Saturday, February 28, 2015


Official Venezuelan media outlets have confirmed that US citizens must now possess visas to enter Venezuela. The compulsory visa program could impact American businesses seeking to operate their investments in Venezuela, as visas could be arbitrarily denied. Apparently, the Venezuelan policy that allowed visa-free travel for US nationals, for up to 90 days, has been terminated.

Venezuela also announced that a number of prominent US officials will not be allowed visas to visit the country, specifically including a number of Senators and Congressmen who oppose the Maduro government. Additionally, Venezuela ha demanded that the United States reduce its current complement of staff at the US Embassy in Caracas, from 100, to 17. Such a greatly reduced diplomatic staff will most likely be unable to assist American nationals involved in any business or legal disputes in Venezuela. Many American expats may now choose to leave Venezuela.

The new visa policy will make visiting and monitoring American investments inside Venezuela difficult, and could result in an increase in Country Risk for that reason alone.


If I was the convicted Ponzi schemer Allen Stanford, whose current release date is April 17, 2105, when he will be 154 years old, I would tread softly when dealing with the Fifth Circuit Court of Appeals, who literally holds my life in its hands. Stanford, who is appealing his conviction and sentence, continues to ask the Court for favors, which it does not choose to grant.

Stanford filed numerous objections to extensions of time granted to the Government attorney handling the appeal, and even resorted to personal attacks on the lawyer herself, which surely will not endear him to the Court. Finally, when he did not prevail in his objections, he asked the Court to allow him to file a supplemental brief, which in essence was using the Governmental delay as excuse to add to his initial brief, which the Court previously restricted in size. He stated that he wanted to brief four additional issues.

Supplemental briefs are rarely permitted, for instance when a new issue has been raised by the Court during Oral Argument. I do not see where the Rules of Appellate Procedure provide for it in his situation, and I am wondering whether his actions merely reflect the arrogant nature of his personality, which was well known to his associates, when he operated the fraud known as Stanford International Bank, in Antigua.

You may recall that Stanford has been dueling with the Court on various issues, with a lack of success; his actions have resulted in both the Court, and the Clerk, being required to take valuable time to repeatedly respond to what many certainly feel were excessive requests.

Now, the Court has entered an order denying his motion for leave to file a supplemental brief, which is but one more time his motions have been rebuffed. One wonder when Mr. Stanford will get the message, and stop pestering the Court, unless he has something with merit.  

Friday, February 27, 2015


For readers who have seen the many articles commenting upon Citigroup's Form 10-K disclosure, filed on February 25, 2015, about its receipt of subpoenas, including a reference to a Grand Jury subpoena, regarding the bank's BSA and AML compliance program, here is the complete text of the Citigroup statement. If you can disregard the legalese, it appears to be a warning that the bank's affiliate, Banamex USA, is a target of both law enforcement, and regulatory agencies, for BSA and AML deficiencies.

The paragraph appears at page 296 of the filing:

"Citigroup and Related parties, including Citigroup's indirect, wholly-owned subsidiary,
 Banamex USA (BUSA), a California state-chartered bank, have received Grand Jury
 Subpoenas issued by the United States Attorney's Office for the District of Massachusetts,
 concerning, among other issues, policies, procedures and activities related to compliance
 with the Bank Secrecy Act (BSA) and anti-money laundering (AML) requirements, under
 applicable federal laws and banking regulations. Banamex USA also has received a subpoena
 from the FDIC, related to its BSA and AML compliance programs. Citigroup and BUSA also
 have received inquiries, and requests for information, from other regulators, including the
 Financial Crimes Enforcement Network and the California Department of Business Oversight, concerning BSA- and AML- related issues. Citigroup is cooperating fully with these inquiries."

Thursday, February 26, 2015


Ignacio Fábrega, the former Director of Supervision at the Superintendency of Securities, the Panamanian securities regulator, has been arrested by the Third Anti-Corruption Prosecutor, and is reportedly scheduled to be immediately interrogated upon suspicion that he violated public order, meaning corruption. Regular readers of this blog will recall that we identified Sr. Fábrega, last year, as the central figure in the Financial Pacific/Petaquilla Mining Ltd. insider trading scandal.

Fábrega is alleged to have quashed the government's initial investigation into misconduct by a number of sitting ministers, and other suspects, all of whom reportedly traded upon non-public inside information that they received, including former President Ricardo Martinelli, to illegally earn huge profits, at the expense of other investors. 


In any Ponzi scheme, there are often consequences for individuals who have participated, even on the margins, of the fraud.  Prominent Fort Lauderdale jeweler Mark Levinson, who was closely associated with one of his major clients, attorney & Ponzi schemer Scott Rothstein, has taken his own life.

Levinson sold Rothstein jewelry for his high-maintenance wife, and his own use, and also quantities of loose diamonds, reportedly for cash. The figure of $20m in total sales has been thrown around in the media, but details of their relationship remain murky. Levinson did disgorge some of his profits to the court-appointed Receiver for the defunct Rothstein Rosenfeldt Adler law firm, but whether he had other exposure, either to a criminal charge, or to further civil actions, remains a mystery, particularly the cash-for-diamonds issue.

Did the jeweler, facing a major problem not publicly known, decide to end his life, unable to cope with the shame and disgrace that was ahead of him ? We cannot say, but there have been rumors of additional upcoming criminal cases, and you may recall that a key former RRA (RRA) staff member was released from custody early, specifically to be available to testify in court in the future. Was this a pending Grand Jury proceeding ? Whatever it is, it is sad when any individual in dire straits commits suicide.

Wednesday, February 25, 2015


Okke Ornstein, the prolific Dutch white-collar criminal and pornographer, who is being sought by the authorities in the Republic of Panama, so that he can begin serving a four year sentence, reportedly eluded capture recently, by literally jumping in the Pacific Ocean, and escaping from Panamanian law enforcement. Ornstein,  a  criminal wanted in his native Netherlands for questioning regarding a child pornography ring operating in Europe, has made a career out of defrauding foreign expats residing in Panama. Most Panamanians remember him as the general manager of the notorious Marc Harris Ponzi scheme; subsequent to that, he operated the fraudulent Tulip Fund, which was shut down by regulators as a scam.

Our articles about Ornstein's activities have made this blogger a target of libelous Internet articles posted by him; nevertheless we shall continue to cover his cases, as he represents a clear & present danger to individuals seeking to invest in Panama.

He is not your typical mild-mannered white-collar criminal; he is a suspect in two homicides that occurred in Panama, and is known to have attempted to blackmail local residents in Panana City. There are several additional criminal cases pending against Ornstein, as well as a $5m civil judgment that is outstanding. Should you encounter this individual, please notify law enforcement immediately; do not attempt to detain him, as he may be armed.

Tuesday, February 24, 2015


Stuart Gulliver, HSBCs chief executive, whose public apology about the reprehensible conduct of his institution's Swiss private bank, himself was playing the Panama corporation game, with his own accounts at the bank. And this is the person that we are trusting to reform HSBC ?

Gulliver reportedly was the beneficial owner of:
(1) Worcester Equities, Inc.  a Panama corporation, meaning bearer shares.
(2) Worcester Foundation, a Panamanian foundation, that has no shareholders or members.

