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LIVE FROM THE HEADLINES

Interview With Larry Johnson

Aired July 15, 2003 - 20:41   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

PAULA ZAHN, CNN ANCHOR: Looks like a familiar scene, doesn't it? In cities across the country.
Well, these days, Americans are being told that they may be funding terrorism by indulging tastes ranging from illegal drugs to SUVs. Now there are some who fear you can add counterfeit consumer items sold by street vendors to the list. Deborah Feyerick explains.

(BEGIN VIDEOTAPE)

DEBORAH FEYERICK, CNN CORRESPONDENT (voice-over): You see them on lots of New York City street corners, counterfeit t-shirts, bootleg DVDs, fake designer handbags.

Louis Vuitton (ph) for just 18 bucks, don't think so. The legal lingo for these kind of knock-offs is intellectual property theft. The International Trade Commission estimates sales of fake goods worldwide total $350 billion a year. But now claims of a new, more dangerous cost.

TIM TRAINER, INTERNATIONAL ANTI-COUNTERFEITING COALITION: There is a very, very strong indication that there would be links to terrorist organizations.

FEYERICK: An industry anti-counterfeiting group claims terrorists are funding operations by selling counterfeit goods. A report compiled by the trade group cites what they call evidence -- a raid on a Manhattan souvenir shop that allegedly turned up counterfeit watches and manuals for Boeing 767s. And the discovery in Denmark of shipping containers filled with counterfeit shampoo and perfume, allegedly sent by a member of al Qaeda.

But the claims may be just claims. To date, the Justice Department brought no charges linking any counterfeit scheme with terrorism.

Treasury officials do not discount the claims, but say they brought no official action to indicate such a link. However, Homeland Security officials do acknowledge in the post-9/11 world they're looking at old-style crimes like counterfeiting and money laundering in a new light. A hearing on Capitol Hill will try to sort out whether the terrorism counterfeit trail is real.

REP. HOWARD BERMAN (D-CA), INTERNATIONAL RELATIONS COMMITTEE: It's not a great leap of faith for me to conclude that terrorists that are looking for sources of funding for their operations would rely and utilize these methods to obtain cash.

FEYERICK (on camera): But a great leap of faith is what it might take if there is no hard evidence backing it up, and Washington insiders say to get any attention from government, you've got to show that your cause has some tie to terrorism.

Deborah Feyerick, CNN, New York.

(END VIDEOTAPE)

ZAHN: And among those testifying in tomorrow's congressional hearing is a corporate security consultant with experience in counterterrorism at both the State Department and the CIA. Larry Johnson is managing director of Berg Associates. He joins us from our Washington bureau tonight. Good of you to join us, sir.

First off, let's talk about any evidence you think that would exist that would prove that there in fact is a money trail linking the profits from the sales of these items on the street to terrorist activities.

LARRY JOHNSON, FORMER STATE DEPARTMENT COUNTERTERRORISM OFFICIAL: There is no evidence that the money from those -- from counterfeiting has caused or gone into a terrorist attack. However, I know first hand of at least three different groups in Central America who are linked to Hezbollah that are involved in counterfeiting. And these are, these are merchant families, but they're known to have direct ties with Hezbollah.

One of these is actually down in the southern part of South America, a man by the name of Baraka (ph), that was sending money directly to Hezbollah. They've been involved with counterfeiting. So it's -- you don't want to create the fear that, you know, counterfeiters are terrorists, but that terrorists are using -- they at least have the opportunity to use counterfeiting money.

ZAHN: If you are so convinced what these families are doing, why aren't, why hasn't the Department of Justice moved on these cases more aggressively?

JOHNSON: Well, the problem is, number one, proving the counterfeit cases themselves is very difficult, because you have to rely upon local government. For example, in Panama, we actually caught someone dead to rights, and one of these individuals, I'm not going to mention the name because -- for obvious reasons, but they paid a bribe to the judge, they got off the charges and were not able to pursue that case.

But I know from intelligence sources that this particular family is based in Panama, based in Colombia, have direct links into Hezbollah. But getting the concrete proof of when the money comes out of businesses and goes into the hands of terrorists, that is not money laundering, that is money dirtying (ph), that's where money that is perceived at least coming from legitimate sources makes its way into the hands of someone who is then going to do something terrible. ZAHN: I want you to react now to some new information that has just come out in an International Anti-Counterfeiting Coalition report, and it points to a counterfeit t-shirt ring, in New York, helping to finance the 1993 attack on the World Trade Center, and then it goes on to say the Irish Republican Army made more than $5 million selling counterfeit "Lion King" videos. If this is true, has anybody been blamed for it?

JOHNSON: We've had a problem for several years, Paula, where, I'll give you another example. Hezbollah members were recently convicted for their role in smuggling cigarettes in North Carolina. When they finally went to trial, it turned out those men had three pages of rap sheets. They had been arrested before.

The problem was prosecutors never pursued it because they didn't consider it a serious crime. A lot of the intellectual property theft is generally not considered a serious crime, because the only ones you're hurting are the companies that are losing the sales. People generally get goods that more often than not are as good a quality as some of the original items. So they figure it's a victimless crime, why pursue it?

But what we know now in the wake of 9/11 is that the terrorist groups have used the same avenues that drug traffickers and other organized criminal gangs used to raise money, because at the end of the day terrorists need money to operate. The old days of getting state sponsorship are gone. It's the new day, if you will, of terrorist entrepreneurs.

ZAHN: Larry, just got about 15 seconds left.

JOHNSON: OK.

ZAHN: Given what you have stated so clearly, what part of this message don't you think the federal government is getting that you want them to get tomorrow if you testify?

JOHNSON: They think that the focus is on terrorism, they're ignoring issues like drug trafficking and counterfeiting. We need to integrate, treat them all the same, because when you go after one, you're actually going to trip up people in the other.

ZAHN: We'll be looking forward to following your testimony, and thank you for helping us better understand how complicated this story actually is. Larry Johnson...

JOHNSON: Thanks, Paula.

ZAHN: Again, thanks for joining us tonight.

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