Friday, July 31, 2015


David Eduardo Helmut Murcia Guzmán, the man whom millions of Colombians looked upon as a financial genius who could make them money at DMG, is looking for payback. Murcia reportedly invested millions of dollars in DMG funds with Ricardo Martinelli, Gary James Lundgren, and Gabriel Btesh, among others, and all of the cash, Panama real estate, yachts, luxury cars, and other assets, were stolen from him when the government of Panama abruptly deported him to Colombia. Martinelli, Lundgren and Betesh had been entrusted with custody of Murcia's assets, and allegedly converted them to their own use.

His Colombian conviction may have been tainted. Though Murcia was convicted in Colombia, and sentenced to 30 years imprisonment, the Supreme Court of Justice of Colombia this week ruled that Murcia was denied due process, and has agree to take a new look at his case, and his sentence.

Murcia, who has been seen in the United States, is believed to be in some sort of WitSec, or witness protection program that permitted him early release from prison. It is not known what the extent of his relationship with US law enforcement is, but reports have come in confirming that he is making preparations to recover the condominiums purchased on his behalf, and titled in the name of shell corporations with bearer shares, that were taken over by several Panamanian businessmen after his deportation, which some observers believe was conducted expressly for the purposes of stealing his assets.

Where are these individuals now ?

(1) Ex-president Ricardo Martinelli fled Panama months ago, as the corruption probe against him heated up. He is believed to be in hiding in Paraguay, though his lawyers and party members assert that he is in the United States. The whereabouts of the bulk cash delivered to him at his Super 99 markets is unknown. He was involved in the PAN scandal, the Financial Pacific scandal, the illegal surveillance program, and many other criminal violations.

(2) Gabriel Betesh a/k/a Btesh has left Panama, permanently, some say, and now resides in Israel. He is thought to still control a significant segment of Murcia's real estate holdings. He has been linked to Panama's PAN scandal.

(3) Gary James Lundgren is in isolation somewhere within his office complex; he refuses to come forward to meet clients and creditors, and sources advise that he fears kidnapping or assassination. He still controls a huge portion of Murcia's real estate empire. Lundgren is reportedly under criminal investigation in the United States. Will he be extradited to face charges in the United States ?

Will Murcia now take legal action to recover his property, or employ some other method ? We cannot say, but we will be watching.

Thursday, July 30, 2015



Aaron "Roni" Mizrachi, the brother-in-law of former Panamanian President Ricardo Martinelli, has fled the Republic after he was publicly exposed as a participant in the reported $21.4m unauthorized government purchases that included advanced surveillance equipment, so that the then-president could illegally spy on the Opposition, and upon prominent PEPs. Martinelli has been charged with multiple offenses arising out of the illegal espionage.

 Mizrachi, who was seen boarding Martinelli's private business jet,  N799RM, (the same aircraft that Martinelli himself used to flee Panama, when serious corruption allegations surfaced), at Marcos A. Gelabart/Albrook Airport, has also been implicated in the Financial Pacific/Petaquilla Mining Ltd. insider trading scandal that has rocked Panama.


Gaza tunnel booty, 2014
Take a good, hard look at the photograph above. During last year's combat in Gaza, the IDF captured thousands of M-16 assault rifles, stored by Hamas in the tunnels dug by children impressed into full-time tunnel rat service, many at the cost of their own young lives, as they died on the job, or were later killed, to prevent the location of the tunnels from being passed on.

The Palestinian Authority received these weapons, from the United States, ostensibly to arm its policemen, but many of them went missing, and the PA refused to release its internal audit, of its official inventory of the rifles, to the US, notwithstanding multiple requests. If you have a sharp eye, you may see that not only M-16s are in the pile, but CAR-15s, and even a couple of modern M-4s, from Afghanistan and Iraq, are now in the fanatical hands of a Specially Designated Global Terrorist organization.

If the US Army ever is called to perform peacekeeping duty in Judea & Samaria, in a future two-state solution, American soldiers will be faced with the fact that they will probably be shot at with American-made weapons, using American-manufactured ammunition, wielded by terrorists.  

Police in Gaza, learning how to field-strip an M-16


B & C Capital, Ltd., an unlicensed Cayman investment company whose managers have disappeared, is no longer in business in Grand Cayman, according to sources who have sought to contact or visit the firm. As we have previously stated on this blog, Managing Director Ryan Bateman is a fugitive from justice, and his successor, Fernando Mota Mendes, has also left the island, for parts unknown. There are no other individuals with signatory rights to B & C accounts.

Regulators in the Caymans are reportedly scrambling to protect millions of dollars held by Canadian investors, who are said to number 50-60 individuals, and whose money was being managed by B & C Capital, with an exempt investment license that expired several months ago. The funds were originally held by Dundee Bank, presently in liquidation, and thereafter passed to B & C; The circumstances through which control was transferred are under investigation.

A Canadian wealth management firm*, which is said to be responsible for the management of the assets, is reportedly unable to contact any of the B & C principals or staff, and the company's offices are reportedly deserted and unoccupied. it has been alleged that the company invested funds for  US residents, which is prohibited under Canadian law.

