No Warrant, No Problem: How the Government Can Get Your Digital Data

ProPublica is back with an update of their December 2012 reference guide outlining the many, many ways law enforcement can get into your personal data – phone records, GPS, email and much more – without a warrant, and without informing you you’re being watched. This is an immensely informative reference, and it’s as up to date as anything out there.

 

By Theodoric Meyer and Peter Maass

ProPublica

Update, Jan. 8, 2014: This post has been updated. It was originally published on Dec. 4, 2012.

The government isn’t allowed to wiretap American citizens without a warrant from a judge. But there are plenty of legal ways for law enforcement, from the local sheriff to the FBI to the Internal Revenue Service, to snoop on the digital trails you create every day. Authorities can often obtain your emails and texts by going to Google or AT&T with a simple subpoena that doesn’t require showing probable cause of a crime. And recent revelations about classified National Security Agency surveillance programs show that the government is regularly sweeping up data on Americans’ telephone calls and has the capability to access emails, files, online chats and other data — all under secret oversight by a special Federal court.

The breadth of and justification for the surveillance are the subjects of ongoing debate in Washington. President Obama and others have defended the programs as necessary to identify terrorists and stop attacks before they happen, but privacy advocates and several U.S. lawmakers have questioned them.

Here’s a look at what the government can get from you and the legal framework behind its power:

Phone Records

How They Get It

Listening to your phone calls without a judge’s warrant is illegal if you’re a U.S. citizen. But police don’t need a warrant — which requires showing “probable cause” of a crime — to get just the numbers for incoming and outgoing calls from phone carriers. Instead, police can get courts to sign off on a subpoena, which only requires that the data they’re after is relevant to an investigation — a lesser standard of evidence. The FBI can also request a secret court order for phone records related to an international terrorism or spying investigation without showing probable cause. One such order obtained by The Guardian newspaper shows that the FBI requested all phone records over a three-month period last year from Verizon Business Network Services. Director of National Intelligence James R. Clapper said in a statement that such orders are renewed by the court every 90 days. And similar orders reportedly exist for other phone companies, including AT&T, Sprint and Bell South. The phone records being collected are for what’s called “metadata” — time, duration, numbers called — but not the content of calls, which President Obama, in defending the surveillance, said would require a judge’s consent.

What The Law Says

Police can get phone records without a warrant thanks to a 1979 Supreme Court ruling, Smith v. Maryland, which found that the Constitution’s Fourth Amendment protection against unreasonable search and seizure doesn’t apply to a list of phone numbers. The New York Times reported in 2012 that New York’s police department “has quietly amassed a trove” of call records by routinely issuing subpoenas for them from phones that had been reported stolen. According to the Times, the records “could conceivably be used for any investigative purpose.” The Foreign Intelligence Surveillance Act, which Congress expanded in 2001 when it passed the Patriot Act, also allows the FBI to apply for a FISA court order to get “any tangible things (including books, records, papers, documents, and other items).” The FISA court ruled on May 24, 2006, that this provision applied to a phone company’s entire call database, according to The Washington Post. (The phone companies had previously handed over the data voluntarily, the Post reported, but grew nervous after The New York Times published a story on the Bush Administration’s warrantless wiretapping program in 2005.) The court order for Verizon obtained by The Guardian — which covers all records from April 25 to July 19, 2013 — is much more expansive than a typical warrant or subpoena, said Hanni Fakhoury, a staff attorney with the Electronic Frontier Foundation. It covers “telephone metadata … for communications (i) between the United States and abroad; or (ii) wholly within the United States, including local telephone calls.” In a statement, Clapper’s office said the government can’t query the metadata it has collected unless there is a “reasonable suspicion” it is associated with a specific foreign terror group. That happened fewer than 300 times in 2012, the statement said, adding that the data is destroyed after five years. Judge Richard J. Leon of the Federal District Court for the District of Columbia ruled last month that the NSA’s bulk collection of phone records likely violates the Constitution. But a second Federal judge, William H. Pauley III, ruled that the collection was legal less than two weeks later, citing Smith v. Maryland in his opinion.

Location Data

How They Get It

Many cell phone carriers provide authorities with a phone’s location and may charge a fee for doing so. Cell towers track where your phone is at any moment; so can the GPS features in some smartphones. In response to a recent inquiry by Senator Edward J. Markey, a Massachusetts Democrat, Sprint reported that it provided location data to law enforcement 67,000 times in 2012. AT&T reported receiving 77,800 requests for location data in 2012. (AT&T also said that it charges $100 to start tracking a phone and $25 a day to keep tracking it.) Other carriers, including T-Mobile, U.S. Cellular and Verizon, didn’t specify the number of location data requests they had received or the number of times they’ve provided it. Internet service providers can also provide location data that tracks users via their computer’s IP address — a unique number assigned to each computer. Clapper has repeatedly said the NSA does not collect location data from cell carriers under Section 215 of the Patriot Act (which is how it vacuums up other phone “metadata”). But the NSA does gather location data on hundreds of millions of phones overseas, according to The Washington Post, including from Americans abroad.

What The Law Says

Many courts have ruled that police don’t need a warrant from a judge to get cell phone location data. They only have to show that, under the Federal Electronic Communications Privacy Act (EPCA), the data contains “specific and articulable facts” related to an investigation — again, a lesser standard than probable cause. Last year, Maine became the second state, after Montana, to require police to obtain a warrant for location data; Gov. Jerry Brown of California, a Democrat, vetoed a similar measure in 2012. Senators Patrick Leahy, a Vermont Democrat, and Mike Lee, a Utah Republican, introduced a bill last year that would have updated the ECPA but wouldn’t have changed how location data is treated. Rep. Zoe Lofgren, a California Democrat, introduced a separate bill in the House that would require a warrant for location data as well as emails. Neither bill has passed. The New Jersey Supreme Court ruled last July that police needed a warrant for location data. But the United States Court of Appeals for the Fifth Circuit in New Orleans ruled weeks later that the authorities could get historical location data from cell carriers without a warrant. Two similar cases, U.S. v. Davis and U.S. v. Graham, are scheduled for oral argument before Federal appeals courts in the coming months.  The Supreme Court has not yet ruled on location data.

IP Addresses

How They Get It

Google, Yahoo, Microsoft and other webmail providers accumulate massive amounts of data about our digital wanderings. A warrant is needed for access to some emails (see below), but not for the IP addresses of the computers used to log into your mail account or surf the Web. According to the American Civil Liberties Union, those records are kept for at least a year. The NSA also runs a program called Marina designed to sweep up Internet “metadata,” or “digital network information,” according to The Washington Post. Whether or not that includes IP addresses is unclear.

What The Law Says

Police can thank U.S. v. Forrester, a case involving two men trying to set up a drug lab in California, for the ease of access. In the 2007 case, the government successfully argued that tracking IP addresses was no different than installing a device to track every telephone number dialed by a given phone (which is legal). Police only need a court to sign off on a subpoena certifying that the data they’re after is relevant to an investigation — the same standard as for cell phone records. FISA also allows the FBI to apply for a secret court order to get “any tangible things (including books, records, papers, documents, and other items)” relevant to an international terrorism or spying investigation.

Emails

How They Get It

There’s a double standard when it comes to email, one of the most requested types of data. A warrant generally is needed to get recent emails, but law enforcement can obtain older ones with only a subpoena. Google says it received 16,407 requests for data — including emails sent through its Gmail service — from U.S. law enforcement in 2012, and an additional 10,918 requests in the first half of 2013. Microsoft, with its Outlook and Hotmail email services, says it received 11,073 requests from U.S. law enforcement agencies in 2012, and an additional 7,014 in the first half of 2013. The company provided some customer data in 75.8 percent of the 2013 requests. (The figures don’t include requests for data from Skype, which Microsoft owns.) And Yahoo says it received 12,444 such requests in the first half of 2013, providing at least some customer data in 91.6 percent of them. Google said last year that it would lobby in favor of greater protections for email. The NSA also obtains emails from companies such as Microsoft, Google, Yahoo and AOL under a program called Prism, as revealed by The Washington Post and The Guardian. Clapper has said the program does not target U.S. citizens or anyone in the country. The Post reported in October that the agency has tapped the private fiber-optic cables that connect Google and Yahoo data centers overseas to collect email metadata en masse, as well as other files. In a single 30-day period, the NSA processed 181,280,466 new records, including email metadata.

What The Law Says

This is another area where the ECPA comes into play. The law gives greater protection to recent messages than to older ones, based on a 180-day cutoff. Only a subpoena is required for emails older than that; otherwise, a warrant is necessary. This extends to authorities beyond the FBI and the police. I.R.S. documents released by the American Civil Liberties Union suggest that the I.R.S.’ Criminal Tax Division reads emails without obtaining a warrant. The ECPA update bills introduced by Leahy and Lee in the Senate and Lofgren in the House would require a warrant for the authorities to get all emails regardless of age. The Justice Department, which had objected to such a change, said last March that it doesn’t any longer. Clapper has said the Prism program is legal under Section 702 of the FISA Amendments Act of 2008, which lays out how intelligence agencies may spy on non-U.S. citizens abroad. Under “limitations,” the section says the surveillance “may not intentionally target a United States person reasonably believed to be located outside the United States” and “shall be conducted in a manner consistent” with the Fourth Amendment’s protections against unreasonable search and seizure. The NSA’s tapping of fiber-optic cables between Google and Yahoo data centers — which would be illegal inside the U.S. — is allowed overseas doesn’t seem to intentionally target U.S. citizens or permanent residents.

Email Drafts

How They Get It

Communicating through draft emails, à la David Petraeus and Paula Broadwell, seems sneaky. But drafts are actually easier for investigators to get than recently sent emails because the law treats them differently.

What The Law Says

The ECPA distinguishes between communications — emails, texts, etc. — and stored electronic data. Draft emails fall into the latter, which get less protection under the law. Authorities need only a subpoena for them. The bills introduced by Leahy and Lee in the Senate and Lofgren in the House would change that by requiring a warrant to obtain email drafts.

Text Messages

How They Get It

Investigators need only a subpoena, not a warrant, to get text messages more than 180 days old from a cell provider — the same standard as emails. Many carriers charge authorities a fee to provide texts and other information. For texts, Sprint charges $30, for example, while Verizon charges $50.

What The Law Says

The ECPA also applies to text messages, according to the EFF’s Fakhoury, which is why the rules are similar to those governing emails. But the ECPA doesn’t apply when it comes to actually reading texts on someone’s phone rather than getting them from a carrier. State courts have split on that issue. Ohio’s Supreme Court has ruled that police need a warrant to view the contents of cell phones of people who’ve been arrested, including texts. But the California Supreme Court has said no warrant is needed. The U.S. Supreme Court in 2010 declined to clear up the matter.

Cloud Data

How They Get It

Authorities typically need only a subpoena to get data from Google Drive, Dropbox, SkyDrive and other services that allow users to store data on their servers, or “in the cloud,” as it’s known. The NSA is gathering “stored data” from companies like Google, according to an NSA PowerPoint briefing obtained by The Washington Post and The Guardian. Clapper has said only non-U.S. citizens abroad are targeted. The agency has also tapped the fiber-optic cables linking Google and Yahoo data centers overseas. Both companies offer cloud-storage services.

What The Law Says

The law treats cloud data the same as draft emails — authorities don’t need a warrant to get it. But files that you’ve shared with others — say, a collaboration using Google Docs — might require a warrant under the ECPA if it’s considered “communication” rather than stored data. “That’s a very hard rule to apply,” says Greg Nojeim, a senior counsel with the Center for Democracy & Technology. “It actually makes no sense for the way we communicate today.” If cloud data is covered by FISA — which seems likely, as the law specifically states that “documents” are included — it would let the FBI request a secret court order for data deemed relevant to international terrorism or spying investigations.

Social Media

How They Get It

When it comes to sites like Facebook, Twitter and LinkedIn, the social networks’ privacy policies dictate how cooperative they are in handing over users’ data. Facebook says it requires a warrant from a judge to disclose a user’s “messages, photos, videos, wall posts, and location information.” But it will supply basic information, such as a user’s email address or the IP addresses of the computers from which someone recently accessed an account, under a subpoena. Twitter has reported that it received 1,494 requests for user information from U.S. authorities in 2012, and an additional 902 in the first half of 2013. The company says it received 56 percent of the 2013 requests through subpoenas, 11 percent through other court others, 23 percent through search warrants and 10 percent through other means. Twitter says that “non-public information about Twitter users is not released except as lawfully required by appropriate legal process such as a subpoena, court order, or other valid legal process.” The NSA is also gathering data from social media from companies such as Facebook, YouTube and Paltalk as part of its Prism program, according to the NSA PowerPoint briefing. Clapper has said only non-U.S. citizens abroad are targeted.

What The Law Says

Courts haven’t issued a definitive ruling on social media. In 2012, a Manhattan Criminal Court judge upheld a prosecutor’s subpoena for information from Twitter about an Occupy Wall Street protester arrested on the Brooklyn Bridge. It was the first time a judge had allowed prosecutors to use a subpoena to get information from Twitter rather than forcing them to get a warrant.

ProPublica: What Deadline? The Obamacare Sign-up Dates Keep Moving

This article, written by Charles Ornstein, was originally published by ProPublica Dec. 19. 

You aren’t alone if you’re confused about the deadline to sign up for coverage on the health insurance marketplaces. The deadline is 2014 and has been 2014 in flux.

When the process began in October, consumers using HealthCare.gov, the Federal marketplace for 36 states, had until Dec. 15 to pick a plan if they wanted coverage that begins Jan. 1. But because of the well-publicized glitches with the website, Federal officials last month extended that deadline until Dec. 23.

Then, last week, the U.S. Department of Health and Human Services sought to delay another key deadline, the date by which consumers have to pay their first month’s premium. As it stood, payments had to be received before coverage began (so, by Dec. 31), but HHS asked insurers to be flexible.

On Wednesday, health insurance companies obliged, extending the payment deadline to Jan. 10 instead of Jan. 1.

So where does this leave folks? It’s still not totally clear.

HHS hinted last week that the enrollment deadline was still not set in stone. “We will consider moving this deadline to a later date should exceptional circumstances pose barriers to consumers enrolling on or before December 23.” The department’s fact sheet did not define “exceptional circumstances.”

The confusion only builds. The Federal government sets enrollment deadlines for the 36 states for which it handles sign-ups; the 14 state-based insurance marketplaces set their own deadlines. Read these couple paragraphs from a story by Jeffrey Young at The Huffington Post:

The final date to choose a health plan that will be in place on Jan. 1 is Dec. 23 in 46 states and the District of Columbia. Marylanders and Oregonians have until Dec. 27, although Oregon residents had only until Dec. 4 to file paper applications with the state exchange because online enrollment remains unavailable.

The deadline to pay January premiums is now Jan. 10 in the 36 states served by the federal exchanges and in Colorado and New York. Users of the exchanges in Massachusetts, Minnesota and Nevada have to pay by Dec. 23. The due date is Jan. 1 for Kentuckians, Jan. 6 for Rhode Islanders, Jan. 7 for Vermonters and Jan. 15 for Marylanders. In the District of Columbia, Aetna customers have until Jan. 8, while CareFirst BlueCross BlueShield and Kaiser Permanente enrollees can pay up until Jan. 15. Hawaii and Oregon are still determining their respective payment deadlines.

Here’s an excerpt from Wednesday’s Seattle Times about Washington’s deadlines:

Washington residents who have started but not finished their applications for insurance through the state’s new health care exchange are getting a deadline reprieve, state officials announced Wednesday.

Anyone who begins an application before the previous deadline of Dec. 23, will get as much help as they need to finish and won’t face a real deadline until Jan. 15, said Michael Marchand, spokesman for the Washington Health Benefit Exchange.

“The most important thing I want people to do is to take the action to get that application started. We can work with them at that point,” Marchand said Wednesday.

All of those dates could still change, so if you are in need of coverage, it’s best to ask questions early and often.

“There is massive confusion around deadlines,” Mike Perry, co-founder of research firm PerryUndem, recently told The Washington Post. He has traveled the country doing focus groups with uninsured Americans this past month. “March comes up. January is prominent. But nobody seems to know the deadlines,” Perry said.

If you don’t need coverage that begins Jan. 1, you’re in luck. The 2014 open enrollment period for the health insurance marketplaces runs through March 31, although your coverage generally won’t begin until the month after you sign up. (Most consumers who go without insurance in 2014 will have to pay a penalty.)

In the next few days, as enrollment surges ahead of Monday’s “deadline,” we’ll begin to understand the scope of the problem. Covered California on Wednesday said that 15,000 people a day are signing up for coverage; in New York, the figure is 4,500.

I’ve heard from a number of consumers this week saying that they had not yet received invoices from their insurance companies, and so they have been unable to pay their first month’s premiums. Along the same lines, at a forum for health journalists last week, an official from the Community Service Society of New York said that she was told that three prominent insurance companies were only beginning to send out invoices to their enrollees.

As I reported last week, some insurers reported that only 5 percent to 15 percent of enrollees had paid their first month’s premium.

 

Editor’s Note: This post is adapted from Ornstein’s “Healthy buzz” blog. Have you tried signing up for health care coverage through the new exchanges?

 

ProPublica On The Coming Obamacare Paper Pileup

This article, by Charles Ornstein, appeared on the ProPublica website on Dec. 12.

When Healthcare.gov and some State-run insurance marketplaces ran into trouble with their Web sites in October and November, they urged consumers to submit paper applications.

Now, it’s time to process all that paper. And with the deadline to enroll in health plans less than two weeks away, there’s growing concern that some of these applications won’t be processed in time.

The Associated Press reported last week that federal officials are now advising navigators 2014 groups paid to assist consumers with enrollment 2014 not to use paper applications anymore, if they can help it.

“We received guidance from the feds recommending that folks apply online as opposed to paper,” said Mike Claffey, spokesman for the Illinois Department of Insurance.

After a conference call earlier this week with federal health officials, Illinois health officials sent a memo Thursday to their roughly 1,600 navigators saying there is no way to complete enrollment through a paper application. The memo, which Claffey said was based on guidance from federal officials, said paper applications should be used only if other means aren’t available.