Apparently, the HSBC CEO parked $7.6m there, which represented bonus payments, and which he reportedly did not want his Hong Kong co-workers to know about. Gulliver lived and worked in the former British Crown Colony for many years, and he is cleverly still domiciled there for tax reasons.

One final note; Gulliver is employed, according to published reports, by the bank's Dutch affiliate, HSBC BV, and not by the UK parent holding company. One cannot help wondering what tax avoidance scheme is the reason for this, remembering the flap over the use, by multinationals of the so-called "Dutch-Irish sandwich," to evade corporate taxes. Who benefits from HSBC having a reported 350 staff members listed as Dutch employees, notwithstanding that they are certainly not working in the Netherlands ?

It is axiomatic that anyone who is in command must lead by example. By artfully concealing the ownership of his wealth through Panama entities, Mr. Gulliver is doing precisely what his Swiss private bank assisted their American clients in doing; obscuring beneficial ownership within a tax haven shell company, and hiding inside a strict bank secrecy, non-cooperative jurisdiction. No wonder regulators are so busy these days.

Monday, February 23, 2015


Alejandro Moncada Luna, the former Chief of the Panama Supreme Court of Justice, who has been under criminal investigation for corruption, has entered a plea of guilty, and will receive a five year sentence. Moncada Luna, whose controversial purchase of two luxury properties, involving large amounts of undeclared cash, entered a guilty plea today to two of the four criminal charges pending against him, Unjust Enrichment, and Falsification of Documents. The other two counts are said to be dismissed, as part of the agreement.

In addition to the prison sentence, the two luxury residences will be forfeited, and he will lose his license to practice law in Panama. The published reports of the plea do not cover bank accounts seized by law enforcement agencies of the Government of Panama, and the disposition of those accounts is unknown.

Chief Justice Moncada Luna is accused of taking bribes to fix Supreme Court cases; some cases were improperly delayed for many years, without any legal justification; others had decisions entered that were contrary to existing law, which were bought by litigants; others were deliberately not heard, notwithstanding that they had sufficient legal merit. He is also believed to have been paid to dismiss the money laundering charges filed against the pyramid schemer, David Murcia Guzmán, and to have him summarily deported to Colombia.

Whether the former judge will actually serve time in prison is not known, because Panama allows early release to house arrest, especially for medical reasons, and Moncada Luna's attorney has stated that his client suffers from health problems, and emotional issues.

Systemic corruption, at Panama's court of last resort, is one of the principal reasons that Country Risk for the Republic of Panama is elevated; its is hoped that the appointment of jurists who will not sell their votes on the Court will change the judicial system for the better, and significantly lower Country Risk.


PLO logo
A Federal civil Jury in New York today returned a verdict against the Palestinian Authority (PA), and the Palestine Liberation Organization (PLO), finding that the defendants knowingly supported terrorist attacks in Israel. The $218.5m jury award is trebled under the Anti-Terrorism Act, to $655.5m .

The plaintiffs, some of whom were injured, and others the estate of those killed in the attacks, proved up their case by showing that many of the perpetrators and planners has been employees of the PA, and that it had made payments to the terrorists, and families of the suicide bombers.

Collection of  a judgment against the PA & PLO may be problematic, however. The PA is insolvent, and riddled with debt at present; the Government of Israel is presently withholding customs revenue, due to the actions of the PA, in joining international bodies, and withdrawing from settlement talks. Local banks in the Territories have declined to give the PA any temporary funding, to cover its budget. The case does have significance, though for compliance.

For compliance officers, though the Palestinian Authority is not a designated terrorist organization, this decision should result in your taking a closer look at the senior Palestinian leaders who were known to be involved in the terrorist financing of the attacks, and it certainly raises Country Risk levels for the Palestinian Territory located in the West Bank, which is already extremely high.
Palestinian Authority
 On the individual level, banking any PLO or PA PEP is now even more unacceptable, on a risk basis, than it was before. Any Palestinian PEP client may be later identified as a terrorist financier. To identify them as PEPs, since they may be reluctant to disclose their status, due to the rampant corruption that exists in the Territories, you will need an Arabic-speaking staff member to conduct due diligence at account opening. Verify any alleged local business Source of Funds for customers claiming that this the source of their wealth.

Note that most of them hold Jordanian, Egyptian, or other Middle Eastern passports; some even have more than one passport, as well as EU travel documents. The fact that billions of dollars, donated specifically to help the Palestinian people, have disappeared into the hands of corrupt Palestinian PEPs, means that it is foolish to even consider accepting them as clients. The late Yassir Arafat is rumored to have taken billions in donated aid money, and he deliberately ignored corruption by his inner circle and supporters.


Sunday, February 22, 2015


As a compliance officer, make it a habit to read transcripts and documents; you may find something hidden in the text that will alert you to an emerging threat. The United States Senate, in connection with its review of the nomination of United States Attorney Loretta Lynch to be Attorney General, submitted a number of written questions for the record*; the answers were submitted to the Senate on February 18, 2015.

Senator Grassley, the Committee Chairman, asked about the consequences or accountability regarding HSBC staff members or officers who allowed $881m in drug trafficking proceeds to be laundered through the bank. She neither fined nor charged anyone at HSBC with a crime. In her answer, US Atty. Lynch wrote, and I quote:

Virtually all of the senior executives who oversaw HSBCs flawed compliance program were replaced. Furthermore, HSBC 'clawed back' bonuses for senior executives who oversaw the anti-money laundering program. Answer to Question No. 2.

I read this as an admission that certain HSBC compliance supervisory staff member were terminated, or more likely, asked to resign. Being experienced in the compliance field, where there is a shortage of experienced compliance officers, they most certainly have found employment since leaving HSBC.

I must assume that they obtained their new positions in no small part due to glowing references from someone at HSBC Human Resources, who was anxious to place the bank's bad apples, and who also did not want to expose the bank to litigation from any ex-employee who might later claim that bad references, which were untruthful, caused them to become unemployable in the financial industry.

Therefore, these individuals, or at least some of them, are at work in new positions. Unfortunately, USA Lynch has stated that she cannot disclose their identities, because they were acquired during Grand Jury proceedings**, which operate under secrecy rules, so you will have to make your own checks. Have you hired anyone whose last place of employment was at HSBC ? If so, you had better take this matter to your outside bank counsel, so that your law firm conducts an intense investigation of this individual. Was he or she part of the systemic failure of HSBC to detect drug money laundering ? Guilty of willful blindness, perhaps ? You must rule them out as a participant, before you can retain them as an employee at your bank or NBFI.

What will you do if some other US Attorney charges them with a crime, before the Statute of Limitations runs out, when they are on the job at your bank ? Imagine the embarrassment and reputation damage to your bank if that happens. Check with your HR department forthwith, to insure that you do not have one of HSBCs bad apples on your compliance staff.
** Answer to Question No. 1.


We are getting close to the June 30, 2015 filing deadline for TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). Money launderers working for clients with significant offshore accounts will be reminding them to transfers funds to accounts where they have no signature authority, or discernible beneficial interest. I would be looking for large funds transfers, between now that Mid-June, especially from known, established offshore financial centers, onward to more obscure jurisdictions, where reporting and record-keeping are poor at best, and generally dysfunctional.


