalinspectors.uspis.gov. An Intranet Web site facilitates confidential employee communications nationwide.
The U.S. Postal Inspection Service extends full cooperation to all federal, state, and local investigative and prosecutive authorities in law enforcement matters to ensure greater protection to the public. Postal Inspectors regularly participate in joint task force investigations with other agencies aimed at curtailing widespread criminal acts of an organized nature.
For more information on the Postal Inspection Service, visit http://postalinspectors.uspis.gov.
Security
Protecting the U.S. Postal Service's infrastructure, which includes its employees, buildings, transportation network and postal products that comprise U.S. Mail, is integral to the U.S.
Postal Inspection Service. Providing protection that is effective and efficient is a constant challenge. The Postal Inspection Service's Security Group mee
ts that challenge through its training, security reviews, and prevention initiatives. About 65 Postal Inspectors in FY 2007 attended three training courses, each of which was one week in length. Staff from various Postal Inspection Service offices also hosted a Verified Identity Program and Physical Access Control Conference in April 2007 to discuss the Homeland Security Presidential Directive and the impact of the Verified Identity Program on physical-access control.
Security and Education
Each year the Postal Inspection Service commits significant resources and capital to its security and prevention campaign. The agency places great emphasis on prevention through education. Postal Inspectors regularly deliver presentations on fraudulent mail schemes, mail center security protocols, and workplace safety practices to other government agencies, major mailers, and postal customers across the country.
The Postal Inspection Service partnered with the Postal Customer
Council in 2007 in a new network initiative that offers "Workshop in a Box" seminars. The first seminar, Protecting your Employees and Securing your Mail Center, offers recommendations to help mail center managers establish practices for safe and secure handling in their mail operations.
Postal customers in the financial and investment industries expressed increased interest in learning about mail center security in FY 2007 following media accounts of "the Bishop" mail bomber. Postal Inspectors arrested a man in April 2007 believed to be the Bishop, who claimed responsibility for mailing more than a dozen threatening letters and two non-functioning mail bombs to financial institutions in an attempt to manipulate the stock prices of two publicly owned companies.
Security Force
The U.S. Postal Inspection Service maintains an armed, uniformed security force of Postal Police Officers (PPOs) to provide ongoing protection for postal employees, mail, and property. PPOs a
re assigned to facilities considered most at risk for crime. The presence of officers serves as a deterrent to criminal activity and creates an environment conducive to the safety of postal employees and customers.
Security provided by PPOs is augmented with unarmed, contract security guards at certain Postal Service facilities. Using a mix of armed and unarmed contract guards improves resource deployment and increases flexibility and mobility for PPOs, who must respond promptly to serious incidents.
Facility Security
The Postal Inspection Service joined other members of a multi-discipline team from the Postal Service's Facilities office to evaluate methods of reducing construction costs for postal facilities while maintaining appropriate levels of security at each facility. Team recommendations included changing window-glazing details, eliminating "man traps" at employee entrances, and reducing exterior fencing from eight feet to six feet.
Instituting the new r
ecommendations for "baseline security" changes will reduce the Postal Service's construction costs for numerous low-risk facilities while continuing to ensure that facilities with higher security risks have the needed measures to protect postal employees, customers, and assets.
Personnel Security
The U.S. Postal Service awarded a contract in April 2007 to Sourcecorp BPS, Inc., to convert all hard copies of employees' Official Personnel Folders (OPFs) to an electronic format as part of the Electronic OPF (eOPF) Project. Currently, copies of employee personnel files are maintained at postal facilities across the country. Once existing documents are electronically scanned, employee records will be maintained in a secure central database, giving employees 24-hour access to information in their official files.
Due to the sensitivity of the information, the Postal Service requested that the Postal Inspection Service be a stakeholder in the eOPF Project. Postal Inspector
s at National Headquarters and certain division locations have been working with postal executives, as well with Sourcecorp managers, to ensure the information is well-protected. The goal of the Postal Service is to "go paperless" and consolidate employee information in a secure, controlled environment.
The project was adopted by the Postal Service as a "best practice" already employed by other federal agencies and private firms. It supports the Postal Service's goal to streamline, standardize, and automate human-resource processes.
Working with staff from the Postal Service's Corporate Information Security office, Postal Inspectors in FY 2007 conducted onsite security reviews at Sourcecorp locations where information will be transferred. The primary site for the project will be the company's Irving, TX, facility. In addition to the initial site review, Postal Inspectors conducted several follow-up reviews to ensure that noted vulnerabilities were corrected before project
implementation. Postal Inspectors required that all Sourcecorp employees and their subcontractors receive a security clearance before being granted access to data, and that all employees involved in transporting hard copies to the Irving facility from National Headquarters, field units, and the 80 postal districts also receive clearances.
The safety and security of employees and employee information are top priorities for the Postal Service. The Postal Inspection Service will continue to work diligently to ensure that employee information is protected and secure.
Staff at the Postal Inspection Service's Security Investigation Service at Memphis, TN, process security clearances for all Postal Service employees and contractors. In FY 2007, staff processed approximately 65,000 clearance requests and, due to problems identified during screening, denied more than 900 of the requests.
Stamp Stock Destruction Security
On July 30, 2007, Postal Inspectors in Boston, MA,
escorted a shipment of postage valued at more than $14 million to an undisclosed incinerator for destruction.
The postage rate increase in 2007 made some stamp stock obsolete, necessitating its destruction. Postal Inspectors provided security and oversight for the operation to ensure all stamps were properly destroyed.
Automated Postal Center Security
Automated Postal Centers (APCs) are self-service kiosks that allow postal customers to ship packages, mail letters, and buy stamps without employee assistance. Generally found in Post Office lobbies, the kiosks give customers 24/7 access to mail services, similar to that provided by bank ATMs. As part of its mission to assure revenue protection for the Postal Service, the U.S. Postal Inspection Service was charged with testing the security of APCs by evaluating various performance parameters, such as the effectiveness of their internal camera systems. In FY 2007, Postal Inspectors conducted 238 security surveys of
APCs across the country.
Postal Inspectors measured the effectiveness of APC internal camera systems by testing the digital images they generated. Postal Inspectors found that approximately 30 percent of the images could not be identified due to glare from ceiling or background lights.
Postal Inspectors tested revenue-assurance processes at APCs by mailing Priority Mail parcels bearing short-paid postage to determine whether employees identified the parcels before they reached their destinations. Of 238 short-paid mailings, employees detected only 19 parcels bearing short-paid postage; they failed to detect 92 percent of the short-paid mail.
Postal Inspectors provided a report to the Deputy Postmaster General's staff, as well as recommendations to postal managers on how to improve images produced by internal cameras at APCs and how to proactively detect short-paid mail.
Security of Postal Assets
The Mailers Technical Advisory Committee (MTAC) working group, co
mprising Postal Inspectors and personnel from the Postal Service's Mail Transportation Equipment Group, launched the "It's a Crime" campaign in January 2007 to address the burgeoning problem of the misuse and theft of postal pallets and flat tubs.
The Postal Service first identified the problem in 2004, when it saw the rapid depletion of its national inventory. By 2006, its equipment losses totaled an alarming $77 million. The "It's a Crime" campaign was designed to educate postal employees and alert business mailers about the need to return postal equipment. Working group members determined that postal employees often were unaware that it is illegal for customers to take Postal Service equipment, such as flat tubs and pallets, for their own use, and business mailers needed to be reminded to return postal property. MTAC determined that part of the problem was that no internal controls were in place to adequately account for equipment.
The dramatic shortfall was caused by
two factors: Some postal customers simply forgot they still had postal pallets and tubs, failed to return them, and eventually began using them for other purposes. In other cases, businesses actually profited by recycling or reselling postal equipment.
Postal Inspectors helped disseminate information for newspaper articles, print ads, and posters and issued articles in several postal publications to target pertinent employee groups. Campaign workers distributed thousands of flyers to resellers and recyclers to request that they return mail equipment-and to remind them that failure to return the equipment is a federal offense subject to criminal prosecution.
Postal Inspectors identified particular problems with stolen equipment in Miami, Chicago, and Cleveland that are still under investigation. In some instances, they determined that large recycling businesses possessed thousands of dollars' worth of postal pallets and were knowingly shredding them for profit.
As awaren
ess of the problem has grown, so have reports from postal employees of people or businesses involved in the misuse, and possible illegal use, of Postal Service equipment. Postal Inspectors worked directly with staff in the Mail Transportation Equipment office to respond to leads for investigative attention, which are forwarded to Postal Inspectors across the country. These combined efforts in FY 2007 netted more than $440,000 worth of recovered postal pallets and flat tubs.
Security Training for U.S. Postal Inspectors
Postal Inspectors at the Philadelphia Division coordinated a two-day security conference in May 2007 for 50 Postal Inspectors from across the country. Held at the Postal Service's Southeastern Processing and Distribution center, the conference introduced Postal Inspectors to security concepts in preparation for the Certified Protection Professional (CPP) exam. The CPP designation is recognized as one of the most elite certifications in security. The tra
ining was provided by the American Society for Industrial Security (ASIS) International, the world's largest organization for security professionals. Participants later completed a practice CPP exam, and ASIS representatives declared that Postal Inspectors held the highest average passing score of any group that had taken the course.
The Postal Inspection Service has teamed with ASIS to offer other educational programs as well, including a specially designed Introduction to Security Management course held for Postal Inspectors in December and May 2007 at Potomac, MD.
Many postal employees were unaware that it is illegal for customers to keep Postal Service equipment for their own use.
Mail Fraud and Revenue Protection
Mail Fraud
The Mail Fraud Statute is the oldest and most effective consumer protection law, and the U.S. Postal Inspection Service is the federal law enforcement agency that uses it to maximum effect.
To increase their efficiency and effecti
veness in mail fraud investigations, Postal Inspectors lead and participate in several joint law enforcement and consumer group initiatives aimed at safeguarding the public's confidence in the U.S. Mail. Educating the public about fraud schemes that involve the mail is an essential component of this goal. Postal Inspectors also work cooperatively on joint task force investigations with other law enforcement agencies to leverage resources and maximize the expertise of each agency.
Postal Inspectors investigated 2,909 fraud cases this past fiscal year, and Postal Inspection Service analysts prepared more than 27,000 letters and informative postcards in response to mail fraud complaints. Postal Inspectors arrested 1,236 mail fraud suspects, and 1,118 were convicted as a result of investigations conducted during FY 2007 and in prior fiscal years.
Mail Fraud Investigations
Mail Fraud Against Businesses
Postal Inspectors devote considerable resources to protecting the bu
siness community from mail fraud.
Following are examples of Postal Inspectors' efforts to disrupt mail fraud schemes against businesses in FY 2007.
n Thuan Huy Ha was sentenced in Santa Ana, CA, in October 2006 to 14 years in federal prison and was ordered to pay $1.4 million in restitution to several health insurance companies. Postal Inspectors determined that Ha had defrauded the firms by submitting claims for prescriptions that were never written. In a jury trial that lasted four weeks, Ha was convicted on 18 counts of mail fraud and 11 counts of money laundering. Co-defendant My-Huong Thi Hoang was sentenced to five years and three months in prison related to nine counts of mail fraud and four counts of money laundering. Postal Inspectors and agents from the Federal Bureau of Investigation and Internal Revenue Service learned that Ha operated a pharmacy in Garden Grove, CA, where Hoang worked as a pharmacist. They obtained patients' names and personal information,
as well as doctors' names, from prescriptions filled at the pharmacy, then submitted more than $5 million in false claims to insurance companies. Ha received the payments through the U.S. Mail.
n Jerold Levert was sentenced in Ohio in December 2006 to 10 years in federal prison for submitting fraudulent loan applications for non-qualified borrowers to mortgage lenders via the U.S. Mail. He pled guilty to a six-count indictment after disclosing to Postal Inspectors he had conspired with mortgage brokers, appraisers, title companies, buyers, and sellers of real property to obtain financing for real estate transactions. Levert created false W-2 wage and tax statements, paycheck stubs, letters of reference, and IRS Forms 1040 using computer software, fictitious entities, corporate shells, and a highly organized office staff. At least 10 mortgage lenders lost more than $1 million as a result of the scheme.
n Nicholas Magalhaes, president of Asset Accumulation Inc. and Mid-Sta
tes Benefit Corporation, was sentenced in June 2007 to two years and six months in prison and three years' supervised release, and was ordered to pay more than $2.4 million in restitution to victims of his mail fraud scheme. Postal Inspectors learned that Asset Accumulation Inc. was a third-party administrator that enrolled small business employers in Voluntary Employee Beneficiary Association programs. The programs allowed employers to obtain group life insurance policies for themselves and their employees, and gave tax deductions to employers. Acting as trustee, Mid-States collected premiums from employers and forwarded them to the insurance companies. Magalhaes defrauded clients by not forwarding their premiums-via the U.S. Mail-to insurance companies and by taking out loans against insurance policies without the knowledge or consent of clients.
