PANAMA PACKED THE COMMITTEE OF INDEPENDENT EXPERTS WITH PEOPLE WHO DID BUSINESS WITH MOSSACK FONSECA

As more details about the composition of the Committee of Experts, appointed by the Government of Panama, to report upon, and recommend, reform, in light of the Panama Papers scandal,  it becomes clear that the Panamanian members were unqualified to sit on the Committee, due to Conflict of Interest. A number of the so-called Experts had either done business with the law firm of Mossack Fonseca, or were among its clients, or had other close relationships with MF that made objective review impossible.

To summarize the obvious conflicts:
(1) One Committee member was a director of a BVI company, set up by Mossack Fonseca.
(2) Another member had discussed a joint business relationship with the law firm, and has social and professional links.
(3) Yet another member is all over the Panama Papers, and wanted to become a lobbyist, paid by Mossack Fonseca.

Remember, the two non-Panamanian members of the Committee, resigned, after they learned that the findings were to be given to the Panamanian Government, before public release, which would give Government publicists time to spin a response, and most ominously, the Committee's report was not to be made public until the Government of Panama gave its permission, meaning that a sizable delay might occur.

The report, which only recommended minor changes, and avoided the radical transparency necessary to implement true reform, including eliminating the bearer share law entirely, was a whitewash. No wonder that new incorporations are way down in Panama; the jurisdiction has given a bad taste to the offshore industry, as to legitimate international businesses. Will Panama ever clean up its act ? Until it does, avoid it, if you wish to reduce risk.

LEON FRAZER CHAIRMAN OF THE BOARD ADMITTED LIABILITY IN $10m LOSS OF CLIENT BEARER STOCK CERTIFICATES

William Tynkaluk, the former Chairman of the Board of Directors, of Leon Frazer & Associates, Inc.,  admitted that his firm was strictly liable, for the loss of ten million dollars of bearer instruments, which had been entrusted to it, for safekeeping, prior to a scheduled sale of the shares, to a corporate purchaser located in the United Arab Emirates. Tynkaluk, who was the personal investment adviser of an LF client, was in charge of the closing of the transaction, declared that the documents had been "lost, misplaced  or misfiled, at our offices in Toronto," which resulted in the permanent cancellation of the sale, in early 2012.

The securities represented 100% of the shares of a money services business, in bearer form, and were extremely valuable, as they conferred the right of the holder to convert the MSB license to that of a full-service commercial financial institution. The market value of the stock was conservatively estimated at CAD$10m, but in 2016, four years later, is is believed to be much higher.

Tynkaluk offered to execute an affidavit, detailing the specifics of the documents that Leon Frazer was handling, which included, but were not limited to:

(1) The MSB license.
(2) The license from the Ministry of Commerce, to operate and issue credit and prepaid cards.
(3) The license from the Ministry of Finance.
(4) The license from MasterCard.
(5) The Certificate of Operation from Government.
(6) The bearer shares.
(7) The corporate share book.

When Leon Frazer "lost" the documents, the sale collapsed. Investigators, who are aware that William Tynkaluk had a long relationship with the fugitive stock trader, Alberta native Ryan Bateman, who was also interested in purchasing the MSB, and the investigators want to talk to Bateman, to determine whether he purchased the MSB, in an off-the-books transaction with Tynkaluk, for future use.

The affidavit, dated April 12, 2012, was not executed by Tynkaluk, at the meeting, scheduled for that specific purpose, when his attorney failed to appear, and the other parties present, all attorneys, stated that he needed independent advice of counsel, in order to sign the document. Though unsigned the admissions, and declaration against interest expressed at that time, by William Tynkaluk, when taken together with the affidavit, are competent evidence of his admission of liability, on the part of Leon Frazer & Associates, Inc.

 At a later date, Tynkaluk, and Leon Frazer alleged that the client had the original documents, which was inconsistent with the documents and correspondence to date. The measure of lost profits, suffered by the LF client, both for the sales price, and future earnings, could render Leon Frazer insolvent, unless the firm's negligence is a covered event, inits insurance policies, though its relationship with the Cayman Gang of Four demonstrates intentional torts, which are generally outside the realm of coverage.

We shall continue to cover the progress of the litigation.

   

LEBANON'S NEW PRIME MINISTER POUNDS HEZBOLLAH-LIKE WAR DRUMS ALONG THE LITANI

Prime Minister Hariri

Saad Hariri, formerly known as one of Hezbollah's most powerful opponents, since the assassination of his father, has returned to politics, as Lebanon's Prime Minister, and made statements that can only be interpreted as bellicose, and in full support of Hezbollah's warlike statements, concerning its bogus position on territory located in the Golan Heights. This turnabout in Hariri's endorsement of taking action, obviously against Israel, to invade the Mount Dov/Shebaa Farms area, raises the prospects of a Third Lebanese War, and substantially increases Country Risk for Lebanon.

The newly-installed Prime Minister, in parroting the Hezbollah party line against Israel, in making a spurious territorial claim not supported by either historical fact, French colonial surveys, or the findings of the United Nations, Syria or Israel. If the Shebaa Farms issue, manufactured by Hezbollah, to maintain claims against Israel, after it withdrew from Lebanon, becomes official Lebanese national policy, the chances of a future war with Israel become much greater than we have seen, since Hezbollah troops became bogged down in the Syrian civil war quagmire.

If Hariri persists in his position, and the formerly effective opposition to Hezbollah policy in Lebanon dissolves, Then the designated terrorist organization could initiate yet another costly war with Israel, resulting in widespread destruction of Lebanese infrastructure, including the probable destruction of the critical Beirut banking sector. Given that the financial services industry dominates the Lebanese economy, and the other industries that fund the government, tourism and trade, would also greatly diminish after another war, universal government support for Hezbollah policies, could prove fatal for the economy of Lebanon.

Country Risk for Lebanon will increase exponentially, should widespread, across the board political party support for Shebaa Farms, become an uncomfortable reality. In that case, Country Risk, for the most popular financial center in the Middle East, will skyrocket upwards.            

EVIDENCE PROVES THAT LEON FRAZER CHAIRMAN OF THE BOARD LIED ABOUT MISSING $10m OF CLIENT'S SECURITIES

Evidence reviewed by a financial crime analyst, in connection with assertions, by a client, that Leon Frazer & Associates, Inc., retired Chairman of the Board of Directors, William Tyunkaluk, did have possession of the client's missing stock certificates, valued at over $10m, has confirmed that Tynkaluk committed perjury, in his recent examination, when he stated that the client, and not Leon Frazer, had custody of the stock. The investigator is expected to be called to testify at the trial of the pending civil suit, which seeks the production of documents, involving $11m, in missing client assets, in addition to the $10m in bearer share stock, which Leon Frazer denies it ever held.

Correspondence, sent to multiple recipients, from Lyle Stein, then the Managing Director of Leon Frazer & Associates, Inc., to the plaintiff, and others, attached copies of the missing stock, and verified that the wealth management firm had the originals. Stein is is longer with Leon Frazer; William Tynkaluk disclosed that the Ontario Securities Commission (OSC) fined Stein, individually, CAD$500,000, for certain unspecified violation of Canadian securities law. The details of that violation were never made public.