The recent official visit, by Indian Prime Minister Modi, to Arunachal Pradesh, the former North East Frontier Agency, has resulted in strong diplomatic protests by China. In 1914, a treaty with what was then a nominally independent Tibet resulted in the establishment of the McMahon Line as the recognized border with India.

The region, which China, claims, calling it South Tibet, has been in dispute since China invaded and occupied Tibet in 1951. India's announced intent, to expand the road & rail transportation networks in the province, has drawn Chinese anger. There has been no progress on repeated negotiations, seeking to settle the border dispute, as China regards the border as never having been drawn or demarcated.

Compliance officers whose clients have extensive trade with India should keep an eye on future developments, given the history of armed conflict between India & China, for the purpose of assessing any changes in Country Risk. 

Saturday, February 21, 2015


After a US District Judge ordered Toronto Dominion (TD) Bank to pay the $67m judgment* entered against it, by February 26, 2015, counsel for the Bank filed a notice of appeal to the Eleventh Circuit, which can only be interpreted as a last-ditch effort to further delay payment of the judgment in the case, which was originally filed back in 2010. I leave the conclusion as to whether it is taken in good faith to the reader.

If you have been following the case, you know that the appeals court has already affirmed the judgment; this "amended appeal" appears to be solely based upon the Bank's professed fear that the plaintiff will obtain a double recovery, inasmuch as the Rothstein law firm's Receiver has disbursed funds to the victims, plaintiff included. This argument has no basis in fact, as counsel for the plaintiff has already represented that his client will refund any and all recoveries that it obtains from the Receiver, back to the RRA Liquidating Trust. Furthermore, the Court has already ordered the plaintiff to rebate, after it receives the judgment payment from TD, the $9m paid to it by the Receiver.There does not appear to be a bona fide issue here for an appeal, in my humble opinion, based upon more than four decades of following appellate decisions, after law school.

There is a supersedeas bond on file with the trial court, which was deposited to allow the bank to take its prior appeal of the judgment. Whether it attempts to further delay the proceedings by arguing that the existing bond is to be applied is not known, but is assumed to be the Bank's position.

The last question I have is whether the Court's Order, entered on February 18, 2015 is truly an appealable order, and should it be the subject to a motion to dismiss, pursuant to Rule 27, Fed.R. App. ? Perhaps it is time for the plaintiff's counsel to explore that possibility.
* Coquina Investments LLC vs. TD Bank, NA,  Case No.: 10-cv-60786



Friday, February 20, 2015



Your Country Risk assessment for Lebanon, already elevated due to ISIS/ISIL knocking on the door, and with Hezbollah making warlike sounds regarding its intent to use the Golan Heights to attack Israel, was just further complicated by a new threat. Hamas, still unhappy with the utter failure of the Arab world to join in against Israel this past Summer, is threatening to utilize the Palestinian refugee camps in Lebanon, to launch attacks against Israel.

With the bitter memory of the damage inflicted upon Lebanon in the 2006 conflict between Hezbollah and Israel in mind, the prospect of a new conflict, which will bring more death and destruction upon Lebanese civilians, and infrastructure, the last thing that the Beirut financial structure needs is more war, but it could occur, and it could seriously disrupt the operation of the banking sector, and thus render it less attractive to foreign bank clients, and investors, for years to come. Will there be a return to the madness of armed conflict ? If so, clients will exit in droves.

Should Hamas begin to attack Israel, from Lebanon, the consequences could be dire; a strong Israeli response might compel Hezbollah to enter the fray, and ISIS/ISIL might then choose to bring the Sunni-Shiite aspects of the Syrian civil war into Lebanon proper, not just the frontier region. The result would be chaos. For those reasons, one must consider again raising Country Risk for Lebanon.

Thursday, February 19, 2015


If you are following this week's biggest corruption story in North America, you know that the fraud and corruption charges filed against the Canadian engineering firm SNC-Lavalin Group, Inc., and two of its subsidiaries, have exposed a multi-million dollar pattern of criminal activity regarding the company's projects, especially those in Libya. Three former employees, and a prominent tax attorney, have been charged previously, in cases involving money laundering, fraud, bribery & embezzlement.

What is more disturbing however, is the disclosure that it was SNC that is behind the stalled Canadian extradition proceeding, presently pending since May, 2013 in the Republic of Panama, against Arthur Porter, who is accused by the Government of Canada of diverting CAN$22.5m from a hospital project where SNC was involved. Porter did not oppose extradition, but Panama mysteriously has delayed the proceedings, claiming that Porter's case is under investigation.

Most Panama observers had thought that the real reason for their government's procrastination was to ultimately seize Porter's large Panamanian bank accounts, which have been frozen. He has lung cancer, and as he has been denied medication and treatment, it is feared that he will die in custody in Panama, and his assets there become the property of that country's government, and/or the banks who are holding his funds. The person responsible for the hold on his extradition was the individual in command, the recently-departed Attorney General of Panama, Ana Isabel Belfon Vejas. She deserves a few years in a dirty Panamanian prison for that stunt.

Ana Belfon
However, new information available, from a source of proven reliability, confirms that it was SNC executives who bribed the Attorney General's office, to indefinitely delay Porter's extradition. Porter's first-hand knowledge about corruption in SNC, should it fall into in the hands of the RCMP, would bury the company, and its executives reportedly hoped that Porter would expire while in custody in Panama, due to his terminal illness, and intentional lack of treatment for his cancer. Did SNC executives order medication and treatment withheld ?

Fortunately, the newly-arrived Panamanian Attorney General promptly agreed to send Porter back to face charges in Canada, but the fact that illicit payments, to high-placed government officials, came directly from SNC, to keep Porter from testifying, indicate that the company actively conspired to bring about his death. Those SMC officers who sent the bribe money to Panama should face additional charges for their reprehensible actions.


Observers of the massive unfolding corruption scandal in the Republic of Panama have reported today that virtually all of the former ministers from the Martinelli cabinet have gone into hiding, and are suspected of having left the country, to avoid possible arrest. Most of the ex-ministers are facing insider trading charges, in the Financial Pacific/Petaquilla Mining Ltd. scandal, as well as probable corruption charges.

Martinelli's private business jet, N799RM, a Hawker 800, has reportedly been making flights in and out of Panama, though rumors that it is being used to transport the former ministers are unconfirmed. Efforts are being made to obtain flight records, as well as any passenger manifests that exist. Some ministers have allegedly had their US visas revoked, which raises the probability that they are being moved to another country in Central America, or to Venezuela.

Contrary to published statements of his supporters, Martinelli has not been seen in Miami, although a photograph was released, allegedly showing him dining in the city's Brickell Avenue financial district. Sightings of the former president have not been reported anywhere else in the United States, and he is presumed to have permanently relocated to Paraguay, a jurisdiction from which he cannot be extradited to Panama.


If you live and work in the Western Hemisphere, and think that my recent article* about criminal activity in the UAE, in Ras Al-Khaimah (RAK), is not relevant to your bank or NBFI, you may be wrong. RAK has a state-of-the-art diamond processing center, and you will never guess where a large portion of its suspect diamonds come from.