Mail Fraud Against Consumers
Consumers may be targeted by criminals via fraudulent sweepstakes, telemarketing fraud, work-a
t-home schemes, merchandise misrepresentations, vacation or real estate scams, Internet fraud, and investment schemes. Case examples from the reporting period follow.
n After pleading guilty to one count of mail fraud, Vasilyn Poinsetta was sentenced in Michigan in October 2006 to five years and three months in prison and three years' supervised release, and was ordered to pay more than $2.3 million in restitution. Postal Inspectors determined that, from February 1996 through February 2004, Poinsetta promoted real estate ventures to some 56 people, including friends and relatives. She had them deposit money in corporate bank accounts she controlled, promising it would be held in escrow until sufficient funds had accumulated to purchase real estate mortgages. Instead, Postal Inspectors found that Poinsetta commingled investors' money with her own and mailed them false statements, causing more than $3 million in investor losses.
n As a result of a Postal Inspection Service
investigation, Ohio resident Daniel Josic was sentenced in May 2007 to four years and seven months in prison and was ordered to pay a $250,000 fine for operating work-at-home schemes that caused more than $2 million in victim losses. Daniel's brother, Jeremy, was sentenced in November 2006 to a year in prison and was ordered to pay $786,000 in restitution for his part in the scheme. Postal Inspectors learned that the Josic brothers scammed 25,000 to 30,000 people by promising them opportunities to earn money at home by stuffing envelopes or stapling booklets, but first requiring an "advance fee" of $79 to $169. None of their respondents received any work. From 1998 through 2003, the Josics operated under the business names Avon Publishing, Horizon Publishing, Lakeside Publications, ABC Publishing, Acme Publishing, Omni Publishing, Able Publishing, and Central Communications. A third defendant, Donna Brombard, was sentenced for her involvement to five months in prison and thr
ee years and five months' home confinement, and was ordered to pay a $20,000 fine.
n John K. Wannamaker was sentenced in October 2006 to nine years and two months in prison and three years' supervised release, and was ordered to pay more than $2.2 million in restitution for operating an Internet investment scheme. Postal Inspectors found that, from January 2001 through August 2001, Wannamaker and co-conspirators operated a "high yield" debenture investment scheme over the Internet, promising incredible returns with no risk. It was marketed as a multi-level operation, and immediate commissions were promised to "downstream" investors who recruited others. Postal Inspectors alleged that no trades were ever conducted, and the vast majority of the $2.6 million collected from victims was converted for personal use by Wannamaker and others. Wannamaker received funds and correspondence from his investors at a Post Office box and a private mailbox in Carrollton, TX.
Corporate F
raud
Named by the White House as a member of its Corporate Fraud Task Force, the U.S. Postal Inspection Service has been increasingly involved in corporate fraud investigations, noted to be among the most significant concerns facing our nation and our economy. Postal Inspectors vigorously pursue and stop those responsible for corporate fraud, as shown in the examples that follow from FY 2007.
n Former chairman of Cendant Corporation Walter A. Forbes was sentenced in Bridgeport, CT, in January 2007 to more than 12 years in prison and three years' supervised release, and was ordered to pay $3.2 billion in restitution to his victims. After two mistrials, Forbes was convicted by a federal jury in October 2006 on charges of mail fraud, wire fraud, and conspiracy for supervising a decade-long accounting scheme that inflated Cendant's earnings. When the scheme was disclosed to shareholders in April 1998, Cendant's stock plummeted, resulting in a one-day loss of $14 billion in mar
ket capitalization, the largest ever recorded at the time. In January 2005, E. Kirk Shelton, the former vice chairman of Cendant who conspired with Forbes, was sentenced to 10 years in prison and was also ordered to pay $3.2 billion in restitution. The restitution ordered is believed to be the largest ever imposed.
n A Corporate Fraud Task Force investigation led to the July 2007 sentencing of Joseph P. Nacchio, former CEO of Qwest Communications International Inc., in Colorado. Nacchio was sentenced to six years in prison and two years of supervised release, and was ordered to forfeit $52 million to his victims and pay a $19 million fine. He was found guilty in April 2007 on 19 counts of insider trading related to $52 million in stock sales. A task force comprising Postal Inspectors and FBI agents learned that Nacchio sold Qwest stock from January to September 2001 while failing to disclose that the company would probably not meet announced earnings targets as the year p
rogressed. Nacchio knew that Qwest's 2001 financial targets were overly aggressive, that Qwest did not have a good track record in growing recurring revenue, that the company's business units were underperforming, and that there would be insufficient nonrecurring revenue sources to close the gap between Qwest's publicly stated financial targets and its actual performance.
n An indictment was unsealed in Manhattan federal court on March 26, 2007, charging David A. Stockman, former CEO and president of Collins & Aikman (and former director of the Office of Management and Budget under President Ronald Reagan), with conspiracy, securities fraud, bank fraud, wire fraud, and obstruction of an agency proceeding. Also charged were former CFO J. Michael Stepp, former controller David Cosgrove, and former director of purchasing Paul Barnaba. Collins & Aikman, an auto parts supplier with annual sales of approximately $4 billion, filed for bankruptcy in May 2005, causing its common st
ock to become nearly worthless and its bond values to plummet, leading to hundreds of millions of dollars in investor and creditor losses. Through the private equity firm he founded, Stockman obtained a controlling interest in Collins & Aikman in 2001. The charges stemmed from December 2001 through May 2005, when the company's earnings before interest, taxes, depreciation, and amortization were falsely inflated by improperly recognizing cost reductions based on supplier rebates. Stockman was also accused of directing a scheme to defraud a creditor by misrepresenting the nature of the company's accounts receivable portfolio, against which it borrowed more than $100 million daily. The Postal Inspection Service was the sole investigative agency.
Mail Fraud Against Local, State, and Federal Government
The U.S. Mail has been used to commit fraud against government agencies at all levels, including false claims for tax refunds and false claims for benefits related to educatio
n, housing, welfare, and natural disaster relief. Examples of cases from FY 2007 follow.
n Operation Home Alone is a Postal Inspection Service initiative targeting fraudulent applications to the Federal Emergency Management Agency (FEMA) for disaster relief related to Hurricanes Katrina and Rita. Postal Inspectors reviewed applications to determine if people who had received FEMA payments via the U.S. Mail resided at addresses suffering damage from the hurricanes. One case led to the July 2007 indictment of Troy N. Randolph in Louisiana on charges of mail fraud and illegal conversion of government funds. Randolph applied to FEMA for disaster relief, claiming Hurricane Katrina caused damage to his home in Baton Rouge, but Inspectors found that Randolph had never lived at the address he provided, nor was his home damaged by the hurricane.
n Jeffrey A. Rothschild was sentenced in the District of Columbia in February 2007 to eight years and six months in prison, and was orde
red to pay more than $129,000 in restitution after he was found guilty of bank fraud, mail fraud, and money laundering. Postal Inspectors determined that Rothschild had received, via the U.S. Mail, approximately $80,000 worth of U.S. Treasury checks intended for victims of Hurricanes Katrina and Rita, and had mailed applications to FEMA requesting more than $104,000 for disaster relief. He created bank accounts in several states to launder the money and stole the identities of about 65 victims, using their names to apply for benefits and open fraudulent credit card accounts.
n Former speaker of the North Carolina House of Representatives James B. Black was sentenced in July 2007 to five years and three months in prison for "corruptly accepting things of value concerning programs receiving federal funds." The U.S. Attorney's Office requested investigative assistance from the Postal Inspection Service due to violations of the mail fraud statute. During Black's tenure in offic
e from 1999 to 2006, the state of North Carolina annually received millions of dollars in funding from the federal government to support state programs, many of which impacted health care services, including Medicaid. Black solicited contributions from individuals and special interest groups. One group, the North Carolina Chiropractic Association, solicited Black's support for its legislative goals, which included "spinal safety laws," "patient co-payments," and "chiropractic treatment reviews." Black accepted cash from several of the member chiropractors, saying that cash was more helpful than contributions made by check. He received more than $25,000 but failed to report it to the North Carolina Board of Elections, instead converting it for his personal use. In return for the money, Black drafted legislation central to the chiropractors' goals and had it inserted into the House version of the budget bill, which was passed into law.
Deceptive Mail
In addition to the pro
tection afforded to consumers by the Mail Fraud Statute, the Postal Service is able to offer its customers the safeguard of remedies provided under administrative and civil statutes. The statutes are intended to protect the public and preserve the integrity of the mail. Through administrative proceedings and civil federal court action, Postal Inspectors may promptly halt any improper use of the mail to shield the public from potential fraud. During FY 2007, Postal Inspectors at the Chicago and New York divisions seized and obtained destruction orders for more than 309,000 pieces of illegal foreign lottery mail destined for consumers in the United States, thereby protecting them from fraudulent offers.
One foreign lottery case in FY 2007 involved a destruction order that was obtained for 14,400 pieces of illegal international lottery mail. The mail was intercepted and examined at the Postal Service's International Service Center at Chicago's O'Hare International Airport in N
ovember 2006 by U.S. Customs and Border Protection personnel pursuant to their border search authority. Customs officers seized the questionable mail and notified the Postal Inspection Service. Postal Inspectors reviewed the contents and determined the mail was similar to previous foreign lottery mailings deemed to be nonmailable. The mail came from Deutsche Post and was intended for the International Mail Acceptance Unit. Along with a lottery solicitation offering a chance to obtain a prize for money, the mailing contained a reply envelope bearing an address in Holland.
Following are further examples of cases from FY 2007 in which Postal Inspectors employed administrative actions to quickly halt the improper use of the U.S. Mail, thereby shielding the public from potential fraud.
n A Permanent Injunction Order was entered in February 2007 against the Payment Processing Center, LLC (PPC) of Newtown, PA, and seven individuals enjoining them from any activity involving un
signed bank drafts processed for a telemarketing transaction. A permanent receiver for PPC was ordered to consolidate and liquidate the firm's assets. Approximately 94 percent of the assets was allocated to a consumer fund for restitution. The judge had issued a Temporary Restraining Order in February 2006, pursuant to the Anti-Fraud Injunction Statute. At that time, Postal Inspectors executed a federal search warrant at the offices of PPC and froze related funds in approximately 25 bank accounts. Their investigation disclosed that in 2005 PPC created about $140 million in demand drafts, based on information from fraudulent telemarketers in the United States, Canada, and other overseas locations. PPC negotiated the drafts through its own Philadelphia accounts, maintained a percentage of the funds, and remitted the bulk of the money back to the telemarketers. Scheme participants mailed fraudulent fulfillment materials to victims. The U.S. Attorney for the Eastern District of
Pennsylvania stated, "This case shows that fraudulent schemes against consumers-particularly against society's most vulnerable-are not beyond the scrutiny of law enforcement, despite the use of third-party camouflage."
n A Cease and Desist Order was issued in June 2007 against James Lovern, doing business as Consumer Grants USA, Inc., Freedom Grant Information Guide, and Government Grants Information Guide of St. Petersburg, FL. Postal Inspectors found that Lovern had placed calls to U.S. citizens from his telemarketing center offering guaranteed government grants for educational purposes. People were told they were already approved to receive the grants but must pay a processing fee of up to $299 and complete a mailed application, for which they also had to pay a fee. Many respondents paid the fee by bank draft over the phone, but Lovern also requested them to mail the fee in the form of a postal money order to a Post Office box in St. Petersburg. Victims received a docum
ent entitled "Government Grants, Government Grant Consumer Package," with public information about how to apply for government grants and who may or may not be eligible for them, but no one actually received a grant.
n A False Representation Order and a Cease and Desist Order were issued in October 2006 against Charles R. Smith, Andrew Grant Miller, and Yellow Page Directory Publishers, Inc., at addresses in California, Georgia, New York, Los Angeles, and Chicago. Postal Inspectors found that, beginning in October 2003, Yellow Page Directory Publishers, Inc., and its owners, Andrew Grant Miller and Charles Robert Smith, mailed deceptive solicitations and false bills of $293 each to businesses across the United States for ads in the "Real Yellow Pages." A Civil Monetary Penalty Order was also issued, ordering the men to pay jointly and severally civil penalties of $5,000.
