Copyright 2002 Federal News Service, Inc.  
Federal News Service
June 25, 2002 Tuesday
SECTION: CAPITOL HILL HEARING

LENGTH: 13568 words

HEADLINE: JOINT HEARING OF THE IMMIGRATION, BORDER SECURITY, AND CLAIMS SUBCOMMITTEE AND THE CRIME, TERRORISM, AND HOMELAND SECURITY SUBCOMMITTEE OF THE HOUSE JUDICIARY COMMITTEE
 
SUBJECT: THE RISK TO HOMELAND SECURITY FROM IDENTITY FRAUD AND IDENTITY THEFT
 
CHAIRED BY: REPRESENTATIVE GEORGE W. GEKAS (R-PA)
 
LOCATION: 2141 RAYBURN HOUSE OFFICE BUILDING, WASHINGTON, D.C.

WITNESSES: PAUL J. MCNULTY, UNITED STATES ATTORNEY, EASTERN DISTRICT OF VIRGINIA;
 
JAMES G. HUSE, JR., INSPECTOR GENERAL, SOCIAL SECURITY ADMINISTRATION;
 
RICHARD M. STANA, DIRECTOR, ADMINISTRATION OF JUSTICE ISSUES, UNITED STATES GENERAL ACCOUNTING OFFICE;
 
EDMUND MIERZWINSKI, CONSUMER PROGRAM DIRECTOR, STATE PUBLIC INTEREST RESEARCH GROUPS
 


BODY:
REP. GEORGE W. GEKAS (R-PA): The hour of 4 o'clock having arrived, this special joint hearing will come to order. The joint hearing is, of course, composed of the two subcommittees in the Judiciary Committee which have oversight capacity on a variety of mutual issues but on this one in particular. It is composed, of course, of the Subcommittee in Immigration, Border Security and Claims and the Subcommittee on Crime, Terrorism and Homeland Security, the chairman of which is Lamar Smith of Texas who joins us and who helps us constitute the hearing quorum for the purpose of this hearing.

As the other members appear in an order which the staff will maintain, we will recognize them as the need arises, but we plan to forge ahead with the hearing and we'll accord all the members the right to insert statements in the record and to other -- and we will otherwise accommodate them as they appear.

The series of problems that have led to this hearing, of course, has to do with identity fraud. And that takes characterization from many different sources, but the one that most disturbs us is the identity fraud that's identified with Social Security identification. And we know, for instance, that our distinguished former -- I don't even know what to call him anymore -- Paul McNulty. I was remarking to him at the start that I think this is his eighth title since I've known him, but we welcome him. But he is the one who has outlined some of the problems in the airports, which we will discuss, having to do with this very same subject.

So we will be inclined to worry with you on the existence of the problems and to work through whatever recommendations that we can fashion together to try to limit the damage that has been done and will still be done if we do not take complete hold of the entire situation. So we will begin the questioning of the witnesses after we accord the time to the gentleman from Texas, Mr. Smith, for an opening statement.

REP. LAMAR SMITH (R-TX): Thank you, Mr. Chairman. And like you, I look forward to this joint hearing on identity fraud in all different variations.

Before I make any formal remarks, also like the chairman, I'd like to single out Paul McNulty who I consider to be a personal friend and who served as general counsel of the Crime Subcommittee before he went on to various other green pastures. And so, Paul, without slighting the rest of the witnesses who are here, I'm looking forward to hearing your testimony as well. I'd also like to mention Roger Estes(ph). Roger Estes is a police detective in Arlington County, who went to great lengths to bring to our attention the problems with identity theft and identity fraud that we're talking about today. Mr. Estes, we're pleased to have you in the audience as well and thank you for taking the initiative in alerting us to so many of the problems involved.

Mr. Chairman, since last September it has become even more apparent how crucial it is to have accurate information regarding an individual's identity. Even without the threat of terrorism, this would be a serious issue. Identity theft and fraud cost businesses and individuals time, money and sometimes their lives. There are three documents frequently used to establish false identities that must be made more secure. We can do a great deal to protect our homeland security if we tighten up the laws governing issuing of driver's licenses, Social Security cards and birth certificates.

Many of us were shocked to hear how easy it was for members of Al-Qaeda to obtain driver's licenses in three different states that allowed them on to U.S. airlines on September 11. Problems with identity fraud are not unique to these states. Each state has different standards for driver's licenses, some even allow illegal aliens to obtain driver's licenses.

In addition, each state has different laws regarding what documents may be used to prove identity or residency to obtain a driver's license. The problem is not only with individuals obtaining false driver's licenses, identification procedures are full of loopholes that make it easy for criminals to take advantage of the system.

Many of the September 11 terrorists also obtained fraudulent Social Security cards or numbers through theft of legitimate Social Security numbers of others or through the use of counterfeit documents. While it has become increasingly obvious in the past few years that identity theft can cause financial damage, it is now becoming apparent that it can cause damage of a much more serious nature. Individuals can obtain fraudulent Social Security cards by inventing a number, stealing an existing Social Security card, buying a counterfeit card, obtaining counterfeit documents such as passports, birth certificates or INS papers, or by fraudulently obtaining a valid replacement Social Security card.

The Social Security Administration is responsible for preventing some of this fraud, but weaknesses in their system make it difficult to detect in all cases. In 1996, Congress ordered the Social Security Administration to develop a proposal for a Social Security card to provide individuals with proof of citizenship or proof of legal resident status that would be harder to counterfeit and harder to alter. Several different types of cards were developed in response to this request but no action has been taken to implement the use of these new cards. And I know we have a witness who will be talking about that problem a little bit more.

Much of the fraud in both the Social Security system and driver's licensing systems is related to fraudulent birth certificates. Because these records are kept in many places by local registrars and there is no national standard for these documents, it is easy to create counterfeit birth certificates or alter legitimate certificates as well. We look forward to hearing suggestions from our witnesses today on how Congress can better protect our citizens and how we can better address these problems.

Thank you, Mr. Chairman.

REP. GEKAS: We thank the gentleman and we acknowledge for the record the presence of the gentleman from Virginia, Mr. Scott, and we accord to him at this moment the right to make an opening statement.

REP. ROBERT C. SCOTT (D-VA): Thank you, Mr. Chairman.

The problem of identity theft has grown rapidly with the growth of automation and now is entrenched as a frontline issue in the war on terrorism. Nearly all of the September 11 hijackers obtained false documentation that allowed them to base themselves here in the United States while plotting the terrorist attacks. However, the war on terror has only added a second tier to an already serious problem with consumer related identity theft. The threat posed by identity theft to homeland security, as well as the dangerous economic and personal effects of consumer related identity theft, require immediate attention from the government, law enforcement agencies, and the credit industry.

According to several sources in May of 2000, there are two major forms of identity theft. True name fraud is when a perpetrator uses a consumer's personal information, often in the form of a Social Security card, to open new accounts in the consumer's name. Of the victims who responded to the survey, 76 percent were victims of this sort of fraud with an average number of six new accounts being opened per victim.

Account takeover fraud occurs when perpetrators gain access to a consumer's existing account, and make fraudulent charges. Victims of this type of fraud were faced with an average of $6,000 worth of fraudulent charges. However, many victims indicated that in addition to financial stress, the personal stress, emotional trauma and difficulty in repairing a damaged credit reputation were perhaps the most damaging.

Other types of identity theft include Social Security fraud, the use of a false Social Security number in tandem with a false, or stolen identity, and so-called "bust-out" schemes where perpetrators use credit card terminals obtained by a shell or front business to make charges to fraudulently obtain credit cards.

Identity theft victimizes between 500,000 and 700,000 victims each year, and all indications are that this number is rising. In March 2002, a GAO study reported a 40 percent increase in identity thefts reported to Social Security during a seven-month period in 2002 than over the same period in 2000.

This documented increase does not take even take into account the fact that many individuals are not even aware that they have been victimized until months after the fact. And that some choose not to report such incidences to law enforcement agencies or identity theft hotlines.