The answer is Venezuela, a member of the Kimberly Process, but which annually declares that it has not exported one carat, notwithstanding that illegal diamond mines, located in the southern and eastern frontier of the country, are known to extract at least 150,000 annually. The Kimberly organization, which seeks to block so-called "conflict diamonds," those originating illegally in war zones, has long threatened to expel Venezuela, but, unfortunately, it has no enforcement powers.

The Venezuelan diamonds are generally smuggled into neighboring Guyana, where regulations are notoriously  lax, and illegally certified there as Guyanese in origin. Thereafter, they are shipped to RAK for processing, and onward transport to the diamond centers of the world. In this manner, the identities of the owners of the diamonds are hidden, and final payment, which is made from reputable companies in the industry, completes the cycle.

It is believed that the groups behind the illicit Venezuelan gem industry are criminal organizations, supported by powerful Venezuelan PEPs, who insure that the illegal mining operations are protected from local law enforcement. Since a number of Venezuelan PEPs are OFAC-sanctioned, there is a genuine risk that any financial institution that participates in the movement of these diamond sale proceeds could be exposed. Also, any member of a criminal organization who is arrested, by an American law enforcement agency in the future, may disclose his banking relationships, in order to reduce his sentence.

Therefore, it is important that compliance officers sensitize their staff to the fact that financial transactions from RAK, or transactions of global gem dealers that are connected to RAK, could potentially increase risk for the bank, and should be subject to enhanced due diligence. The possibility that you have have some exposure from RAK is not so remote as you think.

*RAK Emerges as new Money Laundering Threat in the Gulf

Wednesday, February 18, 2015


After admitting that has literally accepted billions of dollars in cash deposits, from a variety of dodgy customers, for years, and suffering repeated regulatory penalties due to this misconduct, HSBC has now gone to the other extreme, resulting in damage to its regular clients in the process. The bank is declining to allow withdrawals of only a couple of thousand pounds by its longstanding clients, unless the customer provides documentation, or evidence, regarding the purpose of the money. You have to be kidding me; that's like closing the barn door, after the cow is long gone.

Small amounts of cash, unless there are multiple, repeated withdrawals, are not evidence of money laundering, especially when a longtime, legitimate bank client is asking for money on a onetime basis. This has to be one of the most stupid bank policies that I have ever seen; it will alienate the customer base, result in a loss of clients and business, and cause unintended reputation damage. If I am an HSBC client, and I want a couple of thousand pounds out of my account, not tens of thousands, and you decline my request,you may lose me as a customer, and I will certainly tell my business associates about the incident. Is that what the bank wants ?

Candidly, the bank has enough problems this week, with the Swiss authorities investigating the HSBCs private banking branch, and a senior reporter for one of the UKs biggest newspapers, the Telegraph, resigning in disgust, due to the paper's reputed censorship of negative news about HSBC at the Telegraph, so that it could retain its lucrative advertising contract income.

This policy demonstrates that HSBC management still does not understand how to operate an effective AML/CFT program. I do not care how many times it brings in individuals with stellar AML/CFT credentials; it still cannot get it right. Come on, gentlemen, this is low-risk customer service, not cash from Mexican cartel money launderers, that you are fussing over.

Tuesday, February 17, 2015


Ras al-Khaimah, one of the Persian Gulf arab emirates, a relatively obscure part of the United Arab Emirates (UAE) is growing in size as an offshore financial center, and not for the right reasons. With foreign nationals attracted by literally zero taxation, and absolute anonymity of corporate ownership, RAK, as it is commonly known, now reportedly has more than 14,500 corporations.

Formerly the area of operations, for several years, of Viktor Bout, and other arms traffickers, RAK is seeking to become the Cayman Islands of the Gulf, offering turn-key financial services, a free trade zone, investor-friendly business environment, and a sanctions-evasion history, RAK is a short 45 minute drive from Dubai Airport; its deepwater port facilities round out its potential threat as a center of illicit trade.

Given that beneficial ownership, and even the identities of officers & directors, cannot be verified through any trustworthy official source, you would advised not to accept any Ras Al-Khaimah corporation as an account holder, and I personally would not approve any financial transfers, either to, or from, this jurisdiction, at this time. This may sound blunt, but for risk management purposes, you do not want to be on the wrong side of an OFAC, or a sanctions, violation.


The attorneys for former TD (Toronto Dominion) Bank Regional Vice President, Frank Spinosa, who is facing three counts of Wire Fraud, in US District Court* in Fort Lauderdale,  In the Scott Rothstein Ponzi scandal, apparently are engaged in preparation for trial. While their client certainly enjoys the presumption of innocence, is putting the Government through the expense of a trial wise, given the long list of potential witnesses, already serving their sentences, who could receive a sentence reduction for their Substantial Assistance ?

He has two very experienced, and competent, attorneys on his legal team; one is a well-known criminal defense lawyer, with extensive white-collar experience, and the other a seasoned business litigator. A question: do they have an effective defense ?

 On the eve of the December 15, 2014 trial date, they made an Ore Tenus** motion for a continuance, due to the "volume of discovery," which the Court readily granted. One wonders why counsel waited until the eve of trial, before alerting the Court to their problem. In any event, counsel suggested  that they needed nine months before they would be ready for trial, and the Court rescheduled the trial for October 15, 2015.

According to the filings to date, Mr. Spinosa allegedly:

(1) prepared "lock letters," on TD Bank letterhead, which attested to the fact that investor's funds were frozen, for their protection. In truth and in fact, these letters were as bogus as the out-of-court settlements that Rothstein was offering to his prospects.

(2) Allowed Rothstein to conduct sales meetings at TD Bank branches, giving the "investments" an aura of respectability.

(3) Accepted a $50,000 cash payment, as a bribe, from Rothstein, for assisting him in deceiving the prospects. Rothstein himself has previously testified on this subject.

(4) Was responsible for facilitating $250m in investor funds.

(5) Gave assurances about the safety and security of the investments to victims, as a spokesman for TD Bank.

(6) Totally deceived the victims, regarding the bank's role as guarantor and custodian of the funds.

We shall continue to follow a developments in this interesting case, as the 50-year sentence handed down to Scott Rothstein in his case might indicate that the defendant, believing that he is now facing the prospect of a long sentence, has decided to roll the proverbial dice, and go to trial. Will he get 20 years for his prominent role in the Ponzi scheme ? Will he be convicted ? Only time will tell; stay tuned.

* Case No.: 14-cr-60257-BB (SD FL).
** A motion made orally, to the Court.


Monday, February 16, 2015


Notwithstanding that his DMG pyramid/Ponzi scheme ultimately defrauded victims out of billions of dollars, and that David Eduardo Helmut Murcia Guzmán was convicted, in two countries, many Colombians still revere him. His image still commands respect. In fact, his reputation is so strong that a man claiming to be his cousin, Mauricio Guzmán, has reopened for business, using his likeness. Colombians who purchased DMG cards were able to make major purchases at seriously discounted prices during DMGs reign, and there was even talk of him running for president of Colombia, had he not been arrested in Panama, and ultimately convicted in the United States.

Operating out of the Colombian city of Neiva, which is south of Bogotá, and east of Cali, as DMG Inversiones, Mauricio is promising that he can triple your money. He is also offering investments paying, 100, 150, and even 200%, and it is guaranteed, according to the handout. Details of how he intends to accomplish this have not been disclosed.

