Prepared Statement of Ranking Member Chuck Grassley

Senate Committee on the Judiciary

Oversight Hearing on the Department of Justice

Tuesday, November 8, 2011

Thank you, Mr. Chairman, for holding this important oversight hearing.  If our time were not so limited, I would have liked to ask about the department's conference budget, the broken system of reviewing FBI whistleblower cases, the department's attempt to use the tragic failure in Fast and Furious as a pretext to call for new, stricter gun laws, and many other important topics.  However, oversight on Operation Fast and Furious has been my focus since the last time Attorney General Holder appeared before the committee.

Just over nine months ago Attorney General Holder sat in my office.  After discussing a number of items with him, I handed him two letters I had written to the Acting Director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Kenneth Melson.[1] A member of my staff briefly outlined the allegations contained therein that had come to us from an ATF whistleblower.

My letters mentioned: (1) the death of Border Patrol Agent Brian Terry, (2) the allegation that ATF had sanctioned the sale of hundreds of assault weapons to straw buyers, (3) the allegation that two of those weapons had been found at the scene of Agent Terry's death, and (4) the allegation that the whistleblowers who provided this information were already facing retaliation.[2]

Just four days later, I received a response back from the Justice Department.[3] That response explicitly stated that the whistleblower allegations were "false" and that "ATF makes every effort to interdict weapons that have been purchased illegally and prevent their transportation to Mexico."[4] In the nine months since then, mounting evidence has put the lie to those claims.  We have learned that instead of making every effort to interdict, ATF actually allowed the transfer of firearms in several operations, in hopes of making bigger cases.[5] Agents who objected to the practice called it "walking guns."[6] In addition to documentary evidence contradicting the department's denials, six ATF agents testified powerfully at two House Oversight Committee hearings about gunwalking in Operation Fast and Furious.

Assistant Attorney General Lanny Breuer admitted one week ago in this room that the department's letter to me in February was absolutely false.[7] Think about that for a second.  It's bad enough that the head of the Criminal Division admits that the department's letter to me was false.  It gets worse, though.  He admitted that he knew all along that it was false.  Although he could not recall whether he helped edit it, he knew it was false because he was aware of a previous gunwalking operation called Wide Receiver.  Yet he remained silent for nine months as the public controversy over gunwalking grew.  He was aware that Congress had been misled and yet made no effort to correct the department's official denial.  I am eager to hear whether the Attorney General thinks that is acceptable and what he intends to do about it.

Much has been said recently about guns being walked in Operation Wide Receiver "during the Bush era."  It doesn't matter to me when it happened, we need to get to the bottom of it.  According to the Justice Department, Bush-era prosecutors refused to bring the case.[8] However, under Mr. Breuer's leadership headquarters revived it despite the gunwalking issues.[9] Reviving the case may have provided the green light to the Phoenix Field Division to repeat the gunwalking strategy in Operation Fast and Furious on a much bigger scale.

It seems likely that the same ATF managers responsible for overseeing Wide Receiver might have interpreted the administration's willingness to prosecute such cases as an approval of gunwalking as an acceptable tactic.  If that was not the case, then it was Mr. Breuer's responsibility to clearly communicate that gunwalking was not acceptable and to institute oversight and safeguards to ensure that it did not happen again.  He did not do that.

In fact, it is clear from documents produced by the Justice Department that in early 2010, the ATF, Main Justice, and the U.S. Attorney's Office in Arizona considered Wide Receiver and Fast and Furious to be a set of related cases.[10] Yet Mr. Breuer claims that he saw the flaws in one but not the other.[11]

As Mr. Breuer's deputy was learning about the Wide Receiver in March 2010, he asked: "[D]id ATF allow the guns to walk, or did ATF learn about the volume of guns after the FFL began cooperating?"[12] That was the right question, at the right time, about the wrong case.  It was too late to stop gunwalking in Wide Receiver.  However, Fast and Furious was still very active.  By that time, 1,228 weapons had been purchased by the straw buyers in Fast and Furious, and hundreds had been recovered in Mexico.  Gun dealers were giving ATF real time notice each time the straws bought another batch of guns.  As one of the ATF agents testified before the House Committee, "This wasn't a who done it."[13] Yet the criminals were allowed to keep breaking the law, all in the hopes of catching bigger fish.

In March 2010, the Attorney General's current chief of staff, then the No. 2 individual in the department as the Deputy Attorney General, received a personal briefing on Fast and Furious.[14] The briefing included a presentation detailing the numbers of firearms each straw buyer had purchased up to that point, including 313 by one and 241 by another.[15] The presentation explained that those two straw buyers had spent almost $214,000 and $140,000, respectively, on the weapons.[16] A copy of the Deputy Attorney General's presentation includes his handwritten notations.  One said, "all cash," which is a typical red flag of straw buying.[17]

The Deputy Attorney General also wrote such detail in his notes as "followed to 3 stash houses."[18] Yet the presentation also clearly included a map that he labeled "seizures in Mexico."[19] Didn't he stop to question how these weapons were going from being under surveillance at stash houses in the U.S. to being recovered in Mexico?  Didn't he ask why search warrants or other techniques could not have been used to seize the weapons and prevent them from being trafficked to Mexico?  Or was the strategy of "allowing the transfer of firearms to continue to take place" explained to him?[20]

That's how it was described in other briefing papers prepared by ATF, and one of the emails transmitting that paper said it was "likely to go to the DAG [Deputy Attorney General]."[21] The ATF strategy was clearly documented.  Agents were even forbidden to stop and question the straw buyers for fear that it would scare them off and stop further straw buying at the cooperating gun dealers.

