RAISE COUNTRY RISK ON LEBANON, AFTER NEW PRESIDENT BEATS THE WAR DRUMS

Lebanon, after an extended delay, due to an inability of its major political parties to come to an agreement, has now elected a new president. He is retired General Michel Aoun, who is the first pro-Hezbollah president, and who has immediately began making bellicose statement, which could bring the country, once again, to the brink of war.

Aoun, upon taking office, and in his first public speech, boasted that his country would recover what he referred to as "Occupied Lebanon," the Shebaa Farms region of Syria, which the United Nations has determined, repeatedly, after studying historical maps of the area, is not Lebanese territory, but is located within the Golan Heights, on the Syrian side of the established frontier, and annexed by Israel.

Hezbollah has continued to make this spurious claim, over Shebaa farms, since Israel withdrew from Lebanon, in 1980. There is no historical or legal basis for this claim, but Hezbollah has sought to inflame Lebanese sentiment, against Israel, since that withdrawal, by advancing this bogus claim.

The fear, among financial observers, is that Hezbollah will be encouraged to initiate a Third Lebanon War, and rain missiles down upon Israel, at which point the Israeli Air Force will, as promised, attack Lebanese infrastructure, country-wide, including the downtown Beirut financial center. This will disrupt financial transactions for months, if not years, after the end of hostilities, plunging Lebanon into a major depression.

Therefore, the last thing we want to see in Lebanon this week, is saber-rattling, by the country's new president, raising Country Risk levels.   

ALLEN STANFORD FILES HIS REPLY IN US SUPREME COURT CERT PETITION

If you have been following R Allen Stanford's last desperate attempt to reverse his conviction and sentence, for running a massive billion dollar Ponzi scheme at Stanford International Bank, he has now replied to the response of the Solicitor General, on behalf of the United States, in his petition for a Writ of Certiorari to the US Supreme Court.

It is now up to the Justices to conference, and decide whether to accept his petition and grant Certiorari, or to deny cert.
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*Robert Allen Stanford vs. United States, Case No.: 15-490.

RATINGS FIRMS SLAM PANAMA BANKS HARD

The commercial ratings companies, Standard & Poors Global Rating, and Fitch Ratings have published reports critical of the Panamanian banking industry, and three specific financial institutions in particular. Coming on the heels of the twin scandals, the Panama Papers, and the Waked cases, they depict a banking structure that readers of those reports may choose to conclude are a warning to stay out of Panama, due to valid risk issues, as well as OECD and FATF positions on Panama.

The ratings agencies appear to be primarily focused upon the vulnerability of the banks to money laundering, and the facts on the ground support their findings. Money laundering charges, against either Panamanian banks, or individuals bankers, are as rare as hen's teeth, and many years pass, without a single new investigation, by the Superintendent of Banking, let along indictment and conviction. Banks can freely move illicit wealth, without fear of money laundering charges.

 The previous Superintendent, Alberto Diamond R, publicly admitted that $17bn in Venezuelan "flight capital" had ended up in Panama City banks, and he even bragged about it, but since he left office, and left the capital, and no investigation of his activities has even been initiated. That should tell you something about the level of corruption in the Panamanian banking industry.

Alberto Diamond R

S & P has given three Panama banks a Negative rating:

(1) Multibank

(2) Global Bank Corporation.

                                                                                                                                       


(3) Latin American Foreign Trade Bank a/k/a Bladex.

While we have been warning our readers for some time about the money laundering risks presented by Panamanian banks, these new ratings findings, when taken with FATF and OECD statements, should settle the issue that Panama's financial industry is, and remains, high risk. 

WHO IS NAMED IN THE RESTRICTED DISCOVERY IN THE ZARRAB CASE ?

The length to which the United States is going, to protect public disclosure of the discovery furnished to the defense in United States vs. Zarrab, the Iran sanctions violations case pending in the Southern District of New York, indicates that the names in those bank documents could expose not only Confidential Informants, and possible undercover law enforcement agent, but individuals whom the Department of Justice does not want to be alerted to the fact that their identities are known. Whether any of these targets are US nationals is not known.