Confidence in the Mail
The U.S. Postal Inspection Service takes a lead role in partnering with the
mailing industry to reduce fraud and theft via the mail that targets businesses. To increase customers' confidence in the mail, the Postal Inspection Service formed the Financial Industry Mail Security Initiative, which comprises the Postal Inspection Service, major commercial mailers, and suppliers from targeted industries such as banks and credit card companies. In addition to reducing fraud and theft, task force members work to decrease processing problems by identifying and exchanging information on "best practices," fraud trends, and loss-prevention strategies, as well as by developing improved processes and procedures that facilitate criminal investigations and prosecutions where warranted.
During FY 2007, Postal Inspectors investigated 16 cases of rebate fraud. In one case in March 2007, a federal grand jury in Ohio indicted eight suspects for conspiracy to use the mail to defraud the R.J. Reynolds Tobacco Company (RJRT) and operate an illegal gambling business. Pos
tal Inspectors initiated the investigation at the request of RJRT and found that one of its sales representatives colluded with retail store operators in Akron by filing false claims for rebate payments. The company encouraged retailers to sell selected brands of cigarettes at discount and, as an incentive, reimbursed the stores for the difference between the regular price and the discounted price. However, a group of stores operated by an Ohio family inflated their entitlement to payments. They bribed an RJRT sales representative to approve the false claims, and RJRT sent checks via the U.S. Mail to various stores. Losses to the company totaled at least $690,000.
Postal Inspection Service investigations of fraud targeting the business industry in FY 2007 resulted in 17 Withholding Mail Orders. Examples of other cases investigated by Postal Inspectors in the past fiscal year follow.
n Postal Inspectors were notified by the Bernardston, MA, postmaster in July 2005 of a pos
sible mail fraud scheme. Postal Inspectors determined that Mark Gladstone had ordered DVDs and CDs from Columbia House/BMG under fictitious names so he could receive a special introductory rate. He opened more than 128 accounts, resulting in losses to the company of approximately $35,000. A Notice of Withholding Mail was issued in June 2007 directing the postmaster to detain mail addressed to various names being used by Gladstone in Northfield, MA. A Final Withholding Mail Order was issued on July 18, 2007.
n A Final Withholding Mail Order for mail addressed to "Wilson Perez and any and all various names" at PO Box 543, New Haven, CT, was issued in May 2007 as a result of a Postal Inspection Service investigation that revealed Perez used false documents to open the box. The investigation began in September 2005, when Postal Inspectors were notified of suspicious activity involving the Post Office box and boxholder Perez. Perez illegally obtained fraudulent applications for
Tennessee license plates and vehicle registrations by sending money and valid motor vehicle titles from New Haven to several Post Office boxes in Tennessee. Upon receipt, co-conspirator Pioquinto Diaz-Ortiz signed and executed applications for vehicle titles and registrations in the names of actual vehicle owners in Connecticut to match the name on the fraudulently obtained titles. The Tennessee Department of Motor Vehicles forwarded valid plates to Perez, who distributed them to illegal aliens from Guatemala. The illegal aliens also received fraudulent alien registration cards from Perez. Ortiz is awaiting deportation for his involvement in the scheme.
Fraud on the Internet
The Internet is teeming with fraudulent schemes, and swindlers use a variety of methods to exploit people online. Fraud on the Internet often involves mail fraud, as "cyberscammers" use the mail to receive payments and ship items. The Postal Inspection Service actively participates in the Internet
Crime Complaint Center (www.ifcc.gov), a project established by the FBI and the nonprofit National White Collar Crime Center that enables victims of Internet fraud to report suspected crime online. Examples of cases from FY 2007 follow.
n Tony Wang was arrested on May 25, 2007, following his indictment in San Jose, CA, on three counts of mail fraud and six counts of wire fraud related to an Internet auction scheme. Postal Inspectors began investigating Wang in November 2005 after receiving complaints that he was selling such items as Rolex watches, golf clubs, and laptop computers via eBay and Yahoo auctions, but failing to provide the items to the high bidders. He allegedly operated the scheme from 2003 through 2006 by providing false tracking numbers to buyers and sending them e-mails with excuses as to why the products had not arrived. Losses are estimated at $40,000 to $100,000, and victims are located across the United States and Japan.
n A Cease and Desist Order and
a False Representation Order were issued in April 2007 against Rolland Land of Atlanta, GA, for Internet auction fraud. Postal Inspectors learned that Land, using the screen name "roknroll06," posted items for sale on eBay but failed to provide them to the winning bidders after receiving payment through the U.S. Mail. Land instructed winners not to use PayPal and stated in the eBay ads he would accept only a money order or cashier's check as payment.
Telemarketing Fraud
Postal Inspectors reported 162 telemarketing fraud investigations, 83 arrests, and 61 convictions. Case examples from the past fiscal year follow.
n Terrence Croteau of Illinois was sentenced in November 2006 to 12 years in prison and was ordered to pay $2.9 million in restitution for a fraudulent telemarketing scheme. Postal Inspectors found that, from 2000 through April 2004, Croteau was doing business as MDSC Publishing and Pinacle Publishing in Montreal, Quebec, and Welland, Ontario. Croteau used t
he mail to scam small U.S. businesses and charities out of millions of dollars by billing them for business directory services they did not authorize. Croteau pled guilty in May 2006 to 25 felony violations of mail fraud, wire fraud, and conspiracy. The U.S. Postal Inspection Service led the investigation and received assistance from the Federal Trade Commission; the Niagara Regional Police Service in Welland, Ontario; the Ontario Provincial Police; and the Toronto Strategic Partnership.
n Richard Gilson, owner of West Coast Gallery (WCG) in Covina, CA, was sentenced to seven years in prison in October 2006 for a fraudulent boiler room operation. Salesman Geoffrey Gallagher was already sentenced to seven years and six months in prison, and salesman Alonzo Narvaez was sentenced to seven years and three months in prison. The three men were also ordered to pay more than $3.5 million in victim restitution. Postal Inspectors found that WCG induced people to send thousands of do
llars via the mail to an address in Hacienda Heights. They were told their investments in historical and collectible merchandise would be sold at an upcoming auction for a return of at least 50 percent within 90 days or their money would be refunded. The items were purchased primarily from eBay for a fraction of what the victims had invested. On one occasion, a strand of hair allegedly from George Washington was purchased for $13 on eBay and sold to a victim for $30,000. WCG never held an auction, nor did any victims obtain a profit. WCG, however, obtained nearly $4 million from hundreds of victims, mostly the elderly.
Administrative Actions
The chart below provides statistics on administrative actions taken during FY 2007 as the result of investigations conducted by Postal Inspectors.
Victim-Witness Assistance Program
Federal legislation mandating certain rights for victims and witnesses of crime was initially passed in 1982. As part of the Victim Witness Prot
ection Act, Congress instructed the Attorney
General to assure that all federal law enforcement agencies adopt guidelines consistent with the purpose of the act and related legislation. Additional legislation passed over the years strengthened the rights of crime victims. Recently, the Crime Victim Rights Act that was signed into law in October 2004 represented the most far-reaching legislation to date supporting the rights of crime victims.
The U.S. Postal Inspection Service is committed to working with the Department of Justice and the law enforcement community by sharing its "best practices" in support of the Attorney General's guidelines for victims and witnesses. As an investigative agency, the Postal Inspection Service's responsibility is to identify potential victims related to its criminal investigations, provide them with timely notification of their rights, and inform them of the services available to assist them.
Postal Inspectors and other Postal Inspection
Service employees work to ensure the Victim-Witness Assistance Program meets legal mandates and properly assists victims. In the past year, 133 new general analyst positions were created to perform three functions associated with the program: victim-witness assistance, forfeiture action, and investigative analysis. The analysts serve as resources of information at the agency's division locations by providing guidance and training on victim and witness rights, legislation, and Postal Inspection Service policy and procedures. They liaison with U.S. Attorney's Offices at each federal district and maintain records, coordinate victim notifications, refer victims to appropriate services, and prepare required statistical reports.
The Victim-Witness Assistance Program continues to broaden in scope. During the past fiscal year, general analysts received additional training to ensure they have the knowledge and skills needed to help victims of crime.
Also in FY 2007, national goals
were expanded to ensure the Postal Inspection Service remained a top-notch provider of investigative, security, and crime-preventive solutions, as well as a trusted, innovative partner to its customers and other agencies. New objectives were established to improve customer service, increase the program's value and operational efficiency, and achieve results with a more customer-focused and performance-based culture. When a postal customer suffers physical, emotional, or financial harm as the result of a mail-related crime, the customer becomes a crime victim.
The services provided by Postal Inspection Service staff to postal customers who become victimized by crime highlight the important role of customer assistance. When customers become victims, they need immediate help. That includes the right by law to be regularly apprised of the status of their cases in the judicial process-for both legal and emotional reasons. But beyond the legal mandates, victims may require the p
ersonal attention of a trained staff member who regularly calls and otherwise stays in touch with victims to fulfill a host of other needs. Personal attention is often the service most valued and remembered by victims.
A Guide for Victims and Witnesses of Federal Crimes
The backbone of the Postal Inspection Service's Victim and Witness Assistance Program is Publication 308, Know Your Rights: A Guide for Victims & Witnesses of Federal Crimes, which is also available in Spanish. Postal Inspection Service staff provide the brochure to potential victims and witnesses of crimes when it is the lead agency on the investigation. The brochure informs victims of their rights related to the investigative process, including notifications of arrests or other case activity, the reporting of related threats or harassment, and available services that can provide assistance in recovering from the physical and emotional effects of a crime.
Victim Notification and Services
The Po
stal Inspection Service is the second federal law enforcement agency to gain direct access to the Department of Justice's Victim Notification System (VNS). Access was granted because of the Postal Inspection Service's large number of federal investigations that affect large numbers of victims. VNS substantially boosts victim-notification capabilities with better overall program management and new reports that can pinpoint assistance and notification services for specific victims, as well as new templates for victim-notification letters tailored to reflect crimes under the jurisdiction of the Postal Inspection Service. DOJ and Postal Inspection Service staff have continued to combine their skills to expand and improve the program, with increasingly successful results.
In FY 2007, general analysts input more than 60,800 victim records to the VNS. All personnel accessing the system completed training on the VNS Intranet and Internet Web sites and received notices of system up
dates and new releases. Copies of the DOJ User's Manual for VNS were disseminated nationally, and the manual was posted on the Postal Inspection Service's victim-witness Web site for quick reference.
Victim Service Outreach
The Postal Inspection Service continues to enhance its victim-witness outreach programs via a limited number of trained resources that focus on victim services. As the program matures, more services will be added. During FY 2007, the Postal Inspection Service provided the victim services shown below.
n 4,874 information and referrals.
n 2,558 cases of criminal justice support.
n 2,308 cases of identity theft assistance.
n 320 cases of elderly victim support.
n 1,782 cases of victim advocacy services.