Anxious investors are seeking either of the managing directors, but have been unable to located either.  Neither Ryan Bateman, who resides at 49 Mary Read Cres., South Sound, nor Fernando Moto Mendez, who lives at 57 Plantation, South Sound, are on Grand Cayman. Bateman is reportedly in hiding in Miami. Moto Mendes' current location is unknown.

* This firm reportedly has no compliance program nor staff, and allegedly only learned that their clients' funds were unavailable when the clients were unable to draw on them upon request.


Michael Szafranski, a financial adviser who conspired with convicted attorney/master Ponzi schemer Scott Rothstein, in a billion dollar bogus investment scam, has entered a guilty plea to wire fraud conspiracy. He is slated to receive a maximum five year sentence and $250,000 fine, but he could receive a short sentence for cooperating with the prosecution. We have previously detailed his case on this blog.

Szafranski's listed October 21sentencing has been set after the scheduled October 5 trial of former TD Bank Regional Vice President Frank Spinosa, and his testimony against Spinosa could earn him a Government motion for Substantial Assistance, which generally results in a much shorter sentence than the US Sentencing Guidelines calculation offers in his case.

TD Bank, which has been in the news in other cases lately, allegedly facilitated Rothstein's long-running Ponzi scheme, and Spinosa has been accused of being the central player in the bank. Only one other defendant actually has gone to trial in the massive Ponzi scheme fraud, and her verdict was affirmed on appeal. You can assume that the US Attorney's Office has a long list of previously convicted potential witnesses against Spinosa, all of whom are presently serving Federal time, and would jump at the opportunity to reduce their sentences. Szafranski is but one of those who could offer first-hand knowledge of Spinosa's alleged crimes. The trial could expose the role of other TD Bank executives who have heretofore not been named in public documents. 

Wednesday, July 29, 2015


The announcement today, from official Pakistani  sources, that the leader of the Taliban, Mullah Omar, died two years ago, in a hospital in Karachi, Pakistan, is yet another reminder that the United States routinely  classifies, and withholds, information that the compliance industry could use to reduce risk levels in international financial transactions that could provide material support to terrorist organizations.

Did the US Government fail to release the new of Omar's death in 2013, because it confirmed that certain interests (ISI?) in Pakistan not only cooperated with the Taliban, but gave its leadership safe haven in their country. When coupled with the fact that Osama bin Ladin was also living in Pakistan when he was killed, a picture emerges of Pakistani complicity with terrorist organizations, which raises that nation's Country Risk exponentially, and also is critical of American support for a regime that is often supporting our enemies in the war against terrorism. No wonder the State Department wanted that information classified and hidden from view.

Compliance officers, if armed in 2013 with the circumstances of Omar's death, would most certainly has governed themselves accordingly, and initiated enhanced due diligence upon most, if not all, wire transfers to, and other financial transaction with, Pakistan, based upon the well-founded fear that transfers could be terrorist financing. One wonders how many suspect transfers to Pakistan, that would have been stopped, went through, due to a lack of knowledge on the part of US-based compliance officers whose bank customers sent money to Pakistan.

When important information is classified for purely political reasons, it is those from whom the information is being kept from that generally suffer; think about that.

Tuesday, July 28, 2015


It seems that Hamas failed to disclose the names of a significant number of its terrorist fighters who were killed last year, during the conflict with Israel. While we know that it attempted to hide the fact that many of the dead were armed fighters who fought the Israeli Army in Gaza and inside Israel, and claimed that those who were killed were civilians, it has been accepted that a large segment of the dead were combatants.

Fifty of the dead Hamas fighters appear to have been deliberately omitted from casualty lists, and it may have been because some of them were commanders, thus constituting ranking officers, and others were the Hamas equivalent of special forces troops. Their identities, if publicly revealed, might confirm the true nature of Hamas' military infrastructure, and expose its disinformation about casualties.

Were any of the ranking officers killed in 2014 maintaining bank accounts outside the Palestinian Territories ? Given the nature of Hamas' activities, both in Europe, as well as in Africa, Asia & Latin America, it is entirely possible. Such individuals would have disguised their terrorist affiliation, and used passports obtained in Jordan, Egypt or Syria, to conceal their identities.

The morbid nature of Hamas' glorification of their dead has resulted in the proliferation of posters, photographs, and other media, depicting these deceased terrorists as heroes, and these images, together with their real names, and other information, have been collected, and can be accessed in the Appendix of the document that appears here*, which is a list of 50 individuals.

If you are a compliance officer at a bank with a large number of foreign clients from the Middle East, and you believe that it is possible that you might be unwittingly banking Hamas members, you can use the information to rule out those individuals listed, as bank clients.
*Hamas Operatives Killed in Operation Protective Edge


If I was a compliance officer at an international bank, located in North America or within the European Union, I would advise senior management that any wire transfers to banks located in Iraq, or Jordan, may be ultimately ending up in the hands of the so-called Islamic State/ISIS/ISIL. The Finance Committee of the Iraqi Parliament has warned that $6.9bn has been transferred to ISIS, by and through banks in Iraq. This means that wires of funds, by Western banks, could be considered providing material support to a specially designated global terrorist organization, should they be forwarded to ISIS.