Many states have begun to tackle these pressing problems. In Virginia, the attorney general has created a task force to address economic -- electronic crimes, including identity theft. The federal government needs to be ready to assist these types of efforts in any possible way. Tighter administration of Social Security cards and other federal IDs, is one effort to address identity theft, and we must develop these kinds of efforts to help dry up the burgeoning market in illegal information.

I look forward to the testimony of our witnesses and how we can better address the growing problem of identity theft. I'd like to particularly welcome the U.S. attorney from my district, Paul McNulty, to testify before us today.

Thank you.

REP. GEKAS: We thank the gentleman. We will proceed with introductions of the witnesses.

Our first witness is, as aforesaid, Paul J. McNulty, the United States attorney for the Eastern District of Virginia.

Mr. McNulty has had more than 20 years of experience in federal and state government, most of which has involved law enforcement and criminal justice policy. Mr. McNulty's experience also includes over 12 years in the United States Congress, where he was chief counsel and director of Legislative Operations for the Majority Leader of the U.S. House of Representatives. And for eight years he served with the House Subcommittee on Crime, first as minority counsel and later as the chief counsel.

During those years, he was a principal draftsman of many federal anti-terrorism, drug control, firearms and anti-fraud statutes. Mr. McNulty is chairman of the Washington Baltimore High Intensity Drug Trafficking Area Task Force, and is vice chairman of Attorney General Ashcroft's Advisory Committee.

Next to him at the witness table is James G. Huse Jr. He is the inspector general of the Social Security Administration. Prior to his Social Security appointments, Mr. Huse was a special agent in the United States Secret Service for 25 years, rising to the position of assistant director.

During his Secret Service career he was also assigned as the liaison officer to the Department of Justice, and to protective duties at the White House and many presidential election campaigns. In 1995 he received a special award from the secretary of the Treasury for his work as the Secret Service official in charge of the White House Security Review.

Next to him is -- well known to members of this committee, Richard M. Stana, the Director for Justice Issues at the U.S. General Accounting Office. He has testified on behalf of the GAO before the Immigration Subcommittee, and before the Judiciary Committee as a whole many times over the years.

During his 26-year career with the GAO, he has directed reviews on a wide variety of complex military and domestic issues in headquarters, field and overseas offices. Most recently, he has directed GAO's work relating to law enforcement, drug control, immigration, corrections, court administration, and election systems.

They are joined, as in the final seat, the fourth witness, Edward Mierzwinski, the consumer program director, State Public Interest Research Groups. He has been a consumer advocate with USPIRG, the national lobbying office for state PIRGs since January 1989. These are non-profit, non-partisan public interest advocacy organizations with offices around the country.

Ed Mierzwinski has authored numerous reports on consumer, privacy, credit card, credit reporting and other bank and financial issues. He is often quoted in the national press, and has appeared on shows including ABC's Nightline, CNN's Crossfire, NBC's Today, and NPR's Talk of the Nation. From 1993 through 1995 he was a member of the Federal Reserve Board of Governors Consumer Advisory Council.

We will begin with the testimony of witnesses, after we accord the lady from Texas, Ms. Lee, an opportunity for an opening statement.

REP. SHEILA JACKSON-LEE (D-TX): Mr. Chairman, thank you very much.

And I do thank you, and the Chairman of the Crimes Subcommittee on Homeland Terrorism, for holding this hearing. And I acknowledge the ranking member of the Crime Subcommittee.

This is a very important combined hearing, inasmuch as it relates to the jurisdiction of both of our committees, the Crime Subcommittee and the Immigration Claims Committee. You would wonder, as you review September 11th, how much of the ability of the terrorists to enter into this country had a lot to do with identity fraud and theft. And how much prospectively we can expect creative individuals, who wish to do evil, that will be taking advantage of the flexibility and the freedom of this nation in terms of identity fraud and theft.

Already, identity fraud and theft is an enormous burden on our economy as it relates to our own citizens. In my own community, I have had a number of constituents who have been drastically impacted, negatively impacted, losing large sums of resources because someone has taken advantage of their particular identity and, I might say, their good name.

And so the expertise that is before us this afternoon is key. One of the issues that we confront, those of us who are here in the United States Congress, is that we will spend a lot of time in hearings dealing with practicalities. We are the practitioners. And my delay was because I was in a science committee hearing on cyber terrorism, and how we can enhance science and technology to protect us against terrorism. Well, we need the thinkers, as well, to be able to help us design the legislation that will be helpful in this new climate.

And so I would hope that, as we listen to the witnesses, what we will find is a way to balance the freedom of this country, the First Amendment, the protection of the Constitution, the ability to protect without isolating or discriminating against particular groups, the ability to recognize names, if you will, as not names equaling terrorism but as they are intent on committing crimes, that these names do not signal to us that one group versus another as a terrorist group, but we'll be able to discern the actual facts and be able to present these facts so that legislation can be written. I look forward to listening to the witnesses.

And, Mr. Chairman, I would ask that the entirety of my statement be submitted into the record, as we proceed. And I thank you.

REP. GEKAS: Without objection, the statement will be entered into the record. Which brings to mind the general practice that we will accept the written statements of the witnesses for the purposes of inclusion in the record, and then accord each witness five minutes or so, mostly five minutes, less so, to review the contents of the written statement.

We will begin with Mr. McNulty and the five minutes, that will be the general rule.

MR. PAUL J. McNULTY: Thank you very much, Mr. Chairman. I'm delighted to be back with you in this room that holds so many memories for me. As you mentioned, eight years I spent with this prestigious committee. And this committee, actually, in my time here formed an outstanding foundation for me, as I now serve as U.S. attorney in the Eastern District of Virginia, enforcing the laws that are drafted by this committee and to understand those laws is a very beneficial thing. So I'm very happy to be back here now and seeing old friends again.

In the weeks before September 11, nearly a year ago today, Victor Lopez-Flores and Herbert Villalopez -- Villalobos, excuse me, were sitting out front of the dollar store in Arlington, Virginia, across the street from the DMV, the Department of Motor Vehicles, Virginia. This is a place where they hung out a lot. The reason why they hung out there was because of the location of the DMV across the street. You see, Victor and Herbert were in the business of helping people acquire false -- fraudulently, driver's licenses or ID cards from the Department of Motor Vehicles.

Well, one day last August, as they were sitting in front of the dollar store, a van pulled up. It had out of state plates, Newark, New Jersey. I can't remember now exactly what they were. And three men got out of the van, three Middle Eastern men and they approached Victor. They knew that they were coming to him for a particular reason and they asked him to help them to do what Victor was there to do and that is to acquire Virginia identification cards.

They talked to Victor and to Herbert for a little while and they haggled over the price and they agreed to pay $100 per person for the identification card. So Victor and Herbert said, get back in your van and follow us. And Victor and Herbert drove off in their car and they drove down the street to a notary in a law office. And Victor walked into this law office and he knew exactly what he was doing and he'd been in there many times before.

And he took these three people, these three individuals whom he did not know, he took them to this notary, Ms. Galeshia(ph) and she handed them two forms. One was an identification document, the other was a residency certificate. The men signed the identification document and Ms. Galeshia notarized it and got the signature of a lawyer there in the office.

Then she took the residency form and she handed it to Victor and then another one to Herbert and they signed that form and it was notarized. And they indicated that they knew that these three gentlemen were Virginia residents, they certified that they were Virginia residents. Then they got back in their cars and they drove back to DMV and with those two forms, that identification document and that residency certificate, they dropped them off in front of the DMV.

The three men walked into the DMV, they were already instructed as to what to do when they got in there, but Victor and Herbert were in the business of taking many people into the DMV to show them how to make their way through the lines and so forth, and to fill out the application inside. Those three men went in and got Virginia identification documents. A few weeks later, those three men were on flight 77 and they were the alleged hijackers of that plane that flew into the Pentagon and killed 189 people, the worst violent crime in the history of Virginia and part of the tragedy and attack of September 11.

So those three men were part of actually seven, out of the 19 hijackers who acquired false Virginia identification cards. And there were many others who were accomplices or associates of one kind or another who have now been convicted in the Eastern District of Virginia, along with Victor Lopez-Flores and Herbert Villalobos and Ms. Galeshia for this fraudulent ID scam.