Federal health officials also discussed the issue during a conference call Wednesday with navigators and certified counselors in several states.

“They’ve said do not use paper applications because they won’t be able to process them anywhere near in time,” said John Foley, attorney and certified counselor for Legal Aid Society of Palm Beach County, who was on the call.

According to an enrollment report released Wednesday by the U.S. Department of Health and Human Services, about 83 percent of the 1.8 million applications completed between Oct. 1 and Nov. 30 were filled out online; the rest were on paper. The online figure was higher, 91 percent, in the 14 States running their own health exchanges, compared to 80 percent for Healthcare.gov, which processes enrollments for the other 36 States.

But even outside the federal exchange, paper is proving to be a problem.

Covered California in recent days disclosed that it had a backlog of 25,000 paper applications that had to be processed before the Dec. 23 deadline to sign up for coverage that begins Jan. 1. According to an AP report:

The applications came from individuals, insurance agents and health exchange agents who were unable to access the online portal in the first few days after the exchange opened on Oct. 1, said Roy Kennedy, a spokesman for Covered California, the agency that runs the health exchange. He said the agency has been working to process the applications since then.

“We’ve added additional staff and redirected existing staff to input all the paper applications, so we believe that everyone who properly filled out the application, they will have health insurance on Jan. 1,” Kennedy said.

But for people who enrolled through an insurance agent, those workers are only entering basic information such as the applicants’ names and the names of the insurance agents, said Neil Crosby, a spokesman for the California Association of Health Underwriters. He said agents are now being alerted to check the Covered California site several times a day to see whether any of their clients’ applications need to be added.

In Oregon, a State official disclosed this week that more than 30,000 people who submitted health insurance applications still don’t have enrollment packets, the Oregonian reported.

The concession by Dr. Bruce Goldberg, interim director of the state’s exchange, raises serious concerns about the state’s ability to meet Gov. John Kitzhaber’s promise to successfully enroll all Oregonians who need individual insurance Jan. 1.

Of particular concern are the more than 20,000 individuals whose high-risk health insurance plans have no chance of being extended past Dec. 31.

Goldberg, who took over the troubled Cover Oregon exchange last week, said the state’s manual processing system hasn’t worked through an estimated 65,000 applications as quickly as officials first estimated.

“We thought we’d be further along than we are now,” Goldberg said.

In Maryland, another State whose exchange has been plagued by difficulties, 8,500 paper applications were pending as of last week, the Baltimore Sun reported.

And in Vermont, a report by VTDigger.org said paper applications are “piling up.”

There is a backlog of 1,210 applications, some of which date back to as early as Oct. 30, [Department for Children and Families] Commissioner Dave Yacovone said.

Paper applications continue to arrive at a pace of approximately 100 per day, and the department needs to process them all by Dec. 23, in order for people’s coverage to take effect at the start of 2014.

Editor’s Note: This post is adapted from Ornstein’s “Healthy buzz” blog. Have you tried signing up for health care coverage through the new exchanges?

ProPublica Reports: New-And-Improved Healthcare.gov Has Same Old Problems

This article, written by Charles Ornstein, was originally published by ProPublica on Dec. 2.

After a glowing news conference yesterday citing “night and day” progress on Healthcare.gov, I decided to log in this morning and take the web site for a test drive, as I’m sure many others are doing. Early reports had been promising. What I found was hardly encouraging 2014 long delays loading pages, an endless circle of tasks (some already completed) and ultimately an error message.

The load-time issues (sometimes more than a minute) reminded me of the problems users encountered in the very first days of the web site, which handles health insurance enrollment for residents of 36 states. It also appears to contradict what Health and Human Services officials said had been fixed.

“Response times are under 1 second. Error rates are down well under 1%. And the system is stable, with uptimes exceeding 90%,” HHS bragged in a blog post yesterday.

Additionally, once I had completed and submitted my application and verified my identity, the site told me that I was missing information and had to review it again. Nothing was missing. Ultimately, I got an error message telling me to come back later.

The Obama Administration says the site can now handle 50,000 unique visitors at one time and 800,000 over the course of a day. But on Day One of the new-and-improved site, it doesn’t appear able to keep up with the load. No wonder HHS is encouraging users to come back at off-peak hours.

Some screen shots of my experience are below.

Immediately I encountered delays:

1-delays

The delays continued:

2-delays-continued

After completing my application and submitting it successfully, I was told information was missing and was asked to go back through it, with delays:

3-go-back

I finally hit a wall I could not jump over: the error message:

4-error-message

I began a live chat on the web site. Here’s what I was told:

[11:32:03 am]:Thanks for contacting Health Insurance Marketplace Live Chat. Please wait while we connect you to someone who can help.

[11:32:06 am]:Please be patient while we’re helping other people.

[11:32:11 am]:Welcome! You’re now connected to Health Insurance Marketplace Live Chat. Thanks for contacting us. My name is Kassie. To protect your privacy, please don’t provide any personal information, like Social Security Number, or any other sensitive medical or personal information.

[11:32:15 am]:Charlie

Hi there. I have been trying to fill out my application and keep hitting a wall.

[11:32:32 am]:Kassie

Good morning Charlie

[11:32:40 am]:Kassie

I apologize for the inconvenience.

[11:32:45 am]:Charlie

I keep getting long delays on each page and finally successfully submitted my application, but then was told I was missing things.

[11:33:02 am]:Kassie

Where are you getting stuck at?

[11:33:07 am]:Charlie

When I went back through it, nothing was missing, but I got this error: Sorry, theres a problem with our system Please log out, then try again after 30 minutes. If you continue to get this message, call the Marketplace Call Center 1-800-318-2596. TTY users should call 1-855-889-4325. You’ll need the Application ID shown below. Application Id: 160747816

[11:33:39 am]:Kassie

Again, I apologize for the inconvenience.

[11:34:07 am]:Charlie

Is there an overload today or is [it] on my end?

[11:34:25 am]:Kassie

Have you tried logging out and waiting the 30 minutes and then retrying?

[11:34:33 am]:Charlie

Not yet.

[11:34:55 am]:Kassie

We apologize for any technical difficulties you may be experiencing as you use HealthCare.gov. We know this can be frustrating, and we’re working around the clock to improve HealthCare.gov and to make sure your experience with it is a positive one.

[11:35:27 am]:Charlie

I was just wondering if this is on my end. I read that the problems had been fixed and that the load times were much faster, but that hasn’t been my experience today.

[11:35:30 am]:Kassie

Write down your application ID number so you have it.

[11:36:07 am]:Kassie

Nothing you did wrong, Charlie. You’re fine.

[11:36:24 am]:Charlie

OK. Will try again later.

[11:36:30 am]:Kassie

Do you have any other questions that I can help you with?

[11:36:38 am]:Kassie

Thank you for contacting Health Insurance Marketplace Live Chat. We are here to help you 24 hours a day, 7 days a week.

[11:40:37 am]:Kassie

I apologize for the inconvenience.

[11:41:08 am]:Your chat session is over. Thanks for contacting us, and we hope we’ve answered your questions. Have a great day.

I went back 30 minutes later and I couldn’t even log on:

Perhaps aware that the site could crash again, HHS Secretary Kathleen Sebelius is encouraging users not to log on during peak hours.

ProPublica Editor’s Note: This post is adapted from Ornstein’s “Healthy buzz” blog. Have you tried signing up for health care coverage through the new exchanges? Help ProPublica cover the Affordable Care Act by sharing your insurance story.

Fed Asks Judge To Throw Out Lawsuit Brought By Fired Whistleblower

ProPublica continues its coverage of the case of Carmen Segarra, a former Goldman Sachs employee who was fired after taking her job as a compliance officer seriously enough to blow the whistle on the banking firm for failing to enforce a conflict-of-interest policy. Now the New York Fed has asked a judge to throw out Segarra’s wrongful termination suit.

By Jake Bernstein

ProPublica, Nov. 15, 2013, 2:42 p.m.

The Federal Reserve Bank of New York has asked a judge to throw out a lawsuit by a former bank examiner who says she was dismissed after finding fault with Goldman Sachs’ conflict-of-interest policies.

ProPublica reported the allegations last month by Carmen Segarra, who the New York Fed had assigned to examine aspects of Goldman Sachs in November 2011. She was fired seven months later.

In its motion to dismiss Segarra’s lawsuit, the Fed disputed that she is a whistleblower and characterized what transpired as “a non-actionable disagreement between a supervised employee and more senior colleagues over how to interpret a Federal Reserve policy.”

Segarra had been hired as part of an effort by the New York Federal Reserve to comply with new authority it received from Congress to monitor so-called Too-Big-to-Fail financial institutions. The Fed recruited experts to act as “risk specialists” to examine different aspects of these complex firms.

Segarra, who previously had worked in some of the Nation’s largest banks, was tasked with examining legal and compliance functions at Goldman. Her supervisors told her specifically to look at whether Goldman was compliant with Fed guidance that the bank had a firm-wide conflict of interest policy, according to her Oct. 10 complaint.

At the time, Goldman had been buffeted by allegations in media reports and lawsuits over how it handled conflicts of interest. Segarra determined that Goldman did not have such a firm-wide policy. Although her fellow legal and compliance specialists working at the other banks agreed with her findings, however, the Fed’s senior official onsite at Goldman, Michael Silva, ultimately did not, according to her complaint.

Silva and his deputy, Michael Koh, tried to convince Segarra to change her findings, the lawsuit says. Three business days after sending an email to them explaining that the evidence she had gathered made it impossible for her to change her conclusions, Silva fired her. Before being escorted from the building, Silva told her he had lost confidence in her ability to follow directions and not to jump to conclusions, Segarra says.

Segarra’s suit in U.S. District Court names as defendants the New York Fed, Silva, Koh and her direct supervisor, Johnathan Kim. She alleged wrongful termination, breach of employment contract and that the defendants interfered with protected conduct she was exercising as a bank examiner.

Segarra’s lawsuit cites a Federal law that allows bank examiners to sue for wrongful termination if they are fired for providing information regarding “any possible violation of any law or regulation, gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety.”

In its motion to dismiss, the New York Fed said that Segarra worked “at will” and so there could be no “breach of contract.” It also said that she was fired for cause and that the guidance she was told to use to examine Goldman was advisory and not a regulation, so the bank could therefore not be in violation. It further argued that since some of the information Segarra used to make her determination came from Goldman, she technically did not “provide” it to the Fed.

In its filing, the Fed cited a Code of Conduct policy and a 2011 Business Standards Committee Report as evidence that Goldman had a firm-wide policy governing conflicts of interest policy. Goldman, which is not a defendant in Segarra’s lawsuit, has said that it has such a policy.

“She rushed to judgments that even her own evidence refuted,” the New York Fed’s motion said.

The 2011 Business Standards Committee Report the Fed cited mentions plans to update and provide to all employees a conflict–of-interest policy but does not detail policies or procedures. As for it its code of conduct, Segarra told ProPublica that Goldman itself did not believe it constituted a conflict of interest policy since it did not provide it to regulators as such.

“My direct management and some of my peers did not think Goldman’s Code of Conduct was a conflicts-of-interest policy,” she told ProPublica in an interview. “Policies in banks are actually pretty standardized documents, with clear titles and content directly related to the title/purpose of the document, written in a language meant to be understood by every employee at every level.”

Segarra’s attorney, Linda Stengel, disputed the Fed’s contention that her client is not a whistleblower.  “Obviously, Carmen is a whistleblower, and obviously, her work as a bank examiner is protected conduct,” said Stengle. “Those conclusions are simple common sense to most everyone, except FRBNY, apparently.”

Segarra’s complaint asked for reinstatement, back pay, compensation for lost benefits and damages.  The Fed’s motion rejected reinstatement or damages, contending that Segarra “misappropriated and published confidential supervisory information” as exhibits in her lawsuit.

Who Are The State Department’s 100 ‘Special’ Government Employees? It Won’t Say

ProPublica questions why the U.S. State Department won’t come clean about “special” employees, like Huma Abedin, who manage to hold down lucrative corporate jobs and partisan advisory positions while drawing a paycheck from the government. Originally Published Nov. 13, 2013.

By Justin Elliott and Liz Day

ProPublica

Earlier this year, Hillary Clinton aide Huma Abedin drew scrutiny for a special arrangement that allowed her to work part time at the State Department while simultaneously maintaining a side gig working for a corporate consulting firm.

Under the arrangement, first reported by POLITICO, Abedin was a “special government employee,” a category created decades ago designed to allow experts to serve in government while keeping outside jobs.

So who else is a special government employee at the State Department? The department won’t say – even as eight other federal agencies readily sent us lists of their own special government employees.

A State Department spokeswoman did confirm that there are “about 100” such employees. But asked for a list, she added that, “As general policy, [the department] does not disclose employee information of this nature.”

Meanwhile, after we filed a Freedom of Information Act request in July for the same information, State responded in September that no such list actually exists: The human resources department “does not compile lists of personnel or positions in the category of ‘special government employee.’”

Creating such a list would require “extensive research” and thus the agency is not required to respond under FOIA, said a letter responding to our request.

In late September, after we told State we were going to publish a story on its refusal to provide the list, the agency said our FOIA request was being reopened. The agency said it would provide the records in a few weeks.

The State Department has since pushed back the delivery date three times and still hasn’t provided any list. It has been four months since we filed the original request.

Several other agencies, including the Energy and Commerce departments, the Federal Communications Commission, and the Federal Trade Commission, promptly responded to similar FOIA requests with lists of their own special government employees. Requests with several other agencies are still pending.

Agencies reported having anywhere from just one special government employee (SEC) to nearly 400 over the past several years (Energy Department). Many are academics, interns, or private industry professionals and they often serve on government advisory boards.

As for the State Department, two other special government employees have been identified recently, and both are former Clinton staffers. As of August ex-chief of staff Cheryl Mills was still working at the agency part time with a focus on Haiti, according to the Washington Post’s Al Kamen. Maggie Williams, who ran Clinton’s 2008 presidential campaign, worked at the agency’s Office of Global Women’s Issues in 2011 and 2012, according to POLITICO.

Abedin, for her part, was a special government employee between June 2012 when she resigned her position as deputy chief of staff, to February 2013. She also worked for Teneo, a consulting firm founded by former Bill Clinton aide Doug Band.

In a July letter to Senator Chuck Grassley (R-Iowa), Abedin rejected the Senator’s suggestion that she had used her government contacts to provide political intelligence for Teneo’s clients.

“I was not asked, nor did I undertake, any work on Teneo’s behalf before the Department,” Abedin wrote. She said her work consisted of providing “strategic advice and consulting services to the firm’s management team.”

Abedin said in the letter she sought the special arrangement with State because she wanted to spend the bulk of her time at home in New York following the birth of her son in December 2011.

Abedin made $135,000 working for State in 2012, and she and husband Anthony Weiner made approximately $355,000 in combined additional earnings. We don’t know how much Abedin was paid by Teneo or by the Clinton Foundation, which also employed her during this period.

Following time off during Weiner’s unsuccessful New York City mayoral bid, Abedin is now working directly for Clinton, in a private capacity, as her “Transition Director.”

Reporting contributed by Jonathan Lin.

ProPublica: Health Care Delays Squeeze Patients In State High-Risk Pools

This article, written by Charles Ornstein, was originally published by ProPublica on Nov. 8.

“This is what keeps me up at night,” Tanya Case told me earlier this week.

Case is executive director of the Oklahoma Temporary High Risk Pool, funded by the federal government to sell insurance to people denied coverage by private health insurers. Her worry is about some 300,000 people in her program and others like it who now must quickly find health insurance under the Affordable Care Act.

Many of the programs are set to close by law on Dec. 31.

By then consumers are supposed to be able to enroll in new plans that can’t discriminate against them based on their health status.

But as problems continue to bog down the federal health insurance marketplace, Healthcare.gov, it’s an open question whether people in the risk pools can get a policy in time.

“They are very frightened because many of them are undergoing chemotherapy or they’re on high-dollar drugs, and they need to make certain that they have coverage effective Jan. 1,” said Case, who is also chairwoman of the National Association of State Comprehensive Health Insurance Plans, which represents plans in 35 states.

“One lady expressed to me, ‘I’m in the middle of chemotherapy, and then I have to deal with this on top of everything else and quite frankly, I’m scared to death.’ That’s what she told me, and you hear that or a version of that quite frequently,” Case said.

People like this were supposed to among the biggest winners under the Affordable Care Act because insurers can no longer discriminate based on pre-existing conditions. As a result, the cost for many is expected to go down substantially.

Advocates say they still hope that will happen despite the current glitches.

“We’re all in this tough spot right now of guessing whether people will reasonably be able to get through” to purchase insurance on Healthcare.gov, said Stacey Pogue, senior policy analyst for the Center for Public Policy Priorities in Austin, Texas.

The concern is particularly acute in the 36 states that are relying on Healthcare.gov to process insurance enrollments. The other states and the District of Columbia are running their own marketplaces.

A spokesperson for the Centers for Medicare and Medicaid Services said the agency believes that there is enough time for individuals in the high-risk pools to sign up by Dec. 15 for coverage that begins Jan. 1.

Federal officials have pledged that Healthcare.gov will be fixed by the end of November. But even if they are true to their word, Pogue said, that would only give consumers two weeks to choose a plan and enroll.

“I just don’t know yet whether it’s reasonable,” Pogue said.

Texas is one of 14 states that plan to close its high-risk pool by Jan. 1, according to Case’s group. Texas gives its insurance commissioner a bit of discretion to certify that insurance options are “reasonably available” before the state plan shuts down, Pogue said.

A federal program set up under the Affordable Care Act that serves much the same purpose (and funds Oklahoma’s program) will similarly close then. Last week, Indiana became the first state to delay its program’s closure, giving its 6,800 participants another month to find new plans. “The state of Indiana will ensure that these Hoosiers, who are facing significant health care challenges, maintain their health coverage until the problems with the federal marketplace are resolved,” Republican Gov. Mike Pence said in a statement.

Other states are considering similar moves, Case said.

Although some consumers have been successful signing up for new coverage, she said, “I would say that the majority have not been.”