The United States has, thus far, turned a blind eye to the illicit financial transactions occurring in the Kurdish-controlled autonomous region of Iraq, including its movement of US Dollars into Iran, and one of the consequences of that neglect can be seen here. Iraqi Kurdistan rarely obeys any requests of the Iraqi Central Government, and ISIS oil tanker trucks have been known to be allowed to transit the area, en route to markets in Turkey. How much of the money flowing to ISIS is coming from Kurdish banks ?  

The Finance Committee has advised that Erbil & Baghdad banks involved in the illegal transfers refused to disclose the names of the account holders, but that the information was later obtained, through unofficial sources. It is alleged that major Iraqi banks are charging as much as $600,00 per month in fees, to handle the funds transfers. Jordanian banks are reported to be moving the money into Iraq, which it is promptly forwarded to ISIS-controlled financial institutions in Mosul.

Should Western bank now red line all transfers to Iraq, and should it practice enhanced due diligence on all transfers into Jordan ? These questions need prompt answers, for ISIS grows daily, and US and EU law enforcement agencies are fast-tracking their investigations of ISIS. Is the money going from Turkey, as payments for illicit ISIS oil shipments, to Jordan ?

You do not want to be made an example of, in the global war against ISIS; therefore, given the total lack of any effective compliance, Iraq's incestuous relationship with Iran, and rampant corruption, you should consider exiting ALL business with Iraq, effective forthwith, as a prudent risk management move. This may mean ending lucrative correspondent relationships.

Monday, July 27, 2015


TD Bank, which has had its problems in the Scott Rothstein Ponzi scheme, has agreed to pay $20m, to settle claims against the bank in a massive $223m life settlement fraud class action. TD Bank, an affiliate of Canada's Toronto Dominion Bank,  allegedly vouched for customers that were administering the assets of a European life settlement company, Quality Investments, although the bank knew that there were serious problems.

The suit alleged that the bank allowed funds wired to trust accounts to be co-mingled, which meant that money invested for specific life insurance policies were used to pay unrelated premium obligations, to pay money to other investors (was it a Ponzi scheme ?), or to participants in the alleged scheme. TD Bank is said to have allowed the opening of more than thirty accounts, without identifying the investors, the nature of their investment, or their relationship to the life settlement company. The bank's verification of a customer relationship in good standing, with large balances, to investors was inaccurate and misleading, and may have facilitated investors to place their money with Quality.

Furthermore, TD bank reportedly failed to report wire transfers to known offshore tax haven jurisdictions known for money laundering activities, and it seemingly conveyed the impression, to investors, that it was overseeing the accounts.

While there have been criminal charges filed in the EU against four defendants, no criminal charges, arising out of this case, have been filed to date in the United States. Some observers have likened the case to the landmark life settlement case of Mutual Benefits Corp, which was a billion dollar Ponzi scheme.

The preliminary settlement is subject to approval of the US District Court in the Southern District of Florida.

Sunday, July 26, 2015


The shareholder class action suit, filed against the Bancorp Bank, and two of its senior officers, its CEO and CFO, could be the shape of things to come. Should senior management be held liable for AML/BSA deficiencies, when they are not disclosed to stockholders ? A regulatory Consent Order issued on June 5, 2014, caused by rampant BSA compliance deficiencies, most likely caused the bank's stock to tumble from a high of $21.00 per share, to today's $8.75; No wonder the shareholders are angry. They are alleging materially false and misleading statements, and material omissions, were made by Bancorp, a publicly traded company.

We note that 80% of the bank's securities are owned by institutional investors, specifically pension & retirement plans, for teachers, labor groups and police organizations. Many of those interested parties have moved to be appointed as lead plaintiff, and for approval of selection of counsel. The action, which was filed last year in US District Court in Delaware, where the bank's holding company, The Bancorp, Inc., is domiciled, is not yet at issue.

The fact that the bank had an ineffective AML compliance program, and had a close relationship with anonymous prepaid card distributor, Transact Network Limited, of Gibraltar, were well known in compliance circles. Your writer was contacted by Bancorp officers, after providing training to another financial institution in the area, and I personally discussed my concerns with Bancorp senior compliance officials, several months prior to the issuance of the Consent Order, but my warnings fell on deaf ears, as management arrogantly denied that there were any AML problems.

We shall be monitoring all filings in this case, and shall be reporting back on all significant developments, as it is of interest to all in the compliance industry.



Unless you are in law enforcement, or have led a dangerous life, you have never been inside the crystal meth lab*, except while watching Breaking Bad episodes on television. While extremely entertaining, the program had a large number of errors. When it comes to the details of the attorney-client relationship; do not take the legal points made on that show by the "Saul Goodman, Esquire" as gospel.

From New Mexico, where the show was shot, comes the University of New Mexico School of Law,  whose law review staff recently published an entire issue devoted to many of the legal issues that Breaking Bad presented. In my humble opinion, the one subject most relevant to the financial community in these troubled times is the attorney-client relationship, a subject that the authors of one article take great pains to clear up some of the errors presented in the program.