Why was this so important?

Well, we don't know for sure, but what we think was going on was that in order to get the tickets at the counter they needed to show proof of identity. And what better proof at Dulles International Airport than a Virginia identification card or a Virginia driver's license?

That card was an essential tool in the process of committing those horrid crimes. And this is a problem that we have seen in Virginia to an enormous extent. It is the equivalent, that is acquiring this false identification, it's the equivalent to a criminal acquiring a gun. False or stolen IDs have become a tool of the trade.

We prosecuted a case involving the Virginia drivers' licenses and identification cards. That was a scheme that included tens of thousands of false Virginia identification cards and drivers' licenses being provided, mostly to illegal immigrants. That case, the case of Jenny Wrenn, which was prosecuted in February of last year was a scheme involving drivers and middle men that would pick individuals up -- all up and down the East Coast, and for a fee of $500 to $1000, bring them to Virginia and then come into Ms. Wrenn's operation, a real estate business, a front business, and pay a very small fee of $45 for those same documents I just described in the case of the hijackers. And there were many other people in the same business as Ms. Wrenn, which led to again, tens of thousands of false IDs being acquired in Virginia. That's the story of the Virginia driver's license in a nutshell.

We have also, an extensive problem with the false Social Security numbers and the extent of that fraud covers our airport problem and credit card fraud and so forth. And I know, in the interest of time I don't want to repeat my testimony, but let me just say with regard to the airport initiative. We looked at 28,000 people who had secure badges. That is badges that gave them access to almost any spot in the airport. We looked at 28,000 people who had that security badge in five major airports in Eastern Virginia and of those individuals, we identified 75 who had used a false Social Security number to gain their security badge. Those Social Security numbers can either be a made up number or a stolen number. And again, picking a false Social Security number is the foundation for credit card theft and other crimes, all of which we've prosecuted in the district.

Has my time expired? Thank you, Mr. Chairman. I'll be happy to talk in more detail how we are addressing that in the Eastern District.

REP. GEKAS: Yes, we'll give you an opportunity amplify during the question and answer session.

We turn to Mr. Huse.

MR. JAMES G. HUSE, JR.: Good afternoon, Chairman Gekas, Chairman Smith, Ms. Jackson-Lee, Mr. Scott. Let me first thank you for the invitation to be here today.

This is a vitally important matter and a complex one but I will begin my testimony with a simple declarative sentence. The Social Security number is our national identifier. Nine months ago, that statement was challenged by many. Today it is an accepted fact.

Today's hearing focuses on the integrity of the Social Security number with respect to those who arrive at our borders as visitors. You should be aware that this is only one portion, albeit a critical one, of our efforts to protect the SSN's integrity. In calendar year 2000, the Social Security Administration issued approximately 1.2 million SSNs to non citizens. But issued over 5.5 SSNs in all -- 5.5 million.

While SSNs issued to non citizens thus represent only about 20 percent of the total, the volume is significant and the implications, as we have learned, are serious. While the office of inspector general is at this time unable to state unequivocally that any of the September 11th terrorists were numerated by SSA itself, the investigation into the events of that day and the homeland security efforts aimed at preventing future attacks, have revealed the importance of the SSN to any attempt at assimilation into American society. It is now clear that the SSN is our national identifier and protecting the integrity of that identifier is as important to our homeland security as any border patrol or airport screening.

We have issued several audit reports over the past three years, each identifying weaknesses in the enumeration process, the process by which SSA issues SSNs. The most important of these vulnerabilities was SSA's procedures for verifying documents submitted with SSN applications. We have recommended on several occasions that SSA verify with the Immigration and Naturalization Service the authenticity of immigration documents submitted by non-citizens seeking to obtain an SSN. Although there was a time that SSA opposed that recommendation, this is certainly no longer the case. Commissioner Barnhart recognizes how critical it is to keep SSNs out of the hands of those who may seek to harm us, and efforts to provide for INS authentication of immigration documents are accelerating. So too are plans for the enumeration at entry program by which non- citizens entitled to SSNs will be processed at the time of their entry into the United States.

In the interim, the commissioner announced earlier this year that SSA would no longer issue SSNs to non-citizens solely for the purpose of obtaining drivers' licenses. And more recently, she has announced that beginning July 1st in selected cities, and this fall nationwide, SSA will cease the issuance of SSNs to non-citizens if their immigration records have not been verified with the INS. This will likely result in delays that would previously have been thought unacceptable by SSA, but I applaud the commissioner's courage in making this stand.

Preliminary results of a study prepared by my office suggest that as many as 100,000 of the 1.2 million original SSNs issued to non- citizens during calendar year 2000 were based on invalid immigration documents that went undetected by SSA. We believe, and Commissioner Barnhart agrees, that this eight percent error rate is unacceptable and that more must be done. If the federal government is to meet its responsibility with respect to the SSN's role in the homeland security rubric, it will require the same type of interagency cooperation that President Bush spoke of in his address to the nation several weeks ago.

Besides the needed cooperation of SSA and the INS, it will also require the coordinated interactivity of federal, state and local government agencies, each ensuring the authenticity of the identification documentation presented to apply for an SSN. The operations in which our office has participated in some 18 airports across the country over the past several months are but one way in which these efforts continue. Working with joint terrorism task forces and other federal agencies under the aegis of Offices of United States Attorney, we have worked to ensure that no airport employee who has misrepresented his or her SSN and identity has access to secure areas of the nation's airports. A total of 432 people have been arrested to date and, more importantly, have been denied access to the areas which represent a significant terrorism vulnerability. Similar operations are in the planning stages at other sensitive facilities around the country.

We appreciate your interest in these issues and look forward to working with you to enhance the safety of all Americans. Thank you and I'll be happy to answer any questions.

REP. GEKAS: We thank you, Mr. Huse, and return to the next witness. Mr. Stana.

MR. STANA: Thank you, Chairman Gekas, Chairman Smith, Ms. Jackson Lee, Mr. Scott and members of the subcommittees. I'm pleased to be here today to discuss the prevalence of identity fraud and its links to aliens' illegal activities. Generally, identity fraud encompasses a broad range of illegal activities based on fraudulent use of identifying information of a real person or a fictitious person. A pervasive type of identity fraud is identity theft, which involves stealing personal identifying information from someone like you or me, such as a Social Security number, a date of birth, or a mother's maiden name, and then using the information to create false identity documents, to fraudulently establish credit and run up debt, or to take over existing financial accounts. Other types of identity fraud involve fraudulent documents used by aliens to enter the country or illegally obtain employment and other benefits, and in some cases to facilitate a range of criminal activities including terrorism. My prepared statement discusses these and other topics. In my oral statement I'd like to briefly make three main points.

First: although identity theft numbers are not easily captured and sometimes reflect different assumptions, the statistics we compiled show that the prevalence and cost of identity theft continue to rise, and that the probability of getting caught remains low. Data from the three national credit bureaus, the FTCs, Identity Theft Data Clearing House and the Social Security Administration's ID Fraud Hotline, show that the number of people reporting actual or suspected identity theft is increasing dramatically. Recent statistics on investigations and arrest by leading law enforcement agencies, the Secret Service, the SSA/OIG, the IRS, the FBI and the Postal Inspection Service also show an increasing trend in criminal activity. Further, the cost to the financial services industry in terms of documented bank fraud and payment card fraud exceeds $1.8 billion from domestic operations alone.

Since 1998, the Congress and most states have enacted laws that criminalize identity theft. The passage of federal and state identity theft legislation indicates that this kind of crime has been widely recognized as a serious problem across the nation. My second point is that the use of fraudulent documents by aliens is extensive. With nearly 200 countries using unique passports, official stamps, seals and visas, the potential for immigration document fraud is great. In addition, more than 8,000 state or local offices issue birth certificates, drivers' licenses and other documents aliens can use to establish residency or identity. INS inspectors frequently encounter aliens who present fraudulent identity and or various authorization documents in order to attempt illegal entry into the United States. About half of the over 114,000 documents intercepted by INS inspectors last year were border crossing cards and alien registrations cards, commonly called green cards.