The Postal Inspection Service established toll-free numbers for its 18 division locations to provide victims with a convenient method of contacting coordinators and general analysts. This tool has been critical to maintaining reliable communicat
ions for crime victims.
Following are examples of outreach services provided by the Postal Inspection Service to people who potentially were victims of a crime or who were established victims of crime.
n In March 2007, more than $326,000 in forfeited funds was distributed to 78 victims of a cross-border telemarketing scheme investigated by Postal Inspectors at the Philadelphia Division, the Royal Canadian Mounted Police, and Montreal Police Department. Telemarketers falsely informed victims via the U.S. Mail that they had won a lottery and should wire funds via Western Union and Money Gram to outlets in Montreal. Victims were requested to pay $1,000 to $4,000 in fees associated with the winnings. U.S. Attorney Pat Meehan stated, "Our first priority was to make those victims whole, and through the work of U.S. Postal Inspectors and Canadian police, we were able to do that."
n James Brown, Jr. was sentenced in Virginia in April 2007 to serve more than 12 years in prison
and three years of supervised probation after pleading guilty to mail fraud and money laundering as the result of an investigation by Postal Inspectors. At a special restitution hearing in June 2007, Brown was ordered to pay more than $7 million to the 351 victims who lost money from his Ponzi scheme. Brown used his investment firm to fool customers into believing they could double their money every 30 business days. Of the $8.3 million Brown raised, he spent almost $4 million on personal items. Bidders in Richmond came from as far away as Alaska to offer $1.5 million for luxury cars he once owned.
n A Carpentersville, IL, man was convicted in May 2007 for illegal possession of a firearm by a felon, illegal possession of ammunition, and aggravated domestic violence. He was sentenced to six years in prison and must serve 85 percent of his sentence, with additional charges pending. The case is another example of excellent teamwork by Postal Inspectors, local police, and vic
tim-witness coordinators who provided extensive victim services. The man made numerous threats to kill employees at several Post Offices. One employee outlined a pattern of physical abuse by the suspect that was so intolerable she attempted suicide. The victim-witness coordinator assisted her and other affected employees by helping to place them in shelters and receive other protection, acting as a liaison with domestic and Korean violence support groups, and procuring orders of protection. Upon learning the suspect was free on bond, the victim-witness coordinator stayed in constant contact with the physically abused employee, enabling the coordinator to relay valuable information to Postal Inspectors and other law enforcement agents that led to the suspect's capture. The coordinator's professional knowledge and skills were essential to helping the victims of this investigation recover from a violent situation.
n During an investigation of a work-at-home scheme in Philadel
phia, PA, Postal Inspectors learned that con artists had stored in their computers the personal information of thousands of their victims. Victim-witness coordinators subsequently mailed 77,000 postcards, from late April through early May 2007, to notify people about the fraud. The postcards explained why they were being contacted, provided a link to the U.S. Attorney's Web site, listed a toll-free number for information on case status and victim rights, and included an explanation of how to complete an affidavit of loss. The mailing was done under the stipulation that the U.S. Attorney's Office will petition the court to include the cost of postage and the initial mailing to the victims, estimated at $22,480, in the restitution order. The suspects will pay the costs after victims receive restitution. The subjects were incarcerated, have pled guilty, and are awaiting sentencing.
Victim-Witness Education and Prevention
Through consumer-protection campaigns, educationa
l publications, video productions, and congressional liaison, the Postal Inspection Service works to increase public awareness, especially among older Americans, about how to avoid becoming victims of fraud. For the past three years, the agency has partnered with the Department of Justice's Office for Victims of Crime to promote this message during National Crime Victims' Rights Week.
The Office of Victims of Crime and the Postal Inspection Service joined again this past fiscal year to sponsor National Crime Victims' Rights Week. In April 2007, approximately 15,000 postal retail units displayed a new poster, "Victims' Rights: Every Victim, Every Time," in postal lobbies. A card and "take-one" insert, which provided toll-free telephone numbers for victim-service organizations, were also available. The campaign reached an estimated 11 million postal customers each day. The National Center for Victims of Crime, which answers the national helpline at 1-800-FYI-CALL, advised the
ir calls increased by about 30 percent in the first half of April as a result of materials displayed at Post Offices. The Postal Service's Stamp Fulfillment Center also included 30,000 campaign inserts with stamp orders that month.
Postal Inspection Service staff nationwide participated in local media events in support of the campaign. Below are some examples of events held in support of crime victims.
Boston. Postal Inspectors Timothy Mahoney and Mary Ellen Bickett received Certificates of Appreciation for Crime Victims' Awareness Week from the U.S. Attorney's Office in Boston, MA, for their work interviewing victims of a Postal Inspection Service-led investigation of an investment scheme. The interviews were held in a setting that protected victims' privacy and afforded them an opportunity to discuss their losses. Postal Inspectors and other agents and staff held a week-long series of victim-assistance meetings at a location near the homes of many of the victims. Victim
s met with criminal investigators, financial analysts, and taxpayer assistants. Through the cooperative efforts of multiple federal law enforcement agencies, victim data was gathered quickly and victims had immediate access to information about their rights.
Miami. General analysts staffed an informational booth and assisted in events held at the Squirrel Ridge Park Crime Victim's Memorial Park. The county park is the first in Florida dedicated to victims and survivors of crime, and its grounds are maintained by juvenile offenders. The work is part of a restorative program for 20 offenders from across the state who commit to the program for a few months or up to two years. The program teaches teens to recognize the harm they have caused to victims. General Analysts also participated in the Victims' Rights Conference with State Attorney Katherine Rundle and the Broward Sheriff Office's Candlelight Ceremony for Victims' Rights.
Washington, DC. During National Crime Victims
' Rights Week in April 2007, the U.S. Attorney's Office underscored its commitment to safeguarding the rights of crime victims and their families, and honored those who brought them hope, comfort, and justice. The U.S. Attorney of the Eastern District of Virginia Chuck Rosenberg and State Attorney General Bob McDonnell recognized the Metro-Richmond Identity Theft Task Force, led by Postal Inspector Dave McGinnis, for its advocacy of crime-victim rights and for an initiative known as Operation Reconcile. The initiative resulted in the indictment of 51 suspects in November 2006 for identity theft and related offenses. A victim of identity theft and a representative from SunTrust Bank addressed attendees on behalf of all victims of cases prosecuted under Operation Reconcile.
The opportunity to help victims is a strong motivating factor for crime investigators. That factor is reinforced by legislation mandating that the work of the criminal justice system may be considered com
plete only when the rights of victims are addressed in the judicial process. This message is integral to the work of all law enforcement officers and the courts, as recognition of the importance of ensuring the rights of crime victims continues to grow.
Asset Forfeiture
The U.S. Postal Inspection Service uses asset forfeiture laws and regulations to target the financial incentive criminals may gain from postal-related crime. Postal Inspectors investigatedrug trafficking, identity fraud, and other financial crimes to identify money and assets derived from illegal activity that involves the U.S. Postal Service or the U.S. Mail.
Postal Inspectors seized 1,444 illegal assets and secured 538 forfeitures in FY 2007, and forfeiture-related activity netted $5.3 million. As a result of successful asset forfeiture actions, the Postal Inspection Service shared $1.6 million in funds with other federal, state, and local law enforcement agencies. Case examples from the past fi
scal year follow.
n Postal Inspectors in New York were requested by the U.S. Attorney's Office, Southern District of New York, to investigate the Adelphia Communications Corporation in 2002. Their investigation revealed that Adelphia's officers took funds disguised as personal loans from the corporation, but failed to disclose their dealings to regulators and stockholders. The scheme resulted in losses of $252 million to shareholders. All of the officers charged were convicted of conspiracy and multiple counts of securities fraud and bank fraud in July 2005 and are serving prison terms of 15 to 20 years. In 2005, the defendants agreed to forfeit to the United States more than 95 percent of their assets, which included $715 million in cash and stock to be paid to victim shareholders. In July 2007, shares of Time Warner Cable stock, totaling $371.2 million, were sold. The amount represents additional funds received by the U.S. Marshals Service to satisfy the forfeiture judgme
nt and was one of the largest deposits ever made into the Department of Justice's Assets Forfeiture Fund. Additional payments for the balance of the $715 million are forthcoming as other properties are liquidated.
n Beginning in 1976 and continuing through 2005, Milberg Weiss & Bershad, LLC, the nation's largest class-action lawsuit firm, allegedly defrauded the courts, class-action defendants, and class-action members through an illegal fee-sharing (kickback) arrangement with some of its clients. The clients were representative plaintiffs in class-action lawsuits. The firm received more than $250 million in attorney's fees as a result of the fraud. Howard J. Vogel, a participant in the scheme, has forfeited $2 million to the U.S. government. In July 2007, David J. Bershad, a partner in the New York law firm, forfeited to the U.S. government $7.75 million. In October 2007, an additional $1 million was received from defendant Steven Schulman, and another $500 million was rec
eived from Seymour Lazar. Schulman agreed to forfeit an additional $850,000, and Lazar agreed to forfeit an additional $1 million. Another defendant, William Lerach, entered into a plea agreement to forfeit $7.75 million. The United States is seeking an additional forfeiture of up to $251 million in judgments. The investigation is now complete, but prosecution is ongoing. The U.S. Postal Inspection Service was the lead investigative agency on the case.
Money Laundering
The U.S. Postal Inspection Service investigates criminals who attempt to use postal money orders to launder illicit funds and avoid federal reporting requirements in violation of the Money Laundering Control Act and the Bank Secrecy Act. Illicit proceeds may include money gained through narcotic sales, smuggling illegal aliens, tax evasion, or selling counterfeit merchandise.
During FY 2007, Postal Inspectors arrested 70 suspects on charges related to money laundering, and 63 convictions were repor
ted during the same period. Following are examples of money laundering cases investigated by Postal Inspectors in the past fiscal year.
n Postal Inspectors and special agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service-Criminal Investigation Division (IRS-CID), and the New Jersey Department of the Treasury's Division of Taxation arrested three suspects for conspiracy to distribute contraband cigarettes, and warrants were issued for two suspects allegedly responsible for money order structuring. Under federal search warrants, investigators seized $100,000 in cash, jewelry, and 50 cases of contraband cigarettes. The three suspects, who operated several Chinese take-out restaurants, structured the purchases of more than $4.2 million in postal and commercial money orders in a 19-month period. Most of the money orders were used to purchase tax-exempt cigarettes via the Internet and from cigarette distributors affiliated with Indian
reservations. The co-conspirators illegally resold the cigarettes to restaurant customers in New Jersey and New York. The scheme was estimated to defraud the state of New Jersey of more than $3 million in unpaid taxes.
n A Postal Inspection Service investigation culminated in the sentencing of Dr. Steven Herman, a plastic surgeon in Westport, CT, to one year and eight months in federal prison, an order to pay a $60,000 fine and $150,000 in restitution, and an order to forfeit $236,000. Herman pled guilty to charges of tax evasion, illegal structuring of financial transactions, and health care fraud. Postal Inspectors, IRS-CID agents, and FBI agents learned that, from January 1998 through April 2003, Herman skimmed more than $883,000 in cash receipts from his medical practice and failed to declare the money on his income tax returns. To conceal the crime, Herman used the cash to purchase postal money orders at area Post Offices or gave the cash to household employees and d
irected them to purchase money orders for him. Typically, the money orders were purchased four at a time in amounts of exactly $700, to avoid reporting requirements. Herman used approximately $300,000 in postal money orders as a down payment on a ski home in Stratton, VT.
n An investigation of counterfeit merchandise trafficking, conducted by Postal Inspectors and other members of the El Dorado Task Force in New York, resulted in three arrests on December 14, 2006. The defendants used ports of entry in New York and New Jersey to smuggle millions of dollars in illegal goods into the United States. An undercover agent met the suspects and facilitated the pass-through of the counterfeit items. The agent was paid more than $140,000 in bribes via a combination of cash, checks, and postal money orders. The subjects smuggled up to 12 cargo containers of counterfeit goods into the United States each month. To date, the investigation has led to 66 seizures of counterfeit merchandis
e at international ports of entry.