Entitled Better call Saul if you want Discoverable communications: the Misrepresentation of the Attorney-Client Privilege on Breaking Bad, the article is a profusely annotated primer in establishing, and waiving, the attorney-client privilege. The sub-topics covered include;

(1) Proving the contents of attorney-client communication.
(2) The formation and scope of the attorney-client privilege in Breaking Bad.
(3) The myth of protecting all communications involving a lawyer.
(4) Disclosure to multiple clients.
(5) Waiver by disclosure.
(6)  Joint client or common interest doctrine.
(7) Disclosure to family members.
(8) Disclosure to attorney's agents.
(9) Waiver through the crime-fraud exception.
(10) The crime-fraud exception and money laundering.
(11) Advice and the "designed to conceal" element.

You can access the entire article here by going to page 477 on the table of contents*. Cite is:
45 New Mexico L. Rev. 477 (Spring 2015).

*You have probably guessed by now that I have been in such a place, a long time ago and far away.
**New Mexico Law Review Current Issue Vol 45. No.2

Saturday, July 25, 2015


There is a civil suit pending, in the Cayman Islands, between troubled B & C Capital*, and a company named Highgate Securities, Ltd., which has caused me to take a hard look a Highgate.

Highgate Securities, Ltd., claims to be a Belize-registered securities broker & trader, but Internet entries by its staff say it has a "temporary headquarters" in West Palm Beach, Florida. Even if it only solicits non-US investors, residing outside of the United States, one wonders whether the Securities & Exchange Commission, the Florida Office of Financial Regulation, and FINRA, are aware of its existence.

Here's how one knows that there is something dodgy and suspicious about Highgate; take a close look at its website, and the enrollment documents appearing on the site, which must be executed by investors. They are replete with spelling and grammatical errors, typos, and syntax errors that lawyers, especially those who specialize in securities work, never, ever commit. Remember, the official language in Belize is English. There's no way a Belizean attorney would have drafted such poor documents, and that such massive errors would have survived proofreading.

The web designer is a native English speaker who works in Florida; he only input copy that he was given by Highgate. Whoever at Highgate wrote the text for the website obviously needs to go back to school.  

Its website requires visitors to acknowledge the offshore nature of its business by accepting the terms and conditions through a physical act, to wit: pressing a "button" on the relevant page,  but no such device exists. This makes me wonder if anyone at Highgate ever reads its own material. Critical areas of the website are incomplete, and no officers, directors, or lawyers are named anywhere.

Most likely, the website &  legal documents were cut & paste jobs, performed by people who have no legal education or training, and given that some of the individuals on staff have been accused on the Internet of involvement of suspect securities activities, the totality of the facts would suggest that Highgate Securities, Ltd., whose use of a name deceptively similar to other entities is itself suspicious, richly deserves further investigation, by yours truly, and American securities regulators.

*Dodgy New Manager of Cayman Investment Company Misleads Investors Seeking Withdrawals


Hamas, the radical Islamist Palestinian movement, listed as a Specially Designated Global Terrorist (SDGT) organization, and which rules Gaza with an iron fist, has begin offering portions of its website in English. You are warned, however, that most of the articles do not appear to be useful for compliance purposes, reveal only Hamas' slanted version of the truth, and are little more than anti-Israeli and Anti-Semitic propaganda. It does not contain Hamas' manifesto and statement of purpose, which promotes the violent  overthrow of the State of Israel.

Nevertheless, readers can access the website here*.
*Hamas Islamic Resistance


Jesus Roldan-Rubio*, a Mexican national who apparently was contracted to attempt to smuggle over $100,000, and a weapon & ammunition out of Laredo,Texas, was this week sentenced to fifteen months in Federal Prison, and three years of Supervised Release. He was detained after $109,350 was found, hidden in his automobile's battery; a .45 cal. handgun, and 100 rounds were also seized.

Note that the cash was sealed into the battery with silicone. The defendant was driving a vehicle registered in Mexico, and he had entered the United States for the express purpose of bulk cash smuggling.
* Case No.: 5-15-cr-00084-001 (SD TX).

Friday, July 24, 2015


Those observers who have been following Allen Stanford's $7bn Stanford International Bank Ponzi scheme, with the resulting 110 year sentence imposes upon him, are anxiously awaiting an opinion by the Fifth Circuit Court of Appeals, which is handling Stanford's criminal appeal. The appellant's reply brief was filed back in March, but the Court has not yet made it ruling on the sentence and conviction.

Though Stanford requested oral argument, and the US Government advised none was necessary, the Court has not assigned the appeal to the oral argument calendar, and since three-quarters of Federal criminal appeals are decided without hearing oral argument, it is probable that it will not be approved. Stanford admittedly has an uphill battle in his case, as statistically only around 5% of these appeals are reversed.

If his conviction & sentence are affirmed, Stanford's release date will remain April 17, 2105, ninety years from now. He is presently serving his sentence at USP Coleman, in Florida. I know that is is little consolation to those investors who lost everything, due to Stanford's massive fraud, but he will not live to the age of 155, to be released back into the community.

Thursday, July 23, 2015


If you have not seen the fine print in the recently-released Fourth Money Laundering Directive, when it comes to Politically Exposed Persons, or PEPs, read on, please.

The definition of who is a PEP has been expanded to include:

(1) Members of the governing bodies of political parties.
(2) Directors, Deputy Directors, and members of the Board, or equivalent function, of international organizations.
(3) Domestic PEPs.