Moreover, significant numbers of aliens unauthorized to work in the United States have used fraudulent documents to circumvent the employment verification process. Most of the fraudulent documents used were INS documents and Social Security cards. Some aliens have attempted to use fraudulent documents to illegally obtain other immigration benefits, such as naturalization or adjustment of status.

My third point is that identity theft or use of fraudulent documents often is an essential component of criminal activities ranging from bank and credit card fraud to drug trafficking and international terrorism. For instance, INS has reported that although most aliens are smuggled into the country to pursue employment opportunities, some are smuggled as a part of criminal or terrorist enterprises. INS believes that as border enforcement activities increase, organized crime groups will increasingly use smugglers and fraudulent documents to facilitate illegal entry of individuals to engage in criminal activities.

The events of September 11th have underscored the urgency of effectively authenticating the identity of individuals. Terrorists have used and have been in possession of numerous false identification documents. For instance, conspirators involved in the 1993 World Trade Center bombing and the 1999 attempted LAX bombing were in possession of false identification documents. Terrorists' financing methods have been known to use various cash smuggling and bank fraud activities that have been aided by identity theft.

Such instances raise other security questions related to identity fraud. For example, when an alien's identity documents are checked against a watch list at the border, can we be sure the individual is who he presents himself to be? When an individual presents identity documents for employment in sensitive occupations or areas, can we be sure the individual is who he presents himself to be?

Let me close by saying that most instances of aliens using fraudulent identity documents appear to be related to entering the country and obtaining employment or other benefits.

However, recent events dramatically illustrate that law enforcement officials need to be increasingly vigilant to other security vulnerabilities presented by identity fraud.

This concludes my oral statement. I'd be happy to address any questions the members of the subcommittee may have.

REP. GEKAS: We thank you, Mr. Stana, and we turn to Mr. Edmund Mierzwinski.

MR. MIERZWINSKI: Thank you, Mr. Chairman. I'm Ed Mierzwinski, I'm with the National Office of the State Public Interest Research Groups. We're a consumer environmental advocacy organization, nonprofit, nonpartisan, active around the country. We have been looking at the problem of identity theft for as long as anybody. The state PIRGs put out our first report on the problems consumers face with identity theft in 1996. And since then we've put out two subsequent reports on identity theft.

As the previous witnesses have documented, it's very difficult to get a handle on the costs of identity theft and the magnitude of identity theft in the country. And our estimates based on talking to all leading experts and based on looking at all available data, are that as many as half a million Americans a year are victims of identity theft. The Federal Trade Commission is now tracking identity theft as a result of the 1998 legislation and it is part of several intergovernmental taskforces. The Federal Trade Commission now posts on its web site annualized statistics, broken down by city and by state in some instances, on the growth of identity theft.

The big problem that consumers have had with identity theft, and this is of course what I'm referring to first here as financial identity theft, the theft of documents to obtain credit in my name, is of course that for many, many years, the financial industry denied that it was a problem. They continue to deny that it is a problem. And they also continue to deny that consumers are the victim because as most of you know, if your credit card is stolen you're only liable for the first $50.

While our report that we summarized extensively in my testimony documents that in fact the out of pocket costs to consumers, the loss of face, the loss of dignity, the hundreds of hours on the telephone, the thousands of dollars in litigation costs trying to regain their good name, are serious costs to society. And it's high time, in our view, that the Congress imposes strict restrictions on creditors and credit bureaus who used sloppy practices to give somebody credit.

If I want to obtain a copy of my credit report, I need to provide in certain circumstances, a Xerox copy of my utility bill, a Xerox copy of my driver's license, the name of my mother, my mother's maiden name, excuse me, a current address, my recent -- my most recent addresses for the last five years. And even then, the credit bureau gives me trouble getting a copy of my credit report.

If you apply for credit in my name and you know my Social Security number, you'll get credit. That's all you need. The sloppy Social Security number. No offense -- I don't mean to disparage the agency. I'm referring to the sloppy use of the Social Security number in private enterprise. And the easy availability of the Social Security number on the Internet makes it easy for these identify thieves.

So our first recommendation would be to impose greater duties on creditors and credit bureaus to do a better job of determining the authenticity of applicants for credit.

Second, get the Social Security number out of general circulation, make it a crime to publicly display it. Mr. Shaw has some very strong legislation on limiting uses of the Social Security number and preventing coercion of a consumer Social Security number to do business with him.

And third, make it easier for consumers to sue credit bureaus. And there are two bills before the committee that would extend the statute of limitations for an identity theft victim to sue credit bureaus following a bad Supreme Court decision in November, that limited that right to only two years after the crime.

On the important matter of terrorism and identify theft that the committee is deliberating on with a number of hearings, I simply want to say that in our view, some of the solutions that have been proposed as solutions to the terrorism problem are not solutions to the identity theft problem.

First of all, national identity cards will not solve the identity theft problem. I don't need a driver's license. I don't need a card to get credit in your name. All I need to know is your Social Security number.

Second, the more high tech the card, it will cost more than $100 as they may be paying today, but you'll have a lot of false positive cards out there.

Second, imposing restrictions on the ability of immigrants to obtain drivers licenses won't solve the identity theft problem and as the National Immigration Law Reform Institute and the American Civil Liberties Union and the National Council of LARASA have pointed out, immigrants without drivers license will simply fuel the market for illegal identity documents or they'll drive without licenses increasing insurance costs for everyone else.

And finally, I would point that in the view of many experts, biometrics is not a solution to identity theft. Facial recognition and fingerprint identification systems don't adequately do the job. My written testimony goes into a number of details on these and other matters.

Thank you, very much.

REP. GEKAS: We thank the gentleman. Let the record indicate that the gentleman from California, Mr. Issa is present and is the gentleman from North Carolina, Mr. Coble, the gentleman for Virginia, Mr. Goodlatte, the gentleman from California, Mr. Gallegly, and I did spot the lady from Pennsylvania for a moment, a lady -- Ms. Hart. And now comes a time to subject our witnesses to a bit of cross- examination. It is likely that the floor will call the members for a series of votes.

(Off mike.)

No more votes? Thank you for the information. Is that certain or uncertain? Are we going to debate that now or --

(Off mike.)

Well, we'll subject you to some cross-examination.

(Off mike.)

Also, Mr. Chabot was here for part of the hearing. The chair yields itself five minutes for a round of questions. The first question I'd like to ask is to Mr. Stana of the ways in which false identity has been successfully used by people who wish to take advantage of us. Is there any evidence of false identification to get voter's rights, voter's cards?

MR. STANA: We haven't looked at that specifically. I've read allegations to that effect but we have no work that specifically address that question.

REP. GEKAS: Is there anyone studying that at all do you know?

MR. STANA: Not at the GAO.

REP. GEKAS: We might bring it to your attention because after Motor Voter many of us have found instances that resulted in non- citizens gaining the right to vote, and of course everyone who is a non-citizen, the vote cancels out one of our votes who have a legitimate right to do so and that's a separate problem.

MR. STANA: When we spoke with voter registration officials throughout the country in connection with our elections report, we did find that that was a problem, that they had said they experience but we don't have work on the shelf that directly addresses that.

REP. GEKAS: Yes, Mr. Huse. The startling scenario of our terrorists who had a paying legitimate Social Security cards and they got them directly from Social Security Administration, we understand, yet when they were issued these cards they were either tourists or students. How could that have happened? How could does that occur?

MR. HUSE: First of all, Mr. Chairman, to be exact, we have isolated six of the 19 terrorists that possibly obtained Social Security cards legitimately but that still is under investigation. It's still not unequivocally established that they did. We do know that all 19 used Social Security numbers. Now, whether they got them with counterfeit documents or what have you. But to answer the second part of your question. Non-work Social Security numbers were issued in this country for various reasons, some so that people could obtain drivers licenses, very common practice, many of the states required that a Social Security number be a precursor identifier to a driver's license application. That, by the way, has been discontinued as a practice. But prior to September 11th, it was a practice.