This is not the first time successors sought to trade upon David Murcia's fabled reputation; here is an image of an updated DMG $100 bill that was being distributed around Colombia a year ago, by individuals who sought to use his name.

Considering that somewhere between three and four billion dollars were reportedly lost by DMG clients, and most of them were Colombians, some of whom cleaned out their savings accounts to participate in the investment program, I am amazed that Mauricio Guzmán has not already been tarred and feathered by his cousin's victims. Perhaps the reason is that many know that Murcia's subsequent business failure is said to have occurred, not because it was a pyramid scheme, but due to the criminal actions of Panama's powerful Syrian organized crime ring, many of whom were working with Murcia to invest his funds into Panama real estate, and who coveted his vast wealth, and took steps to illegally acquire it all.

According to sources of proven reliability, the Syrian crime group engineered Murcia's arrest, and seizure of his assets. It then prevailed upon the corrupt Supreme Court of Panama Justice Moncada Luna to dismiss all charges, and immediately order Murcia deported to his native Colombia. Thereafter, all of Murcia's holdings and physical assets, most of which was owned by corporations with bearer shares, were appropriated by members of the organized crime group.

 Ricardo Martinelli, and his sons, were later seen driving around Panama City in his collection of luxury automobiles; Gary James Lundgren then took possession, and title, to several upscale condominiums purchased by Murcia, as well as a large amount of bulk cash. Murcia had purchased, and paid in full for, a fleet of twenty luxury yachts, from a prominent Panama yacht broker, who only delivered three, but later retained all the money from the others. The three yachts actually delivered were later auctioned off by the Government of Panama, but the proceeds from those sales was never accounted for.

Panama's biggest mystery remains the location of all that bulk cash, literally billions of dollars, smuggled in from Colombia via speedboat. We know that some of it was employed to make large purchases of Petaquilla Mining Ltd. stock, in the insider trading scandal, but where is the rest of that "flight capital?" The whereabouts of David Murcia himself is unknown; he should still be serving his American sentence, but he is not in the custody of the Bureau of Prisons, according to its records. is he now cooperating, and will he testify against the former Panama business associates who stole from him, in a new case in the United States ?

Whether you believe, like many Colombians, that David Murcia helped them, or whether you consider him a white-collar criminal, the details surrounding the loss of his assets in Panama to its Syrian organized crime elements is a fact. The question is whether any law enforcement agency, Panamanian or American, is willing to seize those properties, and do battle with a powerful adversary.

The new business card, front & back


Judge Palmeri
The legal system in Venezuela remains a cesspool of corruption; Benny Palmeri-Bacchi, a former Venezuelan judge, was sentenced in US District Court in Miami to eighty months. The defendant, whose narcotics trafficking charge was dismissed in a plea agreement, entered a plea to Conspiracy to  Obstruct Justice, Money Laundering Conspiracy, and Extortion. His sentence exceeded what the Government suggested, as the Court  recognized his central role in a criminal conspiracy that also included two other senior Venezuelan PEPs, both of whom remain fugitives from justice.

When Alberto Marin Zamora, a Colombian Norte de Valle narcotics kingpin, was arrested in Venezuela,  Judge Palmeri-Bacchi, who was on the bench at the time, extorted $1.5m from him, to foil his extradition to the United States. To accomplish this,  he filed a bogus local criminal charge against Marin, to keep him in Venezuela. Palmeri later moved his criminal proceeds through a bank in Curacao, and thereafter into a bank in Florida, hence the money laundering charge.

Marin Zamora,  who was later extradited the the US, and convicted, cooperated with American authorities; Palmeri was arrested in Miami, when he arrived there, planning on visiting Disney World. The defendant must also serve three years of Supervised Release.

This case confirms the sorry nature of the Venezuelan court system, where the rule of law does not exist, and justice is for sale to the highest bidder.


Be advised that a law passed in Venezuela, reportedly known as the "Act of Currency Exchange Regime," Article 12, limits the purchase or sale of dollars, by Venezuelan nationals, to no more than USD$10,000 per year. A violation of this statute, according to Venezuelan reports, will result in criminal charges of money laundering. There is no information available yet on fines and/or imprisonment for violations.

Do you have branch employees/clients/customers/vendors who are Venezuelan nationals ? If so, you may want to reexamine any currency exchange practices that you facilitate for them, especially the acquisition of US Dollars, through the exchange of other currencies. It is suggested that you consult with your counsel about this issue; otherwise, you may be unwittingly placing someone at risk.

If you, or your staff, routinely travel to Venezuela,  and you carry US Dollars, you also must establish safeguards and policies to avoid becoming entangled in the possible criminal prosecution of Venezuelan nationals that you deal with, due to business transactions in dollars. Watch this one, please.


The mystery surrounding convicted master Ponzi schemer's bizarre appeal is finally solved. You may recall that Steinger, whose life settlement company, Mutual Benefits Corp., was once the largest company in the world selling secondary market life insurance policies, entered a guilty plea in his case, and was sentenced to 20 years in Federal Prison.

His initial brief is still not filed, due allegedly to the appellant's unavailability to participate in the preparation of his appeal, but his counsel's most recent motion* clears up the puzzle about why he would even file an appeal. Steinger is seeking "to challenge the validity of his guilty plea, based upon the fact that his mental capacity was impaired, due to the numerous strong pain medications that he was taking at the time."

His attorney is seeking to include transcripts of court appearances, which he asserts will support his claim of being under the influence of pain medication. That must occur at the trial court level. Mr. Steinger, who is disabled, due to chronic back problems, was moved to Federal Medical Center Butner on January 12, 2015; his attorney practices law in South Florida, which will certainly make conferences with his client more difficult.

Should the Court set aside his guilty plea, and try the case, Steinger would probably be looking at a Life Sentence, due to the amount of money taken from the victims, the enormity of the fraud. Bear in mind also that the Eleventh Circuit Court of Appeals, ruled that Steinger's insurance products constituted a security, which required registration with the Securities & Exchange Commission; could he actually receive multiple Life Sentences ? We cannot say, but the appellant is playing with fire, in my humble opinion.

*Motion for Leave to Supplement the Record, to Stay all Proceedings, and to set a new Briefing Schedule,  filed February 12, 2105.

Sunday, February 15, 2015


The Supreme Court of Canada has declared that a portion of Canada's anti-money laundering and anti-terrorist financing legislation is unconstitutional as to attorneys, because it violates solicitor-client privilege. The Court held that the requirements that barristers and solicitors collect and retain information about their clients' payments for legal services, including who pays for them, and the provision authorizing FinTRAC to search lawyers' premises without a warrant, violate fundamental principle of justice.

Any readers who wish to review the complete text of the decision, can access it here*.
*Canada v. Federation of Law Societies of Canada, Docket 35399


Richard Chichakli, who is appealing his conviction for violations of sanctions, has filed his initial brief, Pro Se, and for those readers who have been following the case, we shall list his Points on Appeal, together with a short summary of his argument on those points. Bureau of Prison records indicate that he has not yet been transferred to a Federal Correctional Institution, to serve out his five year sentence; he is most likely still in New York, at a pre-trial holding center.