Here are some of the questions:

(1) We do know that Reza Zarrab, who with his reputed partner, the Iranian billionaire Babak Zanjani, (now facing a death sentenced in Iran) allegedly has cached $5bn, in unspecified locations. While Iran has demonstrated an interest in recovering this wealth, is the United States also in the game for this cash ? Do the bank accounts in the discovery confirm the location of those billions ?

(2) Zarrab is said to have melted down some of the gold he acquired, and shipped it to European buyers, one of who is reportedly based in Stuttgart. Are the executives of this company the confidential Informants ? The identity of any additional European bulk buyers of gold is a mystery to date as is the possibility that some parties were granted immunity.

(3) An international seller of prepaid cards, located in the United Kingdom, and who is affiliated with the gold buyer, has also been linked to the operation. has he received immunity from prosecution ?

(4) There are reportedly American purchasers of gold, which originated with Zarrab; what was their role, and does it impact national security ?

The story is further complicated by the abrupt change, on the part of the US Attorney's office; initially, it said the Protective Order was needed to protect ongoing investigations, and for reasons of safety. However, when defense counsel asked for a partial lifting of the Protective Order, for trial preparation purposes, the Government then asserted national security as its grounds, without specifying further details.

The fact that there is a blanket prohibition upon transmission, outside the United States, of any of the discovery, speaks volumes about the probability of  additional indictments, but thus far, there are so many questions, and no answers.

RESEARCHERS SHOULD IGNORE UNITED NATIONS PUBLICATIONS AS A RELIABLE SOURCE OF FACTS

The recent pronouncement, by an agency of the United Nations, UNESCO, that the Temple Mount, in Jerusalem, Israel, has no historical connection to its Christian and Jewish roots, demonstrates that politics has now replaced fact at the United Nations, totally ignoring four thousand years of history. The Temple Mount is repeatedly mentioned in both the Old Testament and the New Testament. What the UNESCO members made was a political statement, in support of specific interests, and the truth be damned.

It is important to remember that most of the members of the United Nations are not democracies, and their actions are often at odds with both the truth, and the rule of law. Don't look to UN publications for accurate facts, for they tend to distort history, to serve the political ends of some, which is is a hallmark of dictatorships, of which the world has far too many; they are all members of the United Nations.

If some of the members of the UN said that the world was flat, they would find others willing to agree to that statement, provided that they would reap some political gain by doing so. If you value truth and accuracy, you had best ignore anything coming from the United Nations, when looking for answers. 

COMPLIANCE OFFICERS MUST HAVE CULTURAL, GEOGRAPHIC AND HISTORICAL LITERACY TO FUNCTION

Here's a true story that you simply could not have made up. A consumer in Birmingham, in the United Kingdom, wrote to Apple, to find out why his £799 I-Phone refund had not been sent. His name is Sharakat Hussain.

Apple's response: he was on the Denied Parties (sanctions) List, and no refund would be forthcoming. Upon further inquiry, he was told that he was asked to supply proof that he WAS NOT SADDAM HUSSEIN.

Any compliance officer who has a rudimentary education knows:

(1) Saddam Hussein and Sharakat Hussein are not even close, regarding false positives.
(2) The former dictator of Iraq is deceased, having been hanged, for War Crimes, among dozens of others, in 2006.

Apple's compliance department, in the UK, must be staffed with imbeciles; these are two fatal compliance errors, either of which demonstrates a total and complete lack of general knowledge, and of familiarity with commonly accepted compliance techniques. That is why I always suggest that your compliance staff (A) have an education, and (B) know how to think outside the box, when vetting customers or clients.

One also wonders what the supervisor of the bright light who sent the email was doing, when he subordinate reported this issue. Apple: please wake up.

ZARRAB DEFENSE ATTORNEY REQUESTS PERMISSION TO FILE ADDITIONAL MOTION TO SUPPRESS

Viet Dinh

Viet Dinh, who was an Associate Attorney General in the Bush Administration*, and is one of the principal defense lawyers for the accused Iranian sanctions violator, the gold trader Reza Zarrab, has written to the Court, requesting permission to file a motion to suppress evidence against his client. He is also asking that a briefing schedule be set up on the motion. The reason for the request is related to the fact that it may discuss documents covered by the Protective Order, and may need to be redacted before filing.