In the same time period the Deputy Attorney General received such a detailed briefing, the Justice Department's Criminal Division in Washington, D.C. assigned a prosecutor  to Fast and Furious as the result of a direct request from ATF Director Melson to Mr. Breuer.[22] Simultaneously, Mr. Breuer's deputies and the Justice Department Office of Enforcement Operations reviewed and approved detailed wiretap applications for Fast and Furious.  Mr. Breuer and his deputies were quick to recognize gunwalking in a Bush-era case and ask all the right questions.  Yet, tell-tale information was right under their very noses that the same field division was doing it again, and Mr. Breuer claims he didn't make the connection.[23]

Mr. Breuer admitted before this committee last week that that very same deputy who informed him of gunwalking in Wide Receiver also approved at least one of the wiretap applications in Operation Fast and Furious.[24] As Mr. Breuer himself said, "The Congress made clear in law that wiretaps on telephones are an extraordinarily intrusive technique."[25] Thus, wiretap applications are extremely detailed documents.  In order to justify tapping the phone of a private citizen, the law requires that law enforcement agencies show that they have tried everything else first. Agencies have to explain the techniques they have tried or considered in order to explain to the court why a wiretap is the only way to get the evidence needed for prosecution.  The Justice Department is supposed to review those claims to make sure they are legally sufficient.

But the very same facts that would show the need to obtain the wiretap would also show that the Justice Department knew these individuals were trafficking weapons.  Indeed, the goal of the wiretap was to identify other co-conspirators.  That's all well and good, but they should have stopped the flow of guns in the meantime. Anyone reviewing the affidavits would likely know that was not happening.

The Justice Department has now produced 10 memos about Operation Fast and Furious received by the Attorney General from March to November 2010, including two he did not reference in his October 7, 2011, letter to Congress.[26] Additionally, the Office of National Drug Control Policy recently produced another three memos addressed to the Attorney General on the issue, bringing the count to 13.[27] These additional three memos were also not included in the Attorney General's October 7 letter.  The memos describe the government's knowledge that straw buyers were responsible for the purchase of over a thousand firearms and that the guns were being supplied to Mexican drug trafficking cartels.  The Attorney General has said that since he does not have time to read the memos he receives, these memos were read by his staff instead.[28] I look forward to hearing today who on his staff did read them, who was responsible for overseeing the case, and why it was deemed unworthy of his attention.

I am also interested to hear when the Attorney General learned of the connection between Operation Fast and Furious and the weapons found at the scene of Border Patrol Agent Brian Terry's death.  The Attorney General's then-Deputy Chief of Staff Monty Wilkinson, spoke with U.S. Attorney Dennis Burke about Operation Fast and Furious the very day that Border Patrol Agent Brian Terry died.[29] Did he learn of the connection between Fast and Furious and Agent Terry's death and bring it to the Attorney General's attention?  Then-Acting Deputy Attorney General Gary Grindler found out within 48 hours of Agent Terry's death of the connection to Fast and Furious.[30] Just two weeks after that, the Attorney General announced that Mr. Grindler would be his new Chief of Staff.  Did Mr. Grindler bring the connection between Fast and Furious and Agent Terry's death to the Attorney General's attention?

One month ago Attorney General Holder finally acknowledged that Operation Fast and Furious was flawed.[31] Yet he said on September 7 of this year:

[T]he notion that somehow or other that this thing reaches into the upper levels of the Justice Department is something that at this point I don't think is supported by the facts.  And I think as we examine and as all the facts are in fact revealed, we'll see that is not the case.[32]

I look forward to closely examining this claim with Mr. Holder today.

I would also add that those who seek to use this tragedy to call for new gun control should note that many of the individuals involved in Fast and Furious should have been indicted and arrested nearly a year before they were.  While trafficking in firearms is a real problem in Mexico, blaming our Second Amendment freedoms in the U.S. isn't accurate and won't fix anything.

Countless stories have documented the weak controls of U.S.-made weapons in Central American nations which has been a source for firearms in Mexico.  Other sources, such as weapons that walk off Mexico military bases, pose a problem too.

So, to say that guns in Mexico are "sourced" to the U.S. just because they were made here is misleading.[33] It doesn't mean that they were ever sold in a retail gun store in the U.S.  The faulty statistics include U.S. weapons sold to the military in Mexico, weapons that were transferred into Mexico years ago, guns from Fast and Furious, and many other sources.