The $10m of bearer securities was being held, in trust by Leon Frazer, in connection with the sale of an interest in a money service business, to a foreign purchaser, which failed to close, after Leon Frazer staff stated that they did not have the securities certificates. The value of the MSB stock, in the open market, was extremely high, because the money service business was convertible to a license to operate a financial institution, a commercial bank.

Where are the stock certificates now ? Tynkaluk had indicated that he had a longtime associate, in the Province of Alberta, who operated in the Republic of Panama, and coveted the MSB stock, and that he, Tynkaluk, preferred the Canadian as a purchaser. That individual is believed to be the fugitive stock trader, Ryan Bateman, a member of the notorious crew of thieves, known as the Cayman Gang of Four*, who are responsible for an estimated $450m in losses, of accounts for Canadian pensioners and retirees. Did Stein & Tynkaluk sell the MSB stock to Bateman, and is he holding the bearer certificates, or did he sell them to a third party ? We cannot say at this time, but the investigation is continuing.

As additional evidence surfaces in the civil suit, filed by a retired Canadian attorney, and QC, that conflicts with sworn testimony of William Tynkaluk, of Leon Frazer & Associates, Inc., the question arises, did the wealth management firm suborn perjury from its retired Chairman of the Board, to evade responsibility for an estimated $21m liability ?
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* The Cayman Gang of Four are:
   (1) Derek Buntain, the cashiered President of Dundee Merchant Bank, now insolvent, of the Cayman Islands. He is a Canadian national, now believed to be in hiding somewhere in Canada's Atlantic Provinces.
  (2) Sharon Lamb, the ex-Senior Vice President of Dundee. A citizen of the Isle of Man, she may be living there at this time.
 (3) Ryan Bateman, the fugitive stock trader, a Canadian from Alberta, now in hiding in Florida.
 (4) William Tynkaluk, a retired Leon Frazer director, also a Canadian, and now living in Ontario.

RISK LEVELS FOR THE MIDDLE EAST MAY INCREASE AFTER JANUARY 20

The Siege  and Destruction of Jerusalem, by David Roberts

Notwithstanding the 500,000 dead in the Syrian Civil War, the existential threats posed to the region by ISIS, and finally, an ascendant Iran, seeking to displace Saudi leadership, the recent focus on Israel, and the expected American response, after the new administration takes office, could result in open anti-American actions, manifesting itself in public protest, with unofficial government support, which might result in a major increase in risk in the Middle East.

The expected movement of the American Embassy to Jerusalem, which is pursuant to an American law passed in 1995, but ignored by previous American presidents, for the purposes of catering to the oil-rich countries of the region, is likely to occur.* Although the Government of the State of Israel has repeatedly advised, as a matter of national policy, that it does not intend to relinquish the Old City of Jerusalem, or any part thereof, you can expect virulent protests, no matter where the new US Embassy is situated, even if it is in West Jerusalem, which has been in Israeli hands since 1948.

When the Old City was annexed to Jordan, during the period between 1948 and 1967, both Christians and Jews were prevented from access to their holy sites, so do not expect Israel to withdraw from any part of it. The embassy move could even trigger armed action against Israel, by its neighbors, if you are to believe some of the propaganda being published, notwithstanding that ISIS is the primary threat for 2017 and beyond.

One should expect widespread Arab outcry, through the Middle East, and since America is regarded as an ally, US financial institutions, as well as bank clients with exposure in, or doing business with, the countries of the region, should be alert for any erupting violent protest movements, which could damage American assets, injure local agents or representatives, or disrupt financial services to the extent that normal commerce, including repayment of debt, or ongoing transactions, might be disrupted.

Therefore, it might be prudent to, early on, examine any outstanding client receivables, or pending transactions, of both the banks and any of its major clients with exposure there. Such an audit should not only be complete before January 20, but any remedies planned should be executed by that date, lest there be an immediate demonstration of the new American administration's likely "big stick" foreign policy measures. Raising Country Risk, for the countries that are most likely to see an adverse response to the embassy move, orchestrated by government, should be seriously considered at this time.
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* The United Nations proposal, for a partition of the British Mandate into Arab state, a Jewish state, and an international zone for Jerusalem, was never approved and implemented, because the Arab countries bordering the new State of Israel declined, and thereafter invaded it. The United States later withdrew its approval of any international status for Jerusalem, and the United Nations' utter failure to act as a peacekeeper since 1950, in a world often at war, means that such a plan could never be successful. Jerusalem has never been the capital of any country, other than the Jewish nation, in its 3000 year history; while under Ottoman, and muslim, control, it never served as a capital city, and Arab claims have no legal or historical basis.

 

  

GERMANY'S NEW DRAFT LAW ON DISCLOSURE OF SHELL COMPANIES

One of the positive developments to have arisen out of the Panama Papers/Mossack Fonseca scandal is the introduction, in Germany, of a proposed law which will require German nationals to disclose all shell companies that that they have a beneficial interest in. Know unofficially as the "Panama law," the legislation could be the start of a global trend.

Readers who wish to review the complete text of the draft law can access it here.

ODEBRECHT SENT $59m IN BRIBES AND KICKBACKS IN CORRUPT PAYMENTS TO PANAMA

Reports from the global investigation into the billions of dollars, paid by the Brazilian construction & petrochemical conglomerate, Odebrecht, to corrupt peps worldwide, to obtain lucrative government contracts, are focusing upon the massive bribes paid in the Republic of Panama. Panama continues to reel from the fallout from the Panama Papers scandal, but insiders in Panama City warn that the net effect of the Odebrecht disclosures will be far more damaging.

The allegations are that $59m was paid, in bribes, to Panamanian officials, and other influential individuals associated with the government, to secure contracts. Over one hundred people are said to have received the illicit payments. These recipients are not only from the corrupt former Martinelli government, some are alleged to be members of the current administration, thought the names have not as yet been made public.

The most damning accusation: at least $6m of the bribe money was paid, between 2010 and 2014, to the adult children of the fugitive ex-President, Ricardo Martinelli. The former president is now the subject of a pending extradition request, made to the United States, by the Ministry of Foreign Affairs of Panama.

PROTECT YOUR CLIENTS FROM THE USUAL HOLIDAY FRAUDS

We are in the midst of the holiday season, and if you are a compliance officer at a commercial bank, the odds are someone in your bank will relate to you some story about a client who is in the bank, seeking a quick withdrawal of funds so some emergency. Remember, many people lose their money each December, due to fraud, and if you are called upon to render an opinion, about a professed "emergency." use your experience to protect your clients.

(1) Anyone who receives an urgent email, saying that a friend has been robbed, and lost everything, including their telephone, during  a trip to a foreign country, is most likely a fraud victim.  have the client call the friend, who will magically answer the phone, as the scenario is totally fictitious.

(2) Calls to relatives, claiming that a loved one has been arrested, and desperately needs bond money to be released, are all bogus, for the relative himself would be making that call, if it was true. Grandparents are the usual targets for this scam.

(3) A bogus kidnapping threat, and demand for ransom, when the supposed victim is really safe, and totally unaware of the scam, is a common fraud.

(4) Allegations that the victim has won a lottery (with he never entered), and that he just needs processing fees paid up front, to receive his winnings, is another common attempt to steal money from greedy individuals, who totally forget that they would have had to purchase a ticket to qualify as a winner.