The first issue is whether the Magistrate Judge, who issued the warrant which the Government used to obtain the defendant's emails, would have found Probable Cause, has the affidavit filed in support of the warrant disclosed that the veracity of the unsigned document relied upon was in dispute, and that it had been discredited. The validity of a Turkish "police report," posted anonymously to the Internet, which has been questioned in several quarters, as being politically motivated, should have been included, according to the defense letter.

The second issue is whether a recent decision, issued by the Second Circuit Court of Appeals, which hears SDNY cases, bars the recovery of electronic information stored overseas, even if the the warrant is based upon a US-based Internet Service Provider (ISP). The case styled Matter of Warrant in Search of Certain E-Mail Account Controlled & Maintained by Microsoft Corp., 829 F.3d 197 (2nd Cir. 2016) holds that the territorial reach of the Court does not exceed the Federal Judicial District, according to the defense interpretation of the decision.  

So that no discovery under the Court's present Protective Order will be inadvertently disclosed to the public, attorney Dinh stated that he sent a copy of his proposed motion directly to Chamber, for prior judicial review, together with the letter. The letter was filed on Friday, October 28, 2016, and the issues it presents should certainly be addressed by the Court.
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* Viet Dinh, while in government service, had a major role in the drafting of the USA PATRIOT Act.

GTOs ARE HERE TO STAY, WILL BECOME PERMANENT, AND MORE EFFECTIVE

If you are not in the real estate business, you may think that a GTO is a 1960s-era muscle car. The original FinCEN Geographic Targeting Order required title insurance companies to vet and report all-cash transactions ($1m in Miiami-Dade County, $3m in New York City-Manhatten); it has since been expanded to include other areas of the United States, where real estate often fetches unusually high sales prices. The identity of the beneficial owner must be verified by the title company before the transaction can close.

For those who thought this was a temporary measure, which would expire, think again. Here in Miami, we are hearing that the GTOs will not only be extended, they will become permanent regulations. Sales of big-ticket real estate items have declined a bit in Miami; was that due to the new reporting requirement ?

Not only that but, the story is it will be expanded. Currently, cash, cashier's checks, money orders and endorsed travelers' checks are covered. It is anticipated that it will shortly include wire transfers (which many buyers have resorted to, to evade the GTO),  and payment by personal & business checks.

The GTO is here to stay, which means that dodgy foreign buyers will either purchase in a non-GTO city, or be forced to qualify for a mortgage, to avoid the disclosure requirements, and you know how commercial banks are about Know Your Customer, when they lend large sums of money, against pricey, (and perhaps overpriced) real estate, where the buyer will not be residing on the premises. The answer is, they won't.

I tip my hat to FinCEN, for a program that actually works.

CRIMINAL CASE AGAINST PANAMANIAN LAWYER DETAILS HOW BEARER SHARE FRAUD OCCURS

Ismael Gerli Champsaur

As a follow-up to our recent article, covering the fraud indictment, brought against Panama City attorney Ismael Gerli Champsaur, we are going to the mechanics of how bearer share fraud was accomplished by Gerli. This is the single most important reason that no country should still have a law permitting bearer shares still on the books.

The specific charge against Gerli* is Falsifying Public Documents. He unilaterally, and without client knowledge and consent, changed the composition of the board of directors, of corporations,and foundations, that he himself had set up for his client, which allowed him to appropriate the entities, and the real properties such entities owned. The client was Vladimir Kokorev, whose case has come to the attention of human rights groups, due to his illegal treatment, by the Government of Spain, in what has been regarded as a purely political case.

Gerli subsequently changed the names of the corporation. Tellingly, he named the new company after the Panamanian prison where his client was detained, after Gerli gave false testimony against the client, leading to his detention, on a material witness warrant from Spain.Thereafter, his clients were extradited to the Canary Islands,  a Spanish territory, where they unlawfully remain, more than a year later, not having ben charged with a crime, nor having to testify as material witnesses. All of this was the result of Gerli giving perjured testimony, in seeking a six figure fee, due to his lawful termination by Kokorev, as attorney.