Former PEPs must be considered risks for one year after their PEP status ceases, and risk-sensitive measures until that individual poses no further risk.

Furthermore, PEP lists cannot be exclusively relied upon, and compliance officers are responsible for making their own assessment, and determination or finding, as to whether an individual is a PEP, or closely associated with a PEP, so as to be considered a PEP as well. 


Remember FBME Bank, Ltd., better (& formerly) known as the Federal Bank of the Middle East, which was formerly found by FinCEN to be of primary money laundering concern ? FinCEN has now issued its Final Rule, barring the bank from all access to the American financial system. US financial institutions are prohibited from opening, or maintaining, correspondent accounts, or payable through accounts, for on on behalf of the bank. This is known as the Fifth Special Measure, the ultimate sanction, as it totally blocks FBME from the US banking structure.

It is recommended that you review the Final Rule, for you will see that the owners and operators, who engaged in terrorist financing, banking criminal organizations, and facilitating fraudsters, originally incorporated in Lebanon, then jumped to the Cayman Islands, and finally reincorporated in Tanzania, all the while operating their principal place of business in the Republic of Cyprus, where they found themselves, rightly so, in regulatory trouble.

Readers who wish to read the complete text of the Final Rule can access it here*.

*Imposition of Special Measures against FBME Bank Ltd.

Wednesday, July 22, 2015


Readers who are interested in reading the complete text of the Banamex USA Notice of Assessment of Civil Money Penalty, Findings of Fact and Conclusions of Law, Order to Pay Civil Money Penalty may access that document here*. Citigroup, the bank's owner has stated publicly that it will wind down banking operations, pursuant to an orderly liquidation plan.
*Banamex USA Order

Tuesday, July 21, 2015


Kimberly Rothstein, the trophy wife of Fort Lauderdale Attorney/Ponzi schemer Scott Rothstein, obtained a final judgment of dissolution of marriage from her husband yesterday. The proceedings were delayed for two years, because Rothstein is in a form of protected custody, and she was unable to serve him with the petition. He was ultimately defaulted, and did not appear at the final hearing.

Scott Rothstein, who is serving a 50-year Federal sentence, for operating a billion dollar scheme that involved the purchase of settlements in non-existent whistle blower, sexual harassment, and discrimination lawsuits, is being protected, not because of the enmity of his victims, but because he participated in a government sting operation, targeting individuals believed to be connected to organized crime, and his personal safety is an issue.  

Mrs. Rothstein's request to have her maiden name, Wendell, restored to her, which is a normal in dissolutions, was denied , for she is serving two years of Supervised Release, the modern form of post-incarceration probation, under her married name. She served fifteen months of an eighteen month sentence, for seeking to hide from the Receiver, and later sell, valuable jewelry purchased by Scott Rothstein with the proceeds of crime.


Some observers in the Republic of Panama have come to the conclusion that the country's former president, Ricardo Martinelli, whose administration was rife with corruption, outright theft of assets, securities fraud, and many other crimes, will never be tried in a Panamanian courtroom. They fear that he simply has so much incriminating information on present officeholders, that there is no interest in extraditing him from wherever he is hiding.

The belief, that he will expose the current president, and other senior officials now in office, may be well-founded. Rumors have swirled around Panama City, for years, that Varela and Martinelli, once bitter political rivals, made a back room deal for the presidency. Martinelli would serve first, then Varela would get his turn, and Martinelli later reportedly reneged on the arrangement, and sought to have his own protegé elected as his successor. Also, Varela might have himself taken illegal profits, through insider trading, in the Financial Pacific/Petaquilla mining case. If this is not true, then Varela  needs to make a public declaration on the subject.

The impression, now shared by many, is that a true reform of the rampant corruption in Panama's government is not occurring, notwithstanding what the newspapers say, that prosecutors are still avoiding some of the worst violators, for unknown reasons. Is the president directing a selective prosecution of offenders ? We cannot say, but thus far, it appears that a number of culpable individuals continue to escape justice.

Monday, July 20, 2015


The Attorney General of Panama, through the Anti-Corruption Prosecutor's Office, has recently seized a number of luxury automobiles, many of which were purchased by the Colombian Pyramid/Ponzi schemer, David Eduardo Helmut Murcia Guzmán, and stolen by Panamanian businessmen who were investing his Ponzi and narcotics profits. We learned this from a source who sought to examine those vehicles, which were in storage at Chichaco Motorsports.

One of the cars, a  2006 Ferrari roadster, was "acquired" (read: stolen) by the expat Alaskan, Gary Lundgren, a/k/a Gary James Lundgren, and rumor has it that Lundgren had the engine removed, to foil potential car thieves. He isn't doing much driving, as he has barricaded himself inside his office, to deter any contact with his investors, who have complained that he has ceased making the required monthly interest payments, and want very badly to see him in person. After all, he promised to pay them all 8% per month, on their investments. Lundgren, who is under investigation by a number of US law enforcement agencies, and regulatory bodies, for the Financial Pacific insider trading scandal, as well as securities fraud, has not been seen in public in Panama for months.


The National Assembly of the Republic of Panama, the country's legislative body, is rife with rumors that there are pending investigations of a large number of its Deputies. Reliable sources within Panama report that many Deputies, who received funds for the electoral process last year, absconded with those funds, and that there has not been any accountability, due to the universal nature of the thefts.

