2001 Annual Report of Investigations of the United States Postal Inspection Service
Our Mission: Safety, Security, Integrity

A Message from the Chief Postal Inspector
November 2001

This 2001 Annual Report of Investigations of the United States Postal Inspection Service comes at the end of a year like no other in our history. During this time of tragedy following the terrorist attacks on our nation, I am proud to report that the U.S. Postal Inspection Service, one of the oldest federal law enforcement agencies in the country, has served America and all Americans with great honor and courage. During and after the attacks on September 11, 2001, the U.S. Postal Inspection Service stood tall, protecting postal employees and assets and assisting in restoring U.S. Postal Service operations swiftly and efficiently. We joined other law enforcement agencies in the investigation of these terrorist acts. We responded to every disaster site-and continue to respond-with the best our service has to offer: the unflagging dedication of the U.S. Postal Inspection Service, charged with safeguarding "the sanctity of the seal." In my testimony before the Senate Subcommittee on International Security, Proliferation and Federal Services on September 20, 2001, reproduced in part in this annual report, I spoke at length on the many acts, large and small, performed by the employees of the Postal Inspection Service since this tragedy occurred. I've never been prouder of how our employees handled themselves and answered the call to duty as they have during this crisis in America. I urge you to read this testimony, which I believe will reaffirm what I have always held to be true: the U.S. Postal Inspection Service, and all employees of the U.S. Postal Service, represent the best of what America is today. While we continue our work in responding to this tragedy, we have sustained our efforts in other important areas. Postal Inspectors this year arrested 11,873 criminal suspects, with 54 percent of the arrests for mail theft. Postal Inspectors additionally investigated 3,475 mail fraud cases in FY 2001 and responded to approximately 66,000 consumer fraud complaints. Mail fraud investigations resulted in 1,691 arrests, approximately $1.2 billion in court-ordered and voluntary restitution and 642 civil or administrative actions. In addition to numerous cases involving bombs, threats and injurious items in the mail, Inspectors arrested 335 suspects for child sexual exploitation offenses related to the mail and 1,662 suspects for drug trafficking and money laundering via the mail. Protecting the U.S. Postal Service's revenue and assets is integral to the mission of the U.S. Postal Inspection Service. Through their investigations of workers' compensation fraud this fiscal year, Postal Inspectors reported $99.2 million in long-term and continuation-of-pay cost-avoidance savings for the Postal Service. I proudly submit this account of our 2001 activities to the Postmaster General, the Postal Service Board of Governors and postal managers and employees across the country. Let all of America know that the U.S. Postal Inspection Service continues to serve this country with dedication and honor, preserving the safety, security and integrity of the U.S. Postal Service, postal employees, postal assets and the U.S. Mail. Kenneth C. Weaver 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 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 employees of a safe work environment. 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. Inspectors work closely with U.S. Attorneys, other law enforcement agencies and local prosecutors to investigate postal cases and prepare them for court. There are more than 1,900 Postal Inspectors stationed throughout the United States who enforce roughly 200 federal laws covering investigations of crimes that adversely affect or fraudulently use the U.S. Mail and postal system. To assist in carrying out its responsibilities, the Postal Inspection Service maintains a Security Force staffed by more than 1,400 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 five forensic crime laboratories strategically located in cities across the country. The labs are staffed with forensic scientists and technical specialists, who assist Inspectors in analyzing evidentiary material needed for identifying and tracking criminal suspects and in providing expert testimony for cases going to trial. The Inspection Service's 900 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 Postal Inspection Service. They perform a wide variety of tasks, including developing and continually upgrading information systems; providing forensic examinations of evidence; deploying electronic security and surveillance equipment; publishing policy handbooks and consumer awareness guides; supplying photography and video services; and facilitating direct communications with Congress and the public. The National Headquarters offices of the Postal Inspection Service are organized in functional groups that report to Deputy Chief Inspectors for Investigations, Security & Information Technology, and Professional Standards & Resource Development. The Postal Inspection Service has 18 field divisions, which report directly to two Deputy Chief Inspectors for field operations. Field offices are supported by five Inspection Service Operations Support Groups. The Inspection Service's Executive Committee, which comprises the Chief Postal Inspector, five Deputy Chief Inspectors and the three Inspectors in Charge who report directly to the Chief Postal Inspector, establishes the direction of the organization. The National Leadership Team consists of the Deputy Chief Inspectors and all Inspectors in Charge. The Postal Inspection Service's national information technology infrastructure supports about 4,300 users at more than 220 sites nationwide. Inspection Service offices are linked nationally via a dedicated frame-relay network, with online connections to the Postal Service, the National Crime Information Center, the National Law Enforcement Telecommunications System and the Internet. The Office of Inspections' threefold mission is to promote integrity and excellence in the Postal Inspection Service through independent internal investigations of its employees, oversee the quality and thoroughness of Inspection Service operations by conducting reviews of field divisions and headquarter units, and protect the safety of postal employees and customers by providing security and preventive services at National Headquarters. The Office of Counsel provides legal advice and services in support of Postal Inspection Service investigations, programs and goals, and processes requests for access to Inspection Service records. The Counsel's office comprises 20 Inspector-Attorneys and a support staff of paralegal specialists, information disclosure specialists, a labor relations specialist, a program specialist and an administrative support specialist. Charged with managing the Postal Inspection Service's internal and external communications, staff from the office of Congressional & Public Affairs (C&PA) issue news and video releases for national distribution, as well as preventive and informational publications for postal employees and the public. C&PA personnel represent Inspection Service interests on Capitol Hill and in liaison efforts with other government and law enforcement agencies. C&PA's Internet Web site provides weekly news updates and in-depth advice for the public on mail theft and mail fraud, and an Intranet Web site facilitates employee communications. 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 cases with other agencies aimed at curtailing widespread criminal acts of an organized nature. For more information on the Postal Inspection Service, please visit our Web site at www.usps.com/postalinspectors. Leadership Team of the United States Postal Inspection Service FY 2001 K.C. Weaver, Chief Postal Inspector J. Rowan, Deputy Chief Inspector, Security & Technology R. Coccia, Inspector in Charge, Information Technology R. Luers, Inspector in Charge, Corporate Information Management J. Easley, Inspector in Charge, Computer Crimes & Commerce D. Hill, Inspector in Charge, International Security T. Denneny, Inspector in Charge, Security K. Newman, Deputy Chief Inspector, Investigations L. Maxwell, Inspector in Charge, Fraud, Child Exploitation, Asset Forfeiture & Money Laundering K. Roberts, Inspector in Charge, Mail Theft & Violent Crimes K. Bond, Inspector in Charge, Revenue & Asset Protection Program R. Geffen, Inspector in Charge, Forensic & Technical Services I. Gillis (Acting), Deputy Chief Inspector, Professional Standards & Resource Development J. Stinchfield, Inspector in Charge, Strategic Planning & Management Process J. Somerset (Acting), Inspector in Charge, Career Development L. Visos (Acting), Inspector in Charge, Finance & Administrative Services N. Johnson, Manager, Human Resource Performance L. Heath, Deputy Chief Inspector, Field Operations-East Inspectors in Charge: J. Belz, Florida A. Crawford, Mid-Atlantic J. Skidmore, New York Metro K. Burke, North Jersey/Caribbean K. Jones, Northeast I. Carle, Philadelphia Metro W. Mitchell, Southeast A. Clemmons, Washington Metro J. Birch, Western Allegheny M. Ahern, Deputy Chief Inspector, Field Operations-West Inspectors in Charge: R. Dodd, Gulf Coast A. Davidson, Michiana R. Bowdren, Midwest A. Kiel, Northern California M. Phanco, Northern Illinois R. Morgan, Northwest M. Cobos, Rocky Mountain J. Freeman, Southern California A. Holmes, Southwest L. Katz, Inspector in Charge, Office of Counsel E. Crespo (Acting), Inspector in Charge, Office of Inspections D. Mihalko, Inspector in Charge, Congressional & Public Affairs Excerpts from the testimony of Chief Postal Inspector Kenneth C. Weaver before the Senate Subcommittee on International Security, Proliferation and Federal Services September 20, 2001 Thank you, Mr. Chairman, and members of the Subcommittee for the opportunity to appear today. I have a written report of the activities of the United States Postal Inspection Service and would like to have it entered into the record. Mr. Chairman, today I am wearing an American flag on my lapel in place of the Postal Inspector lapel pin that I normally wear. I have served in the Army, as you have, under this flag. I have served under this flag in Vietnam. I have served under this flag for 30 years in the United States Postal Service, 27 of them as a Postal Inspector. As the Chief Postal Inspector, I've always been proud of the outstanding work performed by the men and women of the Postal Inspection Service. But I've never been prouder of how Inspection Service employees handled themselves and answered the call to duty than I have during this crisis. The tragic terrorist events of last week have impacted all people of our nation. The Postal Inspection Service immediately took action in support of the Postal Service and all Americans. Across the country, Inspectors, Postal Police Officers and support personnel have performed acts of heroism and provided significant security and investigative assistance that have truly impacted the nation. The Inspection Service has the responsibility to ensure the safety and security of postal employees, facilities and assets, as well as the U.S. Mail. We have done just that. And we have done more. I visited New York yesterday to express my heartfelt appreciation to all our people for the outstanding effort they have put forth during this crisis. Although shaken from the attacks, there is a "steely" New York resolve to put things back together. I saw it in the eyes of our employees. They will not be defeated. Let me outline more specifically responses of Postal Inspection Service personnel since the terrorist attacks. Our New York Metro Division suffered the most serious effects of the attacks. The postal facility across from the World Trade Center, Church Street Station, was the office for numerous Inspectors, Postal Police Officers and support staff, as well as for employees of our New York Crime Lab. The station sustained extensive structural damage from the initial explosion, and from the ash and falling wreckage resulting from the collapse of the World Trade Center towers. Remarkably, the Crime Lab remains intact, with only slight damage. Inspectors at Church Street assisted civilians and local police officers injured in the attack, evacuating the area as glass and debris fell to the ground. Since the attacks, Postal Inspectors in New York and at outlying offices have been following up on the numerous bomb threats that have forced evacuations of postal facilities. Inspectors are also working with the FBI on investigative leads in the New York area. When the attack on the Pentagon occurred, Postal Inspectors from the Washington, DC, area responded to assist FBI agents with evidence collection at the crash site. In Somerset County, Pennsylvania, a team of Inspectors from the Pittsburgh area reported to the plane crash site to assist in securing that site and the mail. Three teams of Postal Inspectors are rotating shifts at the FBI Command Center. Since the attacks, the Postal Inspection Service has provided significant investigative assistance and support to the FBI, the Federal Aviation Administration (FAA) and emergency management agencies across the nation. As part of our role in national security, an Inspector was dispatched to the Federal Emergency Management Agency secure command post to participate with representatives from more than 25 federal agencies to continue operation of the government. As the Postal Service has dealt with moving the mail during the last week, the Inspection Service has worked to ensure mail security nationwide. The Amtrak network has been implemented, and Postal Inspectors are present at the 80 locations nationwide that will serve as transfer points for the mail. Since 1979 the Postal Service has had an aviation mail security program in place. In 1996, working with the FAA, the Postal Inspection Service tightened restrictions to further improve security. Although this may be an inconvenience to our customers, we feel it strengthens airmail security. Tragedies so often bring out the best in people. Unfortunately, tragedies also bring out those who would prey on the misfortune of others and on that very desire to help victims. These include the con artists who solicit donations for the families of victims, yet submit not a dime to those in need. Postal Inspectors will aggressively pursue those con artists, and we've offered some advice to the American public on how to make sure their donations go where they are intended. The safety and security of Postal Service employees is our top priority. Security must be a part of all postal employees' daily activities. We have advised employees of security precautions they should be taking to contribute to this overall effort. Information provided to us by employees has led to investigative leads, and has been helpful. Information was received that some of the hijackers were renting boxes to receive mail anonymously at commercial mail receiving agencies. As we've all too frequently seen, criminals hide behind the protection afforded by an address at a commercial mail receiving agency. The outstanding commitment to duty by all postal employees during this time of crisis is greatly appreciated by the Postal Service and the American public. The United States Postal Inspection Service will continue to keep employees safe, the mail moving and America's confidence in the mail intact. Mr. Chairman, that concludes my remarks. Mail Theft Opening quote: Postal Inspectors arrested 6,364 suspects for mail theft in FY 2001, with volume mail theft receiving the highest level of investigative attention. 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. Mail theft comes under the jurisdiction of U.S. Postal Inspectors, who are charged with preserving the "sanctity of the seal." Mail thieves have a number of opportunities to steal mail. Every day, more than 650 million letters travel across the country and around the globe. The mail is delivered to 145 million addresses six days of every week. And every day those millions of mailpieces-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. U.S. Mail is delivered to many different types of receptacles: mailboxes, collection boxes, apartment mailbox panels, relay boxes, carrier cart-satchels, co-op mailing racks, post office boxes, neighborhood delivery and collection box units, as well as countless varieties of ingenious, homemade mailboxes crafted to meet the federal standards set by the U.S. Postal Service, under the counsel of U.S. Postal Inspectors. Postal Inspectors know all this. They also know that, because mail can contain any number of valuables-not just jewelry and other expensive items, but personal and financial information, credit card applications and the like, criminals always try to steal it. Mail thieves employ an endless number of schemes that Postal Inspectors work hard to thwart. The Postal Inspection Service devotes significant resources to investigating and preventing mail theft. Mail theft rings are the agency's biggest concern. While mail is in transit at airports or on the road, highly organized criminal groups-who may recruit airline employees, postal contractors or postal employees to aid them-can make off with large volumes of mail. Any organization that employs mailroom personnel is at risk for mail theft. It is the job of U.S. Postal Inspectors to anticipate mail theft by deploying the best security technologies at hand, devising preventive tactics that protect postal employees and customers and offering initiatives to educate employees and the public at large about mail theft tactics. For more information on mail theft, visit the Postal Inspection Service Web site at www.usps.com/postalinspectors. Volume Mail Attacks Volume mail thefts, or "volume attacks," include as their targets postal vehicles, collection boxes, apartment mailbox panels, relay boxes, carrier cart-satchels, co-op mailing racks, five or more post office boxes, neighborhood delivery and collection box units (NDCBUs and CBUs) and carrier robberies. Volume mail attacks constitute an ongoing threat to postal customers and receive a high level of investigative attention. Although volume attacks are generally decreasing, problems remain in a few demographic areas. After a significant number of attacks occurred in California and Arizona in FY 2000, the Postal Inspection Service implemented new strategies in FY 2001 to target high-risk areas. Postal Inspectors in Arizona formed a task force to identify and halt criminal groups responsible for the majority of attacks in that state. Large-scale prevention initiatives designed to educate postal customers were also launched. A three-month media campaign in Arizona featured billboards posted at eight major public thoroughfares in Phoenix and 11 in Tucson, warning an estimated 60,000 residents per day, per billboard, about recent mail theft activity. Local television and radio broadcasts at the same time alerted customers to theft-prevention strategies, and Internet Web site postings offered customers additional advice on safeguarding their mail, as well as an on-line venue to report mail theft. Following are examples of volume mail attacks investigated and halted by Postal Inspectors in FY 2001. • Postal Inspectors in Phoenix, AZ, arrested a woman for a series of mail thefts in New Mexico, Colorado, Nebraska, Utah and Idaho. Inspectors searched her car incident to the arrest and found guns, drugs, checks, credit cards, counterfeit IDs, forged birth certificates and financial documents. She is believed to have stolen more than $1 million worth of checks from the mail. • A Fort Worth, TX, woman was sentenced to 30 months in prison and three years' supervised release after pleading guilty to two counts of possessing stolen mail. The judge cited her 21 prior felony convictions as the reason for his upward departure from sentencing guidelines. The woman was the subject of four previous Inspection Service investigations involving volume mail thefts from apartment panel boxes. • A Texas man was sentenced to 14 years in prison and three years' supervised release and was ordered to pay $275,000 in restitution, with a special assessment of $1,800. Postal Inspectors identified him as part of a ring in Houston that stole personal and business checks from the mail, created counterfeits of the checks and cashed them at various post offices across the country in exchange for stamps. • Five Nigerian suspects were indicted in Atlanta, GA, for conspiracy and bank fraud. Postal Inspectors determined the men used IDs from numerous victims to open fraudulent checking accounts and then deposit stolen checks, convenience checks and counterfeit checks into the accounts. They obtained debit cards for the fraudulent accounts to purchase postal money orders in amounts of $700 each, keeping the transactions under $3,000 to avoid federal reporting requirements. All of them used commercial mail receiving agency (CMRA) addresses to maintain their anonymity. Fraud losses associated with the scheme to date exceed $600,000. • Police in Scottsdale, AZ, responded to a forgery in progress at a local bank and brought a suspect back to the station for questioning. After determining he was part of a mail theft ring in Mesa, police notified Postal Inspectors in the Phoenix Volume Mail Theft Task Force. The suspect provided Inspectors with the locations of two major players in the mail theft ring, one of whom had an outstanding arrest warrant from the Postal Inspection Service. Las Vegas police officers and Postal Inspectors confirmed the fugitive was staying at a hotel in town and was armed. The Las Vegas Metro Police SWAT Team reported to the hotel, and a Postal Inspector made telephone contact with the suspect, convincing him to give himself up. The other suspect was located and arrested the same day. Both men were alleged to have been stealing mail from NDCBUs and CBUs in East Phoenix Valley for more than two years as part of a ring of at least 50 others. Quote: In the Southwest portion of the country, the increase in volume mail theft is directly related to the increase in methamphetamine abuse. Volume mail attacks increased nationally from 3,929 in FY 2000 to 6,752 in FY 2001. Graph Volume Mail Attacks: Five-Year Trend FY 97: 4,776 FY 98: 4,550 FY 99: 3,435 FY 00: 3,929 FY 01: 6,752 Identity Theft Identity theft occurs when a thief steals someone's personal identifying information to take over their bank accounts or fraudulently apply for credit in their name. The most common identifiers used are name, address, date of birth, Social Security number and mother's maiden name. The majority of identity theft schemes involve the U.S. Mail. Postal Inspectors work with bank and credit card issuers, financial institutions, retail merchants, credit bureaus and government agencies to educate merchants and consumers about identity theft and provide guidance to victims. Other Inspection Service cases in FY 2001 in this area follow. • A California judge sentenced a man to 51 months in prison and ordered him to pay restitution of more than $400,000. Postal Inspectors determined that, between 1990 and 2000, he had recruited numerous individuals to steal mail from residential mailboxes in the Hollywood Hills area of Los Angeles, CA. The man rented boxes at CMRAs and diverted his victims' credit card and bank mail to those addresses. He also opened new accounts in victims' names and had the mail sent to the CMRAs. The CMRA business was implicated as a willing participant in the fraud. Postal Inspectors have located more than 100 victims of this scheme, and known losses exceed $400,000. At sentencing, the judge stated that if the guidelines permitted he would sentence the man to an additional 51 months in prison for his crimes against the American public. • Postal Inspectors and special agents from the Social Security Administration-Office of Inspector General (OIG) in Chicago arrested a man subsequent to the execution of two search warrants, one for a fictitious business in Wheaton, IL, and the other for his residence in Carol Stream, IL. Inspectors found he was using numerous CMRA addresses in Chicago to receive credit cards obtained via fraudulent applications sent through the mail. Further investigation revealed he was also using fictitious business names, had rented office space at several locations and had applied for and received point of sale (POS) merchant terminals for the offices. He processed bogus merchant transactions through the terminals using the fraudulent credit cards and deposited the sales credits into his own bank accounts. To keep the cards in good standing, he paid the minimum balances on the cards for a period of time, until finally the accounts were put into collection status. A conservative estimate of fraud losses from the scheme totals about $600,000. The suspect was on vacation in Mexico (which he funded