When shares of corporate stock are in bearer form, and not registered, in a stock transfer ledger, whosoever hold the shares owns the stock, and therefore, all the corporate assets. Many countries with a serious level of corruption allow bad actors to easily obtain a fraudulent notarization of the client's signature, and illegal transfer of shares & all the assets. A bill of sale, which can be easily forged, and notarized, completes the fraud.

 Rule of thumb: DO NOT allow clients or customers to use corporations formed in the Republic of Panama, or the British Virgin Islands, or any other dodgy jurisdiction where bearer shares are still legal. To allow such companies, for any purpose, means to assume an extraordinary amount of risk.
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*Ismael Gerli's most notorious client, the American expat, Gary James Lundgren, whose massive bearer share frauds, and other sins, we have covered extensively on this blog, lost his US securities licenses, for life, after a FINRA investigation. While this blog was not named in the opinion, the references to our articles about Lundgren's criminal activities clearly show that they contributed to the investigation, and final outcome. We continue to expose securities crimes, and to make that news available to regulatory agencies, in the United States and Canada, so that justice may be served.

Gary James Lundgren

FORMER MOSSACK FONSECA SENIOR PARTNER AND DIRECTOR NOW OPERATING IN SWITZERLAND

Offshore attorneys, Mossack, Zollinger & Fonseca.

This is a rendering of the senior partners, who are also the directors, of Mossack and Fonseca; while you certainly can recognize Jurgen Rolf Dieter Mossack, and Eduardo Fonseca Mora, the name partners of the law firm now constantly in the news, due to the revelations of the Panama Papers, you may not know the third partner pictured. He is Christophe Zollinger, formerly of Panama City, but lately residing in his native Switzerland.

I bring this up, because Herr Zollinger was not only a partner at Mossack, he lived in the Republic  long enough to acquire Panamanian citizenship, and a diplomatic passport. He was also an adviser to Panama's fugitive ex-president, Ricardo Martinelli, along with his partner, Ramón Fonseca. Martinelli, and several members of his cabinet, are alleged to have placed millions of dollars, in corrupt income, in Swiss banks, and what better person to assist the members of the "Martinelli Mafia," than a Swiss lawyer with more than a decade of experience at the Mossack firm. Furthermore, he dealt with a lot of "colorful" clients at the firm, who he may still be representing.

Zollinger; Panama Bobsled Team. Cool Runnings.

In any event, should you, or your bank clients, encounter Mr. Zollinger, govern yourselves accordingly. Remember, we live in a risk-based world.

MAINTAIN ELEVATED COUNTRY RISK ON ANTIGUA UNTIL IT SURRENDERS ITS CORRUPT BANKING REGULATOR

             

Leroy King, Antigua's former banking regulator, wanted in the United States, in connection with his central role in the Stanford International Bank scandal, was ordered, by a local court, to be extradited in 2010. He is still a free man in Antigua, and until he is extradited, to face American justice, I cannot consider any assessment of Antigua for Country Risk, to be anything less than a high rating.

Antiguan officials, when pressed by foreign media, claim that "the case is in the courts." Are they kidding ? Six years to process an extradition means that King's case has been intentionally delayed, passed from judge to judge, all of whom pass it further along, or refuse to rule. It is not only a disgrace, it demonstrates that no politician in Antigua, elected or appointed, past or present, wants to ever let Leroy King testify that the former Prime Minister, and several senior leaders, were in bed with Allen Stanford, and reportedly received illicit payments from him.

Send Leroy King to Texas, so that justice can be served, please. Otherwise, be prepared for still more de-risking, which is necessary and appropriate, given the circumstances.

WHAT ABOUT OTHER CLIENT COMPLAINTS AGAINST LEON FRAZER LODGED WITH THE ONTARIO SECURITIES COMMISSION ?

As the Ontario Superior Court case* against Leon Frazer & Associates, Inc., begins to enter the discovery phase, we can expect to see subpoenas issued, to the Ontario Securities Commission (OSC), which regulates broker-dealers in Canada, seeking information on:

(1) Complaints made, by other Leon Frazer clients, regarding the firm's failure to comply with reasonable requests for information, concerning their present or past accounts, or for any other reason. Has there been a course or dealings, or course of conduct by LF, in routinely stonewalling clients' documents requests ? Has it refused to provide documents, notwithstanding its fiduciary obligations ?

