2003 Annual Report of Investigations - Text Version

2003 Annual Report of Investigations
Ensuring America's confidence in the U.S. Mail for more than 200 years
United States Postal Inspection Service

A Message from the Chief Postal Inspector February 2004 I am pleased to present this 2003 Annual Report of Investigations of the United States Postal Inspection Service to our key stakeholders: the United States Postal Service, the Postal Service's Board of Governors, members of Congress, and the American public. The mission of the U.S. Postal Inspection Service is to protect the U.S. Mail, postal employees, postal customers, and postal assets, but security efforts headed our list of concerns this past fiscal year. Selected Postal Inspectors were trained to handle incidents of biohazards in the mail, a new Emergency Preparedness and Homeland Security Group was created, and Dangerous Mail Response Teams were deployed-all marking new directions for the Postal Inspection Service in FY 2003. A Security Force Transformation Plan will improve the use of armed personnel, integrate unarmed personnel into the workforce, consolidate existing Control Center operations, and reduce costs overall. U.S. Postal Inspectors in FY 2003 arrested 11,161 criminal suspects, with 56 percent of the arrests for mail theft. Inspectors investigated 3,150 mail fraud cases, arrested 1,453 fraud suspects, and responded to approximately 80,000 consumer fraud complaints. As members of the Department of Justice's Corporate Fraud Task Force, Postal Inspectors played key investigative roles in numerous high-profile fraud cases. Mail fraud investigations resulted in approximately $2 billion in court-ordered and voluntary restitution, and 764 civil or administrative actions. In addition to numerous cases involving bombs, threats, and suspicious items in the mail, Postal Inspectors arrested 320 suspects for child sexual exploitation and obscenity offenses related to the mail, and 1,378 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 Postal Inspection Service. Through our investigations of workers' compensation fraud in FY 2003, Postal Inspectors reported $162.3 million in long-term and continuation-of-pay cost-avoidance savings for the Postal Service. Improved recruitment and applicant processing resulted in the hiring of 225 new Postal Inspectors. The new Inspectors represent diversity in every sense of the word and will be a welcome addition to our agency. The U.S. Postal Inspection Service is proud of its accomplishments. We will continue to build on our strengths-safeguarding the safety, security, and integrity of the U.S. Postal Service, postal employees, and postal assets-to ensure the confidence of all Americans in the U.S. Mail. L. R. Heath Leadership Team of the United States Postal Inspection Service October 3, 2003 L. Heath, Chief Postal Inspector M. Freso, Executive Ombudsman L. Katz, Inspector in Charge, Office of Counsel J. Rowan, Deputy Chief Inspector, Headquarters Operations D. Mihalko, Inspector in Charge, Congressional & Public Affairs R. Geffen, Inspector in Charge, Forensic & Technical Services R. Muehlberger, Laboratory Director T. Denneny, Inspector in Charge, Internal Affairs L. Maxwell, Assistant Chief Inspector, Investigations & Security J. Nedd, Inspector in Charge, Group 1, Safety & Security Vacant, Inspector in Charge, Group 2, Internal & External Investigations C. Giusti, Inspector in Charge, Group 3, Fraud & Dangerous Mail Investigations Z. Hill, Inspector in Charge, Group 4, Emergency Preparedness & Homeland Security H. Lane, Inspector in Charge, Group 5, International Affairs J. Wachuta, Inspector in Charge, Group 6, Intelligence N. Johnson, Assistant Chief Inspector, Administrative Operations V. Bellinger, Manager, Human Resource Performance F. Toogood, Inspector in Charge, Career Development Division L. Spallanzani, Manager, Finance & Administrative Services S. Guttman, Inspector in Charge, Information Technology Division K. Burke, Deputy Chief Inspector, Field Operations, East Inspectors in Charge Charlotte, W. Hall Boston, K. Jones North Jersey/Caribbean, M. Phanco New York, W. Kezer Philadelphia, I. Carle Washington, T. Brady Pittsburgh, R. Dalgleish A. Clemmons, Deputy Chief Inspector, Field Operations, South Inspectors in Charge Miami, J. Belz Houston, R. Dodd Denver, K. Roberts Atlanta, D. Collins Ft. Worth, O. Villanueva M. Ahern, Deputy Chief Inspector, Field Operations, West Inspectors in Charge Detroit, Y. Allen St. Louis, J. Broussard San Francisco, W. Atkins Chicago, A. Davidson Seattle, W. Morris Los Angeles, J. Somerset 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 approximately 1,970 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 roughly 1,100 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 four 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 Postal Inspection Service's approximately 800 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 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 the Deputy Chief Inspector for Headquarters Operations. The Postal Inspection Service has 18 field divisions, which report directly to three Deputy Chief Inspectors for field operations. Field offices are supported by four Inspection Service administrative service centers. The National Leadership Team includes four Deputy Chief Inspectors, two Assistant Chief Inspectors, Inspectors in Charge, and Postal Career Executive Service Managers. The Postal Inspection Service's national information technology infrastructure supports about 4,200 users at more than 180 sites nationwide. Its 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 Internal Affairs Division's mission is to promote integrity and excellence in the Postal Inspection Service through independent internal investigations of its employees 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; processes requests for access to Inspection Service records; and provides legal training to Postal Inspection Service personnel. The Counsel's office comprises 20 Inspector-Attorneys supported by an administrative staff that includes paralegals, information disclosure specialists, a labor relations analyst, a program specialist, and an administrative support specialist. Charged with managing the Postal Inspection Service's internal and external communications, staff from Congressional and Public Affairs (C&PA) issue news and video releases covering investigations or events of national interest, and publications with preventive and informational tips related to mail fraud and other mail crimes for postal employees and the public. C&PA personnel represent Postal Inspection Service interests on Capitol Hill and in liaison activities with other government, law enforcement, and consumer agencies. C&PA's Internet Web site provides weekly investigative news and consumer-oriented tips. Postal customers may report suspected incidents of mail fraud online. An Intranet Web site, maintained by the Information Technology Division, facilitates confidential employee communications nationwide. The U.S. Postal Inspection Service extends full cooperation to all federal, state, and local investigative and prosecutive authorities in law enforcement matters to ensure greater protection to the public. Postal Inspectors regularly participate in joint task force investigations with other agencies aimed at curtailing widespread criminal acts of an organized nature. For more information on the Postal Inspection Service, visit our Web site at www.usps.com/postalinspectors. Quote: Most rewarding aspect of being a federal executive: "Knowing that almost every decision you make and action you take impacts peoples' lives, and your decisions and actions can add value to their everyday life, whether it be postal employees or the general public." Best career advancement advice received: "Work hard at whatever assignment you are given and take advantage of every opportunity that comes your way. Do not sell yourself short and never self-restrict your opportunities for advancement." Advice for your successor: "No matter what you think is important, remember the people side of the business. As a leader, always treat people with dignity and respect. Give them what they need to do their job. Reward and recognize good performance. Deal with poor performance timely, fairly and consistently." -From the Federal Times interview with Chief Postal Inspector Lee Heath, "Fighting Fraud, Theft and Terror in the Mail." Fraud and Dangerous Mail Mail Fraud The Mail Fraud Statute is the oldest and the most effective consumer protection law, and the U.S. 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 approximately 1,970 Postal Inspectors across the nation, roughly 300 are assigned to mail fraud investigations. Inspectors investigated 3,150 fraud cases this past fiscal year, and Inspection Service analysts prepared nearly 80,000 letters in response to mail fraud complaints. During FY 2003, Postal Inspectors arrested 1,453 mail fraud offenders, and 1,387 were convicted as a result of Inspection Service investigations conducted during FY 2003 and in prior fiscal years. Corporate Fraud Postal Inspectors throughout the country are investigating numerous cases of large-scale corporate fraud, which nearly always involves the U.S. Mail. Inspectors have aggressively pursued executives who falsely represent the health of their companies by manipulating financial statements, or who lie to investors while embezzling their funds-resulting in the victimization of thousands of stockholders. Following the arrest by Postal Inspectors of John Rigas, CEO of Adelphia Communications Corporation, in July 2002, the White House named the Postal Inspection Service a member of its Corporate Fraud Task Force. Among the corporate fraud cases investigated by Inspectors in FY 2003 was one involving U.S. Technologies CEO C. Gregory Earls, who was subsequently indicted on charges of mail, wire, and securities fraud, and accused of diverting $15 million from investors for his own purposes. Quote: “They [the Postal Inspection Service] are the mouse that roared when it comes to whitecollar crime. They only have a few dozen people in a place like New York and they have the impact of hundreds,” said Jim Comey, the U.S. Attorney for Manhattan, whose office is prosecuting Earls and the Rigases. Mail Fraud Against Businesses Postal Inspectors work with members of the business community to help protect them from being victimized by mail fraud. Inspectors have established working groups with private industry to share best practices on fraud prevention, exchange information, and provide updated information on recent fraud schemes. Mail Fraud Against Consumers The Postal Inspection Service emphasizes the importance of consumer awareness and prevention as the best protection for consumers, but many still "take the bait." Mail Fraud Against State, Local and Federal Governments 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. Deceptive Mail The Postal Inspection Service created the Deceptive Mail Enforcement Team to identify violators of the Deceptive Mail Prevention and Enforcement Act and ensure swift, appropriate investigative attention in such cases. Team members examine questionable promotions and review consumer complaints for compliance with the act. In FY 2003, Postal Inspectors stopped 144 deceptive mailing operations, up 74 percent from last year. Postal Inspectors have been encouraged by recent findings that promoters are modifying their practices to comply with the law by providing customers with required notices of promotion rules and clearer explanations. Further, the U.S. Postal Service has noted a sharp decline in the number of sweepstakes mailings as companies adopt new marketing strategies in response to the law. Fraud on the Internet Cybercrime presents unique challenges to law enforcement groups. Traditional mail fraud schemes rebound with new success on the Internet, where a greater number of victims can be targeted and perpetrators can remain anonymous. Postal Inspectors investigate Internet fraud when the U.S. Mail is used to facilitate the scheme. Mail Order Fraud The U.S. Postal Inspection Service hosted a meeting of the Business Mailing Data Center (BMDC), formerly known as the Business Mailing Industry Task Force, in Chicago, Illinois, on October 29 and 30, 2002, and in Philadelphia on June 11 and 12, 2003. BMDC works to eliminate fraud in the mailing industry by promoting the sharing of fraud data. The group recently obtained approval from the Department of Justice's Anti-Trust Division and the Federal Trade Commission to allow law enforcement and mailing industry groups to share fraud data. The success of the task force depends on the number of business mailers who agree to share data with other industry members and law enforcement agencies. Telemarketing Fraud Americans receive thousands of unsolicited phone calls each year from telemarketers who are trying to sell a variety of products, often to older citizens. Many offers are legitimate, but unscrupulous telemarketers can be the smoothest of operators, successfully swindling people out of millions of dollars. Indeed, those on fixed incomes who fall prey to these schemes can lose their entire life savings. Telemarketing fraud robs Americans of billions of dollars each year. During FY 2003, Postal Inspectors shut down 37 illegal telemarketing operations, a 40 percent increase over the previous year. 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 2003 to help stem losses from various fraud schemes. Graph Administrative Action, FY2003: Complaints filed by the Law Department - 102 Administrative Action, FY2003: Consent Agreements signed - 62 Administrative Action, FY2003: Cease and Desist Orders issued - 66 Administrative Action, FY2003: False Representation Orders issued - 78 Administrative Action, FY2003: Withholding Mail Orders issued - 43 Administrative Action, FY2003: Temporary Restraining Orders issued - 1 Administrative Action, FY2003: Voluntary Discontinuances signed - 176 Administrative Action, FY2003: Civil Injunctions - 1 A Withholding Mail Order (Title 39, USC 3003) enables the Postal Service to withhold an addressee's mail if he or she is 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 the person to remain anonymous. Fraudulent Foreign Lottery Mail The Chicago Criminal Investigations Service Center (CISC) successfully drafted pleas to stop and destroy foreign lottery mail. There were 43 administrative actions related to foreign lotteries during FY 2003. Postal Inspection Service staff, including CISC employees and Inspector-Attorneys, determined that foreign lottery material mailed from six addresses in Australia and the United Kingdom to the United States was illegal and, therefore, classified as nonmailable. A final order against the mailings was obtained on November 21, 2002. Approximately 164,000 pieces of the illegal mail were destroyed as a result. In June 2003, the Postal Inspection Service group identified similar problems with lottery mailings arriving from the United Kingdom and Australia, resulting in the destruction of 163,943 pieces of mail. During FY 2003, 43 False Representation Orders (FROs) were requested and issued against foreign lottery promoters. FROs enable Postal Inspectors to return mail (most of which contains checks) to victims of false or illegal promotions, thereby stemming losses. To further combat illegal foreign lotteries, Postal Inspectors work with U.S. Immigration and Customs Enforcement (ICE) officials to stop such offerings from entering the U.S. mailstream, and ICE agents contact 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 it is subject to destruction and may appeal the notice. If the mailer fails to appeal or loses the appeal, a Destruction Order is issued and the detained mail is destroyed. As a result of Inspectors' coordination with ICE agents and reviews of foreign lottery mail during FY 2003, none entered the U.S. mailstream or needed to be destroyed. Since the initiative began in 1994, approximately 14.6 million pieces have been destroyed. Case Files: Corporate Fraud The chief executive officer and owner of American Tissue, Inc., a major paper products manufacturing company in New York, surrendered to Postal Inspectors and FBI agents in March 2003 on charges of securities, bank, and wire fraud. Inspectors alleged the former executive had created $20 million worth of fictitious sales invoices, enabling his company to borrow millions of dollars from bank lenders. Three other company officials were also charged, as well as an Arthur Anderson senior auditor, who allegedly shredded certain documents after discovering the company had "cooked the books." The company filed for bankruptcy, and thousands of workers lost their jobs. Losses are estimated at $310 million. Four top executives of Charter Communications, a large firm in St. Louis, Missouri, were indicted in July 2003 on 14 counts of mail fraud, wire fraud, and conspiracy related to inflating revenue, cash flow, and subscriber numbers for the company. Postal Inspectors and FBI agents alleged that, when the chief operating officer and chief financial officer realized the company could fall short of its projected year-end totals, they devised a scheme to artificially inflate the numbers. As a result, more than $17 million in bogus revenue and cash flow were reported for the company in the year 2000. A former senior vice president of the company pled guilty to a single count of conspiracy in July 2003. In October 2003, the U.S. Attorney's Office reported that, due to allegations of witness tampering, separate cases will be opened to resolve the charges. Postal Inspectors, FBI agents, and agents from the Securities and Exchange Commission-all members of the President's Corporate Fraud Task Force-arrested three executives of Dynegy Energy in June 2003 in Houston, Texas, on charges of securities fraud, mail fraud, and wire fraud. The two men and a woman allegedly reported their company "loans" as cash flow, rather than debt, in financial tax statements and engineered a complex series of natural gas sales that generated bogus profits of nearly $300 million. The former executives, who are all certified public accountants, were indicted on June 12, 2003. Case Files: Mail Fraud Against Businesses A three-year investigation by San Francisco Postal Inspectors of a $3 million Internet fraud scheme resulted in the arrest of four suspects in December 2002 in Vilnius, Lithuania, by cooperating members of that country's Criminal Police Bureau. The suspects used stolen credit card numbers to buy computers and other items on the Internet, and had the items delivered by U.S. Mail or private courier to commercial mail receiving agencies (CMRAs) in California, where they rented addresses under false names. After the arrests, one of the suspects, who had been released from prison, advised the CMRAs to forward the mail to a CMRA in Willowbrook, Illinois. Inspectors traveled to Willowbrook and arrested a Lithuanian man there, who later pled guilty to picking up the packages in return for payment from his co-conspirators. Postal Inspectors have been working with the corporate offices of the CMRAs to implement an aggressive prevention campaign to identify the schemes and return items to merchants. Despite their efforts, the fraud scheme has resurfaced, and Inspectors are contacting targeted CMRAs to halt mail-forwarding orders from fraudulent mailers. A grand jury in Kentucky convicted the nation's largest viatical settlement company, its president and vice president, as well as a viatical brokerage company and its chief financial officer, on charges of mail fraud, wire fraud, and conspiracy. Postal Inspectors, assisted by agents from the FBI and Kentucky Department of Insurance, found the defendants had helped terminally ill patients obtain large life insurance policies by falsifying their medical conditions and arranging for healthy imposters to take required medical exams. The policies were then sold back to the settlement company, which collected more than $37 million in fraudulent assets. The defendants received sentences ranging from one year of probation to up to 14 years in prison, and were ordered to pay a combined $661,292 in restitution to victims. Postal Inspectors and Secret Service agents assisted Royal Thailand Police in the May 20, 2003, arrest of a Ukrainian man for criminal copyright infringement, trafficking in counterfeit goods, money laundering, conspiracy, and possessing unauthorized access devices. The man distributed thousands of copies of counterfeit software, valued at more than $3 million, over the Internet. He is allegedly part of a large Eastern European ring of computer hackers responsible for fraudulent transactions on nearly 20 million credit cards. Case Files: Mail Fraud Against Consumers A Texas man was sentenced in October 2002 to 10 years in prison and three years' probation, and was ordered to pay restitution of about $1.7 million. Postal Inspectors proved he sold nearly $4.1 million worth of bogus, "FDIC-insured" certificates of deposit to 35 investors in a Ponzi-type scheme. He pled guilty to mail fraud in November 2001. Postal Inspectors determined that a Weston, Florida, man tricked 50,000 people across the country into mailing him $30 to $45 as a "registration fee" in return for stuffing envelopes at home for $2 per envelope. He collected about $2 million before Inspectors shut him down. He pled guilty to mail fraud on May 12, 2003, and sentencing is pending. Three Virginia men and a former member of the Harlem Globetrotters were arrested in June 2003 for defrauding more than 200 investors. Postal Inspectors and agents from the IRS and FBI alleged that, from 1996 through 2000, the men promoted high-yield investment programs that allegedly returned rates above current market values, some as high as 10 percent monthly. They earned investors' trust by using religious beliefs and themes to promote the bogus programs. The defendants collected more than $10 million under 17 business entities and reassured investors by issuing them "promissory notes," which were fake. Victims were told their money was invested in overseas trading programs, international debentures and bonds, the World Bank, and the International Monetary Fund, among other places, but most of their money was deposited in the defendant's offshore bank accounts to pay for personal expenses and to pay interest to early investors in a Ponzi-like scheme. The president of Wellesley Service Inc. in Fort Dix, New Jersey, which merged waste-management and heating-oil firms for sale to larger conglomerates, pled guilty on June 6, 2003, to mail fraud and conspiracy to commit mail and tax fraud. Postal Inspectors alleged the president and his conspirators enlisted investors via private placement ads and promissory notes, guaranteeing them a 15 percent annual return, plus a 50 percent "kicker" upon repayment. The president mailed letters to investors misrepresenting the company's financial well-being and impending deals, and requesting their notes be rolled over for increased amounts, which most agreed to. Between 1995 and 2001, more than 200 people invested $80 million in the company, including a noted mystery writer who invested nearly $20 million. Rather than using the money to fund operations, the president and others looted the company. The president collected nearly $30 million as part of a sham consulting agreement and had his personal expenses paid by the company, including a $2.5 million home, his clothes, and cars. Sentencing is pending. Case Files: Mail Fraud Against State, County, and Federal Government An investigation by Postal Inspectors and agents from the FBI and the Health and Human Services-Office of Inspector General resulted in indictments for four men in St. Louis, Missouri, in January 2003 for a scheme that defrauded Medicare of more than $6 million. The men allegedly used false and misleading statements to sell a medical device to health care providers. The providers were told to bill the product to Medicare as a "miscellaneous supply" to ensure it was covered. Bills for the fraudulent devices were submitted via the U.S. Mail. Postal Inspectors arrested 18 West Africans in February 2003 on charges of tax fraud and identity fraud in New York. One member of the group cooperated with Inspectors and helped them apprehend his cohorts. Beginning in 1997, ring members reportedly stole and then used more than 3,000 Social Security numbers to file false 2002 individual tax returns. Losses to the United States and local governments are estimated at more than $12 million. Postal Inspectors and other law enforcement officers arrested the owner of Metro One Ambulette, which operated several ambulance companies in Brooklyn, New York, on charges of health-care and mail fraud. Inspectors alleged that, from 1990 through 2000, the owner and others submitted fraudulent claims via the mail to Medicare and Medicaid, provided kickbacks in the form of cash and other gifts to hospital employees so they would use the ambulance service, and transferred company assets to another firm to conceal profits. The owner pled guilty to conspiracy to defraud Medicare and Medicaid and was sentenced in December 2002 to six years and six months in prison and three years' supervised release. Additionally, the judge ordered him to pay $57 million in restitution to his victims and $8 million in forfeiture. The former chief of radiation and oncology at Long Island College Hospital pled guilty in January 2001 to soliciting and receiving kickbacks in exchange for referring his patients to the ambulance company, and the director of security at New York Methodist Hospital (a retired New York police lieutenant) pled guilty to similar charges. Postal Inspectors have arrested another 13 suspects, including a lawyer and hospital and nursing home officials, connected with the scheme. Case Files: Deceptive Mail The operator of a sweepstakes scheme in Rock Hill, South Carolina, agreed in March 2003 to cease and desist his mailings and pay the Postal Service $200,000. Postal Inspectors found that respondents to the mailings were called and told they were winners, but had to mail "taxes" or "Customs fees" to collect their money. Victims either received nothing at all or items vastly inferior to what was represented, losing $15,000 to $102,000 apiece in the scheme. Postal Inspectors from the Bos- ton Division obtained a Consent Decree in New York in May 2003 prohibiting Jason Schwartz, of Credit Choice, Inc., from making false or misleading representations in his mail order business. Inspectors alleged he marketed an unsecured credit card with a $4,000 to $7,500 limit to people who were poor credit risks. Victims were led to believe it was a U.S. business, but Inspectors found the operation was in Quebec, Canada. Inspectors first filed a Temporary Restraining Order against the man in October 2002 to halt the operation, freeze its assets, stop the man from selling or transferring client lists, and prohibit him from soliciting credit cards in any manner. The Better Business Bureau is overseeing refunds for victims. Case Files: Fraud on the Internet Postal Inspectors in Detroit, Michigan, identified a man who was auctioning laptops at eBay.com, collecting payments for them, and then failing to deliver them. He was sentenced in January 2003 to two years and nine months in prison and two years' probation, and was ordered to pay more than $61,000 in restitution. Postal Inspectors in Colorado investigated a man in Gilpin County they suspected was the cause of complaints related to purchases made over the Internet. They determined he had been stealing credit card information from rural mailboxes and using the stolen account numbers to order items over the Internet and by phone. His fraudulent purchases were delivered by U.S. Mail. The man was convicted of committing mail fraud and was sentenced in March 2003 to 12 years in prison. Postal Inspectors from the Boston Division arrested a Connecticut woman in April 2003 who had auctioned hundreds of computers at Internet sites under various names, but never provided the computers or refunded her approximately 350 customers their payments. She was sentenced to four years and nine months in prison and three years' probation, and was ordered to pay restitution of more than $800,000 to her victims. Case Files: Mail Order Fraud A man was sentenced on November 21, 2002, to six months' home detention, three years' probation, and a $4,000 fine after pleading guilty to two counts of mail fraud. He supplied in excess of $350,000 in unredeemed, manufacturers' cents-off coupons to the owner of three grocery stores. From 1992 through 1997, the store owner fraudulently submitted to manufacturers more than 3.7 million unredeemed coupons, valued at more than $2.3 million, which had not been used to buy goods, as required. As a result of an investigation by the Postal Inspection Service and the IRS in Pennsylvania and New Jersey, two men were sentenced on January 16, 2003, to six months' home detention, five years' probation, and 300 hours of community service. They were also ordered to pay the IRS taxes they owed, plus penalties and interest. The men mailed in excess of 1.9 million manufacturers' rebate cents-off coupons, worth more than $1 million, to coupon redemption centers over a four-year period and failed to report more than $93,000 worth of income. A New Jersey man pled guilty in April 2003 to mail fraud and admitted using false names and addresses to open hundreds of customer accounts at two popular record clubs. He and an associate took advantage of promotions that offered nine or more free music CDs with the purchase of one at the regular price. Postal Inspectors learned the defendant and his cohort collected 48,198 CDs in this manner and then sold them at flea markets. They used at least 53 mailing addresses at post offices and commercial mail receiving agencies to receive the CDs. Industry losses were estimated at $772,000. Additional charges are pending. Postal Inspectors in Pittsburgh investigated a computer intrusion and merchandise reshipping scheme that robbed victims of close to $5 million. Two Pennsylvania men gave Inspectors information against the ringleader of the scheme and helped identify a number of co-conspirators in Georgia, Louisiana, and Romania. Each man was sentenced in June 2003 to six months' home confinement and four years of supervised release, and was placed in a drug rehabilitation program. They were also ordered to pay restitution of approximately $96,000 to their victims. Case Files: Telemarketing Fraud More than 38,000 people lost close to $15.4 million to the operator of a sophisticated-but fraudulent-telemarketing scheme. The man convinced timeshare owners to pay $400 for unit appraisals by relying on misrepresentations to win them over, such as promising the unit would be purchased once it was appraised. At sentencing, the judge stated that Postal Inspectors had uncovered "the most corrupt, the most extensive, and the most sophisticated mail fraud scheme this Court has ever seen." Seven others, including three of the operator's children and his son-in-law, were convicted for their roles in the scheme. The operator was sentenced in Hyannis, Massachusetts, in October 2002 to seven years in prison and three years' probation, and the judge imposed a fine of $142,000, representing the defendant's assets in an