And other reasons that a non-work number would be issued would be to establish identification for students at universities for loan applications. And lastly, some of these non-citizens would obtain work SSNs so that they could work at the schools they attended. So there's a variety of loopholes there.

REP. GEKAS: You mean they applied for that work, even if they were non-citizens, the Social Security Administration would issue it, nonetheless?

MR. HUSE: Well, there were several exceptions where non-citizens could get --

REP. GEKAS: Yes, and they are?

MR. HUSE: Driver's licenses, student identification issues. And I believe those are the only reasons -- and if work was authorized for them in the third place, at university, a student job.

REP. GEKAS: Like work visas, direct work visas, you're talking about?

MR. HUSE: Correct. But they won't be allowed to work while they are here on a student visa.

REP. GEKAS: Is that consistent with what Mr. Stana has found?

MR. STANA: In general, yes. I would point out one thing though, that a number of people at the table here have mentioned and that's the way to work to get driver's licenses and other official documents through official agencies. There are other ways to get these documents that I know are used by aliens. I had occasion to visit the Secret Service Office in Dallas not long ago where a person who had been working there for one week made me with a digital camera and publicly available hardware and software -- made me a Nebraska driver's license and a Marine Midland Bank credit card. So you don't need to use a Social Security number or even fill out an application to get these documents and that should be a cause for great concern.

MR. McNULTY: Mr. Chairman --

REP. GEKAS: I was just going to turn to the two fellows that were lingering out in front of what you described, Paul, did that have something to do with that?

MR. McNULTY: Well, no, I was going to say that we prosecuted a case where the INS forms that you were discussing a moment ago which authorized work, those forms were stolen and fraudulently filled out and those were used by a syndicate that was in the business of providing false -- providing Social Security numbers to people who didn't have a right to them. By using those forms, they traveled around the country, went into Social Security offices and got numbers for people who paid for that service.

REP. GEKAS: The time of the chair has expired. We will turn to the gentleman from Texas, Mr. Smith.

REP. LAMAR SMITH (R-TX): Mr. Chairman, after Mrs. Lee, the lady from Texas, who is the ranking minority member on the Board of Security Subcommittee.

REP. SHEILA JACKSON-LEE (D-TX): Thank you, Mr. Chairman.

Let me congratulate Mr. McNulty for his new position and the work that he has done and pose the first question to him on the grounds that I believe the combination of these two committees has more or less a focus and let me view it from my perspective. And that is that as we proceed towards July 12th, as we focus now on the creation of the Homeland Security Department, as we realize that we must begin looking at practical implementation of solutions, I would hope or believe, from my perspective, that this is now looking at ways to not only alleviate identity fraud and theft but really focus on how that impacts on the security of the nation.

You did a sweep with a task force that focused, I believe, on individuals with inappropriate documentation at our nation's airports. And so, what instruction legislatively would you give us, give this committee first of all, on that issue, as it might relate to individuals wishing to do harm? It seems as if your focus was on felons that were there, in essence, under cover. And let me give a slight bias. I recognize and value that this has happened around the country. In fact, the FAA regulations now are that if you have a past record, you can't be around secure areas and those happen to be our citizens. The down side of that, of course, is if someone fails to acknowledge that they had a felony because they're trying to live a new life, they get themselves in trouble and what we have is a person with a lost job in a community like my own. That's a separate issue.

But I'm really focusing on these individuals that might be part of a terrorist cell or network who are there in secure areas. Any instruction out of the work that you did on the task force for it and can we solve the problem with existing laws, as you have done seemingly with the sweep that you did?

MR. McNULTY: Thank you. The law we used primarily was 18USC1001, which is the --

REP. JACKSON-LEE: Lying on the form.

MR. McNULTY: False information on a federal form. I think probably the most significant weakness has been identified by the attorney-general in the proposal to increase the penalties for the general false identity statute, which is 18USC1028. And the problem with that statute is that the penalties essentially don't have any effect whatsoever. They are essentially lumped in with the underlying fraud that's occurring. And so, there's no incentive whatsoever to prosecute someone for the identity card possession in combination with the false form that's been filled out.

If there was an increased penalty such as, I think it's S2541 that's been introduced on the other body, if there was an increased penalty where there would be an additional penalty as an aggravating factor for the possession of the false identification in combination with the fraudulent act, I think you would see probably even more prosecutions for this. Having said that, I mean, I think we are able to use 1001 very effectively and as those airport cases proved, that act of lying about who you are was prosecuted.

REP. JACKSON-LEE: You would, because you rounded up a number of individuals and prosecuted, I assume, those individuals that do -- and some of them were illegal aliens and did you discover any of them with an intent to perpetrate any terrorist acts?

MR. McNULTY: We had no evidence that anyone in our various airports that we did arrest and charge was engaged in some terrorist activity. We had 129 indictments between Dallas and Reagan National and those cases, the vast majority were either criminal history records that were not disclosed or false Social Security numbers. We had a handful of fugitives and a relatively, actually, small number of illegal immigrants who were actually charged for immigration fraud.

REP. JACKSON-LEE: Basically, they were attempting to have a job and to work and to make an income as opposed to --

MR. McNULTY: Most were in this situation. We had a few who were reentry after deportation. So these are individuals we went to all the trouble to deport. They actually reentered and then got this job. They are the more egregious of immigration violation.

REP. JACKSON-LEE: Let me -- Mr. Chairman, I just saw the light green. Is it broken? Because it didn't go to the yellow light in between? Let me just do this as I can. If I get an additional answer now, I can go for an additional one minute. It didn't go to the yellow. Thank you very much, Mr. Chairman.

Let me just quickly say to Mr. Stana and to Mr. Huse, if I can ask you this question very quickly because I do want to get on record that my concern and at this time my opposition to a national identification card. Before September 11th, and as you look at this program globally, was the idea of terrorism a big issue in this identity fraud or was it a question of illegal immigrants using the Social Security cards and others? I mean, what was the big issue on this false identification? For both Mr. Huse and Mr. Stana. Thank you very much.

MR. HUSE: I will take the quick one first. We've actually been involved for the past three years with a series of 14 audit reports where our extreme concern -- this is before September 11th -- about the integrity of the Social Security number and its misuse. A newspaper reporter put it best a few weeks ago in one of his editorials. We conscripted the American people, conscripted the Social Security number to uses way beyond for what it was ever invented. And because that's happened, it's put the Social Security Administration and the SSN in a very different place and that's what we were concerned with, not the terrorism aspects. After September 11th, it took on even a different, more focused concern.

REP. JACKSON-LEE: We thank you for that.

Mr. Stana, your response to the question?

MR. STANA: Before September 11th, most instances of identify theft or identity fraud involved individuals like you and me, people who had lost money. They lost time off of their jobs to try to unwind the situation. As far as fraudulent documents used by aliens to obtain employment, that's been an issue for a long time and we can debate that in greater detail another time. I will say, though, that with the rise of alien smuggling, the issue of using fraudulent documents to bring illegal aliens or legally admissible aliens into the country as a part of a criminal enterprise has heightened. And I think that concern was beginning to heighten before September 11th. Obviously, since September 11th, it has grown even more.

REP. JACKSON-LEE: Thank you very much.

Thank you, Mr. Chairman. I see the issues that we need to address. Thank you very much.

REP. GEKAS: The time of the lady has expired. We turn to the gentleman from Texas, Mr. Smith, for a round of questioning.

REP. SMITH: Thank you, Mr. Chairman.

Mr. McNulty, let me direct my first question to you. In your former testimony you mentioned that this year you had created a cyber crime unit in Eastern Virginia, particularly to try to combat identity theft. The Subcommittee on Crime, Terrorism and Homeland Security has actually held more hearings -- three -- on that particular subject than any other. And I was wondering if you could briefly discuss how bad you think the problem is and what Congress should do about it.