(2) Civil fines, and other penalties, levied by the OSC, against Leon Frazer, its officers, directors, staff members, employees, or agents. These actions are typically not released to the public, and they are relevant to the pending civil action against the firm.

(3) Specific fines and penalties levied against William Tynkaluk, the plaintiff's former personal wealth adviser at Leon Frazer. We do know that he was reportedly interviewed, as much as four times, by the OSC, regarding insider trading allegations. Was he fined ? One former Leon Frazer officer was reportedly fined $500,000 by the OSC. Was Tynkaluk disciplined ?

(4) All other fines and penalties, levied against Leon Frazer & Associates, Inc. by the OSC, as they may be relevant to the plaintiff's case.

While the Ontario Securities Commission, in the past, has refrained from releasing details of its actions against individuals and corporate entities in the securities industry, this information, obtained through the exercise of subpoena powers, will aid the plaintiff in its search for relevant evidence, or information that will lead to relevant evidence. Any prior OSC actions should be brought out into the light, for the benefit of the investing public.
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*Lawrence Heath et al vs. Leon Frazer & Associates, Inc., Ontario Superior Court. 

FUGITIVE IN STANFORD BANK CASE ILLUSTRATES WHY BELIZE IS HIGH RISK FOR ALL COMPLIANCE PURPOSES

Recognize this gentlemen ? He is David Nanes Schnitzer, who is accused of running Allen Stanford's massive Ponzi scheme in Mexico, where he is a wanted man. Nanes, who was recently hit with a $13.9m judgment, in the SEC vs. Stanford International Bank civil case, was detained in Belize, several months ago. He had all the identification, under an alias, necessary to survive, including a Belizean passport, and a Bank of Belize debit card.

He is rumored to have lived quietly in a town in Belize for several years, and to have over $10m in assets in the country. The judge actually let him bond out, when there were extradition warrants existing against him. Of course he fled the country, and Mexican authorities were mystified that a
court in a neighboring country, friendly to Mexico, would release a major fugitive.

Here are the "bogus" documents he had in his possession, when he was arrested, but are they actually valid identity documents ? Yes, they are. Remember this, the next time you hear some bank in Belize complain bitterly about de-risking, and the closure of its correspondent accounts in the United States. the level of corruption necessary to obtain all these documents means that clients of banks in Belize cannot be trusted, and the US banks that terminated their correspondent relationships with banks in Belize took the appropriate risk-based action.

LEON FRAZER IMPROPERLY PREVENTED EXAMINATION FOR DISCOVERY OF RETIRED DIRECTOR

Maybe I am missing something here, but it certainly appears that the refusal of counsel for Leon Frazer & Associates, Inc., to permit William Tynkaluk to be examined under oath, in the suit against the company, where there is a demand for access to account records of the plaintiff, Lawrence Heath, et al vs. Leon Frazer & Associates, Inc. is without a basis in law. While they are obviously following the instructions of their client,  I have a problem with their actions. Allow me to explain.

The undisputed facts are these:

(1) Tynkaluk was noticed to testify twice in the case, but Leon Frazer's counsel prevented him from appearing. indeed, after he was physically served, he was placed in a resort, making him unavailable.

(2) Tynkaluk was noticed to appear to testify, as an individual, and NOT in a representative capacity. Leon Frazer has no right to interfere with his testimony. he was not summoned as a corporate officer with the most personal knowledge of the plaintiff's account.

(3) According to Leon Frazer, Tynkaluk retired as a director several months ago. Therefore, he has no standing as an officer, director, staff member or employee, and Leon Frazer cannot prevent him from testifying.

(4) Tynkaluk was the personal financial adviser to the plaintiff, and the information sought by the plaintiff regards his own personal conduct towards the plaintiff.

This is just one aspect of conduct that can only be described as a bad faith defense of a civil action.

GARY LUNDGREN TRIES TO STEAL THE TRUMP OCEAN CLUB INTERNATIONAL HOTEL

Alaska's most prolific expat fraudster, Gary James Lundgren, whose long career as a white-collar criminal has left a line of angry victims*, that could probably reach across the United States, is not done yet. His latest scam: seeking to obtain sufficient funds, from the wealthy condominium owners at the Trump Ocean Club, in the Republic of Panama, to be able to acquire the distressed hotel property on the site, without any financial expenditure on his own behalf.