In California, officials are feeling good about the transition. “There are no barriers I am aware of with people from California’s high-risk pool or anyone with pre-existing conditions getting covered for January,” said Ken Wood, a senior adviser for Covered California, the state’s insurance marketplace. “Based on the types of calls our service center has received, these individuals were reaching out the first week of October to understand their options and beginning to move through the enrollment process.”

Case said she and her colleagues in other states are encouraging consumers to shop around by calling different insurance companies — even if they cannot yet enroll on the marketplace website. They can use an online calculator to determine their eligibility for premium subsidies.

The program Case runs will shut Dec. 31 because it is funded by the federal government. But Oklahoma runs a second program that isn’t set to close right away, she said.

A map of states with high-risk pools for those with pre-existing conditions that deem them medically uninsurable. Similar federally-funded plans under the Affordable Care Act may not be shown here. (Source: National Association of State Comprehensive Insurance Plans)

 

ProPublica Tells The Story Of Loyal Obama Supporters, Canceled by Obamacare

This article, written by Charles Ornstein, was originally published by ProPublica on Nov. 6.

San Francisco architect Lee Hammack says he and his wife, JoEllen Brothers, are “cradle Democrats.” They have donated to the liberal group Organizing for America and worked the phone banks a year ago for President Obama’s re-election.

Since 1995, Hammack and Brothers have received their health coverage from Kaiser Permanente, where Brothers worked until 2009 as a dietitian and diabetes educator. “We’ve both been in very good health all of our lives – exercise, don’t smoke, drink lightly, healthy weight, no health issues, and so on,” Hammack told me.

The couple — Lee, 60, and JoEllen, 59 — have been paying $550 a month for their health coverage — a plan that offers solid coverage, not one of the skimpy plans Obama has criticized. But recently, Kaiser informed them the plan would be canceled at the end of the year because it did not meet the requirements of the Affordable Care Act. The couple would need to find another one. The cost would be around double what they pay now, but the benefits would be worse.

“From all of the sob stories I’ve heard and read, ours is the most extreme,” Lee told me in an email last week.

I’ve been skeptical about media stories featuring those who claimed they would be worse off because their insurance policies were being canceled on account of the ACA. In many cases, it turns out, the consumers could have found cheaper coverage through the new health insurance marketplaces, or their plans weren’t very good to begin with. Some didn’t know they could qualify for subsidies that would lower their insurance premiums.

So I tried to find flaws in what Hammack told me. I couldn’t find any.

Hammack recalled his reaction when he and his wife received a letters from Kaiser in September informing him their coverage was being canceled. “I work downstairs and my wife had a clear look of shock on her face,” he said. “Our first reaction was clearly there’s got to be some mistake. This was before the exchanges opened up. We quickly calmed down. We were confident that this would all be straightened out. But it wasn’t.”

I asked Hammack to send me details of his current plan. It carried a $4,000 deductible per person, a $40 copay for doctor visits, a $150 emergency room visit fee and 30 percent coinsurance for hospital stays after the deductible. The out-of-pocket maximum was $5,600.

This plan was ending, Kaiser’s letters told them, because it did not meet the requirements of the Affordable Care Act. “Everything is taken care of,” the letters said. “There’s nothing you need to do.”

The letters said the couple would be enrolled in new Kaiser plans that would cost nearly $1,300 a month for the two of them (more than $15,000 a year).

And for that higher amount, what would they get? A higher deductible ($4,500), a higher out-of-pocket maximum ($6,350), higher hospital costs (40 percent of the cost) and possibly higher costs for doctor visits and drugs.

When they shopped around and looked for a different plan on California’s new health insurance marketplace, Covered California, the cheapest one was $975, with hefty deductibles and copays.

In a speech in Boston last week, President Obama said those receiving cancellation letters didn’t have good insurance. “There are a number of Americans — fewer than 5 percent of Americans — who’ve got cut-rate plans that don’t offer real financial protection in the event of a serious illness or an accident,” he said.

“Remember, before the Affordable Care Act, these bad-apple insurers had free rein every single year to limit the care that you received, or use minor preexisting conditions to jack up your premiums or bill you into bankruptcy. So a lot of people thought they were buying coverage, and it turned out not to be so good.”

What is going on here? Kaiser isn’t a “bad apple” insurer and this plan wasn’t “cut rate.” It seems like this is a lose-lose for the Hammacks (and a friend featured in a report last month by the public radio station KQED.)

I called Kaiser Permanente and spoke to spokesman Chris Stenrud, who used to work for the U.S. Department of Health and Human Services. He told me that this was indeed a good plan. Patients in the plan, known as 40/4000, were remarkably healthy, had low medical costs and had not seen their premiums increase in years. “Our actuaries still aren’t entirely sure why that was,” he said.

While many other insurance companies offered skimpier benefits, Stenrud said, “our plans historically have been comprehensive.”

Kaiser has canceled about 160,000 policies in California, and about one third of people were in plans like Hammack’s, Stenrud said. About 30,000 to 35,000 were in his specific plan.

“In a few cases, we are able to find coverage for them that is less expensive, but in most cases, we’re not because, in sort of pure economic terms, they are people who benefited from the current system … Now that the market rules are changing, there will be different people who benefit and different people who don’t.”

“There’s an aspect of market disruption here that I think was not clear to people,” Stenrud acknowledged. “In many respects it has been theory rather than practice for the first three years of the law; folks are seeing the breadth of change that we’re talking about here.”

That’s little comfort to Hammack. He’s written to California’s senators and his representative, House Minority Leader Nancy Pelosi, D-Calif., asking for help.

“We believe that the Act is good for health care, the economy, & the future of our nation. However, ACA options for middle income individuals ages 59 & 60 are unaffordable. We’re learning that many others are similarly affected. In that spirit we ask that you fix this, for all of our sakes,” he and Brothers wrote.

Consumer advocate Anthony Wright said it’s important to remember the way the insurance market worked before the act was passed, when insurers could deny coverage based on pre-existing conditions. “It’s impossible to know what the world would have looked like for these folks in the absence of the law,” said Wright, executive director of the group Health Access.

“We certainly had an individual market, especially in California which was the Wild Wild West, where there was huge price increases, cancellations, a range of other practices.

“That doesn’t mean that there were certain people who lucked out in the old system, who wound up in a group with a relatively healthy risk mix and thus lower premiums,” he added. “The question is: Is health insurance something where people get a rate based on the luck of the draw or do we have something where we have some standards where people who live in the same community, of the same age, with the same benefit package are treated equally?”

Wright said discussions should focus on how to provide consumers like Hammack with assistance if they barely miss qualifying for subsidies.

So what is Hammack going to do? If his income were to fall below four times the federal poverty level, or about $62,000 for a family of two, he would qualify for subsidies that could lower his premium cost to as low as zero. If he makes even one dollar more, he gets nothing.

That’s what he’s leaning toward — lowering his salary or shifting more money toward a retirement account and applying for a subsidy.

“We’re not changing our views because of this situation, but it hurt to hear Obama saying, just the other day, that if our plan has been dropped it’s because it wasn’t any good, and our costs would go up only slightly,” he said. “We’re gratified that the press is on the case, but frustrated that the stewards of the ACA don’t seem to have heard.”

Like this story by health care reporter Charles Ornstein? You may also want to read “Why Health Insurance Cancellations Shouldn’t Be a Surprise” and “The Affordable Care Act’s Most Important Date: Not What You Think.”

 

ProPublica: Six Months After Obama Promised to Divulge More on Drones, Here’s What We Still Don’t Know

This article, written by Cora Currier, was originally published by ProPublica on Nov. 5.

Nearly six months ago, President Obama promised more transparency and tighter policies around targeted killings. In a speech, Obama vowed that the U.S. would only use force against a “continuing and imminent threat to the American people.” It would fire only when there was “near-certainty” civilians would not be killed or injured, and when capture was not feasible.

The number of drone strikes has dropped this year, but they’ve continued to make headlines. On Friday, a U.S. drone killed the head of the Pakistani Taliban. A few days earlier came the first drone strike in Somaliain nearly two years. How much has changed since the president’s speech?

We don’t know the U.S. count of civilian deaths

The administration says that it has a count of civilian deaths, and that there is a “wide gap” between U.S. and independent figures. But the administration won’t release its own figures.

Outside estimates of total civilian deaths since 2002 range from just over 200 to more than 1,000.  The Pakistani government has given three different numbers: 400, 147, and 67.

McClatchy and the Washington Post obtained intelligence documents showing that for long stretches of time, the CIA estimated few or no civilian deaths. The documents also confirmed the use of signature strikes, in which the U.S. targets people without knowing their identity. The CIA categorized many of those killed as simply “other militants” or “foreign fighters.” The Post wrote that the agency sometimes designated “militants” with what seemed like circumstantial or vague evidence, such as “men who were ‘probably’ involved in cross-border attacks” in Afghanistan.

The administration reportedly curtailed signature strikes this year, though the new guidelines don’t necessarily preclude them. A White House factsheet released around Obama’s speech said that “it is not the case that all military-aged males in the vicinity of a target are deemed to be combatants.” It did not say that people must be identified. (In any case, the U.S. has not officially acknowledged the policy of signature strikes.)

Attorney General Eric Holder confirmed only that four Americans have been killed by drone strikes since 2009: Anwar al Awlaki and his sixteen-year-old son, Abdulrahman, Samir Khan, and Jude Kenan Mohammed. Holder said that only the elder Awlaki was “specifically targeted,” but did not explain how the others came to be killed.

Although Obama said that this disclosure was intended to “facilitate transparency and debate,” since then, the administration has not commented on specific allegations of civilian deaths.

We don’t know exactly who can be targeted

The list of groups that the military considers “associated forces” of Al Qaeda is classified. The administration has declared that it targets members of Al Qaeda in the Arabian Peninsula, and “elements of Al Shabaab, but there are still questions about how the U.S. determines that an individual belonging to those groups is in fact a “continuing and imminent threat.” (After the terror alarm that led to the closing of U.S. embassies this summer, officials told the New York Times they had “expanded the scope of people [they] could go after” in Yemen.)

This ties into the debate over civilian casualties: The government would seem to consider some people legitimate targets that others don’t.

Amnesty International and Human Rights Watch conducted in-depth studies of particular strikes in Pakistan and Yemen, respectively. They include eyewitness reports of civilian deaths. (Most of the deaths investigated happened before the Obama administration’s new policies were announced, although the administration has not said when those guidelines went into effect.) The reports also raised questions of the legality of specific strikes, questioning whether the deaths were all unavoidable casualties of legitimate attacks.

It does not appear that the U.S. plans to expand strikes against Al Qaeda to other countries – officials have reportedly told Iraq, for example, it won’t send drones there. But the U.S. has established a surveillance drone base in Niger, and fed information from drones to French forces fighting in Mali.

We don’t know if the U.S. compensates civilian casualties

CIA director John Brennan suggested during his confirmation hearing that the U.S. made condolence payments to harmed families. But there is little evidence of it happening. U.S. Central Command told ProPublica that it had 33 pages related to condolence payments – but wouldn’t release any of them to us.

We don’t always know which strikes are American

While unnamed officials sometimes confirm that strikes came from U.S. drones, other attacks may be from Pakistani, Yemeni, or even Saudi planes.

(It’s also worth noting that the U.S. has also used cruise missiles and Special Forces raids. But the bulk of U.S. counterterrorism actions outside Afghanistan in recent years appear to rely on drones.)

We don’t know the precise legal rationale behind the strikes

Some members of Congress have seen the legal memos behind targeted killing of U.S. citizens. But lawmakers were not granted access to all memos on the program.

Other congressmen have introduced bills with more reporting requirements for targeted killings. (Proposals for a “drone court” for oversight have not gotten very far.)

It’s far from clear that any of that additional oversight would lead to public disclosure.

The government and the American Civil Liberties Union and the New York Times are still locked in court battles over requests for drone documents. While a judge has ruled the CIA can no longer assert the “fiction” that it can’t reveal if it has any interest in drones, the agency hasn’t been compelled to release any information yet. The government has also so far fought off disclosure of legal memos underpinning targeted killings.

 

And here are some things we’ve learned through leaks and independent reporting:

How the U.S. tracks targets: Documents provided by Edward Snowden to the Washington Post detailed the NSA’s “extensive involvement.” Lawyers in a terrorism-related case also uncovered reports that government surveillance of their client may have led to a drone strike in Somalia. The Atlantic published a detailed account of Yemen using a child to plant a tracking chip on a man who was killed in a U.S. strike.

What people in the countries affected think: The Pakistani government’s cooperation with at least some U.S. drone strikes – long an open secret – has now been well-documented. Public sentiment in the country is vividly anti-drone, even when violent Taliban commanders are killed, and politicians continue to denounce them as American interference. Limited polling in the region most affected by drones is contradictory, with some saying that at the very least, they prefer drones to the Pakistani military campaigns. Life in those areas is between a drone and a hard place: Residents told Amnesty International of the psychological toll from drones, and they also face reprisals from militants who accuse them of spying.

Yemen’s president continues to openly embrace U.S. strikes, though the public generally opposes them – particularly those strikes that hit lower-level fighters, or those whose affiliations with Al Qaeda aren’t clear. Foreign Policy recently detailed the aftermath of an August strike where two teenagers died. Their family disputes they had any link to terrorism.

The physical infrastructure: More of the network of drone bases across the world has been revealed – from the unmasking of a secret base in Saudi Arabia to the fact that drones had to be moved off the U.S. base in Djibouti, in the Horn of Africa, after crashes and fear of collision with passenger planes.

The CIA’s role: The administration had reportedly planned to scale back the CIA’s role in targeted killing, moving control of much of the drone program to the military. But the CIA reportedly still handles strikes in Pakistan and has a role in Yemen as well.

The history of the programs: Revelations continue to change our understanding of the contours of the drone war, but two books published this year offer comprehensive accounts – The Way of the Knife, by Mark Mazzetti of the New York Times, and Dirty Wars, by Jeremy Scahill.

 

NIST To Review Standards After Cryptographers Cry Foul Over NSA Meddling

ProPublica examines the latest bit of fallout from ongoing revelations of the extent of the NSA’s surveillance activities: the National Institute for Standards and Technology is taking a hard look at what it recommends developers do as they attempt to make their software products private and secure for end users.

The Federal institute that sets national standards for how government, private citizens and business guard the privacy of their files and communications is reviewing all of its previous recommendations.

The move comes after ProPublica, The Guardian and The New York Times disclosed that the National Security Agency had worked to secretly weaken standards to make it easier for the government to eavesdrop.

The review, announced late Friday afternoon by the National Institute for Standards and Technology, will also include an assessment of how the institute creates encryption standards.

The institute sets national standards for everything from laboratory safety to high-precision timekeeping. NIST’s cryptographic standards are used by software developers around the world to protect confidential data. They are crucial ingredients for privacy on the Internet, and are designed to keep Internet users safe from being eavesdropped on when they make purchases online, pay bills or visit secure websites.

But as the investigation by ProPublica, The Guardian and The New York Times in September revealed, the National Security Agency spends $250 million a year on a project called “SIGINT Enabling” to secretly undermine encryption. One of the key goals, documents said, was to use the agency’s influence to weaken the encryption standards that NIST and other standards bodies publish.

“Trust is crucial to the adoption of strong cryptographic algorithms,” the institute said in a statement on their website. “We will be reviewing our existing body of cryptographic work, looking at both our documented process and the specific procedures used to develop each of these standards and guidelines.”

The NSA is no stranger to NIST’s standards-development process. Under current law, the institute is required to consult with the NSA when drafting standards. NIST also relies on the NSA for help with public standards because the institute doesn’t have as many cryptographers as the agency, which is reported to be the largest employer of mathematicians in the country.

“Unlike NSA, NIST doesn’t have a huge cryptography staff,” said Thomas Ptacek, the founder of Matasano Security, “NIST is not the direct author of many of most of its important standards.”

Some of these standards are products of public competitions among academic cryptography researchers, while others are the result of NSA recommendations. An important standard, known as SHA2, was designed by the NSA and is still trusted by independent cryptographers and software developers worldwide.

NIST withdrew one cryptographic standard, called Dual EC DRGB, after documents provided to news organizations by the former intelligence contractor Edward Snowden raised the possibility that the standard had been covertly weakened by the NSA.

Soon after, a leading cryptography company, RSA, told software writers to stop using the algorithm in a product it sells. The company promised to remove the algorithm in future releases.

Many cryptographers have expressed doubt about NIST standards since the initial revelations were published. One popular encryption library changed its webpage to boast that it did not include NIST-standard cryptography. Silent Circle, a company that makes encryption apps for smartphones, promised to replace the encryption routines in its products with algorithms not published by NIST.

If the NIST review prompts significant changes to existing encryption standards, consumers will not see the benefit immediately. “If the recommendations change, lots of code will need to change,” said Tanja Lange, a cryptographer at the University of Technology at Eindhoven, in the Netherlands. “I think that implementers will embrace such a new challenge, but I can also imagine that vendors will be reluctant to invest the extra time.”

In Friday’s announcement, NIST pointed to its long history of creating standards, including the role it had in creating the first national encryption standard in the 1970s — the Data Encryption Standard, known as DES. “NIST has a proud history in open cryptographic standards, beginning in the 1970s with the Data Encryption Standard,” the bulletin said. But even that early standard was influenced by the NSA.

During the development of DES, the agency insisted that the algorithm use weaker keys than originally intended — keys more susceptible to being broken by super computers. At the time, Whitfield Diffie, a digital cryptography pioneer, raised serious concerns about the keys. “The standard will have to be replaced in as few as five years,” he wrote.

The weakened keys in the standard were not changed. DES was formally withdrawn by the institute in 2005.

The announcement is the latest effort by NIST to restore the confidence of cryptographers. A representative from NIST announced in a public mailing list, also on Friday, that the institute would restore the original version of a new encryption standard, known as SHA3, that had won a recent design competition but altered by the institute after the competition ended. Cryptographers charged that NIST’s changes to the algorithm had weakened it.

The SHA3 announcement referred directly to cryptographers’ concerns. “We were and are comfortable with that version on technical grounds, but the feedback we’ve gotten indicates that a lot of the crypto community is not comfortable with it,” wrote John Kelsey, NIST’s representative. There is no evidence the NSA was involved in the decision to change the algorithm.

