Thank you, Madam Chairman, for calling this important hearing.

Today's hearing provides us with an opportunity to understand the connection that may exist between organized crime and terrorism. It also provides an opportunity to evaluate the level of cooperation between federal and local law officials.

I thank Lieutenant John Stedman of the Los Angeles County Sheriff's Department for being with us today. I also thank our other witnesses, Mr. Kris Buckner and Dr. Matthew Levitt, for providing their expert testimony.

The selling of counterfeit goods pervades every major area of the United States. According to recent estimates, $286 billion dollars in counterfeit goods are sold in the U.S. every year. The problem is not just large companies protecting their intellectual property and their profits. It is also consumers paying for goods they believe are of a certain quality only to receive fake goods. It is people buying dangerous counterfeit pharmaceuticals over the Internet as we heard at several hearings last year before the Permanent Subcommittee on Investigations. Interpol recently reported the tragic case of counterfeit baby formula sold in China which resulted in the deaths of 13 babies and serious illness to another 171 babies.

The sale of counterfeit goods is not a victimless crime. And of those organized criminal enterprises that are involved in the profitable business of counterfeit goods, there is a small number who directly threaten our national security by providing financial support to terrorists.

In July 2003, the House Committee on International Relations held a hearing entitled, "Intellectual Property Crimes: Are Proceeds from Counterfeited Goods Funding Terrorism." At that hearing, the Secretary General of Interpol, Mr. Ronald K. Noble, sounded the alarm that "intellectual property crime is becoming the preferred method of funding for a number of terrorist groups."

Under Secretary Hutchinson said, "Terrorist organizations worldwide are looking for a variety of illegal activities to fund their efforts . . . They have looked at contraband and counterfeiting and piracy all as means of illegal activity to fund their organizations."

One well known case involving counterfeit or pirated goods was reported in the joint Departments of Justice and Treasury 2003 National Money Laundering Strategy. Working with Canadian law enforcement, U.S. officials obtained 18 convictions of members of a Charlotte, North Carolina-based Hezbollah cell, which had smuggled untaxed cigarettes into North Carolina and Michigan and used the proceeds to provide financial support to terrorists in Beirut.

There is a danger that over time terrorist cells and criminal gangs will forge mutually beneficial links that will facilitate terrorist infiltration into the United States. It is one short step from smuggling narcotics to smuggling terrorists and explosives. Once this link is made, the challenge to our domestic security will have exponentially increased.

Some concern has already been reported about possible connections between al Qaida and the street gang, known as MS-13. While these connections appear now not to have been made, our vigilance must be strict and it illustrates the important need for cooperation between criminal intelligence divisions in the local law enforcement field and terrorist intelligence agencies at the federal level.

I hope today's witnesses can address some of those issues and I hope, Madam Chairman, that the Committee will continue to look into these issues. Thank you.