with a fraudulent credit card) when the search warrants were executed and was arrested upon his return. • Postal Inspectors in New Jersey arrested five suspects for an identity-takeover scheme. One of the men was an account executive for a finance corporation. He allegedly convinced co-conspirators to submit false loan applications to his company in the identities of elderly victims in New Jersey. He then used his position in the company to approve the loans, knowing they were fraudulent, and diverted most of the money to his own use. The finance corporation lost more than $400,000. • Postal Inspectors in Dallas-Ft. Worth, FBI agents, police officers from Bedford, TX, and the Dallas-Ft. Worth Airport Department of Public Safety executed a search warrant incident to a mail theft investigation that resulted in the arrest of three suspects for mail theft and credit card fraud. The suspects had been stealing mail to obtain personal identifiers, which they used to apply for fraudulent credit cards. The gang rented six CMRA addresses as mail drops for the scheme. More than 90 victims have been identified to date, and losses exceed $500,000. The case has been accepted for federal prosecution. • Postal Inspectors in Seattle, WA, and agents from the FBI, Secret Service and Social Security-OIG charged a woman with taking over the identities of numerous people. She hid her own identity and location by renting CMRA boxes in Washington, Hawaii and Oregon. After obtaining fraudulent credit cards with the stolen IDs, she opened a bogus business and set up a merchant acquirer account with several banks, running a tab of more than $240,000. She then opened a bank account in the name of a legitimate jewelry business in Seattle and contacted the bank that was the merchant acquirer for the business. Posing as the true owner, she convinced the bank to divert all $260,000 in funds from the business' credit card transactions to her own, fraudulent account. The investigation resulted in an eight-count indictment against the woman on charges of bank fraud, credit card fraud and identity theft. • Postal Inspectors and Secret Service agents in Jacksonville, FL, arrested a Nigerian national as he picked up mail at a CMRA. One of the letters contained a credit card that had been obtained via an account takeover. A consent search of the suspect's hotel room resulted in the recovery of numerous credit cards and a counterfeit Massachusetts driver's license, which bore the suspect's photograph but the name of a known identity theft victim. Several CMRA box keys, a storage locker key and the keys to a 1998 Ford Expedition were also seized. Paperwork in the hotel room revealed the vehicle had been purchased for $18,900 in four cash payments in April 2001, and an invoice showed the vehicle was due to be shipped overseas. The suspect could not be fingerprinted because an unknown process had obliterated his fingerprints. Inspectors are aware of at least five CMRAs he was using to receive credit cards obtained through account takeovers. To date, 75 victims have been identified, and losses exceed $100,000. Credit Card Theft • Postal Inspectors, Secret Service agents, Pembroke Pines police officers and agents from the Social Security-OIG in Miami arrested two women who were operating a large ring involved in credit card fraud and identity theft, using the names of recently deceased individuals. The arrest was based in part on information from the Miami Division's M.I.A.M.I. program (Mail Initiative Against Misappropriated Identities), which targets vacant addresses that are used for mail-related crime. Along with co-conspirators, the pair diverted mail from its intended destinations to CMRA addresses and vacant houses they used as mail drops. More than $1 million in losses have been identified. • Postal Inspectors in Washington, DC, initiated an investigation related to credit cards that were stolen from the mail and used to obtain cash advances, with losses exceeding $100,000. Inspectors met with bank investigators at a Credit Card Mail Security meeting hosted by the Postal Inspection Service, and coordinated a strategy to track future mailings and fraudulent transactions. They identified two suspects, a male and female, through bank surveillance photos. A bank investigator notified Inspectors when someone attempted to use a stolen credit card for a cash advance, and again when the card was used to purchase roundtrip train tickets from New York to Baltimore. Postal Inspectors set up surveillance at the train station and soon identified and arrested the female suspect, based on the bank photo. More arrests are expected. • Postal Inspectors and FBI agents in Newark arrested a Nigerian national on charges of bank fraud. The investigation began when an Inspector in Chicago discovered that Medicare checks exceeding $315,000 in value and destined to residents of a nursing and convalescent center in Clark, NJ, were instead deposited into the suspect's account. When a woman attempted to cash an altered check from Clark Nursing and Convalescent Center at a grocery store in Sayreville, NJ, the cashier refused to cash it and noted the woman's license plate number. The vehicle was registered to an acquaintance of the suspect, who worked at the Clark Nursing Center. • A Chicago judge sentenced a Nigerian national to two years in prison and five years' supervised release and ordered him to pay $141,765 in restitution; the Immigration and Naturalization Service will deport him upon completion of his sentence. The man was a central figure in a West African ring that negotiated stolen credit card access checks at banks in Chicago. Losses attributed to the scheme exceed $2 million. • A judge in Texas sentenced a Nigerian national to 27 months in prison, 36 months of supervised release and $65,000 in restitution. The man used other people's personal IDs to set up fraudulent bank accounts, into which he deposited stolen checks. He used several CMRAs to protect his identity. Fraud losses established at sentencing totaled more than $700,000. • A Portland, OR, woman pled guilty to four counts of identity fraud, bank fraud, misuse of a Social Security number and unauthorized use of an access device. She had been involved in an elaborate credit card scheme that bilked more than $500,000 from credit card companies and banks. She agreed to the forfeiture of a 2000 Chevy Tahoe valued at $30,000. The Postal Inspection Service and the FBI will share the proceeds equally from the sale of the vehicle. • A Nigerian national was convicted on five counts of bank fraud in Illinois after a three-day jury trial. Postal Inspectors in Chicago investigated the man for stealing credit card convenience checks from numerous credit card issuers and negotiating them via bank accounts in the Chicago area. Losses attributed to financial institutions exceed $2 million. He was taken into custody by U.S. Marshals, ordered held without bond and faces deportation upon completion of his sentence. • A Texas man was sentenced to 21 months in prison, three years' supervised release and restitution of $44,298. A Postal Inspector and an officer from the Dallas Police Department arrested the man, who was in possession of more than $5 million in counterfeit checks. He assisted the Postal Inspection Service and FBI with an undercover operation that resulted in the arrest and indictment of a West African national responsible for counterfeiting business checks stolen from the U.S. Mail. • A judge in Texas sentenced four men who pled guilty to conspiracy to commit bank fraud, fraud through access devices and possession of stolen mail. Their sentences ranged from one to five years in prison, with restitution exceeding $310,000. The gang used personal IDs stolen from the mail or via purse snatchings and vehicle and apartment burglaries. They assumed their victims' identities and opened credit card and bank accounts in their names, and used personal computers and stolen IDs to create counterfeit IDs and checks. As a protective measure, members of the ring dressed as women when using the fraudulent cards. One of their favorite activities was to rent and then steal luxury cars and SUVs from rental firms. Their convictions were the result of a joint investigation by Dallas-Ft. Worth Postal Inspectors, the Ft. Worth and Bedford, TX, police departments, the Dallas-Ft. Worth Airport Department of Public Safety and the FBI. Quote: The Financial Crimes Task Force of Southwestern Pennsylvania, active since 1995, comprises Postal Inspectors and representatives from the Pittsburgh Bureau of Police, the Allegheny County Police Department, the Allegheny County District Attorney's Office-Detective Unit, the U.S. Secret Service, the Federal Bureau of Investigation and the Treasury Inspector General for Tax Administration, among others. The group has had unprecedented success in bringing together local, state and federal law enforcement agencies, as well as local bank and merchant groups, to effectively stem the tide of financial crimes-almost always involving use of the mail-that plagued the area. Employee Mail Theft The overwhelming majority of Postal Service employees work conscientiously to move the nation's mail to its proper destination. They take their responsibilities seriously. Unfortunately, a small number of employees abuse the public's trust. It is the job of the Postal Inspection Service to identify dishonest employees and take steps to have them prosecuted and removed from the Postal Service. Following are examples of employee mail thefts investigated and halted by Postal Inspectors during FY 2001. • Postal Inspectors and Nassau County police detectives arrested a mail handler at the LaGuardia Airport Mail Center in Flushing, NY, in November 2000 for stealing mail. The employee met with an undercover detective on four occasions to sell 31 credit cards stolen from the U.S. Mail. The former employee was convicted and sentenced to three months' imprisonment. • Postal Inspectors arrested a processing & distribution center (P&DC) clerk in New Orleans, LA, for conspiracy and possession of stolen mail. At the time of the arrest, the employee was in possession of 120 U.S. Treasury checks worth $84,655 and 124 First-Class letters containing personal checks for credit card payments. On December 28, 2000, the clerk was convicted on all charges. As a result of the investigation, 11 other suspects from outside the Postal Service were arrested for negotiating the stolen checks supplied by the clerk. • A Pasadena, MD, rural letter carrier pled guilty in May 2001 to stealing 16 bank convenience checks and depositing them into his personal checking account. The carrier was ordered to pay $54,100 in restitution to a federal savings bank and was sentenced to five years in prison, suspended, and five years' probation. • A registered mail clerk was sentenced on July 27, 2001, to one year in prison and three years' supervised release and was fined $3,000 for stealing registered mail from the Lubbock, TX P&DC. The employee had stolen a sack of registered mail containing $25,000 in U.S. currency. During an interview with the employee and a consent search, Postal Inspectors recovered $24,500 of the cash from his vehicle and another $400 from his wallet. Quote: On August 17, 2001, Postal Inspectors arrested a registry clerk from the Phoenix, AZ P&DC for stealing registered mail. Postal Inspectors named the clerk as a prime suspect in the theft of approximately 464 registered mail remittances valued at $3.2 million, more than $1.8 million of which was in cash. The employee was reported as missing immediately after the loss in June 2001, and became a fugitive after a warrant was issued for his arrest. On August 17, an off-duty Postal Police Officer, spotted the clerk's vehicle at a hotel in Lynnwood, WA. Postal Inspectors who responded and initiated a surveillance of the scene later identified and arrested the fugitive clerk. A subsequent search of his vehicle and possessions led to the seizure of about $1.77 million in cash. The case is pending federal prosecution and the suspect is being held without bail in federal custody. Violent Crimes Opening quote: Increased attention by Postal Inspectors and Postal Service Threat Assessment Teams has resulted in a dramatic reduction of postal-related assaults and credible threats. Homicides, Assaults and Threats The U.S. Postal Inspection Service is committed to ensuring employee safety in the workplace. Postal Inspectors reported 799 postal-related assaults and credible threats during FY 2001 and made 378 arrests. Inspectors seek prosecution in assault cases when appropriate. Following are examples of investigations by Postal Inspectors during FY 2001. • A man was sentenced on March 26, 2001, to five life terms without parole and an additional 110 years in prison for murdering a letter carrier in Chatsworth, CA, and shooting other individuals on August 10, 1999, at a Jewish Community Center in Granada Hills. He was sentenced to serve two consecutive terms of life in prison and ordered to pay $690,294 in restitution. • A New York man was sentenced in February 2001 to 16 years in prison for the aggravated assault of a Postal Police Officer. Postal Inspectors determined the officer had been performing routine perimeter patrol at the Morgan General Mail Facility on June 2, 2000, when he was suddenly struck on the head, without warning or provocation, by a man wielding a 24-inch steel pipe. He suffered multiple skull fractures and has been unable to return to work despite intensive physical therapy. • A Mississippi man pled guilty in June 2001 to a carjacking that resulted in the death of a postal employee. Postal Inspectors determined he had carjacked a Bailey, MS, rural letter carrier while she was delivering mail on her route. Sentencing was scheduled after the man had testified against a second suspect in September 2001. • A Philadel-phia man was sentenced in November 2000 to 14 years and six months in prison for shooting a city carrier in Prospect Park, PA. Postal Inspectors alleged he struck and critically wounded the carrier with a high-powered rifle as she delivered mail on her route. The man was ordered to pay restitution of $261,054 to the Postal Service to cover workers' compensation payments and medical expenses incurred due to the carrier's disabling injuries. • After an investigation by Postal Inspectors in Tennessee, two men were indicted in May 2001 on charges of conspiracy to kidnap, kidnapping, carjacking, assault, obstruction of justice, wielding a firearm and aiding and abetting. The charges stem from the May 1 kidnapping and rape of a postmaster. The men were arrested by Postal Inspectors on June 11, and a trial date of October 24 was scheduled. • The estranged husband of a full-time postal distribution clerk in California took his own life on June 16, 2001, after shooting his wife multiple times while she was on duty at the East Stockton Station. The clerk is still recovering from her wounds. An investigation by Postal Inspectors disclosed she was in the process of obtaining a restraining order against her husband after nullifying a previous order. • Following a competency hearing on September 5, 2001, a New Jersey man was found not guilty by reason of insanity for his assault of a Bergenfield, NJ, letter carrier. The carrier was intentionally hit by the defendant's car on January 31, 2001, and was then stabbed in the back. He suffered a broken leg and stab wounds, but returned to limited duty in late February 2001 and to full duty in May. His attacker was diagnosed as paranoid schizophrenic and determined insane at the time of the assault. He was ordered committed to a mental institution for long-term psychiatric treatment and hospitalized until deemed no longer a danger to himself or others. The Postal Inspection Service works in partnership with postal managers and employee groups to identify incidents that can be dissipated through early interventions and to support other efforts to prevent violence in the workplace. As a result of these efforts, assaults and credible threats have continued to decline. Graph Assaults & Threats: Five-Year Trend FY 97: 1,426 FY 98: 1,255 FY 99: 1,063 FY 00: 1,037 FY 01: 799 Quote: After a four-year search, Postal Inspectors in Southern California arrested a federal fugitive on July 26, 2001, for the attempted murder of a letter carrier in March 1997. The carrier, who was delivering mail on his route in South Manhattan Place in Los Angeles, was shot in the neck and torso with a .25-caliber handgun. A search for the suspect led Inspectors to several states, including Georgia, Texas, Minnesota and Washington. The case was featured on "America's Most Wanted" in August 2000, but the man remained a fugitive until Inspectors arrested him at a car dealership in Hollywood, CA, where he was working under an assumed name. The maximum penalty for the crime is up to 20 years in prison, plus an additional penalty for using a firearm in the commission of a violent crime. Mail Bombs and Other Prohibited Mail Mail Bombs Historically, the motives for mail bombs and bomb threats often have related to personal and business disputes, with revenge being the common thread. In the interest of protecting postal employees and customers, the Postal Inspection Service considers the investigation of mail bombs among its highest priorities. In FY 2001, Postal Inspectors arrested 53 suspects in incidents related to mail bombs or bomb threats, including threats made against postal facilities, hoax devices, suspicious items in the mail and bombs or explosive devices that were placed in private mail receptacles. Postal Inspectors reported three mail bomb incidents during the past fiscal year. Examples of mail bomb incidents investigated by Postal Inspectors during FY 2001 follow. • A man in Portland, ME, was sentenced on October 17, 2000, to five years in prison for mailing a bomb threat to the Cape Neddick postmaster. An anonymous letter warned the postmaster that a student was going to place pipe bombs at the post office and a school; it named the student and included a map showing where the bombs could be found. Local police located the bombs and rendered them safe. Analysts at the Postal Inspection Service's Forensic Laboratory identified the suspect, who had allegedly raped a 12-year-old student that year and created the scheme to discredit her in the upcoming trial. • An Oregon man was sentenced on February 8, 2001, to four months of home detention on a tracking bracelet, five years' supervised release, restitution to the Postal Service of $1,280 and mental health counseling. Additional conditions specified he take certain medications, could not possess a firearm and could not drink alcohol or frequent locations where it is served. The man was suffering from mental problems when he constructed an improvised bomb device and placed it at the Klamath Falls Post Office on December 30, 1999. Postal Inspectors responded to the scene, and the local bomb squad rendered the device safe. • Postal Inspectors and FBI agents arrested a man on July 18, 2001, who was responsible for preparing and mailing two mail bombs. The first parcel was addressed to his wife at her place of work in Atlanta. When she opened the package at 9:50 a.m. in the company mailroom, the bomb failed to completely explode and she received only minor burns. Because she was in the process of a bitter divorce, Postal Inspectors focused on her husband as the prime suspect. Inspectors determined he had been in Atlanta, GA, the previous weekend and had stayed with his father. The father consented to a search of his home and business, where Inspectors and agents found batteries, wiring, boxes and packaging materials similar to the failed pipe bomb. On July 18, 2001, a second mail bomb was mailed to an office in Lawrenceville, GA. It only partially detonated and did not injure anyone. The husband is accused of mailing both bombs, the second one as a decoy. Graph Mail Bomb Incidents: Five-Year Trend FY 97: 18 Incidents, 1 Explosion, 1 Injury, 0 Deaths FY 98: 7 Incidents, 3 Explosions, 3 Injuries, 1 Death FY 99: 6 Incidents, 2 Explosions, 0 Injuries, 0 Deaths FY 00: 7 Incidents, 4 Explosions, 2 Injuries, 0 Deaths FY 01: 3 Incidents, 3 Explosions, 2 Injuries, 1 Death Quote: An 18-year-old college student was killed by a mail bomb on February 10, 2001, after receiving a package delivered to his San Jose, CA, home in the second week of January 2001. His parents gave him the package, which had been delivered before his visit home from college. The parcel contained a robotic toy dog, which exploded when he inserted batteries as instructed by an accompanying letter. Postal Inspectors and San Jose police responded to the scene, and a task force of Inspectors and local authorities was formed. Their investigation resulted in the indictment of two men on May 1, 2001, on three counts related to mailing an explosive device. Other Prohibited Mail • Fourteen letters, all appearing to come from the same person and containing an anthrax virus threat, were delivered in Orlando, FL, between February 5 and 7, 2001. An investigation by FBI agents, the Seminole County Sheriff's Office, Orlando Florida Police and Florida Department of Law Enforcement Agents is continuing. Another anthrax threat was mailed to 19 people in Sanford, FL, from February 28 through March 1, 2001; all appear to have been prepared by the same person and have fictitious return addresses. The investigation is continuing. Yet another anthrax threat was mailed to the Longwood Police Department on June 18, 2001, in Seminole County. The envelope contained a brown, powdered substance with an odor similar to the smell of curry. A note inside read: "This envelope contains anthrax, go to the hospital or die." Preliminary lab results indicated the powder did not contain anthrax or any other harmful substance. An investigation by Postal Inspectors, FBI agents and the Seminole County Sheriff's Office is continuing. • Two ranchers in rural Osceola County, FL, received letters in April 2001 claiming the paper on which the letters were written was infected with hoof-and-mouth disease. Each bore a return address of Lawson Cattle Equipment, Inc. in Kissimmee, FL. A note inside read: "This piece of paper has now entered the United States of America. Compliments of P.E.T.A." An investigation by Postal Inspectors, FBI agents, agents from the U.S. Department of Agriculture and the Osceola County Sheriff's Office is continuing. • A San Diego man was sentenced on June 11, 2001, to three years in prison for hate crimes after pleading guilty in March to three counts of federal civil rights charges that included harassing four civic leaders with anti-Semitic propaganda and defacing a synagogue. As part of the plea agreement, he was required to meet privately with and apologize to his victims. He admitted leaving threatening messages at the homes and offices of his victims, as well as racist propaganda and a gift box containing a dummy grenade. He has been held in isolation at the Metropolitan Correctional Center since his arrest by Postal Inspectors on November 9, 2000. • Postal Inspectors investigated a Pittsburgh man who was sentenced to two years' probation in January 2001 for wire-tapping, harassment and other charges related to the mailing of anonymous, threatening letters to his former fianc้e at her office at U.S. Airways World Headquarters. The letters accused her of soliciting airline passengers for sex. He had secretly videotaped himself and his ex-fianc้e having sex and mailed the tapes to her office, stating they were evidence of a sexual encounter for money. Poster: SPECIAL REWARD Up to $1 million. For information leading to the arrest and conviction of the individual(s) responsible for the mailing of letters containing anthrax to Tom Brokaw at NBC and Senator Tom Daschle. The mailings took place in the Trenton, NJ, area on or about September 18 and October 9, 2001. Anyone having information, please contact America's Most Wanted at 1-800-CRIME TV or www.amw.com. All information will be held in strict confidence. Reward payment will be made in accordance with the conditions of Postal Service Reward Notice 296, dated February 2000. Robberies and Burglaries Robberies Robberies are 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 both employees and facilities against criminals, but the U.S. Mail will likely always remain a compelling target 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. Postal Inspectors also investigate robberies of postal remittances and trucks (as well as "highway contract route" trucks) that transport valuable registered mail. This type of robbery often depends on the "inside" knowledge of a postal employee, who can provide important details to an accomplice on truck arrivals and departures. Statistics for robberies that occurred in the past two fiscal years are shown in the chart below, and five-year robbery trends are depicted in the graph above. Following are summaries of robberies investigated