Acting Deputy Attorney General Gary G. Grindler Speaks at the National Association of Attorneys General Summer Meeting

Seattle ~ Monday, June 14, 2010
Thank you, Attorney General Bruning, for your warm words. I’m honored to be here today to speak to this storied and significant association. I understand that it was 104 years ago this summer when Herbert Spencer Hadley, a Republican Attorney General then serving under a Democratic Governor, called for a national meeting in St. Louis to bring together all of the State Attorneys General. The discussions at the annual meetings have certainly changed over time, but one topic, one theme, has remained ubiquitous since the start: federal-state partnerships.

It’s my understanding that strengthening federal and state partnerships was one of the founding principles of this Association, and I hope to summon this afternoon the same spirit of shared aspiration, joint responsibility and, above all, strong partnership, that this association has been cultivating for more than a century.

I know many of you in this room have already forged strong partnerships with your local, federal partners on a wide variety of issues in order to protect your constituents from fraud, from waste and abuse of their tax dollars, and from criminals that threaten their safety. I’d like to spend my time today with you talking about three issues in which I know collaboration is well underway, but are ripe for increased cooperation between the federal and state authorities. Those three areas are: financial fraud, healthcare fraud, and child exploitation. These are threats that affect the financial security, health and safety of the citizens in all of the states you represent, and the Department of Justice would like to increase our partnership with you in these areas to reach our shared goal of protecting Americans.

First, financial fraud: Every era is remembered by several defining crimes, and our time will, no doubt, be remembered in large part for this one. But it will, I believe, be remembered not only for the bad. The unprecedented response of law enforcement and prosecutors, across federal and state jurisdictions, should also make the history books.

The scope of the challenge demands we act with no less than our best. The financial crisis we have all felt continues to expose shameless schemes that have decimated pocketbooks and retirement accounts alike, stripping Americans of their economic confidence and fiscal security. Yet, these are not simple crimes; they are widespread and are among the most complex we’ve faced, requiring concentration and collaboration.

That’s why the Department of Justice is honored to lead the government-wide Financial Fraud Enforcement Task Force, which President Obama formed last November.

Empowered not only with criminal enforcement, but also with the authority to bring civil and administrative actions, the Task Force is charged with addressing every kind of financial fraud imaginable, from bank, mortgage, and lending fraud to securities and commodities fraud; from mail and wire fraud to money laundering, False Claims Act violations, unfair competition, discrimination, and more. And because the crisis is so wide, the Task Force’s mandate is, too: it is the largest coalition to fight fraud in the history of the United States, and that is why we need each of you to be involved.

Many Attorneys General here today, including Attorney General Rob McKenna of Washington, Lisa Madigan of Illinois, Richard Cordray of Ohio, and NAAG’s Executive Director, Jim McPherson, have been active leaders on the Task Force. The NAAG itself is a member of the Enforcement Committee, tasked with developing a national strategy to attack financial crimes, and also serves as a Co-Chair on Task Force working groups that focus on mortgage fraud and those who would defraud and misuse Recovery Act funds.

But the Task Force is more than broad. It is powerful. And that, I hope, is where the rest of you can come in. The mission of the Task Force is to implement an interagency effort against financial fraud, using the full criminal and civil enforcement resources of the executive branch, as well as state and local partners, to investigate, prosecute, recover, coordinate, and communicate.

But what, exactly, does that mean? For all you, two things:

First, look for the regional law enforcement summits that we will be holding around the country beginning later this month. These summits are designed to help reinforce the regional state/federal task forces and share ideas on how to improve them. As we speak, the Department is reaching out to U.S. Attorneys’ Offices and their counterparts at the state and local levels to hold these summits around the country. We anticipate the first of these summits will occur soon in Virginia, Colorado, and California. We welcome your involvement and ideas on how we can serve the public through our combined efforts

Second, and most important, I encourage all of you to continue to work with the state and regional task forces around the country that continue to be effective in combating financial fraud, including mortgage fraud and other schemes.

To those of you who have already played key roles in these partnerships, thank you. And to those who have not yet, I look forward to your future involvement. If you’re skeptical, just talk to your fellow Attorneys General, and they will, I’m sure, enthusiastically tell you about the meaningful results they are seeing from the joint federal-state efforts to fight financial fraud.

A few weeks ago in the Eastern District of Virginia, for example, the U.S. Attorney’s Office, the Virginia Attorney General, the Virginia State Corporation Commission, and investigatory and regulatory agencies announced a regional Financial and Securities Task Force focused on financial fraud. Innovative responses like these are working, and, given the nature of the threat, we may not want to rely on anything less.

They pool precious resources, expedite complicated investigations, provide needed expertise, and, above all, ensure that white-collar crimes are prosecuted and punished; that victims regain what they have lost; and that the American people regain trust in their country’s financial institutions.

Second, there is another breed of fraud, also pervasive, also destructive, that can be more effectively handled through partnership. I am, of course, referring to health care fraud, something for which all of us can agree the government must have zero tolerance.