The reversal took Matthew Green, a cryptographer at Johns Hopkins University, by surprise. “NIST backed down! I’m not sure they would have done that a year ago,” he said.

NIST declined to comment.

ProPublica Chronicles Obamacare Users’ Angry Feedback About Healthcare.gov

This piece, compiled by Charles Ornstein, was originally published by ProPublica on Oct. 24.

Over the weekend, the U.S. Department of Health and Human Services began unveiling its effort to fix Healthcare.gov, the home for the federal insurance marketplace. Part of that was a blog post soliciting comments from folks who have tried the site.

“Most importantly, we want to hear from you, and make sure that your experience with HealthCare.gov is a positive one.  If you have any comments, either complimentary or critical, please let us know by sharing your feedback at https://www.healthcare.gov/connect/.  We’ve already heard so many stories of individuals getting health insurance for the first time, and we are dedicated to making that possible for all Americans.”

The Obama administration has not always been transparent about Healthcare.gov: A case in point is how HHS has withheld the number of people who have been able to successfully enroll. But in this instance, the administration allowed comments to the blog post to be seen by all (after moderating them and removing identifying information). Commenters’ identities were not verified and they are identified by whatever name they entered.

As of yesterday afternoon, we counted more than 500 comments. My colleague Mike Tigas pulled them from the site, and I’ve been analyzing the feedback.

“Repeal Obamacare,” several commenters wrote, making political statements based on the website’s problems.

Some urged patience: “Turn off the TV and stop listening to the naysayers,” Darlene wrote. “Its [sic] better to wait patiently and get great health care than to get emotional and frustrated and wind up with NO healthcare…”

Others, like Kim, offered to help: “I have a home office and am VERY tech savvy. I would like to be able to help in whatever way I can.”

By and large, however, the feedback has been negative. While some comments root for the site’s failure, many are from people who’ve tried to use the site without success. Some pose specific questions; others voice general frustrations. Because their identities and contact information isn’t listed (for understandable reasons), there was no way to verify their stories.

The problems touch people from all over the country. The posts below have been trimmed for length, but the original grammar and spelling are used (even if they contain errors).

Wrongly Listed As Jailed

“Website said my wife and I were ineligible due to current incarceration. We have never been arrested in our lives, both 63!!!!!!!!!!!!!!!!!!!!!!!,” Fred wrote on Oct. 21.

Health Problems Made Worse

“I have a pre-existing condition …. a-fib…..and actually had an attack after getting frustrated with this confusing mess,” Bill wrote on Oct. 22. (A-fib refers to atrial fibrillation, an abnormal heartbeat.)

Daughter is Not a Daughter Anymore

“I am having difficulty with my account,” Joanna wrote on Oct. 22. “It appears that my daughter was added twice so that I now have two daughters with the same name and social security number. I am unable to delete one of them.  Also, the drop down menu that relates to what relationship someone is to another is faulty. I choose that my husband is the father of our daughter and that my daughter is a dependant [sic] to me and my husband. What it actually shows though is that my daughter is a stepdaughter to her father and that my daughter is now both my husband and I’s parent. ”

Compromised Identity

“I can sign in … but cannot see the plans available to me — they claim my identity has been compromised. So frustrating!” Rhonda wrote on Oct. 22.

Going in Circles

“I have been trying to get into the system since the beginning,” Marion wrote on Oct. 22. “I have created 3 different accounts and am not able to log into any of them. When I request the user ID or to reset the password it throws me back to the log in page where I can’t login because it says I don’t have an account. When I try to reset the password with the email I used it, I never get an email to validate my account. I won’t let me create another account telling me I already have an account. I feel like I keep going around in circles. Will I ever be able to set up an account? ”

Groundhog Day

“I’ve now filled out that same application multiple times and even though there are hitches and glitches, I do manage to get to the point where I should be able to shop,” wrote one person whose name is listed as “likebillmurrayingroundhogday, on Oct. 21. “However, once at that point, there is no place for me to shop! The system just kicks me back to starting the application again. It’s like “Groundhog Day.”

Blocked

“After many attempts I did manage to set up an account with a log in and password,” Francine wrote on Oct. 23. “NOW when I’m about to get to the meat and potatoes and go shopping a red box pops up and says “you can only do one application per state”. WTF? Several times I was able to find a page that asked me if I was a Florida resident with a yes and no button and it appears that after the site drops off my computer it moves this from yes to no. I can no longer find this page, so this site has BLOCKED me.”

Circular Security Questions

“I get an error message after I answer the security questions that say the answers can’t be the same, but they aren’t the same. If people are getting past this error message, I would like to know how,” Samara wrote on Oct. 20.

Name Not Unique

“I’ve been trying to create an account since program inception (October 1).  I continually get a variety of crazy messages, the most recent being that I could not create an account because my first name, last name and email address are not unique!” Tom wrote on Oct. 20. “What the devil does that mean?  Most people use their names in their email address, so it’s never going to be “unique.”  I need health insurance for my 61-year-old wife and the Marketplace appears promising.  Clean this mess up!”

Insurance Agents Stymied

“I am insurance agent also President of Insurance Agency (50+ Insurance Agents plus 30 employees),” John wrote on Oct. 21. “We have 1000’s of customers who want to sign up for health insurance and most will be subsidized. We have tried everyday since 10-1-2013. Maybe 2 applications have been processed. I have spent well over 250K getting ready for the ACA roll-out. My agency has been writing individual and small group insurance for over 25 years. We have marketed the uninsured and lower income. We have held events to get pre-enrollment applications. We just want to help people get the insurance they need.  What can you do to help me?”

Application Counselor Frustrated

“I am employed as a Certified Application Counselor in Scranton, Pennsylvania and I have not been able to successfully assist the approximately 50 people that visited me looking for assistance,” Suzanne wrote on Oct. 21. “I created an account for myself prior to October 1st to walk myself through the system and have not been able to successfully log in since October 1st.  Needless to say, I am as frustrated as the consumers who visited me are.  I hope the log in situation is fixed soon.”

ProPublica fellow Mike Tigas contributed to this report.

To brush up on today’s congressional hearings, see Charles Ornstein’s quick guide.

 

ProPublica: There’s No Evidence To Back The NSA’s Claim That Spying On Americans Has Thwarted Terror Attacks

This report, written by by Justin Elliott and Theodoric Meyer, was originally published by ProPublica on Oct. 23.

Two weeks after Edward Snowden’s first revelations about sweeping government surveillance, President Obama shot back. “We know of at least 50 threats that have been averted because of this information not just in the United States, but, in some cases, threats here in Germany,” Obama said during a visit to Berlin in June. “So lives have been saved.”

In the months since, intelligence officials, media outlets, and members of Congress from both parties all repeated versions of the claim that NSA surveillance has stopped more than 50 terrorist attacks. The figure has become a key talking point in the debate around the spying programs.

“Fifty-four times this and the other program stopped and thwarted terrorist attacks both here and in Europe — saving real lives,” Rep. Mike Rogers, a Michigan Republican who chairs the House Intelligence Committee, said on the House floor in July, referring to programs authorized by a pair of post-9/11 laws. “This isn’t a game. This is real.”

But there’s no evidence that the oft-cited figure is accurate.

The NSA itself has been inconsistent on how many plots it has helped prevent and what role the surveillance programs played. The agency has often made hedged statements that avoid any sweeping assertions about attacks thwarted.

A chart declassified by the agency in July, for example, says that intelligence from the programs on 54 occasions “has contributed to the [U.S. government’s] understanding of terrorism activities and, in many cases, has enabled the disruption of potential terrorist events at home and abroad” — a much different claim than asserting that the programs have been responsible for thwarting 54 attacks.

NSA officials have mostly repeated versions of this wording.

When NSA chief Gen. Keith Alexander spoke at a Las Vegas security conference in July, for instance, he referred to “54 different terrorist-related activities,” 42 of which were plots and 12 of which were cases in which individuals provided “material support” to terrorism.

But the NSA has not always been so careful.

During Alexander’s speech in Las Vegas, a slide in an accompanying slideshow read simply “54 ATTACKS THWARTED.”

And in a recent letter to NSA employees, Alexander and John Inglis, the NSA’s deputy director, wrote that the agency has “contributed to keeping the U.S. and its allies safe from 54 terrorist plots.” (The letter was obtained by reporter Kevin Gosztola from a source with ties to the intelligence community. The NSA did not respond when asked to authenticate it.)

Asked for clarification of the surveillance programs’ record, the NSA declined to comment.

Earlier this month, Sen. Patrick Leahy, D-Vt., pressed Alexander on the issue at a Senate Judiciary Committee hearing.

“Would you agree that the 54 cases that keep getting cited by the administration were not all plots, and of the 54, only 13 had some nexus to the U.S.?” Leahy said at the hearing. “Would you agree with that, yes or no?”

“Yes,” Alexander replied, without elaborating.

It’s impossible to assess the role NSA surveillance played in the 54 cases because, while the agency has provided a full list to Congress, it remains classified.

Officials have openly discussed only a few of the cases (see below), and the agency has identified only one — involving a San Diego man convicted of sending $8,500 to Somalia to support the militant group Al Shabab — in which NSA surveillance played a dominant role.

The surveillance programs at issue fall into two categories: The collection of metadata on all American phone calls under the Patriot Act, and the snooping of electronic communications targeted at foreigners under a 2007 surveillance law. Alexander has said that surveillance authorized by the latter law provided “the initial tip” in roughly half of the 54 cases. The NSA has not released examples of such cases.

After reading the full classified list, Leahy concluded the NSA’s surveillance has some value but still questioned the agency’s figures.

“We’ve heard over and over again the assertion that 54 terrorist plots were thwarted” by the two programs, Leahy told Alexander at the Judiciary Committee hearing this month. “That’s plainly wrong, but we still get it in letters to members of Congress, we get it in statements. These weren’t all plots and they weren’t all thwarted. The American people are getting left with the inaccurate impression of the effectiveness of NSA programs.”

The origins of the “54” figure go back to a House Intelligence Committee hearing on June 18, less than two weeks after the Guardian’s publication of the first story based on documents leaked by Snowden.

At that hearing, Alexander said, “The information gathered from these programs provided the U.S. government with critical leads to help prevent over 50 potential terrorist events in more than 20 countries around the world.” He didn’t specify what “events” meant. Pressed by Rep. Jim Himes, D-Conn., Alexander said the NSA would send a more detailed breakdown to the committee.

Speaking in Baltimore the next week, Alexander gave an exact figure: 54 cases “in which these programs contributed to our understanding, and in many cases, helped enable the disruption of terrorist plots in the U.S. and in over 20 countries throughout the world.”

But members of Congress have repeatedly ignored the distinctions and hedges.

The websites of the Republicans and Democrats on the House Intelligence Committee include pages titled, “54 Attacks in 20 Countries Thwarted By NSA Collection.”

And individual congressmen have frequently cited the figure in debates around NSA surveillance.

  • Rep. Lynn Westmoreland, R-Ga., who is also on the House Intelligence Committee, released a statement in July referring to “54 terrorist plots that have been foiled by the NSA programs.” Asked about the figure, Westmoreland spokeswoman Leslie Shedd told ProPublica that “he was citing declassified information directly from the National Security Agency.”
  • Rep. Brad Wenstrup, R-Ohio, issued a statement in July saying “the programs in question have thwarted 54 specific plots, many targeting Americans on American soil.”
  • Rep. Joe Heck, R-Nev., issued his own statement the next day: “The Amash amendment would have eliminated Section 215 of the Patriot Act which we know has thwarted 54 terrorist plots against the US (and counting).” (The amendment, which aimed to bar collection of Americans’ phone records, was narrowly defeated in the House.)
  • Mike Rogers, the Intelligence Committee chairman who credited the surveillance programs with thwarting 54 attacks on the House floor, repeated the claim to Bob Schieffer on CBS’ “Face the Nation” in July.“You just heard what he said, senator,” Schieffer said, turning to Sen. Mark Udall, D-Colo., an NSA critic. “Fifty-six terror plots here and abroad have been thwarted by the NSA program. So what’s wrong with it, then, if it’s managed to stop 56 terrorist attacks? That sounds like a pretty good record.”Asked about Rogers’ remarks, House Intelligence Committee spokeswoman Susan Phalen said in a statement: “In 54 specific cases provided by the NSA, the programs stopped actual plots or put terrorists in jail before they could effectuate further terrorist plotting.  These programs save lives by disrupting attacks. Sometimes the information is found early in the planning, and sometimes very late in the planning. But in all those cases these people intended to kill innocent men and women through the use of terror.”
  • Rep. James Lankford, R-Okla., went even further in a town hall meeting in August. Responding to a question about the NSA vacuuming up Americans’ phone records, he said the program had “been used 54 times to be able to interrupt 54 different terrorist plots here in the United States that had originated from overseas in the past eight years. That’s documented.”
  • The same day, Rep. Jim Langevin, D-R.I., who sits on the Intelligence Committee, defended the NSA at a town hall meeting with constituents in Cranston, R.I. “I know that these programs have been directly effective in thwarting and derailing 54 terrorist attacks,” he said.Asked about Langevin’s comments, spokeswoman Meg Fraser said in an email, “The committee was given information from NSA on August 1 that clearly indicated they considered the programs in question to have been used to help disrupt 54 terrorist events. That is the information the Congressman relied on when characterizing the programs at his town hall.”

Wenstrup, Heck and Lankford did not respond to requests for comment.

The claims have also appeared in the media. ABC News, CNN and the New York Times have all repeated versions of the claim that more than 50 plots have been thwarted by the programs.

The NSA has publicly identified four of the 54 cases. They are:

  • The case of Basaaly Moalin, the San Diego man convicted of sending $8,500 to Somalia to support Al Shabab, the terrorist group that has taken responsibility for the attack on a Kenyan mall last month. The NSA has said its collection of American phone records allowed it to determine that a U.S. phone was in contact with a Shabab figure, which in turn led them to Moalin. NSA critic Sen. Ron Wyden, D-Ore., has argued that the NSA could have gotten a court order to get the phone records in question and that the case does not justify the bulk collection of Americans’ phone records.
  • The case of Najibullah Zazi, who in 2009 plotted to bomb the New York subway system. The NSA has said that an email it intercepted to an account of a known Al Qaeda figure in Pakistan allowed authorities to identify and ultimately capture Zazi. But an Associated Press examination of the case concluded that, again, the NSA’s account of the case did not show the need for the new warrantless powers at issue in the current debate. “Even before the surveillance laws of 2007 and 2008, the FBI had the authority to — and did, regularly — monitor email accounts linked to terrorists,” the AP reported.
  • A case involving David Coleman Headley, the Chicago man who helped plan the 2008 Mumbai terrorist attack. Intelligence officials have said that NSA surveillance helped thwart a subsequent plot involving Headley to attack a Danish newspaper. A ProPublica examination of that episode concluded that it was a tip from British intelligence, rather than NSA surveillance, that led authorities to Headley.
  • A case involving a purported plot to attack the New York Stock Exchange. This convoluted episode involves three Americans, including Khalid Ouazzani of Kansas City, Mo., who pleaded guilty in 2010 to bank fraud, money laundering, and conspiracy to provide material support to Al Qaeda. An FBI official said in June that NSA surveillance helped in the case “to detect a nascent plotting to bomb the New York Stock Exchange.” But no one has been charged with crimes related to that or any other planned attack. (Ouazzani was sentenced to 14 years last month.)The Kansas City Star reported that one of the men in the case had “pulled together a short report with the kind of public information easily available from Google Earth, tourist maps and brochures” and that his contact in Yemen “tore up the report, ‘threw it in the street’ and never showed it to anyone.”

    Court records also suggest that the men in Yemen that Ouazzani sent over $20,000 to may have been scamming him and spent some of the money on personal expenses.

Who Watches The Watchers? ProPublica Details How The NY Fed Fired Examiner Who Took on Goldman Sachs

This story, written by Jake Bernstein, was originally published by ProPublica on Oct. 10. A version of the story was also co-published with The Washington Post.

In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem.

Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.

That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.

Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment. Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired.

“They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.”

Today, Segarra filed a wrongful termination lawsuit against the New York Fed in federal court in Manhattan seeking reinstatement and damages. The case provides a detailed look at a key aspect of the post-2008 financial reforms: The work of Fed bank examiners sent to scrutinize the nation’s “Too Big to Fail” institutions.

In hours of interviews with ProPublica, the 41-year-old lawyer gave a detailed account of the events that preceded her dismissal and provided numerous documents, meeting minutes and contemporaneous notes that support her claims. Rarely do outsiders get such a candid view of the Fed’s internal operations.

Segarra is an expert in legal and regulatory compliance whose previous work included jobs at Citigroup and the French bank Société Générale. She was part of a wave of new examiners hired by the New York Fed to monitor systemically important banks after passage in July 2010 of the Dodd-Frank regulatory overhaul, which gave the Fed new oversight responsibilities.

Goldman is known for having close ties with the New York Fed, its primary regulator. The current president of the New York Fed, William Dudley, is a former Goldman partner. One of his New York Fed predecessors, E. Gerald Corrigan, is currently a top executive at Goldman. At the time of Segarra’s firing, Stephen Friedman, a former chairman of the New York Fed, was head of the risk committee for Goldman’s board of directors.

In an email, spokesman Jack Gutt said the New York Fed could not respond to detailed questions out of privacy considerations and because supervisory matters  are confidential. Gutt said the Fed provides “multiple venues and layers of recourse for employees to freely express concerns about the institutions it supervises.”

“Such concerns are treated seriously and investigated appropriately with a high degree of independence,” he said. “Personnel decisions at the New York Fed are based exclusively on individual job performance and are subject to thorough review. We categorically reject any suggestions to the contrary.”

Dudley would not have been involved in the firing, although he might have been informed after the fact, according to a Fed spokesman.

Goldman also declined to respond to detailed questions about Segarra. A spokesman said the bank cannot discuss confidential supervisory matters. He said Goldman “has a comprehensive approach to addressing conflicts through firm-wide and divisional policies and infrastructure” and pointed to a bank document that says Goldman took recent steps to improve management of conflicts.

