Thursday, October 30, 2014

COURT DISMISSES VENEZUELAN MSB'S SUIT AGAINST BANK OF AMERICA FOR ROSEMONT FINANCIAL SEIZURES


The District Court Judge presiding over the suit by Megaval Enterprises, Ltd., against Bank of America, arising out of the Rosemont Financial Seizure case, has been dismissed, though the Court has allowed the plaintiff to amend, one additional time. The case turns upon incorrect legal advice, allegedly given, by the defendant, to Rosemont Financial, that plaintiff was not required to register, as a money service business, with either FinCEN, or the Florida Office of Financial Regulation, to operate through Rosemont's B of A accounts.

To summarize the Court's ruling, which was in response to a Rule 12(b)(6) motion to dismiss, for failure to state a claim upon which relief may be granted:

(1) On the negligence claim, (which hinges on the requirements that the defendant had a duty of care, that the duty was breached, that the breach caused an injury, and that plaintiff was damaged as a result) the Court found that "Megaval was not Bank of America's Customer, and Bank of America did not owe Megaval a Duty of Care. If you followed the Rosemont case, you know that its customers, including Megaval, held "sub-accounts" at B of A, through Rosemont.

(2)"Even if Megaval was Bank of America's customer, Plaintiff still had failed to State a Claim."The plaintiff has failed to plead a fiduciary relationship between the parties.

(3) The bank had no duty, under the Uniform Commercial Code (UCC), to insure that Megaval, a non-client, had the appropriate state and federal licenses and permits.

(4) The Plaintiff's claim for negligent misrepresentation also failed. The elements, as stated by the Court, are:   ( a) A statement, made by the defendant, which he believed  to be true, but which was in fact false.  (b) The defendant was negligent in making the statement, because the defendant should have known that it was false.(c) In making the statement, the defendant intended that the plaintiff would have relied upon it. (d) The plaintiff justifiably relied upon the statement. (e) The plaintiff suffered loss, damage or injury as a result. The Court held that, since claims for negligent misrepresentation are fraud claims, they must be pled with particularity (specificity). the facts pled are insufficient. Additionally, Bank of America was not aware that its legal advice, which was rendered to Rosemont, was false, according to the pleadings.

As I have previously stated, when the case was filed, Megaval's reliance upon a legal opinion of a third party, and without having competent counsel research the issues, and issue an opinion, based upon the law, was a major blunder. Their failure to obtain an independent legal opinion cost them $250,000 .

The Court has given the plaintiff until tomorrow (October 31, 2014) to file its Amended Complaint. Can the plaintiff state a cause of action, given the facts of the case, or does the bank owe no duty to Megaval ? Stay tuned.








Wednesday, October 29, 2014

WAS YOUR NEW BANK CLIENT'S EGYPTIAN PASSPORT REVOKED ?


Egyptian media are reporting that the government has announced that it is revoking the passports of 800 Palestinians*, who received their passports during the former Morsi Administration. The grounds listed are fraud and forgery; no further details have been made available.

Those whose passports are being revoked reportedly include Hamas co-founder and current Foreign Minister, Mahmoud Al-Zahar, who is an ethnic Egyptian, so you can assume that other senior Hamas officers are in the group whose Egyptian identity documents are being cancelled. The President of Egypt is said to have ordered the opening of an investigation into the issuance of over 13,000 passports to Palestinians, by the Morsi Government. The possibilities presented by these passports, for terrorist financing, are disturbing.

Should you, as a compliance officer at a bank with a larger number  of international customers, be approached by a prospective, obviously affluent bank client, bearing an Egyptian passport, ask yourself these questions:

(1) Was the passport issued during the term of the Morsi Government, between June12, 2012, and July 3, 2013 ?
(2) Does the client have a verifiable residential address in Egypt ? With the closing of Hamas offices by the Egyptian Government, front or cover offices probably no longer exist for Hamas in Cairo.
(3) Does your new client's Arabic contain typical Egyptian slang or terms ?
(4) In what city, town or village was the customer born, according to the passport ? Is it within the current borders of Israel or the West Bank ?

You can, alternatively, ask the Egyptian Embassy to validate a prospective customer's identity; they will probably tell you if the passport is no longer in good standing. It would be prudent to onboard any clients that you identify as Palestinians holding Egyptian passports, as they are most likely Hamas members from Gaza. The passport below is for illustrative purposes only, Note that place of birth & date of birth appear on the photo page. Was he born before 1948 ? Before 1967 ? Where ?

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* It is probable that a large number of the passports were issued, based upon fraudulent representations that the applicants were of Egyptian ancestry or origin, and/or that they had no criminal records. Remember, "al-Masri," a common suffix in Palestinian family names, means literally , "the Egyptian."  

PROSECUTOR ASKS THAT RUSSIAN CYBER-CRIMINAL'S TRIAL BE POSTPONED TO NEXT YEAR


The United States Attorney's Office in Seattle has requested that the Federal Judge overseeing the cyber-crime trial of the Russian hacker, Roman Seleznev, be rescheduled to May, 2015. The stated grounds are that the complexity of the case, and the volume of discovery that must be reviewed by defense attorneys, are such that, with their exercise of due diligence, they cannot be adequately prepared for trial before May, 2015.

Specifically cited by the Government was the fact that there are 20 terrabytes of evidence that must be reviewed by counsel before trial. The defendant is charged with the theft of over two million credit card numbers, taken from retail establishments in the State of Washington, and selling a portion of them. The maximum punishment that he could receive in this case is 30 years in Federal Prison.

 Seleznev also faces similar Federal charges in another case filed in the District of Nevada. His father, Russian Duma (Parliament) member Valery Seleznev, who has asserted that his son was illegally kidnapped, by US law enforcement agents, in the Republic of the Maldives, has now stated that the
intention of the United States Government is to fabricate evidence against his son, with the ultimate goal of forcing the Government of Russia to exchange him for the American fugitive NSA contractor, Edward Snowden.