Lundgren, having successfully removed Donald Trump's management team from the condominium tower, replacing it with one owned by Gary's wife, Griselda Perez, and being responsible for Roger Khafif's departure from Newland International Properties Corp, as CEO, he now is looking to take over the hotel itself.  Remember, Donald Trump has a pending action against Lundgren, for $75m, filed with the International Chamber of Commerce, in Europe, alleging that his company's removal was an illegal act.

Gary Lundgren

Some old Panama hands suspect that his ultimate aim is to use the hotel, and later the in-house casino, to launder drug profits for his longtime Colombian narco-clients, a task that may become more difficult within Panama's notoriously nearsighted banks, due to the fallout from the Panama Papers. Lundgren now has a small army of bodyguards protecting him, largely due his inability to pay off on his high yield investments, which are little more than a Ponzi scheme, since Panama's attractiveness for "flight capital" has waned of late.

He obviously needs a new source of cash, to pay his "investors," hence his move against the hotel. His lifetime ban on securities trading, due to the FINRA ruling, has hampered his ability to trade securities for US clients, though he still is engaged in selling investments to them, which constitute securities under Federal securities laws, but he needs a new cash cow badly, according to eyewitnesses in Panama.

Will he be able to convince some of the wealthy "colorful" Russian residents of the condominium tower to fund his hotel acquisition ? Stay tuned, as we will be watching, and reporting on the story.
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* Former Vice Presidential candidate Sarah Palin, when she was mayor of a small town in Alaska, is included in that list.

TYNKALUK'S BOGUS TAX ADVICE DROVE LEON FRAZER CLIENTS TO MOVE ASSETS OFFSHORE

The most serious criminal act, committed by Leon Frazer Director, William "Bill" Tynkaluk, was his delivery of bogus tax advice, to LF clients who were non-residents of Canada. He advised them that Revenue Canada would soon be implementing regulations, wherein they would be taxed upon all their accounts held in Canada. Existing Canadian regulations exempted non-resident Canadians from paying  tax upon their income.

This "advice" was, of course, completely untrue, and a misstatement of material fact; there was no such tax regulation or law, planned, proposed, or set to become law, but the net effect was that a large number of expat clients, estimated in excess of sixty, all agreed to follow Tynkaluk's recommendation, and to transfer their cash deposits to Dundee Merchant Bank, a brass plate bank, located in the Cayman Islands, and owned by Dundee Corporation. Thereafter, the principal officers of the bank, who were known to Tynkaluk, diverted millions of dollars in client money, for their own use, in a scandal now known as the Cayman Gang of Four.

inasmuch as the Leon Frazer clients beleived that Tynkaluk, the most senior Director at LF, and their personal wealth adviser, was acting as an officer of Leon Frazer, when he made those statements, this fraudulent misrepresentation of the tax law can be imputed to the company, under the well-established doctrine of Respondeat Superior, which binds a corporation for the wrongful acts of its staff and employees, when performed within the scope of their employment. 

Readers who were curious as to why Leon Frazer has gone to such extreme lengths to prevent William Tynkaluk from giving sworn testimony, in the civil case against the company, now have some idea about the company's well-founded fear that his statements could spell the end of the 70-year old securities firm. We have previously covered some of the other grounds, including but not limited to, solicitation to engage in Insider Trading, soliciting Leon Frazer clients to purchase non-existent high yield investments, and solicitation of investment capital suspected to be the proceeds of crime. We anxiously await Mr. Tynkaluk's appearance, and testimony.

PANAMANIAN LAWYER LINKED TO GARY LUNDGREN INDICTED FOR FORGERY

                                                   

Ismael Gerli

Ismael Gerli, the Panama City attorney who taught the American expat fraudster, Gary Lundgren*, how to deprive North American and Europeans of their assets, using bearer share corporations, has now been indicted in Panama, on charges of forgery. Gerli allegedly forged signatures of clients, to illegally acquire ownership of real estate that they owned.

