Commission Sensitive

MEMORANDUM FOR THE RECORD

WILLIAM YATES
ASSOCIATE DIRECTOR, OPERATIONS, CIS/DBA
DON CRUCETTI
DIRECTOR - FRAUD DETECTION AND CUSTOMER SERVICES

Event: Interview of Citizenship and Immigration Services, DHS

(Pre 9-11-current)
Date: Friday, February 22, 2003
Special Access Issues: None
Prepared by: Walter T. Hempel
Team Number: 5 (Border Security)
Location: CIS Headquarters, 20 Massachusetts Ave, Washington, DC
Participants - Non-Commission: William Yates, CIS/DHS
Louis D. Crucetti CIS/DHS
Karen Fitzgerald CIS/DHS
Peter Gregory, Assistant Counsel, CIS/DHS

Participants - Commission: Janice Kephart-Roberts, counsel

Susan Ginsburg, senior counsel
Walt Hempel, staff member

Note: no classification required

Documents provided or requested. Requested: Percentage of fraud by application type,
number of IBIS hits, number of IBIS hits that indicate a possible terrorist threat, draft of
CIS/ICE MOU on use of ICE special agents to investigate fraud cases

Recording: no
NOTES:

Mr. Yates stated that the Director of Citizenship and Immigration Services (CIS),
Eduardo Aguirre, established three priorities for CIS: reduce processing time to six
months for most applications, improve customer services and enhance national security.
CIS is trying to meet these goals but has not had any significant increases in staffing.
CIS is to be supported by fees for service and no appropriations are in the FY '05 budget
except for backlog reduction. The Office of Management and Budget (OMB) would like
to establish a new fee schedule as it believes that the current funding mechanism is
broken.

On February 2, 2004, CIS released a budget request for FY '05 of $1,711 billion. It
requested a 60% increase in funds to reduce the backlog. This budget reflects an increase
of S60 million over FY'04.

BACKLOG REDUCTION

Citizenship

The current backlog for naturalization benefits is 621,794 applications (as of September,
2003). Although the number of applications has decreased from 2002, the number of
applications processed has decreased by a similar amount. Therefore the backlog for
2002 and 2003 is about the same. Time and motion studies were conducted in 1997 to
determine the fee structure for naturalization applications. CIS is to be totally funded by
fees after FY '04. CIS receives all fees for applications except for those filed in the
Virgin Islands or Guam. These fees are returned to the governments of these two
territories.

In 1999, the INS made the reduction of the naturalization backlog a top priority. As of
February, 1999, there were 1.8 million form N-400s (Application for Naturalization)
pending. This was due to the rapid increase in the number of applications filed. During
the mid to late '80s, naturalization applications averaged about 225,000 a year. In the
early!990's, the number of applications increased to millions per year. In 1996 and
1997, there were approximately 1.6 million new naturalization applications per year.

There are many reasons for this increase in applications. The legalization program of
1986 gave legal resident status to millions of illegal aliens. This allowed them to file for
citizenship after being a legal permanent resident for five years. Mexico changed its laws
to allow its citizens to be dual nationals, citizens of both the United States and Mexico.
Previously if a Mexican citizen naturalized in the United States, they lost their rights to
owning property in Mexico. They could now also vote in both countries. The state of
California passed a referendum, Proposition 197, which would have restricted state and
local benefits to some aliens. (Although this action has been blocked by the courts, many
aliens decided to legalize their alien status.)

Nationalization services staffing could not keep up with the escalation of applications.
There was also a lack of uniformity in processing times and decision making at the many
local offices handling these cases. The decision was made to centralize the application
process by having most of the applications sent to four Service Centers. These were
designed to reduce the backlog by handling the applications more efficiently. Each center
serviced a specific geographic area.
However with no staff increases at the Service Centers, the processing times began to
slip. The public began to complain about the length of time it took to complete an
application. A series of administrative decisions were made that cut processing times.
There was still a backlog but more applications were being completed and the goal was to
process most applications within 60 days. Again the backlog began to be reduced.