Austrian bank account. A Cape Cod real estate broker who Postal Inspectors proved had defrauded 10,000 timeshare owners of more than $4.5 million was sentenced in January 2003 to three years in prison and three years' probation, and was ordered to pay a $98,000 fine. Similar to the above case, Postal Inspectors found the broker and his assistants talked people into having their units appraised by promising the units would be purchased following the appraisal. Few paying customers received offers, and the offers that were made were far below market value. At sentencing, the judge told the broker that the appraisal companies he worked for were "a sham from the get-go" and that the broker "knew it was a scam." In October 2002, the last of five defendants charged in a telemarketing scheme in Marina del Rey, California, was sentenced after Postal Inspectors proved that the operator, three of his salesmen, and a sales "reloader" had pressured people into purchasing precious metals margin accounts. The operator initially sold investments in platinum, but once people mailed in their money, another salesman would call and try to talk them into investing in precious metals, collectable coins, heating oils, or foreign currency margin contracts. Sentences for the defendants ranged from three years and 10 months in prison, with orders to pay restitution of $3 million, to a year of in-home detention with orders to pay $286,000 in restitution. As the result of Project Colt, a multi-agency task force of Postal Inspectors and other law enforcement agents targeting cross-border telemarketing fraud, a Quebec citizen living in Massachusetts was sentenced on March 26, 2003, to 10 years in prison and three years' probation, and was ordered to pay more than $1.2 million in restitution. Telemarketers posed as attorneys or government officials and targeted mostly elderly people who had lost money in other bogus lotteries. They told victims they could get their money back if they mailed in "taxes" or "advance fees," but, unfortunately, those who responded to the calls were victimized a second time. The defendant was sentenced to an additional two years and three months in prison in Florida for victimizing a resident of that state. Case Files: Administrative Actions Related to Mail Fraud Postal Inspectors in Boston learned a company and its promoter had mailed thousands of postcards advertising an unsecured, major credit card with a $4,000 to $7,500 limit to people who were poor credit risks. The card allegedly could be obtained by calling an "800" number, which Inspectors determined was in Quebec. Telemarketers convinced people to authorize $199 debits from their checking accounts in exchange for the cards, but all respondents received for their money was a catalog, a membership card, and an application for a credit card offered by a bank. Although a Temporary Restraining Order was issued on October 17, 2002, the quick action taken by Inspectors failed to help victims, who apparently mailed millions of dollars to the scamsters. A Tennessee man signed a Cease and Desist Order in November 2002 and agreed to stop operating a work-at-home scheme. Postal Inspectors in Atlanta found he had been running ads in a local newspaper, offering jobs "stuffing envelopes." Those who called and left their addresses received a "Homeworker's Application" in the mail, requiring a $25 deposit. The application promised a payment of $1.40 for every envelope stuffed and sealed, and guaranteed incomes of $700 to $1,400 each week, plus bonuses. No one received any money except the promoter. A Cease and Desist Order issued in January 2003 halted a scheme that offered people a report of the procedures for entering sweepstakes with millions of dollars in winnings. Customers were led to believe they were entering a contest, rather than purchasing a report about it, and mailed the requested $39.95 to an address in St. Louis, Missouri. The address turned out to be a UPS Store (a commercial mail receiving agency) that had instructions to forward the mail to Vancouver, Canada. Postal Inspectors determined that, between March 2001 and February 2002, roughly 58,000 pieces of mail were forwarded, but none of the respondents received a report. Postal Inspectors shut down a North Carolina woman's fraudulent work-at-home scheme in March 2003 after a postmaster reported that customers had problems with a company that was renting a non-commercial post office box. Inspectors traced the mail to local ads for envelope-stuffing jobs that instructed interested takers to call a number and leave their names and addresses. Respondents received flyers in the mail guaranteeing that, for a $25 fee, they would get materials allowing them to earn $700 to $1,400 per week, or $1.40 for each envelope they stuffed and sealed. The $25 fee would be refunded with the first paycheck, and they would also receive an "up-front $225 sign-up bonus." The woman signed a Cease and Desist Order on March 14, 2003. Two Virginia men accused by Postal Inspectors of operating a fraudulent billing scheme signed a Voluntary Discontinuance Agreement in January 2003. They agreed to close the post office box they rented in Winchester to run the scheme and that future incoming mail would be endorsed by the Postal Service as "Post Office Box Closed" and returned to senders. Inspectors determined the men had mailed about 500 bogus invoices to customers of a recycling and disposal service, requesting a $29.97 payment for trash recycling and disposal services they never provided. New York Postal Inspectors Uncover $100 Million International Investment Fraud In a case precipitated by the September 11, 2001, terrorist attacks on the World Trade Center in New York, U.S. Postal Inspectors from the Brooklyn Fraud Team exposed an elaborate investment scam by Evergreen International Spot Trading, Inc. Evergreen represented itself as a foreign currency trading company with three New York offices, and an affiliated clearing firm, First Equity Enterprises, Inc., located on the 15th floor of Two World Trade Center. Using aggressive telemarketing tactics, Evergreen's staff attracted more than 2,000 investors in the United States, Australia, New Zealand, and Europe who were interested in foreign currency trading. Beginning in 1997 and through 2001, investors poured more than $189 million into the company. Evergreen now owes them more than $100 million. Postal Inspectors first learned of problems with Evergreen in September 2001, in the days following the terrorist attacks on the World Trade Center and elsewhere. Worried investors tried to contact their brokers at Evergreen to determine the fate of First Equity and whether its employees and their accounts were safe. They quickly learned their money was gone-and not as a result of terrorism. Evidence collected by U.S. Postal Inspectors revealed that, while Evergreen's brokers mailed customers sales brochures and account statements showing high profits, at least 10 of its employees-including the president, director of operations, chief trader, and chief financial officer-conspired to direct customers' money through First Equity Enterprises, Inc., to a sham entity in Budapest, Hungary, known as Forex International, Ltd. Evergreen told investors that First Equity was an independent clearing firm that would maintain and accurately account for their money. In fact, Inspectors determined that both Evergreen and First Equity, as well as Forex International, were owned and controlled by Andrei Koudachev, and Evergreen was its only client. Evergreen's employees, including chief trader Mamed Mekhtiev, misrepresented themselves as officers and directors of First Equity, and Evergreen's director of operations, Philip Levenson, regularly provided trading data to First Equity, their alleged clearing firm. Evergreen brokers Justin Fauci, Papaemmanual, and Pasqualini assured investors the company used legitimate banks for trading and their funds were secure. The men even provided bogus reference letters from legitimate banks to validate their claims. Inspectors, however, determined that Evergreen never conducted any trading with those banks. Instead, Evergreen used First Equity to transfer large sums of investors' money to Forex International in Hungary, which then transferred it to accounts in Latvia and Cyprus. A review of the accounts disclosed that $600,000 was sent from a Forex account to the personal bank account of Fauci, Evergreen's U.S. sales manager. Worse, any money from First Equity investors that was not transferred to Forex was used by chief financial officer Polina Sirotina to pay millions of dollars in bonuses, commissions, and personal expenses to Evergreen's employees. Fauci, Papaemmanual, Pasqualini, and other Evergreen brokers routinely solicited money from investors based on false representations of their professional qualifications. After Koudachev departed the United States and his associate Habarov refused to return money that had been transferred to Forex, the defendants continued to draw funds from First Equity accounts. This included a $500,000 bonus for Mekhtiev and a $99,000 bonus for Sirotina. Postal Inspectors arrested Gary Farberov, president of First Equity Enterprises, Inc., and he pled guilty in November 2001. Justin Fauci trained the brokers on how to misrepresent Evergreen's offerings. After learning investigators were on his trail, Fauci contacted the U.S. Postal Inspection Service and the U.S. Attorney's Office in the Eastern District of New York, claiming he and the other Evergreen employees were victims of a fraud and embezzlement scheme perpetrated by Koudachev. Albert Guglielmo, Evergreen's president; Philip Levenson, director of operations; Mamed Mekhtiev, the chief trader; and Polina Sirotina, chief financial officer, were all convicted on June 27, 2003, after an 11-week jury trial. Inspectors to date have seized $6.5 million of victims' money from bank accounts in New York, New Jersey, Chicago, and Switzerland. Eleven individuals and two corporations have been charged, five people have pled guilty, and four have been convicted by trial, with sentencing scheduled for March 2004. Koudachev and Habarov remain fugitives since their indictment in May 2002. An arrest warrant for Mamed Mekhtiev was issued on August 27, 2003, after he violated the terms of his pre-sentencing release and became a fugitive. It is believed he fled to Russia. Operation Headwaters: Abbott Laboratories to Pay $614.5 Million for Defrauding Medicare, Medicaid, and Consumers Investigators with Operation Headwaters, an undercover sting initiated by the U.S. Postal Inspection Service, the FBI, and the Health and Human Services-Office of Inspector General, alleged that Ross Products, a division of Abbott Laboratories in Illinois, and CG Nutritionals, Inc. (CG), a wholly owned subsidiary, were responsible for a multimillion-dollar health care fraud. Inspectors found that Abbott had defrauded Medicare, Medicaid, and consumers by conspiring to bill the programs for products that are provided to suppliers at no cost. Further, Abbott offered illegal rebates and kickbacks to suppliers (and to undercover investigators posing as suppliers) in return for fraudulent billings. Abbott agreed to criminal and civil settlements related to the sales and marketing of its enteral-feeding pumps and other items used to help ill patients ingest meals normally. CG pled guilty in July 2003 to a criminal information for its complex mail fraud scheme and for obstructing a criminal investigation of its health care offenses. The guilty plea and settlement required CG (Abbott) to pay $614.5 million in fines and restitution. CG was sentenced to five years' probation and has paid a $200 million fine. CG also reached a civil settlement with the government and paid $400 million in restitution to resolve Medicare and Medicaid losses. CG paid an additional $14.5 million to various state Medicaid programs based on a settlement crafted by the National Association of Medicaid Fraud Control Units. CG will now be permanently excluded from participation in the Medicare and Medicaid programs. Finally, $20 million of the criminal fine was paid to the U.S. Postal Inspection Service's Consumer Fraud Fund. Postal Inspectors were called by the U.S. Attorney's Office in New Jersey to investigate Kevin Jackson after he attempted to redeem what he said was a 1934 Federal Reserve note with a face value of $100 million. Inspectors and Forensic Analysts worked to prove that Jackson's note was bogus, and he was sentenced on October 3, 2002, to four years and three months in prison, plus three years' probation, for one count of conspiracy and two counts of mail fraud. USPSNEWSLINK Thursday | September 18, 2003 FRAUD BUSTER Magazine praises Postal Inspector Postal Inspector Steve Hamilton helped bust one of the biggest fraud cases in recent history, says Car and Driver magazine. Two Los Angeles men were arrested and recently convicted on charges of fraud and money laundering, according to the article from the October issue. Robert Gomez and James Nichols operated Miracle Cars-a bogus company preying mostly on church congregation members by selling, but never delivering, late-model cars at greatly reduced prices. The cars were supposedly part of Nichols' inheritance and were locked in probate, said the magazine. Inspector Hamilton and Treasury Agent Gary Marshall tracked Miracle Car's bank records, showing more than $21.1 million passed through the company's various accounts. Thanks to the efforts of Inspector Hamilton, Agent Marshall, and other law enforcement officials, the two scam artists were convicted of 40 counts of fraud and money laundering, said Car and Driver. Inspectors Disrupt Deceptive Mailing Operation Presort mailer Postal Services, Inc. (PSI) contacted Postal Inspectors in March 2003 at the Omaha, Nebraska, office to report what they thought could be an improper mailing. The mailing was a solicitation to purchase lottery numbers for a fee of $50. Preaddressed envelopes for returning the fee were addressed to the International Winners Group in the United Kingdom. Postal Inspectors determined the person who initiated the mailings was from Brisbane, Australia, and had probably violated the Federal Lottery Statute. The operator flew to the United States several times to met with PSI representatives about what he referred to as his "marketing solicitations." He was also doing business in Dallas, Chicago, and New York, using a foreign bank account in Australia to pay for the mailings via an electronic fund transfer to PSI's account in Omaha. Alleging the mailing was in violation of Title 18, USC 1302, an Inspector prepared a written declaration that the 165,000 piece mailing (seven pallets of boxes) was not legally mailable, so that it was detained until the Postal Service's Law Department filed an official ruling of nonmailability in September 2002. On August 28, 2003, the U.S. Postal Service's Chief Counsel issued a Destruction Order for the Australian foreign lottery mailing, and Postal Inspectors destroyed the mail in September. Postal Inspectors are now on the lookout for foreign lottery operators who send prepared mailings via private courier to presort houses in the United States, in order to bypass ports of entry. Mail Bombs and Other Prohibited Mail 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 U.S. Postal Inspection Service considers the investigation of mail bombs among its highest priorities. In FY 2003, Postal Inspectors arrested 99 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 placed in private mail receptacles. Graph Mail Bomb Incidents: Five-Year Trend 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 FY 02: 0 Incidents, 0 Explosions, 0 Injuries, 0 Deaths FY 03: 2 Incidents, 1 Explosion, 0 Injuries, 0 Deaths Biohazard Detection System The Postal Inspection Service's new Dangerous Mail Response Teams responded to the July 7, 2003, pre-production testing and deployment of a biohazard detection system (BDS) at 14 postal facilities across the United States. The Dangerous Mail Response Teams are charged with reporting to postal facilities in the event of a biohazard alert. Team members comprise Postal Inspectors who have been specially trained to enter hazardous environments and perform critical functions, such as gathering evidence. A total of 46 Postal Inspectors have been trained to be Hazardous Waste Operations and Emergency Response Standard (Hazwoper) Technicians. As BDS is deployed to postal facilities across the country, additional teams of Inspectors will be trained to support the Postal Service's emergency-preparedness plans. Case Files: Bomb Threats, Hoaxes, and Placed Devices Following a four-day trial in Cynthiana, Kentucky, a man was convicted in March 2003 on seven offenses related to two pipe bomb incidents and other crimes committed against the U.S. Postal Service and its employees between 1998 and 2002. The man tried to murder a rural carrier associate, who delivered his mail, with pipe bombs. Prior to the incident, Postal Inspectors and agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) determined the man had been making unsubstantiated complaints about his mail delivery for the past five years. The conviction carries a mandatory sentence of 30 years in prison. Postal Inspectors in Massachusetts reported the arrest of a man on July 3, 2003, who allegedly placed explosive devices in mailboxes in Massachusetts, New York, New Hampshire, and New Jersey over two years. During Memorial Day weekend, several mailbox explosions occurred in Massachusetts. A task force of Postal Inspectors, ATF agents, Massachusetts State Police, and officers from the Bernardston, Massachusetts, Police Department identified the man and obtained evidence against him. He admitted using explosives to destroy mailboxes, despite being arrested for blowing up a phone booth in 1977. Case Files: Other Prohibited Mail Following an investigation by Postal Inspectors, a West Virginia man was sentenced in November 2002 to 16 years in prison and three years' probation. Inspectors proved he had mailed letters containing threats and a white, powdered substance to President George Bush, West Virginia Governor Bob Wise, a U.S. District Court judge, and other government officials. A Massachusetts woman was sentenced in November 2003 to one year and a day in prison and was ordered to pay a $45,000 fine, as well as restitution to agencies affected by her actions. The 69-year-old woman admitted she had mailed 16 threatening letters, including six laced with white powder, at the height of the nation's anthrax scare. The letters were sent to Massachusetts Attorney General Thomas Reilly, members of Reilly's staff, and a Superior Court judge-all of whom were involved in prosecuting the woman on charges of Medicaid fraud. The letters contained words and phrases cut from newspapers and magazines to form death threats, with references to Osama bin Laden and the al Qaeda terror network. A Pennsylvania woman was sentenced to two years and six months in prison and two years' probation in February 2003 for mailing threatening letters to the President of the United States and local government officials. The woman and an accomplice mailed threatening letters containing cornstarch in October 2001, during the anthrax crisis, to local prosecutors and law enforcement officials in retaliation for their criminal prosecution of her juvenile son. The pair also mailed a letter to the President, using the return address of a witness who had testified against her son, hoping to create problems for the person. The woman's accomplice was sentenced to a year and two months in prison and two years' probation. Postal Inspectors, Secret Service agents, Luzerne County District Attorney detectives, and Wilkes-Barre and Nanticoke, Pennsylvania, police investigated the incident. An Urbana, Illinois, man was sentenced in March 2003 to one year in prison and three years' probation for mailing death threats to several people and their families, with whom he was having personal disputes. The man is already serving a 20-year sentence in Arkansas for raping a nine-year-old boy. Postal Inspectors used forensic evidence from the Inspection Service's National Forensic Laboratory to back their allegations. A 25-year-old woman was sentenced in June 2003 to seven years and three months in prison for sending anthrax hoax letters to police and a hotel in Hawaii. The woman was the first person to be convicted and sentenced under a late 1990s federal law concerning threats of using a weapon of mass destruction. The judge imposed two enhancements to the sentence due to the substantial disruption her actions caused to interstate commerce and because she caused an obstruction of justice when she lied in a suppression motion. Postal Inspectors were assisted in the case by the FBI's Joint Terrorism Task Force and the Honolulu Police Department; the Inspection Service's National Forensic Laboratory provided evidence that led to the woman's prosecution. What is BDS? The United States Postal Service is committed to keeping its employees and customers safe. To help counter the threat of anthrax in the mail, the Postal Service has developed a biohazard detection system (BDS) that will detect anthrax in the mail. The system is designed for the highest possible level of detection. Technical Information What is BDS? BDS stands for biohazard detection system. It is proven technology designed exclusively for the Postal Service. BDS uses sophisticated DNA matching to detect the presence of anthrax (bacillus anthracis) in the mail. It tests air samples from mail-canceling equipment. The BDS unit consists of an air-collection hood, a cabinet where collection and analysis devices are housed, a local computer network connection, and a site controller-a networked computer. Why is BDS needed? BDS will enable early identification of anthrax. It also provides for a rapid response if anthrax is detected. How does BDS work? All BDS processes are automated. The equipment collects samples of air as the mail moves through a canceling machine. It absorbs airborne particles into a sterile water base. This creates a liquid sample that can be tested. The liquid sample is injected into a cartridge, and the automated test for a DNA match is performed. What is the science behind BDS? The core of the system is a polymerase chain reaction. The process essentially "photocopies" genes of a sample. There is a template for the anthrax DNA sequence. The test sample is compared to the anthrax template to see if there is a match. How long does a complete BDS test take? It takes approximately one hour. How many air samples will be taken during the day? Continuous air collection will take place while the canceling operation is underway. There are no gaps. How do you find out if there is a positive match? If there is a DNA match, the BDS computer network conveys that information to the site-controller computer. Local management is notified directly by on-site BDS personnel and also by multiple forms of electronic communication from the BDS site controller. Can BDS equipment test for other biohazards? For purposes of the test, the system is fully capable of testing for anthrax. In the future, it could be adapted to test for other biological threats. Response What happens when the alarm goes off? The emergency action plan is activated. The facility's building alarm sounds and everyone in the building is evacuated. An Emergency Notification Center at Postal Service Headquarters will be notified, as well as community "first responders." Upstream and downstream processing facilities will also be notified. Data flow will be automatic. That means the question of how to respond is not left up to individual or local decision-makers-many decision-makers within the system are involved. Once postal employees are outside the building, what will be done for their safety? Supervisors will call the roll and ensure everyone in the building has been evacuated. They will explain the nature of the incident, and everyone will wait for direction from community emergency personnel. Postal Inspectors will re-enter the building to verify that everyone has been evacuated. Will medication be offered? Local public health officials will determine the need for any medication. Are further tests performed after a positive BDS result? An outside lab will perform multiple plate cultures using the BDS positive test sample and other environmental samples-e.g., a wet-wipe or HEPA-SOCK filter samples. How long will it take to get an outside lab result? It will take 48 to 72 hours. Timeline and Logistics When did you begin to develop BDS? Within days of discovering that anthrax had been found in the mail system, the Postal Service commissioned the first-ever rapid test for biohazards in the mail system. Extensive research and testing resulted in a combination of the latest technologies. Will the Department of Homeland Security be notified of a positive test result? Yes, it will be notified. Has the BDS been tested? The Postal Service conducted extensive testing and research, beginning in October 2001. The Executive Office of Science and Technology Policy created an interagency work group that reviewed the performance of BDS and confirmed with its own tests that it is the best possible system the Postal Service can field. In June 2002 the first prototype BDS system was installed in the Baltimore Processing and Distribution Center. It has been operating successfully. Mail Service Issues Does BDS slow mail processing? No, the equipment operates normally. What happens to mail inside the plant if BDS results in a positive test for anthrax? The mail will be retained until it is safe for delivery. If operations are suspended, what will happen to new mail that would normally be processed in the facility? Mail will be diverted to other mail-processing facilities, and delivery operations will proceed from there. Are you still irradiating the mail? We are still irradiating all mail in Washington, DC, that is addressed to federal offices in the 202-205 ZIP Code range. If BDS is as successful as we believe it will be, it could lead to a rethinking of how we use irradiation. Manufacturers Who makes the BDS system? Northrop Grumman, Smiths Detection of Edgewood, MD, and other team members designed a prototype BDS system that has been operating at the Baltimore Processing and Distribution Center since June 2002. Other team members are Cepheid, Inc., of Sunnyvale, CA, and MRI-Midwest Research, Inc./Sceptor Industries of Kansas City, MO. When did the Postal Service award the contract for BDS? In December 2002, the Postal Service awarded Northrop Grumman and the other team members a pre-production contract to expand and continue testing BDS at 14 sites. Child Exploitation Child pornography and the sexual exploitation of children are tragic, heart-rending crimes that plague law enforcement agencies worldwide. Child pornographers who assume (incorrectly) the U.S. Mail will provide a safe, reliable, and anonymous vehicle for exchanging such material are aggressively targeted by U.S. Postal Inspectors, regarded internationally as leaders in the fight against child exploitation. In keeping with this reputation, the Chief Postal Inspector offered remarks at the first White House Conference on Missing and Exploited Children, held October 2, 2002, and hosted by President Bush to promote public awareness and generate recommendations for "best practices" from experts in the field. More than 600 people from across the country attended the event. Other speakers included First Lady Laura Bush, Attorney General John Ashcroft, and Secretary of State Colin Powell. President Bush delivered the keynote address. Inspector in Charge Lawrence Maxwell and Inspector-Program Manager of Child Exploitation Raymond Smith met with President Bush on October 23, 2002, and personally briefed him on the work of the Postal Inspection Service in combating the sexual exploitation of children. The President asked for information on Operation Avalanche, an undercover operation conducted in his home state of Texas, involving a large-scale child pornography business, Landslide Productions. The President learned that, as the result of the Inspection Service-led investigation, the largest commercial child pornography enterprise ever encountered was dismantled. As the investigation expanded to cities around the world, Operation Avalanche became the largest global action ever undertaken against child pornographers. Attorney General John Ashcroft presented an award in December 2002 to Postal Inspector Raymond Smith at the Department of Justice's Criminal Division's Award Ceremony. The Inspector was commended for his invaluable expertise with and assistance to the Child Exploitation and Obscenity Section's national efforts in combating the sexual exploitation of children and the Attorney General's commitment to enforce federal obscenity laws. In May 2003, Attorney General John Ashcroft presented Miami Division Postal Inspector Beth Bendel with one of six national awards at a ceremony held in cooperation with the National Center for Missing and Exploited Children. The Inspector and other national award recipients were again honored at the Congressional Breakfast and National Missing and Exploited Children Awards Ceremony. During the ceremony, the prestigious Officer of the Year Award was also presented to Miami Inspector Bendel for her exemplary investigation of a mail order child pornography distributor in Florida. It was the fifth consecutive year that a Postal Inspector received the prestigious award for outstanding investigations involving the sexual exploitation of children. Further, a Postal Inspector has been named Officer of the Year three times over the past five years. No other agency has achieved such acclaim. The exchange of child pornography by mail is often accompanied by communication over the Internet. Child molesters and pornographers 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 a marked 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. The vast majority of child exploitation cases investigated by Postal Inspectors in FY 2003 involved computers, as well as postal violations. Since the passage of the Child Protection Act of 1984, Postal Inspectors have arrested 4,027 suspects for using the mail in violation of federal child exploitation laws. During FY 2003, Postal Inspectors arrested 310 suspects for child sexual exploitation offenses and reported 283 convictions in such cases from that and prior fiscal years. Incident to a search of a suspect's property, Postal Inspectors may find evidence that the target of the investigation is also a child molester. As a result of Inspectors' casework this past fiscal year, 91 child molesters were identified and 229 child victims saved from potential further abuse. Obscenity The U.S. Postal Inspection Service has investigated mailings of obscene matter for more than a century. In the 1860s and 1870s, Post Office Inspectors tracked down European "smut peddlers," who brought obscene material to America. Anthony Comstock, a New York Post Office Inspector, waged a relentless battle against those who used the U.S. Mail to distribute obscenity. In 1873, Inspector Comstock drafted the nation's first enforceable federal obscenity law, which became known as "The Comstock Act." It was the forerunner of today's postal obscenity statute, Title 18, U.S. Code, Section 