Kenneth Rijock

Kenneth Rijock

Tuesday, August 23, 2016

SECOND CIRCUIT DENIES RICHARD CHICHAKLI REHEARING OR EN BANC OF HIS APPEAL


Readers who have been following Rchard Chichakli's sanctions case know that he took his SDNY convictions for International Emergency Economic Powers Act sanctions violations, money laundering conspiracy, and several counts of wire fraud to the Second Circuit Court of Appeals. The lower court judgment and sentence were affirmed by the appeals court; we reported on the details in this blog earlier this year.

His final act was to petition for a panel hearing, or an en banc rehearing. here is the text of the Court's Order*, which was entered on August 5, 2016:

"Appellant, Richard Ammar Chichakli, filed a petition for panel rehearing, or, in the alternative, for rehearing en banc. the panel that determined the appeal has considered the request for panel rehearing, and the active members of the Court  have considered the request for rehearing en banc."

"IT IS HEREBY ORDERED THAT THE PETITION IS DENIED."

The defendant/appellant has now exhausted all his appellate remedies as a matter of right. Whether he will now file a Section 2255 Petition, to attack his conviction, is not known, but his Presumptive Release Date is June 11, 2017.

Whether justice was served, in Richard Chichakli's case, is a matter of opinion. Should he be serving a long sentence, for money laundering, due to his association with Viktor Bout's African and Asian arms trafficking operations, or should his covert assistance, rendered, with Bout, to the intelligence services of the United States, in a number of classified missions, mitigate any punishment that he receives ? Should he have gotten a free pass, or a much longer sentence ? You be the judge.

Was his silence during the trial, when he could have gone public with details of American operations overseas that certain government agencies would prefer remain hidden, honorable, or did he just opt to remain silent ?  Whatever you think of him, Richard Chichakli's sentence of incarceration ends next year, and, as a US citizen, he will be released. I wonder what his plans are ?
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* United States vs. Viktor Bout, et al, Case No,: 14-4255 (2nd Cir.).






IRAN WANTS ZARRAB, WHO HAS ZANJANI'S BILLIONS, WHICH REPORTEDLY BELONG TO IRAN

Babak Zanjani
The Reza Zarrab Iran sanctions violations case, which is pending in US District Court in Manhattan, is reportedy complicated by the fact that Zarrab is worth approximately $5bn, and the Islamic Republic has a claim on $2.8bn; it wants that money, and it wants custody of Zarrab.

Reza Zarrab's partner in an elaborate sanctions scheme, the Iranian billionaire businessman, Babak Zanjani*, was sentenced to death in Iran, earlier this year, on corruption charges; Zanjani was funneling hard currency to Iran, to evade the international financial sanctions, and Iran claims he owes the state $2.8bn. There are indications that the death sentence might be modified, to a term of imprisonment, should he pay over the funds.

Inasmuch as Zarrab, and other individuals with whom Zarrab and Zanjani are partners, have access to the money claimed by Iran, the country's judicial authorities, and officials, have made no secret of the fact that they want Zarrab, and the money, in their hands. What effect this will have on future exchanges of prisoners is not known.
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 * Named a Specially Designated National (SDN) by OFAC  in 2013.

SANCTIONED MEGA BANK'S CLIENTS USED MOSSACK FONSECA LAW FIRM


While it is not a prominent feature of the Consent Order, entered by the New York State Department of Financial Services, against Mega International Commercial Bank Co., of Taiwan, " a substantial number of customer entries, which have or had accounts at several other Mega Bank branches, were apparently formed with the assistance of the Mossack Fonseca law firm in Panama. Mossack Fonseca is one of the law firms at the center of the formation of shell company activity, possibly to skirt banking and tax laws worldwide, including US laws designed to fight money laundering."