Allegations that several Russian nationals have received stiff sentences in American courts, in what Russia regards as purely political cases, have appeared in Russian media in recent years, beginning with the extradition and conviction of the Russian arms trafficker, Viktor Bout. Public opinion in Russia has been very supportive of criminal defendants, convicted in US courts, who are Russian nationals, irrespective of their guilt. 

RICHARD CHICHAKLI'S SENTENCING DATE CHANGED



The District  Court has reset the sentencing date for Richard Chichakli to December 4, 2014. This may be because the Pre-Sentence Investigation Report was submitted to the defendant after the due date. Given the defendant's extensive Pro Se post-trial motions, all of which were denied by the Court, an appeal is expected.



ARE ARAB BANK'S POST-VERDICT ACTIONS SUSPECT ?



Officials from the Arab Bank have announced that it intends to appeal the verdict entered against it in the landmark terrorism case, in US District Court in New York. While we can certainly understand that, the post-trial filings of bank counsel may indicate that the bank intends to further delay a case that has been pending for more than a decade, and in which the bank's tactics, which were contrary to established case law, and which resulted in the imposition of serious restrictions upon the defense at trial. Some observers, while understanding that this was an extremely complex case, believe that justice delayed is justice denied, and one of the objectives of the bank's defense was to attempt to wear out their plaintiffs and their lawyers.

The bank's refusal to comply with discovery requests, citing bank secrecy laws in the Middle Eastern countries where it is licensed, which flies in the face of the Bank of Nova Scotia case, among other authorities, was dilatory, and unnecessarily delayed the progress of the case, in my opinion. Now, the bank is looking to engage in a course of conduct that could, in essence, give it two bites of the apple in the appellate process.

Here's the situation: the bank has two post-trial motions pending. A Rule 59 Motion for a New Trial, and a Rule 50 Motion for Judgment as a Matter of Law. That is its right, but bank counsel has also alerted the Court that it intends to ask it to certify an Interlocutory Appeal, pursuant to 28 USC §1292(b). This type of appeal, which is purely discretionary with the trial judge, could result in giving the bank two opportunities to present its issues before the Second Circuit Court of Appeals, because, should the interlocutory fail, the bank would then still have the right to appeal on basically the same issues, plus what additional points it chooses to present. Such a course would again delay a final resolution in the case.

Is not the proper thing to do simply to proceed with the appeal ? I believe so, but I do not see it happening. If the bank truly believes that the verdict should be reversed, then it should immediately appeal, and abandon what appear to be more of the dilatory tactics seen in this case since 2004.

   

Tuesday, October 28, 2014

LIFE SETTLEMENT PONZI SCHEMER, HAVING PLED OUT, FILES APPEAL TO ELEVENTH CIRCUIT


Ponzi schemer Joel Steinger, who was the principal owner of what was at one time the world's largest life settlements firm,  Mutual Benefits Corp.,who pled guilty to a single count, to avoid what could have potentially been a life sentence*,  and was sentenced to 20 years in Federal Prison, has now strangely filed an appeal of the judgment and sentence in the two cases. There's just one problem; in his Plea Agreement, and in consideration for the prosecution dropping all the other counts, he waived the right to appeal. So why has he appealed ?

The Plea Agreement, which he and his attorney signed, and which is, so far as I can see, the standard form used by the US Attorney's Office in the Southern District of Florida, recites:

"... In exchange for the undertakings made by the United States in this plea agreement, the defendant hereby waives all rights conferred by Sections 3742 and 1291 to appeal any sentence imposed ... or to appeal the manner in which the sentence was imposed.... This waiver applies to any appeal of the defendant's conviction and sentence in Case No. 08-21158 and case No. 12-20123." Plea Agreement March 28, 2014 at 9.

Mr. Steinger, who has prior criminal convictions, and is no stranger to the rules of procedure, would know that he cannot appeal, either his conviction or his sentence, and his trial attorney, as the lawyer of record on the appeal, would have certainly so advised him, when he signed the Plea Agreement, that he gave up certain rights, including the right to appeal.

When the issues appear, in the initial brief of appellant, we will be in a better position to understand under what theory he is proceeding, although the appeal may be quickly dismissed before any brief is filed. We will be monitoring this curious case, and will update our readers as soon as any clarifying information appears.

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* The Sentencing Reform Act has abolished Gain Time for Life Sentences. Any defendant receiving a life sentence will die in prison, and never be released.




RAISE COUNTRY RISK FOR EGYPT


The security situation in Egypt has deteriorated of late, and it appears that it will get worse. The attacks upon Egyptian military and police in the Sinai Peninsula have increased exponentially, and the perpetrators are known to be radical insurgent groups, trained by Hamas, armed with stolen Israeli weapons and equipment, and deployed from Gaza, using the cross-border tunnels not destroyed by Egypt.

In response, Egypt has Instituted a State of Siege in the Northern Sinai, closed the only crossing with Gaza, and terminated its post-war role, as intermediary between the Palestinians and Israel, due to its belief that Hamas is behind the cross-border attacks. It is also planning either a no-go zone at the frontier, or a wall, similar to the one erected by Israel, on its border with the West Bank, and has asked the West for assistance in counter-terrorism operations.

On Egypt's western and southern borders, radical insurgents, coming from failed states locked in conflict with their organizations, are entering the country at will, through the porous border. Libya's civil war threatens to spill over into Egypt.

In light of the foregoing, and additional non-public facts, it is suggested that you immediately raise Country Risk for Egypt, and educate your bank clients as to the increasing level of risk these insurgent activities pose to Egyptian stability, and continuity of its present government.