The current anti-corruption wave of investigations in Panama, which has resulted in Supreme Court resignations and indictments, and criminal charges against senior government officials, including former ministers, may now extend to the rank-and-file Deputies in the National Assembly, which is an indication of the systemic corruption that pervades government in the Republic.

The question on the lips of Panamanians: can the nation attract, and hold, government officials, and staff members  who will not be mesmerized by the lure of easy money, obtained through corrupt activities.

Sunday, July 19, 2015


Unless you live or work in California. you probably do not know that, effective on January 1st, the State of California has been issuing driver's licenses to illegal aliens. The purposes of this new policy are to promote highway safety and insure that drivers have insurance.

Unfortunately, the ability to obtain a valid driver's license could facilitate bulk cash smuggling into Mexico, as well as money laundering operations. Mexican laundrymen can now easily assist their bulk cash couriers to obtain sufficient documentary proof to qualify for a California license, as Mexican passports, and those notorious consular IDs, are acceptable to the state's license issuing agency.

A smart money launderer, working for a Mexican cartel that is repatriating US-earned drug profits, will see that his couriers are suitably armed with the new California license, which will give them more credibility, during a law enforcement traffic stop. I wonder if the legislature in California thought of this before passing the law, known as AB 60 ?

Granted, the license is specifically not valid for any Federal use, such as boarding an airliner, or visiting Federal facilities or offices, or with Federal law enforcement agencies, and it does prominently bear a warning, "Federal limits apply," on the front (which may be misinterpreted by non-law enforcement individuals), and "Not acceptable for Official Federal Purposes, " on the reverse. Unfortunately, most people do not look at the back of a driver's license when it is presented to them, or when they only have made a copy of the front.

It may not be accepted by out-of-state police officers at a traffic stop, but there has not been any reported incident where it was treated as such, though there have been warnings issued to drivers by consumer advocates.

If you are a compliance officer at a bank, and your new customer's license contains the warnings listed above (see the sample at the beginning of the article), you should take that information into account when assessing the risk levels of the customer. While the vast majority of the 399,000 illegal aliens who have been issued that type of license since January are law-abiding, your new bank client could be engaged in money laundering and/or bulk cash smuggling, and his license was issued under an alias.

Outside of California, should you encounter this type of license at new accounts, you may want to consult with bank counsel for a determination in whether it will be accepted as sole identification, considering that the US Government will not take it, and whether enhanced due diligence should be applied to the applicant, as part of your CIP process.



For those who have bought the fiction that lawyers at the Federation of St. Christopher & Nevis a/k/a St. Kitts, have stopped their facilitation of illegal activities, read on. One of the two regional Swiss banks recently hit with a million dollar  civil penalty, Privatbank AG, which curiously terminated its banking license, used St. Kitts corporations, and other entities, to hide funds of American tax cheats.

The total listed by US authorities was $134m; the most damning element of the employment of St. Kitts-Nevis entities was the fact that Privatbank staff were named as officers & directors of these shell companies, whose sole purpose was to hold accounts at Privatbank AG whose beneficial owners were totally obscure. Why was the civil penalty so small, we wonder ?

The disclosure of the use of St. Kitts-Nevis companies to disguise American offshore money by one Swiss bank raises the question; How many other Swiss banks have routinely used St. Kitts corporations, and other business organizations or non-profits to assist tax evaders ?  

Saturday, July 18, 2015


John Carney,  the attorney who is the court-appointed Receiver for the estate of the insolvent hedge funds formerly operated by convicted Ponzi schemer Francisco Illarramendi, has filed a Submission regarding the sum he has calculated should be the restitution sum charged to Illarramendi. The Receiver, after deducting for payments made, or anticipated to be made, to victims, advises that they will suffer an estimated loss of $370,482,716.54 .  The total allowed claims were $734m, and the amount shown is the remaining loss, after giving effect to the anticipated plan distributions.

Illarramendi is presently serving a thirteen-year sentence in a Federal Correctional Institution for operating an unlicensed hedge fund, which became a Ponzi scheme, after the defendant chose to cover losses with money received from new investors. He also was found to have funded a lavish lifestyle, using funds diverted from the hedge funds he managed. The principal creditor is a pension fund of Petroleos de Venezuela, or PdVSA, the country's oil monopoly.


If your interest in anti-money laundering is due to the fact that you are involved as a vendor of AML services, in sales or otherwise, there is a new report out, entitled Fraud Detection and Prevention and Anti-Money Laundering Market by Vertical, Type & Geography - Global Trends & Forecasts to 2019, Any reader who has an interest in this topic can access the website here*.
*Fraud Detection Prevention and AML Market Report

Friday, July 17, 2015


The mass media appears to have tactfully avoided it, but the fact remains that the shooter, while he may have been born in Kuwait, was of Palestinian origin, and his father had previously been under investigation, in the US, for ties to an unnamed terrorist organization, which most likely was Hamas. Abdulazeez' father, who was born in Nablus, in the West Bank, is from a city under strong Hamas influence. Is the father of the shooter a Hamas member ? US intelligence services, and law enforcement agencies, certainly know the answer to that question, but they are pointedly not sharing that with the American public. If this is an exercise in political correctness, so as not to raise anti-American feelings in the countries of the Middle East, it could result in a failure to take subsequent measures, within the United States, to prevent future attacks by terrorist agents living here.

