Source: United States Department of Justice

Headline: Acting Assistant Attorney General John P. Cronan Announces Futures Markets Spoofing Takedown

Today, the Criminal Division of the Department of Justice is pleased to announce the largest futures market criminal enforcement action in Department history.  

In six cases across three federal districts, we have charged eight individuals in connection with their alleged roles in manipulating futures markets for precious metals, as well as futures markets for S&P 500, Dow Jones Industrial Average, and NASDAQ E-mini futures contracts.  

The alleged conduct in these cases once again reflects a disturbing and reckless trend of individuals and companies seeking to put illicit gains and profits above honest and law abiding conduct – and by doing so, harming innocent investors and putting the very integrity of our financial markets at risk.  

Today’s announcement marks the latest chapter of the Criminal Division’s ongoing – and unwavering – commitment to protecting the integrity of our financial markets.  

The charges we are announcing today relate to alleged fraud and manipulation of the U.S. futures markets through schemes that are colloquially known as “spoofing.”

Spoofing refers to the illegal practice of placing an order for a futures contract that the trader never intended to be executed in the first place.  These spoofed orders are often cancelled almost immediately after they are placed – frequently within seconds – and therefore are never filled.  

Spoofed orders alter the appearance of supply and demand, and manipulate otherwise efficient markets.  The intended effect of spoofing is to entice other traders to base their investment decisions on that false perception of supply and demand.  

The alleged conduct in the cases announced today was identified and investigated through a variety of methods, including traditional law enforcement techniques, cooperation by relevant corporate actors, and, importantly, data analysis.  

Let me say a word about that data analysis.  The Department and its law enforcement partners have developed the ability to identify spoofing patterns through sophisticated analysis of market-level data.  

Going forward, we expect to use data analysis to an even greater degree in order to identify fraudulent and manipulative conduct in our financial markets.  

The Criminal Division’s message is clear.  We are watching.  We are closely monitoring the markets.  And we will leave no stone unturned in our efforts to combat and eradicate illegal, fraudulent, and manipulative market conduct.

Our country’s markets are trusted globally, attracting investors from throughout the United States and around the world – and they must remain trusted.  If investors lose trust and faith in our markets, our country suffers.

I will now briefly discuss the criminal prosecutions announced today.  The first four I will mention were filed in the Northern District of Illinois.

The first case alleges that two precious metals traders – James Vorley of the United Kingdom and Cedric Chanu, a French citizen – participated in a scheme to commit spoofing, wire fraud, and commodities fraud by placing thousands of orders in connection with over one hundred instances of coordinated spoofing between approximately 2008 and 2015.  

The second case charges Jitesh Thakkar with spoofing offenses involving the market for E-mini futures contracts.  

An E-Mini futures contract is a stock market index contract that represents an agreement to buy or sell the future cash value of the S&P 500, NASDAQ, or Dow – depending on which E-Mini futures product is being traded.  

As alleged in the criminal complaint, Thakkar is the founder and principal of Edge Financial Technologies, Inc., a Chicago-based information technology consulting firm that specialized in creating custom computer programs for sophisticated commodities traders.  

Thakkar allegedly was involved in creating a software program that was used by his co-conspirator to engage in spoofing through the placement of thousands of S&P 500 E-mini futures contract orders.  This automated trading program was allegedly designed to prevent certain spoof orders from actually being executed by automatically moving the spoof orders to the back of the order queue.

The third case charges Jiongshen Zhao with various spoofing and fraud offenses, along with making false statements to a registered entity, the Chicago Mercantile Exchange.  

As alleged, Zhao – a trader at a proprietary trading firm located in Sydney, Australia – manipulated the S&P 500 E-Mini futures market in hundreds of individual episodes between approximately 2012 and 2016, by employing an illegal spoofing strategy.  

The fourth case charges Edward Bases and John Pacilio with substantive commodities fraud offenses, and Bases with substantive spoofing offenses, involving the precious metals futures markets.  

According to electronic chats cited in the criminal complaint, both defendants allegedly bragged about their ability to “manipulate” and “spoof” the market to their illicit advantage.

