Counterterrorism Blog

I liked Frank Hyland’s recent CT Blog post, “Ex-Gov. Spitzer - Unfinished Business.” It reminds us that there are serious national security issues - and counterterrorism opportunities - even when it appears that the mischief involves something as banal as nooky.

A few years ago, as I was putting the finishing touches on my book Taxing Terrorism, I read an interesting article describing how foreign intelligence services are mindful of the difficulty their spies have operating in countries that have a strong income tax system. In these countries - and the U.S. clearly qualifies, in terms of our laws, if not always in our political will - law enforcement has a right to know not only how much income one receives, but also from whom. That presents a barrier to people living a lie, by claiming to be employed somewhere but actually being paid by someone else. Taxing Terrorism was my attempt to breathe new life into aggressive tax enforcement, by showing how our criminal tax laws have historically been used to go after people guilty of more than just cheating on their taxes. The book was a labor of love for me, because I started my prosecutorial career as a tax prosecutor. The notion that the IRS has a right to investigate not only the amount of income but its source makes the IRS and the Department of Justice’s Tax Division an underutilized resource in national security. Someone in the U.S. who is selling secrets to our enemies? His payments are taxable, which means he is a tax cheat in addition to being a spy. If you have any doubts about that, ask Jerry Whitworth, if you can find his federal correctional facility in California.

Secondly, the Spitzer affair will hopefully make terrorist financing commentators think twice before arguing that the Bank Secrecy Act is worthless in fighting terrorism. These commentators, who include R.T. Naylor and more recently Ibrahim Warde, are very proud of themselves for their “discovery” that terrorist financing is fundamentally different from money laundering, since terrorism in not a crime of greed and terrorist attacks do not require much cash. They are so busy congratulating themselves to appreciate that this is really a distinction without a difference. Last I checked, Spitzer’s peccadillos were not based on greed, and they did not generate as much cash as drug dealing. It didn’t matter matter. They were uncovered by some alert American bankers, who were doing their duties under the Bank Secrecy Act.

Finally, as noted by Frank, in an age of terrorism, we must police even small violations, because they lead to a loose system that can give rise to bigger criminal problems. This was the basis for the Guiliani/Bratton New York miracle, where aggressively enforcing pan-handling ordinances and prosecuting subway turnstile jumpers led to a dramatic decrease in Manhattan crime. Immediately after 9/11, by friend Paul Warner, who was then the U.S. Attorney in Utah, realized that the Salt Lake City airport seemed to have plenty of people manning the x-ray devices and working in sensitive areas who obviously did not have a good command of the English language. He organized an operation in which these employees’ immigration status and use of Social Security Numbers were reviewed. His suspicions proved correct - the airport was employing plenty of illegal aliens in sensitive locations. The mass arrests were controversial, and Paul apparently lost at least one Hispanic federal prosecutor, who quit the U.S. Attorney’s Office in protest. Nevertheless, Paul maintained that people living a lie while employed in sensitive transportation positions represented a low-grade threat that was too significant to overlook, since they could be blackmailed my people looking to violate TSA security. This point was unassailable, and the Salt Lake City airport operation was replicated in dozens of other jurisdiction over the next several months.

So Frank Hyland is absolutely correct - the Spitzer scandal is more than just nooky. Where you follow the money, and maintain your vigilance, things that seem trifling are actually more significant than they first appear. The trick is to maintain the pressure without apology, in the face of people who have incentive to argue that the government is acting too aggressively.

The views expressed in this article do not reflect those of the Department of Justice.