(5) Lastly, the advance fee fraud; the victim, who needs funds, is hit up for 10% of the amount he needs for a loan. No lender ever requires fees in advance, as they deduct them fro the loan proceeds at closing.

Therefore, if a bank client hurriedly demands a large amount from hi account, and appears to be under pressure, make sure that the need for funds is genuine, if bank staff call upon you to determine whether a fraud is in progress.

HAS BULK CASH SMUGGLING TO MEXICO INCREASED ?

$3m

Are US banks making it so difficult to deposit large amounts of bulk cash, and to send it to tax haven banks, that bulk cash smuggling into Mexico is increasing ? This week, a Volkswagen Passat was seized, in San Diego County, containing $3,180,000 in cash. The vehicle was headed south, riding with another smuggling car, which was also seized, and found to contain bulk cash.

Are the AML/CFT actions of American compliance officers finally deterring the deposit of illicit cash in our banks ? 

GOVERNMENT OPPOSES INDEPENDENT ETHICS OPINION IN ZARRAB CASE

The US Attorney's Office has expressed its objections to the use of an independent ethics opinion, in the Reza Zarrab Iran sanctions case, regarding whether there is a Conflict of Interest regsrding defense counsel, who also represent several victim banks. In a letter to the Court, the Government requests the Court to reconsider, or in the alternative, to stay its order, and has advised that it will fully brief the issue, in a memorandum of law to be filed on December 21st.

The Government did cite to a Second Circuit Court of Appeals decision, Bernstein vs. Bernstein Litowitz Berger & Grossman LLP, which it asserts disapproves of reliance of legal ethics experts, and also cited other authorities, in support of its argument.

PENNSYLVANIA JUDGE, POLICE CHIEF AND DEPUTY CHARGED IN MONEY LAUNDERING STING

A Pennsylvania Magisterial District Judge, a Director of Public Safety, and a Deputy Constable, in Bucks County, north of Philadelphia, have all been charged, in a five count indictment alleging money laundering. They reportedly took cash, understood to be the proceeds of crime, from undercover officers, and laundered it through local bank accounts.

The defendants also attempted to broker the sale of a bar to the undercover officers, believing the purchase price to be the proceeds of drug trafficking, and health care fraud. The case was filed in US District Court in the Eastern District of Pennsylvania.

Readers who wish to review the complete text of the indictment can find it under US vs. John I Waltman, et al, Case No.: Cr 16-509 (ED PA).   

MALTA'S ACCEPTANCE OF PONZI SCHEMER INTO ITS ECONOMIC PASSPORT PROGRAM PROVES THAT IT IS FLAWED

His name is Alberto Chang-Rajii, a Chilean "venture capitalist" who is residing in Malta, and opposing extradition to Santiago, where he faces massive charges that he has operated a Ponzi scheme for years. Why, you ask, is he in Malta ? Because he has a residency card, acquired from the country's Individual Investor Program, Malta's economic passport scheme.

He apparently passed the program's due diligence investigation, and was in line to eventually acquire a Maltese passport. if you don't think this is a good thing, please remember that Malta is part of the European Union, and a passport from that nation entitles the holder to entry into, and through, the Schengen Zone, which includes most of Europe's major countries.

The residency permit, granted by Identity Malta, was only supposed to be issued after the applicant had passed an extensive due diligence investigation, which was conducted by Henley & Partners, but it failed to expose the fact that the applicant's two major claims, that he owned a 1% interest in Google, and that he had an MBA from Stanford university, where he allegedly met Google's founders, were a total fabrication. Both Google and Stanford have publicly stated that his statements are false.

Also, Chang-Rajii was offering investors a 20% return on this funds; this should have been investigated, to rule out pyramid or Ponzi schemes. In the present economy, giving investors something that appears to be too good to be true, usually is. Some are calling Chang-Rajii the Chilean "Bernard Madoff."Representations that are inconsistent with the norms in any trade or industry require enhanced due diligence, but it obviously was not performed in this case.

Even the most inexperienced compliance officer knows how to validate claims of ownership of securities in a publicly-traded company, and of an advanced degree from a major American university. Is Henley and Partners guilty of compliance malpractice ? You decide, but if we have found one instance of an unsatisfactory applicant being approved in Malta, all the others must now be subject to enhanced due diligence, to rule out the presence of others who are unqualified, due to history of, or even ongoing, criminal conduct.

The global economic passport industry has had a black eye for years, due to the issuance of passports to dodgy individuals; is the commission-driven outside management of compliance programs to blame, or is the money so attractive, that governments in the developing world only see the income, and close their eyes to the shortcomings of their applicants ? We cannot say, but compliance officers will certainly now be taking a hard look at Maltese passports, where the holder was not born there, and the passport was relatively issued.

IMPRISONED AND CONVICTED FRAUDSTER OKKE ORNSTEIN STILL TRYING TO TAKE MONEY FROM VICTIMS

Kimberlyn David & Okke Ornstein

Okke Ornstein, twice convicted in the Republic of Panama, and now serving a 40-month sentence, has his associates on the Internet, asking for "donations" for attorneys' fees, in a third case going to trial in Panama. The problem is, it is all a complete fabrication: Panama is paying his lawyer's fees, as it is a court appointment; he has a free lawyer, and the request for fees foe an "imprisoned journalist" is as bogus as Ornstein himself, a career criminal, who fled Panama years ago, to avoid serving time for his convictions, and hid out in the Netherlands, to avoid being served in another criminal case.

Ornstein's partner in the fraudulent solicitation of money, the American expat, Kimberlyn David, is opened up websites and social media pages, often under aliases, posing as interested third parties, seeking "justice" for Ornstein. Not only did he receive a fair trial, he was present at all hearings, and he had a competent, experienced lawyer. No journalist, but a part-time blogger, who slandered many Panamanians, in an effort to extort money, Ornstein has been involved in Panama's lucrative child pornography business for years. He also has a $5m judgment of record against him, and he stole $35,000, from a charity in the Netherlands.

After he is released, Ornstein will be deported to the Netherlands, to serve a 1-year sentence; he also has a $1m judgment against him there. Does this sound like a legitimate member of the press ? The Dutch journalists writing about him would do well to read his long rap sheet, before naming him as one of their own. Besides, he still has three criminal trials ahead of him in Panama.

COURT ASKS FOR INDEPENDENT ETHICS COUNSEL OPINION IN ZARRAB CASE

Reza Zarrab (without beard)

The trial judge, in the Reza Zarrab Iran sanctions violations case, pending in Federal Court in New York, has requested that the US Attorney's Office obtain a written opinion, from independent ethics counsel, regarding the issue of Conflict of Interest by the defense firm Kirkland & Ellis. The short order included the provision that the opinion should "consider and address, among other things, defense counsels' contrary view."Lawyers from another firm, who are part of the defense team, joined the Kirkland firm subsequent to his arrest in the United States.

The order was entered in response to the letter to the Court, from the Government, detailing its response to the issue of whether waivers, from banks [clients] also represented by K & L, who are alleged to be victims of the defendant's sanctions evasion conduct, are sufficient to put to rest the Conflict of Interest issue.

