IS CHINESE PRINCELING/PEP BO GUAGUA SITING ON HIS PARENTS' DIRTY MONEY IN NEW YORK ?

Chinese media is reporting that "princeling" playboy (and somehow Columbia Law student) Bo GuaGua, who now goes by the name of Bo Kuangyi*, is the custodian of his parents' illicit fortune, and that it is believed to be located in New York. Both Bo Xilai and Gu Kailai, his parents, will probably never be released from prison in China, and their son has curiously not returned to Chinese territory since their arrests. One wonders which NY banks or investment houses are holding what is said to be a large multi-million dollar fortune acquired by Bo Xilai, while he was a poorly-paid public servant.

Is there some sort of unwritten understanding in effect here ? If Bo does not speak publicly about his mother's murder, the Chinese Government leaves him alone. I imagine that something like that is in place; otherwise, he would have publicly defended his father from the corruption charges, and his mother from the murder of a  prominent British businessman of in China.

There may be yet another reason: some sources insist that Bo GuaGua was not an innocent party to the murder of Neil Heywood;  his level of involvement has not yet been made public, so we are unable to comment on it, but the sources are so insistent of the accuracy of the information, that Mr. Bo might want to retain the services of a good criminal defense attorney, especially one with experience in opposing extradition procedures.

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* Bo claims he has adopted his grandfather's name. One wonders about the timing of
such a name change.

NEW CHINESE PROGRAM SEEKING OVERSEAS ACCOUNTS OF ITS CORRUPT PEPS COULD IMPACT WESTERN BANKS

In case you are not up on the latest news, China has taken into custody Zhou Yongkang, its former chief of security, and his immediate family, on what appear to be corruption  charges. It seems that his son,  Zhou Bin, has amassed a fortune, in industries where his father was involved. No former senior PEPs are immune, it appears, to corruption charges, in line with a growing anti-corruption drive by the current national leadership.

How does this affect me, as a compliance officer at an international bank that may have some affluent mainland Chinese depositors ? Plenty, for there is a major investigation in progress, seeking illicit funds  secreted abroad. Have you thoroughly eliminated your clients as PEPs ?

The latest wrinkle brings us closer to home. China is telling its ambitious PEPs that they will not be promoted, so long as their immediate family lives abroad. The reason: immediate family are the prime players in any money laundering scheme, for the goal is always to move the proceeds of bribes and kickbacks out of China, or to take the money outside the country, and to place it in safe jurisdictions.

Therefore, this would be a good time to initiate, early on, enhanced due diligence investigations upon all your clients with PRC passports, irrespective of the present size of their accounts, for they may be holding small balances, pending receipt of large amounts of criminal proceeds. PEPs not otherwise identified by your staff now pose a potential future threat; they could quietly slip substantial funds into accounts previously judged to be low-risk. What if China locates these illicit funds and seeks their seizure or forfeiture ? You could suffer substantial reputation damage, should there be negative media coverage. Thus,  you may conclude that they represent a level of risk that your bank does not want to assume.

RAISE COUNTRY RISK ON MALAYSIA (BUT NOT DUE TO AVIATION CAUSES)

Information obtained by the Israel Defense Force, in its ground offensive in Gaza, has confirmed that special operations troops of Hamas received training in Malaysia, including parachute qualification. Add this to the fact that at least five Malaysian financial institutions are know to be under de facto  control of Iranian nationals, and we are looking at potential sanctions violation penalties, and OFAC designation on Malaysia, Malaysian banks, or Malaysian nationals providing material support to a designated terrorist organization.

Compliance officers entrusted with the assessment of Country Risk should review all available data, and make an educated decision. In my humble opinion, it is prudent to raise Country Risk at this time on Malaysia, and to review any existing financial exposure that your bank, or its customers may have, in that country.

HEARING FOR ARRESTED RUSSIAN CREDIT CARD HACKER IN GUAM POSTPONED DUE TO WEATHER EMERGENCY

If you were wondering why there has not been any news regarding the July 30th hearing, in US District Court in Guam, of Roman Seleznev, the arrested Russian stolen credit card number hacker, the Court was forced to postpone the hearing, due to Tropical Storm Halong.

Russian media have been focusing on this case, because the defendant was apparently on holiday in the Maldive Islands, and he was reportedly taken into custody by US law enforcement agents, and transported to Guam, the closest United States territory. There was no formal extradition hearing conducted in the Maldives, and Seleznev's Guamanian attorneys are demanding his release forthwith, upon the grounds of serious governmental misconduct.

HSBC, CITING LACK OF "RISK APPETITE," TO CLOSE MUSLIM BANK ACCOUNTS IN UK

HSBC, which has had regulatory problems in the recent past, has notified Muslim account holders that it will be closing their accounts; the stated reason was that the provisions of banking services to these clients "fall outside out Risk appetite," meaning that the bank has judged the risk level too high to continue them as customers.

The types of businesses that have received these letters:

(1) Mosques.
(2) Muslim charities.
(3) NGOs serving Muslim needs.
(4) Muslim think tanks.
(5) Individual Muslims.