Segarra’s termination has not been made public before now. She was specifically assigned to assess Goldman’s conflict-of-interest policies and took a close look at several deals, including a 2012 merger between two energy companies: El Paso Corp. and Kinder Morgan. Goldman had a $4 billion stake in Kinder Morgan while also advising El Paso on the $23 billion deal.

Segarra said she discovered previously unreported deficiencies in Goldman’s efforts to deal with its conflicts, which were also criticized by the judge presiding over a shareholder lawsuit concerning the merger.

Her lawsuit also alleges that she uncovered evidence that Goldman falsely claimed that the New York Fed had signed off on a transaction with Santander, the Spanish bank, when it had not. A supervisor ordered her not to discuss the Santander matter, the lawsuit says, allegedly telling Segarra it was “for your protection.”

‘Eyes Like Saucers’

The New York Fed is one of 12 regional quasi-private reserve banks. By virtue of its location, it supervises some of the nation’s most complex and important financial institutions. After the 2008 financial crisis, disparate voices pointed to failures of enforcement by the New York Fed as a key reason banks took on too much risk.

Even Fed officials acknowledged shortcomings. After Dodd-Frank, new examiners like Segarra, called “risk specialists,” were hired for their expertise. They were in addition to other Fed staffers, dubbed “business line specialists,” some of whom were already embedded at the banks.

Segarra believed she had found the perfect home when she joined the New York Fed’s legal and compliance risk specialist team in October 2011. It was a prestigious job, insulated from business cycles, where she could do her part to prevent another financial meltdown. Her skills, honed at Harvard, Cornell Law School and the banks where she had worked, consisted of helping to create the policies and procedures needed to meet government financial regulations.

As part of their first assignment, Fed officials told Segarra’s group of risk specialists to examine how the banks in which they were stationed complied with a Fed Supervision and Regulation Letter issued in 2008.

The letter, known as SR 08-08, emphasizes the importance of having company-wide programs to manage risks at firms like Goldman, which engage in diverse lines of business, from private wealth management and trading to mergers and acquisitions. The programs are supposed to be monitored and tested by bank compliance employees to make sure they are working as intended.

“The Fed recognized that financial conglomerates should act like truly combined entities rather than separate divisions or entities where one group has no idea what the other group is doing,” said Christopher Laursen, an economic consultant and former Federal Reserve employee who helped draft the supervisory letter.

In 2009, a review by the Fed had found problems with its efforts to ensure that banks followed the policy, which also says that bank compliance staffers must “be appropriately independent of the business lines” they oversee.

Segarra’s team included examiners placed at nine other “Too Big to Fail” banks, including Citigroup, JPMorgan Chase, Deutsche Bank and Barclays.

Segarra said her bosses told her to focus on Goldman’s conflict-of-interest policies. The firm had long been famous for trying to corral business from every part of the deals it worked on. “If you have a conflict, we have an interest,” is an oft-told joke on Wall Street about the firm’s approach.

The year before Segarra joined the Fed, for instance, Goldman had received a drubbing from the Securities and Exchange Commission and a Senate subcommittee over conflicts related to Abacus, a mortgage transaction the bank constructed. The SEC imposed a $550 million fine on the bank for the deal. A January 2011 Goldman report concluded that the firm should “review and update conflicts-related policies and procedures, as appropriate.”

Initial meetings between the New York Fed and Goldman executives to review the bank’s policies did not go well, said Segarra, who kept detailed minutes.

When the examiners asked in November 2011 to see the conflict-of-interest policy, they were told one didn’t exist, according to the minutes. “It’s probably more than one document — there is no one policy per se,” the minutes recount one Goldman executive as saying.

The discussion turned to the name of the group that oversaw conflicts at Goldman: “Business Selection and Conflicts Resolution Group.” Segarra’s supervisor, Johnathon Kim, asked if business selection and conflicts were, in fact, two different groups. He was told they were not, the minutes show.

Goldman officials stated that the bank did not have a company-wide conflict-of-interest program, Segarra’s minutes show. Moreover, the head of the business selection and conflicts group, Gwen Libstag, who is not a lawyer, said in a subsequent meeting on Dec. 8 that she did not consider what her staff did a “legal and compliance function,” according to Segarra’s minutes.

“That’s why it’s called business selection,” another Goldman executive added. “They do both.”

Given the Fed’s requirements, the regulators were stunned, Segarra recounted in an interview. “Our eyes were open like saucers,” she said. “Business selection is about how you get the deal done. Conflicts of interest acknowledge that there are deals you cannot do.”

After the Dec. 8 meeting, the New York Fed’s senior supervising officer at Goldman, Michael Silva, called an impromptu session with Fed staffers, including Segarra. Silva said he was worried that Goldman was not managing conflicts well and that if the extent of the problem became public, clients might abandon the firm and cause serious financial damage, according to Segarra’s contemporaneous notes.

A Chinese Wall In Their Heads

As part of her examination, Segarra began making document requests. The goal was to determine what policies Goldman had in place and to see how they functioned in Kinder Morgan’s acquisition of El Paso. The merger was in the news after some El Paso shareholders filed a lawsuit claiming they weren’t getting a fair deal.

Although Segarra reported directly to Kim, she also had to keep Silva abreast of her examinations. Silva, who is also a lawyer, had been at the Fed for 20 years and previously had served as a senior vice president and chief of staff for Timothy Geithner while he was New York Fed president. As a senior vice president and senior supervisor, Silva outranked Kim in the Fed hierarchy.

Segarra said James Bergin, then head of the New York Fed’s legal and compliance examiners, noted at a November meeting that there was tension between the new risk specialists and old-guard supervisors at the banks. Segarra said the tension surfaced when she was approached in late December by a Fed business line specialist for Goldman, who wanted to change Segarra’s Dec. 8 meeting minutes.

Segarra told her Fed colleague that she could send any changes to her. When Segarra next met with her fellow risk specialists, she said she told them what had transpired. They told her that nobody should be allowed to change her meeting minutes because they were the evidence for her examination.

Around that time, Silva had a meeting with Segarra, she said. According to her notes, Silva warned her that sometimes new examiners didn’t recognize how they are perceived and that those who are taken most seriously are the most quiet. Segarra took it as more evidence of tension between the two groups of regulators.

Bergin, Silva and Kim did not respond to requests for comment.

By mid-March 2012, Goldman had given Segarra and a fellow examiner from the New York State Banking Department documents and written answers to their detailed questions. Some of the material concerned the El Paso-Kinder Morgan deal.

Segarra and other examiners had been pressing Goldman for details about the merger for months. But it was from news reports about the shareholder lawsuit that they learned the lead Goldman banker representing El Paso, Steve Daniel, also had a $340,000 personal investment in Kinder Morgan, Segarra said.

Delaware Chancery Court Judge Leo Strine had issued a 34-page opinion in the case, which eventually settled. The opinion castigated both El Paso’s leadership and Goldman for their poor handling of multiple conflicts of interest.

At the New York Fed, Goldman told the regulators that its conflict-of-interest procedures had worked well on the deal. Executives said they had “exhaustively” briefed the El Paso board of directors about Goldman’s conflicts, according to Segarra’s meeting minutes.

Yet when Segarra asked to see all board presentations involving conflicts of interest and the merger, Goldman responded that its Business Selection and Conflict Resolution Group “as a general matter” did not confer with Goldman’s board. The bank’s responses to her document requests offered no information from presentations to the El Paso board discussing conflicts, even though lawsuit filings indicate such discussions occurred.

Goldman did provide documents detailing how it had divided its El Paso and Kinder Morgan bankers into “red and blue teams.” These teams were told they could not communicate with each other — what the industry calls a “Chinese Wall” — to prevent sharing information that could unduly benefit one party.

Segarra said Goldman seating charts showed that that in one case, opposing team members had adjacent offices. She also determined that three of the El Paso team members had previously worked for Kinder Morgan in key areas.

“They would have needed a Chinese Wall in their head,” Segarra said.

Pressure To Change Findings

According to Segarra’s lawsuit, Goldman executives acknowledged on multiple occasions that the bank did not have a firm-wide conflict-of-interest policy.

Instead, they provided copies of policies and procedures for some of the bank’s divisions. For those that did not have a division-wide policy, such as the investment management division, they offered what was available. The policy for the private banking group stated that employees shouldn’t write down their conflicts in “emails or written communications.”

“Don’t put that in an email in case we get caught?” Segarra said in an interview. “That’s a joke.”

Segarra said all the policies were missing components required by the Fed.

On March 21, 2012, Segarra presented her conclusion that Goldman lacked an acceptable conflict-of-interest policy to her group of risk specialists from the other “Too Big to Fail” banks. They agreed with her findings, according to Segarra and another examiner who was present and has requested anonymity.

Segarra’s group discussed possible sanctions against the bank, but the final decision was up to their bosses. A summary sheet from the meeting recommended downgrading Goldman from “satisfactory” to “fair” for its policies and procedures, the equivalent of a “C” in a letter grade.

A week later, Segarra presented her findings to Silva and his deputy, Michael Koh, and they didn’t object, she said. Reached by ProPublica, Koh declined to comment.

In April, Goldman assembled some of its senior executives for a meeting with regulators to discuss issues raised by documents it had provided. Segarra said she asked Silva to invite officials from the SEC, because of what she had learned about the El Paso-Kinder Morgan merger, which was awaiting approval by other government agencies.

Segarra said she and a fellow examiner from New York state’s banking department had prepared 65 questions. But before the meeting, Silva told her she could only ask questions that did not concern the El Paso-Kinder Morgan merger, she said.

Nonetheless, SEC officials brought it up. Goldman executives said they had no process to check the personal holdings of bankers like Steve Daniel for possible conflicts, according to notes Segarra took at the time. Asked by Segarra for Goldman’s definition of “conflicts,” the bank’s general counsel, Greg Palm, responded that it could be found in the dictionary, she said.

“What they should have is an easy A-B-C approach to how to manage conflicts,” Segarra said. “But they couldn’t even articulate what was a conflict of interest.”

Goldman declined a request to make Palm available for comment.

As the Goldman examination moved up the Fed’s supervisory chain, Segarra said she began to get pushback. According to her lawsuit, a colleague told Segarra in May that Silva was considering taking the position that Goldman had an acceptable firm-wide conflict-of-interest policy.

Segarra quickly sent an email to her bosses reminding them that wasn’t the case and that her team of risk specialists was preparing enforcement recommendations.

In response, Kim sent an email saying Segarra was trying to “front-run the supervisory process.” Two days later, a longer email arrived from Silva, stating that “repeated statements that you have made to me that [Goldman] does not have a [conflict-of-interest] policy AT ALL are debatable at best, or alternatively, plainly incorrect.”

As evidence, Silva cited the 2011 Goldman report that called for a revamp of its conflict-of-interest procedures, as well as the company’s code of conduct — neither of which Segarra believed met the Fed’s requirements.

While not commenting on Goldman’s situation, Laursen, the consultant who helped draft the Fed policy, said the idea is to police conflicts across divisions. “It would need to be a high-level or firm-wide policy,” he said, that “would identify the types of things that should not occur and the processes and monitoring that make sure they don’t.”

In its email to ProPublica, Goldman cited a May report from its Business Standards Committee that says the company completed an overhaul of its business practices earlier this year that included new policies and training for managing conflicts.

Before Segarra could respond to Silva’s email, Koh summoned her to a meeting. For more than 30 minutes, he and Silva insistently repeated that they did not agree with her findings concerning Goldman, she said.

Segarra detailed all the evidence that supported her conclusion, she said. She offered to participate in a wider meeting with New York Fed personnel to discuss it further. Because Fed officials would ultimately have to ratify her conclusions, she let them know she understood that her findings were subject to change.

Silva and his deputy did not engage with her arguments during the meeting. Instead, they kept reiterating that she was wrong and should change her conclusions, she said.

Afterward, Segarra said she sent an email to Silva detailing why she believed her findings were correct and stating that she could not change them. There was just too much evidence to the contrary, she said in an interview.

Three business days later, Segarra was fired.

Segarra has no evidence that Goldman was involved. Silva told her that the Fed had lost confidence in her ability to follow directions and not jump to conclusions.

Today, Segarra works at another financial institution at a lower level than she feels her qualifications merit. She worries about the New York Fed’s ability to stop the next financial crisis.

“I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the Federal Reserve Bank of New York certainly won’t be capable of supervising banks when even more serious issues arise.”

ProPublica research director Liz Day contributed to this story.

 

ProPublica Recounts A Case Where Telecom Aided Government Spies

This article, written by Raymond Bonner, was originally published by ProPublica on Oct.3.

Over the past several months, the Obama Administration has defended the government’s far-reaching data collection efforts, arguing that only criminals and terrorists need worry. The nation’s leading internet and telecommunications companies have said they are committed to the sanctity of their customers’ privacy.

I have some very personal reasons to doubt those assurances.

In 2004, my telephone records as well as those of another New York Times reporter and two reporters from the Washington Post, were obtained by federal agents assigned to investigate a leak of classified information. What happened next says a lot about what happens when the government’s privacy protections collide with the day-to-day realities of global surveillance.

The story begins in 2003 when I wrote an article about the killing of two American teachers in West Papua, a remote region of Indonesia where Freeport-McMoRan operates one of the world’s largest copper and gold mines. The Indonesian government and Freeport blamed the killings on a separatist group, the Free Papua Movement, which had been fighting a low-level guerrilla war for several decades.

I opened my article with this sentence: “Bush Administration officials have determined that Indonesian soldiers carried out a deadly ambush that killed two American teachers.”

I also reported that two FBI agents had travelled to Indonesia to assist in the inquiry and quoted a “senior administration official” as saying there “was no question there was a military involvement.”

The story prompted a leak investigation. The FBI sought to obtain my  phone records and those of  Jane Perlez, the Times bureau chief in Indonesia and my wife. They also went after the records of the Washington Post reporters in Indonesia who had published the first reports about the Indonesian government’s involvement in the killings.

As part of its investigation, the FBI asked for help from what is described in a subsequent government report as an “on-site communications service” provider. The report, by the Department of Justice’s Inspector General, offers only the vaguest description of this key player, calling it “Company A.”

“We do not identify the specific companies because the identities of the specific providers who were under contract with the FBI for specific services are classified,” the report explained.

Whoever they were, Company A had some impressive powers. Through some means 2013 the report is silent on how 2013 Company A obtained  records of calls made on Indonesian cell phones and landlines by the Times and Post reporters. The records showed whom we called, when and for how long — what has now become famous as “metadata.”

Under DOJ rules, the FBI investigators were required to ask the Attorney General to approve a grand jury subpoena before requesting records of reporters’ calls. But that’s not what happened.

Instead, the bureau sent Company A what is known as an “exigent letter” asking for the metadata.

A heavily redacted version of the DOJ report, released in 2010, noted that exigent letters are supposed to be used in extreme circumstances where there is no time to ask a judge to issue a subpoena. The report found nothing “exigent” in an investigation of several three-year-old newspaper stories.

The need for an exigent letter suggests two things about Company A. First, that it was an American firm subject to American laws. Second, that it had come to possess my records through lawful means and needed legal justification to turn them over to the government.

The report disclosed that the agents’ use of the exigent letter was choreographed by the company and the bureau. It said the FBI agent drafting the letter received “guidance” from “a Company A analyst.”  According to the report, lawyers for Company A and the bureau worked together to develop the approach.

Not surprisingly, “Company A” quickly responded to the letter it helped write. In fact, it was particularly generous, supplying the FBI with records covering a 22-month period, even though the bureau’s investigationwas limited to a seven-month period.Altogether, “Company A” gave the FBI metadata on 1,627 calls by me and the other  reporters.

Only three calls were within the seven-month window of phone conversations investigators had decided to review.

It doesn’t end there.

The DOJ report asserts that “the FBI made no investigative use of the reporters’ telephone records.” But I don’t believe that is accurate.

In 2007, I heard rumblings  that the leak investigation was focusing on a diplomat named Steve Mull, who was the deputy chief of mission in Indonesia at the time of the killings. I had known Mull when he was a political officer in Poland and I was posted there in the early 1990s. He is a person of great integrity and a dedicated public servant.

The DOJ asked to interview me. Of course, I would not agree to help law enforcement officials identify my anonymous sources. But I was troubled because I felt an honorable public servant had been forced to spend money on lawyers to fend off a charge that was untrue. After considerable internal debate, I decided to talk to the DOJ for the limited purpose of clearing Mull.

It was not a decision I could make unilaterally. The Times also had a stake in this. If I allowed myself to be interviewed, how could the Times say no the next time the government wanted to question a Times reporter about a leak?

The Times lawyer handling this was George Freeman, a journalist’s lawyer, a man Times reporters liked having in their corner. George and the DOJ lawyers began to negotiate over my interview. Eventually, we agreed that I would speak on two conditions: one, that they could not ask me for the name of my source; and two, if they asked me if it was 2018X,’ and I said no, they could not then start going through other names.

Freeman and I sat across a table from two DOJ lawyers. I’m a lawyer, and prided myself on being able to answer their questions with ease, never having to turn to Freeman for advice.

Until that is, one of the lawyers took a sheaf of papers that were just off to his right, and began asking me about phone calls I made to Mull. One call was for 19 minutes, the DOJ lawyer said, giving me the date and time. I asked for a break to consult with Freeman.

We came back, and answered questions about the phone calls. I said that I couldn’t remember what these calls were about 2013 it had been more than four years earlier 2013 but that Mull had not given me any information about the killings. Per our agreement, the DOJ lawyers did not ask further questions about my sources, and the interview ended.

I didn’t know how the DOJ had gotten my phone records, but assumed the Indonesian government had provided them. Then, about a year later, I received a letter from the FBI’s general counsel, Valerie Caproni who wrote that my phone records had been taken from “certain databases” under the authority of an “exigent letter,” (a term I had never heard).

Caproni sent similar letters to Perlez, to the Washington Post reporters, and to the executive editors of the Post and the Times, Leonard Downie and Bill Keller, respectively. In addition, FBI Director Robert Mueller called Downie and Keller, according to the report.

Caproni wrote that the records had not been seen by anyone other than the agent requesting them and that they had been expunged from all databases.