The Government stated the waivers submitted are not sufficient. because:
(1) At least one other affected client [bank] has refused to waive.
(2)  Zarrab reportedly has refused to waive any defenses that rely upon a position adverse to the bank.
(3) There are certain conditions, within the bank waivers, that no reasonable defendant would consent to.

The Government has requested that the upcoming Curcio* hearing be rescheduled.
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* A hearing, in Federal Court, to insure that a criminal defendant if fully aware of the ramifications of retaining a lawyer who may have a potential conflict of interest.

DIRTY CREDIT UNIONS CONTINUE TO LAUNDER MONEY WITHOUT REAL-TIME INTERDICTION

Regular readers of the blog will recall the recent case of the Miami-area federal credit union, intended to provide service for underbanked minorities, that was allowed to move huge amounts of suspect funds, for high-risk foreign MSBs, for years, without any regulatory or law enforcement suppression of its operation. None of its staff, who made substantial profits from their illicit activities, was ever charged with money laundering, or any other financial crimes, and many have wondered whether there were local political considerations behind the total lack of prosecution.

Now, it has happened again, but this time, in New York City. FinCEN has fined the Bethex Federal Credit Union, of Bronx, New York, $500,000, for moving $4bn, for MSBs located in high-risk jurisdictions, including Mexico, China and Pakistan. The credit union's AML and KYC was clearly defective, yet for years, no regulatory agency, especially the NCUA, did anything other than point out the deficiencies. Likewise, no law enforcement agency shut down its extended operation.

Now the credit union is in liquidation, but the damage has been done. Whether any of the officers or staff are charged we cannot say, but so long as greedy credit unions are allowed to open their doors, without any meaningful compliance, to dodgy high-risk foreign MSBs, and be allowed to walk away from the results, the abuse will continue. Perhaps US banks should take a hard look at the credit unions that use their services, to insure that there is no money laundering going on right inside their facility. 

STATE DEPARTMENT WARNING AGAINST TRAVEL TO VENEZUELA INCREASES COUNTRY RISK

The US State Department has issued a formal Travel Warning, for US citizens, to the Bolivarian Republic of Venezuela. The reasons fill up an entire page of the Warning, from crime, to food shortages, to arbitrary arrest of Americans without legal cause, to restrictions upon the amount of assistance the US can provide to its nationals in Venezuela.

If you have not already raised your calculation of Country Risk for Venezuela, to the highest levels, you are advised to do so now. In addition to the above threats, journalists working inside Venezuela,
whom we have relied upon to give us objective news about the country, and its slide into economic chaos, are under attack by the security apparatus. We can no longer expect to have sufficient information from inside Venezuela, with which to make decisions, about compliance, and about risk, meaning that any attempt to conduct proper due diligence about Venezuelans, individuals or corporate entities, does not have the necessary tools available.

The runaway inflation, making the Bolivar essentially worthless, against the US Dollar, serves as further deterrent to the conduct of any international trade, and increases the chances that new clients with dollars may be either organized crime figures, or corrupt PEPs who do not identify themselves as such. Until Venezuela stabilizes, disengagement is the best course of action.

NEW YORK COURT CONFERS PERSONAL JURISDICTION UPON NON-US BANK WITH CORRESPONDENT ACCOUNT, APPEARING TO EXPAND APPLICATION OF LONG-ARM STATURE

The New York State Court of Appeals has come a bit closer to the answer to the classic question of obtaining jurisdiction over a non-resident bank that maintains a correspondent account in Manhattan. Is mere maintenance of  US correspondent account sufficient to confer personal jurisdiction, upon a foreign bank, or is something else required ?

A private Swiss bank was sued, in state court in New York, by Saudi companies & a Saudi national, for alleged participation in a bribery and kickback scheme. Certain bank staff members participated,  and were rewarded with bribes, sent through the bank's New York correspondent account, in route to Geneva. A suit against by the bank resulted in decisions against the plaintiff in both the NY Supreme Court, and the Appellate Division*; This appeal, to the court of last resort in New York, followed.

The Court of Appeals held that, where there was deliberate, intentional, and repeated, use of correspondent bank accounts, located within the State of New York, for money laundering operations, the Bank was subject to the personal jurisdiction of NY courts, pursuant to the state's long-arm statute. The Court found that the Bank employees' action satisfied the requirements of the statute.

The Court's decision was divided; any reader who wishes to review the complete text of the decision can access it here. The name of the case is Rasheed Al-Rushaid vs. Pictet & Cie., et al .
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* The highest court in the State of NewYork is not the Supreme Court; it is the Court of Appeals.

ARE YOU BANKING ANY WEALTHY KITTITIANS ?

St Kitts Coat of Arms

Two years ago, the Federation of St Kitts & Nevis, as a component of its Citizenship by Investment  (economic passport) program, sponsored the creation of the Sugar Industry Diversification Program (SIDF), which was designed to develop alternative economic growth, in fields other than the obsolete sugar export industry.

The SIDF has reportedly received more than $1.5bn since its formation, but a recent outside study, commissioned to determine the efficiency of the program, has determined that major flaws exist, that there may have been massive corruption in the awarding of funds, for purely political purposes, and that there is insufficient documentation to support any meaningful investigation.

Was $1bn distributed to curry political favor, or to party allies and cronies ? Did projects that were not economically viable receive funds anyway ? Finally, were bribes & kickbacks paid, as illegal compensation from the recipients of the funds ?

Until we have the answers to those questions, compliance officers at financial institutions, located both in North America, and the United Kingdom, would be well advised to conduct enhanced due diligence upon an St Kitts nationals who maintain large accounts in their banks. Were their accounts only nominal until the period since 2014, and after that, did their size substantially increase ?  What was the SKN political affiliation of these affluent clients ?

Whether the present St Kitts government will decide to "claw back" improperly made payments, to especially favored recipients from the same political party as the former administration we cannot say, but the negative publicity surrounding being named as the depository of illegal funding cannot be discounted. Kindly check out your best St Kitts clients now, to avoid the embarrassment, and hard questions in thew press, at a later date.  

RICHARD CHICHAKLI, NOW CLOSE TO RELEASE, MAY HAVE ABANDONED HIS SUIT AGAINST US ATTORNEY AND ASSISTANT

Richard Ammar Chichakli, the Syrian-American CPA who worked closely with convicted arms trafficker, Viktor Bout, in a global operation that worked on both sides of the law, and who is presently serving time in a Federal Prison, for OFAC sanctions violations, may have abandoned his pending civil suit, filed against the US Attorney in Manhattan, and one of his assistants. The reason: Chichakli is scheduled for release on June 11, 2017, and regarding his need for the documents,  which we know that that a District Judge previously ordered them released to him, (notwithstanding that the defendants allegedly withheld them without cause), they will no longer be needed.

Chichakli asserted that his citizenship documents, and medical records, among other personal documents seized from his Texas residence years earlier, were needed, so that he could participate in certain US Bureau of Prisons programs, and for some unspecified medical reasons. He claimed that the Government had no need for them; the Government stated that it would retain them, until all of Chichakli's appellate remedies were exhausted.