Immigration Benefits

The problem of lengthy processing times is not limited to applications for naturalization.
Applications for other immigration benefits were also backlogged. As of September,
2003, there was a backlog of 5,510,553 pending applications. The volume of
applications increased by 25% from 2002 to 2003. Again the increase was due to the
large number of aliens requesting adjustment within the United States or qualifying for
immigrant visas to enter the United States from abroad. These applications range from
immigrant visas based on family relationships to extensions of stay for non-immigrant
visitors. The processing time for each type of application is influenced by volume, the
priority it is assigned and staffing levels at the Service Centers.

Mr. Yates stated that the current "green card" still says INS/Department of Justice. CIS
is in the process of designing a new DHS version. The current cards are expensive and
difficult to produce. The change over to the new "green card" will occur when the new
card design is approved, the production facility is operational and the old card stock has
been depleted.

National security is a prime consideration in any backlog reduction plan. No one wants
to be the person who approved the paperwork for a terrorist. This means that there is less
discretion in the processing cases. Applications which previously may have been
approved through a broad interpretation of regulations are now being denied.

The events of 9/11 caused INS to look at what security background checks were being
conducted. The controversy of the post humorous sending of the approved student I-20s
to the 9/11 hijackers Atta and Al-Shehhi further focused the issue. Processing times have
to be balanced with the needs of national security.

BACKGROUND CHECKS

Under INS Commissioner James Ziglar, a risk assessment of the naturalization process
was conducted. A number of areas of vulnerability were identified. No one document
covers the results of the study. The extent of the background checks conducted by CIS
are determined by regulation and the possible risks posed by the type of application.
Naturalization which gives United States citizenship to an alien requires more
background checks then a visitor who wants to stay in the United States a few months
more.
 IBIS

Before 9/11, only selected applicants were checked against IBIS (Interagency Border
Inspection System). The IBIS system combines some of the State Department, former
Customs and former INS lookout databases. When IBIS checks were made mandatory,
some local INS offices were unable to check IBIS since they didn't have access to TECS
(Treasury Enforcement Computer System). Now the Service Centers check all names,
petitioners and beneficiaries, through IBIS. This has added to the application processing
time and backlog reduction has stalled. IBIS does not contain all names from all watch
lists.

NAME CHECKS

Federal Bureau of Investigation

Previously, INS had an MOU with the FBI to return name checks within a certain amount
of time. Most were returned within 60 days. If there was some possible interest in the
individual, the response could take up to 180 days. If a possible criminal record was
found, the case had to be reviewed by an INS supervisor before setting up the
naturalization or benefit interview.

There are limitations to the FBI name check. In one case, CIS was told that they had
naturalized a terrorist suspect. A review of the FBI name check records showed that the
FBI had twice returned a "no record" on the subject. Consultation with the FBI revealed
that the FBI never checked the name against the corporate side of their database. This
meant that all the previous name checks may have been invalid. Also if the FBI had an
applicant under investigation, it did not notify CIS of this fact. As a result of this
discovery over 3.2 million names had to be rerun through the FBI.

Today the name checks are conducted at the same time the APIS (Automated Fingerprint
Identification System) fingerprints are submitted. Each FBI name check is logged in and
tracked until a response is received. Most name checks are now returned within 2-48
hours.

Central Intelligence Agency

A copy of the G-325 (Biographic Information) has always been sent to the CIA. Prior to
9/11, the CIA name check was not tracked. Post 9/11, the CIA name check is tracked
and positive "hits" are forwarded to DHS/ICE (Immigration and Customs Enforcement).
There the NSU (National Security Unit) within the Investigations Branch analyses the
information.