Mega Bank, which has drawn a $180m fine, had no less than two branches located in the Republic of Panama; One in Panama City, and more ominously, one in the Colon Free Zone, which many regard as the global center of the Black Market Peso Exchange. We are wondering why no bank compliance officers have been charged, or even named, by NYSDFS.  Mega's BSA Officer for New York was based in Taiwan ! How on earth was he expected to properly discharge his duties, when he worked in another part of the world ?


Monday, August 22, 2016

REZA ZARRAB'S ATTORNEYS FILE THEIR REPLY MEMORANDUM ON MOTIONS TO DISMISS AND TO SUPPRESS



The all-star team of criminal defense attorneys that represents the Iranian gold trader Reza Zarrab, accused of violations of US sanctions against Iran, has responded to the US Attorney's reply to their pending motions, to dismiss, and to suppress evidence obtained during his detention and interrogation, upon arrival into the United States, and before his arrest.

Readers who are not familiar with the legal arguments, and issues, previously presented in US v. Zarrab may want to access previous articles on this blog, which discussed the defense motions, and supporting memorandum, and the government's reply memorandum, in detail.

The basic thrust of the 41-page memorandum just filed by the defense:

(1) Zarrab cannot be prosecuted under the IEEPA, upon the facts of the case, where he is a foreign national, conducting strictly foreign transactions, with only foreign (non-US) entities.
(2) The Rule of Lenity* is applicable, which bars prosecution under the statute & regulation, on these specific facts.
(3) The Bank Fraud count does not fit the allegations of the indictment.
(4) The charges of money laundering, and conspiracy fail, because they depend upon defective sanctions and bank fraud counts.
(5) The motion to suppress should be granted. It is not normal for inbound travelers, at the border, to be compelled to deliver passwords for their electronic devices, and to disclose personal financial information.

On to the arguments:
(A) There is not jurisdiction, under the IEEPA, to prosecute Zarrab.
(B) Zarrab is not subject to the jurisdiction of the United States.
(C) The Indictment failed to allege that Zarrab conspired to export any service from the US, or to cause any such export.
(D) The Rule of Lenity, an Due Process, require dismissal.
(E)  The Indictment fails to allege Conspiracy to Commit Bank fraud.
(F) The Indictment fails to allege a scheme to harm a US bank, or to obtain money under bank custody.
(G) The Indictment fails to allege misrepresentations to a bank.
(H) The Government misapplies the Bank Fraud statute extraterritorially.
(I)   The money laundering, and IEEPA charges impermissibly merge.
(J)   The Indictment does not describe a Conspiracy to Defraud the United States.
(K)  The search of a traveler's IPhone is not routine; all phone data should be suppressed.
(L)  The Government's continue questioning of Zarrab, after he requested counsel, cannot be justified as arrest processing.

The defense is asking for a dismissal of the Indictment. In the event its motion is denied, it is asking for an evidentiary hearing on the motion to suppress

A hearing, during which oral argument will be heard on these motions, is scheduled for September 6, 2016.
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* The Rule of Lenity: In construing an ambiguous criminal statute, a court should resolve the ambiguity in favor of the defendant. A court may also look at the common usage of a word, case law, dictionaries, parallel reasoning, and punctuation  

TURKEY'S ROLE AS FACILITATOR OF TERRORIST FINANCING IS EXPOSED BY ARREST



If you had a question about how Hamas utilizes Turkey in its terrorist operations, particularly terrorist financing, follow this. A recent arrest, of a Hamas agent, in Israel, demonstrated how the terror organization's presence in Turkey simplified funding of operations in the West Bank or Israel.

The individual who was detained, a confirmed Hamas agent, whose mission was to recruit, and pay, individuals, who would then commit terrorist acts.

(1) The specially designated terrorist entity deposited funds in the agent's retail store in Istanbul.
(2) The Istanbul store thereafter sent the funds to the agent's other store, located in Jerusalem.
(3) the new Hamas recruits come into the Jerusalem store, and received cash from the store register.