by Postal Inspectors in FY 2001. • An investigation by Postal Inspectors in Massachusetts resulted in a sentence of life imprisonment without parole for a man who robbed a postal facility. The October 2000 sentence was based on the federal "three strikes" law that mandates life imprisonment for career criminals who commit a federal crime of violence and have two or more other convictions for serious felonies. His sentence follows two previous convictions-he robbed a letter carrier in June 1995 and attempted to murder a witness to that robbery in July 1995. • A North Carolina man was sentenced on February 9, 2001, for the May 2000 armed robbery of the Biscoe, NC Post Office. He was ordered to serve 85 months in prison and three years of supervised release, and must pay $3,250 in restitution to the Postal Service, which will be secured through the Inmate Financial Responsibility Act. The court also ordered him to complete a drug treatment program while incarcerated. • Postal Inspectors apprehended a man who tried to rob the Skokie, IL Post Office on December 22, 2000, resulting in a six-year prison sentence that began in March 2001. Because his previous criminal history included convictions for rape and deviant sexual assault, this latest offense was rated a "Class X Felony." In Illinois, such felons are not eligible for parole or early release and must serve their entire sentences. • The post office at Schodack Landing, NY, was robbed at gunpoint in July 2000. The robber tied the hands and feet of the postmaster and left him at the rear of the office, fleeing with $2,000 in postal money orders and $44 in cash, as well as the postmaster's wallet. He was apprehended that same month while attempting a burglary in Albany, NY, and pled guilty in September. On June 28, 2001, he was sentenced to 15 years and eight months' imprisonment and five years of supervised release, and was ordered to pay $2,000 in restitution to the Postal Service. Graph Robberies: Five-Year Trend FY 97: 233 FY 98: 161 FY 99: 130 FY 00: 116 FY 01: 89 Quote: From 1997 through 1998, several post office robberies in the San Francisco Bay area involved a similar use of guns and physical force on customers and employees. In each case, blank postal money orders were the main target. After another post office was robbed and a money order imprinter was taken in April 1998, Postal Inspectors formed a task force for a more intensive investigation, eventually arresting 17 suspects for possessing and negotiating the stolen money orders. The suspects later received sentences ranging from six months to two years in prison. During his trial, the leader of the ring attempted to have a key witness in the case killed, but Postal Inspectors were able to stop the "hit" just in time. On June 19, 2001, the ringleader was charged with robbing the post offices and witness tampering, and now faces a possible 32 years in federal prison-25 years for armed robbery and seven years for tampering. Quote: FY 00: 5 facility robberies with physical injury and 56 without physical injury for a total of 61 facility robberies; 2 carrier robberies with physical injury and 31 without physical injury for a total of 33 carrier robberies; 5 other robberies with physical injury and 17 without physical injury for a total of 22 other robberies. In FY 00, the total robberies with physical injury was 12 and the total robberies without physical injury was 104 for a grand total of 116 robberies during FY00. FY 01: 3 facility robberies with physical injury and 41 without physical injury for a total of 44 facility robberies; 5 carrier robberies with physical injury and 20 without physical injury for a total of 25 carrier robberies; 1 other robbery with physical injury and 19 without physical injury for a total of 20 other robberies. In FY 01, the total robberies with physical injury was 9 and the total robberies without physical injury was 80 for a grand total of 89 robberies during FY01. Quote: Chief Postal Inspector Kenneth Weaver honored five Baltimore letter carriers in a ceremony held in August 2001 at the Raspeburg, MD Post Office. The carriers were victims of a series of armed robberies that occurred as they delivered mail on their routes. The Chief Postal Inspector presented them with certificates of appreciation for their courage and dedication to duty. With the assistance of the carriers, Postal Inspectors and local police apprehended and arrested two suspects for the crimes. Burglaries The Postal Inspection Service continues to see a significant decrease in the number of postal burglaries occurring over the past five years, although a few problems remain in rural areas of the country. About 81 percent of the burglaries in FY 2001 resulted in losses of less than $1,000; in the case of stolen postal money orders, fewer than 100 were taken. The graph at right depicts postal burglary trends over the past five years. Following are examples of burglaries investigated by Postal Inspectors in FY 2001. • A man in North Carolina was sentenced to 10 months in prison and three years of supervised release in January 2001 after Postal Inspectors proved he burglarized the Wingate, NC Post Office in September 2000. He was ordered to pay the Postal Service $750 in restitution and receive mental health treatment after serving his prison term. • On January 9, 2001, an Ohio man was sentenced to one year in prison and three years of supervised release, with restitution to the Postal Service of $5,938 for the burglary of the East Rochester, OH Post Office on January 24, 2000. • From January 25 through February 24, 2000, five post offices were burglarized in Lake County, CA. Each office was entered the same way, and in each case stamps and cash were stolen by destroying the vending machines. Postal Inspectors identified three suspects in the case, and state arrest warrants were prepared. One man cooperated with Postal Inspectors and pled to lesser charges. In July 2001, the other two men were each sentenced to serve three years in a state correctional institution. Graph Burglaries: Five-Year Trend FY 97: 466 FY 98: 367 FY 99: 291 FY 00: 294 FY 01: 286 Mail Fraud Opening quote: A Florida Inspector interviewed a man who had solicited donations for "Victims of WTC." Although he claimed he would forward checks received at his post office box to a charity, he signed a Voluntary Discontinuance of his operation, and the Inspection Service issued a Withholding Mail Order to ensure such mail would be returned to senders. The Mail Fraud Statute is the oldest and most effective of the consumer protection laws, and the Postal Inspection Service is the federal law enforcement agency mandated by Congress to enforce it. To increase their efficiency in investigating suspected mail fraud, 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 on fraud schemes that involve the mail is an essential component to meeting this goal. Postal Inspectors work cooperatively on joint task force investigations with other law enforcement agencies to take advantage of the expertise of each agency and to leverage resources. Of the more than 1,900 Postal Inspectors across the nation, about 300 are assigned to mail fraud investigations. Inspectors investigated 3,475 fraud cases this past fiscal year, and Inspection Service analysts responded to approximately 66,000 mail fraud complaints. During FY 2001, Postal Inspectors arrested 1,691 mail fraud offenders, and 1,477 were convicted as a result of Inspection Service investigations. Mail Fraud Against Businesses Postal Inspectors work diligently to protect the business community from being victimized by mail fraud. Examples of Postal Inspection Service case activity in FY 2001 follow. • An Illinois doctor and a hospital he controlled agreed to pay the United States and the state of Illinois $14 million to settle allegations that he and the hospital defrauded Medicare and Medicaid over an eight-year period. It was the second-largest settlement for health care fraud ever recorded in Chicago. Postal Inspectors and FBI agents uncovered a scheme in which the doctor paid kickbacks to conspirators, who submitted false claims for services that were either medically unnecessary or improperly reported. • A Postal Inspection Service investigation resulted in the sentencing of two former employees of one of the world's largest petroleum and chemical product handlers, located in Trenton, NJ. Their bid-rigging scheme relied on kickbacks to fraudulently obtain $30 million worth of construction contracts, for which they overbilled clients by approximately $3.3 million. One man was sentenced to three years and 10 months in prison, three years' probation and $1.2 million in restitution; the second was sentenced to two years and nine months in prison, three years' probation and restitution of $900,000. • New York Postal Inspectors joined at least 100 law enforcement officials on a task force investigation that resulted in the arrests of nine suspects. The team targeted a criminal enterprise involved in numerous fraud schemes that reaped more than $4.5 million from insurance companies, the Internal Revenue Service and other entities. The ring used an elaborate web of false IDs and more than 100 addresses in the United States and Canada to insulate themselves from detection and rented boxes at commercial mail receiving agencies (CMRAs) to increase their anonymity. • A Kansas man was sentenced to three years and five months in prison and ordered to pay $1.5 million in restitution to victims of his scheme. Postal Inspectors found that, while running a title company, the man cheated home mortgage holders and real estate investors out of more than a million dollars, using the money entrusted to him for personal gain. • Postal Inspectors in Cheyenne, WY, obtained guilty pleas from two defendants who defrauded automobile dealerships and their customers through a gasoline voucher incentive program. The dealers mailed fuel vouchers worth up to $500 to their customers; they had purchased the vouchers from the defendants for about 10 percent of actual fuel costs, believing the vouchers were approved by major oil companies. None of the customers received reimbursement, and the scammers took in approximately $3 million from 1,300 businesses. • In Minnesota, the central figure in an extensive insider trading and securities fraud and his two sons pled guilty and agreed to criminal fines and forfeiture of approximately $6 million in July 2001. The defendants used their positions of trust to obtain and illegally use non-public information in transactions with publicly traded companies. The defendants admitted they profited personally by using "inside" information. Postal Inspectors conducted the investigation with agents from the IRS and FBI. • Two Pennsylvania suspects entered guilty pleas, one for mail fraud and the other for tax evasion, for a scheme to submit more than 800,000 unredeemed manufacturers' coupons to a coupon clearinghouse for repayment. As part of a plea agreement, one of the suspects agreed to pay $400,000 in restitution, $300,000 of which will be distributed to members of the Coupon Information Corporation, which comprises local, state and federal law enforcement agencies. Mail Fraud Against Consumers Americans receive thousands of unsolicited phone calls from telemarketers each year trying to sell a variety of products. Most are legitimate, but unscrupulous telemarketers can be the smoothest of operators, successfully swindling the public out of millions of dollars. Older citizens are often targeted by these scamsters. Indeed, those on fixed incomes who fall prey to these schemes can lose their entire life savings. Telemarketing fraud costs Americans an estimated $40 billion each year. The Postal Inspection Service emphasizes the importance of consumer awareness and prevention as the best protection for consumers, but many people still "take the bait." Examples of Postal Inspection Service case activity in FY 2001 follow. • Three defendants were convicted for operating two illegal telemarketing operations in California that defrauded 2,200 mostly elderly victims of more than $1.2 million. They ran a bogus business that induced victims to order magazines by promising them valuable prizes. Most victims received nothing at all, while others received cheap watches or magazines worth far less than what was advertised. • Project Colt, a cross-border telemarketing fraud task force of Postal Inspectors and other U.S. and Canadian law enforcement officers, disrupted a Canadian prize-recovery scheme after an intense three-month investigation. Telemarketers posing as lawyers, court officers, law enforcement or other government officials telephoned victims of previous prize promotions-principally elderly Americans-falsely claiming they had leads to substantial sums of money that rightfully belonged to the victims. Victims paid large sums of money to the operators as a "recovery fee," but received nothing. • An investigation by Postal Inspectors in Massachusetts, Florida and Michigan ended a multi-state telemarketing operation that scammed 20,000 victims of $12 million. Timeshare owners were enticed by offers to trade their timeshares in return for a $400 property appraisal. They were mailed "appraisals" printed from a database at a cost of roughly $25 each. • The operator of a multi-state, telemarketing advance-fee promotion was indicted by a federal grand jury in Denver, CO, on 22 counts of mail fraud. Postal Inspectors found the defendant had promised his victims that, for a $25 advance fee, they could become market research analysts, earning money by testing new products and providing feedback to participating companies. More than 45,000 people lost an estimated $1.3 million. Other types of fraud conducted though the mail that may victimize postal customers are described in the cases that follow. • Four individuals in Florida received sentences of two to 27 years in prison for running a Ponzi scheme. Postal Inspectors determined the four had solicited contributions from individuals and church groups via the mail by promising to double their victims' money through investments in gold certificates. More than 18,000 victims mailed the operators an estimated $448 million. Only the operators got rich. • A scheme uncovered by Postal Inspectors in Illinois resulted in guilty pleas and an agreement to pay a fine of $27.5 million. After a nationally known battery manufacturer signed a contract with a major battery retailer, the manufacturer found it was ill-equipped to meet the retailer's needs. Roughly 750,000 batteries were rushed through production, resulting in obvious, as well as latent, defects. Manufacturing officials knew of the defects prior to their rollout, but remained silent. When the defective batteries hit the market, the retailer was met with an avalanche of customer complaints and returned batteries. • An Oregon cattle fraud scheme investigated by Postal Inspectors was cited as the largest case of financial fraud in the state's history, robbing 4,500 investors from 41 states of more than $100 million. The scam involved fraudulent cattle breeding and Individual Retirement Account (IRA) investments. The sentencing judge stated that the scheme's kingpin was the "craftiest criminal" he had sentenced in 38 years on the bench, ordering him to spend 19 years and seven months in prison and pay $102 million in restitution. Five other defendants were sentenced to a total of 13 years and six months in prison and ordered to pay more than $198 million in victim restitution. Total restitution to victims exceeds $300 million. • Postal Inspectors in Philadelphia investigated two men who were sentenced in federal district court for a phony AIDS treatment scam that promoted the use of ozone gas to treat people infected with the virus. One man was sentenced to five years in prison and ordered to pay $168,152 in victim restitution, and the other was ordered to serve three months in prison. • The chairman and chief executive officer of a New York company that designs and sells women's shoes pled guilty in the Southern and Eastern districts of the state. Postal Inspectors found he was involved in 23 fraudulent initial public offerings (IPOs) underwritten by two now-defunct broker-dealers. Under the terms of a plea agreement between the company and the government, the defendant faces a potential sentence of 41 to 51 months in prison and victim restitution of approximately $5 million. • Two men doing business as a commercial tax service were indicted in Florida in August 2001 on mail fraud charges. Their scheme related to the Economic Growth and Tax Relief Reconciliation Act of 2001, which directed the U.S. Treasury to mail tax rebate checks to a majority of Americans. The company mailed about 25,000 solicitations to consumers promising that, for $17.95, it would identify how much tax credit the consumer was entitled to receive and "ensure proper delivery." To protect consumers, Postal Inspectors requested a Withholding Mail Order and a False Representation Order for all mail sent to the Boca Raton address, which was a commercial mail receiving agency. The case was the subject of a House Ways and Means Committee hearing, and the investigation is continuing to determine if other suspects were involved. Fraud on the Internet Cybercrime presents unique challenges to law enforcement groups. Postal Inspectors investigate Internet fraud when the U.S. Mail is used as part of the scam. Traditional mail fraud schemes are rebounding with new success on the Internet, expanding the victim base and providing increased anonymity. In response to this growing threat, the Postal Inspection Service formed the Internet Mail Fraud Initiative, which trains Postal Inspectors across the country on specialized techniques and strategies that target cyberscammers. Postal Inspectors also work with analysts at the Internet Fraud Complaint Center, the Federal Trade Commission's Consumer Sentinel and the Postal Inspection Service's Fraud Complaint System (FCS), soliciting and receiving fraud referrals for investigative attention. A major outcome of the Internet Mail Fraud Initiative was that FCS was enhanced to receive online complaints directly from Internet users. In May 2001, the Postal Inspection Service worked with the FBI on Operation Cyber Loss, a national task force targeting fraud schemes on the Internet. Designed to increase public awareness of this rising trend, the results of the task force's efforts were announced at a press conference held in Washington, DC, on May 23, 2001, with the Department of Justice and the FBI. Operation Cyber Loss resulted in approximately 61 investigations of fraud schemes, 30 searches and seizures, 64 arrests and convictions and 96 indictments. Altogether, investigators identified 57,662 victims of fraud who had lost a total of more than $118 million through Internet fraud schemes. Other examples of Inspection Service cases in this area follow. • Postal Inspectors and recording industry officials arrested a Miami man who was using the Internet and U.S. Mail to sell pirated compact discs, cassettes and videos. He only accepted payments mailed to his post office box in the form of credit cards, money orders or cashier's checks. After establishing a Postal Service customer account, he used more than 700 domestic and Global Priority Mail envelopes and mailers each month. The defendant was sentenced to one year of probation in April 2001. • Postal Inspectors arrested a Nashville, TN, man on charges of defrauding Internet customers of approximately $200,000. His auction Web site offered computer laptops to the highest bidder, but none of the "winners" who mailed money to the CMRA address controlled by the defendant received their merchandise. Quote: One of the Postal Inspection Service's Most Wanted fugitives was arrested as a result of a Kissimmee, FL, stamp and coin shop dealer's positive ID, made after she recognized one of her frequent customers from a Wanted poster on the Inspection Service's Web site. The suspect was indicted in February 2001 on charges related to the unauthorized use of credit cards obtained from Internet auction sites. Postal Inspectors had received complaints that the suspect used dozens of fake online personas to scam hundreds of thousands of dollars at Internet auction sites, taking victims' money but failing to mail their merchandise. Several news stories were posted by MSNBC.com after a reporter interviewed the Northeast Division case Inspector about the fugitive, naming him "the Internet's John Dillinger." Mail Fraud Against State, Local and Federal Agencies Government agencies and health care groups that fall prey to mail fraud scams are afforded the same protection under the Mail Fraud Statute as consumers and businesses. Examples of investigations in FY 2001 follow. • A Utah man was convicted in Newark, NJ, on charges of mail fraud and conspiracy to defraud the United States. Postal Inspectors revealed the man tried to sell, redeem and pass a counterfeit $100 million Federal Reserve note and bond (supposedly from 1934) as collateral for a $20 million cash advance, using brokerage firms in New York and New Jersey. Postal Inspectors determined the Federal Reserve never issued a public note for more than $100,000, and the Bureau of Public Debt never issued a $100 million bond in 1934. • After a task force of 65 law enforcement officers, including Postal Inspectors from Cleveland, was formed to address fraud in government programs, members arrested four individuals who were part of an organized group that illegally redeemed food stamps at grocery stores, as well as vouchers issued by the Women, Infants and Children (WIC) group. The Food Stamp Program lost $15.3 million over five years. • Postal Inspectors in New Jersey investigated 13 individuals who were convicted in a Medicare fraud scheme that netted in excess of $13 million. To date, 10 of the defendants have received prison terms of up to seven years and three months and were ordered to pay more than $10.5 million in restitution. Rebate Mail Fraud The Postal Inspection Service has worked closely with members of the rebate industry for nearly a decade to combat fraud and establish new strategies to increase the security of their operations. A major result of these partnerships was the creation of the Rebate Data Center (RDC), which captures and analyzes rebate fraud data for dissemination to pertinent investigative and industry groups nationwide. A rebate fraud scam that began in 1998 ended with the successful prosecution of four individuals who operated a chain of supermarkets in New York. The defendants illegally redeemed manufacturers' coupons for a profit of more than $5 million. In addition to bringing prosecutive action, Postal Inspectors initiated forfeiture proceedings. That action led to the October 19, 2000, presentation of a $3 million check to the Inspector in Charge of the New York Metro Division, representing the Postal Inspection Service's equitable share of the net proceeds of the forfeiture. Viatical Fraud Viatical settlement fraud occurs when material misrepresentations are made on life insurance applications, hiding the fact that the applicant has been diagnosed with a terminally ill condition, a practice known as "clean sheeting." Due to an increase in viatical settlement fraud, the Postal Inspection Service and the Federal Bureau of Investigation formed Operation Clean Sheet, a joint effort aimed at aggressively pursuing criminal prosecution and establishing preventive strategies that protect the insurance industry and consumers from fraud. Operation Clean Sheet investigators brought to justice a San Francisco man who was convicted of conspiracy to commit mail fraud. Acting on behalf of a viatical settlement company, he bought life insurance policies from terminally ill individuals who had lied about their illnesses on insurance applications. He brokered more than $8 million worth of life insurance policies to the viatical settlement company, for which he was paid a 2 percent commission. Administrative Actions Related to Mail Fraud In addition to criminal prosecution, Postal Inspectors frequently rely on civil or administrative actions to deter mail fraud. Below is a list of actions taken in FY 2001 to help stem losses from various fraud schemes Graph: FY 2001 Administrative Actions: 65 Complaints filed by the Law Department, 30 Consent Agreements signed, 35 Cease & Desist Orders issued, 39 False Representation Orders issued, 109 Withholding Mail Orders issued, 0 Temporary Restraining Orders issued, 361 Voluntary Discontinuances signed and 3 Civil Injunctions. Work-at-home scams target those who need money but are unable to work outside their residences. The scams usually promise big earnings and do not require prior job experience. Postal Inspectors take pride in putting the scammers out of business. The Postal Inspection Service conducted 47 such investigations during FY 2001 and reported 14 arrests, three Cease & Desist Orders, two False Representation Orders