In addition to the forgery indictment, Gerli also faces twelve other criminal charges in the Republic of Panama. He has been accused for giving perjured testimony in Spain, regarding a money laundering investigation, and is reportedly wanted for questioning there, as well as the Ukraine, where he allegedly was engaged in a number of white-collar crimes.

this blog has previously reported on Gerli's criminal activities, and new readers are invited to use the search feature, to access them.
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* Gary James Lundgren also has multiple criminal charges (fraud) pending against him in Panama, and FINRA, the American securities dealer regulatory agency, has barred him, for life, from the securities industry.

Gary James Lundgren

US OPPOSES RELAXATION OF PROTECTIVE ORDER RESTRICTIONS IN ZARRAB IRAN SANCTIONS VIOLATIONS CASE

The United States Attorney's Office in Manhattan has, in a letter to the Court, responded to the request of Reza Zarrab's defense counsel, for a modification of the Protective Order existing in the case, opposing any modification or removal of the restrictions, governing Discovery materials, already produced by the Government. The defense team wants to produce portions of the Discovery to fact witnesses, or third parties, in connection with its preparation of Zarrab's defense, located outside the United States.

The Government's position, in summary:

(1) The parties stipulated to the set of facts, and to the Protective Order, and such stipulations are binding in Federal criminal trials.
(2) The Court relied upon the stipulated set of facts, when it entered the Protective Order.
(3) If Zarrab has a bonafide need, he may petition the Court for authorization to disclose certain specified Discovery materials, which are prohibited by the Protective Order. However, if the individual is outside the United States, it will be impossible to enforce, as they would be outside the jurisdiction of the Court.
(4) If the Court does allow an individual, located outside the United States, to view  Discovery, the US Attorney asks that his office supervise the process, so that no copying, or photography, of the materials is made, by such individual.
(5) If the Court wishes to learn specifically how disclosure of the Discovery "potentially could jeopardize the national security, and thereby undermine the Protective Order," the Government will furnish that information, in a separate, ex parte letter.
(6) The defendant has not shown any justification for a broad modification of the Protective Order.

According to the US Attorney's letter, Zarrab's witnesses are outside the United States. They may not choose to enter the jurisdiction of the Court, where there might be a sealed criminal indictment on file, against them, resulting in their arrest. The defendant himself reportedly had no idea he was under a sealed indictment, when  he arrived in Miami, en route to Disney World, with his family.

It does not appear that an amicable settlement of the defense request for modification is likely, notwithstanding the parties' obligation to seek it. The Court, in an Endorsement of the Government letter, stated: "the parties should meet and confer forthwith, and should be able to resolve these issues between themselves. Please advise follow up your "meet and confer" meetings."

Exactly what are the "compelling national security interests" present in this case ? Leaving aside the defense complaint that the Government switched its argument, from revealing possible other targets, and increasing risk upon third parties, perhaps cooperating witnesses, or undercover law enforcement agents, the US State Department may consider Zarrab's broad role, in facilitating the conversion of gold, used to illegally purchase Iranian oil on the black market, into US Dollars and Euros, both currencies desperately needed by the Iranian Government, as directing affecting American national security, due to Iran's military threat status, as a clear and present danger to the United States.

According to reliable Iranian sources, and those who has contact with, or did business with, those sources abroad, a massive, ongoing Iranian evasion of the international oil sanctions resulted in oil sales in Turkey, and the covert operation of tankers on the high seas, shipping to customers in Latin America, and other regions, details of which have not been shared with the media, by the United States.

Those purchases were reportedly often made with gold, and the mission of Zarrab, and his partner, was to convert these precious metals into hard currencies. A company in Germany was involved in securing clients for the gold, which was shipped out of Turkey; some was melted down, into smaller quantities, for the specific needs of the German company's clientele. Another company in the UK had a tangental role. One must assume that the individuals operating those Western companies are targets of an ongoing investigation.

The transactions were generally on a cash basis, which resulted in the bulk cash that Zarrab's client, Iran, needed, to purchase dual-use goods, for its illegal WMD and ballistic missile programs. Zarrab was an indispensable part of the global Iran oil sanctions evasion pipeline, oil for gold- then sold for cash. Without his ability to sell off the gold, for currency, Iran would only have had a glut of gold, and no Greenbacks.

