MEXICO CITY FRAUD SUMMARY FOR MARCH - AUGUST 2009

UNCLAS SECTION 01 OF 07 MEXICO 003091

SIPDIS

DEPT FOR CA/FPP
POSTS FOR FRAUD PREVENTION MANAGERS
E.O. 12958: N/A
TAGS: KFRD CVIS CPAS CMGT ASEC MX
SUBJECT: MEXICO CITY FRAUD SUMMARY FOR MARCH - AUGUST 2009


1. SUMMARY: Mexico City's Fraud Prevention Unit (FPU) was
substantially reorganized this reporting period. In August the new
Fraud Prevention Manager (FPM) assumed responsibility for
coordinating fraud prevention programs throughout Mexico, and the
deputy FPM took primary responsibility for managing the Mexico City
unit. Staff efforts during the reporting period focused on new
training programs for NIV and ACS line officers, attacking H2 visa
fraud, and developing new procedural standards for anti-fraud
activities. END SUMMARY.

MEXICO CITY FRAUD CONDITIONS
--------------


2. The Mexico City Consular District includes the states of
Chiapas, Guanajuato, Guerrero, Hidalgo, Michoacn, Morelos, Oaxaca,
Puebla, Queretaro, Tabasco, Tamaulipas, Tlaxcala, Veracruz, the
State of Mexico and the Federal District. The Mexico City
metropolitan area is one of the largest population centers in the
world and includes almost 20 percent of the total Mexican
population. The city faces chronic problems of inadequate and
unsanitary water, unreliable electricity, and traffic jams. The
Mexico City consular district has one of the largest U.S. citizen
expatriate populations in the world. Approximately 10,000 Americans
are registered with the Embassy, but estimates of the total number
of citizens in the district at any time range from 300,000 to 1.5
million, including dual nationals. With one of the largest city
economies in the world, Mexico City is also home to many third
country nationals (TCNs) who come here to work, study, and live
permanently in Mexico.


3. Mexico City is a medium to high fraud post, and overall numbers
of visa and passport applicants produce a large absolute number of
fraud-related cases. Mexico's proximity to the U.S. and
deteriorating security and economic conditions here make travel and
migration to the U.S., legal and otherwise, attractive. The
longstanding problems that economic migration has produced on both
sides of the border are well known. In recent years, however,
drug-related violence increased dramatically as cartels sought to
consolidate their territories along the border and extend them into
the U.S. Consequently, growing numbers of wealthy Mexicans seek to
avoid threats to personal security by "investing" their way to
long-term or permanent residence in the U.S. Organized crime and
drug trafficking rings also have links to increased production of
counterfeit documents and instances of stolen or "borrowed"
identity.

NIV FRAUD
--------------


4. Mexico City has one of the three largest non-immigrant visa
(NIV) units in the world, processing between 1,500 and 2,000 visa
applications daily. The vast majority are from Mexican nationals,
but a significant number are from third-country nationals (TCN) who
reside in Mexico, as well as some who reside in the U.S. and wish to
renew employment visas without having to travel to their home
countries.


5. Statistical rates of visa issuance and associated fraud have
remained relatively constant for the last three reporting periods.
In most visa classes less than one percent of applications were
referred to the Fraud Prevention Unit (FPU) or recorded as involving
suspicious documents. P (performer),H (employment) and L
(intra-company transferee) visas had the highest rate of fraud
referrals or suspect documents, but these still reflect no more than
one or two per cent of applications. In absolute numbers, the
overwhelming majority of cases requiring FPU involvement were for
BBBCV visas:

Mar09-Aug09 Sep08-Feb09 Mar08-Sep08

FPU cases* 642 528 749
% BBBCV** 71% 85% 89%

* Reflects the total of pending fraud investigations and resolved
cases with fraud confirmed or not confirmed. Statistics also include
applications accompanied by suspicious documents that may or not
have been formally referred. Hence, there is overlap with some of
the fraud confirmed/not confirmed cases. FPU also handled 1,722
minor NIV inquiries from officers on the visa line.
**Percent of total FPU cases.