The brief, which makes excessive use of capital letters, when seeking to add emphasis to specific statements, discusses several issues, after which I have added my own comments where relevant. The points are taken, verbatim, from the brief:

(1) The judgment should be vacated, because of ineffective assistance of a court-appointed stand-by counsel; he is blaming stand-by counsel for his conviction, though the appellant conducted his own defense. (His problem is that the role of such counsel is strictly limited, and does not rise to the level of that of an attorney retained or appointed to defend a client).

(2) The judgment should be vacated because the Court improperly admitted lay opinion as an expert opinion. (He objects to former IRS Agent Albert Monica's testimony, as he was unqualified.)

(3) The judgment should be vacated, an new trial ordered, by reason of jury misconduct. )There was juror bias, and some e-mail messages were passed between jurors).

(4) This Court should vacate the judgment because evidence admitted under rule 404(b) were [sic] used as basis for conviction. (Rule 404 deals with other criminal conduct, and his actions in Australia, where he lived under an alias, were brought out at trial).

(5) The Court erred in charging the jury, and highly prejudicial external material was introduced to the Jury. ( The appellant's concealment of his OFAC SDN status should not have been communication to the jury; at closing, his relationship with Viktor Bout, his nominal co-defendant, and Charles Taylor, were mentioned).

(6) The Government withheld discovery, in violation of Rule 16, and the Jencks Act (transcripts of government witness testimony or evidence used must be disclosed to the defense); he claims that Documents seized from his residence in the US were not produced in Discovery, and that it withheld Brady material, meaning evidence that establishes the innocence of the defendant, or which might reduce his punishment.

(7) Judgment should be vacated, and new trial directed, pursuant to Rule 60 (b)(3), and fraud on the Court, pursuant to Rule 60(d)(3); ( this one improperly cites to a rule of Federal Civil Procedure, which do not apply in criminal cases) He alleges that multiple references to Viktor Bout, the co-defendant, were improper, and operated as a fraud upon the Court. Bout was, and remains, a co-defendant, Chichakli's indignation notwithstanding, and there was no misrepresentation of that fact here.

(8) The Court failed to issue a missing witness charge, and curtailed examination of the credibility of Agent Zachariaseiwicz; (the Government substituted one DEA witness for another, relating to Viktor Bout's arrest and seizure of his laptop) The argument is disjointed, and I candidly cannot make sense of the discussion, which is absent a conclusion.

(9) Unrelated, highly prejudicial evidence were [sic] improperly admitted, and the Court expresses bias against the defendant; (another discussion of why it was improper for the Government to mention Viktor Bout, Charles Taylor; the Court, in allowing this prejudicial information, demonstrated bias towards the defendant).

(10) The Pro Se defendant denied fair trial by the means of preventing him for preparing for trial by placing him in solitary confinement; ( the movement of the defendant to a Manhattan pre-trial detention center, and placing him in the Special Housing Unit, and not in General Population, denied him the ability to adequately prepare for trial) I am wondering whether the defendant considered that he was in custody when he decided to represent himself, knowing that proper trial preparation is difficult, or even impossible, when a defendant is locked up, and unable to conduct an investigation, interview and subpoena witnesses, and prepare a defense.

(11) Guidelines calculation is improperly enhanced 18-level[s], and Downward Departures, pursuant to 3553(a) were improperly denied. ( the victim's monetary loss and potential loss were improperly added to the case, resulting in a 16 level increase; two more points were added for violation of OFAC sanctions)

(12) The Court erroneously authorized forfeiture; ( the defendant contends that he had no interest in the money seized in connection with his purchase of aircraft).  If this was a purchase and sale, how a=can the sale proceeds, or deposit, not be from the purchaser ?

Whenever an appellant acts Pro Se, his brief may not precisely follow the requirements of the Federal Rules of Appellate Procedure, and local rules, as well as generally accepted principles of brief writing, but much of the brief was rambling, at times even seeming like stream of consciousness prose. he would have been far better served to allow the Second Circuit to appoint counsel to write it for him.

Do Chichakli's  points on appeal have any legal merit, and should the judgment be reversed and remanded for a new trial ? We await the Government's response.

Saturday, February 14, 2015


This week, a Federal Judge in Florida ordered TD Bank to pay, within 14 days,  the $67m awarded in favor of Coquina Investments three years ago, in a case where the bank's role in facilitating and perpetrating the Scott Rothstein Ponzi scheme, at the expense of its victims, was painfully exposed to the public. The Bank, after exhausting all appellate remedies available to it, hung on to the bitter end, filing motions that many thought were without legal merit, and interposed purely for dilatory purposes; they were, of course, denied.

The bank's conduct during this case has not gone unnoticed; a senior bank officer's involvement, in allegedly acting as a reference for victims seeking assurance about the safety of their investment, and the bank's willful blindness to the scheme, was compounded by its blatant discovery violations, and desire to drag out the post-judgment proceeding for years. Such actions are long remembered, not only by the legal community, but by the public at large. The amount of reputation damage that the bank has sustained cannot be measured, and now both trial lawyers, and their clients, know that TD Bank will fight all claims, even those where there is little dispute about their merit, tooth and nail, and use every tool the legal system has available, to do so. This bank's culture is such that it will not settle claims; that is readily apparent here.

Since many plaintiffs do not have the bottomless war chest, for attorneys' fees, that a bank has, plaintiffs  with other claims know that they must prepare for a battle. This can only hurt the bank's image, if more of its dirty laundry is plastered on the pages of local media, in court coverage. Banks that are in the news, repeatedly, in a negative light, scare away customers.

 The lesson here: if you were burned in a Ponzi scheme that your staff did not catch, or one that was too lucrative to ignore, admit your errors, settle the case honorably, and move on. You do not need to have the public, your prospective future clients, think that you cannot concede that mistakes were made.  

Friday, February 13, 2015


This week, the Citibank branch in Panama posted a notice to its customers: kindly find another financial institution for your business, as Citibank is closing. We knew this was coming several months ago, when Citibank announced in October that it was exiting consumer banking in Panama, as well as in Costa Rica, Nicaragua, El Salvador & Guatemala. At the time of the announcement, Panama was rife with rumors that US regulators were pushing Citigroup out of Central America, due to the inability of local regulators and law enforcement agencies to combat rampant money laundering.

It gets worse; last year, sources inside Panama reported that then-President Ricardo Martinelli was warned that, if Panama did not clean up money laundering in the Republic, that the Federal Reserve would cease to process Panamanian transactions. Panama, which has no central bank, depends on the Fed for a variety of financial services. Also, remember, Panama's currency, nominally the Balboa, is actually the US Dollar. If Panama was shut out of direct contact with the US financial structure, its economy would collapse immediately, causing not only financial chaos, but a total disruption of the economy. All the foreign banks resident in Panama would be cut off from the American banking network.

When foreign banks start to pull out of Panama, look out, for this is a sign that: (1) things are only going to get worse with the Panamanian economy, (2) major criminal indictments from the United States are expected, and (3) Panama has lost its appeal as an offshore financial center, due to massive corruption, a dysfunctional court system, organized crime influence, and the inability of government to maintain sufficient cash flow to pay its expenses.   