In many other countries in the Middle East, known Hamas agents are identified, and swiftly deported, but Turkey offers them safe haven.

Another HAMAS agent was bulk cash smuggling Hamas cash, $25,000, from Turkey, into Israel, when he was detained.

Funding for proposed terrorist acts was now complete. HAMAS maintains its global overseas operations center in Turkey, with the open blessing & assistance of the Turkish Government. Though there is some vague promise, on the part of Turkey to close up that facility, it is doubtful that this will occur.

The Istanbul headquarters is headed by Saleh Al-Arouri, a leading HAMAS terrorist, OFAC-santioned, who has spent many years in prison, for terrorist actions.  Do not expect him to cease his terrorist funding operations anytime soon irrespective of what Turkey says it will do.

Sunday, August 21, 2016

NEW YORK BANKING REGULATOR CITES PANAMA BRANCH OF TAIWANESE BANK FOR MAJOR MONEY LAUNDERING VIOLATIONS


The New York State Department of Financial Services, judged by many to be the most effective AML enforcement regulator in the United States, has concluded a Consent Order with Mega International Commercial Bank Co. Ltd., A Taiwanese bank, with branches in New York and the Republic of Panama. This agreement, which includes a $180m fine, for massive AML deficiencies, and the bank's mandatory institution of major remedial measures, across the board, on compliance, should be required reading for all compliance officers. The deficiencies were so widespread, that you are encouraged to review the complete text, which can be accessed here.

Just as important, especially for compliance officers at banks located in North America, are the details surrounding the AML failures at the bank's two Panama offices; one in Panama City, the other in the Colon Free Trade Zone. The NYSDFS Order, which  specifically refers to Panama as a "high risk jurisdiction for money laundering," twice, in the text, describes a shopping list of AML defects.

One of the most unusual violations listed was the pattern of "debit authorizations" (payment reversals), whereby, often months after a wire transfer was effectuated, it was reversed, and the funds returned. Of particular note was the fact that the bank allows this transfer even after the customer had closed his account in Panama. Some of these transfers were to and from the same customer.The utility of such a technique, where permitted by a bank, to facilitate money laundering, is painfully obvious.

Neither the Panama City, nor the Colon, branches have been subject to any action by Panamanian banking regulators, according to public records. Compliance officers should immediately check their recent wire transfer records, to determine whether their bank has engaged in any transactions with Mega, and immediately open an investigation into the circumstances surrounding those transfers, the parties involved, and the underlying business relationships shown by those transfers.


BANNED STOCKBROKER THUMBS HIS NOSE AT FINRA AND THE SEC BY FORMING MULTIPLE FRONT COMPANIES TO TRADE SECURITIES


Gary James Lundgren, barred from the American securities industry, for life, by FINRA, but still evading justice from Panama, has formed a number of new shell companies, through which he continues to illegally solicit American investors, hawking his fraudulent "high yield investment programs," and unregistered securities, masquerading as real estate investments.

Lundgren has reserved a large number of Domain Names, which match his new collection of shell companies; readers should beware, if any of these entities solicit them to invest in high yield programs, coming from these Internet addresses, to ignore them completely:

(1)  gloval-investors.net (note deceptively similar to Global Investors & Global Valores).
(2)  investor-advisor.net
(3)  fund-advisors.net
(4)  Panama-advisors.net
(5)  latin-finance.com (this is NOT the magazine of the same name).
(6)  Panama-investors.net
(7)  asset-advisors.net
(8)  asset-advisors.com
(9)  Globalfundadvisors.net
(10)Panamainvestors.net
(11) globalmutualfunds.net
(12)latin-finance.net
(13)globalbonds.net

Lundgren may be the subject of a sealed Federal indictment, for he continues to refrain from traveling to the United States, where he would be arrested, upon arrival at Immigration and Customs, if such was the case. His much advertised visit to his native Alaska this summer, which he posted exensively on social media, was a complete fabrication, as he is afraid to enter the country.