MR. McNULTY: Well, it's a major priority for the department and certainly in the eastern district of Virginia, where we have such a large presence of high tech companies. If you think about the -- just the presence of the Internet backbone in Northern Virginia alone, it was an important thing to do. So what I did was establish a cyber crime section in the office of six lawyers, who are full-time prosecutors. And one of the important things about doing that is when you have prosecutors who are dedicated to a particular area, they spend their time working with law enforcement agencies to develop cases; because, in a sense, it's kind of entrepreneurial. You're focused on that area of crime and you're working to build cases.

And the range of cases you can do in cyber crime is enormous. Everything from, on the one hand, cyber terrorism and doing things like hacking and disrupting the Internet in various ways, to cyber frauds where the very things we're talking about today are perpetrated by the use of a computer.

REP. SMITH: Thank you, that answers my question.

Mr. Huse, in your testimony, both written and oral, you mentioned that eight percent of non-citizens who had requested Social Security numbers submitted fraudulent documents. My question is: what has the Social Security Administration done since September 11 to correct that massive problem?

MR. HUSE: Since September 11 it recognizes the problem, and that's a very important step right there. And starting on July 1 in selected cities, and then going nationwide in the fall, the commissioner will establish what she calls enumeration centers.

REP. SMITH: We are moving towards a solution then?

MR. HUSE: Yes, we are.

REP. SMITH: Okay. I thought you were very direct and candid in your written testimony that the INS and the IRS, two other agencies, have really failed to protect American lives in not taking actions that they should have. Would you agree with my assessment of your testimony?

MR. HUSE: I think I'd probably state it a little bit more diplomatically, but I think you have a disconnect between three branches of the government that certainly in the past has caused some of this problem to occur.

REP. SMITH: One other quick question for you and for Mr. McNulty. How important and how effective do you think biometric identifiers would be if we were to incorporate them into, say, Social Security or other types of identification?

MR. HUSE: I think --

REP. SMITH: Real briefly, because I want to move on.

MR. HUSE: I'm very wary of the national identifier -- national identity card.

REP. SMITH: I'm simply talking about making Social Security cards more tamper proof by using a fingerprint, or something like that.

MR. HUSE: I think -- and that's probably why I'm rather reticent, I think. We did do this study that Congress asked us to do and reported back and had a range of options for a stronger Social Security card, starting with on the low end different minor enhancements, all the way to biometrics. Those will cost a lot of money and I don't know that they'll really solve much of this problem.

REP. SMITH: Mr. McNulty?

MR. McNULTY: We need to know that people are who they say they are. But I don't know enough about this subject to have an educated guess.

REP. SMITH: Fair enough. Mr. Chairman, I have a minute left and I'm going to yield it to the gentleman from California, Mr. Gallegly.

REP. ELTON GALLEGLY (R-CA): I thank the gentleman for yielding.

Mr. Mierzwinski, I understand you correctly that you do advocate giving drivers licenses to illegal aliens?

MR. MIERZWINSKI: I didn't say that. I said that the Congress ought not to look at restrictions on drivers licenses to aliens, whether legal or illegal, as a solution to the identity theft problem.

I believe that it will simply result in more drivers seeking fraudulent identity and more drivers without --

REP. GALLEGLY: Do you advocate the issuing of drivers licenses to illegal immigrants?

MR. MIERZWINSKI: I don't have a position on that.

REP. GALLEGLY: But they are illegal, so would you advocate any benefits to those that are here illegally, other than their constitutional rights?

MR. MIERZWINSKI: I would refer, as I did in my testimony, to the work of the National Council of La Raza and the American Civil Liberties Union and the Immigration Rights Forum, that have done some major work on this. I'm not prepared to comment on that.

REP. GALLEGLY: I appreciate the gentleman's comments. I just find it a little perplexing that we would give benefits to people that are illegally here, to help perpetuate them being illegally here. I yield back.

MR. MIERZWINSKI: Very briefly, I'm not trying to dodge your question, sir. Our organization simply does not have a position on that specific issue.

REP. GEKAS: The time of the gentleman has expired. Although there are votes pending on the floor, we still have 15 minutes to appear there on. I will take the prerogative of the gavel to recognize the gentleman from Virginia, Mr. Scott, for a round of questioning. And then after his questioning we will recess until 5.20. Mr. Scott is recognized.

REP. SCOTT: Thank you, Mr. Chairman.

Mr. McNulty, you indicated that you had found certain people with false identifications. Did you follow through to see -- to evaluate how many, if any, posed a serious threat? I mean, there's a difference between cheating to get an ID to get a job, and cheating to -- and fraudulently getting an ID to blow up buildings and kill people. Did you do an assessment as to who these people were and what kind of threat they posed?

MR. McNULTY: There was nothing done in the course of the effort to try to do additional investigative work on the individuals. We just recognized the vulnerability of individuals in that situation who could be extorted or could be pressured or coerced to providing some assistance to someone who might have an activity -- a dangerous activity in mind.

REP. SCOTT: Well, the fact that they had a fraudulent ID made them susceptible?

MR. McNULTY: Possibly.

REP. SCOTT: Mr. Mierzwinski, you indicated that biometrics with IDs was not a -- wasn't a good idea. Can you explain what your position there is?

MR. MIERZWINSKI: Well, I think, Mr. Scott, that the biometrics is being promoted by a number of companies who maybe want to sell biometrics as a solution to the terrible problems that our country faces. But I urge the committee to take a close examination. One report I've seen, one researcher spoofed a fingerprint reader with gelatin, the active ingredient in Gummy Bears. And the American Civil Liberties Union has documented that even the Department of Defense has some serious problems with facial recognition systems. The second part of the problem is if I get a good --

REP. SCOTT: By "spoofed" do you mean they got a subsequent ID and used that kind of messed up fingerprint to --

MR. MIERZWINSKI: Right.

REP. SCOTT: -- mask the ID -- the fact that they were in fact someone else who was also in the databank?

MR. MIERZWINSKI: Right, and if you get your fingerprint on an identity card with my name on it, you've got ID that proves you're me, with your fingerprint on it that you can use to be me. You've essentially created a super identity document. The biometrics makes your proof that you're me even better. There are some significant problems out there.

REP. SCOTT: Mr. Huse, what do you need to get a Social Security number? What identification -- how do you validate yourself to get a Social Security number?

MR. HUSE: As a citizen of the United States you need, you know, of course proof of birth in this country. And most Social Security numbers are given at birth in this country today and it's a relatively error-free process. For a non-citizen, of course, you need to prove your place of birth and birth certification with documents that come from --

REP. SCOTT: You have to prove that you have a document that shows that somebody was born in North Carolina on a certain date?

MR. HUSE: Correct.

REP. SCOTT: How do you know it's you?

MR. HUSE: How does Social Security know the --

REP. SCOTT: How do you know it's the person? You have a person who comes in with a birth certificate. How do you know it's the person?

MR. HUSE: Well, if you're an adult -- I mean, for adults Social Security has to verify the authenticity of that document before the number is issued, and it does that.

REP. SCOTT: Well, I guess my --

MR. HUSE: It's suppose to do that.

REP. SCOTT: -- follow up question -- my follow up question would be how does anything that we do today going to make it more likely that the person who has a Social Security number is actually who he says he is?

MR. HUSE: That's why I suggested in my testimony, sir, that there really needs to be more inter-activity at all levels of government to ensure in real time that these documents, or these bona fides are valid at the time they're presented.

REP. SCOTT: How many people are getting false IDs showing they're somebody else, and how many are just trying to get a Social Security card in their own name?

MR. MIERZWINSKI: There -- I mean, there's -- I don't know the answer to your question. I'm sure there are people who do that, but we don't have -- we don't know what we don't know there. If I --

REP. SCOTT: Okay. Well, let me get in one more question, Mr. Mierzwinski, can you tell me what suing the credit bureaus would do?

MR. MIERZWINSKI: Well, I think the credit bureaus need to match credit card applications to credit reports on four or five items rather than simply on the Social Security number, that's the big problem. If I get your Social Security number off the Internet I can get credit in your name very easily. They need to match on my previous address, they need to use some out of wallet identifier, something an ID thief wouldn't know, and they need to use several identifiers in concert together, rather than only the SSN.

REP. SCOTT: This is the credit bureau?