A US Magistrate Judge, in the ongoing case against Bank of China, which is accused of banking a senior Palestinian Islamic Jihad official who moved millions of dollars through his accounts, has ordered the Bank to turn over materials from its pro-suit investigation of possible misconduct. The case is a matter of great public interest, due to persistent allegations that many international terrorist organizations are engaged in widespread use of Chinese banks, to evade global anti-terrorist sanctions. The plaintiffs were victims, and their families, of suicide bombings that occurred in Israel.

The Bank had objected to the disclosure of reports generated in an internal investigation, initiated after planitiffs' counsel had notified the Bank of an impending lawsuit filing, and offering to enter into settlement negotiations. Bank officials were advised, after the investigation had been conducted, that the plaintiffs allegations were baseless.

After suit was filed, and a demand for discovery made, the bank counsel objected on two grounds:
(1) That the investigative material was barred by the Attorney-Client Privilege, though it was not part of any correspondence between the bank and any American attorneys. Subsequently, it was delivered to counsel, for an opinion.

(2) That the material was also barred under the Work Product Doctrine, as it was prepared in anticipation of litigation, by agents acting under the orders of an attorney. The facts showed that no attorney was directing Bank staff in the pre-suit preparation of the report, which went directly to Bank management.

The Court, in an opinion filed by the Magistrate, held:
(A) That the information collected was not barred by the Attorney-Client Privilege, simply because the Bank's staff intended that it later would be transmitted to legal counsel for advice. Documents for the bank's own internal investigation of the matter, which were not direct attorney-client communications, were not privileged, just because they were later given to counsel, when he was retained.

(B) That the Work Product Doctrine did not apply, because the materials must result from the conduct of investigative or analytical tasks to aid counsel in preparing for litigation. Additionally, if the materials would have been performed in essentially similar form, irrespective of litigation, they were not barred by this privilege. The bank did not meet its burden of showing that the materials were protected as Work Product.

The plaintiffs' Motion to Compel Production was granted in January; the Order was recently unsealed.

Thursday, February 12, 2015


Just when you thought you'd seen everything in Panamanian politics, a bribe of huge proportions makes one reconsider how low things have sunk to in the Republic of Panama.  In what must qualify as the most arrogant offer of the year to date, former Panamanian President Ricardo Martinelli, facing several newly-filed criminal charges against him in his country, has boldly and openly offered a seven million dollar bribe to the first Panamanian magistrate or Supreme Court Judge to dismiss all pending cases. His offer extended to all the members of the judiciary, which has infuriated Panamanians, who have called for his arrest, conviction & imprisonment.

The bribe, which if accepted and deliver upon, would operate to relieve Martinelli of all liability for his massive corruption, abuse of power, and money laundering offenses, was conveyed to disgraced former Supreme Court chief, Moncada Luna, and it was discussed, at length, by his attorney, on national radio today. Such an offer constitutes an additional criminal offense under Panama law, and is also actionable before the International Criminal Court.

Martinelli, whose supporters have carefully constructed a fictional "itinerary" saying that he is presently in Miami, and will tour the United States in the coming days, continues to assert his innocence, alleging that he has been charged with multiple crimes for purely political purposes. He is believed to be living in Paraguay.  


NOT a shareholder
Global Valores Inversionistas SA, a Panama City broker-dealer whose clients included former President Ricardo Martinelli, and Colombian Ponzi schemer David Eduardo Helmut Murcia Guzmán, and which operated openly, without a mandatory securities license, is strangely still in business, long after Martinelli's term as president has come to an end. Why has the new Varela reform government not closed it down ?

Many Panamanians believed that this Global Valores was actually owned by Martinelli, who has several companies whose names include the term "Global,"including Global Valores SA, but, in truth and in fact, it is owned by a close associate of the former president. Valores' owner actually encouraged clients to think it was a property of then-President Martinelli. The logo design was a copy of that of Global Bank, where one of Martinelli's sons was a director; we call this a deceptively similar name. It is intended to deceive investors and the public. In fact, the owner boldly told Panamanians that he & Martinelli were shareholders in this company, which was an outright lie.

NOT the Global Valores we are covering here. Deceptively similar names.
 While Martinelli ruled Panama, this Global Valores could operate with impunity; for example, its owner was a regular visitor at HSBC Bank (Panama) SA Premier  (Bella Vista), where eyewitnesses saw him traveling up to the second floor, to see officer Frida Falk, where he would deposit, in cash, $100,00-150,00, several times a week, all done without any bank reporting these unusual deposits to regulators. It is believed that this cash came from David Murcia. One witness reported that it appeared the cash was damp from a probable maritime trip; Murcia was known to smuggle his cash into Panama covertly, using fast speedboats, under cover of darkness.

 The owner of Global Valores Inversionistas  is reportedly under criminal investigation in the United States.

Ms. Falk
Now that Global Valores' preferred status, through Martinelli, no longer exists, we ask the question, when will the new government shut it down ? There have been persistent rumors to the effect that Global is not meeting its current obligations to its investor clients. Clearly, a termination of this unlicensed securities business is called for, and a criminal investigation into alleged money laundering activities needs to take place.


Hidden in the treasure trove of data recently made available, regarding accounts at HSBC's Swiss private banking division, is a startling statistic: 211,000 Panama corporations had accounts at the bank. Panama's opaque bearer-share corporations appear to continue to be the vehicle of choice for those European tax cheats, corrupt PEPs, and assorted criminals who wish to hide their wealth in Switzerland.

One source stated that there were 300,000 financial transactions, between Panama and HSBC Switzerland, and that the total amount reportedly transferred was $3bn800m. If the names of the Panama corporations are publicly disclosed, a search will be on to identify the beneficial owners, which is a difficult task. Panamanian attorneys who form these shell companies routinely set up Powers of Attorney (Poder) to further conceal their clients' names. Often, law office staff front for the client, even at account opening.

Should the names of beneficial owners of these Panama companies be ultimately exposed, rest assured that EU law enforcement agencies will target, and charge any of the offenders who will not agree to governmental terms for settlement of tax liability. Corrupt PEPs are, unfortunately, another story, for many former government officials, heads of government-owned companies, field grade and general officers in the military, all wield serious power, not to mention first-hand information about corruption within present governments, making criminal indictments doubtful.

In any event, we welcome this new transparency; perhaps the fear of future exposure will deter at least some of those considering employing a Panamanian vehicle to commit financial crime. The bottom line, though, is that, so long at Panama allows bearer-share corporations, global criminal abuse of these companies will occur. Panama, please abolish this money laundering tool, lest your grey list designation morphs into areal blacklist designation.



If you are like me, you have always wondered why OFAC has taken the trouble to sanction specific, small Iranian private companies that one can never find any information on, particularly regarding international transactions. The public release of information about a special-purpose unit within the Iranian Revolutionary Guards Corps (IRGC) seems to have put the matter to rest.

Apparently, according to a report, there exists a special operations component within the IRGC, whose sole task is to smuggle weapons overseas. This unit, which hides the weapons within foods or substances that are powdered, or which contain legitimate mechanical parts, or buries the weapons underneath a non-lethal shipment, uses small shell Iranian companies, as fronts, to disguise the cargo.  In truth and in fact, it is an IRGC weapons transport, to Hamas, Hezbollah, or whichever terrorist organization is the end user. That explains OFAC's need to sanction these obscure front companies, and why it is so relentless in imposing civil penalties upon US companies that violate the Iran sanctions;  many of the sanctioned companies are weapons shippers.