More accurate statistics breaking down what is really known about the sources of guns in Mexico would help, and I urge the Attorney General to provide these more detailed breakdowns. As we learn more about the utter failure to enforce our existing gun laws in Fast and Furious, I'm eager to hear from Attorney General Holder who he plans to hold accountable. I also want to know how he plans to prevent another tragedy like this in the future.

Let me be clear.  The bottom line is that it doesn't matter how many laws we pass if those responsible for enforcing them refuse to do their duty?as was the case in Fast and Furious.


[1] Letters from Senator Charles E. Grassley to Kenneth Melson, Acting Director of the ATF (Jan. 27, 2011, and Jan. 31, 2011).

2 Id.

3 Letter from Ronald Weich, Asst. Att'y Gen, U.S. Dept. of Justice, to Senator Charles E. Grassley (Feb. 4, 2011) .

4 Id.

5 Email from George Gillett to David Voth, Oct. 05, 2010, HOGR DOJ 001349-001352 (Attachment 1).

6 Joint Staff Report, The Department of Justice's Operation Fast and Furious: Accounts of ATF Agents, at p. 19 (June 14, 2011).

7 Combatting International Organized Crime: Hearing Before the Subcomm. on Crime and Terrorism of the S. Comm. on the Judiciary, 112th Cong. (2011) (statement of Lanny Breuer, Asst. Att'y Gen.).

8 Letter from Ronald Weich, Asst. Att'y Gen., Department of Justice, to Senator Patrick J Leahy (Oct. 31, 2011).

9 Id.

10 Id.

11 Combatting International Organized Crime: Hearing Before the Subcomm. on Crime and Terrorism of the S. Comm. on the Judiciary, 112th Cong. (2011).

12 Email from Jason Weinstein to Kevin Carwile, Mar. 16 2010, HOGR DOJ 003438 (Attachment 2).

13 Operation Fast and Furious: The Other Side of the Border: Hearing before the H. Comm. on Oversight and Government Reform, 112th Cong. 128-129 (2011) (statement of Carlos Canino, ATF Acting Attache to Mexico).

14 ATF Monthly Meeting with the Acting Deputy Attorney General, HOGR DOJ 002817-002823 (Mar. 12, 2010) (Attachment 3).

15 Id.

16 Id.

17 Id.

18 Id.

19 Id.

20 Email from George Gillett to David Voth, Oct. 05, 2010 (Attachment 1).

21 Id.

22 Email from Kenneth Melson to Lanny Breuer, Dec. 04, 2009, HOGR DOJ 2730 (Attachment 4).

23 Combatting International Organized Crime: Hearing Before the Subcomm. on Crime and Terrorism of the S. Comm. on the Judiciary, 112th Cong. (2011).

24 Id.

25 Id.

26 Memorandum to the Attorney General from Kenneth Melson, HOGR DOJ 003270-003271 (Mar. 01, 2010); Weekly Report to the Attorney General from Lanny Breuer,  HOGR DOJ 003263 (Oct. 25, 2010) (Attachment 5).

27 Weekly Memoranda to the Attorney General from NDIC, ONDCP F&F 000134-000137, 000183-000187, 000205-000208  (Attachment 6).

28 Letter from Attorney General Eric Holder to Chairman Issa, et al.  (Oct. 7, 2011).

29 Email from Monty Wilkinson to Dennis Burke, HOGR USAO 003073-003074 (Dec. 14, 2010) (Attachment 7).

30 Email from Brad Smith to Gary Grindler, HOGR DOJ 002875-2881 (Dec. 17, 2010) (Attachment 8).

31 Letter from Attorney General Eric Holder to Chairman Issa, et al.  (Oct. 7, 2011).

32 Carrie Johnson, Holder Takes Heat Over 'Fast And Furious' Scandal, NPR (Oct. 6, 2011) available at

33 Letter from Senator Charles E. Grassley to Acting Director Kenneth Melson (June 16, 2011) (Attachment 9).

WASHINGTON - Senator Chuck Grassley is leading a group of 14 senators raising concerns about press reports indicating that the U.S. Border Patrol have been directed to stop routine searches of transportation devices entering the United States.

The senators wrote to Department of Homeland Security Secretary Janet Napolitano that the "News of the lessened security will only entice potential terrorists, drug smugglers, and illegal immigrants to attempt to enter the country through the northern border.  The American people must be reassured that our borders remain secure and routine searches will continue."

The senators also noted that routine searches have resulted in the arrest of several people prepared to cause harm to the United States, including Ahmed Ressam who was entering the United States by ferry with a car packed with explosives.

Signing the letter with Grassley were Susan Collins of Maine, Mike Crapo of Idaho, Saxby Chambliss of Georgia, Mike Johanns of Nebraska, Jeff Sessions of Alabama, Johnny Isakson of Georgia, Olympia Snowe of Maine, David Vitter of Louisiana, John Boozman of Arkansas, Orrin Hatch of Utah, Jim DeMint of South Carolina, James Risch of Idaho and John Cornyn of Texas.

Here's a copy of the text of the letter.  A copy of the signed letter can be found here.