1461. The Internet is now the most-used venue for advertising obscene material and introducing it into American homes-where it easily reaches young children. Dealers of obscene matter try to use the U.S. Mail to distribute the illegal material, in violation of federal law. In the late 1990s there was little federal interest in prosecuting obscenity dealers, but the Department of Justice has now called for a renewed focus on obscenity prosecutions to deter the production and distribution of obscene material. Case Files: Child Exploitation A man in Merriam, Kansas, was sentenced to 24 years and six months in prison for repeatedly raping his six-year-old daughter. At the December 2002 sentencing hearing, the state prosecutor called it the worst case of child sexual abuse he had ever prosecuted. The offender was identified during a Postal Inspection Service investigation of illegal child pornography mailings. Statements made by the suspect during the undercover investigation led Inspectors to fear a child was in imminent danger, so they immediately obtained a search warrant for the man's home. Inspectors seized information from the house allowing them to rescue his daughter from further abuse. A man who bought child pornography videotapes through the mail from Russia and reproduced them for sale in the United States was sentenced on December 13, 2002, in Louisville, Kentucky, to nearly 11 years in prison. Postal Inspectors found he had advertised the illegal tapes on the Internet and sent them to customers via insured mail. A Catholic priest in Chicago was sentenced on January 30, 2003, to 20 years in prison on child pornography charges. Postal Inspectors and agents from U.S. Immigration and Customs Enforcement found the priest had bought CDs containing child pornography from an Internet site based in New Zealand; the CDs were sent to him via the U.S. Mail. Inspectors who searched his home seized more than 2,500 images of child pornography, including boys as young as three years old being tortured and confined in cages. At sentencing, a number of his victims testified about the devastating effects his abuse has had on their lives. The now-former priest admitted he had no idea how many children he had molested, but guessed it was in the hundreds. A five-year investigation by Postal Inspectors and Customs Enforcement agents resulted in the conviction of a 47-year-old man in Dyer, Indiana, in February 2003 after a four-day jury trial. Postal Inspectors determined he was running a child prostitution ring disguised as a tourist resort in Acapulco, Mexico, and customers mailed him payments to buy sexual activity with children. The man had a previous conviction in 1988 on state charges for molesting an 11-year-old boy, and now faces up to 50 years in prison. Six others associated with the ring were also convicted and have received sentences of up to 60 years in prison. Postal Inspectors and local law enforcement officers arrested a former Forest Grove, Oregon, community resource police officer and youth sports official on May 1, 2003, after he received a child pornography videotape through the mail. The man told Inspectors he wanted to stop hurting children, and then confessed to molesting at least seven youngsters, including his own stepson, over an eight-year period. New York Postal Inspectors led a multi-agency investigation of the activities of a 58-year-old man in Rochester with a 30-year history of child molestation. Inspectors determined he had been mailing letters to young boys to entice them into sexual encounters. One of his victims attempted suicide twice and required psychiatric treatment. The offender was sentenced to 12 years and four months in prison, and he was ordered to pay $29,000 in restitution to his victims. A Minneapolis, Minnesota, man pled guilty on August 19, 2003, to traveling across state lines to engage in sexual activity with underage children and to produce child pornography. His plea resulted from an investigation that began in November 2002, when an Iowa mother called Postal Inspectors after finding child pornography in a package mailed to her son. Inspectors identified the mailer and determined he had traveled from Minnesota to Iowa several times to molest the woman's teenage son, his 10-year-old brother, and his 12-year-old sister. He took sexually explicit pictures of the 10-year-old boy. Inspectors found more than 15,000 child pornography images on CD-ROM disks at his home. Case Files: Obscenity A Kentucky man pled guilty in December 2002 to mailing obscene material and money laundering after he was arrested by Postal Inspectors as he walked out of the Science Hill Post Office. An undercover investigation deter-mined he used his Internet site, "Taboomovies," to advertise videotapes depicting brutal rape and bestiality, and his post office box address to mail and receive orders. Inspectors executed search warrants at several locations and seized the man's videos, video duplication equipment, mailing supplies, and financial records. On August 6, 2003, a 10-count indictment was returned against a North Hollywood, California, company and its owners in Pittsburgh, Pennsylvania, following a seven-month investigation by Postal Inspectors and Los Angeles detectives. The charges resulted from the company's distribution of videotapes and DVDs, depicting rape and violent sexual abuse, to individuals and wholesale distributors throughout the United States via the U.S. Mail. Four people pled guilty to obscenity charges on August 25, 2003, in Beckley, West Virginia, after an investigation by Postal Inspectors conducted in close cooperation with federal prosecutors from the Child Exploitation and Obscenity Section of the Department of Justice. Inspectors determined the four suspects, who worked in Lewisburg and in Quitman, Georgia, used an Internet site to sell videotapes and DVDs depicting sexually explicit scenes of defecation and urination, and distributed the material via the U.S. Mail. Illegal Drugs and Trafficking The Postal Inspection Service interdicts mailings of illegal drugs and drug proceeds to protect postal employees from the violence 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 1,378 suspects in FY 2003 for drug trafficking and money laundering via the U.S. Mail. Seizures from the mail included roughly four and one-half tons of illegal narcotics. Postal Inspection Service investigations also resulted in the seizure of about $2.8 million in cash and monetary instruments, four vehicles, and 18 firearms. At the annual awards banquet of the High Intensity Drug Trafficking Area (HIDTA) Program held in December 2002, U.S. Postal Inspectors from the Philadelphia, Chicago, and Los Angeles Divisions received awards for their outstanding work in narcotics investigations. HIDTA was created by the Executive Office of the President and operates under the direction of the Office of National Drug Control Policy. Its mission is to coordinate drug-control efforts of local, state, and federal law enforcement agencies in critical regions of the country to eliminate or reduce drug trafficking and its harmful consequences. An HIDTA Task Force, led by Postal Inspectors in the Philadelphia Division, was named "Outstanding Interdiction Group of the Year," and Inspectors in Chicago and San Diego were recognized for their successful investigations targeting narcotics conspiracy and drug trafficking. Case Files: Illegal Drug Trafficking A two-year, multi-agency Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Postal Inspection Service and agents from the FBI, IRS, and the 20th Judicial Task Force targeted a Los Angeles, Memphis, and Nashville drug trafficking and money laundering ring. Investigators arrested 35 suspects in Tennessee who were convicted of shipping more than 3,000 pounds of marijuana via Express Mail, FedEx, and UPS and "laundering" roughly $1.2 million via Western Union to suppliers. Task force members tracked and analyzed phone calls between gang members and conducted numerous interviews, proffers, and financial profiles in Tennessee and Los Angeles in their efforts to dismantle the organization. Three defendants were convicted of conducting a continuing criminal enterprise and received sentences of at least 15 years and up to 20 years in prison. On December 12, 2002, Postal Inspectors, agents from the DEA and FBI, and local police arrested six members of a major drug trafficking organization and seized more than $530,000 in assets and cash. Three other members of the ring were arrested later. The 46-count indictment against the nine defendants included charges of money laundering, felony possession of a firearm, and conspiracy to distribute cocaine, crack cocaine, and heroin. From late 1998 through 2002, ring members distributed at least 5 kilograms or more of cocaine, 50 grams or more of crack cocaine, and at least 1 kilogram or more of heroin in the areas of Chesapeake and Norfolk, Virginia. Six of the nine defendants pled guilty and received sentences ranging from 14 to 24 years in jail. The remaining three, including the ringleader, were found guilty by a jury. The son of the ringleader, who also pled guilty, was a significant witness for the prosecution. A California man was sentenced to life in prison on October 3, 2003, for running a multi-state drug conspiracy. His ring shipped at least 20 kilograms of cocaine a month to St. Louis, Missouri, from Los Angeles, California, and McAllen, Texas. Couriers transported the cocaine to St. Louis in cars with electronically controlled, hidden compartments and sent the proceeds via Express Mail to CMRAs in Los Angeles. Evidence introduced by Inspectors at trial revealed the man sent more than 240 Express Mail packages, each containing between $6,000 and $8,000 in cash, in a single year. Postal Inspectors were joined by agents from the DEA and FBI in the investigation of a Birmingham, Alabama, man who was subsequently sentenced to two years and three months in prison and 10 years of probation for distributing more than 18 pounds of methamphetamine through the mail. His cohort was sentenced to seven years in prison and five years of probation for related activities. Postal Inspectors in Los Angeles and in Utica, New York, concluded a three-year investigation of a marijuana distribution ring in February 2003. Inspectors arrested five suspects who were later indicted for trafficking in excess of 325 pounds of the illegal drug. The case was initiated by a Postal Police Officer in Los Angeles. Postal Inspectors were assisted by agents from the DEA and U.S. Immigration and Customs Enforcement in an Organized Crime Drug Enforcement Task Force case involving 12 companies that allegedly manufactured and distributed illegal drug paraphernalia. The two-year investigation resulted in the arrest of 55 suspects and the seizure of about $150,000 in cash. The suspects were reportedly responsible for generating revenue of more than $200 million via commercial businesses, the Internet, the U.S. Mail, and private mail couriers. A sentence of 18 years in jail was handed down on March 5, 2003, for a Rochester, New York, man who Postal Inspectors found had been running a multi-state heroin distribution ring. The six-year investigation identified seven of his co-conspirators, who have already received lengthy jail sentences. Ring members imported the heroin into the United States via international mail and distributed the drug and drug proceeds in this country via the U.S. Mail. Postal Inspectors in Houston joined federal, state, and local agencies from three states in an investigation of a ring that distributed PCP and cocaine. Gang members obtained the drugs in Los Angeles and transported them for sale in Oklahoma City and Minneapolis using the U.S. Mail or private couriers. Two New York men pled guilty in May 2003 to selling controlled substances over the Internet and shipping the drugs via the mail. Postal Inspectors were tipped off to suspicious Priority Mail by a postal clerk, who found liquid vials labeled "steroids" in a mailing that had broken open. Inspectors obtained search warrants for the package and found inside such illegal substances as anabolic steroids, Xanax, Vicodin, and Dinitrophenol (DNP). In September 2002, Inspectors learned that a 17-year-old Connecticut girl had died from an overdose of DNP she had purchased over the Internet. The drug had been shipped by one of the mailers, who was operating an Internet-based, illegal drug business. Instructions at the site advised customers to e-mail their orders and send cash payments via Priority or Express Mail to a defendant's home address, along with an e-mail address to confirm the order was sent. The men grossed about $30,000 a month and shared the profits equally. They will each receive sentences of one year to a year-and-a-half in prison. The government did not seek an upward departure from the sentencing guidelines in spite of the girl's death, but her parents began an aggressive letter-writing campaign on her behalf, and the judge may decide to increase the defendants' jail time as a result. In June 2003, the third of four defendants was sentenced in Knoxville, Tennessee, for mailing more than 100 parcels containing in excess of 100 kilos of marijuana over a two-year period. The four men had imported more than five kilograms of cocaine and 20 pounds of marijuana into the Knoxville area. Three were sentenced to a combined term of 21 years and nine months in prison, and sentencing for the fourth, who is the mailer, was scheduled for October 2003. Inspectors conducted a search of the mailer's home and seized 27 pounds of marijuana, 24 marijuana plants, $22,000 in cash, and 12 firearms. The investigation was conducted by the Postal Inspection Service, the DEA, and the Knoxville Police Department. Postal Inspectors arrested a Las Vegas, Nevada, man in June 2003 for distributing pseudoephedrine, a drug that can be used to manufacture methamphetamine. Before taking him into custody, Inspectors watched him pick up more than $11,000 from mail he received at a commercial mail receiving agency, and saw him mail 54,000 tablets at another CMRA. Inspectors began the multi-agency, international investigation after seizing 8,000 tablets mailed to a buyer in Missouri. They identified a Canadian man as the source for the Las Vegas drugs and obtained indictments for both suspects. A search warrant resulted in the seizure of 775 pounds of tablets-enough to produce 225 pounds of methamphetamine. Postal Inspectors coordinated the investigation with the Royal Canadian Mounted Police, who seized another 800 pounds of tablets. On the same day in June 2003, the Canadian man was arrested in England, prompting extradition proceedings. Postal Inspectors seized more than $300,000 from two bank accounts associated with the suspects and initiated additional forfeiture action that is expected to result in the seizure of $1.7 million in assets from drug proceeds. Asset Forfeiture and Money Laundering The Postal Inspection Service uses asset forfeiture laws to dismantle criminal organizations involved in drug trafficking, financial crimes, and child exploitation through the mail. Recent legislation, such as the Civil Asset Forfeiture Reform Act of 2000 (CAFRA) and the USA Patriot Act, has provided additional tools that are useful in investigating and prosecuting these offenses. In FY 2003, the Postal Inspection Service provided specialized forfeiture training to asset forfeiture personnel, Inspector-Attorneys, and field Inspectors. During FY 2003, Postal Inspectors seized 553 assets valued at $29 million, and forfeited 439 assets valued at more than $9.5 million. Inspection Service forfeiture activity in FY 2003 netted $6.7 million. As a result of successful asset forfeiture cases, the Inspection Service was able to share $1.6 million with other federal, state, and local law enforcement agencies. Postal Inspectors were also successful in seizing assets and using the proceeds to pay victim restitution. Money Laundering The U.S. Postal Service is considered a non-bank financial institution and a money services business, and must, therefore, comply with the reporting requirements of the Bank Secrecy Act (BSA). The Postal Inspection Service supports the Postal Service's BSA compliance efforts 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. Beginning in 2002, the Postal Inspection Service joined Operation Green Quest, a multi-agency task force headed by U.S. Immigration and Customs Enforcement that identifies and disrupts terrorist funding sources. Illicit proceeds may include money gained through narcotic sales, the smuggling of illegal aliens, tax evasion, or the selling of counterfeit merchandise. Case Files: Asset Forfeiture Postal Inspectors in Seattle, Washington, identified two suspects who were marketing illegal lottery products to U.S. citizens through the mail. The perpetrators collected an estimated $722,000 from unsuspecting victims and transported it between Vancouver, British Columbia, and Tacoma, Washington. Inspectors seized more than $400,000 from the suspects' bank accounts in November 2001, and on December 4, 2002, a consent judgment was issued for the forfeiture of $360,884. New York Postal Inspectors received a tip from a financial broker in November 2001 about suspicious money orders that had been deposited into an investment account. Inspectors found that the 431 postal money orders had been stolen by a New York City letter carrier, who controlled the account. Losses totaled more than $500,000. Inspectors executed seizure warrants during 2002 on all of the carrier's known accounts, recovering more than $380,000. Final forfeiture orders were obtained for the funds, which will be awarded as restitution to the U.S. Postal Service. From 1999 through 2002, Postal Inspectors in Los Angeles, California, and Tampa, Florida, identified several people for trafficking kilograms of cocaine and proceeds from the sales via Express Mail. After arresting one of the suspects, Inspectors seized and forfeited approximately $123,900 in drug proceeds. The defendant was convicted of drug trafficking and faces a possible sentence of life in prison. The investigation is continuing. Case Files: Money Laundering Two men pled guilty in October 2003 to a one-count information charging them with conspiracy to structure currency transactions. Inspectors learned that, over an eight-year period, the men structured the purchase of more than $600,000 worth of money orders, which they deposited into their attorney's trust account-a man who went on to become a Superior Court judge in New Jersey. The attorney pled guilty to his involvement in the scheme and resigned from the bench in February 2002. The two men face up to five years in prison and $250,000 in fines. A money laundering investigation by Postal Inspectors and FBI agents in Houston, Texas, culminated in the February 10, 2003, sentencing of a U.S. citizen from Nigeria. Postal Inspectors determined the man withdrew more than $400,000 from 12 fraudulent brokerage accounts, which contained deposits of stolen and counterfeit checks totaling $1.3 million. The man was sentenced to more than eight years in prison without parole and three years' supervised probation; he also was ordered to pay a $25,000 fine. Postal Inspectors, Secret Service agents, and investigators from the Franchise Tax Board (FTB) arrested an FTB employee on February 18, 2003, for opening at least 10 fraudulent bank accounts in other people's names. Using debit cards from the fraudulent accounts, the employee bought $65,000 worth of postal money orders, which he negotiated at post offices in California and New York. Investigators believe the employee stole approximately $950,000 worth of FTB checks. Postal Inspectors and IRS agents in New Jersey executed seizure warrants on March 7, 2003, for four investment brokerage accounts after finding that, from January 1998 through October 2001, the account holder had bought 599 postal money orders worth $416,280. He sometimes visited as many as six post offices a day, buying the money orders in amounts of less than $3,000 each to avoid federal reporting requirements. He deposited the laundered money into the investment accounts. Postal Inspectors who are members of the FBI's Joint Terrorism Task Force in Denver, Colorado, executed a search warrant in March 2003 on an Express Mail parcel addressed to an Iraqi national that contained $4,200 in blank postal money orders. The mailer and his brother ran an unlicensed money-transferring business, which they used to illegally send more than $7 million to Iraq over two and one-half years. Inspectors arrested the brothers for using the U.S. Mail and postal money orders to conduct illegal business. Identity Theft, Mail Fraud, Access- Device Fraud, and Stolen Mail Postal Inspectors and investigators with the Harris County, Texas, District Attorney's Office initiated an identity theft investigation after an Assistant District Attorney reported that someone had ordered and was using credit cards in her name. The team identified a suspect who was a naturalized U.S. citizen born in Lagos, Nigeria, and executed a search warrant at his home on March 7, 2003. Investigators seized thousands of pieces of stolen U.S. Mail and credit cards, and about $133,000 in cash from a safe. They also seized the suspect's two cars, a Mercedes and a Toyota. Four days later, the team served a search warrant at the suspect's bank, where they seized $230,000 in cash from a safety deposit box he rented. They located and froze his three bank accounts, resulting in a total seizure of more than $500,000, and arrested him on identity theft-related charges. The team identified the suspect's brother for similar violations, and arrested him on March 21 attempting to leave the country; they later seized $75,000 and a 2003 Lexus from him. On September 16, 2003, just minutes prior to a jury being seated, the suspect pled guilty to one count of conspiracy, eight counts of mail fraud, and one count of possessing stolen mail. Internal and External Investigations Mail Theft The American public has the right to expect its mail to be delivered on time and intact. As mandated by law, U.S. Mail should arrive unopened and in the mail receptacle for which it was intended. When the process is interrupted by theft, rifling, obstruction, or destruction of the mail, investigative responsibility comes under the jurisdiction of U.S. Postal Inspectors, who are charged with preserving the "sanctity of the seal." Mail thieves have a number of opportunities to steal mail. Every day, more than 690 million letters travel across the country and around the globe. The mail is delivered to about 150 million addresses six days of every week (with 1.8 million new addresses added every year). 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. More than 200 billion pieces of U.S. Mail are delivered yearly to mailboxes, collection boxes, apartment mailbox panels, relay boxes, co-op mailing racks, post office boxes, neighborhood delivery and collection box units, as well as countless versions of ingenious, homemade mailboxes crafted to meet federal standards set by the U.S. Postal Service, under the counsel of U.S. Postal Inspectors. Postal Inspectors know all this. They also know that, because mail can contain any number of valuables-not just jewelry or other expensive items, but personal and financial information, credit card applications, and the like-criminals will always try to steal it. Mail thieves employ an endless number of schemes that Postal Inspectors work hard to thwart. U.S. Postal Inspectors deploy the best security technology available. They also use preventive tactics to help protect and educate postal employees and the public about mail theft. Volume Attacks The Postal Inspection Service devotes significant resources to preventing and investigating mail theft. Mail theft rings are its 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. Postal vehicles, collection and relay boxes, apartment mailbox panels, and neighborhood delivery and collection box units are commonly targeted by thieves in volume mail attacks. Volume mail attacks constitute an ongoing threat to postal customers and receive a high level of investigative attention. Case Files: Volume Attacks In October and November 2002, criminals attacked 11 two-ton postal vehicles in the Upper East Side of New York City, resulting in the loss of certified, registered, and Express Mail parcels. After Postal Inspectors acquired a video surveillance of four men attacking one of the vehicles and then fleeing in a van, they were able to identify and arrest one of the suspects in November. He is cooperating with Inspectors, and the investigation is continuing. Chicago Postal Inspectors and U.S. Secret Service agents from the Chicago Organized Crime Task Force arrested three suspects in April 2003 on outstanding federal warrants. The arrests stemmed from a two-and-a-half-year investigation into a criminal ring headed by one of the suspects. Ring members used checks stolen from the mail to manufacture counterfeit checks as part of a bank fraud scheme. The suspects also negotiated stolen U.S. Treasury checks and credit cards obtained via identity theft. Inspectors and other task force members arrested 47 other suspects on charges of theft or forgery in state court. One suspect provided counterfeit driver's licenses and credit cards to ring members. A consent search of his home, incident to his arrest, resulted in the seizure of numerous pieces of evidence, including an official postal key, a computer, a credit card encoder and embosser, thousands of blank credit cards, driver's licenses, a loaded handgun, printouts of guest information from a Chicago-area hotel (with thousands of customers' names, addresses, and credit card numbers), and a list of the gang's identity theft victims. The investigation is continuing. On June 17, 2003, Postal Inspectors in San Francisco held press conferences to announce the arrest of 139 mail thieves as the result of Operation Mail Safe. In one week, Inspectors and other agents fanned throughout San Francisco, San Jose, Sacramento, Fresno, Stockton, and Bakersfield to arrest mail theft and identity theft suspects. Similar operations took place in Honolulu, Maui, Reno, Phoenix, Albuquerque, and Salt Lake City, resulting in the arrests of 102 federal suspects and 37 state suspects. Operation Mail Safe received national media coverage, as well as extensive local coverage. Inspectors employed a number of prevention countermeasures to help protect citizens, including modified postal locks, new security locking bars, and new high-security centralized box units in areas of risk. The Postal Inspection Service also mailed more than 100,000 postcards with theft prevention tips to postal customers in the San Francisco Bay area. Identity Theft Identity theft occurs when a thief steals key pieces of someone's identifying information, such as name, date of birth, and Social Security number, and uses the information to fraudulently apply for credit or to take over a victim's credit or bank accounts. When identity theft schemes involve the U.S. Mail, Postal Inspectors have investigative jurisdiction. 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. Mail Theft by Employees and Contractors U.S. 