6. The decreased percentage of fraud-related BBBCV cases during
this reporting period probably reflects a relative increase in the
number of H2B referrals (see paragraphs 16). Of all cases formally
referred to FPU, fraud was confirmed in 34% during this period,
compared with 44% between Sep08 - Feb09 and 35% between Mar08 -
Sep08. A goal for this reporting period is to provide additional
training for adjudicators so that they can better distinguish cases

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that should be formally referred. This should have the
complementary effect of increasing the yield of cases in which fraud
is confirmed.

STRUCTURE AND FUNCTION OF THE MEXICO CITY FPU
--------------

7. Mexico City's current FPU staffing includes an FS-01 FPM, an
FS-04 deputy, a consular associate, one LES-10 consular
assistant/investigator, five FSN-09 LES investigators and one FSN-6
consular clerk. Two FSN investigator positions are now vacant but
will be filled before the end of 2009.
American Staff
--------------

8. With the arrival of a more senior FPM, his role has been expanded
to include regional responsibility for fraud prevention
coordination. (Post will report separately on the development of a
regional approach and the effect it will have on Mexico FPU
operations.) Concurrently, the deputy FPM assumed primary
responsibility for daily management of Mexico City's FPU. In
addition to supervising individual investigations and developing the
unit's growing list of training and outreach opportunities, she has
taken on primary responsibility for organizational, procedural and
personnel decisions within the unit and relates directly with FPMs
at other posts as an operational peer.

9. Similarly, the unit's consular associate now has additional
responsibilities in the reorganized unit. These include direct
involvement in supervising certain kinds of investigations, e.g.
those dealing with verifying of records and establishing
relationships. She also increased her responsibility for project
management, such as developing a Mexico fraud prevention blog and
devising mechanisms for sharing local fraud prevention databases
among U.S. missions in Mexico.
The Role of LES
--------------

10. Locally engaged FPU staffing is adequate and appropriately
allocated. Given the growing importance of H&L visa fraud issues,
however, mission Mexico and the Department might consider creating a
senior country-wide FSN H&L investigator position parallel to that
of the Regional Fraud Prevention Manager.

11. LES in the FPU have two primary roles. The first, and arguably
most important, is education. At least one investigator is present
in the NIV section throughout the day. Investigators answer brief
questions from officers involving local knowledge, e.g. Mexican
employment practices, availability and security of civil documents,
or banking practices. Officers are generally discouraged from
relying on documents, but investigators may provide spot evaluations
of critical items such as civil records that are important to
proving relationships. Finally, investigators are a continuous
resource for building understanding of Mexican culture, including
social mores and taboos, family relationships, government ethics,
etc.


12. FPU staff provided 294 hours of training in the last six
months, more than double the previous period. Audiences included
FSOs, LES and outside agencies and businesses. The FPU "fraud tour"
of Mexico City is a popular activity both for consular officers and
others within the mission. FPU staff provided the following
locally-developed training activities during the reporting period:

(A) Fraud briefing for new consular officers and 3 month update;

(B) Seminar for NIV officers on the Mexican education system;

(C) Seminar for NIV officers on the Mexican tax system;

(D) NIV officer seminar on social and economic aspects of Mexico
City;

(E) NIV officer seminar on social and economic aspects and migration
patterns in the Mexico City consular district;

(F) Airport training in Mexico City, Queretaro, Michoacan, Chiapas,
Oaxaca, Tabasco and Guerrero on Mexican identity documents, US visas
and passports, passenger evaluation and impostor detection.

(G) Training for Mexican and multinational financial institutions
(banks, American Express) on Mexican identity documents.

(H) Seminar on Mexican identity documents for ACS staff.

Additional seminars in the development stage include the Mexican
judiciary system and social security and employment.


13. We are convinced that the more training and context FPU
provides for adjudicators the better decisions they will make. For
example, after a recent fraud tour officers reported interviews with
previously refused candidates who were owners of outdoor stands in
the "Central de Abastos." The refusal notes indicated that officers

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conducting the original interviews believed that applicants owned
small roadside fruit or vegetable stands. During the fraud tour,
however, officers learned that the Central de Abastos is the largest
wholesale food market in all of Latin America. Families owning
stands there face significant security risks because criminal gangs
in the area are aware that owners leave the market every evening
with large amounts of legitimately earned cash. These applicants,
whose ties are clearly very strong, have been issued visas.