Whether the Government acted in poorly towards the defendant is difficult to say; copies of the documents would have certainly been sufficient for the BOP, but the Government failed to deliver even copies to him. We do know that he continually complained about the conditions of his pretrial detention center confinement, when he was preparing his case, Pro Se, for trial. In any event, his suit is most likely barred by the Doctrine of Sovereign Immunity, but he filed it anyway, probably out of anger.

We also know that Chichakli, with Bout, participated in a number of operations, in support of the US military, often in Middle Eastern, or African, combat zones, and for that reason alone, he should have been granted some courtesy, but both he, and Bout, were not exactly treated well, while in custody. Whether there were political considerations at work here, or whether the American intelligence community had a hand in it, we cannot say, but he will be released to the community next year, and as a US citizen, he has the right to reside in America.

Given the swiftness with which civil cases are dismissed, in the Federal Courts, for lack of prosecution, when plaintiffs fail to move them forward, dismissal of the suit is expected shortly, unless he takes some affirmative action.

REZA ZARRAB PARES DOWN HIS DEFENSE TEAM

The January trial, originally set of January, for accused Iran sanctions evader, the gold trader, Reza Zarrab, may have been rescheduled, but the defendant is reducing the size of his "dream team" of top-flight criminal defense law firms. Two of these firm have announced that they are no longer on retainer, and have requested to be removed from their obligations as counsel in the case, pending in United States District Court, in Manhattan.

The law firms are:
(1) Clifford Chance USA LLP, the Washington DC office of the London law firm, Clifford Chance.
(2) Quinn Emanuel Urquhart & Sullivan LLP, of New York City.

With a number of major unresolved issues, in a case involving the scope of American sanctions law, it will continue to be of relevant interest in the compliance community, and we shall coverall developments in detail.

PONZI SCHEMERS FREQUENTLY DRAG THEIR ATTORNEYS DOWN WITH THEM

From time to time, we have covered a number of cases involving the biggest American Ponzi schemers, where their lawyer also goes down with them. Remember the Joel Steinger/Mutual Benefits Corp. case ?  Both the attorney who was the principal outside counsel, as well as the lawyer who was the trustee of escrow funds, received felony convictions for their roles in that massive Ponzi scheme. We have always taken the position that, as soon as any attorney discovers that his client is engaged in any type of Ponzi scheme, he must resign forthwith, stop protecting his client, and notify law enforcement, as the attorney-client privilege does not apply to ongoing criminal conduct, where the lawyer is an unwitting facilitator.

Recently, we saw a Ponzi lawyer punished, in a slightly different way. The fraudster was Nevin Shapiro, who some of our readers may remember, ran a wholesale grocery business, that was actually a $930m Ponzi scheme. After Shapiro received a 20-year sentence, for money laundering and securities fraud, he contacted an attorney to represent him in the bankruptcy of his company.

Shapiro was reportedly angry at the University of Miami, to whose athletic program he had been a major contributor, including making illegal payments, gifts and gratuities to players. He was allegedly angry at the U for not supporting him when he was indicted.

His attorney, who knew that the NCAA wanted more details about UM violations of its rules, but had no subpoena powers, offered to assist the organization, by taking witness depositions, within the scope and authority of the bankruptcy proceeding, and followed Shapiro's instructions, in making that discovery available to the NCAA, who ultimately imposed sanctions upon the University of Miami.

The Florida Bar suspended the attorney for 91 days; this may not sound like much, but reinstatement after any suspension for over 90 days is not automatic, but requires proof of rehabilitation, meaning that the lawyer must show that he or she is rehabilitated, before being eligible to practice again. The reinstatement process can take several months, as there is an investigation, and a hearing. The lawyer's misplaced zeal in representing a criminal client, who was seeking revenge for some imaginary wrong, was costly.

In case after case, wherever we see a major Ponzi scheme, we see those around the principal Ponzi fraudster, also face justice for their role in the crime, and lawyers who have facilitated the scheme, are in for special attention.

REZA ZARRAB'S PARTNER IN ILLEGAL OIL SALES CAN AVOID EXECUTION IF HE PAYS $2.7bn TO IRAN

Babak Zanjani

What passes for justice in Iran is brutal, and often lethal. Babak Zanjani, who was the partner of indicted Iran oil sanctions evader, Reza Zarrab, has been sentenced to death, for billions of dollars, in oil sales, that he diverted for his own personal use, and which should have been paid to the Islamic Republic of Iran. His sentence was affirmed by the Supreme Court of Iran, in December.

Zanjani can avoid execution, by paying Iran what is asserted that he defrauded it of, the sum of two billion, seven hundred million dollars ($2.7bn). Unfortunately, some or all of those funds are believed to be in accounts, located outside Iran, and under the control of Reza Zarrab, who is himself in custody in New York, and fighting sanctions evasion charges that could result on a 75-year sentence. No wonder Iran wants Zarrab extradited; Some sources claim he has as much as $13bn.

Reza Zarrab

Will Zanjani find a way out of his dilemma, before the executioner schedules him to face the firing squad, or be hanged ? We cannot say, but we will be watching, and will report back on all future developments.

CONVICTED FRAUDSTER HAS A COURT-APPOINTED ATTORNEY, BUT HIS SLIPPERY FRIENDS ARE SEEKING DONATIONS FOR ATTORNEY'S FEES

If you have seen any of the pleas for donations, said to be for attorney's fees, for the convicted and imprisoned white-collar career criminal (and ex-general manager of the Marc Harris Ponzi scheme, The Harris organization), Okke Ornstein, be advised that he has a court-appointed attorney in Panama, which is paid for by government funds. He has absolutely no attorney's fees bills to pay, in the three criminal cases presently pending in Panama City; The donation request is a scam.

What is also untrue is the story being hawked by a plethora of radical "journalists.", that Ornstein is innocent of one of the two cases that he is serving 40 months on, in Panama. Don't you believe it for a moment; he not only had competent counsel, he actually appeared at each any every hearing, so for him to cry about due process, is simply the last gasp of a convicted felon, grasping at straws. Innocent journalist ? Don't make me laugh.

By the way, after Ornstein serves his 40 months, he will be deported to his native Netherlands, where he must serve a year in prison, and pay a one million dollar judgment, in yet another case. He also stole thirty five thousand Euros from a Palestinian charity, in the Netherlands; perhaps he will be charged with that case also, while serving his Dutch sentence, in 2020. 

REZA ZARRAB'S ATTORNEYS RESPOND TO GOVERNMENT'S POSITION ON INEVITABLE DISCOVERY

Defense counsel in the Reza Zarrab Iran sanctions violations case has sent a seven-page letter to the Court, containing its argument, and briefing relevant legal authorities, in support of its position, that the Doctrine of Inevitable Discovery* does not apply, to allow information, which they say was illegally seized, into evidence.

The issues argued by counsel:
(1) The Government fails to show that it would have obtained access to Zarrab's email by 'lawful means.'
(2) The Government's allegations are unsubstantiated or irrelevant.
(3) The Court should grant a Franks** hearing to protect the integrity of the judicial process.

Zarrab's motions to suppress have been rescheduled to April 24, 2017.

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* "Evidence that is obtained during the course of an unreasonable search and seizure will not be suppressed if ' that the information ultimately or inevitably would have been discovered by lawful means.'"
** A Franks hearing is a hearing to determine whether a law enforcement officer's affidavit, used to obtain a search warrant that yields incriminating evidence, was based upon false statements, or deliberate or reckless misrepresentations of fact.