9/11 Law Enforcement Sensitive

9/11 Law Enforcement Sensitive

CIS has taken a position that it will not approve an application on anyone who is under
investigation by the FBI or CIA for terrorism, drug trafficking or criminal activity. CIS
has limited authority in these cases particularly when the information falls within the
intelligence community. Applicants can take CIS to court and respond to derogatory
information. In the worst case, CIS may have to grant the benefit but CIS will not issue
the form 1-551 (Green Card). These are difficult cases for CIS to resolve.

Name Variations Make Name Checking Difficult

Much of the problem with name checks is the variety of name variations. Many foreign
born individuals have different spellings of their names. This may be due to the different
systems of transliteration used to convert to names to English. For example Chinese or
Arabic names can be difficult to convert to English. In some cultures, names change with
age or marital status or family position. Government agencies may misspell names on
passports, identification cards or visa.

As an example of this, Mr. Yates stated that after 9/11 there was an urgent effort to
identify any INS records relating to the nineteen hijackers. A study concluded that there
were 255 variations of the nineteen hijacker names. The National Security Unit ran all
possible names against the INS automated systems. There were 3.2 million possibly
related files.

TIPOFF and the TSC (Terrorist Screening Center)

CIS has access to the TIPOFF watch list through IBIS. CIS would like to see all terrorist
watch lists consolidated into the TSC. CIS could then go through the TSC and not have
to go to the CIA. Mr. Yates feels that this would reduce the wait time for responses. A
copy of the G-325 (Biographic Information) would still be provided to the CIA. There
have been discussions on this issue with the ICE Director of Operations, Michael T.
Dougherty.

ELECTRONIC FILING

The following forms can be filed electronically:

1-129, used to classify a non-immigrant worker seeking status as an alien in a specialty

occupation, an alien of extraordinary ability or achievement or an alien who is an
internationally recognized athlete, artist or entertainer.
1-140, a petition for an immigrant worker

1-539, application for non-immigrants requesting a change of non-immigrant status or

extension of stay

Aliens seeking TPS (Temporary Protected Status) may also file their initial claim via the
internet.

1-907, a request for premium service (requires the payment of an additional fee of $1,000)
to expedite case processing

In some cases an application can be filed electronically but the applicant will have to be
processed and/or interviewed at an ASC (Application Support Center). The ASC also
takes the digital photograph, fingerprints and digital signature. This prevents someone
from submitting a fingerprint card in their name but with the fingerprints of someone who
does not have a criminal record. The ASCs are located in metropolitan areas. They
operate by appointment and may be a distance from the applicant's residence.

CIS plans to expand the number of forms that can be filed electronically. Paper forms
must be converted into an electronic format to be handled efficiently. About 80% of all
applications are eventually captured electronically. These applications are maintained in
the CLAIMS 3 (Computer Linked Application Information Management System)
database. The CLAIMS 3 database has some links to the US VISIT Entry-Exit system
through name checking. However, at the present time the two systems are not connected
through biometrics. This could present problems. US Visit will in the future capture two
fingerprints and a photo of some aliens who depart the United States. CIS may not know
when an alien with a pending application leaves the United States. Applications are
considered abandoned in these cases and should be denied. This was the case with the
change of status applications for 9/11 hijackers Mohammed Atta and Marwan al Shehhi.
Both left the country but their applications for vocational student status were not denied
as the adjudications branch was unaware of their departures.

CIS is in the process of designing and building a new database.

BIOMETRICS

Biometrics offer the best way to insure that an alien only has one identity with CIS. The
current biometric for all of CBP (Customs and Border Protection), ICE, and CIS is
fingerprints. In most cases one or both index fingers of an applicant are captured
electronically. These are flat prints, not rolled fingerprints which go from nail edge to
nail edge. Flat prints capture a smaller fingerprint area. This reduces the amount of
information to be stored but also limits the minutia points that can be compared. The FBI
requires a standard rolled ten finger print for identification. The two flat finger
impressions are used by an APIS (Automated Fingerprint Identification System) system
utilizing advanced matching technology to verify identity. A digital photograph is also a
9/11 Law Enforcement Sensitive

part of the IDENT system. This photograph assists in identification when the search
returns multiple possible records.