Some say health care fraud is victimless, but that could not be farther from the truth. Nearly every American, whether covered by Medicare, Medicaid, or one of the many victimized private insurers, has been affected by this self-serving crime. Every year hundreds of billions of federal dollars are spent to provide health security for American seniors, children, and the disabled. And while most medical or pharmaceutical providers do the right thing, when Medicare or Medicaid fraud does occur, it costs the American taxpayer billions that could be spent on patient care, and in that sense, it not only raises taxes and insurance premiums; it harms the stability of public health care programs; and threatens the quality of care in our nation’s doctors’ offices and hospitals.

The numbers are staggering – and unacceptable.

As the combined spending on Medicare and Medicaid has more than doubled over the past decade and it’s projected to exceed $800 billion this year. Fraud has also increased; external estimates project the fraud accounts for three to ten percent of total spending. That’s between $27 and $80 billion.

But you know this is an issue already. So many of you are engaged in Medicare Fraud Strike Forces, and your close working relationship with the National Association of Medicaid Fraud Control Units facilitates the kind of teamwork, sharing, and critical enforcement cooperation that it takes to curb a crime that sometimes appears to know no limits.

We, too, at the Department of Justice have met the crisis with a strong response: the Health Care Fraud Prevention and Enforcement Action Team, or HEAT. HEAT is another historic coalition that reaches across departments, both the Departments of Justice and Health and Human Services, and across law enforcement agencies. The purpose is both to prevent fraud, waste and abuse before it happens, and to aggressively combat it if, and when, it occurs.

On the federal level, that means many things – increasing prepayment reviews, audits, site visits, real-time sharing of claims data, for example, and employing more effective anti-fraud audits – but it also means a great deal for you, our state partners: greater opportunities for coordination, expanded use of Medicare Fraud Strike Forces, and broader state authority to respond appropriately to health care fraud when it occurs.

As I can see every day in my role as supervisor of the Justice Department’s day-to-day health care fraud prevention efforts, it’s working. HEAT’s targeted, data-driven criminal enforcement strategy in key geographic locations – using the Medicare Strike Force teams driven in large part by many of you – has already had a major impact on deterring fraud and abuse, protecting patients and the elderly from scams, and ensuring those who steal taxpayer funds are held fully accountable, as they must be.

Since the announcement of HEAT last May, Strike Force prosecutors have successfully prosecuted hundreds of individuals and secured judgments worth over a billion dollars.

In addition to the federal Task Forces, HEAT is also working to assist you. Just last week Attorney General Holder and Secretary Sebelius reached out to all of you regarding the most recent HEAT initiatives and to identify some areas for increased partnership.

First, following on the National Health Care Fraud Summit that was hosted in Washington, D.C. earlier this year, the President has asked the Department of Justice and HHS to convene a series of regional fraud prevention summits around the country over the next few months. The first summit will take place in Miami on July 16. Other summits will follow in, for example, Los Angeles, Las Vegas, Detroit, Boston, New York, and Philadelphia.

These summits will bring together representatives from federal, state, and local law enforcement agencies, representatives from the private sector including healthcare providers, hospitals, and doctors to share information about trends in health care fraud and to ensure effective referral mechanisms and procedures for joint investigations. Your expertise and experience will be key to the success of these events.

Second, I sent a memo to every United States Attorney in the country asking them to convene regular health care fraud task force meetings to facilitate the exchange of information with partners in the public and private sector, and to help coordinate ant-fraud efforts. Most of these meetings will be held quarterly and all of the U.S. Attorneys have been asked to schedule the first meeting by August 16, 2010. I hope that you and your office will take part in these regular exchanges.

Third, HHS will be doubling the size of the Senior Medicare Patrol which recruits and trains retired professionals and other senior citizens about how to recognize and report instances or patterns of health care fraud. Close to 3 million Medicare beneficiaries have been educated since the start of the program in 1997, and currently the Senior Medicare Patrol program funds projects in every state, the District of Columbia, Puerto Rico, Guam, and the Virginia Islands.

Still, we can do even more.

And legally speaking, more can be done, thanks to the Patient Protection and Affordable Care Act passed earlier this year. In addition to creating new, powerful tools for the federal government in its fight against health care fraud, the heath care reform law provides new access to Medicaid data for the Secretary of HHS that will assist states in coordinating anti-fraud activities, giving them greater incentive and flexibility in identifying and collecting Medicaid overpayments.

And under the new law, states now have stronger authority to suspend payments to providers suspected of fraud, to place providers of high-risk categories of service under provisional increased oversight, and to impose moratoria on the enrollment of certain types of providers. Even if you haven’t felt the effect of these tools quite yet, they will, I’m confident, prove indispensable to each of you in the weeks, months, and years ahead.

In the end, all of these efforts, I believe, go to our basic duty to citizens in every state to ensure their hard-earned tax dollars are spent for the benefit of those who need medical care, not those who seek to enrich themselves at the expense of others. And so we welcome your ideas; your expertise; and, in the best traditions of this association, your active partnership in fulfilling our common duty to address this ongoing threat.