14. The LES staff's other major role is case investigation. When a
case is referred by a line officer it normally remains FPU's
responsibility until the investigation is completed. The goal for
FPU investigators is to obtain sufficient reliable information for
an adjudicating officer to make an informed judgment. FPU
investigators make their findings a part of the permanent electronic
record. In some cases an officer may independently obtain sufficient
information before an investigation is complete to make a decision.
When this happens the officer may request that the case be returned
for immediate adjudication.
Standards for Formal FPU Referrals
--------------

15. Officers are encouraged to refer cases to FPU under limited
circumstances. The most important include: (1) when fraud
indicators suggest possible U.S. citizen involvement, especially
cases of suspected fraud involving American lawyers; (2) when there
is an existing or potential U.S. or Mexican law enforcement
interest; (3) when the suspected fraud is connected to groups of
applicants (e.g., entertainers) and investigation may reveal
wrongdoing on the part of petitioners or disqualification of groups;
and (4) suspected employment visa fraud. Formal referrals in visa
categories subject to Section 214(b) of the INA should be justified
by unusual circumstances. Cases involving high profile applicants or
official inquiries are possible examples.
Investigations Not Involving Officer Referrals
-------------- -

16. The FPU routinely pre-screens some categories of visa
applications, and findings will sometimes result in an investigation
at FPU's own initiative. H2 and P visa cases frequently fall into
this category, as do occasional groups of BBBCV or B1/B2 applicants.
Individual H1 applications involving a common petitioner may
qualify as well. Typical screening includes PIMS checks for adverse
field memos, Lexis/Nexis verification of employer bona fides, and
checking H2B employers against a watch list maintained by the
consulate in Monterrey. FPU also conducts text searches in the
Consular Consolidated Database (CCD) to determine whether a
petitioner has filed petitions at other posts. A summary of vetting
results is sent to H2B adjudicating officers prior to the applicant
interview date. If adverse information is sufficiently strong, FPU
will complete its investigation of a petitioner/recruiter before
interviews proceed (see paragraphs 18-22).
H2 Visas
--------------


17. H visas, and especially H2Bs, have emerged as a leading NIV
category for fraud investigation and confirmed fraud in Mexico City.
Traditionally, FPU efforts to combat H2B fraud have been directed
at all three principal actors - petitioners, recruiters and workers.
There appears to be no objective evidence, however, that devoting
significant resources to proving individual immigration violations
by workers produces proportionately effective results. A major goal
for the next reporting period is open a dialogue on this subject
between FPMs at consulates in Mexico, FPP and perhaps other U.S.
immigration agencies to devise a strategy with regard to individual
violations that is effective while making the most efficient use of
FPU resources.


18. A recent investigation of an H2B petition for horse racing
grooms illustrates some of the issues involved and strategic options
to consider. Horse racing is a highly seasonal and unpredictable
profession. Victory or loss in a race may quickly shift a stable's
focus from one horse or location to another. It is relatively easy
to document through applicant interviews that H2B grooms frequently
work sequentially for different owners and or in different
locations. Both are illegal under H2B guidelines. Some petitioners
deal with the problem by misrepresenting the duration or location of
a job on petitions; in other cases individual owners hire
undocumented workers. A recent twist involves a recruiting company
that allegedly attempted to solve the horse owners' problem by
acting as the employer of record for nearly 300 grooms who would be
farmed out to members of a horsemen's association at a race track in
New Jersey. In theory, this arrangement would have permitted the
employer of record (i.e., the recruiting company) to provide steady
employment for grooms, albeit in a shifting set of stables. It
appears that the horsemen's association, in a genuine attempt to be
helpful to its members, allowed its name to be used by the recruiter
who promised to provide "legal" labor. The association, however,
never made any effort to ensure that the recruiter did things
legally.