Will other UK bank follow suit ? Will civil suits by the affected account holders follow, even though the maintenance of bank accounts is a matter of contract,and is considered a privilege, and not a right ? we cannot say, but we will be monitoring the response of other retail UK financial institutions to this development.

APPEALS COURT AFFIRMS $67m JUDGEMENT AGAINST TD BANK IN ROTHSTEIN PONZI SCHEME

The Eleventh Circuit Court of Appeals has affirmed the $67m District Court judgment against TD Bank, for its role in facilitating the Ponzi scheme perpetrated by Fort Lauderdale attorney Scott Rothstein, and for illegally concealing the truth during the discovery phase of the case.

The plaintiff, Coquina Investments, was originally awarded $32m in compensatory damages, and $35m in punitive damages. The trial judge found that the bank, concealed, or lied about:

(1)  Internal AML alerts on Rothstein bank accounts.
(2) The existence of Special Investigative Protocols.
(3) The removal of a banner designating the Rothstein accounts "High Risk.
(4( Internal emails discussing the bank's bogus "lock letters,' which alleged substantial TD accounts held restricted funds, when there was no money in those accounts.

The discovery violations were the most shocking aspect of the case, as the bank's unethical conduct, in seeking to conceal the truth about its role, demonstrates a lack of ethics, and an arrogant disrespect for the court system. The punishment, $35m in punitive damages, sends a strong message to the banking community, and its lawyers, that this will not stand.

SENTENCING OF BILLION DOLLAR LIFE SETTLEMENTS PONZI SCHEMER RESCHEDULED

The District Judge assigned to $1bn Ponzi schemer Joel Steinger's criminal cases has rescheduled his sentencing, due to the fact that Steinger, who is, for all intents and purposes, disabled, due to a chronic back problem, housed in a Florida hospital. Apparently, the defendant's unit manager failed to timely deliver the Pre-Sentence Investigation Report (PSIR) to him.

Steinger, and his counsel, were therefore unable to prepare any objections. His counsel asked the Court for an additional 30 days, from the original July 18th date. The sentencing has been reset for August 22nd, at 9 AM. Victims of the life settlement Ponzi scheme have been waiting for a decade for justice, and this is a case set for sentencing of the firm's principal owner first for June, then July, and now August. It was filed way back in 2008. The fact that a US government employee failed to deliver a critical sentencing document on time exposes the fact that the Ponzi scheme imploded in 2004, and the case is old news, with a low priority. The victims, especially those who lost their entire life savings, deserve better. 

AFFLUENT CHINESE MOVING THEIR UNTAXED WEALTH INTO US EMPLOY COMPLEX SCHEMES

Money laundering of funds that wealthy Chinese nationals do not want to pay taxes on, and which may be criminal proceed specifically bribes ands kickbacks, is being blamed for the rise in US urban real estate prices. Corrupt Chinese PEPs, who have a well-founded fear that their government will seize any domestically-banked assets, export their dirty cash, either through wire transfers done through cooperating bankers, bulk cash smuggling overseas, or placing the cash into a corrupt casino, and taking it out as "profits."

Complex money laundering pipelines are becoming commonplace, to the extent that I noticed this specific diagram in the press. It speaks volumes about how effective non-transparent schemes are being used by all:

Purchasing real estate in the United States

(A) Through a US trust...
(B) managed by a shell corporation from the Cayman Islands...
(C) with a bank account in Luxembourg...
(D) managed by a Swiss banker who does not know who the beneficial owner is.

I would hope that any compliance officer who sees this type of obviously opaque transaction will act accordingly.

POLICE LIEUTENANT WHO DID DIRTY WORK FOR PONZI SCHEMER SENTENCED TO FIVE YEARS

First jail photo for former Police Lieutanant

The fallout from a billion dollar Ponzi scheme in Florida continues.A Lieutenant in the Broward County, Florida Sheriff's office, who used his badge to conduct a false arrest, and also to cause an individual to leave Florida, all on the orders of convicted Ponzi Schemer/lawyer Scott Rothstein, was sentenced to five years in prison.

Lt. David Benjamin, who did Scott Rothstein's dirty work, and ordered subordinates on the police force to violate the civil rights of individuals that Rothstein deemed a threat, was immediately taken into custody, to commence serving his sentence. His lawyer's bid for a short sentence, and a delayed surrender date, were denied. While the Federal Prison system will most likely place him in a minimum security institution, and may may conceal his identity, to protect him from inmates who might cause him harm, due to his occupation, he will be required to serve 80% of his sentence, before he can be eligible for release, and his conviction ends his law enforcement career.

The Lieutenant in uniform

 The Court has hammered a number of individuals involved in Scott Rothstein's Ponzi scheme, and there are reportedly other individuals under investigation.