November 4, 2011

The Honorable Janet Napolitano

Secretary, Department of Homeland Security

Washington, D.C. 20528


Dear Secretary Napolitano:

We write with great concern regarding recent press reports that the U.S. Border Patrol has been directed to stop its routine searches of buses, trains and other vehicles entering the United States through the northern border and parts of the interior.  Such a directive to the field not only would pose an increased national security threat, but would also encourage an increase in the flow of undocumented individuals, weapons and drugs entering our country.

According to press accounts, border agents state that routine searches account for much of their days with often positive results.  Most notably, a 1997 check of the Bellingham, Washington bus station netted the arrest of Palestinian Gazi Ibrahim Abu Mezer, who was later shot in New York as he prepared to attack the city with a bomb.  In 1999, a routine search led to the arrest of Ahmed Ressam, who had taken a ferry from British Columbia to Washington in a car packed with explosives.  These incidents should serve as a stern warning that the security of our Nation cannot be compromised.

If such a directive has, in fact, been ordered, it is concerning on many levels.  This Administration has long touted a strengthened border, but doing away with routine searches of people and goods would indicate a willingness to gamble with the public's safety.  News of the lessened security will only entice potential terrorists, drug smugglers, and illegal immigrants to attempt to enter the country through the northern border.  The American people must be reassured that our borders remain secure and routine searches will continue.

The nature in which we learned of the orders sent to the northern border field offices is quite troubling considering you appeared before both the Senate and House Judiciary Committees over the past two weeks and neglected to inform Congress of this change in policy.  If agents have been directed to cease these routine searches, we would like a copy of any memo, communication or direction to the field on this matter.  We also would formally request you rescind any directive that reduces the screening performed along the northern border.

Because of the urgent nature of this subject, we request a response by Monday, November 7, 2011.  We appreciate your cooperation.


Senator Charles Grassley

Friday, Nov. 4, 2011

Sen. Chuck Grassley of Iowa made the following comment on whether Gary Gensler, the chairman of the U.S. Commodity Futures Trading Commission, should recuse himself from matters related to MF Global Holdings Ltd., the fund that was run by former New Jersey Gov. Jon Corzine, in light of media reports outlining close, longstanding ties between Gensler and Corzine.  Media reports say Gensler and Corzine "rose through the ranks" together at Goldman Sachs Group Inc. for 18 years and collaborated on Capitol Hill when Corzine was a senator and Gensler was a staffer.

"The chairman of the U.S. Commodity Futures Trading Commission is supposed to look out for investors.  MF Global's case is a big collapse that requires a lot of work from the commission to try to figure out what went wrong and minimize further investor losses if possible.  It's hard to see how the commission chairman could be completely objective in looking out for wronged investors when he has such strong ties to the principal of the failed firm.  It seems recusal would be the best outcome for investors."

During his weekly video address, Senator Chuck Grassley discusses the National Heart Gallery Exhibit that he co-hosted with Senator Mary Landrieu. The National Heart Gallery Exhibit showcases photos of foster children across our nation in need of "forever families" through adoption.

Click here for audio.

Here is the text of the address:

There are 107,000 kids in foster care waiting for adoptive families.  This month, a presidential proclamation launches activities nationwide to help build awareness for adoption of children and youth from foster care.

One of those events is the National Heart Gallery Exhibit.  There are nearly 100 Heart Galleries across the country.  These galleries are traveling photographs of children in foster care who want "forever families."  One of those galleries was unveiled on Capitol Hill this week, and Senator Mary Landrieu of Louisiana and I co-hosted the unveiling to help to build support.

I've worked to pass legislation that's on the books and making it easier for children in foster care to be adopted into permanent, loving homes, including with grandparents.  And I've worked to make legislative improvements in the foster care system.  Expanding on those efforts, two years ago, Senator Landrieu and I put together a Foster Youth Caucus in the Senate to focus on helping young people when they age out of the foster care system, typically at age 18.

As many as 29,000 children age out every year without ever having found an adoptive placement, and without the security of a family, they often end up in very bad situations.  Adoption can help to determine another outcome.  I will continue to do whatever I can to help promote adoptions.

National Adoption Month started as national adoption week in Massachusetts in 1976.  President Reagan proclaimed the first National Adoption Week in 1984, and in 1995, President Clinton made it an entire month.

Today, National Adoption Month is an opportunity to put a special focus on the kids waiting for adoptive families.


WASHINGTON -- Sen. Chuck Grassley of Iowa since April 27 has sought information from the Federal Communications Commission (FCC) that would shed light into the process of the agency's fast-tracking of the LightSquared broadband project. The agency has stonewalled his various requests.  As a result, Grassley today put a statement in the Senate record stating that he will hold up the two pending nominees for commissioner positions at the agency when the nominations reach the Senate floor unless the agency begins to offer more information that will provide transparency into the public business it conducts.

Here is the text of Grassley's statement in the record.

"Mr. President.  I, Senator CHUCK GRASSLEY, intend to object to proceeding to the nomination of Jessica Rosenworcel and Ajit Pai to be commissioners of the Federal Communications Commission for the following reason.