MEXICO 00003091 004 OF 007



19. Information collected from applicants is sometimes key to
discerning illegal activity by petitioners. For this reason, FPU
has often waited until the day scheduled for interviews to resolve
questions about petitions. In this case, however, FPU and the NIV
Chief made a strategic decision not to devote investigator and
adjudicator resources to debrief and interview almost 300 applicants
until or unless problems with the petition, some of which involved
complex and shifting legal issues, were resolved. A threshold
issue, for example, was whether a recruiting company could legally
act as the intermediary between workers and association members.
After considerable research we learned that the Bureau of
Citizenship and Immigration Services (CIS) had in the past accepted
petitions from "agents" of membership organizations, and the
horsemen's petition had been grandfathered under this procedure.
CIS had recently discontinued this type of agent petition, however,
because of precisely the types of abuses we suspected.


20. Waiting to conduct the interviews turned out to be a
practical decision. Armed with legal research, FPU asked the
petitioner's representative for a list of the horse owners and
trainers where grooms would be placed. The recruiter, however,
could provide only a list of the horsemen's association membership.
Telephone checks with members divulged that no specific arrangements
had been made between the petitioner and horse owners for job
placements, and that the membership could not have absorbed anywhere
near 300 workers.


21. Partially as a result of this experience the FPU unit now uses
the prescreening process as a "red light/green light" for scheduling
applicants for interviews. Legal issues related to the petition
receive initial priority, and until those are resolved nothing goes
forward. This not only preserves scarce NIV resources, but keeps
relatively poor H2B applicants from having to pay application fees
and the costs related to travel to Mexico City. We hope to refine
and develop additional strategies in coming months to further
streamline our work.

H2 Training and Outreach
--------------


22. FPU is involved in outreach initiatives to educate the Mexican
public about the H2 program, debunk myths and protect workers'
rights. During the reporting period FPU staff traveled to the
states of Chiapas, Guanajuato, Guerrero, Hidalgo, Oaxaca, Puebla,
Tabasco and Tlaxcala to establish contact with local offices of the
Mexican Immigration Secretariat and conduct workshops on migration
issues. The FPU H visa investigator returned to Hidalgo with an
adjudicating officer for a one-hour interview on a popular radio
program that generated a lively call-in question and answer session.
FPU hopes to build on these successes with similar programs in the
next year.

Visa Fraud in Non-H2 Categories
--------------


23. Although infrequent, fraud in the H1B and L categories is often
complex and difficult to evaluate. Some TN visa applicants create
credentials for scientific technician and "management consultant"
positions that would be more appropriate for less skilled positions.
Groups, applying for P visas or BBBCVs, sometimes include "hangers
on," added to the group or team as a favor or in return for money.
Adjudicating officers also indicate that some crew visa applicants
are so vague about what they are transporting that it raises
concerns that they have cargos of narcotics.

Learning From Mistakes
--------------


24. FPU is working with NIV officers to develop a database of
information culled from I-275 "Withdrawals of Application for
Admission to the U.S." I-275s are distributed to line officers who
review them to determine whether ineligibilities should be applied
based on the information reported by CBP. They then query INK to
verify whether ineligibilities have already been applied when the
I-275 was generated. If recommended ineligibilities or lookouts are
confirmed by the NIV manager FPU enters the lookout and scans
available records into the file. Relevant information is then added
to the FPU database which, when populated, should allow us to
identify trends and share them with adjudicators. During this
reporting period, NIV officers and FPU processed 700 I-275s.DV
FRAUD
--------------


25. Mexico City does not process diversity visas.

ACS AND U.S. PASSPORT FRAUD
--------------


MEXICO 00003091 005 OF 007



26. Mexico City adjudicated approximately 5,000 passports and CRBAs
during the reporting period. Refusal rates were approximately four
per cent for passports nine percent for CRBAs. Approximately one
per cent of passport and CRBA were referred to FPU.


27. Within this small sample (46 total investigations) the level of
confirmed fraud is very low. A typical example involves minor
children born in the U.S. to undocumented Mexican laborers. Such
children were often sent back to Mexico as infants, frequently
y
within days of birth, with no documentation other than a birth
certificate. Raised by relatives in Mexico while parents worked in
the U.S., children acquired everything necessary to live normally in
Mexican society. This included late-registered, fraudulent Mexican
birth certificate previously required for all children to attend
public schools or obtain other public benefits. Years or decades
later when these children attempt to document American citizenship
they appear to have no meaningful relationship to the U.S. other
than a naturally-suspect birth certificate. While time consuming,
most cases following this pattern fortunately can be resolved with a
reasonable degree of certainty.