ARUBA RELEASES WANTED VENEZUELAN DRUG TRAFFICKER AND TERRORIST FACILITATOR

Giving in to pressure from Venezuela,The Dutch Government in Aruba has released General Hugo Carvajal from custody. He had been arrested upon his arrival, as the United States has indicted him on major drug trafficking charges. Carvajal, who is on the OFAC sanctions list, then returned to Caracas. He had not been formally accepted as a diplomat when he was arrested in Aruba.

Originally, the authorities in Aruba had ruled that he was being legally detained for extradition, but reversed themselves after Venezuelan protests. Did Aruba cave in, under political pressure from Caracas ? We cannot say, but I am sure that the US Department of Justice is not happy; allowing a known drug kingpin to be released does not help the global war on drugs. 

IS DOJ NOW TARGETING VENEZUELAN PEPS WHO ARE DRUG TRAFFICKERS ?

How the Cartel del Sol got its name

The furor in Venezuela, over the detention, and attempts to extradite, Major General Hugo Carvajal Barrios from Aruba to the United States, should be taken in the context of what appears to be a real increase in enforcement activity, against Venezuelan PEPs engaged in drug trafficking into the United States. Carvajal is believed to be one of the principals of the Cartel del Sol* drug trafficking organization, led by ranking Venezuelan military officers.

A second recent case** supports this theory. Caracas attorney Benny Palmeri-Bacchi, a former judge and prosecutor, has been arrested in the United States, and charged with:

(1) Money Laundering Conspiracy.
(2) Conspiracy to Distribute Cocaine.
(3)Conspiracy to Obstruct Justice.
(4) Interference with lawful commerce through Extortion.

The defendant allegedly worked with a major Colombian drug trafficker to move Cocaine through Venezuela, and later worked to interfere with his extradition to the US. He is also charged with extorting money from an individual working in real estate.

His co-defendant is a senior Venezuelan police officer who is the former country representative to INTERPOL, the international law enforcement organization; this individual, Rodolfo McTurk, remains a fugitive.

Another hint about this increased activity, directed at Venezuelan narco-PEPs: prominent AUSA Richard Gregorie, who indicted Panamanian General Noriega, is involved in prosecuting the case. He has a long history of handling the most important cases brought by the US Attorney's Office in the Southern District of Florida.

Is the shape of things to come, regarding corrupt Venezuelan PEPs, who earn billions of dollars annually, facilitating the transit of Colombian cocaine through Venezuela, and on into the Continental United States ? We certainly hope so, for the US has previously contented itself with OFAC designations, and the arrest of only lower-level players. It needs to target, arrest, and convict, the leadership of these organizations, and the dirty PEPs who facilitate their operation.
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* In English, Cartel of the Sun, because of the sun insignia, warn on the epaulets of general officers of the Venezuelan Army and National Guard.
** United States vs. Rodolfo McTurk et al, Case No.: 13-20930-CR-Ungaro (SD FL).  

SENIOR HEZBOLLAH OFFICIAL WAS ONBOARD CRASHED AIR ALGERIE JET

If you ever had any doubts about the numerous reports regarding Hezbollah's illegal activities in West Africa, catch this: among the dead on board Air Algerie AH-5017, the MD-83 passenger jet that crashed in Mali,  during a flight from Ouagadougou, Burkina Faso to Algiers, was a Lebanese national who is a senior Hezbollah official.

Was he:

(1)  Extorting "donations" from Muslims in West Africa ?

(2) Riding the organization's illegal cocaine pipeline, which exists through Colombia-Venezuela-Brazil-West Africa, and on into Europe ?

(3) Laundering Hezbollah criminal profits ?

(4) Participating in one of Hezbollah's numerous illicit enterprises, e.g. cigarette smuggling, automobile shipments, and any number of criminal ventures ?

(4) Supervising all of the above ?

The fact that a Hezbollah agent was on board apparently surfaced during the identification of the deceased. One wonders just how many others are operating in the region. African financial institutions, generally deemed to be low risk, should now be regarded as potential facilitators of terrorist financing, if they are in countries in Sub-Saharan Africa that have substantial Muslim population. Also curious is the destination: Algiers. I offer this story as food for thought for compliance officers whose bank clients have business in the region.

WATCH FOR LEBANESE FINANCIAL ROLE IN PURCHASE OF NORTH KOREAN MISSILES FOR HAMAS

Reports indicate that Hamas, having expended a large number of its missile inventory through attacks upon Israel, is seeking to replenish its stocks through a major purchase from North Korea, are a cause for concern, due to probable Lebanese involvement. Front companies located in Lebanon, which have a relationship with both Hamas and North Korea, are said to be the purchasing agents.

Should any Beirut financial institutions be implicated, the regulatory consequences for the Lebanese banking industry could be severe; it is still tainted from the Lebanese-Canadian bank scandal, and any additional problems, involving the provision of material support to designated terrorist organizations, would result in not only probable US sanctions, but a major escalation in Country Risk for a country whose financial services industry is a major part of the Middle East financial structure.

Compliance officers at international banks with important correspondent relationships in Lebanon should be alert for any suspicious transactions that seek, in circuitous ways, to send funds to Asia. Bw aware, especially, with respect to those countries that still have tenuous financial links to North Korea.