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. Case Files: Identity Theft New York Postal Inspectors and other members of the Nigerian Interagency Task Force initiated an identity theft investigation in early 2000 involving victims from Ohio, Michigan, and California. Task force members identified a suspect who had obtained stolen personal information from more than 21,000 credit reports and used it to open credit and bank accounts in victims' names. On October 29, 2002, the task force executed a search warrant at the home of the suspect and recovered several laptops, credit reports, and victims' personal information. They arrested the suspect and, on November 14, 2002, arrested a second man believed responsible for illegally accessing the Experian database to obtain thousands of credit reports. In June 2003, New Jersey Postal Inspectors, FBI agents, U.S. Secret Service agents, and local police detectives arrested 14 people and executed 20 search warrants in an identity theft investigation. The suspects allegedly stole information to fraudulently open credit card accounts, negotiate stolen checks, and lease luxury cars. Inspectors seized computers, electronic devices, and other hardware used to manufacture false IDs. Losses exceeded $10 million. A Chicago woman and her boyfriend used a mail bomb to murder her husband after fraudulently acquiring lines of credit in his name. She was found guilty after a three-week trial in February 2003 and was sentenced in May to 15 years in prison for conspiracy to commit identity theft, 10 years for access-device fraud, five years for mail theft, and life in prison for conspiracy in the bombing murder of her husband (to be served concurrently). She was also ordered to pay more than $142,942 in restitution and a $400,000 special assessment. Two other suspects are awaiting sentencing. On August 13, 2003, a federal grand jury in Louisiana returned an eight-count indictment against five Nigerians and an American for access-device fraud, ID fraud, and mail fraud. The group allegedly diverted dozens of credit cards to addresses they rented at commercial mail receiving agencies. Postal Inspectors recovered from the suspects handwritten pages with victims' names, addresses, dates of birth, Social Security numbers, and credit card numbers. Instructions on how to access credit card accounts online were also found. Case Files: Employee Mail Theft A letter carrier in Chicago was sentenced in July 2003 to six months' community confinement in a Salvation Army work-release center and three years' probation after pleading guilty to stealing U.S. Mail. Postal Inspectors arrested the now-former employee in December 2002, after they recovered 3,722 pieces of mail from him, including 225 rifled greeting cards. A rural letter carrier pled guilty in March 2003 to selling stolen postal keys. Postal Inspectors determined he had sold a stolen postal "arrow key" to a suspect and given him an official Postal Service shirt. Both the key and shirt were used to steal more than 200 pieces of mail from two apartment complex mailboxes in Florida. Postal Inspectors and Polk County, Florida, deputies arrested the rural carrier in October 2002, and he was sentenced in July 2003 to 60 days in prison and three years' supervised release. Case Files: Miscellaneous Crimes Postal Inspectors arrested a postal clerk in July 2003, who was a 38-year employee, after he brandished a cap pistol at the Ronald Reagan National Airport Mail Center. The man was charged with brandishing an object similar in appearance to a firearm, a violation of Virginia Code. He pled not guilty on September 3, 2003. Los Angeles Division Postal Inspectors arrested two men in July 2003 for passing stolen U.S. Treasury checks. The men allegedly deposited the checks into fraudulent bank accounts and laundered the proceeds by purchasing postal money orders with debit cards from the accounts. They recruited bank tellers to help them deposit 100 stolen checks worth $139,000 and low-level "runners" to cash the 43 money orders. Inspectors identified the two debit cards used to purchase the money orders, totaling $23,200, at post offices in Los Angeles and Van Nuys, California. To date, Bank of America has received $89,000 in reclamations from the U.S. Treasury Department for the fraudulently cashed checks. One of the suspects pled guilty in August 2003. New York Postal Inspectors discovered in December 2002 that 72 counterfeit postal money orders totaling $50,400 had been cashed. All were from a bogus company and were made payable to 12 people in Brooklyn and Connecticut. More counterfeit money orders, worth more than $400,000, began appearing in Brooklyn, and Inspectors noted similarities between the two groups. They identified several women who admitted they were being paid to open bank accounts and pass along the associated ATM and PIN numbers. Inspectors arrested three suspects on charges of bank fraud. Postal Inspectors investigating the theft of money orders at the Beverly, Letcher, and Line Fork Post Offices in Kentucky identified the suspects' vehicle when they attempted to cash the money orders. The suspects wrecked a stolen car in April 2003 after flee- ing Kentucky State Troopers, who arrested them. The two suspects admitted stealing the money orders, as well as mail in local mailboxes, while looking for checking account information. Prosecution is pending. Boston Postal Inspectors Bust Credit Card Ring Postal Inspectors in Boston initiated a case on June 3, 2002, involving 57 Discover credit cards that were stolen from the U.S. Mail en route to New Jersey. After tracing the cards to cash advances made in Connecticut, Rhode Island, and New York, Inspectors captured an image of a suspect on a surveillance video. The man used at least 20 stolen credit cards to make cash advances in excess of $300,000. Two weeks later, a woman used a stolen Discover credit card and a fraudulent New Jersey driver's license to get a $3,000 cash advance at the North Community Bank in East Granby, Connecticut. She then visited another North Community Bank in Granby and tried the same tactic, but with a different (also stolen) Discover card. Because Postal Inspectors had alerted the bank about the stolen cards, the manager called local police, who arrested the woman on the spot. Postal Inspectors interviewed her and showed her a photo spread that included their first suspect, whom she identified as a Nigerian national. Inspectors then obtained a federal arrest warrant for the Nigerian on charges of access-device fraud. Postal Inspectors from Boston, New York, and New Jersey, with agents from the Secret Service and New York Police Department, executed a search warrant in Brooklyn in October 2002 at the residence of the Nigerian man. The team seized stolen credit cards, checks, and credit card numbers, plus fraudulent driver's licenses from three states-each with the man's photo-and arrested him. The suspect identified several co-conspirators and admitted the stolen cards came from two other Nigerians. Inspectors arrested a Jamaican man in March 2003 in New Haven and arrested one of the Nigerian suspects in July 2003 in Brooklyn. Inspectors learned the stolen cards came from suspects in New Jersey, Brooklyn, and Staten Island. Postal Inspectors from Connecticut, New York, and New Jersey and other members of the Interagency Nigerian Organized Crime Task Force arrested another Nigerian co-conspirator in July 2003 and seized from him stolen credit cards, credit card numbers, Social Security numbers, and dates of birth, as well as credit bureau printouts and a bag of shredded credit cards, driver's licenses, credit card inserts, and mailing envelopes. On July 23, 2003, District of Connecticut Magistrate Judge Margolis ordered the suspect held without bond. The investigation is continuing. A Virginia highway contract route driver pled guilty on November 21, 2002, to five criminal counts stemming from a complaint about large amounts of mail on his property. The driver-a former deputy sheriff-was responsible for preparing and delivering mail to five post offices in southeastern Virginia. Washington Division Postal Inspectors executed a search warrant at the contractor's home and found mail filling three abandoned vehicles, pits filled with mail in the surrounding woods, and piles of mail beneath his mobile home. The mostly First-Class and standard bulk business mail dated back about 10 years, through May 2002, and Inspectors needed three, nine-ton postal vehicles to transport it from the property. The driver admitted he had taken the mail home and rifled it for money and other articles. He pled guilty to five felony counts of theft of mail by a postal employee and was sentenced on March 6, 2003, to three years in prison. In June 2003, Netflix, Inc., a major retailer that rents DVDs via the U.S. Mail, asked Los Angeles Postal Inspectors for help when it encountered problems with mail theft. Inspectors tracked the cause to four Netflix employees who worked in the mailroom and an outside co-conspirator, who together were believed to have stolen more than 1,000 DVDs-plus another 403 on the day of their arrests. The employees opened the DVDs in the mailroom and placed them in the trash, then paid a collaborator to pick them up from Netflix's outside garbage dumpsters. They sold the stolen DVDs for $2 to $3 each. The employees lost their jobs, and prosecution is pending. A Postal Inspector arrested a Postal Service custodian from the Roy Royall Station in Houston, Texas, in February 2003. After Inspectors analyzed postal records and conducted a surveillance of the employee, they found he had been stealing gas credit cards from the station and using them to sell discounted gas to dump truck drivers. Losses exceeded $54,000. He lost his job with the Postal Service, and prosecution is pending. Homicides, Assaults, and Threats The U.S. Postal Inspection Service is committed to ensuring employee safety in the workplace. Postal Inspectors investigated 845 postal-related assaults and credible threats during FY 2003 and made 356 arrests. Inspectors seek prosecution in assault cases when appropriate. Graph Assaults & Threats: Five-Year Trend FY 99: 1,063 FY 00: 1,037 FY 01: 714 FY 02: 799 FY 03: 845 Case Files: Homicides, Assaults, and Threats A man who entered the lobby of the Lakeside, California, Post Office on May 28, 2003, and took four postal employees hostage at gunpoint was charged with kidnapping with the use of a firearm. He carried an SKS assault rifle and a backpack with more than 200 rounds of ammunition. The suspect demanded to speak with the San Diego district manager's office, and hostages were then able to speak with Postal Inspectors who had responded to that office. Hostage negotiators from the local sheriff's office spoke with the suspect via a cell phone and finally convinced him to release the four employees. The incident lasted about four hours, and no employees suffered physical injuries. The Postal Inspection Service held a press conference on December 23, 2003, the six-month anniversary of the murder of a full-time letter carrier in Pittsburgh, Pennsylvania. The press conference was held at the site where the carrier was shot and killed after he stepped outside his marked postal vehicle, which was parked at the Crafton-Ingram Shopping Center on June 23, 2003. The Postal Inspection Service initiated the event to reinforce its commitment to solving the case, and Inspectors used the opportunity to distribute an updated version of a reward poster, offering up to $100,000 for information leading to the arrest and conviction of the person or persons responsible for the murder. Postal Inspectors and officers from the Allegheny County Police Department are conducting the investigation. Postal Inspectors investigated the murder of an employee of Earl's True Value Hardware store in Fredericksburg, Virginia, who was found dead on July 14, 2003, in a contract postal unit in the store. Postal Inspectors, FBI agents, and members of the Stafford County Sheriff's Office responded to the scene. The employee was completing "close-out" duties when she was attacked, but there were no eyewitnesses to the crime. Postal Inspectors and other members of the Homicide Task Force identified a suspect through evidence recovered from the crime scene, and arrested him on September 13, 2003, after executing a search warrant at his home. He is being held without bond, and further prosecution is pending. A man convicted in 1981 of murdering a postal contractor in Eatonville, Florida, in October 1979 was executed at the Florida State Prison on December 9, 2002, after numerous postponements. Linroy Bottoson abducted Catherine Alexander from a contract postal station after imprinting 37 postal money orders for what was then the maximum amount allowable of $400 each. Postal Inspectors found Alexander with 16 stab wounds and severe injuries that resulted from being run over by a vehicle multiple times. In this aerial photo, some of the 100 or so local, state, and federal officials can be seen during the kidnapping of a letter carrier in Miami, Florida, on January 31, 2003. Postal Inspectors responded to the scene after a report that an unidentified male had jumped into a postal mail truck at NW 185th Street and 39 Court. Inspectors positioned their car four vehicles behind the postal truck in pursuit of the hijacker. During the slow-speed chase, the suspect fired two shots, one from a .357 Magnum and the other from a .380 Baikal pistol, but, fortunately, missed both the police and Inspectors on his trail. Four hours later, the suspect released the carrier, who was unharmed; the suspect surrendered an hour later. After a one-week trial, the jury took only an hour to find the man guilty. He was sentenced on August 5, 2003, to three consecutive terms of life in prison. A co-conspirator, who had been observed near the vehicle, was also arrested and later received a six-year prison term and five years' probation. Robberies and Burglaries 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 employees and facilities against criminals. But the U.S. Mail and post offices will likely 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. At top is a chart that provides statistics on robberies that occurred in the past two fiscal years; above is a graph depicting five-year robbery trends. Postal Inspectors attribute the drop in the number of robberies that occurred during FY 2003 to recent prevention strategies and countermeasures, such as installing locks, lighting, or surveillance cameras at facilities as needed, as well as talking with postal employees and emphasizing robbery prevention tips whenever possible. Inspectors aggressively and thoroughly investigate all postal robberies and attempted robberies. Graph Robberies in FY 2002 and FY 2003 Facility robberies with physical injury in FY 02 - 3 Facility robberies with physical injury in FY 03 - 7 Carrier robberies with physical injury in FY 02 - 3 Carrier robberies with physical injury in FY 03 - 3 Other robberies with physical injury in FY 02 - 0 Other robberies with physical injury in FY 03 - 1 Total robberies with physical injury in FY 02 - 6 Total robberies with physical injury in FY 03 - 11 Facility robberies with death in FY 02 - 0 Facility robberies with death in FY 03 - 2 Carrier robberies with death in FY 02 - 0 Carrier robberies with death in FY 03 - 0 Other robberies with death in FY 02 - 0 Other robberies with death in FY 03 - 0 Total robberies with death in FY 02 - 0 Total robberies with death in FY 03 - 2 Facility robberies without physical injury in FY 02 - 41 Facility robberies without physical injury in FY 03 - 28 Carrier robberies without physical injury in FY 02 - 22 Carrier robberies without physical injury in FY 03 - 9 Other robberies without physical injury in FY 02 - 30 Other robberies without physical injury in FY 03 - 19 Total robberies without physical injury in FY 02 - 93 Total robberies without physical injury in FY 03 - 56 Total facility robberies in FY 02 - 44 Total facility robberies in FY 03 - 37 Total carrier robberies in FY 02 - 25 Total carrier robberies in FY 03 - 12 Total other robberies in FY 02 - 30 Total other robberies in FY 03 - 20 Total robberies in FY 02 - 99 Total robberies in FY 03 - 69 Graph Robberies: Five-Year Trend FY 99: 130 FY 00: 116 FY 01: 89 FY 02: 99 FY 03: 69 Burglaries The U.S. Postal Inspection Service continued its investigations of burglaries during FY 2003, although rates remained relatively stable. A few problems remained in rural areas of the country. About 81 percent of the burglaries in FY 2003 resulted in losses of less than $1,000, or the theft of fewer than 100 postal money orders. The graph above depicts postal burglary trends over the past five fiscal years. Graph Burglaries: Five-Year Trend FY 99: 291 FY 00: 294 FY 01: 286 FY 02: 212 FY 03: 256 Case Files: Robberies Postal Inspectors arrested a full-time distribution clerk at the West Jersey Processing and Distribution Center (P&DC) in Whippany, New Jersey, on October 23, 2002, for bank robbery. Inspectors and FBI agents identified the suspect's latent fingerprints on bank notes he used while committing four bank robberies in New Jersey. An Automated Fingerprint Identification System "hit" was obtained on the employee, and he was arrested without incident at his home in East Orange. The investigation linked the employee to 27 bank robberies in five states since 1998. He was sentenced in August 2003 to 13 years in prison and was ordered to pay restitution of $105,000. An investigation by Washington Division Postal Inspectors and members of the Baltimore, Maryland, Police Department led to the March 2003 indictment of three men for the December 20, 2002, robbery of the Govan's Station Post Office in Baltimore and the January 3, 2003, robbery of a McDonald's restaurant. The men were charged in a six-count indictment with conspiracy to assault with intent to rob, use of a firearm during the commission of a robbery, and violations of the Hobbs Act for obstructing and affecting interstate commerce by robbery. The three men were sentenced on October 16, 2003. One man received an eight-year jail term and the other two were each sentenced to 11 years in prison. Two West Virginia men pled guilty on July 17, 2003, for their part in the armed robbery of a highway contract route (HCR) driver at the Sissonville, West Virginia, Post Office. In February 2000, a man brandishing a gun approached the HCR driver at the rear dock of the post office. As he tied the driver's hands, an accomplice entered the truck. A clerk inside the post office (which had been properly secured) called 911 while the men made several attempts to enter the building. Postal Inspectors identified a postal clerk as a suspect, and arrested three others believed to be involved in the robbery. The first suspect was sentenced in August 2003 to more than 10 years in prison and three years' supervised release, and was ordered to pay $75,241 in restitution to the U.S. Postal Service. The second suspect was sentenced in October 2003 to more than five years in prison and five years of supervised release, and was ordered to pay $32,246 in restitution. The third suspect was also sentenced in October to 12 years in prison and five years of supervised release, and was ordered to pay $75,241 in restitution. Another man was previously sentenced for his role in the crime. Postal Inspectors identified four people suspected in the attempted hijacking of a North Carolina HCR driver. The driver was traveling between post offices on September 10, 2002, when a suspect on a motorcycle alerted three accomplices. One man blocked the highway with his BMW while two others emerged from nearby woods. In a harrowing escape, the HCR driver crouched down in his seat and accelerated around the BMW as shotgun blasts hit his truck. Postal Inspectors identified the suspects and, with the assistance of local sheriff's deputies, arrested all four in April 2003. One of the suspects was a former HCR driver who had alleged he was the victim of a hijacking in January 2002. Two suspects pled guilty on September 24, 2003, to conspiracy and firearm charges. Prosecution is pending for other suspects identified by Postal Inspectors. Case Files: Burglaries Charlotte Division Postal Inspec-tors and Smith County, Tennessee, detectives arrested a man and a woman on April 11, 2003, as they were attempting to negotiate "bait" postal money orders stolen that day during the burglary of the Hickman, Tennessee, Post Office. The couple pried open a locked window and entered the service window area, but were unable to break into the safe. They pled guilty one week later to burglarizing the post office, as well as two local businesses, and were each sentenced to two years of probation. On May 19, 2003, San Francisco Division Postal Inspectors arrested a man in the act of burglarizing the Cedar Station Post Office in Fresno, California. Inspectors initiated the investigation after receiving customer complaints about missing parcels. A video surveillance of the office yielded images of two men stealing parcels on different nights. Inspectors then conducted a surveillance of the office and saw a man using a key to enter the facility and begin filling a duffle bag with mail parcels. After his arrest, the man admitted he had burglarized the post office at least 12 times in the past six months, using a key he got from his former wife, who was a full-time custodian. Postal Inspectors have identified a second suspect, and the investigation is continuing. St. Louis Division Postal Inspectors arrested two men in June 2003, one of whom was already incarcerated at the Iowa State Penitentiary. The men were charged with burglary, receiving stolen government property, and possessing stolen money orders related to the June 16, 2001, burglary of the St. Catherine Contract Postal Unit in St. Paul, Minnesota. The safe containing postal money orders and the money order imprinter was also taken. One of the suspects pled guilty in July 2003 to possessing a stolen money order, and the other pled guilty in August 2003 to the burglary. Inspectors arrested three other suspects for cashing more than $22,000 in money orders stolen during the break-in. Revenue and Financial Investigations Postal Inspectors determine which products and sources of revenue pose the highest financial risks to the Postal Service and target their investigations accordingly. For the past several years, postage fraud schemes involving large-scale business mailers have been a priority, especially mailers who use metered postage and those who claim presorted discount rates of postage. Postal Inspectors measure the effectiveness of their revenue investigations by the number of postage fraud schemes they identify and successfully resolve. In addition to stopping the scheme, 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 left summarizes Postal Inspection Service revenue investigations this past fiscal year. U.S. Postal Inspectors concluded eight major investigations in FY 2003 involving the underpayment of postage by large-scale, commercial mailers. Postage fraud schemes are generally complex due to the many postal operations and postage rate structures, and can pose a problem for prosecutors trying to present the case to a jury. Graph Revenue Investigation Results in FY 2003 Criminal cases: 113 Criminal convictions*: 54 Civil cases resolved*: 9 Amount ordered or agreed to be paid as a result of a civil prosecutive action*: $8.8 million Voluntary restitution*: none Court-ordered restitution-criminal*: $11.9 million *May be related to cases from prior reporting periods. Civil Prosecutions Affirmative Civil Enforcement (ACE) is an effective tool used by investigative agencies and criminal prosecutors to ensure the fullest recovery of losses for the government. ACE allows the government to fashion settlements to address unique law enforcement issues that can arise in complicated fraud cases. ACE also grants triple damages and penalties for false claims. Financial Investigations The majority of financial investigations conducted by the U.S. Postal Inspection Service comprise employee embezzlements. Postal Inspectors have uncovered a range of embezzlement schemes used 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. Postal Inspectors conducted 572 embezzlement investigations during FY 2003 and identified more than $5.4 million in postal losses. Case Files: Revenue Investigations A Colorado mailer signed a $2.4 million settlement agreement on July 23, 2003, as the result of intentionally underpaying postage. Although the Salida Post Office was only two blocks from the mailer's business, Postal Inspectors found the company had been taking its large mailings to an office 13 miles away. That office, which was not equipped to handle large mailings, accepted the mail at incorrect, lower postage rates and then transported it by truck to the Salida Post Office. The mailer actually had sophisticated software to compute the correct postage, but continued to exploit the situation at the remote office. Approximately 8 million pieces of underpaid mail were processed through the office. Postal Inspectors are reviewing operating procedures at the small office. A Norcross, Georgia, man who Postal Inspectors alleged had manipulated postal vending machines was sentenced on April 24, 2003, to 27 months in prison and was ordered to pay $3,700 in restitution. The man altered pennies so they would be accepted as dimes in postal vending machines. After depositing 200 altered pennies into postal machines, which "read" them as being worth $20, he would select the lowest-priced stamp items, allowing him to receive the maximum amount of change in dollar coins. Inspectors estimated he had deposited approximately 154,000 of the altered pennies into the machines. A man in Lewisville, Texas, who owned a third-party mailing business, was sentenced on May 16, 2003, to 27 months in prison and three years of supervised release, and was ordered to pay approximately $66,000 in restitution to his victims. An investigation by Postal Inspectors and agents from the FBI found the owner had overbilled customers by more than $100,000 by using a stolen post office dater to create fictitious postage statements as proofs of mailings. The man also obtained loans and credit cards, via the U.S. Mail, in the name of one of his business partners, resulting in charges of mail fraud. A New York interstate truck driver was sentenced on January 9, 2003, to one year in prison and three years of supervised release, and was ordered to pay full restitution of $17,840 to the Postal Service for writing bad checks at post offices. Postal Inspectors determined the driver was a member of a gang that wrote bad checks to buy stamps, which they would turn over to the ringleader in return for 50 percent of the stamps' value. The ringleader resold the stamps and pocketed the cash. Inspectors arrested seven co-conspirators. Four others have already been sentenced and were ordered to pay a combined $38,069 in restitution. Another suspect is awaiting trial. Case Files: Civil Prosecutions As the result of a seven-year investigation by Postal Inspectors, the U.S. Attorney's Office in New Jersey filed a civil complaint against a Carlstadt company. The company had presented 21 fraudulent checks to cover more than $652,000 worth of mailings. Postal Inspectors determined the company knew it had insufficient funds to back the checks. In March 2003, the judge ordered the company to pay the Postal Service triple damages of nearly $2 million, and $210,000 in penalties, as provided by ACE. A publisher in Jamesburg, New Jersey, signed a $3.7 million settlement agreement on July 3, 2003, in lieu of a civil trial. Postal Inspectors determined the publisher had been submitting false mailing documents for three years. The deception allowed him to pay lower postage for 10 of his publications. The settlement represented nearly double the revenue the publisher owed the Postal Service. Case Files: Financial Investigations A former postal manager of the Longworth House Office Building Station for the U.S. House of Representatives was sentenced on June 26, 2003, to 14 months in prison and three years of probation, and was ordered to pay $199,620 in restitution for stealing postal funds. Postal Inspectors found the manager had issued money orders to himself and spent other postal funds on personal items. A former window clerk from the Market Square Station in Philadelphia, Pennsylvania, was sentenced on June 6, 2003, to three months in prison and three years of probation, and was ordered to pay $119,000 in restitution for stealing postal funds. An Inspection Service investigation disclosed the clerk had posted fictitious expenses on her daily financial reports and did not input various revenue transactions to her retail terminal. She used the excess money for personal expenses. A former postmaster in Wayne, West Virginia, was sentenced on February 24, 2003, to six months in prison and two years of probation, and was ordered to pay $67,264 in restitution for embezzling postal funds. Postal Inspectors determined the postmaster had stolen more than $166,000 in postage sales and post office box rental fees. A former sales and services associate (SSA) from the Columbia University Finance Unit in New York City was sentenced on March 17, 2003, to one year in prison and three years of probation, and was ordered to pay $144,469 in restitution for embezzling postal funds. An Inspection Service investigation found the man had withheld six of the unit's cash deposits. He concealed his activities for more than a year by manipulating postal funds and falsifying postal records. A Postal Inspection Service investigation of more than $40,000 in stamp stock losses at the Sandston, Virginia, Post Office resulted in convictions for two former SSAs who had embezzled postal funds. One SSA was sentenced on May 16, 2003, to 14 months in prison and three years of probation, and was ordered to pay $10,773 in restitution. The other was sentenced to five years of probation and was ordered to pay $20,790 in restitution. Workers' Compensation Fraud 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 $7.1 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 2003 resulted in $152 million in long-term, cost-avoidance savings and another $10.3 million in COP cost savings, totaling $162.3 million in cost savings for the Postal Service. 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 work closely with Injury Compensation offices to flag potentially fraudulent claims. The Postal Inspection Service also has oversight and responsibility for the Contract Fraud Analyst Program, which provides contract fraud analysts to assist Inspectors in investigating suspect claims. During the course of their investigations this past fiscal year, Postal Inspectors identified 380 individuals for defrauding the workers' compensation program and arrested 45 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). Misrepresentations of Physical Abilities Another form of fraud Inspectors uncover in the workers' compensation program involves employees who misrepresent the extent of their physical abilities. The efforts of Postal Inspectors in obtaining prosecution in these cases have been increasingly successful. Case Files: Employment Fraud Postal Inspectors arrested a Rocky Mount, North Carolina, letter carrier in April 2003 for making false statements to obtain workers' compensation benefits. After a referral from the Injury Compensation Unit, Inspectors determined the disabled carrier was holding a job, although he failed to report his income to the Department of Labor (DOL). He collected more than $33,000 in benefits based on false information he provided. The carrier lost his job and pled guilty to making false statements in June 2003. DOL terminated his benefits in July, and sentencing for the carrier was scheduled for 2004. A letter carrier in Fresno, California, was sentenced on May 28, 2003, for making false statements to obtain federal employees' compensation. Postal Inspectors received an anonymous tip that the supposedly disabled carrier had been running a tree-trimming business for 10 years and did not report his income to DOL, or the fact that he was able to work. When Postal Inspectors confronted him about his activities, the employee admitted his job included chopping down trees, raking leaves, cutting firewood, and loading wood onto his pickup truck. As a result of the Inspection Service investigation, the now-former employee was sentenced to five years' probation and ordered to pay restitution of $174,737. The Postal Service realized a future cost savings of $590,750. A clerk in San Francisco, California, was indicted for workers' compensation fraud on April 24, 2003, just six days before the statute of limitations for her case would have expired. She had claimed a back injury in 1975 and then switched between the Office of Workers' Compensation Program and the Office of Personnel Management to file disability claims before resuming employment with the Postal Service in 1981. Within 30 days of returning to her job, she reported a recurrence of the back injury and went on the periodic rolls. DOL rated her as having no wage-earning or re-employment potential for an indefinite period. Postal Inspectors, however, found she had been actively working in a family business and as a notary since 1987. An undercover surveillance of her activities by Postal Inspectors and DOL-OIG agents provided evidence of her false claims. A mail processor in Providence, Rhode Island, pled guilty in December 2002 to making false statements related to workers' compensation. Postal Inspectors found that, although she claimed she was totally disabled, the employee was working as an operations manager for a trucking company from an office set up in her home. She handled the postal highway contract route for the business, worth about $3 million a year in revenue, and coordinated all nonpostal contracts as well. Inspectors set up surveillance on the employee and captured video images of her actually driving a highway contract route, transporting drivers, and refueling trucking company vehicles. When confronted with the evidence, she pled guilty to the charges and resigned from the Postal Service. She was sentenced on March 7, 2003, to four months of home confinement with electronic monitoring, two years' probation, and 50 hours of community service, and was ordered to pay restitution to the Postal Service of $42,846. Further, she is permanently disbarred from ever again receiving workers' compensation benefits. The Postal Service realized a long-term cost savings of $517,590 as a result of the investigation. On February 19, 2003, a clerk at a vehicle maintenance facility in San Diego, California, was convicted of insurance-related workers' compensation fraud after pleading guilty in August 2002. Postal Inspectors determined the clerk was employed as a tow truck operator and mechanic while claiming he was totally disabled and could not work for the Postal Service. He also failed to report his income and misrepresented his physical abilities to DOL and the Postal Service. As a result of the investigation, the clerk lost his job and was sentenced to five years' probation and 200 hours of community service, and was ordered to pay $17,000 in restitution to the Postal Service. The Postal Service also realized a future cost savings of $526,742. A former postal clerk in Tulsa, Oklahoma, was convicted and sentenced on March 11, 2003, for