and 20 Voluntary Discontinuance Agreements. A Withholding Mail Order (Title 39, USC 3003) enables the Postal Service to withhold an addressee's mail if they are using a false or assumed name, title or address to conduct or assist with activity that violates 18 USC 1302 (lottery), 1341 (mail fraud) or 1342 (use of a fictitious name or address), until proper identification is provided and the person's right to receive the mail is established. Under 39 USC 3004, the Postal Service may withhold mail if the address is not a person's residence or business address, allowing them to remain anonymous. Examples of Postal Inspection Service case activity related to administrative actions in FY 2001 follow. • A company advertised "Superactivated Asparagus Tablets" as a diet remedy, claiming they would help people lose weight without dieting. Postal Inspectors learned that mail was being returned to the company's rented commercial mail receiving agency (CMRA) address at a rate of 20 to 40 packages a day. One customer returned a package with a note claiming the product made her sick. Expert testimony from forensic specialists confirmed the pills were useless. A False Representation Order halted further sales and ensured customer refunds. • A Civil Injunction issued in February 2001 against a company and its operator stopped use of the mail, wire or Internet to market, sell or dispense a combination of aloe vera and cesium as a treatment, cure or prevention for cancer or AIDS, and instructed the operator to cease representing himself as a doctor. Postal Inspectors presented at a hearing patients who paid $12,000 for treatment, as well as witnesses who testified that their relatives died during or shortly after the treatment. The operator had not earned a Ph.D and had no medical training. • Withholding Mail Orders, directing that all mail to an addressee be returned unopened to the sender, were used in two investigations to prevent further consumer losses. In one case, a Canadian used a CMRA address to operate a confidence and fortune-telling scheme via the mail. About 200 to 450 pieces of mail arrived at his box daily; the CMRA owner was under instructions to forward it to another CMRA address, thus preserving the fraudster's anonymity. The persistent schemer is the subject of several similar Postal Inspection Service investigations. • A False Representation Order was issued in April 2001 against a man who mailed a flyer advertising a "Black Inheritance Tax." Respondents were told that, by mailing him $51 if they filed single tax returns or $102 if they filed as a married couple, he would help them collect reparation checks from the government-allegedly earned by their ancestors who were held in slavery. Single filers were promised $40,000 checks and married filers were promised $80,000 checks. The Internal Revenue Service stated there are no such provisions in the tax code. Fraudulent Foreign Lottery Mail During FY 2001, 26 False Representation Orders (FROs) were issued against foreign lottery promoters. FROs enable Postal Inspectors to stop lottery mail-most of which contains checks-from leaving the United States and return mail to senders, thereby preventing victim losses. Two Withholding Mail Orders were issued by the Postal Service's judicial officer, one for a CMRA address in Phoenix, AZ, that collected remittances for a foreign lottery promotion and another in Arlington, TX. The promotion stated that European lottery pools were soliciting funds for a mutual lottery and participants could win huge amounts of money within 21 days for a fee ranging from $13 to $38. Due to quick action by Postal Inspectors, more than 7,800 First-Class letters were successfully detained and returned to senders under Withholding Mail Orders. To further combat illegal foreign lotteries, Postal Inspectors are working with U.S. Customs Service officials to stop such offerings from entering the U.S. mailstream. Customs agents contact Postal Inspectors when they find such mail during border searches. Inspectors detain the mail and provide samples to the Postal Service's Law Department to determine if they meet mailing standards. If the pieces are considered nonmailable, the mailer is notified that the material is subject to destruction and may appeal the notice. If the mailer fails to appeal or loses the appeal, the detained mail is destroyed upon the issuance of a Destruction Order. During this reporting period, 817,442 pieces of foreign lottery mail were destroyed prior to entering the mailstream. Since the initiative began in 1994, approximately 11.5 million pieces have been destroyed. Quote: If you believe you've been victimized by fraud conducted through the mail, notify Postal Inspectors at 1-800-FRAUD-IS (1-800-373-8347), or through our Web site at www.usps.com/postalinspectors. Child Exploitation Opening quote: The Postal Inspection Service produced a poster to raise public awareness of the National Center for Missing & Exploited Children's Cyber Tipline-and the need for parents to monitor their children's online activities. The poster was distributed for display at 40,000 post offices nationwide. Poster: Do you think your child is safe at home..., on the computer, talking with this person? Approximately one in five children received a sexual solicitation or approach over the Internet in the past year. If you suspect child exploitation, report it to the National Center for Missing & Exploited Children. 1-800-THE-LOST, 1-800-843-5678, www.cybertipline.com. Use of the mail to traffic in child pornography, or otherwise sexually exploit children, continues to be a significant problem. Child pornographers incorrectly assume the U.S. Mail will provide a safe, reliable and anonymous vehicle to traffic in this illicit material. Clearly, these criminals are unaware that Postal Inspectors have for years been regarded internationally as leaders in the fight against child exploitation. The exchange of child pornography by mail is often preceded or accompanied by communication over the Internet. Child molesters and pornographers often use the Internet to seek potential victims, communicate with like-minded individuals and locate sources of child pornography. Over the past several years, there has been an increase in unlawful computer transmissions and Internet ads for child pornography, which occur hand-in-hand with the trafficking of child pornography videotapes and computer disks through the mail. In FY 2001, 78 percent of child exploitation cases investigated by Postal Inspectors involved computers, as well as postal violations. The U.S. Postal Inspection Service has a long-standing reputation as a leader in the battle against child exploitation. Since the passage of the Child Protection Act of 1984, Postal Inspectors have conducted 4,134 such investigations, resulting in the arrests of 3,462 individuals who used the mail in violation of federal child pornography laws. In FY 2001, Postal Inspectors arrested 335 individuals on child sexual exploitation offenses related to the mail; Inspectors reported 259 convictions in such cases from this and prior fiscal years. Incident to a search of a suspect's property, Postal Inspectors often find evidence that the target of the investigation is also a child molester. As a result of Inspectors' casework this past fiscal year, 124 child molesters were identified and 114 child victims saved from further abuse. Attorney General John D. Ashcroft and Chief Postal Inspector Kenneth C. Weaver announced in August 2001 the successful conclusion of a two-year investigation that dismantled the largest-known commercial child pornography enterprise ever uncovered. Thirty federally funded groups comprise the Internet Crimes Against Children (ICAC) Task Force, which partnered with Postal Inspectors nationwide to launch Operation Avalanche, an undercover operation aimed at eliminating child pornography through the U.S. Mail and via the Internet. Administered and funded in 1998 through the Office of Juvenile Justice and Delinquency Prevention, under the Department of Justice, the ICAC Task Force program provides grants to state and local law enforcement agencies, which use them to build regional task forces that combat Internet-related crimes against children. Operation Avalanche began in 1999, when Postal Inspectors found that a husband and wife in Ft. Worth, TX, were using a Web site to advertise and distribute child pornography. The majority of their business profits came from the subscription sales of child pornography-in just one month, the business grossed as much as $1.4 million. In partnership with the Dallas Police Department's ICAC Task Force, investigators determined that customers could subscribe to child pornography Web sites through a Ft. Worth post office box or via the Internet. The site also had a classified ads section, allowing customers to place or respond to personal ads for child pornography. The National Center for Missing & Exploited Children's Cyber Tipline received more than 250 complaints against the Web site from citizens around the world. Task force members served federal search warrants at the business and the owners' home on September 8, 1999, resulting in an 89-count federal indictment against the owners for conspiracy to distribute and possess child pornography. They were convicted following a jury trial in December 2000. On August 6, 2001, the husband was sentenced to life in prison, and the wife was sentenced to 14 years' imprisonment. Selected Postal Inspection Service case activity in FY 2001 related to the use of the mail for child exploitation follows. • An alleged child molester was arrested in February 2001 in Pendeli, Greece, following a five-month investigation by Postal Inspectors and the Polk County, FL Sheriff's Department into the disappearance of a 14-year-old girl from Mulberry, FL. Postal Inspectors determined the man had used the mail and the Internet to lure the child from her home and convinced her to travel to Greece to be with him. She was recovered in Greece and returned to her family in Florida after Postal Inspectors served search warrants and found evidence leading them to identify and locate the suspect. • A Cedar Grove, NC, man was sentenced in federal district court on August 7, 2001, to 32 years and six months in prison, with 15 years of his sentence suspended, plus three years' probation and $8,100 in restitution. Postal Inspectors seized a large quantity of child pornography in January 2001, including videotapes and photographs of the suspect sexually abusing minor females. His victims included his two stepdaughters and a four-year-old girl. • A man from Glen Allen, VA, received a stiff sentence of 21 years and eight months in prison after an investigation by Postal Inspectors, FBI agents and members of the Henrico County Sheriff's Department. The man was a previously convicted child sex offender who tried to procure child pornography videos by mail. He offered to "sell" a 12-year-old boy for sexual activity to an undercover Postal Inspector. Inspectors also identified and rescued two neighborhood boys he had molested. • A 35-year-old Illinois man, who was an intensive-care nurse at several Chicago-area hospitals, pled guilty in federal district court on June 26 as a result of his arrest by Postal Inspectors for receiving child pornography by mail. The nurse admitted he sexually assaulted as many as 18 young girls and women who were under his care. He selected victims who were either in comas, unconscious or so sedated they could not defend themselves and were unaware of what had happened. State charges are pending. • The parents of several minor-age girls reported their children had received letters asking for sexual favors from a Pennsylvania man serving a two-year sentence for a Megan's Law violation. Postal Inspectors found letters and child pornography in the inmate's cell. He had previously served a 22-year sentence for the rape and attempted kidnapping of two eight- and 11-year-old girls. He was indicted in April 2001 on charges of child exploitation. • A Portland, OR, man who is terminally ill with the AIDS virus was sentenced on February 14 to five years and three months in prison. He admitted to engaging in sexual activity with more than 3,000 males, many of them minors. Postal Inspectors learned he picked up "street kids" and videotaped his sexual activity with them. He mailed copies of the tapes to friends he met on the Internet. Illegal Drugs and Trafficking Opening quote: Postal Inspectors arrested 1,662 suspects in FY 2001 for drug trafficking and money laundering via the U.S. Mail. The Postal Inspection Service interdicts mailings of illegal drugs and drug proceeds to protect postal employees from the violence often related to drug trafficking and to preserve the integrity of the U.S. Mail. Working in concert with other law enforcement agencies, Postal Inspectors arrested 1,662 individuals this fiscal year for drug trafficking and money laundering via the U.S. Mail. Seizures from the mail included more than 8,000 pounds of illegal narcotics and more than 288,000 units of steroids. Postal Inspection Service investigations also resulted in the seizure of more than $3.5 million in cash and monetary instruments, 20 vehicles and 64 firearms. The following paragraphs are examples of Postal Inspection Service investigations of illegal drug trafficking via the mail in FY 2001. • Postal Inspectors arrested a major figure in a heroin conspiracy ring that mailed narcotics from the San Francisco Bay area to Iowa City, IA. The defendant, who is a convicted felon, was found guilty in an Iowa federal court and sentenced on February 2, 2001, to 12 years and five months in prison. • U.S. Customs Service agents stopped a man at Miami International Airport as he returned from Cali, Colombia, after an investigation with Postal Inspectors disclosed he had shipped a suspect Express Mail parcel from Colombia to New Haven, CT. Postal Inspectors who intercepted the parcel obtained a search warrant and found it contained nearly two pounds of cocaine. Inspectors and agents arrested the man and executed another search warrant on his residence, where they seized a loaded handgun. On January 3, 2001, he was indicted on charges of importing cocaine, attempting to possess cocaine with the intent to distribute it and illegally possessing a firearm. Each drug charge carried a mandatory minimum five-year prison sentence and the firearms charge carried a 10-year sentence. • Postal Inspectors dismantled a methamphetamine ring operating in the South Jersey area over a one-year period, shipping and receiving approximately 20 pounds of the drug. Inspectors in San Diego, CA, arrested the mailer, who was sentenced in federal district court in New Jersey to 100 months' incarceration. Two other defendants in South Jersey were each sentenced to 60 months' incarceration, and another two suspects are awaiting sentencing. • Postal Inspectors arrested two men in Morristown, TN, who accepted an Express Mail package containing approximately 14 pounds of marijuana. A joint investigation by Postal Inspectors, agents from the Drug Enforcement Agency (DEA) and Morristown and Knoxville police identified one man as the leader of a cocaine and marijuana conspiracy responsible for mailing at least eight kilograms of cocaine and as much as 500 kilograms of marijuana. At its height, the group distributed about 80 pounds of marijuana a week. Through FedEx shipping records, Inspectors identified eight addresses the ring used at commercial mail receiving agencies. They shipped the packages via FedEx, UPS and the Postal Service, although they shipped all of the cocaine via Express Mail. Following a two-week trial, the two men were convicted on all counts. Five convictions have now been obtained in the case. On June 29, 2001, one man was sentenced to three years and four months in prison. Two others who were awaiting sentencing escaped from a county jail on July 12, 2001, and are fugitives. • A Boston man was sentenced on July 19, 2001, to two years in prison as the result of a joint investigation by Postal Inspectors, DEA agents, Massachusetts State Police and agents from the Food and Drug Administration. The man pled guilty to distributing controlled substances via the Internet. He obtained the drugs from a physician in Tijuana, Mexico, and a source in Madrid, Spain. • A Dallas, TX, man pled guilty on August 8, 2001, to possessing more than 100 grams of heroin. Postal Inspectors arrested him on May 29, 2001, when he accepted an Express Mail parcel containing the drugs and signed the receipt with a fictitious name. He initially denied knowledge of the heroin, which was concealed in jeans and boots. Postal Inspectors investigate the dealing and selling of narcotics by postal employees while on postal property or on duty. Information on the possession or personal use of illegal drugs by postal employees is referred through postal management to the Employee Assistance Program for attention. In FY 2001, Postal Inspectors arrested 43 postal employees suspected of possessing or using illegal drugs on duty; 32 employees were removed from the Postal Service. Following are examples of Postal Inspection Service investigations of narcotics-related offenses by postal employees during FY 2001. • Postal Inspectors and officers from the Detroit Police Department's Narcotics Unit arrested a mail handler at a bulk mail center on November 6, 2000, for possessing and delivering marijuana. The employee was the subject of a six-month investigation into the sale of controlled substances to postal employees while on duty and on postal property. He has since accepted an agreement to resign from the Postal Service and not seek re-employment, perform 150 hours of community service and submit to drug testing and substance abuse treatment. • A member of the Black Disciples street gang was arrested on June 1, 2001, for his role in selling crack cocaine to an undercover Postal Inspector in Chicago, IL. He had supplied the drugs to a letter carrier who had previously been arrested on drug charges. Both men were indicted on May 31 on federal charges for distributing a controlled substance and conspiracy to distribute. The gang member has since been convicted on those charges and was sentenced to more than 17 years in prison and five years' supervised release. The letter carrier pled guilty and was sentenced to six years in prison. He was also ordered to pay $2,660 in restitution to the U.S. Postal Service. • A mail handler in Kalamazoo, MI, was sentenced on June 18, 2001, to five months' imprisonment, three years' supervised release and payment of court costs and fines totaling $5,100 for possession with intent to distribute marijuana. Postal Inspectors arrested the employee and his associate, who was a juvenile probation officer for the state of Michigan. Inspectors and Kalamazoo Valley police identified the two as large-scale manufacturers and distributors of domestic marijuana. The mail handler is on indefinite suspension pending removal. • Postal Inspectors and Cambridge, MA, police arrested a postal custodian on August 2, 2001, for selling marijuana to an undercover Cambridge police detective. At the time of his arrest, he was working at a local post office. Quote: Postal Inspection Service personnel conduct interdictions to identify illegal narcotics in mailings at postal processing sites in major source cities and other locations. Asset Forfeiture and Money Laundering Opening quote: The U.S. Postal Service issues one-third of all domestic money orders sold in the United States, valued at $30 billion a year. In FY 2001, this translated into the sale of more than 228 million postal money orders nationwide. The U.S. Postal Inspection Service is charged with safeguarding the integrity of all postal money orders and protecting them from criminal misuse. Asset Forfeiture The Postal Inspection Service uses asset forfeiture laws to combat financial crimes, as well as drug trafficking and child exploitation conducted through the mail. FY 2001 marked the Inspection Service's first full year of operation under the Civil Asset Forfeiture Reform Act of 2000 (CAFRA). Like other law enforcement agencies with forfeiture authority, the Postal Inspection Service has adjusted its legal processes and procedures to ensure full compliance with the new law. Extra training for Forfeiture Specialists, Inspector-Attorneys and field Inspectors has enabled them to incorporate the new provisions in their investigations. CAFRA gives law enforcement officers a more direct means of seizing the financial proceeds of a crime and returning it to the victims. This provision has been especially helpful in cases of mail fraud: When there are no known victims of a crime to reimburse via forfeited criminal assets, the ill-gotten gains may instead be used to offset law enforcement costs and thwart ongoing criminal ventures. Postal Inspectors seized 421 assets and secured 485 forfeitures in FY 2001. Forfeiture activity by Inspectors this fiscal year netted $9.8 million. The Postal Inspection Service equitably shared $3.7 million with other federal, state and local law enforcement agencies. Additionally, Postal Inspectors are sometimes able to return seized property to victims of fraud using the asset forfeiture process. The new legislation is likely to increase victim restitution. • Between November 2000 and June 2001, Postal Inspectors in St. Louis, MO, seized approximately $927,650 in assets as the result of a mail fraud investigation. Inspectors found that several suspects had acted as third parties in personal injury settlements, dealing with attorneys from both sides. Instead of depositing plaintiffs' funds into a U.S. government security, they diverted the money to other, unauthorized uses, including the purchase and operation of a supermarket chain that eventually went bankrupt. Victims lost approximately $60 million. • Postal Inspectors served seizure warrants in October 2000 on bank accounts in New York, collecting $587,300. The warrants related to an ongoing investigation of the structured purchases of postal money orders at several New York post offices. A judicial forfeiture action is pending in the Eastern District of New York. • On May 15, 2001, the operators of a group of Massachusetts-based companies pled guilty to mail fraud and related charges in an advance-fee scheme that defrauded novice inventors. The operators provided the inventors with false and misleading information on their patenting and marketing services, which were not only ineffective but completely useless. One defendant agreed to forfeit all of his assets, including his residence, a ski chalet and a walk-in mausoleum. Another agreed to forfeit 50 percent of his ownership in his residence. The value of the forfeited assets is estimated at $700,000 to $1 million. Three remaining defendants are scheduled to stand trial in late 2001. Money Laundering Because the Postal Service is considered a non-bank financial institution, it must comply with the reporting requirements of the Bank Secrecy Act (BSA). The Postal Inspection Service is responsible for supporting the Postal Service's BSA compliance by analyzing postal money order transactions and investigating criminals who use them and other postal financial products to launder illicit proceeds and avoid federal reporting requirements. Illicit proceeds may include money gained through narcotic sales, the smuggling of illegal aliens, tax evasion or the selling of counterfeit merchandise. Following are examples of money laundering cases investigated by Postal Inspectors during the past fiscal year. • Postal Inspectors and agents from the New York El Dorado Money Laundering Task Force arrested a man in November 2000 on charges of money laundering. Their investigation revealed he was operating as an unlicensed money remitter who wired narcotics proceeds overseas and illegally structured financial transactions. Undercover meetings with the defendant caught him laundering approximately $400,000 in U.S. currency through a bank account in London, for which he charged a five percent commission. About $175,000 of the laundered money was converted to postal money orders and deposited in the defendant's bank account for personal use. • Postal Inspectors in New York arrested two men on December 13, 2000, for conspiracy to launder money. The men were involved in the structured purchase of money orders and had mailed nine suspect Express Mail parcels with fictitious return addresses to businesses and individuals in Miami, FL. At the time of the arrests, Postal Inspectors seized $55,390 in U.S. currency and $38,300 in money orders. A subsequent consent search of the subjects' residence uncovered $154,500 in money orders, $13,500 of which were postal money orders, in 17 Express Mail parcels. The investigation is continuing. • Postal Inspectors in Southern California seized $345,492 from two bank accounts in January 2001 after finding evidence they were being used for structured financial transactions