28. Post rarely encounters U.S. birth certificates listing midwives
instead of doctors as birth attendants. Mexico City's ACS section
is working closely with the Passport Office in Washington and other
ACS chiefs in Mexico to draft adjudication guidelines for such cases
that comply with the recent Castelano settlement agreement.

ADOPTION FRAUD
--------------


29. Mexico City does not process adoption cases.

USE OF DNA TESTING
--------------


30. Almost all DNA testing at post occurs in passport and/or CRBA
cases when there is doubt about the parent/child relationship. Post
estimates that approximately 20% of passport/CRBA applicants who are
asked to undergo DNA testing abandon their applications. In most
cases this is probably because they know that the necessary
relationship does not exist, but there is some concern that
applications may be abandoned because the tests are prohibitively
expensive for poor families.

ASYLUM AND OTHER DHS BENEFIT FRAUD
--------------


31. The office of the Department of Homeland Security in Mexico
City handles asylum cases and other claims for DHS benefits.


ALIEN SMUGGLING, TRAFFICKING, ORGANIZED CRIME, AND TERRORIST TRAVEL
--------------

32. Alien smuggling and trafficking is a big business in Mexico
operated by local and transnational criminal organizations able to
capitalize on the systemic corruption in Mexican immigration
agencies and civil registries. FPU works closely with the U.S.
Office of Foreign Assets Control to revoke visas of drug kingpins
and their families for whom sufficient evidence exists that they are
involved in or benefit economically from narcotics trafficking.
Post also responds to written requests by U.S. law enforcement
agencies to provide visa record information for use in criminal law
enforcement investigations.
LEAHY VETTING
--------------

33. The Merida Initiatives have provided thousands of training
opportunities for Mexican law enforcement officials. Each trainee,
however, must be vetted through a number of databases, including
CLASS. "Leahy vetting" as it is called has until now been performed
by consular officers. As the Merida Initiatives have grown,
however, Leahy vetting has become a significant workload issue,
frequently requiring 20+ hours per week for officers to complete.
These requirements will continue to increase over time. Continued
Leahy vetting by consular officers is unsustainable given Mexico
City's heavy visa workload and the fact that name checks, many of
which do not involve visa adjudication, serve no consular function.
The FPM is exploring possible alternatives with the Embassy's Leahy
vetting coordinator.
DS CRIMINAL FRAUD INVESTIGATIONS
--------------


34. The Bureau of Diplomatic Security's Criminal Investigations
Program and Visa and Passport Security Program are well established
in Mexico. The program currently has seven DS Special Agents
serving in ARSO-I positions co-located with consular sections in
Mexico City, Hermosillo, Ciudad Juarez, Tijuana, Matamoros,
Monterrey, and Guadalajara. Two more ARSO-I positions will be added

MEXICO 00003091 006 OF 007


in 2010 in Nogales and Nuevo Laredo. In addition, Mexico City now
has a new, permanent Deputy RSO-I for Investigations (DRSO-I) who
will promote Mexico-wide coordination.


35. When FPU identifies visa cases that appear to involve
violations of U.S. law or organized criminal activity in Mexico the
FPM reviews them with the ARSO-I who determines whether to open a
criminal investigation. The ARSO-I files monthly investigation
reports on the status of all criminal visa fraud cases with the
Diplomatic Security Criminal Investigations Division and shares this
information with the FPM. Significant cases, updates, and final
disposition are also shared in regular meetings with FPP. Criminal
cases with only a local nexus are often passed by the ARSO-I's to
host nation authorities for prosecution.


36. During this reporting period, the ARSO-I office in Mexico City
was involved in 11 arrest cases. In addition, the DRSO-I has worked
closely with Mexican authorities and the U.S. Department of Justice
to extradite two Mexican national attorneys believed to be involved
in a trafficking-in-persons case being prosecuted Utah.