making false statements to obtain federal employees' compensation. In December 1991, the clerk was placed on the periodic rolls after straining her back and displacing a lumbar disc, and she then relocated to Sarasota, Florida. Postal Inspectors there determined she got a job at a local call center but was not reporting her income or her ability to work to the Department of Labor and the Postal Service. The clerk provided Inspectors with a sworn statement admitting to the deception, stating, "I know I lied on Form 1032, but I was afraid of losing my monthly check. I am terribly sorry." The claimant was scheduled to turn herself in, but she instead fled to Tulsa, her hometown. Inspectors in Tulsa found and arrested her and, under an agreement between the U.S. Attorney Offices in Oklahoma and Florida, she was tried in Oklahoma. The clerk lost her job and was sentenced to five years of probation and ordered to pay restitution of $28,205. The Postal Service achieved a future cost savings of $515,591. A former full-time postal clerk in Newark, New Jersey, was convicted of mail fraud after Postal Inspectors found he was working as a massage therapist while claiming to the Postal Service he was unable to work. The clerk claimed to be totally disabled after falling and injuring his back on the job, but Inspectors determined he failed to report his income to DOL and was lying about his inability to work. The clerk lost his job and pled guilty to workers' compensation fraud in November 2002. He was sentenced to a year of probation and was ordered to pay $5,102 in restitution to the Postal Service; Inspectors recovered another $21,943 in benefits. The Postal Service realized a future cost savings of more than $1 million as a result of the investigation. Case Files: Misrepresentations of Physical Abilities A letter carrier in White Plains, New York, was sentenced on April 11, 2003, to one year in prison and two years' probation, contingent upon completing 100 hours of community service, for making false statements to obtain workers' compensation. Postal Inspectors determined the now-former letter carrier had tried to get witnesses of a vehicle accident to lie about it. He told his supervisor he was unable to work and was in bed for five days following the incident. Inspectors revealed he was actually quite busy, acting as referee in a basketball game three days after the accident and at least eight times during the period he was allegedly unable to work. In what Inspectors refer to as a "front-end" investigation, the claimant was kept from collecting automatic monthly benefits and was ordered to pay the Postal Service $1,312 in restitution. A postal clerk in Champaign, Illinois, was sentenced on August 29, 2003, to one year in prison and three years' supervised release for defrauding the workers' compensation program and stealing government money. Postal Inspectors and agents from the DOL-OIG found he was deliberately concealing income he earned from an auction house he owned and ran-at the same time he claimed to be totally disabled. The clerk lost his job and was ordered to pay restitution of $35,252 to the Postal Service and $29,523 to the Social Security Administration. The Postal Service achieved a long-term cost avoidance of $779,945 as a result of the investigation. On May 27, 2003, a letter carrier in Atlanta, Georgia, was sentenced to five years' probation and was ordered to pay $24,150 in restitution to the Postal Service after pleading guilty to workers' compensation fraud. The carrier claimed she was unable to work after she injured her left elbow and back when a dog tried to attack her on her route. But when physical therapy staff asked why she stopped her therapy, she replied, "None of your business." Postal Inspectors conducted a surveillance of the carrier and discovered that she routinely appeared at her doctor's office to obtain needed paperwork without wearing a brace or needing any assistance. But when she came to the office for an appointment, she wore a neck brace and requested help from the staff. An independent medical examiner cleared her for full duty, resulting in a long-term cost avoidance of $386,925 for the Postal Service. A New Orleans, Louisiana, mail handler pled guilty on January 9, 2003, to workers' compensation fraud. After less than four months on the job, DOL accepted her claim that she injured her left back, right shoulder, and spine when she lifted a heavy sack of mail. After receiving her salary and medical compensation for two years, the employee returned to work full time in a "limited-duty" status. Three hours into her first day back, she claimed to be in so much pain she had an ambulance take her to the hospital. Her disability claim, however, was denied by DOL, which stated "fact of injury not established." Postal Inspectors investigated the woman and determined she had falsified medical documents, resulting in her arrest. She lost her job and was sentenced to six months in prison, four months of home confinement upon her release from prison, and two years of supervised release. Following a five-day trial that featured 17 witnesses and 63 items of evidence, a postal clerk in Jacksonville, Florida, was convicted in October 2002 on three counts of workers' compensation fraud. The clerk was working in a limited-duty capacity due to bilateral carpal tunnel syndrome. But when she injured herself again and was categorized as totally disabled, the Department of Labor placed her on the periodic rolls in April 2001. Postal Inspectors received a tip about an Internet Web site where the employee advertised herself as "an American watercolor artist" who specialized in painting animals from photographs. Acting undercover, an Inspector visited her studio to learn about her business, and the "disabled" clerk painted several portraits for the Inspector, charging her standard fee of $165 each. Postal Inspectors learned she was not reporting her income to DOL and, worse, she vowed to the undercover officer that "they [the Postal Service] would pay her until she retired." She also revealed plans to move her studio to a new home that she and her husband were having built-financed in part by the $2,247 she was fraudulently collecting each month in tax-free benefits. Instead, thanks to U.S. Postal Inspectors, on June 20, 2003, the now-former postal clerk was sentenced to five months' imprisonment, five months' home detention, and two years' supervised release. She also was ordered to pay $34,231 in restitution to the Postal Service. The Postal Service realized a future cost savings of $508,470 as a result of the investigation. Postal Inspectors Keep an Eye Out for Workers' Compensation Fraud Inspector Nelson collected hours of videotape from surveillances of Melvia Brownlee, who showed no physical disabilities at all once she began collecting workers' compensation pay. DOL removed Brownlee from the periodic rolls after her conviction for defrauding the Workers' Compensation Program. Brownlee was sentenced to probation and restitution to the Postal Service of roughly $206,000. Greer began collecting workers' compensation pay due to an alleged back injury on the job after only eight days of employment with the U.S. Postal Service. She continued to receive benefits for the next 36 years-until Postal Inspector Gale Nelson proved Greer's claims were fraudulent. Postal Inspector Gale Nelson (center) depends on assistance from Contract Fraud Analyst Olander Franklin (left) and Research Assistant Treva Gibson (right) to successfully resolve fraudulent workers' compensation investigations in Memphis. "When fraud or abuse is suspected ... you have an obligation to report it." - from U.S. Postal Service Handbook EL-505, Injury Compensation The Workers' Compensation Program is a good program. Postal Inspectors make sure it's a clean program. workers' compensation : a system that provides disability benefits of up to 75 percent of wages to an employee after an injury occurring during the course of employment. On August 8, 1965, eight days after joining the Postal Service as a full-time distribution clerk at the Memphis, Tennessee, Post Office, Alois Greer suffered a back injury on the job. Greer, age 34, applied for and received workers' compensation benefits, claiming she could no longer perform her duties. She continued to receive benefits for the next 36 years, collecting 75 percent of her regular pay. She never again set foot on the workroom floor. Greer was to receive nearly $2 million in workers' compensation pay. She'd still be collecting benefits if it wasn't for U.S. Postal Inspector Gale Nelson, charged with investigating fraud against the workers' compensation program. Four years after the federal law enforcement officer initiated an investigation of Alois Greer, the former clerk's compensation checks stopped arriving in the mail. on the rolls : refers to the "periodic rolls," the Department of Labor program that allows disabled employees to automatically receive compensation payments every 28 days-for as long as they live, tax-free. Inspector Gale Nelson's interest in Greer was first sparked in early 1996, during a meeting with members of the Postal Service's Injury Compensation Unit in Memphis. The meetings, which had become a monthly event, were for just this purpose: to review the files of employees who were "on the rolls" or otherwise collecting workers' compensation pay. USPS Human Resources Specialist Lois Vinson of the Injury Compensation office pushed three files across the desk toward Inspector Nelson, Research Assistant Treva Gibson, and Contract Fraud Analyst Olander Franklin. "You ought to take a look at these three sisters," Vinson said. "If there's fraud in the program, that's where you're going to find it." A scan of the files seemed to back Vinson's claim. The sisters had different last names, but similar injury histories. They all had worked for the Postal Service in Memphis. All had been injured on the job. Although Greer had worked only eight days before claiming a disability, Melvia Brownlee and Mildred Shaw had held their jobs for exactly a year-to the day-when their disabling injuries occurred. Greer's siblings had been collecting full workers' compensation benefits for nearly as long as Greer: 24 years apiece. continuation of pay : or COP, allows employees who are hurt while on duty to receive a regular paycheck during their recovery, with no charge to sick or annual leave, for up to 45 days following the incident. Inspector Nelson remembers being impressed by Vinson's research, but she was unable to immediately follow up on the tip. "We were focusing on higher- revenue cases," said the Inspector. "Something was obviously fishy with those sisters. But we had to compare that to much younger claimants on the rolls, with years of compensation still ahead. We had to be realistic. These workers' fraud cases eat big holes in the Postal Service's budget-in the hundreds of millions of dollars. There are only so many of us, so we set priorities." Such Postal Inspection Service priorities have served the U.S. Postal Service well. In Fiscal Year 2002, Postal Inspectors' investigations of workers' compensation fraud resulted in a long-term and continuation-of-pay cost-savings of $108.4 million for the Postal Service. In the first half of FY 2003, Inspectors have already realized $84.3 million in long-term and COP savings for the Postal Service, just through its investigations of workers' compensation fraud. fraud : a deception deliberately practiced in order to secure unfair or unlawful gain. Nelson did try to visit two of the women in the fall of 1996, but neither would speak with the Inspector or let her set foot through the door. "That was definitely a sign to me that something was wrong," said Nelson. "Here are these women who are so ill they can't come in to work, so why wouldn't they talk to me? What did they have to hide?" Inspector Nelson and her assistants began spending time on the case, looking for evidence that Greer and her sisters were committing fraud. Nelson ordered the women's medical files from the Department of Labor, and the sisters were videotaped in the hope that incriminating actions would be recorded. Inspector Nelson's break came when she spoke with a former acquaintance of Greer's, who disclosed that Greer, who doctors said depended on a wheelchair, had been a schoolteacher. Then the Inspection Service team began to find a great deal more evidence. Nelson interviewed one of Greer's former principals, who had since retired. He told the Inspector that he remembered the schoolteacher, whose classroom was on the second floor. But he didn't remember seeing a wheelchair. The school had no elevators. Nelson and Treva Gibson next visited the Memphis School Board to get evidence related to Greer's teaching work. It took several requests, but in dusty boxes stored in the basement they found the key to Greer's outside employment: She had given the school a different Social Security number. When Nelson checked Greer's "alternate" SSN with the Social Security Administration, she found it belonged to someone who had died two years earlier. During the same time former distribution clerk Alois Greer was collecting money from the Postal Service because she was unable to work, she also received $220 a month from the Veterans Administration for an education allowance. She used the money to enroll in, and graduate from, a three-year nursing school. She earned a state of Tennessee teaching certificate and taught in public schools for five years. Pretty good for a woman who doctors reported as unable to walk due to pain and weakness in her lower-left extremity and needing a wheelchair for mobility. Over the 36 years that Greer received benefits, she continued to mail back to the Department of Labor every Form CA-1032, questioning whether she was receiving income. Each time, she checked off "none." Under Greer's fake Social Security number, new income appeared. Nelson found a rental property Greer owned and managed, as well as several real estate businesses she operated. She was collecting income from all of it-income she never reported to the Department of Labor. The team next identified the "dependent" Greer had claimed, allowing her to collect the highest level of benefits-75 percent of her salary. He was the doctor who had verified many of the medical documents supporting Greer's 100 percent disability. The doctor died before the case was concluded. On February 4, 1999, Postal Inspectors executed three search warrants on the home and real estate owned by Alois Greer. Memphis Postal Inspectors carted away 22 boxes of documents supporting charges that Greer made false statements to obtain workers' compensation benefits and committed mail fraud when she mailed fraudulent Forms CA-1032 to the Department of Labor. investigation : a detailed inquiry or systematic examination. Research on Greer's sisters revealed similar fraud. After injuring her right elbow at the Post Office, Melvia Brownlee collected temporary total disability compensation. She returned to work for a time, but a "psychiatric disorder" prevailed-along with "severe pain" in her right arm-and she stayed home. The Department of Labor authorized an additional $223.32 a month for an attendant to assist Brownlee, although Brownlee never used the money to hire one. Inspector Nelson visited Mildred Shaw's former Post Office to review her employee files. Shaw had claimed an injury when she was "beat on the back" by a "drunken" co-worker (a scenario contested by two witnesses, who said the co-worker was not drunk, and had "patted her lightly"). After the incident, an order by Shaw's physician excused her from work and recommended "bed rest for two weeks." This was followed by intermittent medical reports variously describing her as "acutely delusional and hallucinatory" and "in a very dilapidated state of schizophrenia, which is catatonic in type." It must have been a very specific type, as Shaw was able to apply for and receive a teaching certificate from the state of Alabama. In November 1986, when asked about her health on a job application, one word sufficed: "Good." She got the job and taught school for nine and a half months. On March 21, 1994, Melvia Brownlee and Mildred Shaw applied separately to become foster parents under a program for children with severe emotional and behavioral problems. The sisters swore on the required medical forms they were "physically healthy in every way, with no illnesses." It earned them each an extra monthly income of $1,200. That same month, the women's doctors reported to the Department of Labor that neither could "dress, undress, take a bath, or put on her shoes." Melvia Brownlee and Mildred Shaw mailed in their Forms CA-1032 with "none" checked off in the employment section, just as their older sister had done. FECA : under the provisions of the Postal Reorganization Act, 39 USC 1005(c), all USPS employees are covered by the Federal Employees' Compensation Act (FECA). The coverage extends to all full-time, part-time, and temporary (including casual and transitional) employees, regardless of the length of time on the job or the type of position held. (Federal Procedure Manual [FECA PM] 2-802) Inspector Gale Nelson presented the team's evidence to the U.S. Attorney, and the three siblings were indicted on charges of workers' compensation fraud-a whopping 75 counts each. When Injury Compensation Specialist Lois Vinson heard the news, she felt a sense of deep satisfaction: "I knew those sisters were abusing the program. Gale Nelson proved it." Greer's sisters pled guilty, were sentenced to probation and home confinement, and were ordered to pay restitution totaling more than $206,000. Alois Greer initially entered a plea of not guilty. But the investigative team proved that Greer had cheated the Postal Service and defrauded the Department of Labor. Greer ended up forfeiting $18,000 in cash that Inspectors seized from her home during the February 1999 search. She entered a guilty plea to four of the counts and was sentenced on July 13, 2001, to one year and six months in federal prison and three years of supervised release. She was ordered to pay restitution to the Postal Service of $366,206. The sisters are no longer on the periodic rolls. When employees at the Memphis Post Office heard the news that the women had been convicted, they were elated. As one employee put it, "Here we are, getting up and coming in to work every day, while they stayed home and got paychecks for it. I'm glad they got caught." workers' compensation penalties : Title 18 USC 1920 states that whoever knowingly and willfully falsifies, conceals, or covers up a material fact, makes a false, fictitious, or fraudulent statement or representation, or makes or uses a false statement knowing it to contain a false, fictitious, or fraudulent statement related to applying for or receiving compensation, other benefits or payments, may be fined or imprisoned. Claimants convicted of fraudulently claiming or obtaining benefits under FECA, cited in Public Law 103-333, also lose entitlement to medical benefits, compensation for wage loss, and any other benefits payable under FECA. 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. 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 work closely with Injury Compensation offices to flag potentially fraudulent claims. The Postal Inspection Service also has oversight and responsibility for the Contract Fraud Analyst Program, which provides contract fraud analysts to assist Inspectors in investigating suspect claims. future liability : the cost of paying benefits to all employees claiming compensation through age 70, an insurance-related estimate of the average age of death. Since its reorganization in 1971, the Postal Service has accrued an estimated $7.1 billion in future liability for workers' compensation claims. Was 36 years too long a time for Alois Greer and her sisters to collect workers' compensation benefits? The Postal Service thinks so. And so do Postal Inspectors. But, by any calculation, the Postal Inspection Service has realized great success with its program: Over the past 10 years, Postal Inspectors have saved the Postal Service close to $1 billion through its workers' compensation investigations. An act of Congress in 1997 assigned the Postal Service responsibility for paying workers' compensation to Post Office Department (POD) employees hired between December 1, 1960, and June 30, 1971. In February 1999, Postal Inspectors conducted a national review of the 1,547 POD claimants on the periodic rolls. The liability amounted to more than $258 million. In the next fiscal year, the Postal Service recorded $31.3 million in chargeback expenses for POD claims. Postal Inspectors were charged with physically locating every one of the claimants from DOL records. Over the next year, Inspectors whittled down the number: 15 of the names were the result of duplicate files, 69 claimants were deceased, 19 had returned to work, three were employees from other agencies, and 21 of the claimants had retired-leaving 1,404 on the rolls. As the reviews continued, Inspectors determined 22 of the remaining POD claimants were defrauding the Postal Service. Postal Inspection Service goal : our goal is to reduce and deter criminal misuse of the Workers' Compensation Program in the Postal Service and reduce costs due to fraudulent schemes. Last year alone, Postal Inspectors uncovered $162.3 million in workers' compensation program fraud. How do they do it? Inspectors investigate cases of suspected fraud and initiate criminal, civil, or administrative actions against people or companies suspected of abusing the program. Specialists in fraudulent workers' compensation investigations analyze the program to stay abreast of problems and to find solutions to help prevent fraud-and, ultimately, to reduce compensation costs to the U.S. Postal Service. It's not an easy job, but it's essential to the financial well-being of the Postal Service, which must fund workers' compensation benefits. In the past fiscal year alone, the Postal Service paid approximately $797.1 million in compensation, medical benefits, and DOL administrative charges. protecting revenue and assets : the Postal Inspection Service's program to combat fraudulent workers' compensation began in 1981, when New York Inspectors initiated an analysis of how the agency could best support the corporate goals of the Postal Service and recognize the financial impact of fraudulent claims. U.S. Postal Inspection Service Workers' Compensation Investigations Five-Year Results FY 1999, IDs* 301, Arrests 64, Convictions** 55, Cost Savings $105.1 million FY 2000, IDs* 325, Arrests 47, Convictions** 55, Cost Savings $122.4 million FY 2001, IDs* 403, Arrests 40, Convictions** 34, Cost Savings $99.3 million FY 2002, IDs* 380, Arrests 45, Convictions** 35, Cost Savings $108.4 million FY 2003, IDs* 444, Arrests 50, Convictions** 43, Cost Savings $162.3 million *IDs comprise workers' compensation cases investigated by Postal Inspectors in which some action was taken against a claimant. **Convictions may be related to investigations from prior reporting periods. The solution was the establishment in 1993 of the Revenue and Asset Protection Program (RAPP), featuring, among other initiatives, the Fraudulent Workers' Compensation (FWC) Program. Before RAPP, workers' compensation investigations were handled by the same Inspectors assigned to internal postal crimes. Viewed under the tighter scrutiny of the new program, Inspectors determined that workers' compensation fraud so impacted postal and fiscal operations that a special focus was needed to keep the program "clean." Inspectors now concentrate on identifying fraudulent claims before the claims go onto the periodic rolls. It's a process known to Inspectors as "front-end" investigations. Postal Inspectors who find instances of fraud may resolve the problems in a number of ways: through an arrest, job removal, a long-term job suspension, or by reducing or discontinuing an employee's compensation benefits. U.S. Postal Inspection Service Reward of up to $10,000 for Reporting Workers' Compensation Fraud The U.S. Postal Inspection Service offers a reward of up to $10,000 for information or services leading to the arrest and conviction of any current or former postal employee for defrauding the Workers' Compensation Program (Federal Employees' Compensation Act, USC, Sections 8101 et seq.). If you suspect a current or former postal employee of defrauding the Workers' Compensation Program, please notify your local U.S. Postal Inspection Service office, or log on to: www.usps.com/postalinspectors. 1. The U.S. Postal Inspection Service investigates workers' compensation fraud. Furnish information on violations, requests for reward applications, and reward claims to your nearest Postal Inspector. Submit claims for reward payments within six months of the offender's conviction. 2. Reward amounts will be based on the services rendered, the character of the offender, risks and hazards involved, time spent, and expenses incurred. The reward shown above is the maximum amount paid. 3. The U.S. Postal Service may reject a reward claim if there is collusion or criminal involvement, or if improper methods are used to make an arrest or secure a conviction. Only one reward may be granted if several people are convicted of the same offense, or one person is convicted of several offenses. 4. Employees of the U.S. Postal Inspection Service or General Counsel's Office, or who manage or administer the Injury Compensation Program, are ineligible for a reward, unless their actions are exceptionally meritorious. All information is kept strictly confidential. www.usps.com/postalinspectors Washington Division team approach : identify criminal misuse of the Postal Service's workers' compensation program in the Baltimore, Capital, and Northern Virginia Districts. Inspector in Charge Tom Brady of the Postal Inspection Service's Washington Division is clearly proud of his Workers' Compensation Fraud Team. "We not only have star players, we're having a winning season," he observes. During FY 2003, his six-member team of Workers' Compensation Fraud Inspectors, supported by four Contract Fraud Analysts, realized more than $9.13 million in future cost-savings for the Postal Service. Brady attributes much of his division's success to the relationships team members have been building with the three U.S. Attorney's Offices in the area and the Postal Service's Injury Compensation Units. "When you have all parties communicating and sharing information, you get good results," he said. Inspector Mike Mackert, Team Leader for Workers' Compensation Fraud, agreed: "The Washington Division is having a phenomenal year. Some of it is due to investigations started a year or so ago that we were able to close during this fiscal year-successfully. The other reason is the high quality of work being done by the team." Inspector Frank Schissler has spent four years on the team. He noted that most workers' comp fraud cases start with tips from postal managers. "Front-line managers are the ones who get the injury claims," he said. "They know the employee, maybe his or her background, or they know the employee is angry about something. They know something's just not right with the claim. These are typical leads. These are typical continuation-of-pay cases." One case recently investigated in Maryland involved a full-time rural letter carrier. The employee reported being injured after her vehicle was struck from behind during a delivery. Neither local police officers nor the woman's managers could find any vehicle damage, and no accidents had been reported at that location. The carrier nonetheless submitted a claim, supported by her personal physician, that due to a cervical muscle sprain suffered during the incident, she be placed on temporary total disability. But the carrier failed to return to her job a month later, as recommended by her doctor. Her manager requested the woman be examined by another physician, who concluded there was no reason to continue medical treatment. The manager contacted Inspector Mark Kuechler for help. Kuechler worked with Contract Fraud Analyst Earl Gould to begin a surveillance of the carrier. The resulting videotapes made for surprising viewing. The carrier led an active life as a "disabled" employee. She was taped on four occasions performing line-dancing as part of a country music group-at events 180 miles from her home. She not only danced, but kicked up her legs and was spun around by her partners. In an interview with some of the woman's co-workers, Inspector Kuechler learned they had seen her performing with the group as early as one month after her accident. Inspectors Schissler and Kuechler spoke with the carrier. She claimed she was only capable of "light dancing," and only then if she took painkillers. Postal Inspectors submitted their evidence of the carrier's wrongdoings to the Department of Labor and to postal managers. DOL terminated the woman's benefits, and the Postal Service fired her from her job. The Postal Service realized a cost-savings of $784,549 as a result of the investigation. A host of other cases from the Washington Division's Workers' Compensation Fraud Team affirm the value of the team's work. A savings of $510,343 was realized after Inspectors received a tip about a part-time flexible clerk who filed an injury due to a pulled muscle suffered on duty. She claimed she was unable to do housework and could not hold a frying pan in her left hand without the help of her right hand. A videotaped surveillance documented, among other activities, the clerk loading five bags of mulch from a grocery cart into the back of her minivan with both hands. She was indicted in April 2003 on two counts of workers' compensation fraud and she lost her job with the Postal Service. A referral by a postal manager in Virginia tipped off Postal Inspectors to the fraud being committed by a mailhandler with almost 10 years on the job. He was diagnosed with a back strain and advised to return to limited-duty work. He refused, and the Department of Labor accepted his claim. But Inspectors caught him on videotape driving, shopping, carrying grocery bags, and washing his several cars. If that weren't enough, he managed to own and operate a courier business. He was removed from employment with the Postal Service, and the U.S. Attorney's Office indicted the former mailhandler for making false statements. The Postal Service realized a cost-avoidance of $719,713. Other examples of Postal Inspectors' clean-up efforts abound. In Pennsylvania, a full-time clerk met her match when Postal Inspector Jim O'Connell of the Pittsburgh Division suspected her of workers' compensation fraud. Inspector O'Connell received a tip that the clerk, who had been on the periodic rolls since August 1994, was faking her disability. Despite medical reports citing carpal tunnel syndrome and a bone problem called Kienbšck's disease in her right wrist, the investigation by O'Connell and his division's Fraudulent Workers' Compensation Team proved the clerk was cheating the Postal Service. Inspectors from the Pittsburgh office, with the assistance of Contract Fraud Analyst Bruce Stutzman (a retired Inspector), conducted surveillances of the clerk, which included setting up a camera behind her house for three months. The videos revealed a woman perfectly able to take