PANAMA'S ATTEMPTS AT CONTAINING PANAMA PAPERS DAMAGE FALL SHORT

The Government of the Republic of Panama, anxious to show the financial world that it is engaged in meaningful reform, has announced that it is adopting the recommendations of the controversial Independent Committee, which was hastily formed as a counter to the national reputational damage inflicted by the release of the Panama Papers. The two non-Panamainan members of the Committee resigned, charging that the project was flawed from the beginning, and was being controlled by government officials.

The reforms, which are to be adopted, according to a government statement yesterday, and which appear to fall short of any comprehensive reform, are:

(1) To require that all corporate Registered Agents (resident agents for service of process) be licensed and identified, and subject to supervision and regulation. There's also some vague provision about differentiating them from licensed attorneys, involved in the practice of law.

(2) Strengthen institutions for "greater oversight." Does this means government institutions, or the banking sector, which is rarely, if ever, disciplined for rampant money laundering practices, fraud against clients, and making loans to insiders, which reduces capitalization.

(3) Seek the independence  of the judiciary; the court system is hopelessly corrupt, including the judges, prosecutors, judicial assistants, and even the file clerks. There is no detail supplied as to precisely this will be accomplished.

(4) Implement the country's commitments to exchange of financial information again, no meaningful details are discussed in the report. Panama has been notorious in its dilatory actions regarding exchange with other countries.

Whether all these reforms will actually occur, any how they are to be implements, remains an open question. Meanwhile, Panama's negative image, as a facilitator of corruption, and money laundering, continues to pay out in the media, as more and more Panama Papers documents are released.

ARMS SHIPMENTS FROM VENEZUELA TO HEZBOLLAH RAISE RISK LEVELS

Iran & Syria are not the only nations sending missiles and rockets to Hezbollah in Lebanon, according to a reliable source in Panama, who has been monitoring them. How does the regime happen to have them, you ask ? That question requires some background information.

Iran has been shipping arms and weapons, including Shabab 3 missiles, to Venezuela for several years, though most Western Hemisphere governments would prefer that this tidbit not become public knowledge, because there might be a call to remove them. The close relationship between Iran's rulers, and the late Hugo Chavez, Venezuela's former dictator, resulted in multiple deliveries of missiles, ostensibly for defense against a feared American invasion, but in truth and in fact, as a stockpile of arms for the future.

The Government of Venezuela, and Hezbollah, have maintained a close relationship for years, and there is a large contingent of Hezbollah agents working inside Venezuela. When Shi'ite Lebanese civilians needed cash to rebuild the homes that were damaged or destroyed during the Second Lebanon War, it was Venezuela that shipped US Dollars into Syria, using civilian business jets. the money was later transported, via surface routes, into Hezbollah-controlled areas of eastern Lebanon, and there after handed out, publicly, to civilians. Most people assumed that it was an Iranian project, and again, those in the US Government that knew about the true origins of the cash, did not release it to the media, so that Venezuela's role as a supporter of terrorism remained out of the limelight.

There are regular shipments of civilian goods, from Venezuelan ports, to Beirut, and hiding arms within those freighters, some of which are registered in Lebanon, is most likely a continuing operation. Whether this information will raise your Country Risk levels on Venezuela, is your decision, but you should consider the Bolivarian Republic a state sponsor of terrorism. 

DON'T LET CHINESE CORRUPTION CRACKDOWN MAKE YOU COLLATERAL DAMAGE

We've all heard the urban legends, about convicted felons, in US prisons, who secure a sentence reduction by inventing criminal conduct, allegedly committed by others, and testifying, under oath, about their supposed first-hand knowledge of the incriminating information, resulting in a prison term for innocent individuals.  How often that occurs in real life, we may never know, but events in China could place your bank clients, and even you, in a nasty Chinese prison, for events you know nothing about, due to China's recent take-no-prisoners corruption investigations.

China's rulers are busy chasing an estimated one million corrupt public officials, and when they are arrested, they are subject to the types of mistreatment we in the West generally call torture, whether physical or mental, until they confess. Confessions are a necessary prerequisite to the closed trial, where a conviction is a foregone conclusion.

Detainees are told they are required to confess, as an obligation,  irrespective of their guilt or innocence, and that their case will not proceed without it. Therefore, you can expect that some subjects will embellish their role, or even create phantom crimes, simply to move their sad cases forward.

Here's where your bank client, and sometimes you as well, come in. The imprisoned official, who is reluctant to name the Western businessmen who richly rewarded his corrupt cooperation, names your client as the source of his ill-gotten gains, and perhaps you and your bank as the facilitator. Maybe your client was guilty, or maybe he was not, but if he (and you) happen to be inside China when the scandal breaks, you both could soon find yourselves incarcerated in a country not exactly known for following the Rule of Law; Your convictions area foregone conclusion, and your embassy cannot extricate you from this nightmare.

The bottom line: Given the new enforcement mode in China, and given the rampant corruption, often freely engaged in by international businessmen,  your clients, who pay bribes & kickbacks, disguised as something else, means that you want to be staying out of China, even on holiday, lest you find yourself arrested for something you did not commit, but some scared and imprisoned PEP says you did.

US SUPREME COURT HOLDS FAMILY MEMBER LIABLE FOR INSIDER TRADING EVEN IF NO COMPENSATION PAID FOR THE TIP

The United States Supreme Court, in Salman vs. United States, has held that an individual who supplied inside corporate information to a family member, but who did not receive any compensation therefor, still received a personal benefit for the information, and the tipee is thus liable. Readers who wish to review the decision can review it here. 

NOTE TO FINRA AND S.E.C.: FUGITIVE FRAUDSTER AND CAYMAN GANGSTER RYAN BATEMAN RUNS AMUCK IN FLORIDA

Ryan Bateman

The Canadian securities dealer & fraudster Ryan Bateman, wanted in the Cayman Islands, for failing to appear at his trial, on charges of brutally beating his wife*, and named as a major player in the Cayman Gang of Four** $450m theft, is up to his old tricks again, and this time in South Florida. Bateman is living in Southwest Ranches, near Fort Lauderdale, Florida.

In September 15, 2016, Bateman formed a shell corporation, under Florida law, called Santa Ana Canyon Development Corporation, which is the exact same name as a California company, formed back in 1987, and whose principal officer is Bateman associate, Shane Manning. Earlier this year, a  company Bateman had a controlling interest in, EYGY, was suspended by regulators, after allegations were made of price manipulation. What is Bateman planning with Santa Ana ?

Financial criminals often form corporations, with the same name, in multiple jurisdictions, which affords them the ability to quietly transfer funds out of a country, without alerting victims, tax authorities, or law enforcement agencies, and to hide criminal proceeds from prying eyes seeking to recover them, through levy, or attachment and garnishment.

For example, Bateman formed B & C Capital, Ltd., in the Cayman Islands, and the same name in the UK, and in the Bahamas. he also formed  B & C Capital, Inc., in the Republic of Panama. Most bankers do not have such attention to detail, that they would notice the difference, in an international wire transfer request; some bankers even ignore inconsistencies in the suffix ( Ltd., Corp., Inc., etc.) when handling funds. This is how money launderers exploit busy bankers; the devil is in the details.