Revenue Protection
The Chief Postal Inspector designated revenue protection as a key area of focus for the Postal Inspection Service in FY 2007. As a result, Postal Inspectors with expertise in revenue investigations were assigned to identify products and services representing the highest revenue risks to the Postal Service. Postal Inspectors subsequently defined the following areas as posing the greatest risk to Postal Service revenue:
n Permit Imprint mail. Mailing is accepted for processing without first being verified.
n Discount fraud. A mailing does not qualify for the claimed level of sortation. The mailer submitted more mail than claimed, or claimed value-added discounts for higher volumes than what was entered in the mailstream.
n Plant-verified drop shipments. A mailer added mailpieces after the mailing was verified.
n Eligibility fraud. A mailing does not meet requirements for preferential rates, such as for Period
icals or Nonprofit Mail.
n Bribery, collusion, or employee misconduct. A mailer colluded with a postal employee to avoid paying postage.
n Meters. A mailer counterfeited meter indicia or manipulated meters to avoid paying postage.
n Information-based indicia. A mailer counterfeited indicia or used a fraudulent credit card to pay for PC Postage.
n Retail fraud. A mailer used a fraudulent financial credit card or a bad check to purchase postal services or products.
n Stamp counterfeits. A mailer used counterfeit U.S. postage.
n Customer fraud. A mail preparation firm charged customers for services not provided, which may give customers the impression that the Postal Service failed to provide the requested service.
Postal Inspectors measure the effectiveness of their revenue investigations by the number of postage fraud schemes they identify and successfully resolve. In addition to stopping the scheme, a resolution may include sending the perpetrator to jail, recouping
lost revenue, and paying fines and penalties. Postal Inspectors also identified numerous projects designed to greatly increase the effectiveness of our revenue investigations. These included a review of internal controls for existing revenue streams to determine if significant weaknesses exist; and the identification of relevant postal databases for use in identifying potential fraud.
Due to the high priority of the program, it was critical to develop a core group of Postal Inspectors with expertise in this area. A multi-phase initiative developed by the Career Development Division provided on-line training and a week-long, facilitator-based session. During FY 2007, 48 Postal Inspectors completed both phases of the training, and additional sessions were planned for FY 2008.
During FY 2007, Postal Inspectors initiated 179 new investigations related to postal revenue. They arrested 78 suspects for revenue-related crime, and reported 64 convictions in the same period, s
ome from cases initiated in prior reporting periods. Losses from fraudulent activities totaling $20.3 million were identified, while civil settlements, voluntary restitution, and court-ordered fines, penalties, and restitution totaled more then $8 million in FY 2007.
Following are examples of investigations conducted by Postal Inspectors in the past fiscal year involving underpayment of postage, trafficking of counterfeit postage, or the purchase of postage through fraudulent means.
n In March 2007, Ameriprise Financial, Inc., a former subsidiary of American Express Financial Corporation, signed a settlement with the U.S. Department of Justice agreeing to pay $8 million for underpayment of postage to the U.S. Postal Service. Ameriprise improperly claimed automation and presort discounts for its mailings by failing to periodically compare address information with lists maintained by the Postal Service, which is a requirement for the discounts. Ameriprise approached the Po
stal Service after learning of a $6 million settlement in a similar case involving Providian Financial Corporation. Ameriprise officials initially reported underpaid postage totaling $552,000. Postal Inspectors determined the actual underpayment was, in fact, much higher, which resulted in the eventual settlement amount. Of the funds specified in the settlement, the Postal Service will be paid $7.8 million.
n Albert Barsa pled guilty in April 2007 for a scheme to defraud the U.S. Postal Service through the use of a fraudulent postage meter. In September and December 2006, Josefina Abreu and Jose Taveras pled guilty to conspiracy charges in the same investigation, and a fourth suspect is awaiting trial. Postal Inspectors were alerted that a business was using a postage meter that had been reported as withdrawn from service and destroyed. Mail bearing the serial number of the meter was detected during a statistical sampling. Barsa, Abreu, and Tavares conspired to defraud the
Postal Service by applying counterfeit postage to mail that was prepared by Direct Mail of New Jersey and National Fulfillment Services. Losses to the Postal Service totaled approximately $2 million.
n Postal Inspectors learned in February 2007 that a New York print shop was being used to manufacture counterfeit stamps. Pursuant to a court-ordered search of the location, as well as suspect interviews, Postal Inspectors found that approximately 150 coils of 39-cent stamps were being produced on a daily basis. They also determined that suspects were making plans to train additional individuals in the printing process so the operation could operate continuously, rather than only eight hours a day. In January and February 2007, approximately $300,000 worth of counterfeit postage stamps was produced. To date, one suspect has been convicted and another charged.
Illegal Drugs and Trafficking
The U.S. Postal Inspection Service interdicts mailings of illegal drugs and dr
ug proceeds to protect the integrity of the U.S. Mail. Postal Inspectors also investigate organized narcotic distribution groups to protect employees and customers from the violence related to drug trafficking. and to preserve the integrity of the U.S. Mail.
Postal Inspectors, often working with other law enforcement officials, arrested 860 suspects for drug trafficking via the mail in FY 2007. Their investigations resulted in the seizure of approximately 5.1 tons of illegal narcotics found in the mail, as well as more than $3.8 million in cash and monetary instruments, seven firearms, and two vehicles related to ongoing investigations.
Postal Inspector Honored for Keeping the Mail Safe
Postal Inspector Sean Grillo of the Pittsburgh Division received an Exceptional Service by an Individual Award in July 2007 at the Organized Crime Drug Enforcement Task Force and National Asset Forfeiture National Leadership Conference. Inspector Grillo was the lead agent on the foll
owing case, which is just one example of his exemplary work.
Postal Inspectors in Pittsburgh, PA, seized an Express Mail package containing approximately three kilos of cocaine that had been concealed inside a torque converter, and later arrested suspects in Pittsburgh and Los Angeles for the mailing. An inquiry of the Postal Inspection Service's money laundering database revealed that more than $100,000 worth of postal money orders had been purchased in suspicious quantities in Pittsburgh, leading Postal Inspectors to several more seizures of cocaine shipments and suspect arrests. As a result, in February 2007 Michael S. Frawley was sentenced to 14 years in federal prison and his father, Michael R. Frawley, was sentenced in April 2007 to six years and five months in prison. Convicted suspects Mark Hill, Laurie Rode, and Richard Glanz await sentencing. Overall, Postal Inspectors in Pittsburgh and Los Angeles seized in excess of $257,680 in cash, 17 kilograms of cocaine, and
more than 200 pounds of marijuana. Following are other examples of investigations by Postal Inspectors in FY 2007 related to illegal drugs seized from the mail.
Postal Inspectors are assigned to Operation Red Dragon, a joint law enforcement initiative aimed at stopping the importation of illicit chemicals used to make methamphetamine. Task force members dismantled 114 clandestine meth laboratories, including 20 in Arizona and others in Texas, New York, North Carolina, and several foreign countries. The operation, which began in August 2004, found that suspects used a Web site to sell, via the U.S. Mail, approximately 319,100 grams of red phosphorus and 45,950 grams of iodine to U.S. customers, providing enough material to produce more than 1,400 pounds of meth with a wholesale value of about $12.6 million. Investigators believed the suspects also supplied a global network of meth labs in Europe, Australia, New Zealand, and other countries. As a result of Operation Red Drag
on, Paul K. Charlton, U.S. Attorney for the District of Arizona at the time, stated, "Internet criminals rely on the World Wide Web to provide them with a borderless weapon and anonymous shield. Here, traffickers had set up a virtual 'one-stop shop' to provide an international supply of the chemicals used to manufacture meth. Today, we demonstrate how law enforcement authorities around the world can work across borders to identify and dismantle operations like this." Arrests and prosecution are ongoing.
The U.S. Postal Inspection Service was also a major contributor to a multi-agency task force investigation known as Operation Scallywags. The operation focused on the use of Express Mail to transport large quantities of cocaine from Puerto Rico to central Florida. Task force members determined that some of the suspects were also involved in the purchase of high-powered firearms and several murders, including that of a pregnant woman. Postal Inspectors led several aspects of
the investigation, including interdicting parcels in San Juan and Orlando that contained approximately 60 kilos of cocaine and executing several search warrants. Investigators believe the drug ring was responsible for shipping more than 300 kilos of cocaine through the U.S. Mail in the past year. The first round of arrests occurred on June 13, 2007, at which time 30 of 33 federal arrest warrants and five search warrants were successfully served. Several other suspects were arrested on state charges. Approximately $138,000 in cash was seized, in addition to drugs, guns, and vehicles.
DOJ Mail Fraud Team Awarded for Outstanding Law Enforcement Partnerships
The Department of Justice (DOJ) Mail Fraud Team received the Assistant Attorney General's Outstanding Law Enforcement Partnership award at the Criminal Division's Award Ceremony in Washington, DC, in FY 2007. The team comprises experienced Postal Inspectors and consumer fraud analysts assigned to work directly with
DOJ Criminal Fraud Section attorneys on significant and complex mail fraud cases. Since its creation in March 2005, initially as a pilot program, team members have conducted high-priority domestic and international mail fraud investigations, and worked closely with their law enforcement counterparts in the United States and abroad. The team is now assigned full time to the DOJ Criminal Fraud Section at its offices in Washington, DC. DOJ recognized the team for its significant contributions to the Fraud Section and for "the successful launch of this significant partnership between the Department and the Postal Inspection Service, which has been key in many high-profile corporate fraud investigations." Team members have worked closely with their law enforcement counterparts in Amsterdam, Nigeria, and Canada investigating international fraud conspiracies. Their investigations have resulted in several indictments related to corporate, commodities, and advance-fee fraud cases.
1st row, sitting
Dave Cyr, Consumer Fraud Analyst IV (retired Postal Inspector); Patrick Corcoran, Inspector in Charge, Special Investigations; Ray Smith, Assistant Inspector in Charge, Special Investigations; Joe McGowan, Postal Inspector-Fraud Team Leader (Pittsburgh).
2nd row, standing
Randy Willetts, Consumer Fraud Analyst IV (retired Postal Inspector); James Petrakis, Consumer Fraud Analyst IV (retired Postal Inspector); Cheryl Duffy, Consumer Fraud Analyst I; James Walsh, Consumer Fraud Analyst IV (retired Postal Inspector); Cynthia Shoffner, Postal Inspector; Mary Giberson, Postal Inspector; James Tendick, DOJ Fraud Team Leader-Postal Inspector; and Patricia Lingan, Consumer Fraud Analyst IV (retired IRS agent).
After a Postal Inspector completed training on the agency's Financial Crimes Database, he decided to put his knowledge to the test by reviewing fraud complaints from major banks. He immediately noted a number of complaints related to Jacqueline Brewe
r of Indiana, who he assumed was a fraud victim. Brewer reported that several credit cards mailed to her home had never arrived. To his surprise, the Postal Inspector determined that Brewer was the perpetrator, not the victim, of a crime. After receiving a credit card in the mail, Brewer would charge thousands of dollars worth of merchandise on the card or use it to take cash advances at casinos to satisfy her gambling addiction. Brewer then reported the cards as "not received." The Postal Inspector found Brewer had gained a certain level of fame at many of the major banking entities she had defrauded, due to the high number of reports she filed. The Postal Inspection Service's Central Indiana Financial Crimes Task Force teamed with other federal, state, and local law enforcement agencies to arrest Brewer near Atlanta, GA, in October 2006. She pled guilty in federal court in Indianapolis on March 28, 2007. That same day, Brewer brazenly withdrew money from an ATM at a casino
in Mississippi using a fraudulent credit card. Losses attributed to her scheme totaled about $500,000. Brewer was sentenced in July 2007 to approximately five years in federal prison.