"I will object to proceeding to the nomination because the FCC continues to stonewall a document request I submitted to the FCC over six months ago on April 27, 2011, regarding their actions related to LightSquared and Harbinger Capital.  Since then, I have repeated my request to the FCC through letters I sent on July 5th and September 8th and the FCC continues to deny my request for documents.

"During the course of my correspondence with the FCC, the FCC has made it clear that it will not voluntarily turn over documents to the 99.6 percent of the Members of Congress and Senators who do not chair a committee with direct jurisdiction over the FCC.  As I said in my September 8, 2011, letter, their actions are misguided and unsupportable.

"It not only sets a dangerous precedent for a federal agency to unilaterally set the rules on how it engages with Congress -- it also prevents any meaningful ability for the vast majority of Congress to inform themselves of how an agency works.

"Several months ago, I had to take similar action when I supported Senator Chambliss' hold of James Cole's nomination to be Deputy Attorney General in order to get documents from the Department of Justice.  In the end, the documents we uncovered shed light on the Department's actions regarding Operation Fast and Furious and the murder of Agent Brian Terry.

"I strongly believe that it is critical for Congress to have access to documents in order to conduct vigorous and independent oversight.  It is unfortunate that this administration, which has pledged to be the most transparent in history, disagrees.  As long as they continue to do so, I will be forced to take steps like this in order to ensure that Congress receives a complete picture of this administration's actions."

Grassley has pressed the FCC to explain why it decided to fast-track LightSquared's licensing process amid a series of red flags.  These include warnings that LightSquared's interference with Global Positioning System (GPS) signals would cause major problems --  including risks to public safety in the case of aviation -- by jamming GPS use in precision farming, trucking, air travel, law enforcement, by the military and in general consumer navigation.  Another concern is that the head of Harbinger, the hedge fund behind the project, told investors that his firm is under investigation by the Securities and Exchange Commission for allegations of market manipulation, according to media reports.  The firm has been the subject of considerable media attention for losing large amounts of money and other controversies including whether the firm should have told investors in a timely fashion about a $113 million loan it extended to the principal of the firm.

Media reports also have quoted emails between LightSquared and senior White House aides, showing that LightSquared representatives cited political connections and friendships to get an audience with White House staff, including referring to a fund-raiser for the President.  "Political connections don't necessarily drive policy decisions, but in the absence of transparency at the FCC, it's impossible to know one way or the other," Grassley said. 
"The FCC's refusal to make documents public continues to give the appearance that there's something to hide."

Here is more detail on the nominees Grassley intends to hold when the nominations reach the Senate floor:

Nominee: Jessica Rosenworcel, of Connecticut, to be a Member of the Federal Communications Commission for a term of five years from July 1, 2010, vice Michael Joseph Copps, term expired. Received: November 01, 2011.  Referred: Senate Commerce, Science, and Transportation. Latest Action: November 01, 2011 - Received in the Senate and referred to the Committee on Commerce, Science, and Transportation.

Nominee: Ajit Varadaraj Pai, of Kansas, to be a Member of the Federal Communications Commission for a term of five years from July 1, 2011, vice Meredith Attwell Baker, term expired. Received: November 01, 2011.    Referred: Senate Commerce, Science, and Transportation.  Latest Action: November 01, 2011 - Received in the Senate and referred to the Committee on Commerce, Science, and Transportation.

The details of Grassley's inquiries to the FCC over LightSquared are available herehere and here.



Open government advocates complained that "lying" diminished integrity of federal government

WASHINGTON - After hearing objections raised by Senate Judiciary Committee Ranking Member Chuck Grassley about the Department of Justice's proposal to make potentially misleading statements to Americans submitting Freedom of Information Act, or FOIA, requests if the documents are deemed by the agency as inappropriate to release, the department is now saying that they are pulling the proposed regulation.

Grassley said that while the proposed regulation is being stopped, there remain questions about how agencies handle these requests.  He said that there's a balance that needs to be struck between ensuring national security or other sensitive requests and the public's right to know.

"The Justice Department decided that misleading the American people would be wrong, and made the right decision to pull the proposed regulation.  The American people are increasingly cynical with the federal government, and increasing transparency can be an important tool to build more trust," Grassley said.  "In other words, the public's business ought to be public."

The controversy stems from recent reports that the Justice Department was considering changing existing FOIA regulations to allow agencies responding to a FOIA request to state that no records exist, even if the records do, in fact, exist, whenever they determine that the requested documents they possess fit within a certain exclusion of the law.

In response to the Justice Department's proposal, Grassley wrote to Attorney General Eric Holder expressing concern and asking for additional information about the proposed changes.

Grassley wrote in his letter to the Attorney General, "The new proposed regulation stands in stark contrast to both the President's and your prior statements about FOIA, transparency, and open government.  In fact, this policy directly contradicts your many statements, to me and other members of the Judiciary Committee, as part of your nomination hearing, that you support transparency of the Executive Branch."

