The overall proposed 2013 budget for the Justice Department was flat, $27.1 billion in discretionary spending, with officials shuffling funds to address the biggest priorities since there is little appetite in Congress to increase spending in light of recent $1 trillion-plus deficits.

Still, the Justice Department asked Congress for $5 million to hire 14 new employees, including nine attorneys, to focus on intellectual property crimes. Last year, the administration sought $3 million for six new hires but Congress refused.

"We've had an increase in the number of cases that we're dealing with in IP (intellectual property)," Deputy Attorney General James Cole told reporters. "We think this is an area that really needs some focus and some efforts and increases in the future."

Last month U.S. prosecutors accused one of the most heavily-trafficked websites in the world, Megaupload, of peddling copyrighted movies, television shows and music and earning tens of millions of dollars from the alleged scheme.

If the budget request is approved by Congress, the team would grow to 34. The entertainment industry has been pushing the administration to do more, and efforts to pass new legislation to crack down further on such crimes has stalled.

Separately, the Obama administration dropped its previous budget request to buy a prison in Illinois that would have been used to house terrorism suspects currently incarcerated at the U.S. military prison at Guantanamo Bay, Cuba.

The White House and Congress have been at loggerheads over where to detain and prosecute the suspects, including the accused mastermind of the September 11, 2001 attacks, Khalid Sheikh Mohammed. The administration had hoped to buy a facility in Thomson, Illinois but Congress has refused to pay for it.

"We're still trying to work with Congress to see if we can get funding for it and get approvals for it, it's certainly still part of what we think is a necessary add-on to the Bureau of Prison system for high security and that kind of level of incarceration," Cole said.

(Reporting By Jeremy Pelofsky; Editing by Cynthia Osterman)

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