Administrative Actions FY 2007
Complaints filed 257
Consent Agreements signed 73
Temporary Restraining Orders issued 0
Civil Injunctions 1
False Representation Orders issued 28
Cease and Desist Orders issued 105
Withholding Mail Orders issued 135
Voluntary Discontinuance Agreements signed 22
General analysts staff an information booth in Miami during National Crime Victims' Rights Week.
Postal Inspectors Earn Awards for Drug Enforcement and Asset Forfeiture
Postal Inspectors Phil Garn, Joe Casciotta, and Sean Grillo received national recognition for their outstanding contributions to the Organized Crime Drug Enforcement Task Force (OCDETF) and Asset Forfeiture Program. Postal Inspector Garn was recognized for his work on Operation Gear Grinder, which targeted a major
drug syndicate affiliate, as well as eight Mexican manufacturing companies that supplied more than 80 percent of the anabolic steroids seized in the United States. The investigation tracked more than $2.3 million in illicit proceeds and led to $1 million in seizures. Postal Inspector Casciotta received recognition for his work on Operation Carlito's Way, which targeted a major trafficking ring that illegally distributed prescription drugs via the Internet. The operation resulted in the indictment of 20 suspects and the seizure of more than $8 million, more than 10 million doses of pharmaceutical drugs, and 108 kilograms of ketamine. Postal Inspector Grillo received individual recognition for his commitment to the Asset Forfeiture Program in the Pittsburgh area, where he repeatedly used the forfeiture of cash and money orders to successfully combat illegal drug activity.
Global Security and Investigations
U.S. Mail now comprises nearly one-half of the world's tot
al mail volume. As the U.S. Postal Service's presence in the global delivery marketplace expands, the U.S. Postal Inspection Service has responded in kind. FY 2007 marked the introduction of the Postal Inspection Service's new office of Global Security and Investigations, charged with protecting U.S. Mail worldwide and postal revenue generated by international business development.
Staff and resources have been allocated to address work needed with international postal administrations to assure the security of U.S. Mail delivered to, and transiting through, other countries. In addition to protecting mail from fraud, Postal Inspectors focus their investigations on international mail theft, mailings of dangerous items, and illegal contraband.
Global Security and International Liaison
Postal Inspectors in the Global Security and International Liaison Division are assigned to the U.S. Postal Service's National Headquarters; Interpol's U.S. National Central Bureau at
Washington, DC; the Interpol General Secretariat in Lyon, France; and the International Bureau-Universal Postal Union (UPU) in Berne, Switzerland.
In 2007, staff took action to improve the security of international mail dispatches. Postal Inspectors provided guidance to several postal administrations in Latin America on how to detect explosives and other prohibited items in the mail. The Postal Inspection Service was a forerunner in using portable X-ray equipment to detect mailed explosive devices and, based on the effort's overwhelming success, donated the equipment to the postal administrations of Honduras, Panama, Costa Rica, Bolivia, and the Dominican Republic. Postal Inspectors also provided hands-on training for personnel in those countries to operate the equipment.
Other efforts to improve international mail security focused on reducing the incidence of dangerous goods in the mail. Postal Inspectors shared their expertise with their international counterparts by sp
onsoring a variety of training initiatives. In FY 2007, Postal Inspectors coordinated a Postal Security Action Group Workshop, "Basic Mail Theft and Dangerous Goods," at the Asia Pacific Postal College in Bangkok, Thailand, for 26 postal security representatives from the Asia Pacific Region. Participants arrived from 15 countries, including Brunei, Cambodia, Hong Kong, India, Iran, Laos, Malaysia, Maldives, Nepal, Pakistan, Philippines, Sri Lanka, Solomon Islands, Thailand, and Vietnam, and included 18 students attending a U.S. Postal Service course for managers.
Postal Inspectors offered instruction in how to investigate mail theft, respond to incidents of suspicious and dangerous material in the mail, and develop and implement Continuity of Operations Plans, which are structured emergency plans for postal administrations. A training highlight was a presentation depicting the response by the Postal Inspection Service to secure postal employees, U.S. Mail, and postal asset
s in the aftermath of Hurricanes Katrina and Rita.
Postal Inspectors also work to support the goals of the Universal Postal Union and the United Nations Office on Drugs and Crime to reduce the trafficking of illegal drugs via the mail. Over the past fiscal year, Postal Inspectors provided training in drug detection and investigation for postal officials in Dubai, United Arab Emirates, and Tripoli, Libya-regions that have experienced problems with illegal drugs smuggled through the mail.
Postal Security Action Group
Since 1997, the Postal Inspection Service has coordinated more than 50 mail quality assurance and airport security reviews in countries around the globe. The reviews are designed to evaluate mail security procedures at airports and international offices of exchange, and identify opportunities to improve the security of mail service worldwide. Review teams identify "best practices" in the industry and share their findings through the Postal Security Act
ion Group (PSAG) and the Universal Postal Union (UPU) Restricted Unions. The reviews also help postal administrations improve the security of international mail and allow team members to establish a professional network of airport coordinators, operations personnel, and stakeholders at all major international airports.
Postal Inspectors work closely with postal security experts from PSAG working groups and member postal administrations to conduct International Airport Quality Assurance and Airport Security Reviews. PSAG placed 12 major international airports, which serve as mail hubs, on three-year airport security review cycles. The airports are located in five major regions of the world, including Asia Pacific, Latin America, Europe, North America, and Africa. In FY 2007, Inspectors coordinated and conducted reviews in Paris, France; Johannesburg and Cape Town, South Africa; Singapore; La Paz, Bolivia; Mexico City, Mexico; Milan, Italy; and Los Angeles, CA.
Postal Inspec
tors also coordinated training on eMARIA, an international mail-loss reporting system, for the United States and four major world regions. Inspectors use eMARIA to quantify and identify losses of outbound, inbound, and transiting international mail. It supports the Postal Inspection Service's work to ensure customer confidence by identifying international mail-loss trends, high-risk airports, and high-risk air travel routes for U.S. Mail.
The Postal Security Action Group and the UPU-Bucharest Congress have named eMARIA the official database of international mail irregularities and urge all 190 UPU member countries to use it. During FY 2007, Postal Inspectors conducted training for postal security, information technology, and postal employees in the United States, certain European countries, Asia Pacific, and Central and South America. Postal Inspectors share data from eMARIA with teams at international service centers related to incoming and outgoing international mail.
Interpol
The U.S. Postal Inspection Service assumed the Assistant Directorship of the Economic Crimes Division at Interpol's U.S. National Central Bureau in Washington, DC, in December 2004. Since then, Postal Inspectors have reviewed more than 3,900 cases to identify mail-related fraud, money laundering, child exploitation, and other crimes with a mail nexus for referral to Inspectors across the United States. The Assistant Directorship is responsible for managing agents from the U.S. Secret Service, U.S. Immigration and Customs Enforcement, Internal Revenue Service, and Environmental Protection Agency, as well as the U.S. Postal Inspection Service.
A Postal Inspector from the office of Global Security and Investigations is assigned to the Interpol General Secretariat in Lyon, France. In FY 2007, he led a database development project to streamline the processing of international police information and ensure timely and relevant responses to member-country inquirie
s. Project team members coordinate their work with the Interpol National Central Bureaus and national police agencies. The new system is expected to vastly improve Interpol's ability to meet the law enforcement needs of all 186 member countries.
Partnership with the Mexican Postal Service
The Postal Inspection Service has a key role in the new partnership of the U.S. Postal Service and Servicio Postal Mexicano, the Mexican postal service commonly known as Sepomex. The new arrangement lays a foundation for a seamless distribution network between the United States and Mexico designed to encourage and strengthen commercial exchanges. The U.S. Postal Service assists Sepomex in transforming its management structure and processes and reengineering its operations. In exchange, Sepomex will join the Postal Service in exploring and developing joint business opportunities and cross-border services.
A key component of the agreement is a collaborative effort to develop enhanc
ed security procedures for all mail products. The Postal Inspection Service will support Sepomex in developing its own postal inspection agency, to include the selection, hiring, and training of Mexican postal inspectors. The partnership will build on an already established relationship between the two organizations. Last year, Postal Inspectors worked with Sepomex officials to coordinate the security of inbound registered mail dispatches from Mexico to U.S. gateway cities. Also, as part of Mexico's first-ever vote abroad campaign, the Postal Inspection Service provided technical assistance to Sepomex and the Mexican Federal Electoral Institute on how to protect the integrity of absentee ballots sent through the mail. The continued and expanded partnership is intended to improve security of the mail and service for citizens in the United States and Mexico.
Global Investigations
The Global Investigations Division comprises Postal Inspectors assigned to the U.S. Pos
tal Service's National Headquarters in Washington, DC, and at international mail
centers in Miami, Los Angeles, San Francisco, Chicago, and New York. Global Investigations staff focused on international mail theft cases in FY 2007 to protect postal money orders from overseas fraudsters and U.S. Postal Service products from cyber crimes.
International Investigations
In 2007, Postal Inspectors assigned to the Postal Service's five international service centers worked on mail theft cases traced to 16 countries, including Canada, Hong Kong, Japan, Togo, South Korea, Vietnam, China, Greece, Australia, Bolivia, Ecuador, Panama, Liberia, East Asia, Kyrgyzstan, and Russia.
One of the group's most significant achievements over the past fiscal year was the Global Counterfeit Initiative, which resulted in the largest seizure of counterfeit checks and money orders in Postal Inspection Service history. Between January and August 2007, Postal Inspectors and other agents seized
more than 540,000 counterfeit checks and money orders valued at more than $2.1 billion.
The Global Counterfeit Initiative was formed to protect the integrity of postal money orders and other financial instruments targeted by overseas criminals. Global Investigations staff coordinated a task force of more than 200 Postal Inspectors, officials from other U.S. law enforcement agencies, and officials from international law enforcement agencies in Canada, Nigeria, the United Kingdom, and the Netherlands.
The multipronged campaign included extensive consumer-awareness actions by the financial services industry, eCommerce companies, global couriers, global law enforcement groups, international stakeholders, investigative intelligence, domestic and international law enforcement agencies, and financial industry representatives.
Postal Inspectors and their domestic and international counterparts conducted interdictions of counterfeit checks and money orders arriving in the United
States, Canada, London, and Nigeria. The Postal Inspection Service joined with London's Serious Organized Crime Agency to attack the source of the counterfeit documents through joint investigations, shared intelligence, combined fraud data, and coordinated interdictions to seize counterfeit financial instruments coming from Nigeria and other West African countries. From July 17 through August 17, 2007, Global Investigations staff assigned 10 Postal Inspectors to work with British agents in Nigeria on interdictions approved by the Economic and Financial Crimes Commission. In a 21-day interdiction, Postal Inspectors and other agents pulled more than 15,000 counterfeit checks and money orders from the mailstream in Lagos, Nigeria. The initiative also led to the takedown of two cyber cafes in Nigeria and 16 related arrests. Together with other federal law enforcement actions around the world, the initiative resulted in the seizure of 540,000 counterfeits valued at more than $2
billion, and more than 70 related arrests.
On October 3, 2007, Postmaster General John Potter, U.S. Representative Danny Davis, Assistant U.S. Attorney General Alice Fisher, representatives from the Alliance for Consumer Fraud Awareness, and several international law enforcement agencies launched the largest fraud-prevention campaign in the history of the Postal Inspection Service. The campaign is described in detail in the Consumer Education and Fraud Prevention section of this report.
Europol
In FY 2007, the U.S. Postal Inspection Service established a temporary presence at Europol in The Hague, Netherlands. Europol is the European Union Police office that supports the law
enforcement community and promotes intelligence-led policing. It is a multicultural and multi-agency organization with members from 27 countries. Europol assists the law enforcement authorities of the European Union in the fight against serious organized crime.