down Halloween decorations in her backyard, enjoy a train excursion to West Virginia, and tote luggage through the airport-on her way to a vacation in Mexico. But when the clerk actually used evasive driving tactics to shake Inspectors off her trail, they became even more suspect. They called in Inspector Joe Larkin, a member of the Trenton Technical Services group of the Inspection Service's Forensics Division, to set up a tracking device on the woman. That's when the enterprising clerk's self-employment came to light. The same woman who was too disabled to report for work at the Post Office-and who was collecting roughly $2,700 a month as a result-was also hiding income she was earning as a housekeeper at several homes. The clerk pled not guilty to the six charges of workers' compensation fraud and wire fraud in her indictment, but the jury convicted her on three of the counts. She was sentenced in May 2003 to three years of probation and ordered to pay restitution of $2,500. The judge also ordered her to attend a mental health treatment program. The Postal Service, which fired her from her job, will realize a cost-savings of $472,000 as a result of the Inspection Service investigation. Postal Inspectors in Minnesota received a tip questioning the claim of a letter carrier who was placed on the periodic rolls after suffering a back injury while delivering mail. The carrier refused limited-duty offers, stating to the Postal Service, "I can't do anything. I was told to live my life as if I were in a body cast. If I see something on the floor, I get on all fours and crawl over to pick it up." Inspectors, however, quickly turned up a number of problems with his claim. The carrier had never informed the Postal Service that he had medical problems-including carpal tunnel syndrome, back strain, and alcohol abuse-before he became a postal employee. Further, although the man swore to DOL he was totally disabled "now and indefinitely thereafter," Inspectors secured videotapes of him loading packages into his van, driving the van as many as 266 miles a day, using a leaf blower and electric weed trimmer on his lawn, and carrying five-gallon buckets of powdered asphalt. Inspectors presented the case to the Postal Service, DOL, and prosecutors. The carrier lost his job, DOL terminated his benefits, and he was convicted on a single charge of workers' compensation fraud. The former employee was sentenced to six months of electronic monitoring and five months of probation, and the court ordered him to pay restitution to the Postal Service of $60,000. The Postal Service realized $711,316 in cost-savings as a result of the investigation. Despite declaring herself disabled due to carpal tunnel syndrome and a bone disease, Postal Inspectors videotaped this now-former clerk toting buckets and other equipment as she made the rounds of her self-run housekeeping business-which she neglected to report to the Department of Labor. She was also well enough to need no help unloading a bulky suitcase from the back of a van en route to a vacation in Mexico. As a result of the Inspection Service investigation, the clerk lost her job and gained a prison record: three years of probation and an order to pay restitution of $2,500. Even better, the Postal Service realized a cost-savings of $472,000. In Oregon, a letter carrier claimed he suffered a wrist sprain and back injury after falling from his postal vehicle; a claim of "psychological injuries" was later added to the list. The Department of Labor accepted the claim, and the employee stayed home from his job for 18 months, collecting $1,725 every two weeks in tax-free workers' compensation benefits. Postal Inspectors received a tip the carrier was lying, so they began a surveillance of him, with interesting results. The carrier was not only a full-time student, but Inspectors obtained a videotape of him riding bulls at a rodeo in Phoenix and riding sheep at a children's rodeo. In fact, the only time the claimant appeared disabled was at the doctor's office, where he limped and used a cane. After his physician saw the videos, he reported to DOL: "I think it is clear the patient had the appearance of being disabled for the benefit of my office, but beyond my office to have not been disabled whatsoever ... I must say I am astonished by the boldness of what appears to be a very long-term ruse." Inspectors presented their evidence to the carrier, who resigned from the Postal Service. The Department of Labor terminated the carrier's disability payments and the case was accepted for prosecution. The former employee was convicted and sentenced to three months in prison, three months of home detention, and five years of probation. He was also assessed a court fee of $1,300 and ordered to pay restitution of $29,500. The investigation by Postal Inspectors resulted in a future cost-savings of $915,975 for the Postal Service. The only time Postal Inspectors ever saw this letter carrier using a cane was when he went to doctor appointments to certify his "total disability." Even the doctor was surprised when he later viewed videotapes of his patient hanging onto the back of an angry bull at a local rodeo. Maybe riding a bull requires a whole different set of muscles than delivering mail? Maybe so, but he was unable to convince the jury that convicted him of workers' compensation fraud, resulting in a sentence of three months in prison, three months of home detention, and five years of probation, as well as restitution of $29,500. This single investigation by Postal Inspectors resulted in a future cost-savings of $915,975 for the Postal Service. The mission of the U.S. 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. Integral to the Inspection Service's mission is safeguarding the Postal Service's revenue and assets. Through their investigations of workers' compensation fraud in the past 10 years, Postal Inspectors achieved a future cost savings of close to $1 billion for the Postal Service. Do you know someone who's cheating the Workers' Compensation Program? Then you know someone who's cheating you. Safety and Security Safeguarding Employees, Facilities, and the U.S. Mail The Safety and Security Group manages programs that support the U.S. Postal Inspection Service's commitment to provide a safe and secure work environment. Group staff manage employee and contractor background screening by reviewing hiring at Postal Service districts and at airlines; identifying potential vulnerabilities of postal facilities by conducting facility security reviews and observing mail processing conditions at facilities; and protecting employees, facilities, and mail by deploying a uniformed Security Force at high-risk postal sites. Security Force The Postal Inspection Service maintains an armed, uniformed Security Force to provide ongoing protection for postal employees and property. Officers are assigned to facilities considered most at risk for crime. The presence of officers serves as a deterrent to criminal activity and provides an environment conducive to the safety of postal employees and customers. Following a comprehensive review of Security Force operations, staffing, and risk assessment at postal facilities, the Postal Inspection Service closed Security Force operations at six sites: Buffalo, New York; Hartford, Connecticut; Birmingham, Alabama; Jacksonville, Florida; Denver, Colorado; and Seattle, Washington. The Safety and Security Group determined that using electronic-security measures, strengthening facility design, and hiring unarmed, contract guards would upgrade security at these facilities and allow Security Force positions to be redeployed to areas at greater risk. As attention to security issues has increased in the past two years, the Postal Inspection Service has recommended to the Postal Service numerous improvements to physical security at postal facilities, including installing perimeter fences, access-control technology at building entrances, closed-circuit television systems, and other enhancements that reduce the risk of unauthorized entry to postal property. As the result of new methods being used by terrorists, the Postal Inspection Service has also sought to increase security in ways other than physical countermeasures. Employee security practices have been modified and expanded, and detailed security measures are now in place to protect the Postal Service from terrorist attack, particularly in response to changes in the nation's terror alert status. The Postal Inspection Service continues to evaluate the deployment of Postal Inspectors, Postal Police Officers, and support positions; the reorganization or elimination of certain functional areas of the Postal Inspection Service; and the development or enhancement of some support positions. The goal is to use resources in the most effective and efficient manner to protect the Postal Service, the public, and the U.S. Mail, with the flexibility to allocate limited resources to the areas of greatest need. At some postal facilities, the Postal Inspection Service employs contract security personnel as an adjunct to physical security measures. Contracts were set up with two companies that provide uniformed security officers who have been carefully screened and trained to provide quality service. The vendors already provide security personnel at some of the most sensitive government facilities, and the Inspection Service is confident that these officers will prove beneficial to the safety and well-being of postal employees and customers. Personnel Hiring and Screening The Safety and Security Group found that mail theft, workplace violence, and other crimes targeting the U.S. Postal Service are minimized by conducting hiring and screening reviews of employees. Postal Inspectors performed reviews at the 85 postal districts, focusing on compliance with employee-hiring policies and procedures, including management oversight, police checks, drug screening, Office of Personnel Management reviews, employee interviews, and fingerprint submissions. Inspectors identified 281 deficiencies, 276 of which have been corrected. Postal Inspectors reviewed personnel screening performed by commercial airlines and ground-handling suppliers that are responsible for transporting mail via the airlines. The review identified 57 deficiencies at commercial airline contract sites and 22 deficiencies at terminal-handling contract sites. The deficiencies ranged from noncompliance with required documentation to allowing unscreened personnel access to the mail. Postal Inspectors worked closely with postal managers and suppliers to ensure corrective action was taken. Facility Security The Postal Inspection Service uses a facility-risk rating model to assess vulnerability to crime. Points are assigned based on risk factors and countermeasures already in place. The model is a tool to help postal managers plan and fund projects and manage risk levels. During the past fiscal year, 199 risk models were completed. The maximum score on a risk model is 2,854, which can be reached only if the facility is in the worst location possible and has no security measures or countermeasures in place. Of the facilities reviewed, Inspectors found that approximately nine percent fell above 800 points. All of the facilities were processing and distribution centers. The Postal Service's Policies and Procedures office issued an article in the Postal Bulletin on November 14, 2002, addressing the need to improve security for postal doors, keys, and vehicles. The following day, the senior vice president of Operations issued a memo to field personnel about vehicle security. The Chief Operating Officer then distributed a notice on the proper handling of registered mail in a memo dated December 2002, and the manager of processing and distribution center operations issued a memo on registered mail and postal plant security irregularities in January 2003. Service Investigations The Postal Inspection Service also conducted Observation of Mail Condition (OMC) reviews during the fall and holiday mailing seasons. At the request of the Postal Service's Chief Operating Officer, Inspectors reviewed operations to evaluate the security of the mail, employees, and assets, and to verify data input to the Mail Condition Reporting System and the Customer Service Daily Reporting System. After Postal Inspectors visited 2,373 facilities, they issued 16 weekly and two special reports between September 20, 2002, and January 10, 2003, as well as two follow-up reports in May 2003. Of particular note was the failure at some sites to report delayed Standard Mail, for which Inspectors identified 164 operational issues. Security was a major focus of the fiscal year's OMC, and Postal Inspectors identified 740 security concerns that revealed opportunities for improvement. These included employees' lack of knowledge of and adherence to policies and procedures for handling registered mail; limiting access by authorized personnel at postal and contract facilities; securing and accounting for postal and contract vehicles, including "P-Tags"; securing and accounting for keys to postal facilities and other postal-access keys; and identifying, updating, and properly disseminating postal contingency plans, emergency contacts, and phone numbers. As a result of Inspectors' observations, the Chief Operating Officer assigned responsibility to the Postal Service's Headquarters Operations group and vice presidents of area operations offices to assure that OMC findings and security issues "are addressed on an ongoing basis." The Chief Operating Officer also distributed a Standard Operating Procedure on registered mail and provided a training package for field groups. The package included two security videos describing vehicle and facility access issues noted in the Postal Inspection Service's weekly OMC reports. Postal area managers were requested to respond each week, in writing, with a description of the corrective actions they would take to address items of concern. District and processing and distribution center managers implemented specific corrective actions and, in some instances, immediate corrective action the same week of their reviews. The actions included remedial training, policy letters, follow-up reviews, and the correction of deficient security procedures. Intelligence The U.S. Postal Inspection Service formed an Intelligence Group in FY 2003 as part of its new National Headquarters organizational structure. The group's mission is to analyze, consolidate, and deliver intelligence information in ways that will support the overall mission of the Postal Inspection Service. Group members will analyze past and ongoing data from numerous internal and external sources to identify threats, crime trends, criminal groups, and suspect individuals with the potential to adversely impact postal operations or the public's confidence in the U.S. Mail. By providing accurate, relevant, and timely assessments of data, the Intelligence Group will strengthen strategic, operational, and tactical decision-making at all levels. The group's effectiveness will be measured by the number of useful investigative leads and amount of case assistance it provides to other Postal Inspection Service groups. The Postal Inspection Service has always been effective at collecting information and innovative in its approach to evaluating it. This new functional area directs a staff trained in analytical processes to identify, monitor, evaluate, and disseminate information on active and emerging threats to the U.S. Postal Service, its employees, and its customers. During FY 2004, this function will be incorporated in field division offices. The National Headquarters group will provide operational and strategic information to divisions and to agency executives for use in operational and long-range decisions affecting the deployment and allocation of resources. Emergency Preparedness and Homeland Security Even under adverse conditions, the U.S. Postal Inspection Service must maintain its ability to respond to and investigate criminal attacks against the U.S. Postal Service and provide security for postal employees and assets. The Emergency Preparedness and Homeland Security Group (EPHS) of the Postal Inspection Service ensures the agency meets this challenge by developing policies, procedures, and capabilities that will allow the Postal Service to continue to safely deliver America's mail. EPHS works closely with Postal Service managers and certain federal agencies on issues of national security, classified intelligence and programs, and emergency preparedness and response. EPHS programs cover a wide spectrum of national security concerns to coordinate aviation security, bioterrorism liaison, continuity of operations, continuity of government, counterterrorism liaison, event-mail screening, protection of classified information, and weapons of mass destruction. Biological Detection System (BDS) and Related Programs EPHS staff members refined the Postal Service's plan to support the deployment of equipment that can detect biohazards in the postal system. At a BDS symposium sponsored by the Postal Service's Emergency Management Activity Task Force in March 2003, EPHS staff, including 15 Postal Inspectors chosen to serve as coordinators, presented information to more than 100 postal managers and other staff about a BDS pilot test scheduled for 15 postal sites. Inspectors also worked with the Postal Service's district and plant Emergency Management Teams on an Integrated Emergency Management Plan to address all hazards, including man-made and natural. Emergency Management Team training at BDS deployment sites was completed between April and May 2003. The BDS pilot test was completed successfully in July 2003. The Postal Inspection Service's Emergency Preparedness and Homeland Security Group and Fraud and Dangerous Mail Investigations Group co-sponsored training in Hazardous Waste Operations and Emergency Response (Hazwoper) and BDS crime scenes for 91 Postal Inspectors in FY 2003. The Inspectors were certified as Hazwoper Technicians and BDS crime-scene investigators, and were issued personal-protection equipment for use in responding to biological attacks. During the first six months of FY 2003, EPHS staff continued to work with the U.S. Postal Service's Engineering Group and Mitretek Systems in a multi-phase project to analyze and assess potential terrorist acts that use chemical, biological, radiological, or explosives threats against the Postal Service. The consequence-management phase of the study was completed, and Mitretek submitted its final report in April 2003. Inspectors are continuing to work with postal managers to implement recommendations from the report. National Emergency Communications Test Beginning in February 2003, EPHS staff conducted its first national emergency communications test as part of the Continuity of Operations Plan (COOP). The purpose of the test was to ensure viable communications between Postal Inspection Service offices nationwide and the EPHS Group office at National Headquarters in Washington, DC, in the event of an emergency. The test comprised six modes of communications: landline phones, secure telephone units, fax machines, the Government Emergency Telecommunications System (GETS), e-mail, and satellite phones. EPHS staff measured the timeliness and accuracy of transmitted and received messages, and gathered feedback from divisions. Staff also evaluated equipment operation and the clarity and completeness of messages. The test was considered successful and identified a few opportunities for improvement related to secure telephone units, GETS, and satellite phones. Postal Inspection Service division offices submitted drafts of their local Continuity of Operations Plans in FY 2003 to the EPHS Group for review, with a deadline of July 1, 2003, for any recommended revisions. Division managers finalized their plans and submitted them to Headquarters for final approval. Division offices will store their plans locally and at National Headquarters. The Emergency Preparedness and Homeland Security Group was authorized to establish Postal Inspector liaison positions with three national security intelligence agencies: the CIA, the FBI, and the Department of Homeland Security. The liaison positions will enable EPHS staff to gather intelligence on threats that could affect the Postal Service. An added benefit of the new positions is that other agencies will learn how to assist the Postal Inspection Service in developing and analyzing threat information. The Postal Inspection Service is now able to access foreign and domestic intelligence related to homeland security issues that can affect the postal infrastructure and the Postal Inspection Service's security and law enforcement mission. Natural Disasters Postal Inspectors must address a wide variety of man-made and natural disasters that can affect postal operations across the country. Disasters may 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 respond to the scene of the incident and provide security guidance to managers, ensuring that facility infrastructures and operations are secure and operational. In December 2003, FedEx Flight 647, carrying 33,875 pounds of U.S. Mail from Oakland, California, crashed and caught fire upon landing at the Memphis, Tennessee, FedEx hub. Because the fire did not penetrate the wall of the MD-10 freighter, the mail was not damaged. Postal Inspectors were present to provide security as mail was unloaded from the plane and transported to the FedEx Hub. Hurricane Isabel caused numerous postal facilities to close due to high winds, flooding, and sporadic power outages across the Eastern and Capital Metro Areas in September 2003. Various flights were canceled as the weather deteriorated. Six states, plus Washington, DC, were declared to be in an emergency status. The Postal Inspection Service activated 24-hour Command Centers at National Headquarters and affected field divisions to monitor the hurricane and help postal managers with securing accountable property, providing safety guidelines, and initiating special procedures for registered mail. Postal Inspectors also assisted in assessing damage at postal facilities and worked individually with managers on other security-related issues. In August 2003, the northeastern part of the country experienced a widespread blackout that affected postal sites in New Jersey, New York, Pittsburgh, and Detroit. The Postal Inspection Service activated Continuity of Operations Plans and Command Centers in those areas, and Postal Inspectors provided security for postal facilities and assistance with operational problems caused by the emergency. Postal Inspectors from the St. Louis Division responded to the scene of a two-train collision in May 2003 at a signal passing near Matfield Green, Kansas. The engineer of a train containing two rail cars of U.S. Mail, traveling westbound to Ft. Worth, Texas, suffered a heart attack and lost control of the train, causing it to strike an eastbound train containing one trailer of U.S. Mail. Postal Inspectors assisted local postal managers in determining the origin and identity of the mail, and notifying offices of the incident. Inspectors also helped with the recovery of the mail, although most of it was destroyed in a fire that broke out after the collision. Postal Inspector Ron Pry of the Houston Division researched information for a memorial plaque honoring Postal Inspection Service employees who gave their lives in the line of duty. The plaque was dedicated during a ceremony led by Chief Postal Inspector Lee Heath at National Headquarters. Consumer Education, Fraud Prevention and Legislative Action Mail fraud investigations focus on a variety of schemes conducted through the U.S. Mail in an effort to maintain the integrity of the mail and to ensure the confidence that government agencies, businesses, and other postal customers place in the U.S. Postal Service. The U.S. Postal Inspection Service works to protect the American public from fraudulent schemes, in part by educating people about fraud trends that target various groups, including some of the most vulnerable citizens, the nation's elderly. Postal Inspectors this past fiscal year initiated a number of fraud prevention projects and worked with consumer protection agencies and other groups to help citizens protect themselves-before they become victims of fraud. U.S. Postal Inspection Service Informs the Public About Identity Theft In July, the Postal Inspection Service produced video and audio-only versions of public service announcements (PSAs) featuring actor Jerry Orbach speaking from the lobby of the James A. Farley Post Office in New York City. Mr. Orbach was selected as the spokesman for "Operation: Identity Crisis," a U.S. Postal Inspection Service consumer-awareness campaign targeting identity theft, a crime that may involve the U.S. Mail. The U.S. Secret Service, the Federal Trade Commission (FTC), and other government agencies and private companies joined the campaign to educate consumers about identity theft and bring criminals to justice. In the first six months of the campaign, the PSAs aired 20,000 times on roughly 400 television and radio stations-equivalent to more than $1 million in advertising. On September 14, 2003, newspaper ads were published in metropolitan areas with the highest number of identity theft complaints, and brochures with prevention tips were mailed to 3 million residential addresses in those areas. The Postal Inspection Service produced posters with prevention tips that were displayed in financial institutions and post office lobbies across the country, and were featured at a national press conference on identity theft held in New York in September 2003. U.S. Postal Inspectors joined with the International Association of Chiefs of Police, the U.S. Department of Justice, the U.S. Secret Service, and the FTC to provide identity theft training at seminars in Palisades, New York, and Richmond, Virginia. Similar seminars were held in Arizona, Washington, Missouri, and Texas. The sessions featured training for state and local law enforcement agencies on issues specific to identity theft investigations. Postal Inspectors provided an overview of how mail is used in the schemes, resources to assist with investigations, and information gleaned from prevention and public-awareness campaigns. The Chief Postal Inspector participated in a press conference in July 2003 at the Capitol in Washington, DC, with the U.S. Secret Service, the FTC, and the International Association of Chiefs of Police. The press conference publicized the dangers of identity theft and announced the release of an informational CD-ROM providing useful information and resources on identity crime for local and state law enforcement officers. National Consumer Protection Week The Postal Inspection Service partnered with the Postal Service's Consumer Advocate Office during National Consumer Protection Week, held from February 3 through 8, 2003. The theme echoed the Postal Inspection Service's focus on the nation's fastest-growing crime: "Identity Theft-Safeguard Your Personal Information." Postal Inspectors presented information via a video news release and an article in the Postal Bulletin (available online for viewing and printing at www.usps.com). The Postal Inspection Service also produced and distributed a guide with the latest facts on identity theft, Publication 280, Identity Theft: Safeguard Your Personal Information (available online for printing and viewing at www.usps.com/postalinspectors). Seventh Annual United States-Canada Cross-Border Crime Forum The U.S. Postal Inspection Service co-sponsored the Seventh Annual Cross-Border Crime Forum, which was hosted by the Attorney General of the United States and attended by the Solicitor General of Canada, as well as law enforcement officers from the United States and Canada. The Chief Postal Inspector made a presentation before the Attorney General and Solicitor General on the international challenges of fighting child exploitation and the national child exploitation strategy of the Postal Inspection Service, with highlights of some of the agency's most successful investigations. 