Sunday, November 23, 2014


The unfolding Financial Pacific insider trading securities scandal, in the Republic of Panama, is alleged to have resulted in millions of dollars in illicit profits, for former President Ricardo Martinelli, and several of the ministers in his Cabinet. Since it is reasonable to assume that the guilty parties have previously transferred their criminal proceeds out of Panama, and into accounts in banks located in North America, and in other jurisdictions, it is suggested that you run the names of the Martinelli ministers.

 Should any of these individuals happen to be current bank clients, you will want to take a hard look at their accounts. If there have ever been funds on deposit in excess of the known estimated income and assets of the client, you should consult bank counsel for advice forthwith, for you may have a duty to report to regulatory authorities, and where appropriate, exit account relationships. It is imperative that you have records that verify Source of Funds for any Panamanian PEPs that you are banking.

These are the ministers of state who were listed officeholders when Martinelli left office earlier this year:

(1)   Oscar Armando Osorio, Minister of Agriculture.
(2)   Romulo Alberto Roux Moses, Minister of Canal Affairs.
(3)   Ricardo Quijano Jimenez, Minister of Commerce.
(4)   Frank de Lima, Minister of Economy.
(5)   Lucinda Molinar, Minister of Education.
(6)   Franklin Vergara, Minister of Health.
(7)   Carlos Alberto Duboy Sierra, Minister of Housing.
(8)   Jorge Ricardo Fabrega, Minister of Government.
(9)   Demetrio Papadimitriu, Minister of the Presidency.
(10)  Jose Raul Mulino Quintero, Minister of Public Security.
(11)  Federico Jose Suarez, Minister of Public Works.
(12)  Giselle de Calcagno, Minister of Small & Medium Enterprises.
(13) Antonio Ferrufino Benitez. Minister of Social Development.
(14) Alma Lorena Cortes Aguilar, Minister of Labor.
(15)  Ana Isabel Belfon Vejas, Attorney General.
(16) Dario Berbey, Manager, National Bank of Panama.
(17)  Mario Jaramillo, Ambassador of Panama to the United States.
(18) Pablo Antonio Thalassinos, Permanent representative to UN.

You should also note that corrupt public officials in Panama often use corporations to hide their illicit wealth, and have been known to list close family members as corporate officers and directors.

Saturday, November 22, 2014


Aerial photographs show that China is not only dredging Fiery Cross Reef, a large island in the disputed Spratley chain, located in an area of the South China Sea that is far from the mainland, and any legitimate territorial claim, but the emerging island will contain a 3000 meter runway. This changes the equation in the region, when it comes to the calculation of risk.

The new runway, when completed will be able to accommodate Chinese fighter aircraft, and allow them to range throughout all areas of the South China Sea, including those areas extremely close to the territory of the Philippines,Vietnam, and Malaysia, where China continues to advance claims that are not only unsupported by history, but violate international maritime law. The Chinese arrogance about these colorable claims will now be supported by military might.

Do we really need the introduction of fighter jets into the region ? It increases the risk of an incident, of loss of life, and the threat of actual military engagements, between China and its nervous neighbors, all supported by the United States. All this could occur, when Chinese fighter pilots buzz aircraft or naval or coastal vessels of other countries in the region.  You may wish to consider raising Country Risk upon Vietnam, the Philippines, and Malaysia.


The news about the Private Client division of a major Swiss bank, opening what it proudly described as a New Markets effort, is disturbing. This new class of wealthy individuals, which is composed of minorities, and other groups not previously considered to be potential clients, because they did not previously have sufficient wealth to qualify, are being specifically targeted by a financial institution with a regulatory history, and one that pursued American wealth, holding out the carrot of tax evasion techniques to possible clients.