via the purchase of postal money orders. On February 2, Inspectors seized $148,000 from two accounts at another California bank that were also being used for deposits of structured postal money orders. The investigation is continuing. • Postal Inspectors and agents from the High Intensity Financial Crimes Area (HIFCA) Task Force in San Juan, PR, arrested a man on March 29, 2001, for money laundering violations. He purchased postal money orders at various postal stations from January 2000 through March 2001, with each purchase totaling less than $3,000. Postal Inspectors and agents seized $133,356. • A man agreed to forfeit $100,000 to the government in May 2001 as a result of a money laundering investigation by Postal Inspectors and Internal Revenue Service agents. He bought 184 postal money orders on at least 15 dates at 12 post offices in New Jersey. His purchases evaded the reporting requirements of Title 31 of the U.S. Code. • U.S. Marshals in Massachusetts served a warrant and motion for forfeiture in April 2001 on an insurance company and a bank, resulting in the seizure of $251,603 from the defendant's account. The forfeiture resulted from a Postal Inspection Service investigation of postal money orders purchased in transactions calculated to avoid federal reporting requirements. Postal Inspectors determined that, on 19 occasions, the defendant had purchased 198 postal money orders from 26 postal facilities in central Massachusetts. Quote: The Inspector in Charge of the New York Metro Division was presented with a $3 million forfeiture check as a result of an Inspection Service investigation of rebate fraud through the mail. Postal Inspectors determined that four men who operated a chain of supermarkets in New York had illegally redeemed manufacturers' coupons for items not purchased at their stores, bringing them a profit of more than $5 million. The $3 million check represents the Inspection Service's equitable share of the net proceeds of the forfeiture. Revenue and Asset Protection Opening quote: In FY 2001 the Postal Service reported annual operating revenues of $64.5 billion. Postal Inspectors are charged with protecting all postal revenue and assets. A primary mission of the U.S. Postal Inspection Service is to safeguard postal revenue and assets from criminal attack. While the vast majority of postal customers and employees are honest, Postal Inspectors crack down on large-scale commercial mailers who attempt to underpay postage, as well as employees who try to steal postal funds or who lie about work-related injuries to receive compensation benefits to which they are not entitled. Revenue Investigations Postal Inspectors determine which products and sources of revenue pose the highest risk in potential losses to the Postal Service each year and target their investigations accordingly. For the past several years, fraud schemes involving large-scale business mailers have led the way, with metered, presorted, nonprofit and Periodical mail receiving priority attention. Postal Inspectors measure the effectiveness of their revenue investigations by the number of fraud schemes they identify and successfully resolve. In addition to stopping the scheme, the "resolution" may involve sending the perpetrator to jail, recouping lost funds if possible and, as appropriate, collecting fines and penalties from the perpetrators. The chart below summarizes Postal Inspection Service revenue investigations this past fiscal year. In FY 2001, Postal Inspectors concluded more than 13 major investigations involving the underpayment of postage by large-scale, commercial mailers. Postage fraud schemes are generally complex. Indeed, it can be difficult to understand them without extensive knowledge of postal operations-a problem when they are presented to a jury for prosecution. In this respect, the past fiscal year has been noteworthy, with juries returning a large number of criminal convictions. Further, Postal Inspectors presented to civil prosecutors an unusually high number of cases related to fraud by third-party mailers. All of the cases were successfully argued by prosecutors, resulting in substantial settlement agreements and severe penalty assessments. An especially significant victory in FY 2001 was a four-year investigation by Postal Inspectors of 13 officers and employees of the largest mail preparation company in the New York area. Two principals of the company were found guilty following a three-month jury trial that ended in July 2001, and a third principal pled guilty shortly after the trial began. Up to $40 million of what was identified as the proceeds of their illegal activities may be subject to forfeiture. Among other allegations, the defendants were charged with underreporting 208 million pieces of First-Class Mail, resulting in losses of more than $20 million to the Postal Service. The defendants operated a mail sorting company that processed 2 million pieces of mail daily for customers in the New York metropolitan area. Postal Inspectors found the defendants had been cheating the Postal Service-and their own customers-through a number of fraudulent practices. Customers paid the company to sort their mail by ZIP Code and apply computer-readable barcodes, allowing them to receive reduced postage rates. But Postal Inspectors discovered the company had submitted false mailing statements to the Postal Service, underreported the quantity of mail it submitted to the Postal Service, knowingly used broken meters that printed postage free of charge, overbilled customers for postage and bribed other customers so they would "overlook" inflated mail invoices. Seven other defendants, including a postal employee, pled guilty to charges of mail fraud and racketeering, another is awaiting trial and a ninth suspect is still at large. Each defendant faces a maximum sentence of 20 years or more in prison. Additional examples of revenue investigations conducted by Postal Inspectors in FY 2001 follow. • The owner of a Chicago-area presort bureau was sentenced to prison following a lengthy investigation. Postal Inspectors determined he had underreported the amount of mail he processed by manipulating the software used with his sortation equipment, and altered the supporting documents presented to the Postal Service in order to claim reduced postage rates. Both the owner and company were ordered to pay restitution of $346,000. The owner paid an additional $30,000 in criminal fines and was sentenced to one year in prison. The company was sentenced to five years' probation and ordered to pay a criminal fine of $210,000. A companion civil judgment required the owner and the company to pay a penalty of $173,000. • The owner of a direct-advertising company in Los Angeles pled guilty to defrauding the Postal Service of more than $650,000 in postage. Over the course of several years, Postal Inspectors found he had routinely submitted false postage statements indicating his mail had been pre-paid with stamps. The owner was sentenced to 21 months in prison and ordered to pay $562,833 in restitution and a $40,000 fine. • Presort bureaus in Birmingham, AL; Louisville, KY; and San Juan, PR, reached settlement agreements with the government totaling $415,000 after Postal Inspectors demonstrated the mailers had lied about postage discounts they claimed and the number of pieces they mailed. In a case in Reading, PA, the owners of a presort bureau agreed to a lump-sum payment to the government of $3.25 million after Inspectors uncovered their postage fraud scheme. In each instance, the Postal Service's legal counsel worked with the U.S. Attorney's Office in finalizing the settlements and drafting the agreements, ensuring that losses and penalties were recovered. Finally, the manager of a Dallas-area presort bureau was sentenced to five years and six months in prison after Postal Inspectors proved he had defrauded the Postal Service, as well as his employer. He was ordered to pay in excess of $5 million in restitution, the majority of which will go to the Postal Service. • Special Periodicals rates are granted for publications that meet strict eligibility requirements. When a mailing fails to meet the standards and there is evidence the mailer knowingly failed to comply, sterner penalties apply, including the possibility of multiple damages and criminal charges. Postal Inspectors arrested the publisher and part-owner of a New York-based magazine for misleading both the U.S. Postal Service and the magazine's advertisers. He was charged with mail fraud for providing false information to justify lower postage and for deceiving the magazine's advertisers, who paid higher ad rates after he misled them about the magazine's readership. Graph Revenue Investigation Results in FY 2001 Criminal cases: 315 Criminal convictions*: 86 Civil cases presented: 12 Civil cases resolved*: 12 Amount ordered or agreed to be paid as a result of a civil prosecutive action*: $5.9 million Voluntary restitution*: $33,147 Court-ordered restitution-criminal*: $9.3 million *May be related to cases from prior reporting periods. Graph 2001 Revenue Investigation Convictions & Civil Cases: Workhours vs Results FY 97: 262,080 Workhours; 31 Prosecution Actions FY 98: 223,915 Workhours; 14 Prosecution Actions FY 99: 186,737 Workhours; 25 Prosecution Actions FY 00: 158,611 Workhours; 30 Prosecution Actions FY 01: 103,721 Workhours; 32 Prosecution Actions Workhours are down, but results are up as Postal Inspectors focus their efforts on the most serious schemes impacting postal revenues. Embezzlements Employee embezzlements unfortunately occur in all businesses. Postal Inspectors have uncovered a range of such schemes by postal employees: failing to report postal retail sales and using the cash for personal expenses; delaying the reporting of postal sales to fund personal, short-term loans; stealing postal stamps, retail products or packaging products; and covering shortages in postal funds by submitting bogus reimbursements for nonexistent or inflated business expenses. During FY 2001, the Postal Service deployed point of service (POS One) systems to more than 9,000 postal retail units; concurrently, the units began using Segmented Inventory Accountability (SIA) for their financial operations. The sites included Postal Retail Stores that operate under unit, or shared, accountability and traditional retail units where clerks had individual accountability. Approximately 25 percent of postal retail units now use POS One systems and SIA financial procedures; these units are responsible for about 60 percent of postal "walk-in" revenue. Embezzlements that occur at retail stores and other SIA offices are more difficult to investigate. They are more labor-intensive and require more sophisticated technology than those at post offices where clerks have separate accountabilities. Postal Inspectors conducted 557 embezzlement investigations during the past fiscal year and identified $4.8 million in postal losses. Examples of Inspectors' casework in this area during FY 2001 are summarized below. • A Washington, DC, window unit supervisor was sentenced on April 4, 2001, to 30 months' imprisonment and three years' supervised release; he was also ordered to enter treatment programs for alcohol and gambling addictions, and to pay restitution of $120,622 and a special assessment of $1,400. Postal Inspectors proved he failed to properly account for meter-setting funds on daily financial statements and accounting records. When he prepared daily close-out statements, he included customers' checks in the bank deposit, but removed an equivalent amount of cash for his own use. • A supervisor in Ft. Worth, TX, was sentenced to 15 months' imprisonment and three years' supervised release, with $137,785 in restitution. Postal Inspectors found she had directed her clerks to issue postal money orders to fake companies for postage meter refunds. She either cashed in the refunds or deposited them to her bank account. • A window clerk in Philadelphia was sentenced on June 21, 2001, to four months' home confinement with electronic monitoring, four years' probation and restitution of $17,571. The clerk failed to account for the full face value of 29 postal money orders she had issued. Postal Inspectors determined she had issued the money orders in one amount, discarded or destroyed the corresponding vouchers and submitted facsimile vouchers for lower amounts. She issued the money orders to herself or her creditors. • A San Jose, CA, tort claims coordinator was sentenced to one year of home detention, three years of supervised probation and restitution of $67,946. Postal Inspectors proved he had approved false accident claims, had tort claim checks issued to fictitious businesses and had checks made out to people he had recruited to file the false claims. • A postmaster in North Carolina signed a plea agreement on March 7, 2001, pleading guilty to one count of misappropriating postal funds and agreeing to pay the Postal Service $151,907. An Inspection Service investigation showed that when his customers submitted trust fund payments and presented bulk mailings on the same day, the postmaster kept their money and sent the mailings for free. He included the checks with his bank deposits, but removed an equivalent amount of cash or issued himself postal money orders. • A postmaster in New York was sentenced in March 2001 to 18 months' imprisonment and three years' supervised release. He was also ordered to pay restitution of $271,863 to the Postal Service and attend Gamblers Anonymous meetings. Postal Inspectors determined he had embezzled postal funds for the past five years by underreporting postage sales. • A window and vending clerk in New Jersey was sentenced on March 22, 2001, to one year in prison, three years' probation and restitution of $215,994 for embezzling postal funds. While working the retail counter at the main post office and one of its branches, the clerk failed to remit postage sales from vending machines he serviced, and he underreported sales. He moved stamp stock from one accountability to another to cover shortages. • Postal Inspectors determined that the former postmaster of Moorefield, WV, had been depositing customers' checks for bulk mail payments to the bank, but was removing an equal amount of cash for his own use. The former postmaster was convicted of embezzling public money and was sentenced in September 2001 to more than two years in prison and three years' supervised release. At sentencing, the former employee presented to the court a check for $84,678, representing the sale of his Myrtle Beach, SC, condominium, which he had purchased with the embezzled funds. Fraudulent Workers' Compensation Compensation and medical benefits paid to postal employees who sustain injuries while on duty are a major expense for the Postal Service, which is responsible for funding workers' compensation benefits. The Postal Service has accrued approximately $5.8 billion in future liability for workers' compensation claims since its reorganization in 1971. The Postal Service fully supports the workers' compensation program; however, a small percentage of postal employees and medical providers abuse the system, causing the Postal Service to incur millions of dollars each year in chargebacks for fraudulent claims and enforcement costs. As a proactive measure to identify and eliminate fraudulent claims earlier in the claims process, Postal Inspectors' efforts this past fiscal year emphasized continuation-of-pay (COP) investigations. U.S. Postal Inspection Service investigations in FY 2001 resulted in $93.8 million in long-term, cost-avoidance savings and another $5.5 million in COP cost savings, totaling $99.2 million in cost savings for the Postal Service. As a result of Inspectors' work, there was a 30 percent increase in COP cost savings from FY 2000 and a 24 percent increase overall in identifications of employees defrauding the workers' compensation program. The Postal Inspection Service initiates criminal investigations when it suspects individuals of defrauding the Federal Employees' Compensation Act (FECA), helping to safeguard Postal Service expenses. It also refers to the Postal Service any matters that may require administrative action. Inspectors worked closely with Injury Compensation offices to flag potentially fraudulent claims. The Postal Inspection Service assumed full oversight and responsibility for the Contract Fraud Analyst Program in FY 2000, which provides contract fraud analysts to assist Inspectors in investigating suspect claims. During the course of their investigations this past fiscal year, Inspectors identified 403 individuals for defrauding the workers' compensation program and arrested 40 employees for workers' compensation fraud. Employment Fraud Postal Inspectors primarily seek prosecution in workers' compensation fraud cases, as it is the best deterrent and prevents the resumption of benefit payments. By law, future payments are barred to anyone convicted of workers' compensation fraud. Prosecution generally is based on showing that the allegedly disabled claimant is receiving outside earnings and failing to report them to the Department of Labor (DOL). The following paragraphs highlight examples of court actions that occurred as a result of Inspection Service investigations in FY 2001. • A Postal Inspection Service investigation revealed that a former clerk in Millington, TN, had misrepresented her physical abilities and failed to report to DOL her earnings as a domestic worker in order to claim workers' compensation benefits. She was sentenced on March 16, 2001, to four months' imprisonment, four months' home detention, 40 hours' community service and restitution of $9,501. Future cost savings to the Postal Service totaled $492,609. • A former motor vehicle service operator in Kearny, NJ, was sentenced on April 6, 2001, for stealing public money. Postal Inspectors proved that, while he owned and operated a horse stable, he misrepresented his physical abilities and failed to report his income to DOL as required. The claimant was sentenced to a year of incarceration, three years' supervised release and restitution of $48,835. Future cost savings to the Postal Service totaled $792,940. • A former St. Paul, MN, letter carrier was sentenced in May 2001 to eight months' imprisonment with work-release privileges, three years' supervised release and restitution of $55,434 for concealing his employment as a high school coach and misrepresenting his physical abilities. As a result of the investigation by Postal Inspectors, the Postal Service realized a future cost savings of $684,625. • A former letter carrier in New Orleans was sentenced in October 2000 to three years' supervised probation and restitution of $20,899. Postal Inspectors proved that, while the carrier claimed to be totally disabled as the result of injuries to her lower back, right hip, lower leg, foot and both knees, she had attended college classes full-time and received a Bachelor of Science degree. Inspectors also discovered that she was working as a beauty consultant at the same time, but did not report to DOL the job or her income. Future cost savings to the Postal Service totaled $899,605. • A former letter carrier in Houston was sentenced in February 2001 to 21 months' imprisonment and three years' supervised release. DOL placed her on the long-term benefits rolls after she claimed a back injury in 1995; she had been in two automobile accidents and claimed similar back injuries for each. A Postal Inspection Service investigation revealed that one accident occurred prior to her postal employment, but she failed to report it on her pre-employment application; the second accident occurred six days before her workers' compensation claim. Inspectors further proved she failed to report earnings from an upholstery business, was enrolled in college and was receiving other government subsidies, such as food stamps and Aid to Families with Dependent Children. Future cost savings to the Postal Service totaled $369,330. • A former mail handler in Massillon, OH, who had received compensation benefits for 31 years, was sentenced in February 2001 to one year in prison and three months' probation for making false statements to obtain federal employees' compensation and for mail fraud. Postal Inspectors found he had failed to report his income as a restaurant manager and had misrepresented his physical abilities. The investigation resulted in $346,723 in future cost savings to the Postal Service. Misrepresentations of Physical Abilities Another form of fraud Inspectors uncover in the workers' compensation program involves individuals who misrepresent the extent of their physical abilities. The efforts of Postal Inspectors in obtaining prosecution in these cases have been increasingly successful, as seen in the FY 2001 case activity that follows. • A former postal custodian in Goshen, NY, was sentenced in October 2000 to three years' probation and restitution of $20,000 after Postal Inspectors proved he was receiving workers' compensation benefits while misrepresenting his physical abilities. He claimed to be totally disabled due to a lower-back injury and could not perform his job, but, during the same period, he managed to shovel snow, help someone lift a dead deer on top of a van and clean and "detail" his automobile by hand. As a result of the investigation, the Postal Service realized $561,720 in future cost savings. • A former mail handler in Pensacola, FL, was sentenced in December 2000 to two years' imprisonment, three months' probation and restitution of $76,462. After sustaining a back injury and undergoing surgery, the mail handler was placed on the periodic rolls. An investigation by Postal Inspectors disclosed that, although claiming he was totally disabled, the employee exceeded his medical restrictions almost daily. His activities included extended periods of driving; repeated bending, stooping, twisting and reaching; lifting a lawn mower onto the bed of his truck; and reeling in large fish on a deep-sea fishing expedition. As a result of Postal Inspection Service efforts, the Postal Service realized a future cost savings of $672,944. • In March 2001, a former letter carrier in Atlanta, GA, was sentenced to six months in prison, three years' probation and two months' home detention. The carrier had been on the periodic rolls since 1994 for a traumatic wrist injury and carpal tunnel damage to her right wrist in 1995. A referral from a home visitation team led to an investigation by Postal Inspectors and Health and Human Services agents, who revealed she was misrepresenting her physical activities and receiving Social Security benefits for herself and a child for the alleged injuries. The investigation resulted in court-ordered restitution of $45,153; future cost savings to the Postal Service totaled $840,706. • An Inspection Service investigation of a former letter carrier in St. Croix, U.S. Virgin Islands, revealed that, although he claimed he was unable to return to his job because of a back injury, he was able to perform heavy construction work at home, mow his lawn and work on his car. Postal Inspectors saw him using a cane when he visited his doctor. The man made false claims to his physician, the Postal Service and DOL. He was sentenced in July 2001 to 45 months in prison, two years' supervised release and restitution to DOL of $81,899. Future cost savings to the Postal Service totaled $442,900. Quote: A former letter carrier in Toledo, OH, who was on total disability, claimed he could not lift anything weighing over 10 pounds or stand on concrete, and must nap four hours every day. Postal Inspectors, however, found he had misled even his physicians as to his true physical abilities. Surveillance tapes and other evidence submitted by Inspectors revealed the former carrier had been power-lifting weights of 400 pounds and more at various gyms since 1987. He worked out an average of five to six times a week and was known to enter power weight-lifting competitions. The former carrier was sentenced in May 2001 to two years in prison and ordered to pay restitution of $190,647. The ruling was significant, because the judge stated it was the employee's responsibility to advise his physician of improvements in his condition. Future cost savings to the Postal Service totaled $420,617. Quote: At the request of the U.S. Postal Service, Postal Inspectors focused their investigations of workers' compensation fraud in FY 2001 primarily on continuation-of-pay cases to identify fraudulent claims before they entered the long-term benefits rolls. As a result, Postal Inspectors realized a 23 percent increase in COP cost savings over FY 2000, and a 20 percent increase in identifications of employees who defrauded the workers' compensation program. Security and Safety Opening quote: "The U.S. Postal Service places the highest priority on the safety of our customers and employees and on the security of the mail." - Postmaster General John E. Potter Security United