We also are announcing today charges that were previously filed in the District of Connecticut against an alleged precious metals futures trader for UBS AG named Andre Flotron.  Flotron allegedly conspired with other UBS precious metal traders to engage in spoofing between approximately 2008 and 2013.

Lastly, Krishna Mohan, allegedly a commodities trader at a proprietary electronic trading firm with locations around the world, was charged in the Southern District of Texas with commodities fraud and spoofing offenses.  

Mohan allegedly engaged in manipulating Dow and NASDAQ E-Mini futures in hundreds of episodes by employing an illegal spoofing strategy that involved placing orders on both sides of the market.

Through recent cases handled by the Criminal Division, and the cases we are announcing today, criminal activity that jeopardizes the integrity of our financial markets will not be tolerated.

Finally, I want to thank the hard working prosecutors in the Criminal Division’s Fraud Section who are handling these cases. In particular, I commend the leadership of the Fraud Section, and especially thank Assistant Chiefs Nicholas Surmacz and Carol Sipperly; Trial Attorneys Jeffrey Le Riche, Michael O’Neill, Michael Rinaldi, Matthew Sullivan, Mark Cipolletti, and Corey Jacobs; and Assistant United States Attorney Avi Perry from the U.S. Attorney’s Office for the District of Connecticut, for their outstanding work prosecuting these cases.

I also thank the dedicated law enforcement agents at the Federal Bureau of Investigation and United States Postal Inspection Service who have investigated, and will continue to investigate, these cases, as well as James McDonald, the Director of Enforcement at the Commodity Futures Trading Commission, and his staff, for their assistance.  
 

Source: United States Department of Justice

Headline: Attorney General Sessions Announces New Tool to Fight Online Drug Trafficking

Attorney General Jeff Sessions today announced a new resource to help federal law enforcement disrupt online illicit opioid sales, the Joint Criminal Opioid Darknet Enforcement (J-CODE) team.

“Criminals think that they are safe on the darknet, but they are in for a rude awakening,” Attorney General Sessions said.  “We have already infiltrated their networks, and we are determined to bring them to justice.  In the midst of the deadliest drug crisis in American history, the FBI and the Department of Justice are stepping up our investment in fighting opioid-related crimes.  The J-CODE team will help us continue to shut down the online marketplaces that drug traffickers use and ultimately that will help us reduce addiction and overdoses across the nation.”

J-CODE will more than double the FBI’s investment in fighting online opioid trafficking.  The FBI is dedicating dozens more Special Agents, Intelligence Analysts, and professional staff to J-CODE so that they can focus on this one issue of online opioid trafficking.

In July 2017, Attorney General Sessions announced the seizure of the largest dark net marketplace in history.  This site hosted some 220,000 drug listings and was responsible for countless synthetic opioid overdoses, including the tragic death of a 13 year old.

In August 2017, Attorney General Sessions ordered the creation of a new data analytics program, the Opioid Fraud and Abuse Detection Unit, to focus specifically on investigating opioid-related health care fraud.  The same day, he assigned a dozen prosecutors to “hot spot” districts—where opioid addiction is especially prevalent—to focus solely on investigating and prosecuting opioid-related health care fraud.

In November, Attorney General Sessions ordered all 94 U.S. Attorney offices to designate an opioid coordinator who will customize federal law enforcement’s anti-opioid strategy in their district.

Source: United States Department of Justice

Headline: Deputy Assistant Attorney General Roger P. Alford Delivers Remarks at the American Chamber of Commerce in South Korea

It is my pleasure to be able to speak with you today to address issues of common concern relating to the enforcement of antitrust laws.  I am thrilled to be with you on the eve of the Winter Olympics in PyeongChang.  Beginning next week the entire world will focus its attention on South Korea, much as it did thirty years ago during the Seoul Olympics of 1988.  The Seoul Olympics were for me and millions of my generation, a coming out party for South Korea.  I’m confident that the same will be true next week, as hundreds of millions of people will look beyond the security threats of the Korean peninsula, and focus on the amazing culture, cuisine, and hospitality of the Land of the Morning Calm.