Wednesday, February 11, 2015


Foreign investors, lured to the Republic of Panama by its tax-free status for offshore corporations, are finding it impossible to extricate themselves, and their wealth, once they have established themselves there. Some of the issues they face include:

(1) Any legal issues that require civil litigation are generally impossible to resolve through the court system, notorious for its corruption and delays, which extends up to and includes the highest court, the Supreme Court of Justice, where payments have made a number of the justices very rich men. Court reform, though promised by the new reform government, has not yet begun.

(2) Bearer share fraud, where investors unwittingly give up control of their Panamanian corporation, and thereby their accounts and tangible assets, to trusted local partners and their confederates, runs rampant. Panamanian attorneys continue to oppose the termination of the law which authorizes the issuance of bearer shares, as corporate formation is an extremely lucrative segment of their business.

(3) Should a foreign national be charged with a serious crime, all his assets are routinely seized. If he is acquitted at trial, the government agencies that seized his assets fail to return his property to him, and there is no effective avenue for relief. In a celebrated case, one investor lost $300m that was seized, notwithstanding that he was found innocent of all charges.

(4) A well-entrenched organized crime group, of Middle Eastern extraction, predominantly Syrian, dominates ownership of the banking industry, and has members placed in most government agencies. Its power and reach can threaten your own business there, should it be deemed to compete with OC-dominated commercial operations. It has been known to use the power of government agencies against foreign-owned companies working in Panama.

I could go on with more examples, but these should be sufficient to convince you that Country Risk for Panama is at one of the highest levels you can assign; add to the above the current political chaos, driven by a massive governmental investigation that has accused several former government ministers, and the ex-president, of  corruption, abuse of power, and mismanagement, and you must conclude that the country must be red-lined for investments, and existing investments should be extracted forthwith, even though such an act may be costly.


Do you remember Oscar Aguilar* ? The Mexican national, living in Brownsville, bulk cash smuggled narco-dollars over the border, into Matamoros. Here is his method:

(1) He had his associates open several accounts at the local branch of Bank of America.
(2) money mules would then deposit drug profits at B of A branches in Florida.
(3) His Brownsville associates then drew it out in amounts less than $10,000.
(4) Aguilar then moved it into Mexico.

Sr. Aguilar has now received a fourteen year sentence. He also must pay $1.8m, and he will be deported to Mexico at the end of his sentence.

If you are a regular customer at Bank of America, you may have noticed recently that the bank tellers now routinely ask you if you are the person whose account you are depositing the funds into. Are they responding to the lessons learned in the Aguilar case ? perhaps.
*Texas Bulk Cash Smuggling Ring Moved money internally through Bank of America


We are still waiting to see the initial appellate brief of convicted Ponzi schemer, Joel Steinger, who strangely filed two appeals from his conviction and sentence, in which he entered a guilty plea, and received a 20-year sentence. Upon what legal authority does he base these bizarre appeals ?

The latest procedural error: he failed to file his brief & appendix when due in December, and the Court gave him until the end of January to seek leave to file late. When his counsel did make that request, he failed to attach a copy of the brief and appendix to his motion, committing yet another error of procedure. Is his attorney so unfamiliar with appellate procedure, and local rules, that he continues to make mistakes ? His last one, seeking to add a transcript to the Record on Appeal, when the appropriate procedure is to seek to have it added at the trial court level, indicates a possible lack of knowledge of basic appellate procedure.

Anyway, if the appellant's brief is ultimately admitted, we shall analyze it in detail,  

Monday, February 9, 2015



Coquina Investments, who recovered a $67m judgment* against TD Bank, for the bank's role in facilitating Scott Rothstein's $1.4bn Ponzi scheme, has asked the trial judge to apply the bank's supersedeas bond, which stayed enforcement while the bank brought an unsuccessful appeal, so that it can recover upon the judgment. The bank has declined to satisfy the judgment, and it appears that some of its actions could be viewed as purely dilatory, to unduly delay the matter after the bank had exhausted all its legal remedies.

The plaintiff, who filed its civil suit in 2010, has asserted that none of the bank's pending motions are relevant, or have any legal merit, which justify any further delays. The case is a textbook lesson for banks; they must always look past lucrative clients, to determine whether there are any red flags which indicate that their client is not operating legitimate business, and could be perpetrating financial crime, with the assistance of the bank. In the Rothstein case, all TD Bank had to do was check the litigation dockets in South Florida courts, and they would have learned that the number of lawsuits in which the Rothstein firm was counsel of record were inconsistent with the volume of deposits.  Ponzi schemes working out of your bank can result in finger pointing at the bank, as a facilitator, when the Ponzi implodes, leaving the victims angry, and bent on justice.

Ponzi schemes must be identified early on, and the account relationship terminated, to avoid the nightmare of a major lawsuit in the aftermath of a Ponzi scheme; The TD Bank case should make all bankers take notice of the consequences of failure to do so.
Case no.: 10-cv-60786-MGC (SD FL).


A major investigative article came out yesterday in the New York Times, detailing the large number of multi-million dollar residences in New York City, that are being purchased through LLCs owned by foreign white-collar criminals, and corrupt PEPs. While the information was quite informative, it failed to explain how these transactions evade AML. The answer, which may surprise you, is in two parts:

(1) These eight-figure transactions are not subject to any meaningful bank AML, because there is no mortgage qualification process; the buyers are wiring in full payment for the units they purchase, and are thus not subject to bank compliance due diligence. The purchasing entities are LLCs created by attorneys specifically to keep their clients' names out of the limelight, and they are rarely known.

(2) In truth and in fact, there is NO statutory or regulatory requirement that real estate agents and brokers file Suspicious Activity Reports (SARs) on troubling transactions. In fact, they assume personal risk if they do so, so don't blame them. Here is the official warning, verbatim, from the National Association of Realtors website, on the page discussing money laundering issues:

 "It is important to note that, while the bank Secrecy Act contains a safe
   harbor, shielding financial institutions from civil liability in connection with
   the filing of a SAR, there is no precedent to suggest that the safe harbor
   would extend beyond financial institutions to real estate processionals.
   Therefore, a real estate agent should be prudent and file a suspicious
    activity report only after thoroughly evaluating the circumstances
    surrounding the suspicious activity, and additionally should consider
    consulting an attorney on the matter prior to filing a SAR. otherwise, a real
    estate agent could subject themselves to civil liability as a a result "
    Anti-Money Laundering Guidelines for Real Estate Professionals

To date, the powerful real estate lobby has prevented its industry from being subject to what we call best practices in AML. You may recall it was the US banking lobby that killed five proposed AML/CFT bills in Congress. I know this because in 1999 and 2000, I testified in favor of three of them, before Congressional committees. Those bills later became the nucleus of the US PATRIOT Act of 2001. Does real estate now need its own version ? Of course.

Can some brave souls in the US Congress now stand up, and pass legislation requiring that companies in the real estate industry operate an effective AML program, with SAR safe harbors to protect its agents ? Otherwise, foreign PEPs with dirty cash to burn will continue to drive up prices in New York, as they place, and launder, their illicit wealth in America.