Grassley has championed the public's right to know by strengthening and reforming sunshine laws, including oversight and enforcement of the FOIA, and measures to protect watchdogs and whistleblowers.

A signed copy of Grassley's October 28, 2010 letter can be found by clicking here.

The response from the Justice Department can be found here.



Click Here for the video of Senator Grassley questioning Assistant Attorney General Lanny Breuer regarding his knowledge of gunwalking being allowed by the ATF at the hearing.

Click Here for the Documents Senator Grassley Provided at the Hearing.

Prepared Statement of Ranking Member Chuck Grassley

Senate Committee on the Judiciary

Subcommittee on Crime and Terrorism

"Combating International Organized Crime: Evaluating Current

Authorities, Tools and Resources"

Tuesday, November 1, 2011

Yesterday Assistant Attorney General Breuer made a public statement regarding an ATF case known as Operation Wide Receiver.  In the statement, he said:

"When the allegations related to Operation Fast and Furious became public earlier this year, the leadership of ATF and the U.S. Attorney's Office in Arizona repeatedly assured individuals in the Criminal Division and the leadership of the Department of Justice that those allegations were not true."

The Justice Department officially assured me that the allegations were not true.  On February 4, 2011, the Department sent me a letter that read: "ATF makes every effort to interdict weapons that have been purchased illegally and prevent their transportation to Mexico."  However, as Mr. Breuer's admissions in yesterday's statement made clear, the Department's claim was not true.

According to documents received last night, Mr. Breuer's deputy asked the most basic question of Wide Receiver that anyone should have known to ask of Fast and Furious upon becoming aware of the number of guns involved: "[D]id ATF allow the guns to walk, or did ATF learn about the volume of guns after the FFL began cooperating?"  In Operation Wide Receiver, around 300 guns were walked by ATF.  In Fast and Furious, just 5 of the straw buyers were allowed to purchase nearly 1000 guns while an FFL was cooperating, while being watched by ATF, while their phone calls were being monitored by a wiretap approved by Justice Department headquarters, and while a prosecutor from headquarters was assigned to the case.

The headquarters prosecutor was assigned to Fast and Furious because of an email that ATF Director Ken Melson sent Mr. Breuer in December 2009.  Director Melson requested an attorney to work with ATF Phoenix Field Office on a case.  Mr. Breuer said it was a "terrific idea" and assigned someone from the Gang Unit by March 2010.

That same month, Deputy Attorney General Gary Grindler?now the Attorney General's Chief of Staff?was being briefed in person on investigative details of Fast and Furious.  The briefing included a very detailed PowerPoint presentation from ATF, and Mr. Grindler made a number of hand-written notes on a print-out of the PowerPoint.  The PowerPoint included such details as the fact that by March 12, one straw buyer had already bought as many guns as were ever walked in Wide Receiver.  The PowerPoint also included a map of where in Mexico guns were being recovered and the amount of money each straw buyer had spent on the gun purchases, most in the tens of thousands of dollars, along with a note from Mr. Grindler saying "all cash."

The American people?and especially the family of murdered Border Patrol Agent Brian Terry?deserve answers from the Justice Department about why they claim they didn't know gunwalking was occurring in Operation Fast and Furious when the department's fingerprints are all over it.


WASHINGTON -- On Oct. 3, Sens. Chuck Grassley (R-Iowa) and Herb Kohl (D-Wis.) wrote to the administrator of the Centers for Medicare and Medicaid Services (CMS), seeking an explanation for the agency's missed deadline for drafting the implementing details of the Physician Payment Sunshine Act (Sunshine Act), a new law requiring public disclosure of the financial relationships between physicians and the pharmaceutical, medical device and biologics industries.  The administrator responded.  The senators made the following comments on the response.

Sen. Grassley comment: "The administrator's response doesn't tell us anything new.  There's no explanation for the delay and no indication of when to expect completion.   It's an inadequate response any way you look at it.  Meanwhile, the U.S. government just settled with a medical device maker for $2.4 million over allegations of kickbacks to doctors to use the company's products.  The payments to doctors are the kind that might be prevented through disclosure as soon as the Sunshine Act is in place.  The longer we wait, the more taxpayers miss out on the benefits.   I'll continue to press for answers from CMS."

Sen. Kohl comment: "Given how straightforward and detailed the Sunshine Act provisions were, it's troubling that the response to our letter would come a month late without any indication on progress, a timeline or what caused the delay.  With medical device and pharmaceutical companies facing the January 1, 2012 deadline to begin collecting information about all payments to physicians, the lack of guidance leaves a great deal of uncertainty and I'm sure that's why many of the affected companies have joined us in calling for swift implementation." 

Here's an article describing the settlement referred to in Sen. Grassley's comment.

Fraud and Abuse

California Medical Device Maker to Pay $2.4 Million to Settle Kickback Charges

By Tom Gilroy

LOS ANGELES–A San Jose, Calif., maker of devices to treat spinal fractures has agreed to pay the United States $2.4 million to settle Department of Justice allegations that the company paid kickbacks to induce physicians to use its products, DOJ said in an Oct. 26 announcement (United States ex rel. Eberhard v. DFine Inc., W.D. Tenn., No. 10-CV-2474, settlement announced 10/26/11).