MR. MIERZWINSKI: Well, the credit card companies and the credit bureaus need to work together on this. The credit bureaus need to --

REP. SCOTT: If they don't do that and give somebody credit in my name and I am inconvenienced and my checking account is raided, they would be financially liable for those losses?

MR. MIERZWINSKI: Well, the bank would be financially liable for those losses in most cases, so the banks typically eat this as a cost of doing business. They think the cost of doing business is less than the cost to society of the half a million victims who've had their lives ruined, and that's the reason the banks haven't upgraded their systems. They're not financially liable enough.

REP. SCOTT: Mr. Chairman, I'd like unanimous consent that these documents be put into the record.

REP. GEKAS: Without objection, and the time of the gentleman has expired. The chair revises its estimate as to when the committee shall return. We now stand in recess until 5:35.

(Recess.)

REP. GEKAS: The hour of 5:35 having arrived, the recess has expired, but so has the chairman. We must, under the rules, await the presence of two members, one besides the chair, in order to proceed. But what I wanted to do was to keep my own record running on, starting on time, whenever and wherever possible. So you have to bear the brunt of that. And you have the choice: I can recite sonnets from Shakespeare, or sing Amazing Grace, whichever you wish to accomplish. Keep the decision to yourself, and we will await the arrival of another member.

(Recess.)

REP. GEKAS: The time of the recess has expired. Let the record indicate that the gentleman, Mr. Scott, along with the chair, constitute the required hearing quorum. And so we shall proceed to quit.

I do have one question that I wish to pose. And I will let the gentleman from Virginia, if he wishes to pose another question, and we will wind it up that way, pending the arrival of some other member.

One question, Mr. Huse, that leaps out at us from your testimony, where on page 3, you state that our own work illustrates how wise a decision this is, that is, to beef up the integrity of their system. In a recent study, preliminary results indicate that 8 percent, over 100,000 of the 1.2 million Social Security numbers assigned to non- citizens during calendar year 2000, were based on invalid immigration documents, which current SSA processes did not detect. That's a lot of people running around without proper documentation. Are we doing anything about that? That's the general question. What is the Social Security Administration doing to minimize that?

MR. HUSE: I previously mentioned some of that, Mr. Chairman.

REP. GEKAS: Yes, you did.

MR. HUSE: And it's a long story. But our audit work told us that we had a problem here several years ago, that this isn't new information that happened just after -- because of September 11th. We had previously established that there needed to be a much closer connection between the authentication of documents provided by the Immigration and Naturalization Service and our processing of SSNs for non-citizens.

In the last administration, you know, there were a succession of letters sent to INS by the Commissioner of Social Security and, clearly, this problem was known. Since September 11th, however, immediately following those horrific events, the acting Social Security commissioner at the time, Larry Massanari established an enumeration task force to fix some of these things. And those are some of the results I alluded to in my testimony.

But they are being addressed now. There are new procedures in place. And there is a commitment now, under the aegis of homeland security, under that impetus, for the Immigration and Naturalization Service, and SSA, to work much closer together to close this gap. I mean, I can be more specific as to what those things are, but --

REP. GEKAS: When you said that the Social Security administrator, or acting Social Security administrator, wrote several letters to the INS --

MR. HUSE: No, that was the previous commissioner.

REP. GEKAS: I understand.

MR. HUSE: Right.

REP. GEKAS: What prompted his sending the letters? Did he have something on his desk that showed --

MR. HUSE: Audit work that we had done that showed that we were continuing to enumerate non-citizens without proper verification of the documents concerned. That was established by our work.

REP. GEKAS: The chair now reneges on his first promise to go to Mr. Scott, because Mr. Flake appeared. And he not yet had a chance to ask any questions. So, the gentleman from Arizona is recognized for five minutes.

REP. JEFF FLAKE (R-AZ): I thank the chair for holding this hearing.

The panel may know that I have a bill that would require states to issue drivers' licenses that expire no later than a person, a temporary resident's visa. Right now, we have a situation in most states where someone can come to the country on a six-month visa, or a two-year visa, some kind of student visa, and actually go in to get a driver's license for up to, in some states, 44 years if you happen to be 16 years old. That was the practice in my state of Arizona. We have since changed. And I believe seven states now will not issue a license for a period longer than the visa.

Mr. Mierzwinski, you mentioned that any restrictions or any -- trying to define who's legal and who is not, and the issues of licenses would simply raise the cost of insurance premiums, is that your intention?

MR. MIERZWINSKI: Two things, congressman. And first of all, my organization hasn't taken a formal position on your legislation. My knowledge on identity theft is the reason I am a witness here. But I have looked at a number of the suggested solutions to the -- to some of the problems facing the country. And national ID cards and restrictions of drivers' licenses, I don't think, will solve the problem of identity theft.

The problem with restricting drivers' licenses, I think, is clear. It will fuel a market for more fraudulent documents, perhaps even more high tech fraudulent documents. And, in addition, it may increase drivers' premiums, as more people choose to drive without drivers' licenses. Those are some serious issues that I urge you to weigh with your legislation.

REP. FLAKE: Before I do, can I ask you, is there empirical evidence, is there anything to quantify how many -- if having a license actually encourages you to buy insurance? Has there been any study on the topic that you can cite?

MR. MIERZWINSKI: I don't have that study with me, but I will certainly look into it and get back to your staff.

REP. FLAKE: Okay. But you're not aware of any study that shows a correlation between having a license for an illegal, and actually purchasing insurance?

MR. MIERZWINSKI: Shows or does not show, but I am in contact with a number of experts on insurance and I'd be happy to get back to you.

REP. FLAKE: But you're not aware at this point?

MR. MIERZWINSKI: Not at this time.

REP. FLAKE: So any suggestion that it would increase premiums is pure speculation at this point?

MR. MIERZWINSKI: Well, I've seen it suggested by a number of groups and it seemed to make sense to me.

REP. FLAKE: Okay, that's good.

Mr. Stana, have you taken a position on the legislation.

MR. STANA: Well, I think that there isn't one answer to this question.

It think what you're proposing would --

REP. FLAKE: Yeah, I understand that. I just --

MR. STANA: -- would certainly help if it were coupled with some sort of a verification process, a two stage process that would entail not only a visual inspection but also some sort of inspection that keys back to a database to verify that this individual's visa has expired or driver's license has expired. If you don't do that, just flashing a driver's license or another form of identification, could further identity theft not prevent it.

REP. FLAKE: Right. Mr. Huse?

MR. HUSE: I'm going to answer your question obliquely because I think it's a good idea. We did audit work several years ago or maybe even less than several years ago that involved the state of -- one of your nearby western states, the state of Utah, where we found that a significant number, and I don't have the number exactly but I'd be glad to expand that answer in a written response to you, of non- citizens were going into Utah because they could get a driver's license there, a driver's license that had no limits. And that was being used for purposes way beyond operating a motor vehicle on Utah's roads.

REP. FLAKE: Yes, well, that's -- the point of the legislation is that if there is a de facto form of national ID at this point it's the driver's license.

MR. HUSE: It's the link between -- I think the driver's license and the combination of the driver's license and the Social Security number together makes the national ID. I think that's a fair statement.

REP. FLAKE: Thank you.

Mr. McNulty, in the last 30 seconds I have.

MR. McNULTY: I'm here on the Department of Justice ticket so I don't have a position --

REP. FLAKE: That's okay with me.

MR. McNULTY: Well, I don't think we have a position on the issue.

REP. FLAKE: I thank the chair.

REP. GEKAS: The time of the gentleman has expired.

It is the intention of the chair to recognize the gentleman from Virginia, Mr. Scott, for a follow-up question, to be followed by the recognition of the lady from Texas who will act as the cleanup hitter for another follow-up question or two. The gentleman from Virginia is recognized.

REP. SCOTT: Thank you, Mr. Chairman.

Mr. McNulty, when a credit card is stolen the bank will just cut off the credit and do the loss. Is there any attempt to let the credit run to see if you can catch the person?