Third, and finally, I’d like to speak to you briefly about an area of past, present and, hopefully, future collaboration about which each of you cares very deeply: the exploitation of children.

These are the vilest crimes, and yet, as all of you know best, abductions, child pornography, assaults, and other exploitations of children continue to mount, both in this country and around the world. And not only are these crimes expanding; they are evolving with the increasing sophistication of the Internet. As front-line fighters in this ongoing battle, you confront this disturbing trend every day.

The most recent research compiled by the Justice Department, as mandated by the PROTECT Our Children Act of 2008, indicates there has been a 432 percent increase in child pornography submitted for identification of the children depicted between 2005 and 2009. Estimates say more than 200 new images are circulated every day. And profits derived from these criminal acts could be as high as $20 billion annually.

Of course, pornography is not the only threat. Enticement of our children over the Internet continues at alarming rates; a July 2009 United Nations report estimates there are approximately 750,000 sexual predators using the Internet to try to make contact with children for the purpose of sexually exploiting them.

And outside of the Internet, runaways, throwaways, sexual assault victims, and neglected children are being recruited into violent lives of forced prostitution. Between 2004 and 2008, ICAC Task Forces saw a 914 percent increase in the number of child victims of prostitution complaints processed.

We all have our theories as to why these numbers continue to mount: more reporting, maybe; more criminals turning from drug dealing and robbery to the more lucrative field of human trafficking; or simply more demand. Whatever the reason, the fact is that child exploitation is a global problem that knows no international or domestic borders – and whose response, therefore, must know no jurisdictional or agency boundaries.

As I don’t need to tell you, nothing less than the lives not only of our children, but also of those in the most impoverished and vulnerable areas of the world are at stake. And that’s why the Department of Justice, and every U.S. Attorney’s Office, is fully committed to working with each of your offices to escalate the struggle against the sexual exploitation of children on all fronts, including prevention, deterrence, and interdiction.

That means we’re working to launch a national database that will enable you, as well as our international partners, to initiate undercover operations, share time-sensitive information, provide and access critical data, and stay one step ahead of those who prey on the innocent and vulnerable.

That means we’re exploring the expansion of the Innocence Lost Initiative – which since 2003 has recovered more than 900 children victimized by pimps, madams, and those who pay to sexually assault them – into other cities beyond the 38 task forces that currently exist.

That means as the U.S. Marshals Service continues to aggressively pursue and apprehend fugitive sex offenders, it will also be working to make fully operational their Sex Offender Targeting Center to better track and apprehend fugitive sex offenders in every state.

That means, for the first time, we have a national coordinator to help foster partnerships among the Department, your district’s U.S. Attorney and each of your offices. Francey Hakes, an experienced federal prosecutor who previously worked closely with the ICAC Task Force in her home state of Georgia, is here and would enjoy talking to each of you about the ongoing child exploitation initiatives throughout the country.

But above all, that means we will continue to vigorously support the Internet Crimes Against Children Task Forces, which for more than a decade have been among our top priorities at the Department. If you can believe it, the program has grown to 61 task forces over the past 12 years, with more than 3,000 agencies represented. This includes eight ICAC task forces led by a State Attorney General’s office, some of whom are among you today, including Attorneys General Mark Bennett of Hawaii, Gary King of New Mexico, and Mark Shurtleff of Utah.

Since the program began, more than 180,000 complaints of child exploitation have been investigated; more than 20,000 suspects have been arrested; and, most important, thousands of children have been rescued. There are few better examples than these task forces of how effective we can be – and how many lives we can improve, if not save – when we work together.

It was a year ago this month that the Utah ICAC Task Force received a "Priority One" case – the highest classification of potential risk to a child. A new series of child pornography, known as "SpongeB," was being traded across the Internet, spreading across peer-to-peer networks. But in the background of a couple of the illicit photos, investigators noticed an unintended prop: a Utah phonebook, as well as an image of the perpetrator and the victim at a popular Las Vegas hotel attraction.

That’s when the invaluable collaboration began. Agents in Utah received information from their St. Louis ICAC office about the victim and the suspect – leads related to other child pornography investigations. A Utah SSA Agent and an FBI Special Agent located and interviewed the victim. And after he disclosed details of the abuse and pornography, the abuser was eventually found, too, by local police, at a traffic stop. Federal charges have since been filed. And, as a direct result of a federal-state partnership, one more criminal will be put behind bars.

And that story exemplifies why I feel strongly that embracing collaboration and solidifying our partnerships is the right course for us as leaders and citizens.

To all the citizens we serve – the homeowner devastated by undeserved debt, the patient crushed by unexpected premiums, the child in search of his freedom from his abuser– we owe nothing less.

Nor, thanks to your commitment and collaboration, will we deliver anything less.

Thank you all for your time. As always, we at the Department stand ready to serve as a resource and partner as we work together to address the many threats that face our Nation.