It is remarkable how far the world has come since the Seoul Olympics.  In 1988 the two countries at the top of the leader board for Olympic medals were the Soviet Union and East Germany.  No one could have guessed it, but Seoul would be their last Olympic Games, because shortly thereafter the Soviet Union dissolved and Germany reunited.  In a few short decades, we have moved from a world of superpower military antagonism to a world of interconnected economic prosperity.  With the end of the Cold War, most people generally have retreated from considering other countries as existential military threats. Typically, we treat our foreign counterparts as potential trading partners, or at worst as fierce economic rivals.  If one had to choose to live in the world as it existed during the Seoul Olympics, or the world as it exists during the PyeongChang Olympics, regardless of where you live, I can easily hazard a guess as to which you would choose.  The better angels of our nature have prevailed, and we live in the most peaceful and prosperous time in the history of humanity.

Equally remarkable are the changes that have been wrought in South Korea.  In 1988, South Korea had a per capita GDP of less than $5,000, and a government under military control.  The judiciary lacked independence, and direct democracy was still on the horizon.  But since that time, South Korea has transformed itself into a prosperous, stable, vibrant democracy.  As one scholar has noted, “the South Koreans have written the most unlikely and impressive story of nation-building of the last century.”

There is much to appreciate in South Korea’s economic success story over the past several decades.  It is a familiar story to all of you, but it is worth repeating:  South Korea is one of the fastest growing and most successful economies in the world.  It now has a per capita GDP of $35,000.  It is one of only seven countries—including Britain, France, Germany, Italy, Japan, and the United States, in the 20/50 club of countries with over 50 million people and per capita income over $20,000.  It is ranked 19th in the world on the rule of law index, which is a remarkable achievement.  It would be ranked even higher but for lower marks due to corruption, and certain shortcomings on fundamental rights such as due process and non-discrimination.    

All of these successes exemplify three key lessons about government’s role in building a strong and successful economy. First and most important is the significance of market-based legal reforms to economic growth.  When faced with serious economic challenges over the past several decades, South Korea has repeatedly demonstrated the ability and perseverance to tackle market-based reforms that have paved the way for renewed growth.  Second is how essential it is for governments to foster innovation.  This includes creating regulatory and enforcement structures that support the market investment necessary for such innovation and working towards a stronger rule of law that offers the transparency and the predictability to encourage such investment.  Third and relatedly, I see how closely intertwined the Korean success story has been with a recognition of our global connections.  Today, Korean firms develop and manufacture technologies that are part of the daily lives of people around the world, and those technologies—from smart phones to LCD TVs to mobile broadband—are among the means by which the global economy becomes even more interconnected.  Many of you here today have been a part of this market success.     

All three of these principles—a commitment to rule of law, support for innovation, and recognition of our global connections—are key pillars of sound antitrust law, the area where I now focus my efforts as a Deputy Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.  Since joining the Department of Justice last summer, I have spoken repeatedly about the importance of rule of law in antitrust enforcement.  In the past few months, I have traveled from Asia to South America to Europe on a listening tour, gaining insights on the amazing complexity of the competition landscape.  I have come away from those meetings impressed at how well agencies are conducting themselves, often with finite resources, limited experience, and intense political oversight.  But I also have come away with concerns about some of the hurdles that continue to undermine agency effectiveness in certain countries.  I have engaged in productive discussions with our counterparts around the world regarding effective, transparent and non-discriminatory enforcement of the antitrust laws.  The effort to champion rule of law in antitrust enforcement is a cornerstone of the Department of Justice’s work internationally, and we continue to work on new ways to advance this message around the world.

Ensuring that antitrust enforcement supports innovation is equally a priority, and it is no coincidence that this was the subject of one of the first public speeches by the Antitrust Division’s Assistant Attorney General, Makan Delrahim.  In his remarks this past October at New York University, AAG Delrahim announced his commitment to work together on a mutual consensus toward non-discriminatory enforcement of antitrust laws worldwide.  This past November, he reaffirmed the Antitrust Division’s commitment to enforcement principles that reward and foster innovation.  He spoke forcefully about ways in which the DOJ’s Antitrust Division works to ensure a proper balancing of intellectual property and antitrust law.   His focus in this area continues the long-standing view of the Antitrust Division that the intellectual property laws create vital incentives for innovation and commercialization, and reflects his deep commitment to innovation policy in the U.S. and abroad.   