Readers who think the shooter was from Kuwait may need a history lesson; Palestinians had a large contingent in Kuwait, but most of them were expelled by the Kuwaiti government in 1991, as the consequence of the fact that the PLO had supported the Iraqi invasion, and occupation, of Kuwait in 1990. Abdulazeez is believed to have been born in 1990, in Kuwait, but spent several years in Jordan, which has an estimated 60-80% Palestinian population.

A Middle Eastern watchdog organization today published excerpts from Abdulazeez' recent blog entries, which were radical, even morbid, Islamist statements, extolling the virtues of the afterlife, and of Jihad, or holy war. The timing of the attacks, coming upon the last day of an annual religious observance, cannot be a coincidence.

Both the Palestinian Authority, and Israel, have recently arrested hundreds of reputed Hamas members in the West Bank, and inside Israel itself, as there is a clear and present danger that these agents intend to commit terrorist acts, both in Israel, and in the West Bank. The Hamas headquarters in Turkey is believed to be directing the actions of these individuals.

A trusted Syrian source has stated that the Hamas leadership has placed what can only be described as "sleeper agents" inside the United States, for future use in terrorist acts on American soil. This information, though unconfirmed, could explain yesterday's attacks.  

Thursday, July 16, 2015


If you thought that corrupt Iraqi PEPs were the worst in the Middle East, think again. A US State Department document, leaked to the media by Edward Snowden, disclosed that, several years ago, Israeli special forces troops, after killing a top Syrian general reportedly supplying weapons to Hezbollah, and supervision security for Syria's secret atomic reactor. found $80m, hidden in the officer's home. The general, Muhammad Suleiman, was said to be the senior aide to Syria's President Assad.


Lest we forget, early on in his presidency, the former leader of the Republic of Panama, Ricardo Martinelli, solicited, and accepted, a six million dollar bribe, and issued a casino license to an unacceptable license applicant, with international organized crime connections. The next time someone tells you that the corruption, and insider trading, charges pending against Martinelli are purely political, and not supported by fact, remind them about this case.

All the senior officials the in office in Panama knew about the circumstances surrounding the bribe, but being that they were all Martinelli appointees, no one objected. Panama should post a multi-million dollar reward for information leading to his capture and extradition; the public needs to see him in the dock in Panama City, to answer for his many crimes.


In a move that most observers believe smacks of sheer desperation, attorneys for former Panamanian President Ricardo Martinelli have filed criminal charges against the remaining judges and magistrates of the Supreme Court of Justice, effectively shutting down the country's dysfunctional criminal justice system. Panama's highest court, which is grappling with a massive docket of official corruption cases, must now grind to a halt, which was most likely Martinelli's objective, since it is members of his cabinet, and agency appointees, who are charged with criminal acts, as well as Martinelli himself.

The charges, which include Abuse of Authority, and Defamation, do not appear to have any factual basis, and have been interposed strictly for dilatory reasons, to halt the current criminal cases from proceeding to trial. Martinelli's arrogance, and abuse of the judicial system, has once more interfered with the forward movement of President Varela's reform program.

One wonders why INTERPOL, which was given Red Card notices for some of the fugitives from justice, did not get Ricardo Martinelli's name as well. Is everyone in Panama still afraid of the man the Opposition called "Mad Dog" Martinelli ?

Wednesday, July 15, 2015


Michael Szafranski
Michael Szafranski, the independent financial adviser who was supposed to examine, and qualify, Scott Rothstein's bogus investments for clients, but ended up taking money from Rothstein, and steering clients to what he knew, or should have known, was a Ponzi scheme, has indicated that he will change his plea to guilty, in US District Court in Florida. it is alleged that he concealed material information about the safety and validity of the Rothstein "investments" in structured out-of-court settlements, and profited from his participation in the massive fraud.

It had been originally anticipated that Szafranski would actually go to trial in his case, but delays in the setting of the trial date raised the possible issue as to whether his attorney was negotiating a plea with the US Attorney's Office. Whether he will be compelled to disgorge the reputed millions of dollars paid to him by Scott Rothstein is not known.

 The case represents a teachable moment in any investment: insure that your financial investment adviser in truly independent, that he does not receive any monetary benefit from referring specific investments to you, and that he does perform due diligence, or enhanced due diligence, and provides you with evidence of this. Remember, Szafranski originally was engaged by a hedge fund to verify the Rothstein investments.

You can be proactive in checking out your adviser;  Is he living above what you believe his means is ? Has he purchased substantial real estate holdings, over and above what he should be capable of buying ? Is he driving a Rolls or Bentley ? Know your adviser, if you trust him with your investment decisions.

Tuesday, July 14, 2015


If you were disturbed by our earlier article*, about the fugitive Canadian financier, Ryan Bateman, who fled not only pending criminal charges in the Cayman Islands, but was under investigation by government regulators, it gets worse. Replacing Bateman at the helm of the (unlicensed) B & C Capital Ltd., is Fernando Moto Mendes, whose sordid record on Grand Cayman should have disqualified him from that position, and Mendes has started right off, by misleading foreign clients who have sought to withdraw portions of their holdings.