HOST COUNTRY PASSPORT, IDENTITY DOCUMENTS, AND CIVIL REGISTRY
--------------


37. In late 2007 the SRE established an internal passport integrity
unit. In February 2008 the Narcotics Affairs Section (NAS)
sponsored anti-fraud training for several members of the new unit in
Washington. The unit officially began operations in March 2009
under the direction of a close contact of the Mexico City FPU. Thus
far, the unit has operated independently, and has been successful
implementing reforms and management controls that resulted in
dismissal of a number of employees. The unit travels extensively to
inspect regional passport agencies as well as Mexican consulates in
the U.S.


38. Despite these improvements, Mexican passport security still has
far to go. Although the Mexican passport includes effective
security features, it remains easy to acquire legitimate Mexican
passports using fraudulent birth certificates. Mexico City's FPU
has shared with the Mexican Secretariat of External Relations
(SRE)information about local passport offices that appear to have a
history of issuing fraudulently obtained passports. One of FPU's
priorities is to work with other USG agencies to support and
strengthen the SRE passport security initiative.

Cooperation with Host Government Authorities
--------------


39. FPU has excellent contacts with civil registrars throughout the
consular district. In addition, FPU and the ARSO-I recently began
to works closely with the Mexican Attorney General's office (PGR) to
prosecute double identity and other serious fraud cases. In a
related effort, FPU investigators meet regularly with Mexican police
to turn over false "cedulas profesionales," that have been submitted
in support of visa applications. In a number of instances FPU has
determined that applicants had been using the cards to practice
professions without a license both in Mexico and the U.S. Mexican
authorities take these cases seriously and information provided by
the Embassy frequently leads to prosecutions.

COOPERATION WITH OTHER EMBASSY AGENCIES AND AGENCIES IN U.S.
--------------


40. FPU receives requests for information or assistance from U.S.
government agencies at the Embassy and in the U.S. Frequently these
are requests for copies of Mexican civil documents needed in
connection with criminal investigations or to establish rights to
benefits. FPU also performs INK name checks on behalf of USG
agencies that sponsor Mexican citizens for training or exchange
visitor programs, need clearances for new hires or for Embassy
landlords.

AREAS OF PARTICULAR CONCERN/INTEREST
--------------


41. Only two of Mexico City's authorized six LES investigators have
taken the FSI fraud prevention course. With the recent departure of
two investigators it is essential that two additional investigators
with three or more years' experience attend this important course.
Post also hopes to establish a regular schedule of initial and
follow-up training for all FPU personnel, including FSOs and LES.


42. Ciudad Juarez will be host a countrywide H&L visa fraud
conference in late January or February 2010. The conference will
have a broad scope, but H2 visas will receive particular attention.
Attendees will likely include the FPM and at least one LES from each
Mexico post, as well as representatives from the ARSO-I program,
FPP, KCC and CIS.

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STAFFING AND TRAINING
--------------

43. Post started this reporting period with an acting FPM, an entry
level rotational officer, a senior FSN fraud investigator, and 5 FSN
fraud investigators. The acting FPM was on leave for several
months. In addition, two LES investigators resigned to pursue new
opportunities near the end of the reporting period. The new FPM, an
ELO deputy FPM and consular associate arrived in August at the same
time as the new DRSO-I who is filling a temporary ARSO-I gap. The
new ARSO-I is expected to arrive at the end of October. The
following is a list of current FPU employees and fraud prevention
training received by each:

Fraud Prevention Manager: Colwell Whitney
(PC-542 - July 2009)

Deputy Fraud Prevention Manager: Michele Kimpel Guzman
(On the job training)

Senior FSN Fraud Investigator: Mihai Ghitescu
(Equivalent of PC 542 taken in Fort Lauderdale, FL in 1998)

FSN Fraud Investigator: Francisco Osorio
(PC 542 - March 2006)

FSN Fraud Investigator: Fluviano Florencio
(No formal training)

FSN Fraud Investigator (H and L): Monica Madera
(No formal training)

FSN Administrative Assistant: Alan Picazo
(No formal training)

FEELEY