MR. McNULTY: That's a very interesting question, we were talking about that during the break. I'm not familiar --

REP. SCOTT: Let me follow up with that. I had that situation where somebody got a card and they were buying gasoline with it several times, and that was all they were charging on the card. It seems to me something like that you have the potential of actually catching somebody.

MR. McNULTY: Well, two thoughts. First, there are stories about cards continuing to run and it's a little confusing as to why that is the case. It should be and most people would expect that it would be cut off immediately and it wouldn't be used again, but you do hear that. Now, why, it's not sure -- it's note clear, and that led my second -- leads me to my second point, which is that I think there needs to be more enforcement in this area and it appears as though from a business perspective they view this as just a cost of doing business and are not too interested in the enforcement side, at least in terms of bringing cases to law enforcement. So if that's what they're doing, I'm not sure I see the fruit of that activity.

REP. SCOTT: Well, when I said let it run, I meant as a sting possibility.

MR. McNULTY: Yeah, I hear you.

REP. SCOTT: Some of the -- because all of them are pre- authorized so when the number gets in, you know, you could have an alert. Perhaps that might be something we -- because it's so expensive to try to do that and the return may not be there, that we may want to fund such an operation and think along those lines.

But let me ask one other question to Mr. Huse. For non-citizens trying to get a Social Security card you have a lot of rigmarole to go through. Is the potential of actually catching somebody using the Social Security number for violent criminal purposes worth all the aggravation you're going to put people through who are trying to get a card legally?

MR. McNULTY: I believe it is. I believe it is, sir.

REP. SCOTT: And how much would it cost in terms of your administration and people's aggravation to actually tighten it up so that you would know that the person before you is who he is and he's not trying to use it illegally?

MR. McNULTY: Well, I think the Social Security Administration has some idea that by increasing the stewardship side of the focus here so that there is more real-time verification of these documents, which may cause some time delay, that we'll be able to close this loophole. I think the record following September 11th dictates that this be done.

REP. SCOTT: Anybody else want to comment?

MR. STANA: No, I would just say that I think having some form of verification is essential. I think just having a visual verification, whether you're talking about a Social Security card, you're talking about driver's license, a border crossing card, isn't sufficient. It's easier to cross the borders in the United States than it is to get in the GAO building, and I'm not so sure that's what should be.

REP. SCOTT: Well, I mean, the original documents you need like a birth certificate, how do you get a birth certificate?

MR. STANA: Verified? Well, you know, you raise a good point. In your questioning before the break you asked how do you know that the person who's presenting the birth certificate is really the person who should be presenting that document, and you're raising a good point. And I personally believe that once biometric technology matures there may afford opportunities to clarify identity than is currently the case.

MR. HUSE: When a foreign visitor comes to this country they -- both the State Department and the Immigration and Naturalization Service have a piece in establishing that individuals bona fides and issuing certificate documentation that is -- and that's what Social Security gets, it's that certificate documentation from INS that says it's okay to enumerate this person. In the ideal this should be done at the time of entry and that's really where we're going to go. But that requires perhaps some strengthening of databases and systems that needs to be invested in from what we have today.

Today we're willing to make the sacrifice to slow things down a little bit to get this done because of the security implementations, but in the ideal this should be done at the time of entry.

MR. STANA: If I might add briefly, that information that is given to INS and INS uses to create the identity is only going to be as good as the host country's systems, okay. So you're running into a whole other problem.

REP. GEKAS: The time for the gentleman has expired.

We turn to the lady from Texas.

REP. JACKSON-LEE: Thank you very much, Mr. Chairman.

I always thought I could be a great baseball player and now here I Let me try to summarize from my perspective, and certainly not represent the view of my colleagues, but I do believe that the thrust of this hearing is to really narrow in on the injury that may be done by these false documents and those who would do harm to this country, though I am very concerned of the abuse of the Social Security card, because what I know it to be from growing up is it is to say that you are who you are. It's the card that has now become part of my identity to the extent that I could not find that paper card if my life depended on me, but when you ask me for my Social Security number I do know it, and it has been used through colleges and your transcripts and for any manner of -- and I would like us not to have to move away from that, I think it has been very effective.

Obviously it is also used to establish a benefit and that you're the person to get the benefit, but I would say to you that we need to, even with its broken system, we need to look at the State Department and INS relationship on the visas, because that is what happened with the terrorists, they came in on either tourist and/or student visas. They received them from their country of origin and they received them through presenting some sort of documentation. If there has to be any harsh procedures we've got to wake up and invest in the technology and data sharing that gets them at that point, and we can do no less for this country.

So we need to begin to look at that, and even if -- because I have individuals in my constituency who want to reunite family members and they've got a mother-in-law who's as innocent as the day is long but at the visa point she's being stalled for a variety of reasons. I would like that not to happen, I'd like us to have procedures that can really ferret out the bad guys, and that's technology and documenting who they are, and when I say documenting who they are. And when I say documenting, looking at fingerprints, how many times they've come into the country, and I think we can do that.

But getting back to the Social Security card, if we can fix that, then explain to me, Mr. Huse, and I must compliment you for what you all have tried to do in proposal, but it looks to me as if you have not yet done some of the things that have been recommended. So I'd like you to comment on obtaining the independent verification from agencies like the INS and State Department when these individuals present you this documentation here in the United States and say, "Yeah, I'm okay, give me an S.S. and give me number?" How do we do that better? How do we -- what are you doing? Why haven't you moved into getting that documentation? What do we need, more investment in technology? Let me just finish.

The -- also the training of our field office employees, who I know are inundated and frustrated, that was one of the issues that we dealt with in the Social Security offices again in my community, frustration, denials, keeps you from doing this kind of unique work. I think you need to train people separately from the general run of the mill crowd that comes in and needs a disability because I don't want those people to be cut off of disability or standing in line and confused with others. If you deal with individuals who do not have citizenship documentation, isolating them not for the color of their skin, or the language they speak, but because they're not a citizen and have people who are professional.

I'd appreciate it if you'd respond to those inquiries, and I guess last is to -- I like this one, expand the agency's data matching activities of the federal, state and local government entities, and it looks as if you've not yet done that. We've got to do that kind of work, I think, before we can begin to indict ourselves as to the fact that we can't get the job done. I yield to the distinguished witness.

MR. HUSE: Thank you. I'm going to take that last part of your question first. And there is significant work to do for us to look at the matching and privacy implications of doing better in sharing data with all of the entities concerned, and that's underway. That's complex and may require some legislative activity on the part of the Congress. That's -- we're in a dialogue now with all concerned to include the Justice Department --

MS. JACKSON LEE: And it's internally underway? And what you're saying is you're looking at that now?

MR. HUSE: Yes, it is underway, that effort --

MS. JACKSON LEE: All right.

MR. HUSE: That effort has been joined. The second part of your question --

MS. JACKSON LEE: Training your employees.

MR. HUSE: We recognize -- or actually, Commissioner Barnhart has recognized and has ordered the establishment of and on July 1st we'll start the first of these enumeration centers where we'll take Social Security professionals, INS professionals, members from my staff and other law enforcement involved and create a center where enumeration will occur outside of the Social Security field office, which really isn't the place for it in the first place, with all of the new requirements that are called for. That will be started in several cities on July 1st and the in the Fall it will increase to I think 14 of the locations around the United States, and eventually it is hoped that will become the way we accomplish this until something better can be done to bring everybody, through data sharing and so forth, to a better place.

MS. JACKSON LEE: When you were answering the last question, which is the confirmation of the evidentiary documents, I mean, are you going -- I assume this last comment --

MR. HUSE: It'll become right in one place, which we think is a really effective way to -- we'll bring everybody to one room where this will be done.

MS. JACKSON LEE: So you'll take special pains now to make sure these documents are in fact legitimate, and you'll have the --

MR. HUSE: In real time right at one place.

MS. JACKSON LEE: All right. I thank the gentleman.

REP. GEKAS: The time of the lady has expired. The time has come for us to dismiss the witnesses with gratitude and to tell them that by their presence here they also submit to written interrogatories on the part of the members, so we expect that there will be some of that. Again, we thank you. This meeting stands adjourned.

(Adjourn)

END

LOAD-DATE: June 27, 2002