Personally, I would keep a sharp eye out for this individual: SAMI ABU ZUHRI , Hamas' press spokesman, who is currently operating out of Lebanon. Zuhri is a known bulk cash smuggler, who was once detained, at the border, with a money belt containing just under one million Euros on his person.

Sami Abu Zuhri, Hamas press spokesman and bulk cash smuggler

LONG REACH OF OFAC: DESIGNATED VENEZUELAN GENERAL WHO AIDED THE FARC ARRESTED IN ARUBA FOR EXTRADITION

The consequences of being on the OFAC last can be severe. Venezuelan General Hugo Carvajal, designated by OFAC for providing material support to the FARC, was arrested in Aruba, on an American warrant*, for narcotics trafficking and other offenses. Carvajal, who is the former head of Venezuelan Military Intelligence, was the longtime liaison between the FARC, and the Government of Venezuela, which provided arms and assistance to the designated global terrorist organization.

Carvajal, who now faces extradition to the United States, was seeking to become an accredited diplomat to Aruba, but the Venezuelan Government had not yet completed the process, leaving him vulnerable to arrest. He has also been named as a principal player in a $2bn money laundering operation, whereby criminal proceeds from Venezuela were transferred into Houston, Texas, via a trade-based money laundering scheme.

The Government of Venezuela has protested his arrest, and directly threatened to disrupt the economy of Aruba, should he be extradited to the United States.
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Case No.: 13-20345-CR-Moore (SD FL).

CALIFORNIA COMPANY DRAWS $4m FINE FOR IRAN SANCTIONS VIOLATIONS

A firm located in California was fined* $4,073,000 for doing business with a firm that reexported its products to Iran. Like most of those sanctioned, it had no compliance program, a fact that OFAC has often seized upon, when levying monetary penalties.

The company was also guilty of these acts:

(1) It attempted to hide the fact that it had sales to Iran.
(2) It kept shipping even after OFAC warnings were received.
(3) It provided false information to OFAC, in response to subpoenas.
(4) it exhibited a reckless disregard for OFAC sanctions.

Another case involved a San Juan, Puerto Rico company, fined $27,000 for purchasing fruit juice and pulp products from a Colombian firm that is a Specially Designated Narcotics Trafficker. Again, the corporation sanctioned had no compliance program in place at the time of the violations.

The takeaway: all of your bank clients that are engaged in international trade or business should be advised, in writing, to create an OFAC compliance program, or risk fines and penalties for noncompliance. The risk levels should be increased on any bank customer who fails to confirm that it has such a program up and running.
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* http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/OFAC-Recent-Actions.asp

COMPANIES PROVIDING LUXURY SERVICES TO HAMAS LEADERSHIP RISK FINES AND PENALTIES FOR SANCTIONS VIOLATIONS

Khaled Mashal, and other Hamas leaders, on a private jet

Most of Hamas' supporters in the Middle East are unaware that the organization's senior leadership often fly around in expensive private jets, and stay at luxury hotels. Inasmuch as Hamas rockets have destroyed Gaza's connections to electricity, and the present conflict has made it extremely difficult for Gazans to obtain food, we wonder what the average Palestinian thinks about the fact that Hamas leaders, some of whom permanently live outside Gaza enjoy luxury while they go hungry in a dark home, and endure retaliation from Israel, while their "leaders" oppose a cease-fire from the comfort, and safety, of a luxury residence in Qatar.


The use of luxury goods and services by Hamas leaders exposes those service providers to some nasty fines & penalties, should the relationship be exposed. Business jet companies operating in Europe and the Middle East, luxury hotel operators, and even luxury goods retailers should throughly check out any  clients who claim Palestinian nationality, lest they pay the price down the road, for doing business with a Specially Designated Global Terrorist Organization.

AMERICAN COURT ENTERS JUDGMENT AGAINST NPRK AND IRAN FOR HEZBOLLAH ACTIONS AGAINST US CITIZENS

A United States District Judge* in Washington has entered a default judgment against Iran and North Korea, on liability, ruling that the plaintiffs, US citizens, or their family members, that were injured or killed as the result of Hezbollah missile attacks on Israel in 2006, could recover, pursuant to the Foreign Sovereign Immunities Act. Defaults were entered in 2010, when the defendants failed to defend or otherwise plead to the compliant. A judgment against the Central Bank of Iran was denied for lack of evidence.

Plaintiffs had proved, to the satisfaction of the Court, that Iran & the DPRK were instrumental in providing material support and assistance in the development of Hezbollah's missile program. The plaintiffs must now prove damages.
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Case Nos.: 09-civ-483, 10-civ-646-RCL (D DC).

TO MY READERS WORKING IN FRANCE

Coat of Arms of Charles VIII of France 

For readers of this blog whose principal language is French, and who do not read any of the other languages that the book is published in, the translation and release of "The Laundry Man," into French, by a Paris publisher, which was delayed, due to some financial issues at the publishing house, is now progressing with all deliberate speed. Thank you for your continued interest in "The Laundry Man."