Today, I would like to speak at more length about the third principle—recognizing the global impact of antitrust enforcement.  Just as Korea and the world have fundamentally changed since the 1988 Seoul Olympics, so too has global antitrust enforcement.  In 1988 there was no International Competition Network, and only a handful of competition agencies were active, as much of the world continued to embrace highly-regulated or command economies.  As President Ronald Reagan put it, the attitude of governments at the time was “if it moves, tax it, if it keeps moving, regulate it, and if it stops moving, subsidize it.”  But as companies competed on an ever more global scale, countries became ever more committed to market-based economies and to enforcing competition laws.  Today there are more than 130 different jurisdictions with antitrust agencies.  A merger of two multinational firms can trigger merger filings and reviews in a dozen or more jurisdictions.  Cartels affecting the global supply chain may involve companies engaged in illegal activity in countries separated by thousands of miles, numerous time zones, and multiple languages.  Unilateral conduct enforcement in one jurisdiction has the potential to affect marketing and licensing practices not just in that jurisdiction, but around the world.

For antitrust enforcers, this means that international coordination and cooperation are more important than ever.  Without these tools, the uncertainty associated with divergent approaches to enforcement has potentially significant costs for globally active companies, and the risks of inconsistent and potentially conflicting remedies are high.  Antitrust enforcers who do not consider the global impact of their enforcement decisions can create inefficiencies that ultimately harm consumers throughout our interconnected world.

The increasingly international scope of antitrust enforcement is one reason that the Department of Justice, together with the U.S. Federal Trade Commission, updated and reissued the Antitrust Guidelines for International Enforcement and Cooperation last year.   Among the issues that these Guidelines address is our application of U.S antitrust law to conduct outside the United States, and the factors that we consider in applying our laws to that conduct.  Namely, before pursuing an enforcement action or seeking a remedy that might have impacts outside the United States, the Department of Justice considers whether the U.S. antitrust laws apply to the conduct and whether there are comity considerations that should be taken into account.

As the Guidelines note and as the U.S. Supreme Court made clear, the U.S. antitrust laws apply to conduct outside the United States that has a substantial and intended effect in the U.S.  This application was reaffirmed when U.S. Congress passed the FTAIA, amending the Sherman Act, in 1982.  The ability to apply the U.S. antitrust laws in this way has been a key part of our efforts to effectively address international cartels whose illegal activities raise prices and cause economic harm to U.S. commerce and consumers.  

It is also clear that where necessary to address U.S. harm, the U.S. antitrust agencies can impose remedies that go beyond U.S. borders.  But, when the Antitrust Division considers an extraterritorial remedy, it does not do so lightly.  The Antitrust Division will look carefully at several issues.  First, is the remedy necessary to redress harm or threatened harm to U.S. commerce and customers?  Second, is the remedy we seek consistent with a comity analysis?  

The first inquiry is highly fact intensive and can only be answered after a thorough investigation as to the harm to U.S. commerce.  As the Antitrust Division has noted in its Policy Guide to Merger Remedies, the remedy should fit the violation and flow from the theory of competitive harm.  Moreover, relief is most likely to effectively protect consumers when it is based on a careful application of economic and legal analysis to the particular facts of the case.    

Numerous cases in which U.S. antitrust enforcers have gone beyond our borders illustrate this principle.  For example, an appellate court found in a recent case that foreign divestiture of a manufacturing plant in Austria was needed to restore competition in the U.S. market.  The same was true in the recent review of mergers in the beer industry, where the Division required, and the court approved, the divestiture of a brewery in Mexico to help maintain competition in the U.S. market. 

Linking the remedy to the harm is only part of our analysis.  We also consider comity, and the comity analysis requires answers to a host of different questions.  These are described in detail in our Antitrust Guidelines for International Enforcement and Cooperation.  The most obvious comity question is whether the proposed remedy creates a direct conflict of laws, what the Supreme Court has called a “true conflict.”   If a remedy would put a person in the position of being unable to comply with the laws of another sovereign to which that person is subject, then comity may counsel against enforcement, or in favor of an alternative remedy.