States Postal Inspectors are charged with ensuring the safety of postal employees, customers and assets. Using a combination of aggressive programs that target specific criminal activities and proven prevention strategies, Postal Inspectors offer a comprehensive approach to postal security, giving employees a safe work environment, reducing or eliminating criminal activity against the Postal Service and educating postal customers about mail-related crime. Postal Inspectors address numerous problems related to the theft of mail from postal collection and relay boxes, neighborhood delivery and collection boxes and cluster box units by developing various security countermeasures. Several devices deployed during the past fiscal year have proven to be successful deterrents. Inspectors assisted in the installment of improved security devices at nine Postal Service districts, and the Postal Inspection Service is working closely with postal engineers to develop new versions of high-security mail collection and delivery equipment. Integral to the security efforts of the Postal Inspection Service are the Postal Police Officers (PPOs) of the Security Force, which celebrated its 30th anniversary this past fiscal year. PPOs provide ongoing protection for postal employees and property by enforcing federal laws and regulations at postal facilities. Their presence serves as a key deterrent to assaults, maintaining an environment conducive to the safety and well-being of postal employees, customers and assets. PPOs routinely provide perimeter security at high-risk areas and escort high-value mail shipments. In FY 2001, the Postal Inspection Service initiated a comprehensive review of Security Force operations and staffing nationwide. A final report will offer new recommendations for postal facilities to ensure sufficient security at sites with the highest risks. Terrorism and Disaster Assistance Postal Inspectors and PPOs have routinely assisted other law enforcement agencies in responding to terrorist acts in this country, and Postal Inspectors are assigned to FBI-sponsored counterterrorism task forces nationwide. Postal Inspectors also team with the Federal Aviation Administration (FAA). Due to the Postal Service's extensive use of commercial airlines to transport mail, it is essential for Inspectors to work with the FAA to review practices and recommend procedures that will guard the safety of the traveling public. In the aftermath of the attack on the World Trade Center in New York City on September 11, 2001, wreckage from the twin towers fell on the Church Street Postal Station, resulting in extensive damage to the top floors. Postal Inspectors and Postal Police Officers evacuated the station and led injured civilians and police officers to safety as glass and debris fell to the ground. Postal Inspectors in Manhattan were deployed to emergency command centers established by the FBI and the mayor of New York, and additionally were assigned to bolster security at all postal facilities in Manhattan. Inspectors from nearby offices assisted with emergencies, and those from adjacent divisions provided security at other postal facilities around the city. When the attack on the Pentagon occurred about one hour later, Postal Inspectors from the Washington, DC, area responded to assist FBI agents with evidence collection at the crash site. A team of Postal Inspectors from the Pittsburgh area reported to the hijacked plane crash site at Somerset County, PA, to assist in securing the site and the mail. Three teams of Postal Inspectors rotated shifts at the FBI Command Center and aided with evidence-gathering at the scene of the crash. Inspectors at National Headquarters in Washington, DC, evacuated employees at the L'Enfant Plaza building and relocated national postal operations to an alternate site. Postal Inspectors and PPOs provided building security at both Headquarters and the alternate site, disseminating intelligence information to postal managers and generally assisting them in making operational decisions. Postal Inspectors must address a wide variety of natural disasters that can affect postal operations across the country. Disasters can range from truck or train accidents, which may expose mail to security hazards, to raging floods or tropical storms that can destroy mail, close postal facilities and harm employees. Postal Inspectors provide guidance to managers when a post office suffers a fire or has a roof torn off during a storm. When post offices in California were affected by rolling blackouts this past year, Inspectors worked with postal management to mitigate the problem by anticipating power outages. Tropical Storm Allison caused flooding in downtown Houston in March 2001, when as much as 26 inches of rain fell in a 24-hour period. While not all postal facilities were damaged, many were inaccessible due to road flooding. Postal Inspectors and Postal Police Officers provided security at the Houston P&DC, coordinated the clean-up of the facility and worked with postal managers to direct alternative mail activities. Floodwaters in West Virginia destroyed as many as 3,000 homes in July 2001, including those of many postal employees. Six post offices were seriously affected, with five suffering flood damage to mail and postage stock. Postal Inspectors assisted with clean-up operations, as well as the recovery of mail and postal property that were washed away by the floods. Postal Inspectors also helped to establish temporary post office sites to return mail service to needy areas. Observations of Mail Conditions For the third consecutive year, the chief operating officer of the U.S. Postal Service requested the Postal Inspection Service to conduct an Observation of Mail Conditions (OMC) review during the fall and holiday mailing seasons. Inspectors held planning meetings with postal managers to determine site selections for the past year's OMC efforts. The first of 20 OMC reviews began during the week of September 5, 2000, and Postal Inspectors began to submit weekly reports of the reviews beginning September 15, 2000. The OMC program emphasized direct contact with postal area operations support, district and processing and distribution center (P&DC) managers. The Postal Inspection Service upgraded this year's OMC program with a new report generated from the Customer Service Daily Reporting System (CSDRS) database; initiating the Quality Test Letter, which incorporates an electronic-tracking device for mail; and using the Confirm-Planet barcode system. Postal Inspectors expanded their coverage to provide more focus on facility, employee and mail security during site visits, and added more information on security to their weekly reports for postal managers. Inspectors continued to evaluate Mail Condition Reports and the Management Operating Data System report in relation to actual observations of mail on-hand. As part of the OMC program in FY 2001, Postal Inspectors reviewed all political mailings transported on November 6 and 7, 2000. OMCs were conducted at every postal area and almost every postal district. Inspectors issued 20 OMC reports and one special report on conditions at the Washington Bulk Mail Center between September 15, 2000, and January 26, 2001, and issued 17 Investigative Memorandums during the same period on observations at customer service facilities. Postal Inspectors observed mail conditions and conducted security reviews at 374 postal area offices, district offices and mail processing facilities, and during 525 visits to customer service facilities in FY 2001. During the November 2000 national elections, Inspectors visited an additional 66 mail processing sites and 129 customer service sites. Some sites were observed during multiple visits to follow up on prior reports or because of management requests. Mail-Screening Operations Postal Inspectors performed mail-screening operations at a number of high-profile events at the request of organizers and local law enforcement agencies. In the past fiscal year, Inspectors set up mail-screening at the National Governors' Conference at Providence, RI, and at Super Bowl XXXV at Tampa, FL. The Postal Inspection Service has already begun preparing for the 2002 Olympics, assigning Inspectors to the Salt Lake Olympic Organizing Committee and developing strategies with federal, state and local law enforcement agencies to ensure the security of the Winter Olympics in February 2002, which will be immediately followed by the Winter Paralympic Games. Employee and Contractor Screening The Inspection Service Operations Support Group (ISOSG) in Memphis provides the critical processing of security packets for postal employees and contractors requiring clearances. During FY 2001, approximately 7,700 "sensitive" clearance requests and 63,000 non-sensitive requests were evaluated and adjudicated. Approximately two percent of the requests were denied on the basis of criminal histories or outstanding warrants. The clearance process has proven particularly important as the Postal Service forms new partnerships with other organizations. The USPS-FedEx Express contract included a provision that FedEx Express employees receive Inspection Service security clearances, in addition to the standard background investigations conducted by FedEx Express. FedEx Express officials embraced the process, recognizing the value of providing adequate screening for their workforce. Security clearances are also required when the Postal Inspection Service must share sensitive data with "outside" partners. Because the Postal Service continues to explore e-commerce initiatives, it is imperative the Inspection Service take adequate precautions to ensure customers' data is not compromised. A survey conducted by the Computer Security Institute revealed that businesses suffered their most serious financial losses through the theft of proprietary information. Thirty-one percent of respondents cited their internal systems as a frequent point of attack. A significant portion of consumers (92 percent) is concerned about misuse of their personal information. The results support the position of the Postal Inspection Service, which maintains that employees of outside partners must be carefully screened to ensure that information is not entrusted to individuals who pose an unacceptable risk to the organization. Facility Security Members of the Security Division of the Postal Inspection Service are completing work on the Facilities Security Database (FSD), a Web-based application designed to collect and analyze security data. FSD will generate reports from the Facility Profile Database, facility security surveys, facility risk surveys and a commercial crime database known as CAP-Index. Security Control Officers completed surveys at each of the Postal Service's 35,000 sites in FY 2001, and that data, along with other demographic information, was input to the FSD database. Once deployed, the database will assist Postal Inspection Service managers, postal area security coordinators and postal managers in directing financial resources to address facility security issues based on risk assessments. Security Division staff continue to work with Postal Inspection Service field offices and postal area security coordinators to identify security deficiencies. Poster 66: WORK PLACE SECURITY, January 2001 It's good business and it's personal! • Wear Your I.D. Badge • Politely Question Strangers Without I.D. • Secure Doors to Prevent Unauthorized Entry • Identify and Report Security Deficiencies Educational Initiatives The Security Division continued its efforts this past year to educate postal employees on basic security practices. The National Security Messaging Task Force, a partnership comprising members of the Postal Inspection Service's Security Division and the Postal Service's area security coordinators and Public Affairs & Communications staff, joined in an educational campaign to benefit postal employees. The highlight of this year's efforts was the distribution of a poster to major postal facilities outlining four steps postal employees can follow to contribute to security in the workplace. Titled "Workplace Security -It's Good Business and It's Personal," the poster can be ordered by any postal facility. Computer Crimes and Commerce Computer Crimes & Commerce Division staff equip Postal Inspectors across the country with the technical knowledge, skills and tools necessary to combat postal crimes in the information age. Division personnel train field Inspectors on recent technologies, advise the Chief Postal Inspector on policy issues, provide loss-prevention and security consulting services to Postal Service managers and lend in-depth support on computer-related investigations. The division completed a two-day Digital Evidence and Internet Investigations training course for more than 600 Postal Inspectors, a project that spanned a two-year period. The course introduced Inspectors to new investigative and evidentiary issues related to high-tech crimes, educated them on how to use the Internet as a valuable source of information and demonstrated methods of searching the Internet to detect criminal activity. Computer Crimes & Commerce staff also developed and maintained an Intranet Web site over the past year, with links to Web sites relevant to Inspectors investigating Internet- and computer-related crime. Postal Inspectors from the Computer Crimes & Commerce Division advise Postal Service managers on prevention techniques, revenue protection and security issues for e-commerce products and services. During FY 2001, the division completed 16 facility security reviews and conducted several site visits of contractor facilities related to postal e-commerce products, such as eBillPay,ฎ NetPost Mailing Online™ and NetPost™ Premium Postcards. The reviews focused on physical security, access control and employee security clearances. In August 2001, the division hosted the first E-Commerce Security Specialist Conference in Potomac, MD. The conference brought together Postal Inspectors from across the country to acquaint them with various features of postal e-commerce products, such as eBillPay,ฎ NetPost™ Services, PosteCS™ and Electronic Postmark (EPM). The conference was a first step in increasing the Postal Inspection Service's ability to effectively investigate crimes committed against, or using, postal e-commerce products. International Security The International Security Group of the U.S. Postal Inspection Service undertakes initiatives to improve the safety, security and reliability of international mail products for the U.S. Postal Service. Formed in 1990, the group comprises Postal Inspectors assigned to offices at the Postal Service's National Headquarters and the U.S. National Central Bureau-Interpol in Washington, DC; the Interpol General Secretariat in Lyon, France; the International Bureau-Universal Postal Union (UPU) in Berne, Switzerland; the Dallas International Mail Service Center in Texas; and the Miami Airport Mail Center in Florida. International Security Group members develop strategies and initiatives aimed at maintaining a high quality of service and security for the 189 member countries of the UPU. An extension of this effort is the establishment, development and management of the Postal Security Action Group (PSAG) of the UPU. Chaired by the Chief Postal Inspector, PSAG now comprises postal security officials from 53 member and 34 observer countries, as well as numerous international organizations concerned with postal security. Over the past four years, the International Security Group has worked closely with the UPU to implement the International Mail Quality Assurance-Airport Security Review Program. In January 2001, Postal Inspectors coordinated international reviews at Port of Spain, Trinidad and Tobago; Bridgetown, Barbados; Kingston, Jamaica; Santiago, Chile; and Nairobi, Kenya. A cadre of postal security experts from their respective regions and host countries, including representatives from local airlines, airport security and airport authority, participated. In each case, the review team included all stakeholders with a vested interest in improving mail handling and security at international airports and offices of exchange. Other international reviews conducted under the aegis of the UPU were completed at Panama City, Panama, and San Jos้, Costa Rica, in August 2001. The International Security Group supported three bilateral international missions in 2001. Group members coordinated an investigative trip to Rome, Italy, in April 2001, to address significant irregularities in the Postal Service's CON-CON civilian mail (concentration and convoy of registered mail), destined for Rome's International Airport. Postal Inspectors from the JFK International Team; postal officials from Mannheim, Germany; and a transportation manager from International Network Operations met with representatives of the U.S. military, Poste Italiane, air carriers, airport authorities and law enforcement personnel with airport jurisdiction to address mail theft issues. A follow-up trip to Milan, Italy, in May 2001, was made to determine whether originating CON-CON mail could be diverted from Rome to Milan in the event security could not be improved in Rome. Although the JFK International Team initiated measures intended to stop further losses, new initiatives are pending with Poste Italiane officials. Two representatives from the International Security Group and JFK International Team (from Germany) and a representative from International Network Operations traveled to Amsterdam, Netherlands, in May 2001, to review U.S. Mail operations at Schiopol International Airport. A review of transit mail irregularities at Amsterdam found that procedures and security for U.S. Mail were acceptable. Although delayed U.S. Mail scheduled to transit through Amsterdam to destinations in Eastern Europe and Africa was reported as missing, when the dispatches were delivered, officials failed to notify the Postal Service, and the MARIA database (the International Mail Loss Reporting System) reflected no losses. The International Security Group hosted the Postal Inspection Service-FedEx Express Security Seminar at Memphis, TN, in August 2001. Co-hosted with the Security Group, the seminar joined FedEx Express and international airport (gateway) coordinators, operations personnel and FedEx Express security officials to address issues related to the new USPS-FedEx Express Alliance. More than 120 participants attended the four-day seminar to address investigative guidelines and protocols, network with FedEx Express security officials and share information on domestic and international initiatives, resulting in new guidelines that will facilitate investigative responses. The International Security Group also coordinated the following training initiatives in FY 2001: • Bilateral Basic Investigations Training Course for Mexican Federal Police Officers and Servicio Postal Mexicano postal inspectors at Los Angeles, CA, in October 2000, enabling U.S. Postal Inspectors to share intelligence on internal crimes, external crimes, money orders and checks, airport security and related issues. • Management Issues in Postal Security training course in Seville, Spain, with 22 participants from 16 member countries of the Postal Union of the Americas, plus Spain and Portugal, designed for mid- and senior-level postal security officials. • A two-day training seminar in Port of Spain, Trinidad and Tobago, in January 2001 for member countries of the Caribbean Postal Union's Security Action Group. Officials from Barbados, Guyana, Jamaica, Trinidad and Tobago, and the United States studied issues on internal crimes, airport security and MARIA 2000. • International Revenue Protection training course in February 2001 in Santiago, Chile, with 22 participants from 17 member countries of the Postal Union of the Americas, plus Spain and Portugal, to study money laundering, contracts and procurement, bulk mail acceptance procedures, postage meters and related issues. • Security and Investigation Training Course in Santo Domingo, Dominican Republic, in March 2001, in which U.S. Postal Inspectors from several divisions trained 40 new inspectors from the Dominican Republic. • MARIA 2001 and Airport Security Coordinator training course in Bangkok, Thailand. More than 35 participants from 20 Asia Pacific Postal Union member countries attended UPU's July 2001, one-week course for postal security, operations and information technology personnel who needed training on the MARIA 2001 global mail irregularity and the International Airport Mail Security Review Programs. The International Security Group assisted with the rollout of MARIA 2001 this fiscal year by conducting in-depth training for Postal Inspectors and information technology specialists at Ottawa and Montreal, Canada; Tokyo, Japan; Rio de Janeiro, Brazil; and Washington, DC. MARIA software enables users worldwide to collect, distribute and analyze postal data to identify high-loss airmail route segments by comparing and contrasting routes with losses. The system was installed in Europe, Asia-Pacific, the Caribbean and South America in the past year. The Deputy Chief Postal Inspector-Field Operations East and an International Security Group member coordinated the West Africa Fraud Working Group of the UPU, which has representatives from Belgium, Great Britain, Nigeria, South Africa, Sweden, Togo and the United States. The twice-yearly meeting focuses on global initiatives targeting the worldwide problem of advance-fee schemes, which originate in West Africa. To date, member countries have removed from the mailstream more than 18 million letters-about 9.24 tons of mail containing fraudulent advance-fee investment opportunities from Nigeria and other West African countries; 6 million of the fraudulent letters were seized by U.S. Postal Inspectors before they reached the hands of potential victims. The International Security Group coordinated PSAG's Global Mail Security Working Group, which features officials from Brazil, Germany, Great Britain, Netherlands, Portugal, Singapore and the United States responsible for strengthening the international mail network, reducing global mail irregularities and protecting assets. The group developed a model Airport Security Review Program, facilitated the global rollout of MARIA 2000, analyzed the international mail-loss database and identified high-risk international airports needing reviews. In June 2001, the Chief Postal Inspector and representatives from the International Security Group participated in the first Regional Commonwealth in the Field of Communications (RCC) Postal Security Action Group meeting in Moscow, Russia. Forty postal security experts from 12 former Soviet Bloc countries participated in the two-day seminar to develop strategies and initiatives to improve the quality of service and mail security. With the leadership of Russia's Chief Postal Inspector, the RCC has established a regional postal security network to enhance communications among its member countries and increase the security and reliability of international products. The International Security Group coordinated the United Nations Drug Control Program-Universal Postal Union program in September 2001 for 18 African countries. Focusing on drugs in the mail and money laundering, the program will target transnational crime to ensure cooperative investigations and improve the integrity of international mail. Quote: Millions of official-looking letters are received in the United States each year purporting to be from government officials in Nigeria, who claim to have millions of dollars from "business contracts" to move out of their country. The letters seek addressees' personal information as well as their help in moving the money out of Nigeria in exchange for a share of the funds. People who respond may not only lose large amounts of money, they may also become victims of identity takeover fraud. Since FY 1998, more than 5.5 million of the fraudulent letters were seized by U.S. Postal Inspectors before they reached the hands of potential victims. Information Technology Opening quote: The Postal Inspection Service's national IT infrastructure supports about 4,300 users at more than 220 sites nationwide. The U.S. Postal Inspection Service continues to enhance and upgrade its information technology (IT) infrastructure and technological capabilities. Technical and business groups are working cooperatively to identify business goals and external factors that determine how IT can best fulfill Postal Inspection Service needs. The Information Technology Division (ITD) strives to provide rapid access to data, develop new IT systems as needed and deploy services that increase the overall effectiveness of Postal Inspection Service operations. Strategic alliances with business partners and interagency task forces allow for greater access to a variety of databases and the ability to electronically share data. The Postal Inspection Service's 2001-2006 Strategic