FEDERAL JUDGE DENIES HEDGE FUND PONZI SCHEMER TEMPORARY RELEASE TO PREPARE FOR TRIAL

The Connecticut Federal trial judge in Francisco Illarramendi's Ponzi scheme case has denied the defendant's motion to be release from custody, purportedly in order to prepare for trial. His counsel had argued that the complex hedge fund case required the defendant's attention, to assist in his defense, and that he could not accurately compute the precise loss suffered by victims while incarcerated.

Though the text of the order, captioned "Order Denying Motion for Temporary Release," has not been made available yet, the US Attorney has previously stated, in opposition to Illarramendi's release, that he is a flight risk, that he previously demonstrated misconduct while out on bail, and that he has already admitted a loss of more than $300m. His release prior to trial was no expected by observers of Federal Ponzi scheme cases.

Illarramendi did get one small victory, though; the Court again granted his motion to delay the trial, which was scheduled for August. It has now been set for October 28,2014. The defendant has gone through several lawyers during the pendency of his case; apparently he is rarely happy with the efforts of competent counsel. Perhaps he needs to face the fact that a guilty plea is his best course of action, as putting the government through a costly and time-consuming trial will only hurt him at sentencing. The case has been pending for years; he should consider damage control, such as it available to him at this late date, and plead out.

There may be another reason why he has chosen to go to trial in an obviously losing case; he may fear physical harm will come to him if he gives evidence against others linked to the Ponzi scheme. We have identified the other players, powerful financiers thus far unindicted, who could turn on him if he incriminates them. We will be discussing again on this blog.

HEZBOLLAH INTERNATIONAL FINANCING PREVENTION ACT OF 2014 PASSES HOUSE OF REPRESENTATIVES

The US House of Representatives has passed the Hezbollah International Financing Prevention Act of 2014; the bill has now gone to the US Senate for a vote on passage, to become law. Most observers believe that this will occur in September, due to the imminent summer recess. There has been overwhelming support for the bill in both chambers.

Lebanese banking circles have been quoted as that that the bill, which severely punishes financial institutions that conduct business with Hezbollah, will not impact them, as they claim to already be fully compliant with US sanctions. Though the bill is designed to target Latin American and African violators of US sanctions, whether Lebanese banks have truly completely divested themselves of connections to Hezbollah is doubtful, if we look objectively at the terrorist organization's history of the use of Lebanese banks to facilitate its operations.

 Of course, whether American law enforcement takes action against Lebanese violators, due to political considerations, is not known. The United States supports the Lebanese Government, and may be reluctant to again attack its banks for terrorist financing or money laundering.

Lest we forget

NORTH KOREA'S MEMBERSHIP IN AML GROUP: MOVE IN RIGHT DIRECTION, OR CRUEL JOKE ?

News this week, to the effect that the Democratic Peoples' Republic of Korea, North Korea, has joined the Asia-Pacific Group, a FATF affiliate, and plans a meeting with APG officials, should not be cause for you to let your guard down on North Korea, whose officially-sponsored counterfeiting of the US Dollar, illicit trafficking in both illegal as well as counterfeit legitimate drugs, and sundry other criminal enterprises, to raise capital, continues unabated. I do not see this action as anything other than a cynical propaganda move; AML/CFT does not exist in heavily-sanctioned North Korea. Let us hope nobody in compliance thinks the country is reforming, as is occurring in Myanmar/Burma, and relaxes their guard.

Kindly continue to treat all transactions with the DPRK, given the existing sanctions, as you have in the past. Nothing has changed; forget the North Korean government's clumsy attempts to portray itself as reformist.

Remember also, if you are in North America, or the EU, that North Korea is setting up an embassy in Caracas, for unknown dark and illegal purposes. Venezuela is a perfect location for concealing DPRK financial activities, and for effective sanctions evasion, and Venezuela and North Korea have had a covert relationship for many years. 

ARRESTED RUSSIAN HACKER'S LAWYERS CHARGE OUTRAGEOUS GOVERNMENTAL MISCONDUCT

Roman Seleznev, the accused Russian hacker, sits in a cell in the US Territory of Guam,while his attorneys fight his removal to District Court in the State of Washington, where he faces major felony charges. He also has Federal criminal charges pending against him in Nevada. The defendant's attorneys have made serious accusations against the US Secret Service, regarding the circumstances surrounding his detention, and transport to Guam. Though most Federal decisions do not inquire into how a defendant was brought before the Court, there are some decisions where a defendant did receive relief for constitutional violations.

Seleznev's attorneys have filed a Motion for Discharge and Release, pursuant to Federal Criminal Rule 12(b)(3)(A). Their accompanying memorandum of law asserts:

(1) The Guam District Court lacks jurisdiction over Seleznev, because his abduction by us agents, in the Maldives, constitutes Outrageous Governmental Misconduct.

(2) The methods through which the US Government secured the defendant's presence violates due process, as well as the extradition law of the Maldives, which requires that the Court divest itself of jurisdiction over his person.