Bateman has been playing this deceptive game for years, using BVI, Cayman, Panama, UK, and other jurisdictions, to facilitate his fraud schemes, move dirty money for clients, and hide laundered criminal profits from his victims. Where will he strike next ? We cannot say, but we will be watching.
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* According to Cayman sources, he also committed sexual battery, but he was not charged
   with that crime.
** The Cayman Gang of Four are Derek Buntain, the cashiered former president of Dundee Merchant Bank, also a Canadian, Sharon Lexa Lamb, the former Senior Vice President of the bank, also fired, Ryan Bateman, Fernando Mendes, and William Tynkaluk, the Director of Leon Frazer & Associates, Inc., of Ontario, Canada. Lamb and Buntain are in hiding; they are not in the Cayman islands.

Lamb, Bateman, Buntain

      

FINRA FINES CREDIT SUISSE SECURITIES $16.5m FOR MAJOR AML DEFICIENCIES

The Financial Industry Regulatory Authority, FINRA has imposed a fine of $16.5m, and required implementation of a number of policies and procedures, upon Credit Suisse Securities (USA) LLC (a subsidiary of Credit Suisse Group AG), for systemic deficiencies in its anti-money laundering program.

The agency found:
(1) The company's registered representatives, who were responsible for identifying suspicious trading, and high-risk activity, did not always investigate such matters, when they occurred.
(2) The company's automatic surveillance system, which was supposed to monitor suspicious money transactions, was flawed;  data feeds were missing, and the system had not been properly implemented.

Readers who wish to review the complete text of the eleven page Letter of Acceptance, Waiver and Consent  may access it here.

BOGUS US EMBASSY IN GHANA ISSUED WORK VISAS FOR YEARS

Some of the counterfeit documents seized by law enforcement.

A Turkish organized crime syndicate, working with local Ghanian talent, operated a completely bogus "American Embassy" in Accra, Ghana, for several years, issuing legitimate, but stolen, US work visas to nationals from Ghana, the Ivory Coast and Togo, together with additional counterfeit forms of identification. including Ghanian passports, and visas for the Schengen Zone. The criminals bribed local law enforcement officers, to ignore their scam; they may have been open for as long as ten years.

The bogus visas allow individuals to enter, and remain, in the United States, irrespective of their criminal records, terrorist leanings, or other characteristics that render them unsuitable, under US immigration laws. Compliance officers at US banks, whose clientele might include foreign nationals from those three West African nations, would be well advised to initiate enhanced due diligence upon all such customers whose background indicates they could be holding bogus visas, and possibly passports.

APPEALS COURT CONFIRMS DEATH SENTENCE FOR REZA ZARRAB'S PARTNER

Iran's Supreme Court has affirmed the conviction, and death sentence, of the Iranian billionaire, Babek Zanjani, the former partner of Reza Zarrab, the gold trader who has been indicted, in US District Court, on major Iran sanctions violations charges. Zanjani allegedly diverted at least $3bn, in funds that Iran claims, to his own use, and is reportedly worth over $13bn, at least some of which is said to be under Zarrab's control, in accounts outside of Iran, and that may be why its government has expressed a desire that he be transferred there.

 Turkey also wants Zarrab, but claims he is being charged for purely political purposes, by the United States. Zarrab's defense team has taken the position that all his transactions, having been conducted totally outside the United States, are not a violation of US Iran sanctions laws and regulations, and they have made a number of persuasive arguments in support thereof, though the trial judge has not agreed. He will have a number of important issues on appeal, should he be convicted.

The condemned was originally charged with money laundering, and a host of other offenses, including one specific to Iran, known as Corruption on Earth. His execution, it is feared, will occur without the authorities learning which corrupt Iranian officials he favored with bribes, and other illicit payments, and for that reason some want his sentence reduced, though executions for white-collar crime do occur regularly in Iran.  We shall see whether Zarrab will someday end up facing Iran's harsh justice as well.

DOZENS OF FINANCIAL FRAUDSTERS USED MOSSACK FONSECA TO HIDE CRIMINAL PROCEEDS

Losses of $250m

Given the large number of convicted fraudsters who availed themselves of the services of Mossack Fonseca, I wonder why the partners of that Panama City law firm were never charged, as co-conspirators, in any one of a number of major frauds. Though we know that the Central Intelligence Agency, and certain other unnamed foreign intelligence services, bought companies from Mossack, as well as using their "banking services," meaning ability to open anonymous accounts at dodgy Panama banks, were law enforcement agencies also using the firm, and is that why the firm was not touched ?

For years, this blog followed the hedge fund Ponzi scheme scandal perpetrated by Francisco Illarramendi, who stole hundreds of millions from PDVSA retirement funds, and who is swerving thirteen years for his crimes, but the fact that he used Mossack to form shell companies, to hide funds, should have resulted in the law firm being charged for its involvement, but that did not happen. Why was Mossack Fonseca only focused upon, when the ICIJ outed it in a public forum, the global media ?

Is some American or European prosecutor going to insert the firm's partners in a pending criminal case, for their role in a financial crime, or is there something there beneath the waterline, so to speak, preventing justice from being served ? 

LEON FRAZER DIRECTOR WILLIAM TYNKALUK TO BE EXAMINED THIS WEEK IN CAYMAN GANG OF FOUR LITIGATION

Attorneys for the plaintiff, Lawrence Heath, will examine Leon Frazer & Associates, Inc. Director William "Bill" Tyunkaluk, on December 8th, inToronto. Tynkaluk, who was Heath's personal wealth adviser at Leon Frazer, was charged with managing and preserving the plaintiff's $13m account at LF. Those funds, and securities, disappeared while Tynkaluk, as officer of Leon Frazer & Associates, had a fiduciary responsibility to manage & protect them.

NEW YORK BLACKLISTS EUROPEAN BANKS AND ENTITIES THAT SUPPORT BDS

Andrew Coumo, the Governor of the State of New York, has ordered that certain specified European financial institutions, and corporate entities, be hereafter off limits, for any business purpose, to all state agencies, bureaus and offices. the reason for this blacklisting is the determination that these  sanctioned entities are participating in a BDS program, which involves boycotting goods and services from Israel, divesting themselves of any investments in Israel, and supporting anti-Israel sanctions targeting activities.

The institutions and companies named are:

(1) ASN Bank NV
(2) Betsah SA
(3) Bersah Invest SA
(4) Cactus SA
(5) The Co-operative Group
(6) Danske Bank
(7) FreedomCall UK
(8) Guloguz Dis Deposu Ticaret ve Pazarlams Ltd.
(9) KLP Kapitalfortvaltning
(10) Kommunal Landspensjonskasse (KLP)
(11) Royal Haskoning DHV
(12) Triodos Bank
(13) Vitens NV

Please note that some of these entities are also subject to similar state sanctions, in Florida, and other states. Whether you choose to elevate risk levels involving the financial institutions named above is your decision, but given that Hamas is deeply involved in global BDS anti-Israel operations, it is prudent to consider doing so, for you do not want to later learn, too late, that your bank is under investigation for providing material support to a designated terrorist organization.

Readers who wish to confirm the names of the financial entities and companies may do so by accessing the State of New York Office of General Services webpage here.