Plan names IT development as one of six strategic management challenges. Maintaining strategic and effective IT resources is key to meeting organizational priorities and goals. The growth of electronic commerce, the globalization of business and the increasingly rapid pace of change present new and exciting challenges to the Postal Inspection Service. IT Infrastructure To maximize IT investment, the ITD staff is developing new strategies that more broadly integrate the telecommunications infrastructure. One effort entails joint research by ITD and Forensic & Technical Services Division staff on how to use the Postal Inspection Service's network infrastructure to support national radio network and video requirements. Another involves a pilot test using wireless technology, via a handheld device, to access Inspection Service-wide applications. In concert with these efforts, staff members have upgraded strategic host computers that support national applications, enabling a redesign of its applications infrastructure that will better support the Postal Inspection Service's new integrated databases. Business Systems ITD has added new Web-based applications to the Postal Inspection Service's portfolio via its Intranet site. Division staff completed the migration of "legacy" applications from a DEC VAX architecture to the new infrastructure, and all national applications were integrated into the new Inspection Service Integrated Database. The Inspection Service Database Information System also continues to be upgraded and enhanced to meet strategic goals. ITD deployed these business systems during FY 2001: • Firearms Management and Tracking System • Confidential Informant System • Confidential Funding Program • Property Disposition System • Freedom of Information Access System • Vacancy Announcement Program • Laboratory Information Management System • Inspection Service National Assets Tracking System • Electronic Surveillance Tracking System • Mathematical Analysis by Route of Irregularities in the Air Transport of Mail System Rehabilitation Act Compliance Section 508 of the Rehabilitation Act, Web Accessibility, mandated that, by June 21, 2001, all government agencies meet established standards that guarantee handicapped individuals, including employees and the general public, access to their electronic information. ITD staff reviewed and remediated the Postal Inspection Service's Web-based applications and Intranet and Internet Web sites to ensure their compliance as required. Approval for Information Technology Initiatives The 1996 Clinger-Cohen Act directs government agencies to improve the design, planning and management of IT projects. This fiscal year, the Postal Inspection Service implemented the IT Initiative Approval Process to align IT resources with strategic goals and ensure they meet agency priorities. Each new project must demonstrate its contribution to the agency's mission and ability to fit the existing information infrastructure. The newly established Information Technology Resource Committee (ITRC) directs the process by reviewing all requests to implement IT initiatives and determining whether they meet established standards. Information Systems Security The ITD information security staff coordinates the Postal Inspection Service's information systems security program to ensure the confidentiality, integrity and availability of data and operations. To safeguard the IT network from malicious computer viruses, ITD enhanced its virus protection systems and continually upgrades the virus protection software resident on all computer networks. The implementation of new firewall hardware and software also helps to minimize security risks and prevent intruders from accessing the network. NCIC-NLETS The National Crime Information Center (NCIC) and the National Law Enforcement Telecommunications System (NLETS) provide critical law enforcement information to more than 70,000 law enforcement agencies in the United States. ITD staff installed firewall protection for the NCIC-NLETS system to protect it from cyberhackers. A new NexTest server with browser-based technology meets NCIC re-certification requirements, improving efficiencies in time and costs related to system testing and certification. The Postal Inspection Service's NCIC Program Manager, who is the NCIC Federal Service Coordinator and NLETS Representative, serves as chairman for the Federal Working Group, vice-chairman for the Security and Access subcommittee, a voting member of the Advisory Policy Board and a member of the Operation and Procedures subcommittee. The program manager was also appointed by the U.S. Attorney General to represent the federal law enforcement community for the Criminal Justice Information Services Division Advisory Process. Investigative Tools Postal Inspectors now use the i2 Analyst Notebook, an investigative software tool that graphically displays complex criminal activity and investigative data, with the added bonus of formatting data for use in courtroom presentations during trials. Postal Inspectors also access the Financial Management Service to obtain images of negotiated U.S. Treasury checks. 'Best Practices' for IT The ITD staff partnered with the Postal Inspection Service's Corporate Information Management group to benchmark best practices for information technology. Best practices were identified by reviewing the business processes, IT organizations and structures, and technological needs of other law enforcement and government agencies. Technology Policy Council The ITD staff regularly attends meetings held by the Department of Justice's Technology Policy Council, which shares information on new law enforcement technologies with member agencies. Chaired by the Deputy Attorney General, the Policy Council holds quarterly meetings chaired by the director of the National Institute of Justice of the Office of Science and Technology. Consumer Education, Fraud Prevention and Legislative Action Opening quote: Postal Inspectors work to make the mail safe, relying not just on their investigations and interventions of suspected criminal activity, but on consumer education to proactively alert the American public about crimes involving the mail. Consumer Education and Fraud Prevention Potential victims of fraud scams have a choice: to participate or to wisely refrain from enticing but dishonest promotions. Armed with the right knowledge, almost anyone can recognize a fraudulent scheme and make the right decision-to stay away. For this reason, Postal Inspectors work to educate the American public about current fraud trends. Inspectors this fiscal year joined a number of initiatives with consumer protection agencies and other groups to help citizens protect themselves before they become victims of a fraudster's gambit. Memorandum of Understanding: Postal Inspection Service and FTC A Memorandum of Understanding between the Postal Inspection Service and Federal Trade Commission (FTC) signed in March 2001 supports consumer protection efforts by joining the resources of the agencies and leveraging their assets. Through data-sharing on fraud and related intelligence, activities related to fraud prevention, detection and prosecution are expected to increase. The Postal Inspection Service's Fraud Complaint System and the FTC's Consumer Sentinel database are now open to Postal Inspectors and FTC analysts for review. This allows them to target complaints that, when viewed in tandem, may represent significant criminal activity-activity that might once have gone overlooked. Know Fraud: Identity Theft The intent of the Know Fraud initiative is to educate consumers before they become victimized by fraud schemes. Before there can be "no fraud," the public must "know fraud." Hoping to duplicate the success of its efforts in FY 2000, Know Fraud partners have taken the campaign to the grass roots level, hosting town hall meetings with consumers across the country to educate them about the dangers of identity theft and other schemes specific to their communities. With the help of extensive media coverage, a Town Hall meeting on July 26 in Atlanta, GA, and another one on August 3 in Phoenix, AZ, reached diverse audiences of consumers and advocates. The Atlanta meeting was endorsed and attended by the attorney general of Georgia and representatives from Senator Max Cleland's (D-GA) office, the U.S. Attorney's Office, the Federal Trade Commission and the FBI, among others. The Phoenix meeting featured a representative of the U.S. Attorney's Office and representatives of the local Better Business Bureau and AARP. Senator John Kyl's (R-AZ) video on identity theft and fraud demonstrated his support of the Know Fraud initiative. On-site computers allowed attendees to file fraud complaints, and a Postal Inspector provided training for law enforcement officers on the Federal Trade Commission's Consumer Sentinel Fraud Complaint system and Identity Fraud database. Consumer Protection Week Staff members from the Postal Service's Consumer Advocate office and the Postal Inspection Service's Congressional & Public Affairs Division partnered to sponsor seminars and publicity campaigns during Consumer Protection Week, February 2 through 9, 2001. "If it's too good to be true, it probably is" was the theme for the 2001 campaign. The Postal Service's Consumer Advocate and the Chief Postal Inspector greeted Headquarters employees at the building entrance the morning of February 9, distributing pamphlets and other informational literature on mail fraud-related scams. The two offices also paired to produce an educational video news release about an Internet scam that victimized an Ohio teenager when he failed to receive an item he had ordered online and paid for through the mail. Consumer Affairs managers and Postal Inspector-Public Information Officers in Cleveland, Philadelphia and Richmond were recognized for their outstanding contributions and creativity in the week's events at a luncheon hosted by the Chief Postal Inspector and the Consumer Advocate. Business Mailing Industry Task Force The U.S. Postal Inspection Service continued its rewarding sponsorship of the new Business Mailing Industry Task Force (BMITF) in FY 2001. Its focus was on merging the Rebate Data Center, Inc., with the Postal Inspection Service's former Confidence in the Mail Task Force. The Postal Inspection Service hosted the first joint meeting of the two groups in Seattle in December 2000, when it was decided that working as a single entity would benefit each by substantially increasing their power to target and eliminate fraud in the mailing industry. Additional meetings of the Business Mailing Industry Task Force resolved issues on sharing fraud data, forming a leadership team and setting criteria for membership. The U.S. Department of Justice formally approved data-sharing in June 2001. The Postal Inspection Service is preparing to host an Internet Web site with fraud updates, industry news, meeting notes and a BMITF membership directory. When established, it will open a new gateway for communications among the business mailing community and law enforcement groups. In August 2001, the Postal Inspection Service initiated an undercover investigation targeting mail order fraud and rebate, or coupon, fraud on the Internet. BMITF members are attempting to determine the extent to which Internet fraud affects the business mailing industry. Titled "Operation Cut It Out," it represents a first for law enforcement groups, which traditionally reserve such operations for other criminal arenas. Preventing Child Exploitation Through the Mail The Postal Inspection Service and the Postal Service launched a national crime prevention initiative with the National Center for Missing & Exploited Children (NCMEC) to raise public awareness of the online sexual victimization of children. The Postal Inspection Service printed an eye-catching poster for display in 40,000 post offices nationwide, offering a simple, powerful message to adults: Be aware of your child's online activities, and make sure you know who they "talk" to online. The poster features NCMEC's toll-free hotline number, 800-843-5678, and the Cyber Tipline's Internet address at www.cybertipline.com for reporting suspected incidents of child exploitation and sexual abuse. Postal Inspectors from the Southeast, Southwest and Mid-Atlantic Divisions were presented with the 2001 National Missing and Exploited Children's Award on May 23, 2001. It is the third consecutive year Postal Inspectors received this honor. The Inspectors were recognized for their investigation of a husband and wife who videotaped themselves and others having sex with their children, ages nine and 12. The father was sentenced to four consecutive life terms, and the mother was sentenced to 45 years in prison; other defendants received two consecutive life terms and a 15-year prison sentence. Another investigation involved two Henrico County, VA, residents who molested their neighbor's 12-year-old boy, videotaped the acts and sold the videotapes through the mail. Attorney General John Ashcroft recognized Postal Inspectors at a Department of Justice ceremony for their exceptional accomplishments in child exploitation investigations. The Federal Law Enforcement Administrators (FLEA), an organization comprising leaders of 17 federal law enforcement agencies in Northern California, presented a Postal Inspector from the Northern California Division with an Excellence in Law Enforcement Award for his extensive efforts related to child exploitation cases and the rapport he has developed in coordinating investigations with other federal, state and local law enforcement agencies. Recognition for Fraud Prevention The Postal Inspection Service received an award on March 11, 2001, from the Software & Information Industry Association (SIIA), which represents more than 1,000 high-tech companies that develop and market software. SIIA protects the intellectual property rights of its members through anti-piracy education and enforcement and refers any possible mail-related violations to Postal Inspectors. The SIIA award recognized Postal Inspection Service efforts to protect customers from intellectual property violations and named the Inspection Service as a leader in protecting citizens' rights. Postal Inspectors are currently investigating five mail fraud schemes based on SIIA referrals. The National Association of Consumer Agency Administrators (NACAA) recognized the Postal Inspection Service for its participation in the Strategic Partnership, a United States and Canadian effort to fight cross-border telemarketing fraud. The partnership includes the Postal Inspection Service, Toronto Police Service, Ontario Ministry of Consumer and Business Services, Competition Bureau of Industry Canada, Canada's PhoneBusters and the Federal Trade Commission. At the annual NACAA conference in June 2001, the Strategic Partnership received NACAA's prestigious Consumer Agency Achievement Award. Legislative and Regulatory Action During the first session of the 107th Congress, the Postal Inspection Service briefed Capitol Hill legislators on deceptive mailings, identity theft, revenue and asset protection, registry losses and e-commerce, and testified at hearings on related issues. Staff from the Postal Inspection Service's Congressional & Public Affairs Division also prepared and disseminated brochures and information packages to acquaint new members with postal crime-related issues. The Postal Inspection Service participated for a second year at a Technology Summit sponsored by the Senate Appropriations Subcommittee on Treasury and General Government. The event afforded law enforcement agencies the opportunity to showcase technology developed and used in their crime-fighting campaigns. The Chief Postal Inspector and members of the Inspection Service's Forensic & Technical Services Division demonstrated new technology in mail-screening devices, transmitters, video cameras and tracking equipment for senators and other attendees. On May 31, 2001, congressional staffers from the House Government Reform Committee toured the Inspection Service's National Forensic Laboratory at Dulles, VA. State-of-the-art forensic technology and its role in meeting the mission of the Postal Inspection Service was emphasized. Staffers also toured the Postal Inspection Service's training facilities in August 2001 at the Career Development Division, located at the Bolger Center for Leadership Development at Potomac, MD. The Postal Inspector in Charge of Fraud, Child Exploitation, Asset Forfeiture & Money Laundering testified June 14, 2001, on cross-border fraud before the Senate Permanent Subcommittee on Investigations. He discussed Postal Inspection Service cross-border investigations and task force successes, emphasizing that Postal Inspectors seized approximately 129,000 pieces of incoming illegal foreign lottery mail that month alone. The illegal mail was seized before it entered the mailstream. The Postal Inspector in Charge of Fraud, Child Exploitation, Asset Forfeiture & Money Laundering again testified on July 19 at a Capitol Hill hearing on deceptive mailings related to tax refunds. The House Ways and Means Subcommittee on Oversight sponsored the hearing. The Inspector in Charge discussed an investigation of the Revenue Resource Center (RRC) of Boca Raton, FL. Postal Inspectors arrested two suspects who were charged with conspiracy to commit mail fraud in a scheme related to the Economic Growth and Tax Relief Reconciliation Act of 2001. H.R. 2600 and H.R. 2601, The Children's Air Travel Protection Act, would amend federal aviation law to prohibit an air carrier or foreign air carrier from providing air transportation to an unaccompanied minor under the age of 18, or a minor accompanied by someone 18 years or older, without written authorization by a custodial parent, foster parent or legal guardian. If passed, this law sets forth civil and criminal penalties for falsely certifying authorization. The legislation was prompted by the work of a Postal Inspector in Florida who located a 14-year-old girl in Greece after a German sex offender lured her there (see the Child Exploitation chapter of this report). Staffers from 15 offices of the Congressional Caucus on Missing and Exploited Children were briefed in August 2001 on Operation Avalanche, a multimillion-dollar child porn sting operation conducted by the Postal Inspection Service and others. Chief Postal Inspector Kenneth Weaver and Attorney General John Ashcroft announced the results of that operation at a national press conference at National Headquarters on August 8, 2001. The Postal Inspection Service participated in the 2001 Annual Legislative Conference sponsored by the Congressional Black Caucus Foundation in Washington, DC, from September 26 through 29, 2001. Postal Inspectors presented information on postal crime issues and discussed their mission to protect postal employees and assets and safeguard the mail. On September 20, 2001, Chief Postal Inspector Weaver was requested to accompany Postmaster General John E. Potter to testify before the Senate Subcommittee on International Security, Proliferation and Federal Services. Chief Postal Inspector Weaver described in full the role of the U.S. Postal Inspection Service in responding to the terrorist attacks on September 11, 2001, assigning Inspection Service personnel to the investigations in New York, Washington, DC, and Pennsylvania. Excerpts from the Chief's testimony are provided in a special section in the front of this report. Quote: Inspector in Charge of the Northern Illinois Division Ida L. Gillis welcomed President George W. Bush to the 25th annual conference of the National Organization of Black Law Enforcement Executives (NOBLE) in July 2001, bringing her year as President and CEO of NOBLE to a close. Since 1976, NOBLE has served as the "conscience of law enforcement," addressing critical issues related to the mission of law enforcement agencies nationwide and their relationships to the communities they serve. Forensic and Technical Services Opening quote: "Documents are intimate brain-children of their authors. Unless questioned, they sometimes mislead, lie, cheat, and travel incognito." -from Evidential Documents, published by James V.P. Conway, former Postal Inspector and Examiner of Questioned Documents, 1959 Solving cases and convicting criminals frequently depend on the unique support of scientific and technical personnel assigned to the Forensic & Technical Services Division. Forensic Analysts at the Postal Inspection Service's National Forensic Laboratory in Dulles, VA, and four field laboratories provide expert examinations and testimony on evidence submitted by Postal Inspectors for document, fingerprint, chemical and physical evidence analysis. Lab personnel respond to the most critical and complex crime investigations and assist in processing and evaluating evidence. Postal Inspection Service chemists are on hand to provide scientific analyses of suspected controlled substances transported through the U.S. Mail. This year, forensic staff assisted on-site with a mail bomb murder in California, the abduction of a postmaster in Tennessee and a multi-state investigation of the loss of a large quantity of registered mail from Arizona. The Digital Evidence Unit (DEU) of the Forensic & Technical Services Division supports criminal investigations by assisting Postal Inspectors with the collection, preservation, recovery and analysis of computer-based evidence. Using state-of-the-art hardware and forensic software, Inspectors and Analysts from this unit work with Postal Inspectors to execute search warrants and conduct forensic analyses of seized computers and related equipment. DEU contributes to the successful resolution of investigations ranging from child exploitation to financial fraud and identity takeovers via the mail. In FY 2001, Postal Inspectors submitted 741 requests to DEU for the examination of evidence, a 20 percent increase from the past fiscal year. The complexity of service provided by DEU staff was epitomized this year by our support on a national, multi-agency child pornography sting called Operation Avalanche, which is described in detail in the Child Exploitation chapter of this report. Forensic specialists coordinated the interagency searches, seizures and technical investigation of mainframe and personal computers and performed analyses of digital evidence on-site, as well as in the laboratory. Postal Inspection Service forensic experts conducted 3,663 forensic examinations during FY 2001 and identified 1,354 violators of postal statutes. Forensic analysts also made 81 court appearances to provide expert testimony. The Forensic & Technical Services Division also supports Postal Inspectors in complex surveillance and security endeavors. The division provides equipment, training and field responses to ensure the safety of personnel and allow for proper evidence-gathering. Specially trained Inspectors and technicians used their expertise to help resolve almost every high-profile case discussed in this report. Staff members also oversee the selection, training and qualification of Postal Inspectors assigned to conduct polygraph examinations. Postal Inspector-Examiners scheduled 969 polygraph exams for 395 cases during the fiscal year and contributed to the solution of approximately 146 cases as a result of pre-test and post-test interviews conducted incident to the examinations. Quote: A sample of "questioned" handwriting was gathered from U.S. Treasury checks believed to have been signed and cashed after the man who supposedly signed them was dead-allegedly killed by a suspect Ohio Postal Inspectors were investigating for mail fraud. An Inspection Service Forensic Document Analyst used the sample in her courtroom testimony to prove the signatures were tracings of the victim's handwriting. She made transparencies of the questioned tracings to show that, if you superimposed the tracings over each other, you could see they all came from a single model-there was no variation in the writing. While Inspectors were unable to provide sufficient evidence their suspect was a murderer, the suspect was convicted of mail fraud and related charges and received the maximum sentence of 30 years in prison. Quote: Suspicious items discovered in the mail are submitted to Inspection Service Forensic Scientists for examination. Professional Standards and Resource Development Opening quote: Effective training in the workplace enables every Postal Inspection Service employee to contribute to the organization's success. Professional Standards & Resource Development (PS&RD) oversees and promotes all facets of strategic planning, employee training and development, workforce strategic planning, training assessment and budget and administration. PS&RD comprises the offices of Strategic Planning & Management Process, Career Development, Finance & Administrative Services and human resource functions. PS&RD implements training initiatives and employee