Between March and September
2007, the Postal Inspection Service's Liaison Officer at Europol responded to 26 requests for information from Postal Inspectors conducting investigations in the United States. Based on the Postal Inspection Service's success in coordinating criminal investigations with its counterparts at Europol over the past fiscal year, the Department of State for the U.S. Embassy at The Hague authorized a Postal Inspector to be assigned there on a permanent basis.
In August 2007, Chief Postal Inspector Alexander Lazaroff (left) and Mexican Secretary of Communications and Transport Luis TŽllez shook hands on a new partnership between the U.S. Postal Service and Servicio Postal Mexicano that will strengthen postal services in Mexico and develop business opportunities for their respective countries.
Inspector in Charge of Global Investigations Greg Campbell announced the results of the Global Counterfeit Initiative at a press conference in Washington, DC, in FY 2007. Between Ja
nuary and August 2007, Postal Inspectors and other agents seized more than 540,000 counterfeit checks and money orders valued at more than $2.1 billion.
Postal Inspectors traveled to Lagos, Nigeria, to work with local authorities from the Economic and Financial Crime Commission. They are shown here at a Nigerian postal facility (NIPOST), one of the interdiction sites where officials seized counterfeit checks and money orders from mail destined for the United States.
Mail Theft and Violent Crime
Mail Theft
The American public has the right to expect its mail to be delivered on time and intact. As mandated by law, U.S. Mail should arrive unopened and in the mail receptacle for which it was intended. When delivery is interrupted by theft, rifling, obstruction or destruction of the mail, investigative responsibility comes under the jurisdiction of U.S. Postal Inspectors, who are charged with preserving the "sanctity of the seal."
Mail thieves have many opp
ortunities to steal mail. Every day, more than 703 million pieces of mail travel across the country. Mail is delivered to about 146 million addresses six days every week. Every day, those millions of mail pieces-First Class letters, parcels, magazines, financial documents, business correspondence, Express and Priority Mail, Registered Mail, international mail, and much more-are moved to their destinations by plane, ship, rail, truck, automobile, and human beings.
More than 213 billion pieces of U.S. Mail are delivered yearly to mailboxes, apartment mailbox panels, Post Office boxes, neighborhood delivery units, and countless versions of ingenious, homemade mailboxes crafted to meet federal standards set by the U.S. Postal Service, under the counsel of U.S. Postal Inspectors.
Postal Inspectors know that, because mail can contain any number of valuables-not just jewelry or other expensive items, but personal and financial information, credit card applications, and such-crim
inals will try to steal it. Mail thieves employ an endless number of schemes that Postal Inspectors work hard to thwart.
U.S. Postal Inspectors deploy the best security available. They also take preventive measures to help protect and educate postal employees and the public about mail theft.
Volume Attacks
The Postal Inspection Service devotes significant resources to protecting the U.S. Mail. Postal vehicles, collection and relay boxes, apartment mailbox panels, cluster box units (CBUs), and neighborhood delivery and collection box units (NDCBUs) are frequently targeted by thieves in volume mail attacks. The attacks constitute a threat to postal employees and customers.
Protecting and securing the U.S. Mail is integral to the mission of the Postal Inspection Service. Postal Inspectors are pleased to report that customers' confidence in the mail is justified, as volume mail attacks were down nearly 36 percent from last year, when 5,536 volume attacks were recorded.
Inspectors aggressively investigate these thefts and work closely with the Postal Service's Engineering, Collection, and Delivery offices to develop and install neighborhood delivery units with stronger security features.
The American public depends on Postal Inspectors to identify and arrest mail thieves. In FY 2007, Postal Inspectors arrested 3,306 suspects for mail theft and, in the same period, 2,927 mail theft suspects were convicted of such charges.
Following are examples of volume mail thefts investigated by Postal Inspectors in FY 2007.
n Postal Inspectors initiated an investigation of a mail theft ring in December 2006 after learning that collection boxes had been stolen in San Bernardino, CA, and neighboring cities. Connected to the thefts were complaints from people who had suffered fraudulent transactions on their financial accounts after depositing mail into collection boxes in front of the Colton, CA, Post Office. Postal managers discovered that the upper
part of the collection boxes had been blocked to trap mail inside and place it within reach for retrieval. Inspectors developed a suspect who was a recidivist mail thief recently released from prison. In March 2007, Postal Inspectors apprehended the thief following a high-speed chase after seeing him steal mail from collection boxes in front of the Colton Post Office. Inspectors have since arrested six other suspects for participating in the scheme.
n In July 2007, Postal Inspectors arrested the alleged leader of a mail theft ring who was responsible for a least four postal vehicle attacks and multiple incidents of mail theft in San Juan, PR. The seven-member gang stole mail from vehicles on the first of every month, starting in October 2006. Postal Inspectors executed three federal search warrants and recovered evidence associated with the thefts.
n Postal Inspectors arrested two suspects in July 2007 after catching them on a surveillance video stealing mail from apart
ment mailboxes in Dallas, TX. Following the arrest, Inspectors executed a federal search warrant on the suspects' home and seized more than 500 pieces of stolen mail, 100 credit and debit cards, fake driver's licenses, and other fake IDs.
Other examples of mail theft investigated by Postal Inspectors in FY 2007 follow.
n A federal grand jury in Georgia returned a 29-count indictment in March 2007 against three suspects for using unauthorized access devices, stealing mail, and receiving stolen mail. Postal Inspectors found that, between January and February 2007, the suspects took mail from residential mailboxes in Savannah to obtain financial information. They used the stolen information to open new accounts and take over victims' accounts. Inspectors have identified approximately 40 victims.
n In October 2006, the leader of an organized mail theft ring was indicted following a nine-month investigation by Postal Inspectors. Inspectors had received reports that checks w
ere stolen from collection boxes in Glenview, Barrington, Arlington Heights, and Palatine, IL. The ringleader was reputedly skilled at creating counterfeit Postal Service arrow keys, using stolen locks as a template. The leader recruited ring members to use the counterfeit keys to steal mail, and had others negotiate counterfeit checks that were created from the contents of stolen mail. Inspectors executed a search warrant on the suspect's home and seized 16 counterfeit keys and three postal locks. Losses are estimated at $500,000 or more.
n In July 2007, 14 suspects in Oklahoma were indicted on 15 counts related to the possession of stolen mail. The indictment culminated an eight-month investigation by Postal Inspectors and agents from the U.S. Secret Service of a mail theft ring operating in eastern Oklahoma and western Arkansas. The ring allegedly stole mail from residential mailboxes and used information from the stolen items to manufacture counterfeit checks. Victim lo
sses are estimated to total about $140,000.
Mail Theft by Contractors
The U.S. Postal Service contracts the movement of some of the nation's mail to businesses that work conscientiously to aid postal employees in delivering mail to its proper destinations. These individuals, like postal employees, take their responsibilities seriously. Unfortunately, a small percentage of contractors abuse the public's trust. The U.S. Postal Inspection Service is charged with investigating and identifying those who steal mail, and take steps to have them prosecuted and their contracts terminated. In FY 2007, Postal Inspectors' investigations of mail theft by contractors resulted in 181 arrests and 144 convictions.
The following are examples of contractor mail theft investigations by Postal Inspectors in FY 2007.
n Postal Inspectors arrested a Duluth, MN, man who was indicted on charges of mail theft in March 2007 by a federal grand jury. As a contract driver for a third-party freig
ht carrier, he transferred mail from a major mailer's warehouse in Wisconsin to area Post Offices. A national sporting goods chain reported to Postal Inspectors it had lost numerous shipments, and Inspectors found similar merchandise on sale at a pawnshop in Duluth. The pawnshop manager told Inspectors that a uniformed man was pawning large quantities of new items. After a surveillance of the suspect, Postal Inspectors executed a search warrant at his home and seized a large amount of stolen merchandise, including 45 unopened parcels. The suspect confessed he had been stealing parcels from the U.S. Mail since October 2005, resulting in losses to mailers of at least $90,000. On August 9, 2007, he was sentenced in federal court to a one-year prison term and terminated from his employment.
n Postal Inspectors in Memphis, TN, and investigators from FedEx identified six FedEx employees for allegedly rifling mail containing greeting cards. Four other employees apparently witnesse
d the activity but failed to report it. A total of 11 FedEx employees were terminated from their jobs, and federal prosecution was authorized for the six who rifled and stole the contents of U.S. Mail.
Identity Theft
Identity theft occurs when a criminal steals someone's identifying information, such as a name, date of birth or Social Security number, and uses it to fraudulently apply for credit or take over someone's credit or bank accounts. When identity theft involves the U.S. Mail, Postal Inspectors have investigative jurisdiction. In fact, the Postal Inspection Service is the lead agency in investigating incidents of identity theft when criminals misuse the nation's postal system to defraud the American public.
In response to the heavy financial and emotional toll suffered by victims and the severe burdens placed on the economy, President George W. Bush signed an Executive Order on May 10, 2006, creating the nation's first-ever Identity Theft Task Force. The ta
sk force comprises 17 federal agencies and departments, including the U.S. Postal Service. Co-chaired by the U.S. Attorney General and the Federal Trade Commission (FTC) chairman, the task force marshals the resources of several federal agencies to crack down on criminals who traffic in stolen identities and protect Americans from this devastating crime. Four working groups were formed to tackle identity theft from different perspectives. The Postal Inspection Service participates in two of them.
On April 23, 2007, the Attorney General and FTC chairman announced the completion of the Strategic Plan of the President's Identity Theft Task Force, the result of an unprecedented federal effort to formulate a comprehensive and coordinated proposal to attack this widespread and destructive crime. The plan focuses on methods of improving the effectiveness of criminal prosecutions of identity theft; enhancing data protection for sensitive consumer information maintained by the publ
ic sector, private sector, and consumers; providing more comprehensive and effective guidance for consumers and the business community; and improving recovery and assistance for consumers.
The Postal Inspection Service will continue to help implement the 31 major recommendations of the Strategic Plan that target the full cycle of identity theft, including acquiring sensitive consumer data, tracking the misuse of personal data, investigating and prosecuting criminals, helping with the recovery of victims, and providing recommendations for various sectors of the economy. One recommendation was to create or make use of interagency working groups and task forces devoted to identity theft.
The Postal Inspection Service is the lead agency, or acts as co-lead, for 19 Financial Crimes Task Forces and working groups. Twelve task forces are funded by the Mail Theft and Violent Crimes Group of the Postal Inspection Service. Postal Inspectors made 834 arrests and assisted other law en
forcement agencies with 81 arrests, and task force members forfeited $880,130 as of September 2007. Task force members also delivered 95 or more presentations to various consumer groups to educate them about how to protect people from identity theft.
The American public depends on Postal Inspectors to identify and arrest identity thieves. In FY 2007, Postal Inspectors arrested 2,071 suspects and, in the same period, 1,511 identity thieves were convicted.