I’m uneasy because the DOJ report makes clear that the FBI is still concealing some aspect of this incident. After describing Caproni’s letters, the report says: “However, the FBI did not disclose to the reporters or their editors that [BLACKED OUT].”  The thick black lines obliterate what appear to be several sentences.

If you were to ask senior intelligence officials whether I should wonder about those deletions, they’d probably say no.

I’m not so sure.

The government learned extensive details about my personal and professional life. Most of those calls were about other stories I was writing. Some were undoubtedly to arrange my golf game with the Australian ambassador. Is he now under suspicion? The report says the data has been destroyed and that only two analysts ever looked at it.

But who is this ‘Company A” that willing cooperated with the government?  Why was it working hand in glove with the FBI? And what did the FBI director not tell the editors of the Times and the Washington Post when he called them acknowledging the government had improperly obtained reporter’s records?

Raymond Bonner, a lawyer and former New York Times reporter, is the author of “Anatomy of Injustice: A Murder Case Gone Wrong.”

Where Did Syria’s Chemical Weapons Come From?

ProPublica looks beyond the rhetoric of current and past Western governmental administrations to trace the genealogy of Syria’s current chem “stockpile.” You aren’t likely to be surprised at the shape of the chemical warfare family tree.

by Jannis Brühl
ProPublica,  Sep. 25, 2013, 12:41 p.m.

In the wake of a recent Russian-U.S. deal averting American airstrikes, Syria has begun to answer questions about its chemical weapons stockpile. One thing inspectors don’t have the mandate to ask is where those weapons came from in the first place. But evidence already out there suggests Syria got crucial help from Moscow and Western European companies.

When Secretary of Defense Chuck Hagel was asked recently about the origins of Syria’s chemical weapons, he said, “Well, the Russians supply them.“ Hagel’s spokesman George Little quickly walked back that statement, saying Hagel was simply referring to Syria’s conventional weapons. Syria’s chemical weapons program, Little explained, is “largely indigenous.”

But declassified intelligence documents suggest Hagel, while mistakenly suggesting the support was ongoing, was at least pointing his finger in the right direction.

A Special National Intelligence Estimate dated Sept. 15, 1983, lists Syria as a “major recipient of Soviet CW [Chemical Weapons] assistance.” Both “Czechoslovakia and the Soviet Union provided the chemical agents, delivery systems, and training that flowed to Syria.” “As long as this support is forthcoming,” the 1983 document continues,” there is no need for Syria to develop an indigenous capability to produce CW agents or materiel, and none has been identified.”

Soviet support was also mentioned, though with less details, in another intelligence estimate dated Feb. 2, 1982. That report muses about the U.S.S.R.’s motivation for exporting chemical weapons to Syria and other countries. The Kremlin saw gas as useful for allies fighting against insurgencies: For the countries that had actually used it in combat – Kampuchea, Laos, Afghanistan and Yemen – the authors conclude that the Soviet Union saw it as a way of “breaking the will and resistance of stubborn guerrilla forces operating from relatively inaccessible protected sanctuaries.”

The 1982 report goes on to say: “The Soviets probably reasoned that attainment of these objectives – as quickly and cheap as possible – justified use of chemical weapons and outweighed a small risk of exposure and international condemnation.” Last week, German newspaper Süddeutsche Zeitung reported that intelligence sources in the country are convinced blueprints for four of the five Syrian poison gas plants came from Moscow.

Evidence gathered from what we now know was a sarin attack last month is also suggestive. According to an investigation by Human Rights Watch, one of the weapons used in the attack was “a Soviet-produced 140mm rocket.” Meanwhile, the UN’s own report shows a picture of Cyrillic letters on the remnants of the rocket.

It’s impossible to know the exact extent of Soviet and Russian help. U.S. intelligence was not particularly focused on the Syrian program, says Gary Crocker, a proliferation specialist at the State Department’s Bureau of Intelligence and Research in the 1970s and 1980s. Most analysts did not know much about its program: “Detailed information on the Syrian program was only accessible to very high level intelligence officials,” Crocker said.

There are also indications that the Soviets grew increasingly uneasy with Syria’s ability to deliver the deadly gas by long-range missile. Concerned about Syria’s buildup, the head of the Soviet chemical warfare corps, General Vladimir Pikalov,flew to Syria in 1988. According to reports from the time, he decided against supplying the country with SS-23 missiles, which would have been able to deliver poison gas deep into Israel.

But the Soviets don’t appear to be the only ones who provided some help.

“Soviets provided the initial setup, then the Syrians became quite proficient at it. Later, German companies came in,” Crocker said.

As then- CIA director William Webster said in Senate testimony back in 1989: “West European firms were instrumental in supplying the required precursor chemicals and equipment.” Asked why the companies did it, Webster answered: “Some, of course, are unwitting of the ultimate destination of the products they supply, others are not. In the latter case, I can only surmise that greed is the explanation.”

Indeed, Syria received precursor chemicals from the West until well into the last decade. Last week, the German government acknowledged that between 2002 and 2006, it had approved  the export to Syria of more than 100 tons of so-called dual-use chemicals. Among the substances were hydrogen fluoride, which can be used to make Teflon,  and also sarin. The exports were allowed under the condition that Syria would only use them for civilian purposes. The British government also recently acknowledged exports of dual-use chemicals to Syria.

Both the British and German governments said there’s no evidence the chemicals were used to make weapons.

It’s not the first time Germany may have turned a blind eye to potentially dangerous trade. In the 1980s, for instance, German and French companies were crucial in building poison gas plants in Iraq and Libya . Stricter export controls in Europe were only installed after a web of companies that supplied the chemical weapons programs in the Middle East was exposed in the late 1980s. The New York Times embarrassed the German government by revealing the connection between German company Imhausen-Chemie and a Libyan poison gas plant in Rabta. (Times columnist William Safire German later called the plant “ Auschwitz-in-the-sand.”)

In the following years, German authorities indicted more than 150 managers of companies involved in Saddam Hussein’s program, which he had used to kill thousands of Kurds. According to one report, from the late ‘90s, more than half of the proceedings were stopped. Most of those that went to trial were acquitted or paid fines, a handful received jail time.

Just how deeply were German companies involved in Syria’s program? We may never know.  A long-ago proposal by the German Green party to install a fact-finding commission to comprehensively investigate the web of German companies supplying Middle Eastern states – and government knowledge of these exports – was voted down by all other parties in parliament.

ProPublica Explains How Obama Administration Halted Military Aid Transparency

This article, written by Cora Currier, was originally published by ProPublica on Tuesday.

The U.S. spent roughly $25 billion last year on what’s loosely known as security assistance—a term that can cover everything from training Afghan security forces to sending Egypt F-16 fighter jets to equipping Mexican port police with radiation scanners.

The spending, which has soared in the past decade, can be hard to trace, funneled through dozens of sometimes overlapping programs across multiple agencies. There’s also evidence it’s not always wisely spent. In Afghanistan, for instance, the military bought $771 million worth of aircraft this year for Afghan pilots, most of whom still don’t know how to fly them.

Last year, legislators in the House drafted a bill that would require more transparency and evaluation of security and all foreign aid programs. The bill was championed by an unlikely coalition of Tea Party budget hawks and giant aid groups such as Oxfam America.

But the Obama administration successfully pushed to have security assistance exempted from the bill’s requirements, according to a letter obtained by ProPublica and interviews with Congressional staffers.

The Pentagon wrote that it “strongly” opposed last year’s bill in a statement to Congressional staff laying out its “informal view” last December. “The extensive public reporting requirements raise concerns,” the letter said. “Country A could…potentially learn what Country B has received in military assistance.” Foreign governments would also “likely be resistant” to monitoring and evaluation from the U.S.  Staffers say the State Department had also resisted the bill’s increased oversight of security assistance. (The State Department declined our requests to discuss that.)

Two weeks later, the House passed a version that covered only “development assistance.” The bill never made it to a vote in the Senate.

The State and Defense Departments, which handle most security assistance, “really are scared,” said a House staffer who worked on last year’s bill.  “They’re afraid of transparency about what the money is funding, where the weapons are going, who is getting training.”

As it is now, the staffer said, “some reports come two or three years after the fact, and the data is not easily manipulable.”

Increased oversight of security assistance is needed, said Walter Slocombe, former Undersecretary of Defense for Policy, who recently led a government-sponsored study on the issue. The problem is that “a lot of these programs have been developed ad hoc,” he said. “There’s not much coordination among agencies, though often they are trying to do more or less the same thing.”

New versions of the bill have been reintroduced in the House and Senate. This time, the administration’s stance isn’t clear. A spokesman for the National Security Council declined to comment, as did the Pentagon.

This year’s bill has a loophole for security spending: a waiver allowing the Secretary of State to exempt such programs if he deems it in the “national interest.”

Still, including security programs in the bill at all is “going to be a bit more difficult,” said an aide to one of the House bill’s co-sponsors, Gerry Connolly, D-Va. The exemption requires the State Department to tell Congress which programs it isn’t including, and why.

Lauren Frese, a State Department foreign assistance official said, “We support Congress’ objectives with the bill. It’s more a matter of making sure we’re not legislating something that isn’t aligned with what we’ve already got going on.” As the White House points out, it has already required agencies to be more transparent about spending on foreign aid.  Agencies must upload budget data to a central public dashboard, foreignassistance.gov, though the site’s data is currently incomplete and information from the Defense Department is available only in generic categories. The bill would turn such directives into law.

The legislation also goes further. It would require the State Department to develop guidelines for monitoring and evaluating aid’s effectiveness across agencies.

In a hearing in April, the House bill’s co-sponsor, Ted Poe, R-Texas, said that “Americans want to see [whether] the money that we’re sending to NGOs, the governments, et cetera is working or not working.”

Representative Connolly hopes the bill will help the public “better understand the rationale for aid, and the context: what a small, small part of the government’s budget it represents,” he told ProPublica. Indeed, foreign aid makes up only about 1 percent  of the federal budget.

Supporters of the bill say excluding security assistance would leave a huge gap.

In January, an independent advisory board to the State Department recommended comprehensive reform of the whole concept of security assistance, calling for concrete objectives, better long-term monitoring, and a greater emphasis on non-military programs, such as programs to strengthen justice systems. (A few months later, the White House issued a policy directive that pledged to take on many of the same issues.)

“Nobody looks at it systematically,” said Gordon Adams, who worked on national security and international affairs for the Office of Management and Budget in the 1990s and has argued for a reduced military role in security assistance. That’s in part a reflection of how the landscape of programs has grown and fragmented in recent decades. Security assistance grew 227 percent between fiscal years 2002 and 2012, to a peak of $26.8 billion, according to data collected by the Stimson Center, where Adams is a fellow. That growth comes largely from programs in Iraq and Afghanistan, which are beginning to be scaled back. This year’s budget still allocated more than $20 billion across State and Defense.

State officially oversees all foreign aid, including many programs traditionally thought of as “military,” like weapons sales, but the Pentagon expanded its portfolio of “military operations other than war” and special operations in the 1990s. After 9/11, Congress also legislated new programs related to the “war on terror,” such as the Combating Terrorism Fellowship Program and the Coalition Support Fund. With its Afghan programs, the Pentagon accounts for more than half of all security spending – not counting covert operations.

Last year, then-Defense Secretary Leon Panetta promoted training and aid to partners as “low cost and small-footprint approaches” to military objectives.

The Pentagon’s increased role in foreign aid highlights a long-standing tension between the State Department and the military, which always has more cash on hand. “If you’ve got a $600 billion budget it’s easier to squeeze in a few million dollars here and there,” said Slocombe, who chaired the study for the State Department.

Countless examples from Afghanistan illustrate the problem of lack of both long-term planning and cooperation between agencies. In 2010, ProPublica and Newsweek documented the failures of the police training program, which had by then cost $6 billion. Responsibility shifted between agencies and contractors, and State and Defense squabbled “over whether the training should emphasize police work or counterinsurgency.” Last year, in one police facility built by the Army Corps of Engineers, the inspector general for Afghanistan reconstruction found a well building being used as a chicken coop. Another encampment, designed for 175 police, was occupied by just 12. The men didn’t even have keys for many of the buildings.

Other reports found the military paid $6 million for vehicles that were destroyed or hadn’t been seen in years, and that $12.8 million in electrical equipment was sitting unused, as Defense and USAID each expected the other to install it.

Afghanistan is an exceptional case, given the scale of the spending and wartime conditions. But it also has the scrutiny of a special inspector general and a large U.S. presence. Security assistance to other countries has far fewer eyes on it – or a clear idea of what the objectives for the aid are. Empowering local police and armies can have more severe political and human rights repercussions than digging wells. “It engages us with a bunch of countries where our interests are at best opaque,” said Adams.

Some programs are designed for political and diplomatic reasons (as was long the case with arm sales to Egypt), while others are meant to build up a country’s ability to help the U.S. in its aims, such as countering terrorism or drug-dealing. In other words, giving a country what it wants, versus what the U.S. thinks it needs. (In fact, the Government Accountability Office found that branches of the military differ on which programs are supposed to do what.)

In a February testimony, the GAO said that few of the military’s training programs had looked carefully at long-term impacts. “Reporting on progress and effectiveness,” had in some cases “been limited to anecdotal information.” For example, while Yemen has received over $360 million from two of the military’s new counterterrorism programs, due to security concerns the Pentagon has yet to evaluate whether that money’s had any effect.

The House bill’s sponsors believe it could help with these problems of planning and communication. The bill “is not designed to be hostile or adversarial for the Pentagon and State Department,” said Representative Connolly. “It’s designed to provide them with a more cogent rationale for these programs.”

 

ProPublica Explains How Far Private Companies Can Go In Gathering Information About You

This post, written by  Lois Beckett, was originally published by ProPublica on March 7, 2013. It was updated with new information on Sept. 13.

We’re continuing to learn new details about how the American government is collecting bulk records of citizens’ communications — from demanding that a telephone company hand over the daily records of “all telephone calls in its systems,” to collecting an unknown number of emails, instant messages and Facebook messages.

It’s not clear how much information about ordinary people’s conversations the National Security Agency has gathered. But we do know there’s a thriving public market for data on individual Americans — especially data about the things we buy and might want to buy.

Consumer data companies scoop up large amounts of consumer information about people around the world and sell it, providing marketers details about whether you’re pregnant or divorced or trying to lose weight, about how rich you are and what kinds of cars you drive. But many people still don’t know data brokers exist.

Regulators and some in Congress have been taking a closer look at this industry, and are beginning to push the companies to give consumers more information and control over what happens to their data. The prominent data broker Acxiom recently launched aboutthedata.com, a site that allows you to review some of the information the company has connected to your name — and, potentially, edit and update it as well.

Here’s a look (originally published in March) at what we know about the consumer data industry.

How much do these companies know about individual people?

They start with the basics, like names, addresses and contact information, and add on demographics, like age, race, occupation and “education level,” according to consumer data firm Acxiom’s overview of its various categories.

But that’s just the beginning: The companies collect lists of people experiencing “life-event triggers” like getting married, buying a home, sending a kid to college — or even getting divorced.

Credit reporting giant Experian has a separate marketing services division, which sells lists of “names of expectant parents and families with newborns” that are “updated weekly.”

The companies also collect data about your hobbies and many of the purchases you make. Want to buy a list of people who read romance novels? Epsilon can sell you that, as well as a list of people who donate to international aid charities.

A subsidiary of credit reporting company Equifax even collects detailed salary and paystub information for roughly 38 percent of employed Americans, as NBC news reported. As part of handling employee verification requests, the company gets the information directly from employers.

Equifax said in a statement that the information is only sold to customers “who have been verified through a detailed credentialing process.” It added that if a mortgage company or other lender wants to access information about your salary, they must obtain your permission to do so.

Of course, data companies typically don’t have all of this information on any one person. As Acxiom notes in its overview, “No individual record ever contains all the possible data.” And some of the data these companies sell is really just a guess about your background or preferences, based on the characteristics of your neighborhood, or other people in a similar age or demographic group.

Where are they getting all this info?

The stores where you shop sell it to them.

Datalogix, for instance, which collects information from store loyalty cards, says it has information on more than $1 trillion in consumer spending “across 1400+ leading brands.” It doesn’t say which ones. (Datalogix did not respond to our requests for comment.)

Data companies usually refuse to say exactly what companies sell them information, citing competitive reasons. And retailers also don’t make it easy for you to find out whether they’re selling your information.

But thanks to California’s “Shine the Light” law, researchers at U.C. Berkeley were able to get a small glimpse of how companies sell or share your data. The study recruited volunteers to ask more than 80 companies how the volunteers’ information was being shared.

Only two companies actually responded with details about how volunteers’ information had been shared. Upscale furniture store Restoration Hardware said that it had sent “your name, address and what you purchased” to seven other companies, including a data “cooperative” that allows retailers to pool data about customer transactions, and another company that later became part of Datalogix. (Restoration Hardware hasn’t responded to our request for comment.)

Walt Disney also responded and described sharing even more information: not just a person’s name and address and what they purchased, but their age, occupation, and the number, age and gender of their children. It listed companies that received data, among them companies owned by Disney, like ABC and ESPN, as well as others, including Honda, HarperCollins Publishing, Almay cosmetics, and yogurt company Dannon.

But Disney spokeswoman Zenia Mucha said that Disney’s letter, sent in 2007, “wasn’t clear” about how the data was actually shared with different companies on the list. Outside companies like Honda only received personal information as part of a contest, sweepstakes, or other joint promotion that they had done with Disney, Mucha said. The data was shared “for the fulfillment of that contest prize, not for their own marketing purposes.”

Where else do data brokers get information about me?

Government records and other publicly available information, including some sources that may surprise you. Your state Department of Motor Vehicles, for instance, may sell personal information — like your name, address, and the type of vehicles you own — to data companies, although only for certain permitted purposes, including identify verification.

Public voting records, which include information about your party registration and how often you vote, can also be bought and sold for commercial purposes in some states.

Are there limits to the kinds of data these companies can buy and sell?

Yes, certain kinds of sensitive data are protected — but much of your information can be bought and sold without any input from you.