A good money launderer can often wash the proceeds of crime, find a suitable, and willing, front man, or woman, and build a credible cover story about him or her, sufficient to withstand a rudimentary background check, but rarely enough to survive an enhanced due diligence investigation. In their haste to enroll this new class of non-mainstream,  yet affluent, private client, wealth management teams may intentionally choose to ignore deep due diligence, in favor of easy new money coming into the bank.

Money launderers read the newspapers too, and I guarantee that some of the more accomplished ones are aware of this New Markets initiative, by private bankers, and are already on the way towards matching up laundered narco-profits, that have been repatriated into the United States, with cooperating front men, who happen to be from minority ethnic groups, or even those of different sexual orientation, who are also being targeted by private bankers, to place money into those blue-chip international financial institutions, from where wire transfers can often be accomplished, completely outside the American financial structure.

Remember what happened when a certain American bank expanded its clientele to foreign nationals from the newly-emerging non-Communist economy of Russia ? Literally billions of dollars of dirty Russian money went through the New York banking center. Let us hope that, in their eagerness to accept this New Money, bankers do not cut corners on compliance, and unwittingly, or intentionally, accept criminal proceeds for deposit.  


The US Attorney's Office in New York has filed its Sentencing Submission in the IEEPA/OFAC sanctions violation case against Richard Chichakli. The defendant, you may recall from his recent filing*, has asserted that a sentence of only 8-14 months is appropriate, and claimed that a large portion of the enhancements the the US Probation Office (USPO) added to their Guidelines calculation were incorrect or improper.

There were some surprises in the Government's filing. it seems that Chichakli was involved in two other ongoing business ventures, with US citizens, that violated his Specially Designated National (SDN) status, which made it illegal for him to conduct any business with Americans. It is been alleged that he used these ventures to support himself while he was living in Australia under an alias. Though on their surface legitimate, they were, under OFAC regulations, illegal.

(1) Chichakli operated what has been described as a company that sold silverware to Americans. The entity was known as "Essence of Nobility," but there is no further information about its legal status, so we do not know whether it was merely a ficticious name, or a corporation. It had 320 customers, and the US Attorney's filing stated that he was earning a six figure income from this activity.

(2) The defendant was purchasing used automobiles in the United States, and exporting them. Correspondence from an American shipping firm was attached, in support of this information.

The Sentencing Submission did, of course, cover, in detail, Chichakli and partner Viktor Bout's venture in Samar Airlines, specifically their organizational activities, and their attempted acquisition of  B727-200, a B737, and an MD83 airliners. This was the IEEPA/OFAC charge specified in the indictment, which was described as "flagrant and repeated violations of the law," in the sentencing filing.

Regarding the sentencing suggested by the US Attorney:

(A) The US Attorney's Office concluded that their own computation of the defendant's conduct came to a Level 29, which is 87-108 months' imprisonment (The Submission states that the USPO calculation was a Level 33, which results in a recommendation of 133-168 months).

(B) That, contrary to Chichakli's claims, no downward departure is warranted, for the lack of actual monetary losses, for the alleged failure to disclose Brady material (favorable to the defense), for the defendant's purported efforts to render Substantial Assistance, and for his alleged and unproven PTSD, which was as a result of his service in the US Military, in the Middle East.

(C) That there were no errors in the charge of IEEPA/OFAC violation.

(D) Restitution, in the amount of $70,000, to cover the attorneys' fees expended by the South Florida company where Chichakli attempted to illegally purchase an airliner, Aventura Aviation.

Sentencing is scheduled for December 4, and an appeal of whatever sentence is imposed is expected.
*Richard Chichakli contests his Guidelines Sentence Computation

Friday, November 21, 2014


A California Superior Court Judge has dismissed the civil action, brought by the imprisoned former Panamanian General and President, Manuel Noriega, against a prominent American video game maker. The suit charged that the portrayal of Noriega's likeness in the popular game, Call of Duty: Black Ops II, was unlawful, and damaged the former dictator's reputation.