Following are examples of identity theft cases investigated by Postal Inspectors in FY 2007.
n In June 2007, six suspects in Alexandria, VA, were indicted on 12 counts, including conspiracy, financial crimes enterprise, and mail fraud. Postal Inspectors alleged the suspects used approximately 35 identities to fraudulently obtain 200 credit cards and open at least 60 bank accounts. Inspectors executed nine federal warrants and seized numerous documents related to the scheme. Losses are estimated at $8 million.
n Five
Lebanese nationals were indicted in June 2007 in Los Angeles, CA, on 14 counts related to access-device fraud, misuse of a Social Security number, bank fraud, and aggravated identity theft. Postal Inspectors alleged the suspects defrauded at least eight banks. They used more than 500 fraudulently obtained credit cards to open more than 35 bogus personal accounts and 12 merchant accounts. Losses exceeded $2.8 million.
n Postal Inspectors arrested a man in May 2007 in New York, NY, on charges of wire fraud related to a mortgage-fraud scheme. He used stolen identities to obtain refinancing loans totaling about $1.1 million for two real estate properties owned by other people. Inspectors later found the man had committed a similar crime years earlier, when he sold a woman's home for $300,000 in cash without her knowledge.
n After an investigation by the U.S. Postal Inspection Service, U.S. Secret Service and the Hialeah, FL, Police Department, eight suspects were indicted in
June 2007 for an identity theft and access-device scheme. Two suspects allegedly used their home computers to steal credit reports from hundreds of victims and then sold the reports, which listed victims' names, Social Security numbers, and lines of credit. Others in the scheme assumed the identities of the credit card holders and requested replacement cards be mailed to a designated address. The suspects are believed to have charged items and made cash advances with the cards in south Florida. The ring is responsible for approximately $400,000 in losses.
n On July 19, 2007, Postal Inspectors and other law enforcement agencies arrested 10 identity theft suspects, most of whom were from Kenya, and executed five search warrants. Six others were detained on immigration charges. The suspects allegedly stole identities from hundreds of victims, primarily elderly people in nursing homes, and used the information to file fraudulent federal and state tax returns. Attempted losses
exceeded $13 million and affected more than 27 states. The case began in January 2006, when Postal Inspectors received a call from the operator of a commercial mail receiving agency reporting that several men had leased numerous mailboxes to receive financial mail under a variety of names. Inspectors found the group had opened bank accounts in Kansas City in victims' names. When Postal Inspectors tracked money transferred to the accounts, it led them to one of the largest tax fraud cases ever uncovered in the Midwest, involving more than 365 fraudulent federal tax returns. Once Postal Inspectors discovered the scheme, the U.S. Attorney's Office, the Internal Revenue Service, U.S. Immigration and Customs Enforcement, and the U.S. Secret Service joined the investigation, which drew nearly 100 law enforcement officers from approximately 15 state and federal agencies. One suspect worked as a tax preparer, and seven others worked at nursing homes or hospitals in Kansas City, with
full access to patient information. False refund claims ranged from $4,000 to $47,000. In conjunction with the federal claims statute, false returns to state taxing agencies were also filed, and those claims ranged from $1,500 to $20,000 per return. The proceeds were wired to Kenya.
Homicides, Assaults, and Threats
The U.S. Postal Inspection Service is committed to ensuring employee safety in the workplace. Postal Inspectors investigated 830 postal-related assaults and credible threats during
FY 2007, down from 950 in the previous fiscal year, and arrested 331 suspects. Postal Inspectors seek prosecution in assault cases when appropriate.
To ensure that its employees have a safe and healthful place to work, the U.S. Postal Service employs several proactive strategies and tools for reducing workplace violence. Integral to this effort are its Threat Assessment Teams (TATs), which operate at each postal district. TATs use a cross-functional, multidisciplinary appr
oach to assess and manage risks, help reduce incidents of inappropriate behavior, and resolve conflicts.
Postal Inspectors work closely with TAT members at each district to prevent violence in the workplace. In addition to conducting investigations, they serve as advisors to the teams by assisting them in assessing situations, determining the risk of violence, and developing risk-abatement plans. Another prevention strategy used by Postal Inspectors, as well as postal supervisors, are "stand-up" talks, during which they visit postal facilities to address employees on violence prevention. In FY 2007, the Postal Inspection Service produced a video titled "Workplace Violence: Stop it Before it Happens" as an additional tool to help employees learn how to resolve conflicts before they escalate to violence. Postal Inspectors will present the DVD during future talks with employees.
Following are examples of assault investigations conducted by Postal Inspectors in FY 2007.
n
Two former mail handlers were convicted in the U.S. District Court of Maryland of assaulting a federal employee on duty and inflicting bodily injury. The former mail handlers, who are brothers, attacked an acting manager of distribution operations (MDO) at the Incoming Mail Facility, Linthicum, MD. The acting MDO had been called when the brothers became verbally abusive to a supervisor who had instructed one of them to return to his work assignment. The brothers physically assaulted the acting MDO and another mail handler who came to the aid of the female supervisor. Prior to leaving the facility, the brothers threatened to return with guns. Postal Inspectors, Postal Police Officers, and Anne Arundel County Police responded to the facility and conducted a surveillance to locate the suspects. Inspectors worked with the U.S. Attorney's Office of the District of Maryland to obtain a federal indictment against the brothers. One brother entered a guilty plea on July 26, 2007, and
the other was convicted after a four-day trial on August 2, 2007.
n A man was charged with making criminal threats after threatening to harm his wife, who is a postal employee, her family and co-workers. He also threatened to set fire to the Post Office. Postal Inspectors and Los Angeles police conducted a joint investigation. During questioning, the man admitted to the crime, and a receipt for a 12-gauge Remington shotgun, purchased the day after he made the threats, was recovered during a search of his vehicle. Also recovered was a notebook containing references to killing people and having no feelings about it. A protective order was issued, barring the suspect from purchasing firearms or going within 100 yards of the Encino, CA, postal facility. Postal Inspectors obtained evidence that resulted in four additional counts of criminal threats. During a preliminary hearing on June 14, 2007, the judge ordered him held on a $2 million bond.
Robberies
Robberies pos
e a threat to postal employees, jeopardize the public's trust in the mail, and attack the financial integrity of the Postal Service. Postal Inspectors in all parts of the country receive expert training on how to safeguard employees and facilities against criminals, but the U.S. Mail and Post Offices likely will remain compelling targets for larceny.
Thieves who attack letter carriers seek mail containing valuables-such as jewelry, checks, or financial information-or keys to mail receptacles that give them greater access to even more mail. Those who target postal facilities are usually after cash and money orders.
Statistics for robberies that occurred in the past two fiscal years are shown in the chart below.
Postal Inspectors aggressively investigate postal robberies and attempted robberies. Following are examples of robberies investigated by Inspectors in FY 2007.
n A Maryland man was sentenced in August 2007 to 22 years in prison and was ordered to pay $88,520 in res
titution to the U.S. Postal Service. Postal Inspectors proved he committed the following crimes: robbery of the North College Park Post Office, robbery of the Congress Heights Post Office, armed robbery of a Postal Service motor vehicle services (MVS) driver at the Congress Heights Post Office, and the armed robbery of an MVS driver at the Oxon Hill Post Office. The man also attempted the armed robbery of a Dunbar armored truck delivering money to a Bank of America branch in Silver Spring, MD, during which he wore a postal uniform.
n A man was sentenced in June 2007 to 70 months in prison and three years' supervised release for the armed robbery of the Norland, FL, Post Office. The man and an accomplice were convicted for the March 2007 armed robbery. During a post-conviction proffer session with Postal Inspectors, the man also admitted to prior thefts from the Miami General Mail Facility in 1995. He was the primary suspect in that investigation but was never charged.
n A
highway contract route (HCR) driver was robbed on January 31, 2007, while picking up mail at the Bentonia, MS, Post Office. The suspect fled with four remittance bags. Postal Inspectors developed a suspect after concentrating their investigation on former and current employees and contractors familiar with the HCR route. When confronted with the evidence, the suspect admitted he had robbed the driver because he needed money. He was arrested by Postal Inspectors in March 2007 and convicted in August 2007.
n Two men were indicted in June 2007 by a federal grand jury in Charleston, SC, on a seven-count indictment charging them with the May 12, 2007, armed robbery of the Seabrook Post Office and use of a dangerous weapon to commit the crime. Both men were incarcerated at local county detention centers and held without bond.
n The Southwest Station Post Office in Jackson, MS, was robbed at gunpoint on May 25, 2007. Postal Inspectors received a tip from someone who saw the rewa
rd poster distributed throughout the area. Inspectors arrested a suspect on June 26, and the man was held without bond following an initial appearance before the magistrate judge.
Burglaries
Postal Inspectors in FY 2007 reported 201 burglaries at postal facilities nationwide. Because of increased security and aggressive investigations, roughly 97 percent of burglaries in the past fiscal year resulted in minor losses of less than $1,000.
Following are examples of postal burglaries investigated by Postal Inspectors in FY 2007.
n A man pled guilty in May 2007 on charges related to the burglary and arson of the Golden Gate, IL, Post Office. On February 16, 2007, the man and an accomplice broke into the Post Office and then set it on fire to conceal the crime. The Post Office was located in a leased building and was deemed a total loss. The suspect was sentenced to 10 years in prison for the burglary and seven years' imprisonment for the arson. His accomplice was se
ntenced to 16 years in prison.
n The Etna, ME, Post Office was burglarized the weekend of November 4, 2006. Postal Inspectors recovered blood from the scene, which was taken to the Maine State Police Crime Lab for DNA analysis. On November 20, a home-invasion crime occurred in the nearby town of Newburgh, and a man arrested for the crime was placed in custody of the Maine State Prison. When the suspect submitted a mandated blood sample, DNA analysis confirmed his blood matched that found at the scene of the Post Office burglary. On August 1, 2007, Postal Inspectors arrested the man, who was indicted for burglary of the Post Office.
No More Trouble: Postal Inspectors Nab Postal Burglar
U.S. Postal Inspectors received a report from a supervisor in June 2007 that someone had broken into Post Office Boxes in the 24-hour lobby of Arlington Station in Riverside, CA. Postal Inspectors responded and installed covert cameras in hopes of catching the criminal. After the statio
n was hit again in August and October, Inspectors were able to identify a suspect from the video. A woman appeared to be prying open the boxes with a screwdriver and removing mail.
Postal Inspectors distributed a wanted poster with photos from the surveillance tape in hopes of catching the suspect. Sure enough, a detective from the Riverside Police Department called Inspectors on October 30 to report that convicted felon Yvonne Rose Flores, who lived down the street from the Arlington Station, matched the photos. Flores was on probation for theft.
Postal Inspectors interviewed Flores while executing a search warrant at her home on November 1. They arrested her after she admitted to breaking into Post Office Boxes at least five times to steal mail containing checks, and said someone named "Michael" paid her $20 for each stack of mail or checks she produced. When she saw her picture on the wanted poster, she told Postal Inspectors the T-shirt in the photo read "I AM TROUBL
E." On November 27, 2007, Yvonne Rose Flores pled guilty to one count of burglary.
Dangerous Mail
The Dangerous Mail Group of the U.S. Postal Inspection Service develops protocols for and coordinates responses to reports of alleged or suspected dangerous items in the mail or at mail facilities. Postal Inspectors across the country respond to the incidents, resolve alleged and actual threats, and conduct investigations of the incidents and any related criminal activity.
Dangerous mail refers to mail containing explosives or biological, chemical, or radiological substances. Postal Inspectors receive specialized training and equipment to address these threats to the mail system and to the employees and customers who use it.
The Dangerous Mail Group partners with other agencies in the homeland security community and assists with national security programs. Postal Inspectors are assigned to full-time positions with the FBI's National Joint Terrorism Task Force an
d the Department of Homeland Security's National Operations Center. Postal Inspectors are also active participants in numerous homeland security and law enforcement working groups, including the federal Interagency Intelligence Committee on Counterterrorism and the National Counterterrorism Center. Furthermore, Postal Inspectors represent the Postal Service on the Postal & Shipping Sector Coordinating Council, one of 17 private sector councils under the Department of Homeland Security.
Biological or Chemical Hazards in the Mail
In FY 2007, the U.S. Postal Inspection Service responded to 3,049 incidents nationwide involving unidentified suspicious powders and liquids reported by postal employees, customers, or other federal agencies. The unidentified substances were found in the Postal Service's critical infrastructure, at postal facilities, or in the U.S. Mail. Postal Inspectors' investigations of such incidents resulted in 17 arrests in FY 2007. While the overwhe
lming majority of incidents are nonhazardous, the response by Postal Inspectors ensures that countless postal facilities are kept open rather than evacuated, resulting in fewer lost workhours, better productivity, and improved delivery standards.
Field-Screening Equipment for Unidentified Substances
Beginning in May 2005, the Postal Inspection Service began purchasing and deploying throughout the country the most advanced equipment of its type to perform screening for a wide variety of unidentified substances i