development programs and processes to enhance individual employee performance and increase organizational effectiveness. The office also monitors and coordinates work "details" and other developmental opportunities, participation in the Postal Service's Advanced Leadership Program and supervisory and mid-level managerial training for Inspection Service personnel. PS&RD funded the Basic Law Enforcement Supervisory Training Program (BLESTP) for 35 Postal Inspector-Team Leaders and Postal Police Officer Supervisors in FY 2001. It also coordinated the Federal Law Enforcement Management Training Program (FLEMTP) for 11 Assistant Inspectors in Charge and Field Office Inspectors in Charge at the Federal Law Enforcement Training Center (FLETC) at Glynco, GA. BLESTP gives law enforcement professionals the opportunity to expand and refine their supervisory skills, and FLEMTP focuses on leadership and management skills vital to mid-level managers. Also during the past fiscal year, certified Master Facilitators delivered more than 40 training sessions to Inspection Service personnel in intercultural and gender communications, team building and career development skills. PS&RD staff members coordinated and deployed the new eTravel program, an automated travel expense system, for Postal Inspection Service employees. ETravel streamlines expense reporting, eliminates paperwork and speeds expense reimbursements to travelers. Strategic Planning and Management Process The office of Strategic Planning & Management Process assists the Postal Inspection Service in determining how to respond effectively to short- and long-term changes that will affect the agency. During FY 2001, the office published a 2001-2006 Strategic Plan for the Postal Inspection Service, identifying the challenges the agency faces in continuing to meet the needs of the U.S. Postal Service and the American public in the years ahead. The Postal Inspection Service also published its first 2001-2004 Information Technology Strategic Plan this fiscal year. Focusing on information technology (IT) requirements throughout the organization, the plan acknowledges the importance of partnerships with other law enforcement agencies, the business community and the American public. It offers a comprehensive overview of IT architecture, programs and processes to ensure that IT support reaches all Postal Inspection Service stakeholders. Career Development The Career Development Division (CDD) of the Postal Inspection Service provides basic training for candidate Postal Inspectors, in-service training comprising refresher and specialized courses for all Inspection Service personnel and certification for threat management instructors. Located at the William F. Bolger Center for Leadership Development in Potomac, MD, CDD's large campus offers the advanced features of an elite law enforcement training program, with dormitory, dining, classroom, fitness and firearms facilities. Inspector candidates undergo 13 weeks of scenario-based training that covers investigative techniques, defensive tactics, firearms, legal matters, search and seizure, arrest techniques, court procedures, postal operations and a detailed study of the federal laws over which the Postal Inspection Service has jurisdiction. Training focuses on problem-solving abilities, critical thinking and cognitive skills. All candidate Inspectors must successfully complete academic, firearms and practical exercises to graduate from the program. Upon successful completion of the program, new Postal Inspectors participate in four to six months of formal, post-basic training designed and monitored by CDD and administered at an assigned Inspection Service field location. Post-basic training is administered by experienced Postal Inspectors and includes at least two weeks of assessed field training in each functional area for a minimum of 400 hours. New Inspectors spend a minimum of 200 hours in their initial assignments under the direct supervision of a team leader or senior Inspector. During FY 2001, CDD successfully graduated one Inspector class, and two more classes were started in August 2001. The 24 graduates are currently completing various phases of post-basic training. Postal Police Officers (PPOs) undergo a 10-week basic training course at the Federal Law Enforcement Training Center (FLETC) in Glynco, GA. In August 2001, a class of 48 PPO candidates began training at FLETC. CDD co-sponsored training for 1,705 Postal Inspection Service employees during FY 2001. Using NetMeeting, an electronic vehicle for delivering training, CDD staff members assisted in deploying eTravel training and training for Postal Inspectors on the redesigned Inspections Review Program. Partnering with the Office of Counsel, members of CDD also developed and provided legal training for 940 Postal Inspectors from across the country. Quote: Postal Inspectors receive basic training at the Postal Service's William F. Bolger Center for Leadership Development in Potomac, MD. Finance and Administrative Services The Finance & Administrative Services group (FAS) oversees the planning, administration and reporting of the national and capital budgets of the Postal Inspection Service. FAS streamlines decision-making for Inspection Service managers by supplying them with detailed financial analyses, forecasting data and cost-accounting reports, thereby helping ensure the financial stability of the Postal Inspection Service. While FAS dedicates the majority of its efforts to the budget process, the group is also responsible for managing the Postal Inspection Service's administrative programs. These include the vehicle fleet program, employee timekeeping program, national asset tracking system, travel and relocation program, health and medical exams, credit card program and facility project and space administration. FAS staff monitors and evaluates the programs through modeling and cost-benefit analysis. FAS staff also oversees the Postal Inspection Service's general office services at National Headquarters, including office machine maintenance, mailroom services, office space requirements and office supply and furnishing procurements. Statistical Charts Table: FY 2001 Imperatives, Operational Goals, Objectives, Targets and Results Imperative: Safety Operational Goal: Ensure a safe, secure and drug-free work environment Objective: Reduce and deter employee-on-employee assaults and credible threats Target: Not to exceed 500 employee-on-employee assaults and credible threats, Result: 360 Objective: Reduce and deter robberies of postal employees and facilities Target: Not to exceed 60 facility robberies, Result: 44 Target: Achieve a facility robbery solution rate of 55%, Result: 73.7% Target: Not to exceed 45 non-facility robberies, Result: 45 Target: Achieve a non-facility robbery solution rate of 55%, Result: 53.6% Objective: Reduce and deter illegal drugs in the postal environment Target: Implement strategies at a minimum of 18 identified facilities, Result: 18 Imperative: Security Operational Goal: Reduce the theft of mail Objective: Reduce and deter volume mail theft in high-theft areas Target: Texas (Southwest and Gulf Coast Divisions) 291, Result: 375 Target: Arizona (Rocky Mountain Division) 1,168, Result: 3,211 Target: California (Northern and Southern Divisions) 736, Result: 1,521 Objective: Identify and resolve domestic and international in-transit mail theft Target: Resolve 15 major domestic and international airport mail theft problems, Result: 29 Operational Goal: Reduce and deter criminal attacks of postal products, services and assets Objective: Reduce and deter embezzlements Target: Resolve 810 financial embezzlement schemes through criminal or administrative actions, with 120 from SIA offices, Result: 801 108 (SIA) Objective: Reduce and deter criminal misuse of the Postal Service's workers' compensation program Target: 365 fraudulent workers' compensation schemes resolved through criminal or administrative actions, Result: 403 Objective: Reduce and deter postage fraud schemes Target: 36 successful criminal or civil actions in high-risk areas, Result: 32 Imperative: Integrity Operational Goal: Reduce the use of the mail to defraud consumers, businesses and government agencies Objective: Reduce and deter multi-state domestic and international telemarketing and deceptive mail operations Target: 15 multi-state domestic and/or international telemarketing promotions disrupted, Result: 28 Target: 10 deceptive mailing promotions disrupted, Result: 57 Operational Goal: Reduce and deter the use of the postal system for prohibited, illegal and dangerous mailings Objective: Eliminate the use of the nation's mail system by major organizations to transport illegal narcotics Target: 4 national interdictions, Result: 4 national (plus 80 local) 110 Target: 10 organized groups identified and disrupted, Result: 4 national (plus 80 local) 110 Objective: Reduce and deter the use of postal money orders to launder money by disrupting money-laundering operations Target: 10 operations disrupted, Result: 22 Objective: Reduce and deter the use of the postal system for the procurement or delivery of material that promotes the sexual exploitation of children Target: 270 offenders identified and prosecuted, Result: 329 Table: FY 2002 Operational Goals and Objectives Safety Goal 1: Ensure a safe, secure and drug-free work environment Objective 1A: Reduce and deter employee-on-employee assaults and credible threats Objective 1B: Deter robberies of postal employees and facilities Objective 1C: Reduce and deter illegal drugs in the postal environment Security Goal 2: Reduce mail theft Objective 2A: Reduce and deter attacks on postal vehicles, apartment panels, collection boxes, NDCBUs and CBUs in Arizona and California Objective 2B: Identify and resolve domestic and international in-transit mail theft Objective 2C: Reduce and deter mail theft-related identity theft and identity takeover crimes Goal 3: Reduce and deter criminal attacks of postal products, services and assets Objective 3A: Reduce and deter embezzlements Objective 3B: Reduce and deter criminal misuse of the Postal Service's workers' compensation program and reduce long-term compensation costs Objective 3C: Reduce and deter postage fraud schemes Objective 3D: Assure the sanctity and security of the U.S. Mail Integrity Goal 4: Reduce the use of the mail to defraud consumers, businesses and government agencies Objective 4A: Reduce and deter multi-state domestic and international telemarketing and deceptive mailing operations Objective 4B: Reduce and deter deceptive mailing operations Goal 5: Reduce and prevent the use of the postal system for prohibited, illegal and dangerous mailings Objective 5A: Reduce and deter the use of the nation's mail system by organized groups to transport illegal narcotics Objective 5B: Reduce and deter the use of U.S. postal money orders to launder money by disrupting money-laundering operations Objective 5C: Reduce and deter the use of the U.S. Mail for the procurement or delivery of material that promotes the sexual exploitation of children Table: U.S. Postal Inspection Service Criminal Statistics for FY 2001 Type of Investigation: Mail Theft (includes theft and possession of stolen mail) Arrests: 6,364 Convictions*: 5,384 Type of Investigation: Miscellaneous External Crimes (includes counterfeit and contraband postage, money order offenses, vandalism and arson) Arrests: 573 Convictions*: 554 Type of Investigation: Miscellaneous Employee Crimes (includes theft of postal property and sabotage of equipment) Arrests: 66 Convictions*: 52 Type of Investigation: Bombs, Threats, Hoaxes and Explosive Devices Arrests: 53 Convictions*: 35 Type of Investigation: Prohibited Mailings (includes hazardous material, firearms and weapons, intoxicants, explosives other than bombs, extortion and false documents) Arrests: 72 Convictions*: 63 Type of Investigation: Assaults and Threats (includes threats and assaults against on-duty postal employees) Arrests: 378 Convictions*: 290 Type of Investigation: Robberies Arrests: 74 Convictions*: 71 Type of Investigation: Burglaries Arrests: 163 Convictions*: 156 Type of Investigation: Mailing of Controlled Substances (includes narcotics, steroids, drug-related proceeds and drug paraphernalia) Arrests: 1,662 Convictions*: 1,139 Type of Investigation: Employee Narcotics Cases (includes employees and non-employees selling narcotics on postal property) Arrests: 43 Convictions*: 33 Type of Investigation: Mail Fraud Arrests: 1,691 Convictions*: 1,477 Type of Investigation: Child Exploitation, Mailing of Obscene Matter and Sexually Oriented Advertisements Arrests: 335 Convictions*: 259 Type of Investigation: Financial Investigations Arrests: 281 Convictions*: 281 Type of Investigation: Workers' Compensation Fraud Arrests: 40 Convictions*: 34 Type of Investigation: Revenue Investigations Arrests: 78 Convictions*: 86 Total Arrests: 11,873 Total Convictions*: 9,914 *Convictions may be related to cases from prior fiscal years. Table: Postal Inspection Service Jurisdiction and Laws Postal Inspectors enforce over 200 federal laws in investigations of crimes that may adversely affect or fraudulently use the U.S. Mail, the postal system or postal employees. The list below describes some of our most important areas of jurisdiction. Assaults (18 USC 111 & 1114) The protection of Postal Service employees is one of our most important responsibilities. Inspectors promptly investigate assaults and threats that occur while postal employees are performing official duties or as a result of their employment. Bombs (18 USC 1716) Although a rare crime, the mailing of bombs is given one of our highest investigative priorities due to the severe impact it can have on postal customers, employees and operations. Burglary (18 USC 2115) The Postal Service has experienced about 300 burglaries each year. Inspectors have minimized losses through the use of security equipment and facility design. Child Exploitation (18 USC 1470, 2251, 2252, 2253, 2254, 2422, 2425) The Postal Inspection Service has long been recognized as the leading federal law enforcement agency in the effort to combat the production and distribution of child pornography and other crimes exploiting children through the mail and, when it involves the mail, over the Internet. Controlled Substances (21 USC 841, 843 & 844) Postal Inspectors initiate investigations related to transporting and distributing narcotics through the mail or at postal facilities. Electronic Crimes (18 USC 1029, 1030, 1343 & 2701) Inspectors protect postal customers from fraud schemes and other crimes that may occur online and involve the misuse of the mail or of the Postal Service. This includes using or selling stolen or counterfeit access devices, such as credit card numbers; using protected computers without proper authority or exceeding authorized access; using computer communications in a scheme to defraud; and unauthorized access to communications that are stored electronically via a communications service. Embezzlement (18 USC 1711) Postal Inspectors investigate employees and contractors suspected of embezzling postal funds and review the Postal Service's internal financial controls to protect postal revenue and assets from internal theft or misuse. Forfeiture (18 USC 981 and 982) Postal Inspectors use criminal and civil forfeiture statutes, when appropriate, to seize assets associated with criminal acts. Identity Fraud (18 USC 1028) The Postal Inspection Service is a leading federal law enforcement agency in the investigation of identity takeovers, a crime that often begins with the theft of mail or use of the mail to defraud individuals or financial institutions. Mail Fraud (18 USC 1341, 1342 & 1345; 39 USC 3005 & 3007) The Postal Inspection Service is committed to protecting postal customers from misuse of the mail. Inspectors place special emphasis on mail fraud scams related to advance fees, boiler rooms, health care, insurance, investments and other consumer frauds, especially when they target the elderly or other susceptible groups. Money Laundering (18 USC 1956 & 1957) Postal Inspectors aggressively investigate criminals who attempt to conceal the proceeds of illegal acts through monetary transactions. Inspectors identify and seize criminals' assets, denying violators the proceeds of their crimes. Money Order Crimes (18 USC 500) Postal Inspectors investigate the counterfeiting, altering and forging of postal money orders. Robbery (18 USC 2114) Postal Inspectors respond promptly to robberies of postal employees and postal contractors. Inspectors focus on preventing robberies through the use of security equipment and improved postal procedures. Theft of Mail (18 USC 1708 & 1709) Postal Inspectors invest significant resources into the investigation of mail theft by criminals, postal contractors and employees. Workers' Compensation Fraud (18 USC 1920) The Postal Inspection Service places a high priority on investigations of workers' compensation fraud due to the high costs of the program: The Postal Service incurs about 25 percent of the entire federal government cost of workers' compensation. For assistance with postal-related problems of a law enforcement nature, contact your nearest Inspection Service division. Florida Division 3400 Lakeside Dr, 6th Fl Miramar FL 33027-3242 954-436-7200 Gulf Coast Division PO Box 1276 Houston TX 77251-1276 713-238-4400 Michiana Division PO Box 330119 Detroit MI 48232-6119 313-226-8184 Mid-Atlantic Division PO Box 3000 Charlotte NC 28228-3000 704-329-9120 Midwest Division 1106 Walnut St St Louis MO 63199-2201 314-539-9300 New York Metro Division PO Box 555 New York NY 10116-0555 212-330-3844 Northeast Division 425 Summer St, 7th Fl Boston MA 02210-1736 617-464-8000 Northern California Division PO Box 882528 San Francisco CA 94188-2528 415-778-5800 Northern Illinois Division 433 W Harrison St, Rm 50190 Chicago IL 60669-2201 312-983-7900 North Jersey/Caribbean Division PO Box 509 Newark NJ 07101-0509 973-693-5400 Northwest Division PO Box 400 Seattle WA 98111-4000 206-442-6300 Philadelphia Metro Division PO Box 7500 Philadelphia PA 19101-9000 215-895-8450 Rocky Mountain Division 1745 Stout St, Ste 900 Denver CO 80202-3034 303-313-5320 Southeast Division PO Box 16489 Atlanta GA 30321-0489 404-608-4500 Southern California Division PO Box 2000 Pasadena CA 91102-2000 626-405-1200 Southwest Division PO Box 162929 Ft Worth TX 76161-2929 817-317-3400 Washington Metro Division PO Box 96096 Washington DC 20066-6096 202-636-2300 Western Allegheny Division 1001 California Ave Pittsburgh PA 15290-9000 412-359-7900 In the Nation's Service: A Chronology of the United States Postal Inspection Service 1737 Postmaster Benjamin Franklin of Philadelphia given the task of "regulating the several post offices and bringing the postmasters to account." 1772 Under the colonial postal system, Postmaster General Benjamin Franklin creates the position of "Surveyor" because he could no longer single-handedly regulate and audit post offices. 1776 Surveyors establish and keep open lines of communication necessary to conduct the Revolutionary War. William Goddard named the first Surveyor of the new American Postal Service. 1792 Congress imposes the death penalty for stealing mail. 1801 Title of Surveyor changed to "Special Agent." 1812 Special Agents observe and report the movements of the British fleet in the Potomac River during the War of 1812. 1828 Noah Webster, who was one of the first Surveyors, publishes his dictionary. 1829 Preston S. Loughborough is appointed as the first Chief Postal Inspector. 1830 Office of Instructions and Mail Depredations is established as the investigative branch of the Post Office Department. 1853 The number of Special Agents grows to 18. Assigned to specific territories, their duties include reporting on the conditions of stagecoaches, steamboats, railroads and horses used to transport mail; visiting mail distributing offices; and examining postal accounts. 1861 Special Agents establish and maintain military post offices and routes during the Civil War. 1872 Congress enacts the Mail Fraud Statute to combat a post-Civil War outbreak of swindles using the mail. 1873 The Postal Obscenity Statute is enacted by Congress, based on the urging of Special Agent Anthony Comstock. 1880 Special Agents become known as "Post Office Inspectors" by Act of Congress. 1881 Post Office Inspectors interview Billy the Kid in connection with a mail robbery in Santa Fe, NM. 1908 In Clinton, MS, Inspector Charles Fitzgerald is the first Post Office Inspector killed in the line of duty. 1916 The last known stagecoach robbery in the United States is solved by Post Office Inspectors, who apprehend the bandits within five days of the crime. 1925 Inspectors armed with Tommy guns quell heavy outbreak of train robberies and post office holdups. 1926 Post Office Inspectors successfully conclude a 31/2-year, worldwide manhunt for three train bandits known as the D'Autremont brothers. The brothers killed four men and blew up a mail car, which they thought was carrying half a million dollars in gold. 1934 When the nation's $15.5 billion gold reserve is transferred from New York to Fort Knox, Post Office Inspectors plan the movement and protection of the bullion, which was sent by registered mail. The transfer required 500 rail cars, took several years and was completed without a mishap. 1940 The first of five Postal Inspection Service forensic laboratories is established. 1941 Post Office Inspectors organized the mail system for the military during World War II. The system is so efficient that even front-line troops expect mail delivery as normal procedure. 1947 Jesse M. Donaldson, the Chief Postal Inspector, is appointed Postmaster General. 1954 Inspectors are renamed "Postal Inspectors" to reflect their relationship to all phases of postal services and the U.S. Mail, instead of only to post offices. 1958 Owners of the Hope Diamond send the priceless jewel to the Smithsonian Institution by U.S. Mail. Postal Inspectors ensured that the gem arrived safely at its destination. 1970-1971 With the Postal Reorganization Act of 1970 (effective 1971), the Bureau of the Chief Postal Inspector becomes the "United States Postal Inspection Service." A uniformed security force is added to assist in carrying out the Inspection Service's mission. 1971 The U.S. Postal Inspection Service becomes one of the first federal law enforcement agencies to hire female agents. 1972 Postal Inspectors and Postal Inspection Service forensic scientists prove that a handwritten note giving Clifford Irving exclusive rights to write Howard Hughes' biography was a fraud. 1984 The passage of the Child Protection Act gives Postal Inspectors additional powers to focus on the peddlers of child pornography. 1987 Investigations by Postal Inspectors reveal widespread white-collar crime on Wall Street, including insider trading and a massive check-kiting scheme. 1989 Postal Inspectors arrest televangelist Jim Bakker, co-founder of the Praise the Lord (PTL) Club. Inspectors proved Bakker committed mail fraud after he scammed believers by using $178 million of their mailed-in money for personal gain. He is sentenced to 45 years in prison. 1991 The Postal Inspection Service breaks up a worldwide art-fraud ring that marketed bogus paintings purported to be by such renowned artists as Salvador Dali, Joan Miro and Pablo Picasso. 1998 Postal Inspectors play an integral role on a multi-agency task force that arrests the Unabomber, marking the end of one of the largest and most extensive criminal manhunts in modern history. 2000 "Know Fraud" is launched, the largest consumer protection effort ever undertaken, with postcards sent to 123 million addresses across America, arming consumers with common-sense tips and guidelines to prevent telemarketing and mail fraud. 2001 "Operation Avalanche," a coordinated strike by the Postal Inspection Service and 30 other federally funded task forces, results in the arrest of 100 subscribers to child pornography Web sites on the Internet. Quote: The U.S. Postal Service delivers 680 million items—including money, messages and merchandise—to 145 million addresses each day at some of the most affordable postage rates in the world. U.S. Postal Inspectors are mandated to safeguard all of it—including the people who move it and the customers who use it—and it’s all included in the price of a stamp. Quote: The mission of the United States Postal Inspection Service is to protect the U.S. Postal Service, its employees and its customers from criminal attack, and protect the nation’s mail system from criminal misuse. Published in November 2001 U.S. Postal Inspection Service 475 L’Enfant Plaza SW Washington, DC 20260-2175 Kenneth C. Weaver Chief Postal Inspector Daniel L. Mihalko Inspector in Charge Congressional & Public Affairs Debbi Baer, Editor Congressional & Public Affairs Martin Communications, Inc. Design For more information on the U.S. Postal Inspection Service, go to our Web site at: www.usps.com/postalinspectors