Note: The IDENT (INS Automated Biometric Identification System) utilizes two flat
index fingerprints. IDENT is an inkless system that is used to collect two fingerprints
from aliens who are arrested for immigration violations, some applicants for immigration
benefits, persons entering the United States under the US Visit program and persons who
were registered under the NSEERS (National Security Entry Exit Registration System )
program The FBI also contributes some criminal alien fingerprints to IDENT but only
the two index fingerprints which are stripped from the FBI ten fingerprint cards and
converted into the IDENT format. | ~]

' I
Some applications such as political asylum and naturalization require that all ten fingers
be printed and submitted to the FBI fingerprint division for a search. These are checked
against the FBI criminal fingerprint records for any matches. The civil applicant cards
are retained by the FBI and CIS is notified if any criminal records are found. The FBI
does not enter civil applicant fingerprint cards into a searchable database. The FBI only
enters criminal fingerprint cards into their database.

The IDENT system is used throughout the application process to verify the identity of
applicants. A CIS adjudicator can verify the identity of the alien at interviews,
processing, etc. This prevents aliens from using a new identity if their previous
application is denied.

Mr. Yates felt that biometrics were a key to the integrity of the application system. He
stated that some of the delays were due to the transition from INS to DHS. He also feels
that the systems integration board, which directs and approves major systems changes at
DHS, was aware of the needs at CIS.

BENEFIT FRAUD

Mr. Yates was asked about the amount of benefit fraud that CIS has to deal with. He
stated that there were previous studies that indicated significant fraud. Also that fraud
was systemic but the amount of fraud varied among the different benefit programs. He
does not want to approve any applications where there is an indicator of fraud.

Last year, Mr. Yates requested that ICE conduct field investigations on a sampling of a
few types of applications. This was to assist CIS in determining the fraud rate. A small
number of applications chosen at random were given to ICE Special Agents to
investigate. For instance, agents were asked to check if the photo on the Form 1-90
(Request to Replace Form 1-551) matched the original card holder and were not of an
impostor. The initial finding was that only 1% of these cases were fraudulent. What this
example does not show is how many of the replacement "green cards" were obtained for
use by relatives or friends.
The ICE Director of Operations, Michael T. Dougherty terminated the investigation at
about the midpoint of the study. He felt that the results were skewed and invalid because
investigations were not being thoroughly conducted. Some ICE Special Agents never did
the required field investigations but completed cases at their desks. Mr. Dougherty felt
that the data was going to be inaccurate and that it was better to terminate the sampling
then try to explain the results.

Mr. Crucetti stated that CIS has the responsibility to identify any fraud in the application
process. The most simple and expedient option in fraud cases is to deny the benefit and
remove the alien from the United States. If the fraud was complex and widespread, the
case would be given to ICE to determine if an ICE Special Agent would be assigned to
the investigation. ICE tentatively agreed to make this determination within 30 days of
receiving the case from CIS. If the case referral is refused by ICE, CIS also had the
option to do further review of the case and again present it to ICE with any new evidence.
CIS feels that the regulations governing the benefits program preclude CIS from
prosecuting its own criminal cases. Therefore it is critical that CIS and ICE have a
working agreement on how cases will be accepted or refused for investigation by ICE
Special Agents. Mr. Crucetti said that he has been working on a Memorandum of
Understanding between CIS and ICE on this critical issue. No MOU had been signed at
the time of the interview.

Fraud Detection Units (FDU)

These are located within the CIS Service Centers. There are 44 FTEs for this purpose.
Not all are currently filled. The FDUs will do analytical work with the adjudications
staff to identify both individual and systemic fraud. They will use data mining, matching
technologies, CLAIMS 3 programming and intelligence leads to prevent the approval of
suspected fraudulent applications. Many complex fraud rings operate in multiple
locations. The Service Centers will have to share their data to be effective.