But the comity analysis does not end there.  The Supreme Court has embraced a broader international comity analysis in the antitrust context, and consistent with that position, the Antitrust Division assesses, among other things, the “articulated interests and policies of a foreign sovereign.”  Among the questions the Antitrust Division will ask as part of its comity analysis is whether a foreign sovereign encourages or discourages certain courses of conduct or leaves parties free to choose among different courses of conduct.  In other words, comity requires an analysis of the policies of other jurisdictions that consider the behavior procompetitive.

By reaching out to foreign authorities we can secure a better understanding of how to fashion a remedy that addresses the harm to our market and the relevant foreign policy concerns of other jurisdictions.  To reiterate, the Antitrust Division will only seek a remedy that includes conduct or assets outside the United States if it is needed to redress harm to the United States and is consistent with our international comity concerns.  And those comity concerns are broader than the “true conflict” scenario.  In conducting its comity analysis, the Division considers, among other things, the degree of conflict with a foreign jurisdiction’s law or articulated policy and the extent to which enforcement activities of another jurisdiction—including remedies resulting from those enforcement actions—may be affected.  We have articulated these principles not only in our Guidelines, but in cooperation agreements with our counterpart enforcers as well.  As our 2015 cooperation agreement with the Korean Fair Trade Commission states, we must give “careful consideration to the enforcement objectives and important interests of the other country’s competition authority … in conducting [our] enforcement activities. 

In a world of concurrent authority, it behooves us to recognize that conduct we condemn abroad may affect international commerce and impact the power of other nations to grant rights to their subjects and regulate conduct within the scope of their authority.  These principles of international comity are as old as the nation state.  Writing in 1689, just a few decades after the Peace of Westphalia, Ulrich Huber stated that “nothing could be more inconvenient to commerce … than that transactions valid by the law of one place should be rendered of no effect elsewhere on account of a difference in the law.”  Of course there are limits to the exercise of power abroad, for each nation has the authority to bind “within the limits of that government and … all [those] subject to it, but not beyond.”  But in the interest of international commerce, Huber wrote, each nation shall enforce the laws of one another insofar “as they do not cause prejudice to the power or rights of such government or of its subjects.”   Under this understanding of comity, this means that “the effects of competition foreign laws are everywhere admitted, except when prejudicial to the forum State or its citizens.”

We of course have moved beyond the world of strict territorial sovereignty, as evident by the effects doctrine and similar exceptions that we apply in the antitrust and other contexts.  Nonetheless, it remains true that comity counsels governments to respect the needs of international commerce and be sensitive to the interests of other sovereigns, including the rights sovereigns grant to those subject to their authority.

This question of international comity is particularly critical with respect to the choice of remedies.  What if the comity analysis shows that the proposed remedy implicates the interests of a foreign sovereign?  It has been the longstanding practice of the Antitrust Division to adopt remedies that avoid unnecessary conflicts with the remedies of other jurisdictions.  A key focus of the frequent and strong international cooperation the Division has engaged in over the years in merger reviews has been to forestall such potentially conflicting remedies.  Beyond the immediate issue of whether an antitrust remedy conflicts with one imposed by another jurisdiction, the Antitrust Division will work collaboratively where possible with other jurisdictions to minimize comity concerns while still ensuring that the remedy fulfills its purpose of addressing the harm or threatened harm to U.S. commerce and consumers.

The considerations I describe with respect to extraterritorial antitrust remedies implicate not only the principle that sound antitrust enforcement must take into account its global impact, but also the other two principles of antitrust enforcement with which I began this talk— enforcement based on a transparent, non-discriminatory rule of law, and enforcement that fosters innovation and the investment that innovation requires.

I have spoken before at length about the importance of transparency for creating the stability and predictability in enforcement that allows business to prosper and for enhancing confidence that antitrust enforcers are making reasoned, non-discriminatory enforcement decisions.    In the context of remedies that stretch across borders, this transparency demands that before imposing a remedy, an antitrust enforcer clearly articulate the harm to its commerce and consumers and describe how the proposed remedy is necessary to address that harm.  Where the remedy involves an extraterritorial component, this kind of transparency is necessary not only for all the usual reasons but also because it allows for productive engagement with other jurisdictions whose comity interests may be implicated.  Before imposing a global remedy to address local harm, an agency should be transparent as to why that remedy is narrowly tailored to achieve the desired ends.  Without such transparency, some will assume the worst and leap to the conclusion that the remedy is designed to serve other, improper objectives. 