The settlement, which came as a result of a qui tam whistleblower lawsuit brought under the False Claims Act, resolves the government's contention that DFine Inc. used customer surveys, known as User Preference Evaluations (UPEs), to pay participating doctors illegal kickbacks to induce them to use DFine's vertebral augmentation devices.

"Although DFine ostensibly collected product information from participating physicians, each UPE survey required use of a new DFine device in a patient, the majority of which were Medicare beneficiaries," DOJ noted.

$500 Payment to Fill Out Survey

In each case, DFine paid the physicians $500 per patient to participate in the survey, DOJ added. The government also alleged that DFine provided improper remuneration in the form of travel expenses, lavish dinners, entertainment, and promotional speaker fees to doctors located in Chicago and Little Rock, Ark. DFine also solicited doctors to convert their business from a competitor's product and/or persuaded the physicians to continue to use DFine products, DOJ alleged.DOJ charged that DFine's alleged conduct violated the anti-kickback statute, which prohibits offering or paying remuneration to induce referrals or services covered by Medicare, Medicaid, or other federally funded programs. The lawsuit was filed in U.S. District Court for the Western District of Tennessee. The investigation of the case was handled by the DOJ's Civil Division, the U.S. Attorney's Office for the Western District of Tennessee, and the Office of Inspector General at the U.S. Department of Health and Human Services.

Company Admits No Wrongdoing

In a statement, DFine said it fully cooperated with the investigation and "continues to deny all of DOJ's unproven allegations."The terms of the agreement specifically state that DFINE and its employees admit no wrongdoing, liability or illegal activity," the statement said. "The decision to settle prior to completing the full investigation was a very difficult one, but one we felt was best for the company based upon the significant disruption and associated costs to continue the investigation, as well as the uncertainty regarding its duration."According to the settlement, the company was represented by Leo Cunningham and Lee-Anne V. Mulholland of Wilson Sonsini Goodrich & Rosati. The settlement is at


October, 25, 2011

Senate Judiciary Committee Ranking Member Chuck Grassley made the following statement after the Federal Trade Commission (FTC) released a staff report that found drug companies entered into 28 potential pay-for-delay deals between October 1, 2010 and September 30, 2011.

Grassley, along with Senator Herb Kohl of Wisconsin, is the author of legislation that would end these settlements between generic and brand name drug companies that keep more affordable generics off the market.  The senators also sent a letter to the Deficit Reduction Committee encouraging them to use their legislation as a cost-saving measure.   The Congressional Budget Office estimated that the Grassley-Kohl bill will save the federal government - which pays approximately one-third of all prescription costs - $2.68 billion over ten years.  The Federal Trade Commission estimates that ending these settlements would save consumers who pay for prescription drugs through private insurance or on their own $3.5 billion per year.   The Washington Post also editorialized about the issue today.

Here's Grassley's comment.

"The pay-for-delay tactics employed by brand name and generic drug companies only benefit those companies that engage in such settlements.  It hurts consumers who don't have access to affordable medications, and it hurts taxpayers who pay for prescription drugs in both Medicare and Medicaid.  The FTC's study shows a remarkable continuation of a practice that puts the interests of drug companies above the interests of consumers.  No one has to engage in such deal making at the expense of consumers, and it's time to put an end to it."

According to the FTC staff report, companies reached 156 final patent settlements in fiscal 2011, and 28 of those settlements contained a payment to a generic manufacturer which restricted the generic company's ability to market its product. The FTC went on to say that "Of those 28 settlements, 18 involved generics that were so-called 'first filers,' meaning that they were the first to seek FDA approval to market a generic version of the branded drug, and, at the time of the settlement, were eligible to exclusively market the generic product for period of time." The FTC press release explains that "Because of the regulatory framework, when first filers delay entering the market, other generic manufacturers can also be blocked from entering the market, which makes such patent settlement deals particularly harmful to consumers."


Sens. Franken, Grassley, Lead Bipartisan Group in Pressing for Investigation of Mobile Phone "Stalking Apps" that Allow Abusers to Secretly Track Victims

Senators Ask Department of Justice, Federal Trade Commission to Look Into Legality of Apps

WASHINGTON, D.C.?Today, U.S. Sens. Al Franken (D-Minn.) and Chuck Grassley (R-Iowa) led a bipartisan group of Senators in calling on key federal agencies for an investigation into mobile phone "stalking apps."  The apps are designed to allow domestic abusers and stalkers to secretly track a victim's movement and location, read a victim's email and text messages, or listen to a victim's phone calls?all without the victim's knowledge or consent.

Sens. Franken and Grassley wrote a letter to the Federal Trade Commission and the Department of Justice and urged the agencies to determine whether such apps are legal under current law. The letter was also signed by Sens. Amy Klobuchar (D-Minn.), John Cornyn (R-Texas), Richard Blumenthal (D-Conn.), Lindsey Graham (R-S.C.), Sheldon Whitehouse (D-R.I.), Charles Schumer (D-N.Y.) and Dianne Feinstein (D-Calif.).