'Operation Pipe Dreams' Press Conference Chief Postal Inspector Lee Heath attended a national press conference in February 2003 with the Department of Justice and the Drug Enforcement Administration on "Operation Pipe Dreams," a large-scale investigation of criminals who transport drug paraphernalia via the U.S. Mail, and the announcement of the indictment of 27 suspects on charges of trafficking in illegal drug paraphernalia. White House Conference on Missing and Exploited Children The Chief Postal Inspector presented remarks at the first-ever White House Conference on Missing and Exploited Children in October 2002. President Bush hosted the event and delivered the keynote address to promote public awareness on the issues and to generate recommendations and solicit "best practices" from experts in the field. More than 600 invitees from across the country attended the event. Other speakers included First Lady Laura Bush, Attorney General John Ashcroft, and Secretary of State Colin Powell. U.S. Postal Inspection Service Awards Philadelphia Postal Inspector James Devlin received the "Outstanding Contribution in Law Enforcement Award" from the Executive Office of U.S. Attorneys Directors. The award was presented by Attorney General John Ashcroft and U.S. Attorney of the Eastern District of Pennsylvania Patrick Meehan at a ceremony held at the International Trade Center in Washington, DC, in November 2002. Inspector Devlin was recognized for his persistent investigation and successful prosecution of 10 members of the Philadelphia Medical Examiner's Office who engaged in a macabre scheme to steal cash, credit cards, financial information, and firearms from deceased people. Each U.S. Attorney submitted nominations for this prestigious award, and all attended the ceremony. At an annual awards ceremony of Pittsburgh Law Enforcement Agency Directors in October 2002, a group award was presented to the Postal Inspection Service, FBI, ATF, and Pennsylvania State Police for their extensive work at the September 11, 2001, crash site of United Airlines Flight 93 in Pennsylvania. The Postal Inspection Service crash-site team included Inspectors from Cleveland, Ohio, and Pittsburgh, Pennsylvania. Law Enforcement Explorers Program Law Enforcement Explorers is a national program that encourages adolescents to consider careers in law enforcement. The Postal Inspection Service established a Law Enforcement Explorers Post #3972 in New York, named in honor of slain Postal Police Officer Michael J. Healy, in September 2002. During FY 2003, Post #3972 visited Camp Smith near Peekskill, New York, for defensive tactics training. They participated in Law Enforcement Air Day, sponsored by the FBI at the Morristown, New Jersey, airport and helped produce a Bomb Threat and Search training video. At the Law Enforcement Winter Competition, Explorers from Post #3972 won first place. The Explorers viewed security operations at the Postal Service's Morgan Processing and Distribution Center in Manhattan and at U.S. Immigration and Customs Enforcement offices at JFK Airport. Post #3972 entered the Explorer Law Enforcement Spring Competition at Staten Island and took third place in the White Collar Crime event. Later in the year, Explorers toured sites around the Washington, DC, area, including the National Law Enforcement Officers Memorial. Postal Inspection Service Videos Congressional and Public Affairs produced four segments of "Inside the Inspection Service," which were aired to postal employees nationwide on USPS-TV. Topics included information on identity theft, Postal Inspector recruitment efforts, workers' compensation fraud, and investment fraud. C&PA staff also produced a video for the Cross-Border Conference and, for a hearing before the Senate Subcommittee on Crimes, Corrections and Victims' Rights, a video about senior fraud victims. Newspaper and Radio Coverage of the Postal Inspection Service As part of their mission to promote the work of the U.S. Postal Inspection Service to the general public, media representatives from Congressional and Public Affairs distributed newspaper articles and radio scripts through the North American Precis Syndicate. The syndicate distributes articles written by and about the Postal Inspection Service to 8,500 weekly and 1,500 daily newspapers, and sends radio scripts to 6,500 radio stations across the country. In one 18-month period, newspapers carrying articles on the Postal Inspection Service reached 105.4 million readers. Radio stations broadcasting stories about the Postal Inspection Service reached 12.7 million listeners, for a combined audience of 118.1 million people. Employee- and Consumer-Awareness Publications Staff from Congressional and Public Affairs (C&PA) published a Special Bulletin in June 2003 entitled "Postal Inspectors Keep an Eye on Workers' Compensation Fraud." The Special Bulletin was distributed to postal managers and supervisors at facilities across the country to reach audiences most likely to be aware of such fraud. Incidents of workers' compensation fraud detected by Postal Inspectors were recounted, with explanations of how such fraud negatively impacts the bottom line for the Postal Service. U.S. Postal Inspection Service investigations of workers' compensation fraud have been tremendously successful, saving the Postal Service more than $1 billion in the past 10 years. However, program savings could potentially be reduced further by improving communications between postal managers and Inspectors, and educating managers about services offered by Postal Inspectors to stem fraud. Several managers requested an extra supply of the publication for distribution to postal employees in their areas, citing its usefulness as a prevention measure. An updated version of the Special Bulletin is included as an insert in this 2003 Annual Report of Investigations. C&PA staff also issued the following publications over the past fiscal year (available online for viewing and printing at www.usps.com/postalinspectors): - Publication 146, A Law Enforcement Guide to Postal Crimes. - Publication 546, Sweepstakes Advertising. - Publication 280, Identity Theft: Safeguard Your Personal Information. - Publication 281, Consumer Fraud by Phone or Mail: Know How to Protect Yourself. - Three issues of the Financial Industry Mail Security Newsletter. - U.S. Postal Inspection Service Bulletin magazine for active and retired employees of the agency. - A brochure and poster explaining the Postal Inspection Service's Ombudsman program, available for Inspection Service employees. Congressional Liaison U.S. Postal Inspection Service personnel who have liaison responsibilities with Congress distributed "welcome packets" to the 108th Congress in January 2003, with copies of the Postal Inspection Service's 2002 Annual Report of Investigations, C&PA liaison contact information, a brochure entitled "Congressional Guide to Postal Crimes," Publication 162, Because the Mail Matters, and a guide to the Postal Inspection Service's Jurisdiction and Laws. In April 2003, a number of staffers from the House of Representatives toured the Postal Inspection Service's Career Development Division at Potomac, Maryland, and the National Forensic Laboratory at Dulles, Virginia, to further understand challenges facing the Postal Inspection Service. During the tour, the Inspector in Charge of Congressional and Public Affairs emphasized the role of U.S. Postal Inspectors in protecting postal employees and postal customers. Senators Recognized by the Postal Inspection Service Congressional and Public Affairs staff and the Chief Postal Inspector visited the Capitol Hill offices of Senators Susan Collins and Carl Levin in November 2002 to present plaques to the Senators and their staff in recognition of their work in combating telemarketing fraud. The Senators introduced a bipartisan resolution (Senate Resolution 281) establishing the week of August 25, 2002, as "National Fraud Against Senior Citizens Awareness Week" to help seniors learn about the dangers of telemarketing scams. Congressional Testimony on Identity Theft Testifying on behalf of the Postal Inspection Service, the Inspector in Charge of Congressional and Public Affairs, Daniel Mihalko, appeared before the Subcommittee on Financial Institutions and Consumer Credit of the House Financial Services Committee on June 24, 2003. Inspector Mihalko testified on the Postal Inspection Service's role in fighting identity theft through a combination of investigative, preventive, and educational strategies. He highlighted the Inspection Service's progress in combating identity theft through collaborative efforts with postal partners in the mailing industry and close cooperation with other law enforcement and regulatory agencies. House lawmakers were addressing identity theft issues before reauthorizing certain provisions of the Fair Credit Reporting Act. The final version of the act reauthorizing the Fair Credit Reporting Act specifically mentioned the Postal Inspection Service. Members of the House and Senate introduced several bills throughout the year containing anti-identity theft measures, mostly sponsoring legislation that would keep credit report information out of the hands of criminals or that establish penalties for aggravated identity theft. The bills remain in various House and Senate committees. Legislation Federal Officer Pay Reform On January 3, 2003, Representative Peter T. King (R-NY) introduced H.R. 466, a bill that would adjust pay in certain high-cost areas. Representative Mike Rogers (R-MI) on April 8 introduced H.R. 1676, The Comprehensive Federal Law Enforcement Officer Pay Equity and Reform Act. A companion bill was introduced by Senator Christopher Dodd (D-CT) on May 1. The bills attempt to address disparities in personnel policies and practices between various federal law enforcement agencies. Disparities in pay scales and retirement programs, and policies governing other compensation benefits, such as locality pay, may cause experienced law enforcement personnel to go to other agencies or jobs in the private sector offering better compensation. San Francisco, Southern California, Boston, New York, and Washington, DC, were cited by lawmakers as having difficulty keeping or recruiting talented officers, claiming the current locality pay system fails to take into account the rapid rise in housing and related costs in key areas. According to lawmakers, many of the areas that most need federal law enforcement protection-major population centers, busy port cities, and border regions-are also the most expensive places to live. The Department of Homeland Security, which is faced with realigning pay scales and "perks" for more than 24,000 officers, feels the government needs consistency in law enforcement pay as it beefs up security in response to the September 11, 2001, terrorist attacks. The Bush administration wants to avoid instability in law enforcement ranks. Several law enforcement agencies faced staff shortages after losing officers to the new Transportation Security Administration, which often offered higher pay to people willing to serve as federal air marshals. Virtual Child Pornography The President signed into law the Omnibus Child Protection Act on April 30, 2003, as Public Law 108-21. The act was introduced by Senator Orrin Hatch (R-UT) on January 13. One provision of the new law bans so-called "virtual child pornography"-sexual images that appear to be of children, but are created using youthful-looking adults, or are computer-generated. Biomedical Countermeasures On May 15, 2003, Congressman Billy Tauzin (R-LA) introduced the Project Bioshield Act of 2003. It passed the House in July 2003. The act seeks to enhance research, development, procurement, and the use of biomedical countermeasures to respond to public health threats affecting national security. Its companion bill, S. 15, remains in committee. Throughout 2003, a series of congressional hearings before the House Government Reform Subcommittee on National Security, Emerging Threats, and International Relations was devoted to the prevention, detection, and decontamination of bio-agents. A hearing held May 19 focused on the anthrax contamination at the Wallingford, Connecticut, Post Office and explored the multi-agency collaboration on anthrax testing and clean-up procedures, and communications with Wallingford postal employees during and after the incident. In October 2001, the Postal Service and other agencies lacked standard protocols for the environmental testing of biohazards such as anthrax. Tom Day, the Postal Service's vice president of Engineering, provided testimony on the Postal Service's response to the anthrax attacks in 2001 and its plans for detecting and neutralizing any future biohazard attacks. President's Commission on the U.S. Postal Service President Bush appointed a nine-member commission during FY 2003 to study postal reform. On July 31, the commission reported to the President that it opposed privatizing the Postal Service and recommended the agency have the flexibility to operate, in many ways, like a company. In addition, the commission suggested the Postal Service consolidate its facilities and consider outsourcing tasks deemed incidental to delivering the mail. It recommended the Postal Service have authority to negotiate retiree pension and health-care benefits different from those offered under existing federal plans. It also recommended 17 additions to the agency's personnel practices and uses of technology. One addition recommended the agency design a pay-for-performance program "meaningful to Postal Service employees and assists the [agency] in meeting its productivity and service quality goals." Most commission members supported the idea of pay-for-performance, but advised the system would need to be properly designed. The commission also proposed the Postal Service consider standardizing technology at mail-processing facilities to improve efficiency and to use technology to address security issues, such as the ability to identify the sender of every piece of mail. Such technology is fairly straightforward to install, but could pose concerns about privacy. The commission suggested the Postal Service coordinate the proposal with the Department of Homeland Security if it chooses to implement the recommendation. The presidential panel additionally proposed changing the politically appointed, Senate-confirmed Board of Governors. It would be replaced by a board of directors similar to those found in corporations, with a corporate-style, 11-member group with business backgrounds and increased authority to oversee Postal Service operations. The commission adopted a recommendation that would give the Postal Service more flexibility to raise rates quickly in response to market changes, within limits established by a new independent agency called the Postal Regulatory Board. The panel also proposed these recommendations: - Set up an independent commission to recommend post office closings similar to the system used to close unnecessary military bases. - Trim the workforce through attrition and buyouts. - Concentrate on the Postal Service's core mission by restricting its activities to collecting, sorting, and delivering mail. - Expand efforts to provide mailing services at mall and grocery store kiosks. - Expand contracts with companies such as cargo airlines that haul mail and packages. Many of the recommendations were championed by Postmaster General Jack Potter in the Postal Service's Transformation Plan and resembled provisions in postal reform legislation sponsored last year by Representative John McHugh (R-NY) and Representative Henry Waxman (D-CA). Although it did not appear in the formal list of recommendations found in Appendix C of the commission's report, there is report language that references the Postal Inspection Service: "The commission recognizes that the Postal Inspection Service plays a vital law enforcement function. Only those activities of the Postal Inspection Service that directly support the safety and security of the nation's mail and postal systems should be assumed by the ratepayers. The cost of law enforcement operations that track broader crimes committed through the mail should be borne by taxpayers, generally." While neither Congress nor the Postmaster General has commented on this recommendation at any hearings, the Congressional Research Service of the Library of Congress reported on the language. The Congressional Research Service is a source widely used by members of Congress. Strategic Planning and Performance Management The Strategic Planning and Performance Management Group oversees and coordinates U.S. Postal Inspection Service initiatives related to its goals and objectives. The group supports the Inspection Service's overall mission by developing strategic responses to short- and long-term operational and organizational challenges. Strategic Planning and Performance Management staff help develop the Postal Inspection Service's annual management cycle by formulating its fiscal year objectives, monitoring progress in achieving the objectives by measuring and analyzing performance, and communicating each group's results to senior management to promote the Inspection Service's attainment of its strategic, investigative, and transformational goals. As part of its performance management responsibilities, the group oversees policies related to investigative case management, subject categories for cases, and case-reporting requirements to promote performance management. Additionally, staff coordinate and implement a quality assurance process to ensure that all Inspection Service groups comply with established policies, regulations, and laws. During FY 2003, the Strategic Planning and Performance Management Group worked with the National Leadership Team to set goals and objectives for FY 2004 through FY 2005. A focus on security was recognized as a new imperative for the Postal Inspection Service, requiring proactive goals and strategies to mitigate risks from and vulnerabilities to possible terrorist attacks. The Strategic Planning and Performance Management Group also supported the Postal Service's Transformation Plan in FY 2003 by developing and implementing corresponding initiatives for the Postal Inspection Service. All planned projects were evaluated to ensure they capitalized on opportunities that safeguard the safety, security, and integrity of the mail and the U.S. Postal Service. Group staff worked with members of each Postal Inspection Service group to develop project plans to be used as a foundation for the Postal Inspection Service's Transformation Plan. They tracked each group's progress toward reaching goals and provided ongoing status reports to the Postal Service. Employing input from senior executives, the group also finalized a system to allow the Postal Service to measure the Inspection Service's progress in reaching Transformation Plan goals. Also during FY 2003, the responsibility for monitoring the field divisions and Headquarters groups was assigned to the Strategic Planning and Performance Management Group. To fulfill that responsibility, staff performed on-site quality assurance reviews for six field divisions: Detroit, Philadelphia, Denver, Atlanta, Pittsburgh, and Ft. Worth. International Affairs The International Affairs Group of the U.S. Postal Inspection Service undertook several initiatives in FY 2003 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 U.S. Postal Service's National Headquarters and Interpol's U.S. National Central Bureau in Washington, DC; at the Interpol General Secretariat in Lyon, France; at the International Bureau-Universal Postal Union (UPU) in Berne, Switzerland; and at the Miami International Airport Mail Center in Florida. International Affairs Group members develop strategies to maintain high-quality service and security for the 189 member countries of the UPU. Chaired by the Chief Postal Inspector, the Postal Security Action Group (PSAG) now comprises 61 member and 33 observer countries, as well as 10 international organizations concerned with postal and aviation security. The group meets biannually in Berne to address such topics as aviation security, bioterrorism, revenue security, mail fraud, drugs and money laundering via the mail, eCommerce security, and strategies for preventing mail losses. In response to the potential threat of radiological terrorism, a Memorandum of Understanding was signed by the Director of External Relations of the International Atomic Energy Agency and the Director General of the UPU at the October 2002 PSAG meeting. The groups pledged closer cooperation in ensuring the safety of the international mail network through early detection of the illicit transport of radioactive materials and the safe shipment of accepted materials. During its April 2003 meeting, the PSAG hosted a workshop, "Postal Financial Services," for UPU member postal administrations that are expanding postal financial services as a means of growing revenue. The dangers of money laundering, especially as it relates to the financial support of terrorism, was discussed by a panel of experts that included representatives from the U.S. Department of Justice, the Financial Intelligence Unit in Liechtenstein, the Ireland Postal Administration, and the U.S. Postal Inspection Service. Based on the recommendations of the Money Laundering Panel, the PSAG established a Financial Crimes and Anti-Money Laundering Working Group to develop educational programs and countermeasures, and pledged to share best practices on postal financial services and compliance with applicable laws. Since 1997, the group has coordinated more than 40 international mail quality assurance and airport security reviews at major hubs. The reviews assess security and operations at the airport and international office of exchange and identify opportunities to improve both the security of service and mail security worldwide. Review teams identify best practices in the industry and share their findings globally through the PSAG and UPU Restricted Unions. The reviews have enabled group members to establish a professional network of airport coordinators, operations personnel, and stakeholders at the major international airports. International Affairs Group members also reviewed international airport operations in Milan and Rome, Italy; Madrid, Spain; Singapore, Republic of Singapore; Lima, Peru; La Paz and Santa Cruz, Bolivia; Oranjestad, Aruba; and St. Johns, Antigua, during FY 2003. An International Affairs Group Inspector and Postal Inspector-Team Leader from the Miami Division represented the UPU as lead instructors for the UPU-United Nations Office on Drugs and Crime in an initiative titled "Countering Drug Trafficking and Money Laundering via Postal Systems in Africa during FY 2003." Funded by the UPU and UNODC, the initiative teaches technical skills to frontline Postal Inspection Service, U.S. Immigration and Customs Enforcement (ICE), and other law enforcement officials throughout Africa. Over the past year, courses were held in Dakar, Senegal; Accra, Ghana; Rabat, Morocco; and Cairo, Egypt. The group continued its support of the U.S. State Department's Antiterrorism Assistance Program, which included providing instructors for a Postal Chemical and Biological Incident Management Course on handling and screening procedures for explosive and biochemical components in the mail. The group taught courses for law enforcement, hazmat, and postal officials in Pretoria, South Africa; Nairobi, Kenya; Amman, Jordan; Cairo, Egypt; Athens, Greece; Ankara, Turkey; and Bogotá, Colombia. The program is the result of an interagency agreement between the U.S. Postal Inspection Service and the Department of State's Bureau of Diplomatic Security. The group coordinated a four-day workshop, "Countering Drug Trafficking and Money Laundering via Postal Systems in the Caribbean," at the United Nations' Office on Drugs and Crime in Barbados. Designed to increase awareness of how the mail is used to transport illicit narcotics and laundered money, the workshop included drug screening and identification programs. Thirty-eight representatives from 20 countries participated, resulting in new investigative protocols for postal, customs, and law enforcement managers. The International Affairs Group coordinated a visit for 15 representatives from the Diplomatic Security-Antiterrorism Assistance Program and Greek Olympic Committee security experts at the Baltimore Processing and Distribution Center. Attendees were briefed on and given a demonstration of the biohazard detection system (BDS). A member of the group coordinated the U.S. Postal Inspection Service's contribution to the U.S. Postal Service- U.S. Immigration and Customs Enforcement (ICE) initiative to implement and deploy radiation-detection equipment at gateway postal facilities. The equipment detects illicit shipments of nuclear weapons or related material, radiation-dispersal devices, and other illegal or illicit radioactive material that could be transported via international mail. During the violent attacks on the Administration of Mexico's (SEPOMEX) postal officials when U.S. Treasury checks mailed to Mexico City were stolen, Mexican inspectors met with U.S. Secret Service agents and the U.S. Department of Justice attaché in Mexico City to assist with the investigation. Following the shooting death of an airport manager in Mexico City, a Mexican inspector worked with the Postal Service's International Network office and Social Security officials to develop short- and long-term security solutions for more than 30,000 U.S. Treasury checks dispatched to Mexico. Inspectors worked with the Ft. Worth Division's Financial Crimes Task Force, the Social Security-Office of Inspector General, the U.S. Secret Service, and ICE to advance the investigation. To date, nine suspects in Mexico City have been arrested for mail theft. In January 2003, the Chief Postal Inspector met with Secretary General Ronald K. Noble in Lyon, France. They discussed the Interpol-UPU Memorandum of Understanding and the continued support of Interpol by the U.S. Postal Inspection Service. The meeting afforded the Chief Postal Inspector a rare opportunity to meet with senior Interpol officials on crime trend issues and the threat of international terrorism. The International Affairs Group coordinates the MARIA program (International Mail Loss Reporting System) for the United States and other major regions of the world. By quantifying and identifying losses of outbound, inbound, and transiting international mail, the program reinforces the public's confidence in the mail by identifying international mail-loss trends, high-risk airports, and high-risk routes for mail flow. In collaboration with Inspectors from the Postal Inspection Service's Information Technology Division and regional coordinators in Germany, Portugal, Sweden, and Uruguay, group members developed a new eMARIA computer application that enables UPU postal administrations to enter and receive eMARIA data via the Internet. The user friendly version significantly advances the creation of an international mail event database for postal security officials worldwide. The International Affairs Group also coordinated these initiatives in FY 2003: - Hosted the Security Coordinator for TPG Post, Netherlands, in Washington, DC, and New York to share techniques used by Postal Inspectors in conducting mail theft investigations. - Presented the Security Action Group's 2003 Work Plan for the 27 member countries and results from 2002 during the Consultative and Executive Council Meetings of the Postal Union of the Americas, Spain and Portugal (PUASP) in Montevideo, Uruguay. A Postal Inspector serves as manager of the Security Action Group, which is responsible for improving the quality and security of mail throughout the Western Hemisphere, its islands, Spain, and Portugal. A Postal Inspector also serves as security consultant to the General Secretariat of the PUASP. - Presented the 2003 Work Plan and results of the CPU Mail Security Task Force at the 7th Caribbean Postal Union (CPU) Conference in the Cayman Islands for postmasters general and ministers. An Inspector is chairman of the task force, which is responsible for airport security reviews, training and security missions, and operational reviews of key postal facilities throughout the region. - Hosted four senior law enforcement officials from Spain during the Department of State's International Visitor Program and made presentations on Postal Inspection Service initiatives to combat international crime. A key topic included the African initiative, "Countering Drug Trafficking and Money Laundering via Postal Systems," and prohibited mailing issues, such as mail fraud and the sexual exploitation of children through the mail. - Participated in a seminar hosted by La Poste in Paris, France, "European Cooperation on Postal Security-The Anthrax Crisis and Beyond" to discuss the anthrax crisis in Europe and its impact on postal operators, using crisis-management practices to anticipate future problems, and improving European coordination by bringing together crisis units in each country. - Represented the Director General of the UPU at the United Nations Counter-Terrorism Committee in a special meeting at UN Headquarters in New York. Discussions centered on improving global counterterrorism responses, methods of disseminating best practices, and the value of using the committee for international coordination. UN Secretary-General Kofi Annan addressed the group on ways to enhance communications and share best practices in the international community. - Assisted Internal Affairs Division staff during the Postmaster General's visit to Davos, Switzerland, to attend the World Economic Forum. A Postal Inspector assisted with logistics, coordinated security with Zurich Airport Police and American Embassy security officials in Berne, Switzerland, and provided on-site security. - Coordinated a one-week security and investigative training course in San José, Costa Rica, for postal security officials from Central America, the Dominican Republic, and Venezuela. Sixty officials from eight countries discussed external and internal crimes investigations, crime prevention, mail bomb investigations, and the airport coordinator program. - Coordinated a one-week security mission to Athens, Greece, to review postal operations and investigative strategies addressing the theft of mail sent from the United States via Amsterdam to Greece. The Director of the Hellenic Post, airport administration and security officials, and Hellenic Police stationed at the new Athens Airport also discussed methods of improving the security of U.S.