Taking extraterritorial impact into account with respect to remedies also has a clear connection to the goal of fostering innovation.  Where remedies involve the terms on which intellectual property is licensed, it is particularly likely that extraterritoriality will be an issue.  Internationally active firms may prefer and may even need global licensing terms for intellectual property.  Goods subject to these licenses may flow through multiple jurisdictions and multiple levels of the supply chain before they reach the end user, and it may be impractical to track at a granular level whether a good licensed for a particular jurisdiction ends up in that jurisdiction and not in some other one.  Moreover, the intellectual property laws of a particular jurisdiction may be, as they are in the United States, a clearly articulated policy to support innovation by permitting a patent holder to extract the full value of the patent holder’s rights.  As a result, an antitrust remedy that impacts the protections another jurisdiction offers under its intellectual property laws is one is which comity concerns may well arise.  

In sum, in order for antitrust enforcement to respond to an increasingly interconnected world of concurrent authority, antitrust enforcers cannot simply ignore the impact their remedies may have on other jurisdictions.  It is not enough to engage in case cooperation with other jurisdictions that are pursuing an investigation of the same matter.  Nor is it enough to ask whether the parties are between a rock and a hard place, unable to comply with competing commands.  Comity also requires a degree of policy cooperation as to the interests of other affected jurisdictions.  How else can one assess the articulated interests and policies of a foreign sovereign?  In the specific context of the U.S.-Korea relationship, that means abiding by our commitment from 2015 to regularly consult with one another and keep each other informed of significant enforcement developments and policy changes.  

A commitment to transparency and cross-border cooperation on the part of all antitrust enforcers is necessary to ensure that we avoid the risks and the inefficiencies of conflicting remedies and the harm these may have on the very consumers we seek to benefit.  In particular, we need frank and open discussions among antitrust enforcers around the world about the role of comity in extraterritorial remedies that go beyond a simple conflict of rules analysis.  Only then can we ensure that we are best protecting competition and consumers in all of our jurisdictions.

I am delighted to be with you at this time and I greatly appreciate the hospitality of the Commissioners of the Korean Fair Trade Commission at this busy time of year.  In celebration of the upcoming Winter Olympics, let me close with an Olympic analogy.  If one were to compare international antitrust enforcement to one of the winter sports that will be on display next week, which one would you choose?  In my office, some suggested bobsledding because of the teamwork required.  Others suggested figure skating because skaters are required to perfect core technical elements and present their routines with finesse and grace.  For me, I can say with confidence that it would not be downhill skiing, where a skier is alone on the mountain, racing down the hill in blissful ignorance of everyone around her, laser focused on reaching the finish line.  I think the best analogy is ice hockey, in which almost everyone is trying to play by the rules, but there are some unscrupulous players who frequently come to blows, attempting to hide their charging and checking from millions of watchful eyes.  In hockey, the best players have incredible situational awareness, acutely conscious of the surrounding environment and the likely intentions of everyone around them.  “Eyes in the back of the head” is the common term for it.  In the context of antitrust enforcement, international comity provides antitrust enforcers with that situational awareness and spatial intelligence, permitting us to maneuver in ways that are sensitive to the surrounding context and the likely intentions of the other players in the game. 

Thank you.

Source: United States Department of Justice

Headline: Attorney General Sessions Delivers Remarks on the Fight Against the Opioid Epidemic and Violent Crime

Remarks as prepared for delivery.

 

Thank you, Scott, for that kind introduction, and thank you for your six years of service to this Department.  You accomplished a lot in private practice, but you gave that up to serve your community and your country and now you’ve accomplished even more.  I know that several years ago, you helped take a heroin trafficking ring off of the streets in the Hazelwood neighborhood.  That’s exactly the kind of work that is needed across this country right now.

I also want to thank you for your hospitality.  This is my 33rd visit to a U.S. Attorney’s Office.  I’m always inspired to meet the attorneys, investigators, and officers who are in the trenches every day making us safer.

In particular I want to thank Sheriff Mullen, who has been in law enforcement for nearly half a century.  Bill is known as a humble guy, but he has a lot to be proud of.