The FDUs will also assemble the basic cases and evidence. Yates said that when he was
the director of the Vermont Service Center, a large, complex case that involved over
7,000 fraudulent political asylum cases was identified. This case resulted in a successful
Federal prosecution. The FDUs will pass on their suspected cases to the Benefit Fraud
Units.

Benefit Fraud Units (BFU)

The benefit fraud units are made up of ICE Special Agents to be assigned to each Service
Center. Currently most are working in Vermont and California. In most cases these
Special Agents had previously been assigned to the INS Regional Offices. The Regional
Offices were dissolved with the transition to DHS/ICE. The current distribution of these
ICE Special Agents among the service centers varies greatly. The BFU will take the
suspect cases from the FDUs and develop them further. They will assemble the evidence,
determine the administrative and criminal violations, use advanced investigative
techniques, and determine how the case can be successfully prosecuted.
ICE, with a limited number of special agents, only wants to prosecute large, complex
conspiracies or those involving national security. ICE has not said how many ICE
Special Agents will handle the CIS fraud cases. Until last year, some ICE Special Agent
positions were funded through the application fees received by CIS. The regulations
dividing the former INS into three different branches under DHS prevents the transfer of
any CIS fee monies to ICE. Therefore, there may be only a few Special Agents under
each ICE SAC who will be available to do these immigration fraud prosecutions. It is
unresolved how ICE will determine which cases will be accepted and what will happen to
the potential criminal cases that ICE does not accept. Mr. Yates is also concerned that
historically INS has been very successful in prosecuting the key conspirators but made
little or no effort to remove the aliens who benefited by the fraud.

Referrals to ICE Special Agents

How the case referral process is to be handled is not finalized. The MOU is still under
negotiation. BFU will forward to ICE cases that involve benefit fraud organizations,
facilitators and individuals who pose an imminent threat to public safety or national
security. CIS will also refer large, complex conspiracies cases. ICE will accept or reject
the case. If it accepts the case, ICE will investigate it and prosecute it or return it to CIS
with recommendations. Timelines on how long ICE will have to make a decision on
each case are not decided.

ICE has a very limited complement of special agents. It remains to be seen how many
CIS fraud cases ICE will be willing and able to investigate.

Non-criminal Investigations

Many suspected benefit fraud cases require some field investigation below the level of
criminal investigation. This may be a simple drive by to establish that a residence is
actually a residence and not a mail drop. Or that a business that claims to have fifty
employees is not a "mom and pop" deli. These investigations do not require highly
trained Federal criminal investigators but they still need to be done. CIS is proposing that
about 270 compliance positions be created to meet these needs. These employees will
not have arrest powers. They may be Federal employees or contract employees. They
will be located throughout the country. This will be a new approach which is
necessitated by the transition from INS to DHS.

Volume of Applications

Even if there is only a 1% fraud rate, the numbers of aliens benefiting from fraud is
staggering. 1% of the 5.6 million back log is 50,600 aliens. Any fraud strategy has to
deal with massive numbers of applications. According to CIS, each adjudicator
completes 1.2 cases an hour. At that rate the backlog cannot be reduced. Any future
expansion of immigration benefits will have to be considered in light of the current
volume and backlog.
Summary
Every day the Department of Homeland Security, Citizenship and Immigration Services
issues 20,000 "green cards", conducts 140,000 background checks, adjudicates 30,000
applications, receives 50,000 telephone calls, takes 8,000 fingerprints at the ASCs, and
naturalizes 3,000 new citizens. Benefit fraud detection and prevention is critical to the
integrity of the overall immigration program. The challenge is to integrate an effective
fraud detection and prevention program into a system that is overwhelmed with volume,
under going restructuring, under funded by a fee system and reducing a 5.6 million
application backlog while responding to enhanced national security concerns.

10