-originating mail. Forensic and Technical Services Solving cases and convicting criminals frequently depend on the unique support of scientific and technical personnel assigned to the Forensic and Technical Services Division. Forensic Analysts at the Postal Inspection Service's National Forensic Laboratory in Dulles, Virginia, and three 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. During FY 2003, forensic staff assisted on-site with a homicide in Pittsburgh, a burglary in Phoenix, and evidence collection in numerous other crime scene investigations. Forensic laboratory experts from the Postal Inspection Service conducted 2,679 forensic examinations during FY 2003 and identified 1,155 violators of postal statutes. Forensic Analysts made 71 court appearances to provide expert testimony. The lab's continued use of Automated Fingerprint Identification System (AFIS) technology has proven to be an extremely valuable tool in identifying suspects in the Postal Inspection Service's criminal investigations. The Digital Evidence Unit (DEU) of the Forensic and 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 the unit work with Postal Inspectors to execute search warrants and conduct forensic analyses of seized computers and related equipment. Digital evidence contributes to the successful resolution of investigations ranging from child exploitation to financial fraud and identity takeovers via the mail. During FY 2003, Postal Inspectors submitted 822 requests to DEU staff for the examination of evidence. The Forensic and Technical Services Division also supports Postal Inspectors in complex surveillance and security endeavors. Forensic staff provide support for security, mail screening, communications, and other technical equipment needed for special events, including those designated by the Department for Homeland Security as National Security events. The division provides equipment, training, and field responses to ensure the safety of personnel and to assist case Inspectors in proper evidence-gathering techniques. Specially trained Inspectors and technicians have used their expertise to help resolve almost every high-profile case discussed in this report. Postal Inspection Service Polygraph Examiners provided significant investigative assistance to Inspectors at field divisions and National Headquarters during FY 2003. F&TSD staff members oversee the selection, training, and qualification of Postal Inspectors assigned to conduct polygraph examinations. Postal Inspector-Examiners scheduled 1,140 polygraph exams for 240 cases during FY 2003 and contributed to the solution of approximately 121 cases as a result of pre- and post-test interviews conducted incident to the examinations. Polygraph Examiners provided assistance in several major cases, including the Amerithrax investigation of anthrax in the mail. Examiners also assisted with two postal homicide investigations. Examiners administered seven exams related to the shooting death of a letter carrier, and 10 exams related to the investigation of the stabbing death of a contract station clerk. Finally, examiners played a vital role in the investigation of a missing registered remittance when they identified an employee at the Orlando, Florida, Processing and Distribution Center as responsible for stealing remittances totaling $500,000. Administrative Operations Career Development Division The Career Development Division (CDD) of the U.S. Postal Inspection Service provides basic training for candidate Postal Inspectors, in-service 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, Maryland, the CDD campus offers the advanced features of an elite law enforcement training program, with a dormitory, full dining amenities, classrooms, a fitness center, and firearms facilities. Inspector candidates undergo 12 weeks of scenario-based training that covers investigative techniques, defensive tactics, firearms, legal matters, search and seizure tactics, 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. From December 2002 through September 2003, CDD successfully graduated seven Inspector classes. Upon successful completion of the program, new Postal Inspectors participate in four to six months of formal, post-basic training that is designed and monitored by CDD and provided at an assigned Postal Inspection Service site. Post-basic training is administered by experienced 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. CDD co-sponsored training for 901 Inspectors this past fiscal year, including the first hazwoper training in biohazard detection systems (BDS) offered by the Inspection Service. Work continues on an eLearning initiative, a pilot project sponsored jointly by the Postal Inspection Service and the Federal Law Enforcement Training Center (FLETC). A six-week pilot for 492 registered employees began on July 7, 2003. Postal Inspection Service employees are authorized to access more than 1,000 training courses online at the FLETC Web site, which features a virtual learning environment. Course development and learning management opportunities are also available at the site. Human Resource Performance The Employee Development Group implemented the Supervisory Training Program in FY 2003, which incorporates online lessons, self-study modules (reviewed with certified On-the-Job Instructors), instructor-led classroom training, and eLearning. This specialized training was developed with subject-matter experts for newly promoted supervisors in three groups: Team Leaders (Inspectors), Administrative Support, and Postal Police Supervisors. Human Resource Performance staff gave employees at more than 16 sites an opportunity to enhance their skills in preparing PS Form 991, the Postal Service's job application form, by enrolling in its course, "411 on the 991," which included the award-winning video, "PS Form 991 Exposed," produced by staff members. More than 600 Inspection Service employees elected to receive the highly rated training. The group also led an effort to implement a Training Prioritization Model to identify and set priorities for training needs in line with Postal Inspection Service goals and objectives. The Executive Resources and Leadership Development Group hosted the Postal Inspection Service's first Successor Forum in July 2003 to identify potential successors for executive positions. Titled "Filling Inspection Service Executive's Shoes," the forum invited 30 participants to discuss leadership concepts relative to the future of the U.S. Postal Service. The forum emphasized the new Succession Planning Process, Individual Development Plans, the Structured Interview Process, and the Strategic Diversity Management Program. Chief Postal Inspector Heath was joined by the Postal Service's Chief Financial Officer Richard Strasser, its Vice President of Diversity Development Murray Weatherall, and its Acting Vice President of Strategic Planning Julie Moore. As part of its commitment to support employee self-development, the Executive Resources and Leadership Development Group tapped into the Postal Service's Advanced Leadership Program to enhance employee skills through facilitated sessions in personal awareness, business foundations, business decisions, business leadership, and related courses at an accredited college or university. Thirteen Postal Inspection Service employees graduated from the program in November 2002. Employees at National Headquarters participated in the Summer Internship Program sponsored by the Postal Service's Corporate Personnel Department in support of recruitment and communications goals. Four college students gained experience working with Human Resource Performance staff during its second year of participation in the program. Also during FY 2003, 45 students, dubbed "Future Leaders," toured the Postal Inspection Service's National Forensic Laboratory at Dulles, Virginia, where forensic staff provided overviews of the Fingerprints, Physical Evidence, and Questioned Documents sections of the lab. The Inspector in Charge of Congressional and Public Affairs spoke about the history and mission of the Postal Inspection Service, and other Postal Inspectors discussed basic training requirements and allowed the students to observe arrest exercises in progress. Information Technology The U.S. Postal Inspection Service continues to maintain a secure and reliable information technology (IT) infrastructure. Maintaining this strategic and effective IT resource is essential to meeting organizational priorities and goals. A secure IT infrastructure has become increasingly important as the Postal Inspection Service faces new challenges: the growth of electronic commerce and communication, which increases the likelihood of cyber security threats, such as computer viruses, worms, and intrusions; the globalization of business and crime; and the rapid pace of technological change. The Information Technology Division (ITD) has multiple roles in improving the Postal Inspection Service's investigative capabilities. Integrating business systems, securing and speeding access to information, implementing new technologies, and upgrading the IT infrastructure and technology all require the attention of an IT staff with specialized skills. To help meet new demands imposed by technological changes, ITD deployed nearly 1,400 new desktop and laptop computers with a new Inspection Service software toolkit for increased security and enhanced performance. All computers on the network now have software that allows employees to consistently manage and support the IT infrastructure. More than 200 high-performance network printers were also purchased. The Postal Inspection Service is developing a Web-based, case management system to improve the accessibility and completeness of case information, investigative data, and administrative work. The first part of this multi-phased system was deployed in October 2003. ITD also enhanced existing applications during the past fiscal year, including the Laboratory Information Management System, Prohibited Mailings-Narcotics System, Property Disposition System, Fraud Complaint System, Recruitment Applicant Processing System, eMaria System, and the Firearms System. ITD staff coordinate the Postal Inspection Service's security program to ensure the confidentiality, integrity, and availability of information and operations. To safeguard the network from malicious cyberattacks, minimize security risks, and prevent intruders from accessing the network, ITD enhanced its information security systems. Special-use, dedicated servers were deployed to secure the Inspection Service's IT infrastructure by scanning all incoming Internet traffic for viruses. Additionally, the servers improved performance for end-users by maintaining copies of frequently used Web sites to decrease Internet use. Finance and Administrative Services The Finance and Administrative Services (FAS) Group oversees planning and administration for the Postal Inspection Service and the reporting of its national and capital budgets. FAS members analyze financial data, develop data forecasts and cost-accounting reports, and assist in financial decision-making to ensure the overall stability of the U.S. Postal Inspection Service. While FAS dedicates the majority of its efforts to the budget process, the group also manages administrative areas of the Postal Inspection Service, including the Vehicle Fleet Program, Travel Program, Credit Card Program, Facilities Program, space administration, and health and medical exams. The FAS group monitors and evaluates the programs using benchmarking, financial modeling, and cost-benefit analysis. Sharing responsibility for oversight of administrative duties and the national budget is the Procurement & Administrative Service Center at Bala Cynwyd, Pennsylvania. As a branch of FAS, the group supports, reviews, and guides work in these program areas, in addition to managing the National Assets Tracking System, Firearms Program, Relocation Program, and the Time and Attendance Collection System. FAS established the National Administrative Committee (NAC) in FY 2003 to enhance administrative processes and serve as a liaison for managers on administrative personnel issues. During FY 2003, NAC redesigned the capital investment and purchasing process to increase its efficiency and effectiveness. NAC staff members review workloads for administrative personnel at field offices and design and conduct training for administrative specialists. The National Threat Management Coordinator position was assigned to FAS during FY 2003 to provide program management for the Firearms, Officer Survival, and Defensive Tactics programs. The position will be responsible for developing policies and procedures for the Postal Inspection Service's threat management programs and will serve as a liaison with other agencies. Statistical Charts Table: FY 2003 Goals, Objectives, Indicators, and Targets Safety Goal 1: Ensure a safe, secure and drug-free work environment Objective 1A: Ensure employee screening is effective Indicator 1A-1: District hiring offices reviewed that are in compliance with prescribed screening criteria Target 1A-1: All district hiring offices reviewed are at 90% compliance, Result: 85 Objective 1B: Enhance security of postal facilities Indicator 1B-1: "Facility Risk Rating" for high-profile postal facilities Target 1B-1: Establish indicator and baseline, Result: 17 Security Goal 2: Reduce and deter criminal attack of postal products, services, and assets Objective 2A: Reduce theft of mail Indicator 2A-1: Number of ICMT prosecutive actions related to identy theft and identity-takeover schemes Target 2A-1: 95 ICMT actions, Result: 98 Indicator 2A-2: Number of ECMT prosecutive actions related to identity theft and identity-takeover schemes Target 2A-2: 2,350 ECMT actions, Result: 3,148 Indicator 2A-3: Compliance with all airport security review criteria Target 2A-3a: 80% correction of deficiencies identified in FY 2003 physical airport security reviews that are under control of AMC manager, to include 100% of all policy and process compliance issues, Result: 80 Target 2A-3b: Completion of all airport security reviews, Result: 21 Objective 2B: Reduce and deter criminal misuse of the Postal Service Workers' Compensation Program and reduce costs due to fraudulent schemes Indicator 2B-1: Periodic roll schemes resolved and cost avoidance achieved due to termination or reduction of benefits and civil settlements Target 2B-1a: 210 FWC schemes resolved through criminal or administrative actions, Result: 201 Target 2B-1b: $108 million in cost avoidance, Result: $152 million Indicator 2B-2. Front-end investigations cost savings and schemes resolved (COP and occupational injuries) Target 2B-2a: 210 front-end schemes resolved through criminal or administrative actions, Result: 243 Target 2B-2b: $8.78 million in cost savings, Result: $10.3 million Integrity Goal 3: Reduce the use of the postal system to defraud consumers, businesses, and government agencies and prevent its use to transport prohibited, illegal, and dangerous mailings and their proceeds Objective 3A: Protect consumers and business from fraud schemes Indicator 3A-1: Number of multistate domestic and international telemarketing and direct mail category 1 operations disrupted Target 3A-1: 30 operations disrupted, Result: 37 Indicator 3A-2. Number of deceptive mailing operations disrupted via criminal, civil, or administrative action Target 3A-2: 110 operations disrupted, Result: 142 Objective 3B: Reduce the use of postal money orders and the postal system to launder money Indicator 3B-1: Number of money laundering operations disrupted Target 3B-1: 20 operations disrupted (excluding 3B-2 below), Result: 31 Indicator 3B-2: Number of money laundering schemes attributed to terrorist activities Target 3B-2: Identify schemes and establish baseline and case subject codes, Result: 3 Objective 3C: Reduce and deter the use of the U.S. Mail for procurement or delivery of materials that promote the sexual exploitation of children Indicator 3C-1: Number of offenders identified and prosecuted Target 3C-1: 180 offenders prosecuted, Result: 257 AMC-airport mail center ASYS-airline systems CBU-collection box units COP-continuation of pay DNO-distribution network office ECMT-external crimes-mail theft FWC-fraudulent workers' compensation HCR-highway contract route ICMT-internal crimes-mail theft ISOSG-Inspection Service Operations Support Group NDCBU-neighborhood delivery and collection box units SIA-segmented inventory account SNET-shared network terminal THS-terminal handler suppliers Table: FY 2003 Management Challenges, Objectives, Indicators, Targets, and Results* Challenge 1: Enhance management functions to support major operational programs Objective 1A: Enhance the national program management function Indicator 1A-1: Program management training program initiated Target: Training curriculum approved/funded – 12/31/02 Target: Pilot courses completed – 03/31/03 Target: Formal training initiated – 06/30/03 Owner: Manager, Human Resource Performance Objective 1B: Establish a performance-based budgeting (PBB) function for the Inspection Service Indicator 1B-1: Initial phase of the PBB program implemented Indicator 1B-2: Supplemental PBB phases recommended Target: Recruit and place cost accountant at Headquarters – 04/30/03 Target: ID and schedule PBB-based training for Headquarters staff – 03/31/03 Target: Complete benchmarking efforts of other agencies – 06/30/03 Target: Make recommendations for PBB implementation – 09/30/03 Owner: INC, Finance and Administrative Services Objective 1C: Implement recommended improvements for case management activities Indicator 1C-1: Establishment of fixed responsibility Indicator 1C-2: Policy to improve case management reporting Indicator 1C-3: Victim-witness reporting procedures Indicator 1C-4: Measuring system for effective processes Target: Designated responsibility – 10/31/02 Target: Policy completed and published – 06/30/03 Target: Procedures disseminated – 03/31/03 Target: Concept developed and presented to EC – 06/30/03 Owner: Manager, Strategic Planning & Management Process Challenge 2: Improve Inspection Service capabilities through effective use of information technology Objective 2A: Improve investigative capabilities through the development and enhancement of applications, and implementation of emerging technologies Indicator 2A-1: Case-management information system development initiated Target: Case-management project team established – 10/30/02 Target: Case-management information system design finalized – 02/28/03 Target: Case-management information system development initiated – 06/30/03 Owner: INC, Information Technology Indicator 2A-2: Other IT Review Committee (ITRC)-approved applications completed Indicator 2A-3: Emerging technologies implemented Target: Other ITRC-approved applications completed – 09/30/03 Target: Emerging technologies implemented – 09/30/03 Owner: INC, Information Technology Objective 2B: Enhance the ability to access and share information with multiple sources Indicator 2B-1: Ability to electronically obtain information from USPS Indicator 2B-2: Strategic alliance with business partners and interagency task forces to electronically share information of investigative value Target: Obtain information electronically from USPS – 09/30/03 Target: Develop strategic alliance and electronically share information – 09/30/03 Owner: INC, Information Technology Challenge 3: Establish a Comprehensive Intelligence Analyst support function for the Inspection Service Objective 3A: Build an Advanced Intelligence Analytical capability within the Inspection Service Indicator 3A-1: Establish objectives for Intelligence Group Indicator 3A-2: Data and data sources identified Indicator 3A-3: Develop analytical process to be used Indicator 3A-4: Develop staffing model Indicator 3A-5: Establish number of managers/analysts Target: Objectives identified and adopted – 12/31/02 Target: Data and data sources identified by program – 03/31/03 Target: Process developed and implemented – 03/31/03 Target: Group organizational chart developed – 03/31/03 Target: Staffing of group – 06/30/03 Owner: INC, Intelligence Challenge 4: Improve Inspection Service internal and external communications Objective 4A: Develop an overall strategy to improve the internal and external communication of the Inspection Service role Indicator 4A-1: Strategies for division-based IS awareness programs (C&PA) Indicator 4A-2: Division-based awareness programs for: - the American public through the media - Congress - the law enforcement community, and - the Postal Service Target: Strategies disseminated to field – 12/31/02 (C&PA) Target: Division program plans established – 03/31/03 (Field DCIs) Owner: INC, C&PA Field and DCIs Challenge 5: Contribute to IS performance by ensuring human capital needs are identified, planned for, and allocated based on operational and organizational goals Objective 5A: Recruit and retain a workforce that possesses current, as well as anticipated, skill sets to support the organization’s dynamic environment Indicator 5A-1: Availability of Postal Inspector candidates to fill nine projected Basic Inspector Training (BIT) classes in FY 2003 Target: 180 Postal Inspectors hired in FY 2003 Owner: Manager, Human Resource Performance & INC, Career Development Division Challenge 6: Update and enhance Inspection Service employee training and development Objective 6A: Ensure that training systems and processes are aligned with operational objectives of the organization Indicator 6A-1: Implement training prioritization model Target: Training architecture established – 05/15/03 Target: Link to Annual Planning Cycle – 08/15/03 Target: Link to budget – 08/31/03 Owner: Manager, Human Resource Performance Objective 6B: Enhance supervisory performance through increased job knowledge and enrichment of interpersonal skills Indicator 6B-1: Initial level supervisory training initiated Target: On-the-job training at field level conducted – 03/15/03 Target: Appropriate classroom training conducted – 03/31/03 Target: Training evaluation conducted – 03/31/03 Owner: Manager, Human Resource Performance Challenge 7: Improve Inspection Service capabilities to support investigative and security initiatives by preventing the Postal Service from being the subject of, or used to further, acts of terrorism Objective: 7A Improve the Inspection Service’s preparedness and ability to prevent incidents of acts of terrorism through the use of the U.S. Mail system Indicator 7A-1: Continuity of Operations Plans (COOP) Indicator 7A-2: Homeland Security Advisory System (HSAS) Indicator 7A-3: Intelligence Indicator 7A-4: Continuing Threat Assessment Target: Updated and published: NHQ & Divisions – 03/01/03 Target: Ops Plan published: NHQ – 02/28/03 Target: Ops Plan published: Divisions – 05/01/03 Target: COOP Communications tests – 06/30/03 Target: HSAS (USPS) published – 12/31/02 Target: HSAS protective measures finalized – 09/30/03 Target: Improve security communications – 09/30/03 Target: Threat and vulnerability assessment completed – 03/31/03 Target: BDS deployment begun – 09/30/03 Owner: INC, Emergency Preparedness Objective 7B: Improve the Inspection Service’s ability to assess and react to incidents of acts of terrorism through the use of the U.S. Mail system Indicator 7B-1: WMD Protocol Indicator 7B-2: WMD Field Equipment Indicator 7B-3: WMD Response Training Indicator 7B-4: Reverse Alert System Indicator 7B-5: National Headquarters Command Center Target: Protocol instituted – 06/30/03 Target: Deploy WMD equipment to field – 06/30/03 Target: Develop training – 06/30/03 Target: Develop alert system – 12/31/02 Target: NHQ Command Center complete – 09/30/03 Owner: INC, Emergency Preparedness * The Postal Inspection Service selected 12 Management Challenge objectives for FY 2003. The objectives focused attention in the areas of program management, information technology, intelligence, communications, human resources, and training. Most of the objectives were met. The implementation of initiatives, resulting from the objectives, had an overall positive effect on the operations of the organization for FY 2003 and will continue to build for future years. For more detailed information on the results, please read the Postal Inspection Service’s FY 2003 Performance Report on our Web site at www.usps.com/postalinspectors. Table: FY 2004 Goals, Objectives, Indicators, and Targets Safety Goal: Ensure a safe, secure, and drug-free work environment Objective 1: Enhance the security of USPS facilities Indicator 1: Reduction in the number of facilities reviewed in the previous FY with a risk rating score of 800+ Target: 25% reduction Security Goal: Reduce and deter criminal attack of postal products, services, and assets Objective 2: Reduce and deter theft of mail Indicator 2a: Reduction in ICMT losses involving major mailers Target: Establish performance baseline Indicator 2b: Increase in the number of ECMT (Category 1) cases related to ID theft and ID takeover schemes. Target: 10% increase over FY 2003 Objective 3: Reduce and deter criminal misuse of the Postal Service’s Workers’ Compensation Program, and reduce costs due to fraudulent schemes Indicator 3a: Periodic roll schemes resolved and cost avoidance achieved due to termination or reduction of benefits and civil settlements Target: $110 million in long-term cost savings Target: 218 long-term schemes resolved Indicator 3b: Front-end investigations, cost savings, and schemes resolved (COP and occupational injuries) Target: $13.23 million in front-end cost savings Target: 316 front-end schemes resolved Objective 4: Enhance the security controls of commercial major mailer facilities Indicator 4: Establish security risk ratings for major mailer facilities Target: Develop baseline of facility risk ratings Objective 5: Improve efficiency of the investigative process Indicator 5a: Improvement in average time from case issuance to arrest/identification Target: Develop indicator measurement system and establish performance baseline Indicator 5b: Improvement in average resolution rate (prosecutive or administrative actions) Target: Develop indicator measurement system and establish performance baseline Integrity Goal: Reduce the use of the postal system to defraud consumers, businesses, and government agencies and prevent its use to transport prohibited, illegal, and dangerous mailings and their proceeds Objective 5: Improve efficiency of the investigative process Indicator 5a: Improvement in average time from case issuance to arrest/identification Target: Develop indicator measurement system and establish performance baseline Indicator 5b: Improvement in average resolution rate (prosecutive or administrative actions) Target: Develop indicator measurement system and establish performance baseline Objective 6: Deter the use of the U.S. Mail for procurement or delivery of materials that promote the sexual exploitation of children Indicator 6a: Increase in number of offenders identified and prosecuted Target: 15% increase over FY 2003 Indicator 6b: Increase in number of child exploitation federal prosecutions Target: 10% increase over FY 2003 Objective 7: Increase emphasis on corporate mail fraud investigations Indicator 7: Increase in number of corporate mail fraud federal prosecutions Target: 5% increase over FY 2003 Objective 8: Enhance capabilities in international crime investigations Indicator 8: Identify criminal activity with international implications Target: Develop indicator measurement system and establish baseline Objective 9: Establish advanced capabilities in the area of dangerous mail investigations (DMI) Indicator 9a: Number of divisions with basic biohazard detection system (BDS) support capabilities Target: 100% Indicator 9b: Number of divisions with advanced DMI response capabilities, including crime scene investigations (CSI) Target: 50% Management Initiatives Goal: Improve Inspection Service capabilities through advanced management systems, effective use of technology, and human capital management Objective 10: Implement improved Inspector recruitment and hiring process Indicator 10a: Reduction in number of basic Inspector training candidates in pre-assessment pool Target: 50% reduction in FY 2003 pool Indicator 10b: Basic Inspector training applications received in current FY and processed through selection pool within six months or less Target: 70% Indicator 10c: Inspector vacancies to authorized complement Target: 2% Objective 11: Establish a performance-based budget (PBB) function Indicator 11: Performance costing capability Target: 60% capability Objective 12: Improve Inspection Service internal and external communications Indicator 12a: Fully integrated internal communication system Target: 25% capability Indicator 12b: Improved public relations outreach capability Target: Establish performance baseline Table: Criminal Statistics for FY 2003 Type of Investigation: Mail Theft (includes theft and possession of stolen mail) Arrests: 6,269 Convictions*: 5,456 Type of Investigation: Miscellaneous External Crimes (includes counterfeit and contraband postage, money order offenses, vandalism, and arson) Arrests: 448 Convictions*: 351 Type of Investigation: Miscellaneous Employee Crimes (includes theft of postal property and sabotage of equipment) Arrests: 87 Convictions*: 57 Type of Investigation: Bombs, Threats, Hoaxes, and Explosive Devices Arrests: 99 Convictions*: 82 Type of Investigation: Prohibited Mailings (includes hazardous material, firearms and weapons, intoxicants, extortion, and false documents) Arrests: 128 Convictions*: 125 Type of Investigation: Assaults and Threats (includes assaults and threats against on-duty postal employees) Arrests: 356 Convictions*: 274 Type of Investigation: Robbery Arrests: 61 Convictions*: 70 Type of Investigation: Burglary Arrests: 128 Convictions*: 115 Type of Investigation: Mailing of Controlled Substances (includes narcotics, steroids, drug-related proceeds, and drug paraphernalia) Arrests: 1,378 Convictions*: 1,180 Type of Investigation: Employee Narcotics Cases (includes employees and non-employees selling narcotics on postal property) Arrests: 31 Convictions*: 29 Type of Investigation: Mail Fraud Arrests: 1,453 Convictions*: 1,387 Type of Investigation: Child Exploitation, Mailing of Obscene Matter, and Sexually Oriented Advertisements Arrests: 320 Convictions*: 289 Type of Investigation: Financial and Expenditure Investigations Arrests: 285 Convictions*: 271 Type of Investigation: Workers’ Compensation Fraud Arrests: 50 Convictions*: 43 Type of Investigation: Revenue Investigations Arrests: 68 Convictions*: 54 Total Arrests: 11,161 Total Convictions*: 9,783 *Convictions may be related to cases from prior reporting periods. U.S. Postal Inspection Service Jurisdiction and Laws Postal Inspectors enforce more than 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 averages 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. Counterfeiting Stamps and Money Orders, and Related Crimes (18 USC 500, 501, 503, 1720) Postal Inspectors preserve public confidence in the mail by pursuing individuals who forge or counterfeit postage stamps, postal money orders and other stamp products. The Inspection Service helps train postal employees to recognize bogus postal money orders. Destruction, Obstruction, and Delay of Mail (18 USC 1700, 1701, 1702, 1703) The Postal Inspection Service upholds federal statutes aimed at securing customers' mail, including those related to the desertion, obstruction, delay or destruction of mail. Postal Inspectors demonstrate their resolve by implementing mail security processes to ensure that customers receive their mail intact and free from outside interference. 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. Extortion (18 USC 876) The Postal Inspection Service has jurisdiction when the U.S. Mail is used to injure a person's reputation or property, or a threat to accuse a person of a crime, accompanied by a demand for money or other item of value. Forfeiture (18 USC 981, 982) Postal Inspectors use criminal and civil forfei- ture statutes, when appropriate, to seize assets associated with criminal acts. The Postal Inspection Service equitably shares forfeited assets with other local, state, and federal law enforcement agencies as appropriate. Identity Theft (18 USC 1028, 1029) 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. Lotteries (18 USC 1301, 1302, 1303; 39 USC 3005) Postal Inspectors protect consumers by strictly enforcing all laws related to importing, transporting, and mailing lottery tickets. Under the false representations and lottery statute (3005), Inspectors are authorized to instruct postmasters to withhold from delivery and return to sender any mail that violates the law. 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. Mail or Mailbox Destruction (18 USC 1705) The Postal Inspection Service is committed to ensuring the security of the nation's mail and the receptacles intended for the receipt or delivery of the mail. To this end, Postal Inspectors aggressively pursue individuals who willfully or maliciously injure or destroy such receptacles. 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. Obscenity and Sexually Oriented Advertising (18 USC 1461, 1463, 1735; 39 USC 3010) Postal Inspectors follow court-established guidelines to uphold obscenity standards, which prohibit "obscene, lascivious, indecent, filthy or vile" mailings. Customers who wish to halt mailings of sexually oriented advertisements or similar solicitations may complete and submit to a post office Form 1500, which is available at post offices. 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 for workers' compensation. For assistance with postal-related problems of a law enforcement nature, contact your nearest Postal Inspection Service division. Atlanta Division PO Box 16489 Atlanta GA 30321-0489 404-608-4500 Boston Division 495 Summer St, Ste 600 Boston MA 02210-2114 617-556-4400 Charlotte Division PO Box 3000 Charlotte NC 28228-3000 704-329-9120 Chicago Division 433 W Harrison St, Rm 50190 Chicago IL 60669-2201 312-983-7900 Denver Division 1745 Stout St, Ste 900 Denver CO 80299-3034 303-313-5320 Detroit Division PO Box 330119 Detroit MI 48232-6119 313-226-8184 Ft. Worth Division PO Box 162929 Ft Worth TX 76161-2929 817-317-3400 Houston Division PO Box 1276 Houston TX 77251-1276 713-238-4400 Los Angeles Division PO Box 2000 Pasadena CA 91102-2000 626-405-1200 Miami Division 3400 Lakeside Dr, 6th Fl Miramar FL 33027-3242 954-436-7200 New Jersey/Caribbean Division PO Box 509 Newark NJ 07101-0509 973-693-5400 New York Division PO Box 555 New York NY 10116-0555 212-330-3844 Philadelphia Division PO Box 7500 Philadelphia PA 19101-9000 215-895-8450 Pittsburgh Division 1001 California Ave Pittsburgh PA 15290-9000 412-359-7900 St. Louis Division 1106 Walnut St St Louis MO 63199-2201 314-539-9300 San Francisco Division PO Box 882528 San Francisco CA 94188-2528 415-778-5800 Seattle Division PO Box 400 Seattle WA 98111-4000 206-442-6300 Washington Division Little Patuxent Parkway, Ste 200 Columbia, MD 21044-3509 410-715-7700 For information on employment opportunities, write to: U.S. Postal Inspection Service Security Investigations Service Center Attn: Recruitment 225 N Humphreys Blvd 4th Floor Memphis, TN 38161-0001 1-866-648-7472 (toll free) | Inspection Service Home Page |