REZA ZARRAB TRIAL MOVED FROM JANUARY TO OCTOBER

The trial judge in the Iran sanctions violation case, against the Iranian-Turkish gold trader, Reza Zarrab, his brother, and others, has changed the January 23rd trial date; the case will now be heard on October 17, 2017. The new trial date was granted at a hearing on other matters, on November 30, after the defense represented that it would not be adequately prepared for a January trial, in light of a recently-filed Superseding Indictment, which added additional charges against their client.

The new indictment, which added Zarrab's brother, Mohammad, to the case, also alleges that both brothers were deeply involved with the Iranian carrier , Mahan Air, an OFAC-sanctioned entity that transports troops and military equipment, for both the sanctioned Iranian Revolutionary Guard Corps (IRGC), and the sanctioned Lebanese Shi'ite terrorist organization, Hezbollah.

It is also, when considering whether the rescheduling of the trial date was necessary, important to note that the defense has three major pretrial motions pending; two suppression motions, regarding discovery issues, and a Conflict of Interest motion, filed against the defense law firm of Kirkland & Ellis. All pretrial matters must be resolved in advance of trial, and appeals of decisions on them, including potential interlocutory appeals, could derail the trial at the last moment.

The conflict motion, which Kirkland & Ellis sought to resolve, by filing consents, from firm clients, Bank of America, and Deutsche Bank, has now gotten more complex, after the Government disclosed that additional banks clients of K & L have suffered damages, and could testify at trial. Those clients are:

(1) JP Morgan Chase Bank.
(2) Citibank.
(3) HSBC Bank USA.
(4) UBS.
(5) Wells Fargo Bank.

The Court exempted the period from January 23 to October 16 from Speedy Trial computation. This means that the defense cannot move to dismiss the case, for failure to bring the matter to trial within 70 days of the filing of the Superseding indictment, pursuant to the Speedy Trial Act.

The pending motions are all scheduled for hearings during the month of December, but the issues presented are complex, and they may not be resolved at that time.

IS CHILEAN CIVIL SUIT, FILED BY A PALESTINIAN, A CAUSE FOR CONCERN ?

A suit has been filed, by an Arab Chilean of Palestinian extraction, against three present and former justices of the Supreme Court of Israel, alleging war crimes and crimes against humanity. The claim is based upon the fact that the justices approved the construction of a separation barrier, a wall, between Israel and the territories of Judea & Samaria.

While the legal basis for the suit is clearly questionable at best, and most likely barred by law, the fact that it was filed at all is a cause for concern, on the part of compliance officers. Chile is home to more Palestinians, and their descendants, than any country outside the Middle East, and they claim to wield substantial political power in Chile. In recent years, they have become more vocal and militant, in their opposition to Israel.

Many Palestinians do not support the Palestinian Authority, and Fatah, the reigning political party; they support Hamas, which is designated SDGT by OFAC. Hamas' charter calls for the destruction of the State of Israel, by military means, for the occupation of all its sovereign territory, and the removal of its Jewish citizens.

 If Arab Chileans of Palestinian descent start actively supporting Hamas, in addition to the financial assistance they already send to it,  they will be guilty of providing material support to a terrorist organization. If they employ US financial institutions for that purpose, any banks that fail to interdict transactions involving the purchase of goods or services, for Hamas, could be subject to serious fines & civil penalties, or worse, indictment in Federal Court

 Companies in the United States and Chile enjoy a healthy trading relationship, and Chile is regarded, compliance officers in the US & Canada, as low risk, for Country Risk and AML/CFT purposes. Should  Chileans of Palestinian descent initiate the purchase of dual purpose goods, or engage in other material support of Hamas, then Country Risk must be elevated accordingly, and profiling of Chileans with Arab surnames, to rule out terrorist supporters, could become standard operating practice.

Given the US position on Hamas, and the threat of sanctions for failure to act as a gatekeeper, on a real-time basis, compliance officers should become alert to any increase in anti-Israel activity originating in Chile, and to take steps to identify possible high-risk Chileans, who pose a greater risk that they will engage with Hamas, or are already doing do.

Examine these potential red flags:

(1) Was the individual born, according to his passport, in the Middle East ?
(2) Did he change his name ?
(3) Is his dress, and that of his wife or companion, consistent with that of a typical Latin American ?
(4) Is he fluent in Spanish, and does he use another language, when conversing with family members ?
(5) Is he engaged in international trade ?
(6) Does he have traditional Latin American physical features ?
(7) Does he show multiple trips to the Middle East in his passport ?

DOES YOUR NEW YORK BANK HAVE HAMAS CLIENTS ?

Compliance officers at New York City-area banks would do well to examine their client lists, for the Palestinian Return Centre PRC, a UK NGO that has had consultative status at the United Nations since 2015, has at least three known Hamas officials as directors. Banks that cater to United Nations members should be especially concerned, because the NGO has UN identification documents, due to its status there, and new accounts staff at such banks may consider them to be a low-risk, even quasi-diplomatic entity. Nothing could be further from the truth.

Hamas is a specially-designated global terrorist organization, under OFAC regulations, and its members are banned from any type of account relationship with any US entity or person. For the names of the specific individuals, and their sordid records as terrorists, see the white paper link at the end of this article*. Israel banned the Palestinian Return Centre, as a Hamas front organization, in 2010.

The entire premise of the PRC is flawed; Arabs who lived in the British Mandate of Palestine do not have any legally recognized "right to return" to the homes that they abandoned in 1948, on the advice of their leadership, which was allied with the six Arab countries who unsuccessfully attempted to wipe the newly-formed nation of Israel off the map, through a military invasion that failed.

The Balfour Declaration of 1917, which recognized the ancient right of the Jewish People to their ancestral home, reserved the rights of other residents, but did not give them national rights in what is now Israel, and in 1920, the UK spun off 77% of the Mandate for the Arab nation of Jordan. Palestinian efforts to force the UK to "apologize" for Balfour are historically inaccurate, and frankly, insulting.

To return to the present, NYC bankers are invited to review the linked document, to insure that they are neither  the PRC, nor its Hamas leaders.
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*The Palestinian Return Centre

JEFFREY WEBB GETS SIX MONTH DELAY IN SENTENCE IN HIS MONEY LAUNDERING AND CORRUPTION CASE

The legendary Cayman football fIgure, and ex-VP at FIFA, Jeffrey Webb has obtained a six-month delay in his sentencing in his American Federal criminal case. Should Caymanians be worried ?

Webb, whose May 2017 sentencing will be two years after he pled guilty in the massive FIFA corruption scandal, is most likely rendering Substantial Assistance to US law enforcement, which explains the delay, and his cooperation is not completed

Webb is probably either:

(1) Going to testify against former FIFA associates, at their trials, or
(2) Making new cases against others, which may not be FIFA-related.

Given that Webb, now under house arrest in a luxurious home he built in the US, with the proceeds of corruption, is also wanted in a Cayman Islands case, he may have evidence against his fellow Caymanians, which could result in their indictment, thus qualifying him for a probable shorter sentence in May. Most media don't like to discuss such matters, but they are part of the reality, when an individual is looking at 20 years on a money laundering charge in US District Court. Who will be next in the dock and in which country, the US or the Cayman Islands ?