(3) Extraterritorial abduction violates customary international law.

(4) Alternatively, the Court should dismiss all the pending criminal charges, to implement a remedy for the violations, to preserve judicial integrity, and to deter future similar illegal conduct.

The US Government has responded; it its rebuttal, it states that the Rule 5 Identity Hearing, on confirming whether the detainee is the indicted Roman Seleznev, which is a removal proceeding, to decide whether to transfer him to the State of Washington for trial, limits the Guam Court's jurisdiction to the sole issue of identity for transfer. It is further suggested that only the District Court in Washington has jurisdiction over the discharge motion.

The reply of the defendant's counsel: Jurisdiction is a threshold issue. It is fundamental and primary, and cannot be deferred for a transferee court.

There are several issues of fact, regarding the circumstances of the defendant's detention, transport, and arrival in Guam, all of which have been raised by defense counsel, and which should be resolved, but whether this will occur now, or at the trial court in Washington, is now up to a Federal Judge in Guam. We shall continue to monitor this case, and update our readers on further rulings of the Court.

RED FLAGS OF FUNNEL ACCOUNTS USED TO LAUNDER HUMAN SMUGGLING PAYMENTS

What are the red flags (indicators) that tell you that an account is being used to pay human traffickers who are engaged in smuggling aliens into the United States from abroad ? I have annotated it,  to better explain what happens in these accounts and, to facilitate your recognition of such activity:

(1) A smuggler opens accounts in a US border state. Remember that both our northern and southern borders are used to smuggle immigrants into the Continental United States, as well as maritime routes, often through the Caribbean, into Florida.

(2) The deposits, which pay for the smuggling, are always under $10,000 in cash, so as not to trigger the reporting requirements. US-based relatives of the immigrants to be smuggled in often pay the costs of the illegal transport. The going rate in many areas is $8000 per person.

(3) The deposits are made in geographical areas remote from the border, into large American banks which have branches in several states. Many of the payors live in the northern states, and send the money to traffickers, who maintain accounts in the border states.

(4) The depositors do NOT know the account holders. When questioned by tellers accepting payment, they often have none of the information about the account holders that would be expected in a legitimate transaction.

(5)  Deposits into what appear to be business accounts are from businesses not related to the type of business of the account holders. The business accounts are purely fronts to receive payments, and you will not find any normal account activity of the type you would expect an active business to have, only in-and-out money movement; and no purchases of any kind.

(6) The handwriting on the signatures generally does not match that on the rest of the check, indicating that the amount, and the payee's name, is often filled in later by the traffickers, or that third parties are involved in the laundering of the money.

(7) After the money is received by the traffickers, they often close the accounts, and open new ones at other US banks in border states. This continuous process, of closing and opening new accounts, is
designed to frustrate any investigation of their activities, and to impede their identification by US law enforcement.

(8) Sometimes, the money in the funnel accounts is wired to Mexican banks.

Variations on these themes often occur, so be alert to any permutations or combinations of these red flags.

SEIZED CYPRIOT BANK MOVED MONEY FOR HEZBOLLAH

FMBE Bank Ltd., formerly known as the Federal Bank of the Middle East, a Lebanese-owned bank in Cyprus, was designated an institution of primary money laundering concern by FinCEN*, and has been taken over by the Cypriot government. Now incorporated in Tanzania, the bank appears have been suspected of extensive money laundering, sanctions violations, and terrorist financing.

The allegations include:

(1) Clients used the bank to evade international sanctions against Syria.
(2) Payments to Hezbollah were allegedly made through the bank.
(3) The widespread use of shell companies, by bank clients, for the purposes of money laundering.

Compliance officers who access Country Risk should review all the information available in this case, and consider whether to increase it for Cyprus at this time.
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*http://www.fincen.gov/

RICHARD CHICHAKLI ASSERTS THAT US GOVERNMENT UNDERMINED HIS ABILITY TO DEFEND HIMSELF

In a Reply Memorandum, filed in connection with his pending Motion for a New Trial, Richard Chichakli has alleged that the United States government deliberately sabotaged his ability to prepare for trial, in which he was acting as his own counsel, pro se. Chichakli has stated that, had he known about the prior inconsistent statements of a government witness, an aviation dealer from whom he attempted to illegally purchase a passenger jet, he would have impeached him in the stand, and not be found guilty. He is accusing the government of failing to timely disclose important evidence, resulting in his conviction.

Chichakli says that the government intentionally had him housed in the SHU, the area of the Federal jail where inmates are kept in isolation, and where he could not adequately prepare for trial. He also alleges that he was moved around, which further interfered his ability to conduct his own defense.

Finally, he says he did not receive the material that showed prior inconsistent statements of a witness until the first day of trial, when the witness was on the stand. He asks how he could have reviewed the material at that late state, especially since he was acting as his own attorney. He also states that he received additional discovery, during the trial, which was far too late to review it.