"Stalking apps are dangerous," the Senators wrote in the letter. "We ask that you quickly determine if they are also illegal. If so, we ask that the Department of Justice and the Federal Trade Commission use their full force to investigate and prosecute those behind the development and marketing of these products for illegal stalking."

Stalking apps are directly marketed to individuals seeking to secretly track their spouses and intimate partners. "Worried about your spouse cheating?" one apps' website asked, offering the ability to "Track EVERY text, EVERY call and EVERY Move They make Using our EASY Cell Phone Spy Software." Other apps make similar claims, telling users that they can "track her movements throughout the day" or even "tap her actual phone call." According to 2006 Bureau of Justice Statistics data, some 26,000 Americans are victims of GPS stalking annually, including by cell phone?although most advocates believe that number if considerably larger in 2011.

The letter cites an example of a victim from St. Louis County, Minnesota, who was tracked by her abuser through her smartphone during her trips to various county buildings to obtain an Order of Protection against him.  This example was drawn from testimony submitted by the Minnesota Coalition for Battered Women and the National Network to End Domestic Violence to the Senate Judiciary Subcommittee on Privacy, Technology and the Law, which Franken chairs.

You can read the full text of the letter below.


The Hon. Eric H. Holder, Jr.

Attorney General

Department of Justice


The Honorable Jon Liebowitz


Federal Trade Commission


Dear Attorney General Holder and Chairman Liebowitz:

We are writing to express our urgent concern about the proliferation and use of so-called "stalking apps"?mobile apps for cell phones and smartphones that allow a domestic abuser or stalker to continuously and secretly monitor a victim's movements and whereabouts.  Based on 2006 data, the Bureau of Justice Statistics has estimated that more than 26,000 persons are victims of GPS stalking annually, including by cell phone.  Reports from advocates?and the boom in mobile technology?strongly suggest that this figure is much higher in 2011.  We ask that your agencies investigate whether the developers and distributors of stalking apps are in compliance with all applicable federal criminal and consumer protection laws.

In testimony submitted for a May 2011 hearing before the Senate Judiciary Subcommittee on Privacy, Technology and the Law, the Minnesota Coalition for Battered Women and the National Network to End Domestic Violence recounted the disturbing experience of a Minnesota woman who was stalked through her smartphone:

In a recent case in Northern St. Louis County, MN, an advocate reported that a woman who entered the domestic violence program located within a county building received a text message from her abuser within five minutes of entering the building. The abuser asked why she was in the county building. The woman was extremely frightened and the advocate helped her obtain an Order for Protection (OFP) at the local courthouse. After filing the OFP, the woman received another text message asking why she went to the courthouse and if she was filing an OFP against him. The only device the woman had on her was her smart phone and they later concluded that her abuser was tracking her via a location tracking application or service on her phone.

This excerpt reflects just one example of numerous cases of stalking through mobile devices.

Stalking applications are widely available and simple to install, usually by a spouse or intimate partner.  Anyone who leaves their mobile phone alone for five minutes could have stalking software installed without their knowledge. See Ben Goldacre, "How I Stalked My Girlfriend," The Guardian (Jan. 31, 2006).  Once installed, stalking apps can allow an abuser to listen to his victim's phone calls, read her emails and text messages, and track her real-time GPS location?entirely without the victim's knowledge or consent.

These apps are openly marketed to individuals who are trying to stalk or "spy" on an unwitting victim.  "Worried about your spouse cheating?" one app's website asks.  "Track EVERY text, EVERY call and EVERY Move They make Using our EASY Cell Phone Spy Software." Another app brags that its software will "turn a mobile into a secret gps [sic] tracking device." Still another site advertises that it will allow a user to "[t]rack her movements throughout the day," "[k]now what number she is calling or receiving," and even "tap her actual phone call."

Location-based services (LBS) offer consumers numerous benefits.  They help users navigate commutes and avoid traffic, help locate lost or stolen wireless devices, and also help parents keep track of their families.  Indeed, most major wireless carriers offer their customers legitimate services that allow them to track the locations of the users of their calling plans?especially minor children.  While these services can be abused by individual customers, all major carriers take precautions pursuant to voluntary industry guidelines to notify a wireless user that he or she is being tracked through one of these services.

In contrast, stalking apps abuse and misuse LBS to affirmatively facilitate stalking.  Indeed, these apps are designed to run secretly on a victim's phone and are actually marketed to abusers as being "undetectable."  While many of these apps also advertise themselves as a mechanism for parents to keep tabs on their minor children, their design and marketing suggests that this is an attempt to legitimize an otherwise suspect activity.  We believe that in most cases, stalking apps' intrusion into victims' privacy and their potential for abuse will far outweigh any legitimate purpose that these apps may serve.

Stalking apps are dangerous.  We ask that you quickly determine if they are also illegal.  If so, we ask that the Department of Justice and the Federal Trade Commission use their full force to investigate and prosecute those behind the development and marketing of these products for illegal stalking.