Mendes has a "colorful" history, in his residence in the Cayman Islands:

(1) In 2010, he failed to pay large debts when due,  which is the textbook definition of insolvency, and a final judgment for USD$ 513,638.78 was entered,  after which the judgment creditors took him into involuntary bankruptcy, in the Financial Services Division of the Grand Court. The Court heard his case in 2011, and he, and his counsel delayed the proceedings a number of times, claiming that payment of the debit was imminent, but no proof was offered for the truth of his assertion.**.

(2) In 2011, Mendes was arrested, and charged with Theft, Attempted Theft, False Accounting, and the Making of a False Statement by a Company Director, in the Finab Ltd. case. Mendes had been the Managing Director of Finab. At his 2014 trial, the Court found that the Royal Cayman Islands Police Service had failed to obtain and retain material evidence, which made it impossible for the defendant to have a fair trial, and stayed the proceedings, discharging Mendes. Rumors swirled around Grand Cayman that an illegal payment had been made to certain police officers, which resulted in their failure to secure vital evidence.

Canadian investors seeking, at this time, to withdraw portions of the assets placed with B & C have been told, by Mendes, that there will have to be certain funds withheld, for Canadian taxation. The truth is that there is no withholding agreement, nor any reciprocal tax agreement, between Cayman & Canada. Given that Bateman is said to have co-mingled investor money with his own, and that some  money may be missing, whether lost, due to Bateman's negligence, or stolen by him, it is likely that B & C, which was recommended by prominent Canadian law firms, does not have the investors' funds.

Is Fernando Mendes a part of Bateman's illegal actions ? In any event, why is he lying about the withholding to clients ? Where is the investors' money, and how did Mendes ever get the position he holds at B & C Capital, with his record ?
*Alert for fugitive fraudster from Cayman company hiding out in Miami
**In the Matter of Fernando Mendes, Debtor, Case No.: FRD 243 of 2010; available on the Internet.


This is Ryan Bateman, a Canadian national accused of financial malpractice in the Cayman Islands, who is unlawfully evading arrest and extradition, after he failed to return to court from a trip to Canada. He is accused of deducting exorbitant charges from clients, funds of co-mingling client funds with his own, and of using client funds for his own purposes.

He is not licensed or registered to perform brokerage services, nor are his firms. They are;

(1) Bateman & Company Ltd.
(2) Bateman Financial ltd.
(3) B & C Capital Ltd.

Do NOT attempt to apprehend this individual, as he is wanted for maliciously inflicting grievous bodily harm and rape, on an individual in the Caymans; consider him to be extremely dangerous. Contact the local police or FBI, if you see him, or know where he is living. 

Monday, July 13, 2015


A Mexican national, already on probation for an earlier bulk cash smuggling conviction, was again detained, when he attempted to smuggle over $200,000 out of the United States. I simply cannot understand how our Federal judiciary can think that sentences of probation deter anyone from bulk cash smuggling. What was the sentencing judge thinking here ?

In another case, the US Attorney agreed to dismiss multiple counts of bulk cash smuggling, and allow the defendant to plead guilty to Misprison of Felony*, and serve only 13 months. Is this a misguided attempt at rehabilitation of offenders? for they generally go right back to bulk cash smuggling. The joke is on the United States, which must often arrest and convict the same smugglers again & again.

Making back room deals with bulk cash smugglers, in the hope that they will lead US law enforcement agencies back to the Mexican cartel boss who oversees their action, is not only ineffective, it is a bad joke on the American people, who deserve better. No more coddling of career cash couriers, please, your honors.
* One of the most obscure, and seldom charged, Federal felonies, the elements are:
(1) A felony was committed and completed by another.
(2) The defendant had knowledge of the crime.
(3) The defendant failed to notify the authorities.
(4) The defendant took affirmative steps to conceal the crime.


If you are working in Canada, in the financial services industry, you might want to read a new survey of Canadian compliance officers, regarding anti-money laundering issues and practices. Entitled Canada's Compliance Officers speak out, it was published by Grant Thornton. You can access it here*.
*Canada's Compliance officers speak out  

Sunday, July 12, 2015


One point to note, in passing, in connection with the government investigation into the purchase, and installation, of illegal telephone and Internet monitoring equipment, purchased for Panama's former President, Ricardo Martinelli, to spy on opposition figures, and individuals that he wanted to blackmail, or to coerce them into having sexual relations with him. Martinelli's assistants used shell companies, organized in Belize, to mask the purchases, as well as hold title to the surveillance gear.

Food for thought: even though Panama is itself a jurisdiction where beneficial ownership can be totally obscured behind bearer-share corporate vehicles,  Sr. Martinelli still chose to utilize another offshore financial center & tax haven. Apparently he feared disclosure of his illegal acts. Remember, the next time someone brings you a Belize corporation, that a law passed in 2012 still allows bearer shares, so long as they were held in the actual custody of the registered agent. I wonder how many compliance officers can secure airfare from their superiors, in order to view such shares that a client represents belong to him ?

By the way, bearer shares of a Belize company can be easily converted into registered shares. Why would a legitimate client continue to hold them in bearer form ?