Thank you Bob Johnson of the FBI, David Battiste of DEA, Mike Baughman with the Marshals Service, Don Robinson of ATF, Tim Burke of the Secret Service, Ed Wirth with the IRS, Tommy Coke with our Postal Inspectors, and all of our other law enforcement leaders who are here.

On behalf of President Trump, I am here to say thank you for your service to this country.

The President and I are proud to stand with all of you.

He understands that law enforcement officers are not the problem—they’re the solution.

It was largely because of officers like you that crime declined in America for 20 years.

From 2014 to 2016, however, the trends reversed.  The violent crime rate went up by nearly seven percent.  Murder shot up by more than 20 percent.

Meanwhile, our country continues to suffer from the deadliest drug crisis in our history.  More Americans are dying because of drugs than ever before.  2016 saw an estimated 64,000 Americans die of drug overdose—one every nine minutes.  That’s more than the population of Lancaster, Pennsylvania dead in one year.  And in 2017 it appears that the death toll was even higher.

For Americans under the age of 50, drug overdoses are now the leading cause of death.  Millions of Americans are living with the daily struggle of an addiction.

I don’t think it was a coincidence that violent crime and drug abuse rose at the same time.  I was just reading one of our Department-funded studies that found that nearly a quarter of the increase in homicides is the result of the increase in drug-related homicides.

And that should be no surprise: drug trafficking is an inherently violent business.  If you want to collect a drug debt, you can’t file a lawsuit in court.  You collect it by the barrel of a gun. Clearly, the deaths caused by drugs go far beyond overdose deaths. Clearly, allowing drug trafficking organizations and gangs to grow rich and powerful will result in more violence and death.

Sadly, Pennsylvania knows this all too well.

In 2016 in Pittsburgh, the violent crime rate was double the national average.  The murder rate and the robbery rate was triple the national average.  Pittsburgh is in the 77th percentile for violent crime overall, the 88th percentile for robbery, and the 90th percentile for murder.

Statewide, the violent crime rate went up between 2014 and 2016; the murder rate went up by more than eight percent, and rape went up by 16 percent.

In 2016, Pennsylvania saw a 37 percent increase in overdoses, with more than 4,000 Pennsylvanians losing their lives to drug overdoses.  That’s 13 a day. Allegheny County alone accounted for 650 deaths in 2016.  It is looking like 2017 will see another increase, but the preliminary data appears to show that the increase will not be as drastic.  This is also true nationally.

But as we all know, these are not numbers—these are moms, dads, daughters, spouses, friends, and neighbors.

They include Jo Lawrence Stewart, age 7, from North Braddock.  He was found shot to death next to his Dad—who was also shot to death—inside their home a little more than a month ago.

And, of course, they include a man and a woman who overdosed and died at home.  Their helpless five-month old daughter was home alone with them. She starved to death in her bassinet over the course of three days.

The people in this community know these stories.  These stories are heartbreaking.

But we will not stand by and watch violence and addiction rise.  Plain and simple, we will not allow the progress made by our women and men in blue over the past two decades to simply slip through our fingers.  We will not cede one community, one block, or one street corner to violent thugs or poison peddlers.

As Attorney General, I am committed to combating violent crime and supporting the work of our police officers.  I have made it a top priority.

The day I was sworn in as Attorney General, President Trump sent me a simple, straightforward executive order: reduce crime in America.

At the Department of Justice, we embrace that goal.  And you and I know from experience that it can be done. Crime rates aren’t like the tides—we can take action to help bring them down.

And over the past year, we have taken action.  In 2017, the Department of Justice brought cases against the greatest number of violent criminals in a quarter of a century.  We charged the most federal firearm prosecutions in a decade.  We also arrested and charged hundreds of people suspected of contributing to the ongoing opioid crisis.

We secured the convictions of nearly 500 human traffickers and 1,200 gang members, and worked with our international allies to arrest or charge more than 4,000 MS-13 members.

MS-13 didn’t like that, by the way.  I saw a news report last week from Voice of America that the MS-13 gang leaders back in El Salvador have taken notice of these efforts.  They know that hundreds of their members are now behind bars.