Federal law protects the confidentiality of your medical records and your conversations with your doctor. There are also strict rules regarding the sale of information used to determine your credit-worthiness, or your eligibility for employment, insurance and housing. For instance, consumers have the right to view and correct their own credit reports, and potential employers have to ask for your consent before they buy a credit report about you.

Other than certain kinds of protected data — including medical records and data used for credit reports — consumers have no legal right to control or even monitor how information about them is bought and sold. As the FTC notes, “There are no current laws requiring data brokers to maintain the privacy of consumer data unless they use that data for credit, employment, insurance, housing, or other similar purposes.”

So they don’t sell information about my health?

Actually, they do.

Data companies can capture information about your “interests” in certain health conditions based on what you buy — or what you search for online. Datalogix has lists of people classified as “allergy sufferers” and “dieters.” Acxiom sells data on whether an individual has an “online search propensity” for a certain “ailment or prescription.”

Consumer data is also beginning to be used to evaluate whether you’re making healthy choices.

One health insurance company recently bought data on more than three million people’s consumer purchases in order to flag health-related actions, like purchasing plus-sized clothing, the Wall Street Journal reported. (The company bought purchasing information for current plan members, not as part of screening people for potential coverage.)

Spokeswoman Michelle Douglas said that Blue Cross and Blue Shield of North Carolina would use the data to target free programming offers to their customers.

Douglas suggested that it might be more valuable for companies to use consumer data “to determine ways to help me improve my health” rather than “to buy my data to send me pre-paid credit card applications or catalogs full of stuff they want me to buy.”

Do companies collect information about my social media profiles and what I do online?

Yes.

As we highlighted last year, some data companies record — and then resell — all kinds of information you post online, including your screen names, website addresses, interests, hometown and professional history, and how many friends or followers you have.

Acxiom said it collects information about which social media sites individual people use, and “whether they are a heavy or a light user,” but that they do not collect information about “individual postings” or your “lists of friends.”

More traditional consumer data can also be connected with information about what you do online. Datalogix, the company that collects loyalty card data, has partnered with Facebook to track whether Facebook users who see ads for certain products actually end up buying them at local stores, as the Financial Times reported last year.

Is there a way to find out exactly what these data companies know about me? (Updated 9/5/2013)

Not really — although that’s beginning to change.

You have the right to review and correct your credit report. But with marketing data, there’s often no way to know exactly what information is attached to your name — or whether it’s accurate.

Most companies offer, at best, a partial picture.

In September, Acxiom debuted aboutthedata.com, which allows to you review and edit some of the company’s marketing data on you, by entering your name, address, birth date and the last four digits of your social security number.

The Federal Trade Commission’s Julie Brill tweeted that “more data brokers should follow” Acxiom’s example. But the effort received mixed reviews from users, privacy advocates and government regulators, the New York Times reported.

Previously, Acxiom only let customers review a smaller slice of the information the company sells about them, including criminal history, as New York Times reporter Natasha Singer described last year. When Singer requested and finally received her report in 2012, all it included was a record of her residential addresses.

Other companies also offer some access. A spokeswoman for Epsilon said it allows consumers to review “high level information” about their data — like whether or not you’ve purchased “home furnishings” merchandise. (Requests to review this information cost $5 and can only be made by postal mail.)

RapLeaf, a company that advertises that it has “real-time data” on 80 percent of U.S. email addresses, says it gives customers “total control over the data we have on you,” and allows them to review and edit the categories it associates with them (like “estimated household income” and “Likely Political Contributor to Republicans”).

How do I know when someone has purchased data about me?

Most of the time, you don’t.

When you’re checking out at a store and a cashier asks you for your Zip code, the store isn’t just getting that single piece of information. Acxiom and other data companies offer services that allow stores to use your Zip code and the name on your credit card to pinpoint your home address — without asking you for it directly.

Is there any way to stop the companies from collecting and sharing information about me?

Yes, but it would require a whole lot of work.

Many data brokers offer consumers the chance to “opt out” of being included in their databases, or at least from receiving advertising enabled by that company. Rapleaf, for instance, has a “Permanent opt-out” that “deletes information associated with your email address from the Rapleaf database.”

But to actually opt-out effectively, you need to know about all the different data brokers and where to find their opt-outs. Most consumers, of course, don’t have that information.

In their privacy report last year, the FTC suggested that data brokers should create a centralized website that would make it easier for consumers to learn about the existence of these companies and their rights regarding the data they collect.

How many people do these companies have information on?

Basically everyone in the U.S. and many beyond it. Acxiom, recently profiled by the New York Times, says it has information on 500 million people worldwide, including “nearly every U.S. consumer.”

After the 9/11 attacks, CNN reported, Acxiom was able to locate 11 of the 19 hijackers in its database.

How is all of this data actually used?

Mostly to sell you stuff. Companies want to buy lists of people who might be interested in what they’re selling — and also want to learn more about their current customers.

They also sell their information for other purposes, including identity verification, fraud prevention and background checks.

If new privacy laws are passed, will they include the right to see what data these companies have collected about me?

Unlikely.

In a report on privacy last year, the Federal Trade Commission recommended that Congress pass legislation “that would provide consumers with access to information about them held by a data broker.” President Barack Obama has also proposed a Consumer Privacy Bill of Rights that would give consumers the right to access and correct certain information about them.

But this probably won’t include access to marketing data, which the Federal Trade Commission considers less sensitive than data used for credit reports or identity verification.

In terms of marketing data, “we think at the very least consumers should have access to the general categories of data the companies have about consumers,” said Maneesha Mithal of the FTC’s Division of Privacy and Identity Protection.

Data companies have also pushed back against the idea of opening up marketing profiles for individual consumers’ inspection.

Even if there were errors in your marketing data profile, “the worst thing that could happen is that you get an advertising offer that isn’t relevant to you,” said Rachel Thomas, the vice president of government affairs at the Direct Marketing Association.

“The fraud and security risks that you run by opening up those files is higher than any potential harm that could happen to the consumer,” Thomas said.

 

 

ProPublica On U.S. Aid To Egypt: Where Does All Of The Money Go?

This ProPublica article, written by Marian Wang and Theodoric Meyer, has been updated to reflect new developments. It was first published on Jan. 31, 2011.

Questions about the United States’ aid to Egypt have intensified in the wake of last month’s military coup. More than 1,000 Egyptians have been killed in the last week, most apparently supporters of ousted president Mohamed Morsi. A few members of Congress have called for cutting off aid to Egypt, which the White House says is under review.

We’ve taken a step back and tried to answer some basic questions about the aid, including how much the U.S. is giving Egypt, what’s changed in the years since the Arab Spring and what all the money buys.

How much does the U.S. spend on Egypt?

Egypt receives more U.S. aid than any country except for Israel, Afghanistan, Pakistan and Iraq.

The exact amount varies from year to year and there are many different funding streams, but U.S. foreign assistance to Egypt has averaged about $2 billion a year since 1979, when Egypt struck a peace treaty with Israel. Most of that goes toward military aid. President Obama’s 2014 budget tentatively includes $1.55 billion in aid, about the same amount the U.S. has sent in recent years.

Has any of the aid been cut off?

Actually, yes, but only economic aid, and only some of that. State Department has put a hold on some programs financed by the $250 million in annual economic aid to Egypt, including training programs in the U.S. for Egyptian hospital administrators, teachers and other government workers.

What about the military aid?

The administration delayed a scheduled delivery of four F-16 fighters to Egypt last month, and it is considering a similar delay for a shipment of Apache attack helicopters and repair kits for tanks. But the White House has not actually cut-off military aid, which has held steady at about $1.3 billion since 1987.  (Economic aid, meanwhile, has fallen by more than two-thirds since 1998.)

American officials say that military aid doesn’t just promote peace between Egypt and Israel, it also gives the U.S. benefits such as “expedited processing” for U.S. Navy warships when they pass through the Suez Canal. A 2009 U.S. embassy cable released by WikiLeaks makes essentially the same point:

President Mubarak and military leaders view our military assistance program as the cornerstone of our mil-mil relationship and consider the USD 1.3 billion in annual FMF as “untouchable compensation” for making and maintaining peace with Israel. The tangible benefits to our mil-mil relationship are clear: Egypt remains at peace with Israel, and the U.S. military enjoys priority access to the Suez Canal and Egyptian airspace.

According to the State Department, the military aid has included tanks, armored personnel carriers, antiaircraft missile batteries and surveillance aircraft in addition to the F-16 fighters and Apache attack helicopters. In the past, the Egyptian government has bought some of the weapons on credit.

How important is the aid to Egypt?

Pretty important. Saudi Arabia, which along with other Persian Gulf countries pledged $12 billion in aid to Egypt after the coup, promised this week to make up the difference in any aid cut by the U.S. or other Western nations. But much of the aid can’t easily be replaced, in particular fancy U.S. weapons and replacements parts for them.

Does the aid require Egypt to meet any specific conditions regarding human rights?

Not really. When an exiled Egyptian dissident called on the U.S. to attach conditions to aid to Egypt in 2008, Francis J. Ricciardone Jr., who had recently stepped down as the U.S. ambassador to Egypt, told the Washington Post the idea was “admirable but not realistic.” And then-Defense Secretary Robert Gates said in 2009 that military aid “should be without conditions” at a Cairo press conference.

Sen. Patrick Leahy, a Vermont Democrat, led Congress in adding language to a spending bill in 2011 to make aid to Egypt conditional on the secretary of state certifying that Egypt is supporting human rights and being a good neighbor. The language requires that Egypt abide by the 1979 peace treaty with Israel, support “the transition to civilian government including holding free and fair elections,” and put in place policies to protect freedom of expression, association, and religion, and due process of law.” It sounds pretty tough, but it’s not.

Has American aid to Egypt ever been cut off?

No. Congress threatened to block aid last year when Egypt began a crackdown on a number of American pro-democracy groups. A senior Obama administration official said that then-Secretary of State Hillary Rodham Clinton had no way to certify the conditions set out in the spending bill were being met.

But Clinton waived the certification requirement (yes, the secretary of state can do that) and approved the aid, despite concerns about Egypt’s human rights record. The reason? “A delay or cut in $1.3 billion in military aid to Egypt risked breaking existing contracts with American arms manufacturers that could have shut down production lines in the middle of President Obama’s re-election campaign,” the New York Times reported. Breaking the contracts could have left the Pentagon on the hook for $2 billion.

Doesn’t the U.S. have to cut off foreign aid after a coup?

The Foreign Assistance Act mandates that the U.S. cut aid to any country “whose duly elected head of government is deposed by military coup or decree.” But last month the White House decided that it was not legally required to decide whether Morsi, who was democratically elected last year, was the victim of a coup 2014 which allowed the aid to keep flowing. “We will not say it was a coup, we will not say it was not a coup, we will just not say,” an anonymous senior official told the New York Times.

As the Washington Post’s Max Fisher points out, Obama and his predecessors have dealt this kind of thing before. The president cut some aid to Honduras after a coup in 2009 and to Mali and the Central African Republic after coups there in 2012, but not all of it. And those countries aren’t nearly as important to U.S. foreign policy as Egypt. President Bill Clinton cut some aid to Pakistan after a coup there in 1999, but President George W. Bush reinstated all of it after the Sept. 11, 2001, attacks.

Obama’s refusal to call it a coup infuriated Morsi supporters. “What is a coup?” Wael Haddara, a senior adviser to Morsi, told the New York Times. “We’re going to get into some really Orwellian stuff here.”

What about economic aid and efforts to promote democracy?

The various economic aid efforts have had mixed results. The State Department has described the Commodity Import Program, which gave Egypt millions of dollars between 1986 and 2008 to import American goods, as “one of the largest and most popular USAID programs.” But an audit of the four-year, $57 million effort to create agricultural jobs and boost rural incomes in 2007 found that the program “has not increased the number of jobs as planned.” And an audit of a $151 million program to modernize Egypt’s real estate finance market in 2009 found that, while the market had improved since the program began, the growth was “not clearly measurable or attributable” to the aid efforts.

The U.S. has also funded programs to promote democracy and good government in Egypt 2014 again with few results. It has sent about $24 million a year between 1999 and 2009 to a variety of NGOs in the country. According to a 2009 inspector general’s audit, the efforts didn’t add much due to “a lack of support” from the Egyptian government, which “suspended the activities of many U.S. NGOs because Egyptian officials thought these organizations were too aggressive.”

recent audit of the European Union’s 20AC1 billion 2014 about $1.35 billion 2014aid program found that it had been “well-intentioned but ineffective” in promoting good governance and human rights. And a WikiLeaks cable revealed the Egyptian government had asked USAID in 2008 to stop financing NGOs that weren’t properly registered.

 

ProPublica Explains A Powerful Legal Tool, and Its Potential for Abuse

This story, written by Joaquin Sapien for ProPublica, was updated by the publication to include a recent decision by the U.S. Court of Appeals for the Second Circuit in the case of a Queens woman who says she was illegally held as a material witness in 2008.

The 20-year-old document labeled the Hotel Custody log by the Brooklyn District Attorney’s office is not easy to decipher. It contains a list of New York City hotels beside columns labeled “Date In” and “Date Out.” There are names of individual prosecutors and the units they worked for at the district attorney’s office.

A spokesman for the district attorney’s office, asked to explain the document, refused to say anything. And a judge recently placed the document under seal at the request of lawyers for the city.

Ruddy Quezada and his lawyers, however, are pretty sure they have figured the document out, and that it in particular the third line from the bottom holds a key to Quezada’s freedom after more than 20 years behind bars for a murder he insists he didn’t commit.

Quezada’s lawyers assert that the document is a record of witnesses in criminal trials held in hotel rooms by the district attorney in the winter of 1993. Some of the witnesses were prisoners released to testify and held overnight in custody. Others were witnesses who were fearful for their safety.

But some on the list were held under what are known in the criminal justice system as material witness orders, men and women who were deemed “uncooperative,” arrested by detectives and not freed until they agreed to testify.

Most specifically, Quezada’s lawyers say that on March 11, 1993, a man named Sixto Salcedo was checked into the Holiday Inn Crowne Plaza. Salcedo, they say, was released the following day, after he agreed to do what prosecutors wanted: testify that he had seen Ruddy Quezada shoot dead a man named Jose Rosado on the streets of Brooklyn.

Salcedo did testify, and Quezada was convicted. But a lot has happened since Salcedo has recanted his testimony, another man has confessed to the murder, and Quezada has asked a federal judge to free him from prison. And much of what happens next could turn on what took place at the Crowne Plaza that night 20 years ago.

Salcedo now says in sworn testimony that he never saw Quezada shoot anyone, and that he only agreed to say otherwise after he had been arrested on a material witness order, threatened by detectives and held overnight in one of the hotels used by the district attorney’s office.

“I’m not trying to justify myself,” Salcedo said in the sworn statement, “I’m just trying to have a clear conscience, since I regret the harm that I have caused.”

For some defense lawyers in New York, the Quezada case is just one example of a wider abuse of material witness orders.

The orders are meant to help prosecutors compel testimony from problematic witnesses in criminal cases. But the orders, which must be signed by judges, are supposed to be used only in extraordinary circumstances, as a kind of last resort, often when prosecutors fear a potential witness might flee instead of testifying.

Prosecutors are required to honor basic protocols aimed at protecting the rights of such witnesses: once detained, they are to be brought directly before a judge and provided with a lawyer. A hearing is then supposed to be held to explore the reasons behind a witness’ reluctance to testify: Is it fear? Possible complicity in the crime? Or are witnesses being intimidated into testifying falsely?

Determining much about the use of material witness orders is not easy. Court administrators in New York State are able to say that prosecutors continue to seek them and judges continue to grant them, but can’t say definitively how often the orders are issued or whether prosecutors abide by the law in executing them.

A spokesman for the Queens District Attorney said prosecutors in the office always take such witnesses before a judge. But the city’s other four district attorneys told ProPublica they would not answer questions about how material witness orders are handled by their offices.

But the Quezada case is not the only one dealing with the possible abuse of material witness orders to have surfaced in recent years. Some defense lawyers say they are concerned about how often local prosecutors might have disregarded the safeguards meant to protect the witnesses.

A lawyer for a Queens woman who says she was illegally held as a material witness in 2008 is now pressing to hold prosecutors accountable, seeking to find them personally liable. She scored a considerable victory in her effort this week when a three-judge panel on the U.S. Court of Appeals for the Second Circuit held that prosecutors in the case were not entitled to “absolute immunity” from her lawsuit, and ordered the case to be reconsidered by a district court.

“A material witness warrant secures a witness’s presence at a trial or grand jury proceeding,” Judge Gerard E. Lynch of the Second Circuit wrote in an opinion made public Friday. “It does not authorize a person’s arrest and prolonged detention for purposes of investigative interrogation by the police or a prosecutor.”

Another lawyer, Joel Rudin, has asked a federal judge in Brooklyn to force the Brooklyn District Attorney to turn over its records concerning the detention of witnesses in hotels over the years. Rudin, who is suing the city over a wrongful conviction that was achieved in part by the abuse of a material witness order, already has won rare access to some material.

Rudin said some witnesses held in hotels were formally classified as prisoners; they may have been inmates brought to court to testify in a criminal trial. But scores of others on the logs he has seen were likely innocent men and women who were being detained under material witness orders, he said.

“If they were not happening in Brooklyn, we would associate such practices with a police state,” Rudin said in court documents filed in May.

The Brooklyn District Attorney declined to respond to Rudin’s allegations.

Controversy arose around federal prosecutors’ deployment of material witness orders after 9/11, when it came to light that they had used the warrants to detain large numbers of people to provide information about terror cases.

But the use of these orders at the state-level remains largely unexamined. In New Jersey, legislators adopted reforms to the state’s material witness statute two decades ago, prompted by a case in which a man was held in jail to testify against a defendant who hadn’t even been charged with a crime yet.

The reforms came after a state commission surveyed the laws on material witness orders across the country.

“Some states had some protections for witnesses, some had none, but no state had a comprehensive set of protections,” said John Cannel, a member of the New Jersey Law Revision Commission, an arm of the state legislature.

One Living Witness, Perhaps Too Valued

Jose Rosado was killed in a drive-by shooting in the crime-ridden Brownsville section of Brooklyn on Oct. 19, 1991. Ruddy Quezada was arrested for the crime, based on the statements to police of two alleged eyewitnesses: Sixto Salcedo and John Delacruz.