HEDGE FUND RAINMAKER CHARGED IN SCOTT ROTHSTEIN PONZI SCHEME CASE

Scott Rothstein: now serving a 50-year sentence 

An individual associated with the Banyon Group,  which are hedge funds, has been charged with Conspiracy to commit Wire fraud, in connection with the Scott Rothstein Ponzi scheme. Frank Preve, who reportedly steered investors to Rothstein's phantom legal settlements, is accused of obtaining $20m in additional investments, after he know that Rothstein's had stopped paying out returns. He also allegedly made material misrepresentations regarding verification of the existence of the bogus settlements that he purportedly conducted, and attested to in a memorandum.

Preve was charged through a criminal Information, not a Grand Jury indictment, which is generally an indication that the defendant is cooperating with the US Attorney's office. The maximum possible penalty is five years in Federal Prison, and a $250,000 fine. He has a civil suit pending against him, filed by the Securities & Exchange Commission.

PROFANE BRITISH BANKER, WHO CHALLENGED US SANCTIONS, FINALLY LEAVES STANDARD CHARTERED

Richard Meddings, who insulted America's Iran sanctions program, as his bank intentionally evaded it, has finally left Standard Chartered. His infamous " You f__king Americans" statement personified the attitude of that minority of greedy, amoral international bankers, who often choose lucrative profits over compliance, and see nothing wrong with it. Meddings believes that the United States is meddling when it enforces its sanctions upon foreign banks who transact business in America. He forgets that access of foreign banks, to the financial centers of America, is a privilege, not a right, and it can be revoked for cause.

 If there ultimately is a war between the Western democracies and Iran, banks that facilitated Tehran's sanctioned missile and nuclear weapons programs, solely for profit, should face harsh justice.

Personally, should organizers at any one of the upcoming banking conferences in the United States in 2014-2015 have the temerity to invite Mr. Meddings to speak at their function, they might want to reconsider. I would think that his listing as a speaker will deter bankers from attending, meaning a major loss in revenue.  They should also expect to see some angry protesters there, for Mr. Meddings will find that he is not welcome in the United States.

ALERT: UNLICENSED BITCOIN "BANK" IS SOLICITING IN MIAMI

Please consider this an alert for unlicensed banking activity, with the operators advertising the services of a Bank that they have designated Bitcoin Bank US. According to Internet postings on Twitter, the solicitation claims that "Bitcoin Bank US", (with superscript indicating that it is a registered trademark*), is available to distribute its debit cards to the public. The "bank" claims that its clients are protected by FDIC insurance and something called cyber-threat insurance, and that it offers a globally-accepted debit card to its clients.

Neither the Florida Division of Financial Regulation, which licenses and regulates state-chartered banks, nor any of the Federal agencies (ICC, FDIC) have any record of issuing a banking license, under the above name. My own exhaustive Internet search cannot find any reference anywhere to
BITCOIN BANK US.

In the State of Florida, Fla. Stat.  § 655.922 prohibits any entity from using the term "bank," unless it has obtained the appropriate license as a financial institution. How do the organizers intend to evade the law ? On June 18 of this year, they formed** a limited liability company; the name:
BITCOIN B.N.K. US LLC
Note that they deleted a letter from the word, so as not to set off alarms; However, they are using the term 'bank' in their deceptive advertising, and that advertising appears to violate state law.

Please note that the so-called bank's listed address is a post office box in a store in a strip mall in Miami. Govern yourselves accordingly, gentlemen as this seems to be a shell company, recently formed, with no assets, no physical brick-and-mortar location, no website, no track record,  no banking license, and with no regulatory agency overseeing its operation, asking for your money for a debit card.
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*I can find no record of an existing trademark.
** The corporation's filing can be found on the Florida Secretary of State search page:
 http://www.sunbiz.org/

BNP PARIBAS AND HEZBOLLAH MISSILES BEING FIRED INTO ISRAEL THIS WEEK

If you were thinking that the penalties visited upon BNP Paribas by US regulators recently were too harsh, consider this: The bank, according to published statements, made by its compliance staff to senior management, knew very well that the BNP program of evading US sanctions on the Sudan was assisting in supporting the regime, and keeping it in power there. Management disregarded the information, and chose lucrative profits over obeying sanctions. Their total and complete arrogance, in the face of obvious risks for noncompliance, can only be explained by pure greed.  

As you may know from my previous articles, the regime in Sudan has been engaged for years in allowing Iranian-manufactured missiles to be transshipped through its territory, and into Egypt, from where the arms are smuggled in Gaza. Therefore, you can place the blame squarely upon BNP for facilitating the Iranian missiles that Hamas has rained upon the civilian population. If there was a regime change in Sudan, that underground missile pipeline would dry up. Remember that the next time someone opines that the US sanctions were excessive. They didn't go far enough, in my humble opinion.