 So now they’re trying to send younger and more violent gang members to the United States to replenish their depleted ranks.  But they will not succeed.

And we are beginning to see positive signs.  In the first six months of last year, the increase in the murder rate slowed significantly and violent crime actually went down.  Publicly available data for the rest of the year suggest further progress.

The preliminary data for Pittsburgh looks promising as well, with violent crimes declining by 13.3 percent and murders declining by 1.8 percent. This is very good news.

These are major accomplishments that benefit the American people.  And we could not have realized them without a true partnership between our federal team and our state and local law enforcement personnel.

But of course we still have a lot more work to do—especially in confronting the opioid epidemic.

That’s why today I am announcing a new resource that will build on steps I’ve already taken this past year to turn the tide.

In August I announced with the DEA a new data analytics program – the Opioid Fraud and Abuse Detection Unit.  I created this unit to focus specifically on opioid-related health care fraud—using data to identify and prosecute individuals that are contributing to this opioid epidemic.  This sort of data analytics team can tell us important information about prescription opioids—like who is prescribing the most drugs, who is dispensing the most drugs, and whose patients are dying of overdoses.

I also assigned experienced prosecutors in opioid hot-spot districts to focus solely on investigating and prosecuting opioid-related health care fraud.  I have sent these prosecutors to where they are especially needed—including one right here in this office.

These talented and experienced prosecutors, like Robert Cessar, work with the DEA, FBI, the Department of Health and Human Services, as well as our state and local partners, to target and prosecute doctors, pharmacies, and medical providers who are exploiting the drug epidemic to line their pockets.  And they’ve already begun issuing indictments—including right here in Pittsburgh.

That will help us shut off the flow of prescription drugs to our streets.

There is no doubt that much of our addiction arises from prescription drug over use which leads to heroin and fentanyl. We are prescribing and consuming too many pain pills.

And you don’t have to go to a street corner to buy drugs.  With a few clicks of a button, you can go online and have them shipped right to your door.

A lot of criminals think that they’re safe online because they’re anonymous.

They’re in for a rude awakening.

This past summer, the Department announced the seizure of the largest dark net marketplace in history, Alpha Bay.  This site hosted some 220,000 drug listings and was responsible for countless synthetic opioid overdoses, including the tragic death of a 13 year old.

This office has an impressive Darknet Fentanyl working group.  You work with the FBI, DEA, Homeland Security Investigators, the county Crime Lab, the state Attorney General, and the postal inspectors to stop fentanyl from reaching this community.  And you do amazing work. This cooperative effort is essential.

For example, thanks to investigations done by this working group, we’ve seen arrests from Seattle to Philadelphia to the United Kingdom.

Those are the kind of results we can achieve if we work together.

In the internet age, a criminal in Whitehall, Pennsylvania can communicate with a criminal in Whitehall, England in seconds.

But so can we.  So can law enforcement.

That’s why today I am announcing today a new resource to help you go after drug traffickers online. It’s called J-CODE: Joint Criminal Opioid Darknet Enforcement team.

By bringing together DEA, our Safe Streets Task Forces, our drug trafficking task forces, Health Care Fraud Special Agents, and other assets, the FBI will more than double its investment in the fight against online drug trafficking—dedicating dozens more Special Agents, Intelligence Analysts, and professional staff to focus solely on this one issue.

The J-CODE team will coordinate across the FBI’s offices all around the world to target and disrupt the sale of synthetic opioids and other drugs on the darknet.

I believe that this new resource will fulfill a need that so far has not been met, and I am convinced that this new investment will pay dividends for the people of Pennsylvania.

It will help us make more arrests of those selling these deadly substances online as well as shutdown the marketplaces that these drug dealers use—and ultimately help us reduce addiction and overdoses in this community and across the nation.

Together we can do this.  We can bring down crime and give every American peace of mind. These never before seen overdose death rates and surging homicide rates must end. We can and will do it.

I want to close by reiterating my deep appreciation and profound thanks to all the women and men of law enforcement—federal, state and local—and their families, for sacrificing so much and putting your lives on the line every day so that the rest of us may enjoy the safety and security you provide.  We love you and honor your work.

You can be certain about this: we have your back and you have our thanks.