The defendant corporation, whose attorneys included former New York City Mayor (and ex-Associate US Attorney General, and US Attorney) Rudolph Giuliani, had filed a Special Motion to Strike, asserting that "the video game at issue constitutes protected expression on matters of public interest, and that the plaintiff cannot establish a probability that he will prevail on any of his claims."

Oral argument was heard on the motion; the Court, after surveying extensive existing case law in California, regarding a public figure's rights to publicity, and the First Amendment right of free expression, held that:

 "In applying these standards to the evidence presented here, this Court concludes that Noriega's right of publicity is outweighed by defendant's First Amendment right to free expression. "(Opinion at 3)

"A brief survey of the defendants' uncontroverted evidence conclusively shows that Noriega is a notorious public figure, perhaps one of the more notable historical figures of the 1980s." (Opinion at 4)

"Noriega failed to provide any evidence of harm to his reputation." (Opinion at 4)

Readers who wish to review the complete text of the Court's decision, can access it here*.
*Noriega vs. Activision/Blizzard et al, BC551747

Wednesday, November 19, 2014


If you are a regular reader of the blog, you know that, during his tenure as Panama's president, Ricardo Martinelli once took an extended vacation, to Europe and Asia. We wrote* about his side-trip to the Republic of Azerbaijan, where our sources stated that he, and his sons, reportedly maintain large bank accounts. You may even remember that, on this trip, he took no less than 38 large suitcases, and we expressed the belief that he was, among other things, depositing some of his ill-gotten gains there.

Now, the protected witness who blew the whistle on the organized bribery scheme orchestrated by the government agency PAN*, perpetrated upon virtually all new construction projects, is talking about where the estimated $700m went. The whistle blower has advised Panamanian investigators that most of it was packed up in those very suitcases that Martinelli took with him to Azerbaijan, and that all the illicit cash, now controlled by Martinelli, was deposited into accounts in the Azeri capital of Baku.

The whistle blower has testified, under oath, of personally witnessing the loading of Martinelli's suitcases, with the bribe money, which was criminal proceeds that PAN collected from legitimate businesses seeking licenses and permits for new projects. This new evidence may make it impossible for the Government of Panama to delay filing formal criminal charges against the country's former president, during whose administration, rampant corruption, governmental mismanagement, and a complete failure to suppress financial crime, occurred. Martinelli is at the top of a long list of corrupt Panamanian PEPs who deserve long prison terms, for massive bribery and corruption activities.

It remains to be seen whether prosecutors will now take down the most senior offenders, but we will be watching.
** The National Social Assistance Program, whose receipts are supposed to be for the benefit of the people of Panama.

Note to reader: You may want to read yesterday's article, Panama Rocked by yet Another Major Corruption Schedule, which covers the PAN scandal in depth. 

Tuesday, November 18, 2014


Rafael Guardia Jaén

The former director of PAN, Panama's National Social Assistance Program, Rafael Guardia Jaén, has been arrested, and charged with illicit enrichment and corruption, by the First Anti-Corruption Prosecutor's Office. The local Panama press has crucified him, after the authorities seized $9m in bank accounts that he controlled, and a residence valued at more than $1m, all acquired on a monthly salary of $7000.

Guardia, who was taken into custody by the Directorate of Judicial Investigation (DIJ), was Director of PAN between 2012 and 2014, appointed to that position by then President Ricardo Martinelli. Panamanian law enforcement has reportedly also found five additional estates, farms and ranches owned or controlled by Guardia.

There are reports that the Government of Panama has a protected witness, whose identity has not been disclosed, who alerted the authorities to the massive program of organized bribery in operation at PAN, whereby all major builders and developers were required to donate large sums to PAN, in order to be properly licensed to proceed with their real estate projects. It is claimed at $600m-$700m was illegally obtained in this manner, and all that money is missing from PAN accounts. Former President Martinelli is said to be closely linked to the illicit PAN bribery program. Whether he will also be charged remains a question, but he is alleged to have been the recipient of a large portion of the bribe money.