The Sudan as a clear and present danger ? You might want to watch the YouTube video ( English subtitles) of the Sudanese cleric Al-Jazouli declaring that Islam permits the killing of American women and children.
http://www.youtube.com/watch?v=DB_D9E1vutY

GENERAL NORIEGA FILES CIVIL SUIT IN LOS ANGELES

General Noriega, and what he says is his game image 

Former Panamanian head of state and General, Manuel Noriega, serving time in prison in Panama, after stints in American and French prisons, has filed a civil suit against an American video manufacturer, alleging that his images and likeness has appeared in a popular video game, " Call of Duty: Black Ops II" without his authorization or consent.

Noriega, who completed his US sentence, was then extradited to France, where he haD been convicted in absentia for money laundering, and murder, and was later shipped to Panama, to serve time on other charges, claims that he has been portrayed as a "kidnapper, murderer, and enemy of the state" in the game, where he reportedly betrays his associates. 

He is seeking damages for unjust enrichment, unfair business practices, and violation of common-law publicity rights. There is also, reportedly, a punitive damage claim pending.

FOREIGN LANGUAGE VERSIONS OF "THE LAUNDRY MAN" ARE AVAILABLE

Readers whose first language is other than English are reminded that they can obtain the book in these languages:

(1) Spanish
(2) Dutch
(3) Hungarian
(4) Polish
(5) Slovakian

And soon, they will be able to read it in these languages:

(6) Chinese
(7) French

Thank you for your interest in The Laundry Man.

LAS VEGAS CIVIL LAWYER SENTENCED TO 366 DAYS FOR LAUNDERING OF MONETARY INSTRUMENTS

R. Christopher Reade, center.

Nevada attorney R. Christopher Reade, who represented a $16m fraudster, who is now serving a 25-year sentence, was handed a 366 day sentence for Accessory after the Fact to the Laundering of Monetary Instruments, in US District Court* this week. He was also fined $40,000, and sentenced to three years of post-incarceration Supervised Release; government prosecutors asked for a two-year sentence, and his attorney requested leniency, claiming that the attorney was only guilty of zealously representing his client. That may be the case when a client is engaged in legitimate business, but not when the client is a fraudster, and you know it.

Reade reportedly hid his client's financial interest in a purchase, and later committed perjury when he was asked to disclose relevant information about ownership, and a $2.3m investment. Non-lawyer readers who were wondering why he received the extra day, in lieu of a 1-year sentence: adding the additional day gives the defendant two months of gain time off his sentence, which is only earned if it was more than one year. The Court did the defendant a favor.

Was the sentence insufficient as a deterrent to other legal professionals who might be tempted ? We cannot say, but we hope that local media about the case, have been read, and assimilated, by the American legal community. If you look at the above photo, the defendant is, rightly so, humiliated and ashamed. American attorneys have a poor enough image with the public; every time another one goes to prison for money laundering, it deteriorates further.
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* United States vs. Reade, Case No.: 14-cr-00022-KJD-CWH (D Nev).

  

JUDGE IN SILK ROAD CASE SAYS "ONE CAN MONEY LAUNDER USING BITCOIN"

The US District Court Judge in the Silk Road case has ruled* that it is not a defense to a money laundering charge that the defendant used Bitcoins. The Court held held that the money laundering statute is broad enough to encompass the use of Bitcoins in financial transactions, and that any other interpretation is nonsense. Ross William Ulbricht faces a carload of charges, including Continuing Criminal Enterprise, the so-called "kingpin" statute.

The defendant's counsel had argued that, since both the Internal Revenue Service, and FinCEN, have rendered opinions to the effect that Bitcoin is something other than money, the money laundering conspiracy charge against Ulbricht should be dismissed. The Court ruled that the term "financial transactions" is broadly defined, and that US Government agencies do not have the power to define money laundering laws.

Perhaps this will now put to an end the arguments of defense lawyers regarding Bitcoin transactions as being incapable of being considered money laundering offenses.
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* United States vs. Ulbricht, Case No.: 14-cr-00068 (SD NY) [51-page Opinion and Order, July 9, 2014].

AMERICAN REGULATORS SHOW INTEREST IN TURKISH BANKS AS SANCTIONS EVASION FACILITATORS

The Federal Reserve, and the New York State Department of Financial Services have entered into a BSA/AML agreement with Ziraat Bank's New York branch, as well as its parent in Turkey, signaling serious interest in curbing Iran's sanctions evaders operating in Turkey. The bank, whose proper name is Turkiye Cuhuriyeti Ziraat Bankasi AS, is reported to have been involved with the dual Iranian-Turkish national, Reza Zaraab, who is suspected of massive Iran sanctions evasion activity

Readers who wish to review the complete text can access it here*. We have reported in a number of issues involving Turkish banks this year, regarding transactions with Iran and Iraq. You can access them through the white search box at the upper left-hand corner of this page; Simply type in your query.

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Docket No. 14-011-WA/RB-EB

INCOMING ROCKET FIRE IS NOT FUN

If you have never been on the receiving end of rocket or artillery fire, you should know that it is one of the most stressful things that can ever happen to you. Since the War of 1812, no foreign power has ever shelled American territory. I found this image disturbing, but extremely relevant to this week's events.