But by the time prosecutors were preparing for trial in late 1992, Salcedo was the only witness alive. Delacruz had turned up dead in the Bronx, leaving prosecutors with a badly weakened case without Salcedo’s testimony.

But Salcedo now says that in the run-up to Quezada’s trial he was no longer so certain about what he’d seen that night and refused to testify. Frustrated by Salcedo, prosecutors went to a judge in December 1992 to get an order to arrest him, and question him about just how uncertain he really was.

Salcedo says he eventually was picked up by an investigator with the Brooklyn District Attorney’s office, and brought to the Crowne Plaza hotel. Salcedo says he was never brought before a judge or provided with an attorney, and the Brooklyn District Attorney’s office has offered no evidence to the contrary.

Instead, he got a night with a New York Police Detective named Thomas Buda, who, according to court filings, threatened Salcedo with jail if he didn’t cooperate with prosecutors. Salcedo relented and testified the next day.

At trial he said he was standing in front of a bodega when he saw a black Cadillac with the headlights turned off pull up across the street. Quezada was in the passenger seat. He raised a machine gun and fired multiple shots out of the window.

“I saw him,” Salcedo said of Quezada, according to records of the trial. “I saw his face and then I saw some movement, then the shots, then we ran.”

The prosecutor, Ephraim Shaban, reassured the jury that Salcedo had come forward voluntarily.

Quezada, then 30, was convicted of second-degree murder and sentenced to 25 years to life in state prison.

Quezada immediately began to file appeals. And he eventually pressed for information concerning the circumstances of Salcedo’s testimony. He and his lawyers wanted to know if Salcedo had been arrested under a material witness order prior to trial.

For nearly a decade, in court filings and hearings, the Brooklyn District Attorney’s office insisted there was no material witness order used to compel Salcedo’s testimony. State judges accepted the district attorney’s claims. Quezada’s appeals were rejected.

But in 2011, close to 20 years after Quezada’s conviction, prosecutors produced what they had long insisted didn’t exist: a warrant to arrest Salcedo signed by Judge Abraham Gerges on Feb. 8, 1993. It stated that Salcedo should be brought “before the court forthwith” for a hearing to determine whether he did in fact have testimony relevant to the case and whether he should be held in police custody. Quezada’s lawyers also were given the page of the hotel custody log that recorded Salcedo’s night at the Crowne Plaza hotel.

The Brooklyn District Attorney’s office offered no explanation or apology for its failure to turn over the material earlier.

A federal court is now deciding whether to hold a hearing to examine Quezada’s claim of innocence.

Rudin, who is representing a wrongfully convicted Brooklyn man named Jabbar Collins in a multimillion-dollar lawsuit against New York City, suspects the abuse of material witness orders has been a regular feature of the way the Brooklyn District Attorney’s office did business over the years.

Collins, convicted of killing a Brooklyn rabbi in 1995, was told for years that an order used to prompt the testimony of a critical and damning witness in the case against him didn’t exist. Rudin ultimately found that to be false. Much like Quezada’s lawyers, he found that the key witness was picked up on a material witness order and then held for several days before he testified.

Rudin is now digging into the office’s use of material witness orders to bolster his accusation that there has been systemic misconduct in the Brooklyn District Attorney’s office. As part of that effort, Rudin has obtained the sworn testimony of Christopher Salsarulo, a former investigator for the district attorney’s office who says he executed many material witness orders during his three years with the office.

Salsarulo said in his sworn testimony that he received next to no training on how to properly execute a material witness order. He says nothing about bringing witnesses before judges or getting them lawyers.

Salsarulo said he was simply told “to do your best to find the material witness and bring her back to the DA’s office.” Salsarulo said material witnesses were sometimes put in handcuffs and taken to locked hotel rooms under armed guard.

The Brooklyn District Attorney’s office has denied Rudin’s claim that the office ran a rogue operation in which witnesses were routinely jailed and coerced into testifying falsely. To date, the office has not responded to Salsarulo’s portrayal of how material witnesses were handled.

Salsarulo, in his affidavit, painted a vivid picture of how uncooperative witnesses were dealt with, and how such treatment could produce useful testimony.

Witnesses, he said, would be left handcuffed in their underwear.

“You like pants?” Salsarulo said he would ask the witness.

Salsarulo, who now works as an agent for the U.S. Drug Enforcement Administration in New Jersey, said the technique often worked.

“If they’re compliant,” he said of the jailed witnesses, “we dress them and give them water, whatever they need so they would be comfortable.”

“I Didn’t Want to Come to Trial”

At 6 a.m. one January morning in 1992, 19-year-old Michael Thompson was asleep in his mother’s apartment on Avenue C in Manhattan when police rousted him from bed, according to court records. They had a material witness order to bring him before a judge and explore why he had been resistant to testify in a murder case. Six months earlier, Thompson had told police he’d seen someone shoot a man outside a Manhattan nightclub. He’d said he could identify the dead man, and his killer, a man named Fernando Bermudez.

But police and prosecutors had become frustrated over the months by what they viewed as Thompson’s lack of cooperation.

According to court documents, Thompson repeatedly told a Manhattan homicide prosecutor, James Rodriguez, that he didn’t want to testify against Bermudez. He told Rodriguez he’d never been sure of what he had seen that night outside the club.

But Rodriguez wasn’t persuaded. Several other witnesses had also identified Bermudez as the shooter. Rodriguez was determined to have Thompson testify. And so Rodriguez went before Manhattan Judge John A.K. Bradley, and obtained a material witness order authorizing his arrest.

Under New York law, Thompson should’ve been taken before a judge immediately after his arrest. But testimony and court records indicate that didn’t happen. He was supposed to get a lawyer. That didn’t happen. Instead, police drove him directly to the Manhattan District Attorney’s office to meet Rodriguez.

The Manhattan District Attorney’s office, which is now being sued by Bermudez, has declined to comment on the case.

In court filings, city attorneys representing the Manhattan District Attorney have denied any wrongdoing in the case. They claim that neither Thompson, nor any other witness, was pressured to testify falsely. To the contrary, they’ve suggested that the witnesses who recanted did so only as a result of pressure from Bermudez. Rodriguez, the prosecutor on the case, no longer works for the Manhattan District Attorney.

Thompson had been at the scene when Raymond Blount, his 16-year-old friend, was shot to death outside the club. He and others later picked Bermudez’s photograph out of a smattering of pictures provided by police in the days following the shooting. Thompson also picked Bermudez out of a line-up. But the photo was just of his face. And during the line-up, Bermudez never stood up, so Thompson couldn’t see how tall he was.

The man who shot Blount, Thompson said, was 5’8″ or 5’9″ and weighed about 160 pounds. Bermudez was 6’2″ and about 215 pounds.

Thompson says he repeated his concerns to Rodriguez at the office that day he was picked up.

“I didn’t want to come to trial. I kept telling the ADA this because I doubted the identification. It was dark when Raymond got shot, and late,” Thompson said in a sworn statement he signed a year after the trial.

Police had found a toy gun in Thompson’s bedroom that morning. Thompson, who already had a criminal record, said he feared they’d make a case against him for it.

So he testified against Bermudez, as did several others.

“Before I went into the trial court the ADA took me and Frank Kent into his office to rehearse us. I was mad at what I had to do,” Thompson said in his sworn statement. “When I was in court I wasn’t sure no more of what to do. I remember looking at the defendant and thinking 2018he ain’t the kid who did it.’ I said what I was told to say by the ADA2026 I know now that it was a mistake.”

Bermudez was convicted and given a sentence of 23 years to life.

A year later, all of the witnesses recanted, including Thompson.

After nearly two decades in prison, the case finally imploded completely. State Judge John Cataldo found that Thompson’s forced false testimony was one of a raft of problems with the prosecution of Bermudez: the witnesses, teenagers all, viewed pictures of Bermudez and discussed them while they were all grouped together, violating basic police procedure and rendering their identifications unreliable; one witness feared being charged with the crime himself, and a substantial amount of evidence implicated another gunman.

In the case of Thompson, Cataldo found that he was arrested and threatened in secret, resulting in false testimony that contributed to a wrongful conviction.

“He was arrested and taken to the trial Assistant and told to make the identification or see if the judge would jail him for his lack of cooperation. The resulting testimony was tainted by these actions,” Cataldo said in a 79-page decision.

Thompson and another witness against Bermudez, Cataldo ruled, were left with a “feeling they had no recourse but to walk into court and identify Mr. Bermudez as the shooter, no matter what their doubts might have been.”

A Rare Review for an Overlooked Statute

In the late 1980s, New Jersey’s Hackensack River was suffering from decades of heavy industrial pollution. The 50-mile-long river had absorbed the waste of the state’s booming chemical processing industry. There were high levels of lead, cadmium, petroleum products, and other toxic refuse.

In 1989, state prosecutors were trying to hold polluters to account, and they thought they’d found someone who could help them: a man named Janos Misik, a low-level employee who worked for the Petro King Terminal Corp., a company suspected of dumping petroleum into the river. But Misik failed to attend a scheduled appointment with prosecutors. The prosecutors obtained a material witness order from a state judge and arrested Misik.

Misik’s attorney objected to the arrest. Misik’s employer hadn’t even been indicted, the attorney pointed out; therefore the state had no business obtaining a material witness order to pick him up.

A state judge ultimately found that prosecutors used the warrant as an “oppressive tool which amounted to a clear abuse of the court’s process,” and also identified some glaring deficiencies in the New Jersey law governing material witness orders. For one thing, the judge noted, the statute was over a century old. Second, it didn’t even define the term “material witness.” It didn’t include standards for determining the circumstances under which a witness could be arrested.

The judge suggested the state legislature undertake a review of the law.

So a case of toxic waste dumping, it turned out, gave rise to an uncommon inquiry on the long-obscure issue of material witnesses.

The New Jersey Law Revision Commission2014 an investigative arm of the state’s legislature2014 began examining the state’s material witness law in 1990.

Comprised of deans from three New Jersey law schools, two state legislators, and four practicing attorneys, the commission spent nearly two years analyzing academic work on the subject, case law and material witness statutes from all over the country.

It found that other state statutes were similarly out of date. So in 1992, the commission suggested its own reforms and the state legislature adopted them in 1994.

In order to obtain a material witness order from a judge, a New Jersey prosecutor now has to prove by clear and convincing evidence that the person does indeed have information material to the case and will not agree to cooperate.

When judges authorize such orders, witnesses have to be brought immediately to court for hearings in which judges evaluate their testimony and determine whether they need to be held in custody.

To date, there has been no similar move to examine New York’s statute.

At ProPublica’s request, Professor Bennett Gershman, a leading expert on prosecutorial misconduct, reviewed the material witness laws for New Jersey and New York. He suggested that they’re actually quite similar. The laws are not problematic, Gershman said, but rather the compliance of prosecutors with them.

“These are strong-arm tactics under the guise of something that looks official to bring people into the D.A.’s office or hotel room or some other place where the witness is being held secretly incommunicado and the witness is interrogated,” said Gershman, who has closely followed the New York cases involving material witnesses. “It’s possible that material witness order laws are being bypassed in New York as a matter of policy.”

The Sweeping Presidential Power To Help Prisoners That Holder Didn’t Mention

This ProPublica Article by Cora Currier, published Wednesday, examines the Obama Administration’s Spartan invocation of the power of the Presidential Pardon, alongside Attorney General Eric Holder’s arbitrary interpretation of his own promise to get “smart on crime.” Taken together, they demonstrate a mystifying take on Americans’ due process and civil liberties; one that veers closer to totalitarianism than to liberalism in its classic sense.

 

by Cora Currier

This week, Attorney General Eric Holder spoke out against the impacts of “draconian” sentences for nonviolent drug offenders. “Too many Americans go to too many prisons for far too long, and for no truly good law enforcement reason,” said Holder.

But in unveiling the new “smart on crime” initiative, Holder skipped mention of the sweeping power the president has to shorten or forgive a federal prisoner’s sentence.

President Obama has given just one person early release from prison. As ProPublica has documented, Obama has overall granted clemency at a lower rate than any modern president, which includes both commutations – early release – and pardons. Last year, ProPublica reported that the Justice Department’s Office of the Pardon Attorney rarely gives positive clemency recommendations to the president. Experts have been calling for reform of the entire clemency process.

“Holder’s speech begs the question, why is not more attention given to the broken pardons office?” said Robert Ehrlich, a former Republican governor of Maryland who recently started a law clinic devoted to pardons.

One person who is still waiting to hear about his petition for commutation is Clarence Aaron. He has been in prison since 1993, when he was sentenced to three life terms for his role in a drug deal. Aaron was not the buyer, seller, nor supplier of the drugs. It was his first criminal offense.

The White House ordered a fresh review of Aaron’s petition last year after ProPublica found that the  pardon attorney, Ronald Rodgers, had misrepresented Aaron’s case when it was brought to President George W. Bush. An Inspector General’s report released in December supported ProPublica’s findings, and referred the incident to the Deputy Attorney General to determine if “administrative action is appropriate.”

Nine months later, Justice Department spokesman Wyn Hornbuckle says the “issues raised in the report are still being examined.”

In his speech, Holder expressed concern about racial disparities in sentencing and treatment of prisoners. In 2011, a ProPublica investigation found that whites were four times as likely to receive pardons as minorities. Following our story, the Justice Department commissioned a study on racial disparities in pardons. Hornbuckle says that study is “ongoing.”

“The clemency process will need to be invigorated both from the bottom up and the top down,” said Jeffrey Crouch, a professor at American University, who wrote a book on pardons. “One step is the pardon attorney giving applicants a fair review and a positive recommendation. The other step is President Obama being more willing to use his pardon power.”

For now, Holder’s initiative has little to offer prisoners already behind bars. He directed prosecutors to avoid charges that carried mandatory minimum sentences for certain low-level, nonviolent drug offenders and urged the passage of legislation to change those sentencing requirements. But in 2010, there were more than 75,000 people in federal custody that had been given mandatory sentences.

“We’ve been getting a lot of calls asking, does this mean my loved one gets to go home?” said Molly Gill, government affairs counsel at Families Against Mandatory Minimums. “For the vast majority of people it doesn’t change their sentences and it isn’t retroactive.” (Holder did expand “compassionate release” for some elderly prisoners.)

While clemency does not generally reach wide swaths of prisoners, Presidents Gerald Ford and Jimmy Carter used it to affect policy on a larger scale, creating programs to forgive thousands of Vietnam War draft evaders.

In the 1960s, Attorney General Robert F. Kennedy also took a stand against what he described as “grossly unjust” outcomes of sentencing practices – and used commutations to do so. He directed federal prison wardens to seek out and bring him prisoners deserving of early release. Kennedy acknowledged that presidential commutations were “at best only stop-gaps” in a sentencing regime that needed reform. President John F. Kennedy commuted 100 sentences in total, and President Lyndon B. Johnson 226.

Mark Osler, a law professor at St. Thomas University who runs a clinic on commutations, said Obama could also do more. “Holder’s emphasis on how wrong these laws have been, and how damaging the Justice Department’s enforcement of those laws has been, gives me hope that this only the first step,” Osler said.

ProPublica: Does the U.S. Pay Families When Drones Kill Innocent Yemenis?

This piece, written by Cora Currier of ProPublica, was originally published Aug. 12, 2013.

There have been nine drone strikes reported in Yemen in the past two weeks, an uptick apparently connected to the Al Qaeda threat that shut down U.S. embassies across the Middle East and Africa. As many as six civilian deaths have also been reported.

President Obama has promised increased transparency around drones, but when asked about the strikes on Friday, Obama wouldn’t even confirm U.S. involvement.

“I will not have a discussion about operational issues,” he said.

The military is also following that line, refusing to release details about what happens when civilians are harmed in these strikes, including if and how families of innocent victims are compensated.

In response to a Freedom of Information Act request, U.S. Central Command told ProPublica it has 33 pages somehow related to condolence payments in Yemen 2013 but it won’t release any of them, or detail what they are.

The military’s letter rejecting our FOIA cites a series of reasons, including classified national security information. (Here’s the letter.)

There’s no way to know what the military is withholding. A Pentagon spokesman told us they haven’t actually made condolence payments in Yemen. But CIA director John Brennan said during his confirmation process in February that the U.S. does offer condolence payments to the families of civilians killed in U.S. strikes. (Both the military and CIA fly drones over Yemen.)

In May, the White House released new guidelines for targeted killing, saying that there must be a “near certainty that non-combatants will not be injured or killed.” But the administration has said little about how civilian deaths are assessed or handled when they do occur. It has refused to address the U.S. role in almost any particular death 2013 including that of a 10-year-old boy, killed a few weeks after Obama’s promise of increased transparency.

Outside reporting on drone strike deaths is spotty and often conflicted. On Sunday, a Yemeni activist and journalist named three civilians who had been injured, “just hanging arnd n thir neighborhood.” Another recent strike killed up to five “militants,” according to Reuters and other news agencies. But Yemenis reported on Twitter that a child was also killed. (The White House declined to comment to ProPublica on the recent strikes or on condolence payments.)

In Afghanistan, the U.S. has long given out condolence payments, which military leaders have come to see as a key part of the battle for hearts and minds. What might seem like a callous exercise 2013 assigning a dollar amount to a human life 2013 is also embraced by many humanitarian groups. The Center for Civilians in Conflict, for example, sees it as a way to help families financially and as “a gesture of respect.” In fiscal year 2012, condolence payments in Afghanistan totaled nearly a million dollars.

It’s likely harder to do that in the drone war. Military and intelligence leaders have expressed concern about “blowback” from local populations resentful of the strikes. But the U.S. has no visible troops on the ground in countries like Yemen or Pakistan, and almost never acknowledges specific strikes.

Despite the recent surge, overall there have been far fewer drone strikes and civilian deaths alleged in 2013 than in previous years.

For more on the U.S.’ shadowy drone war, read ProPublica’s latest story, “Who Are We at War With? That’s Classified,” coverage of the controversial practice of “signature strikes“, and the organization’s chat with national security reporters on the challenges of covering a remote and secret war.