Therefore, if Zarrab was instrumental in funneling large amounts of bulk cash into Iranian hands, which was used to fund purchases for that country's ongoing weapons development programs, the US may consider the matter a sanctions violations case, directly involving the national security of America.


     

LEON FRAZER DIRECTOR TYNKALUK OFFERED BOGUS HIGH YIELD INVESTMENT PROGRAM, INSIDE INFORMATION ON STOCKS,

While on its surface, Lawrence Heath vs. Leon Frazer & Associates, Inc., is a civil suit to recover client information, concerning the plaintiff's accounts at the wealth management firm, and the disposition of his multi-million dollar investments, it promises to reveal details of the firm's conduct that will call into question its suitability to continue to offer investments to the public, and to manage their assets.

Leon Frazer senior Director (and Vice Chairman) William Tynkaluk, who was the personal wealth adviser to the plaintiff, and to many other investors, offered a number of investments to him, and to others who have now agreed to testify, which violated Canadian law:

(1) Insider Trading, where Tyunkaluk offering nonpublic information to his clients, regarding the sale of Leon  Frazer to Jovian. Tynkaluk recommended that the plaintiff purchase Jovian stock, prior to the release of information about the sale; he learned about the proposed purchase, by virtue of his director position.

(2) Insider Trading: Tynkaluk recommended the plaintiff, and others, that they purchase Blackberry stock. He bragged that he had a cousin working in the company, who had given him inside information of a nonpublic nature, indicating that an increase in the price of company stock would increase.

(3) High-Yield Investment Program: Tynkaluk widely offered HYIP, claiming that clients would realize extraordinary monthly returns upon their investments. Most educated financial planners know that no such investment exists, with monthly double-digit returns, and that any adviser offering it is either committing investment fraud, or operating a Ponzi scheme, both of which are crimes.

(4) Solicitation of illicit funds from clients: Tynkaluk openly asked his clients, as well as non-clients who will be witnesses, to bring in "Russian money, " without reference to either the suitability of the investors, or the Source of Funds, which is a violation of all Know your Customer requirements. He explicitly invited his clients to bring in investors with dirty money.

When taken as a whole, the above conduct should result in a term in a Canadian prison for Tynkaluk; more importantly, it should result in the revocation of all licenses held by Leon Frazer & Associates, for, when the most senior director can offer illegal, or non-existent, investments, he does so with the implied blessing and consent of the corporation, as its act and deed. When the evidence has been presented to the Court in this case, we hope that the Ontario Securities Commission, and other relevant Federal regulatory agencies, take the appropriate action, to protect the investing public

REZA ZARRAB'S ATTORNEYS ARGUE FOR EASEMENT OF PRETRIAL EVIDENTIARY RESTRICTIONS

The law firms representing the Iranian gold trader, Reza Zarrab, charged with massive Iran sanctions violations, have asked the Court to loosen the severe restrictions placed upon them, regarding the sharing of Discovery with fact witnesses or third parties. This request, which came in the form of a letter to the sitting District Judge, which appears in the court file, reveals a disturbing change in the Government's position, affecting the more than 60,000 documents it has produced.

Early on in the case, and with agreement of both sides, the Court entered a Protective Order, restricting access to the Discovery to only defense counsel, their immediate support staff, and expert witnesses. The defense was prohibited from allowing any other party to review it, and could not  disseminate it to foreign individuals or entities, or send it outside the United States, for any purpose. All recipients were to receive a copy of the Protective Order, and could not share the evidence with anyone else.

The Government's stated reason for the severe restrictions it wanted placed upon the Discovery was that it contained certain materials that, if delivered to third parties, could impede ongoing investigations, and possibly affect the safety of others. Given those stated concerns, the defense team agreed to the Protective Order.

There are generally valid reasons for these grounds. If the documents revealed additional targets of the investigation, they could be alerted to this fact, and engage in flight to avoid prosecution. Also, some documents, if made public, might identify cooperating individuals, who supplied evidence, or even undercover law enforcement officers, both of whom might have their lives at risk, under those circumstances, if their names appeared in the Discovery, or they were the obvious sole source of the information.

Subsequently, the law firms representing Zarrab, in the preparation of his defense, concluded that they needed to show some of the evidence to fact witnesses, or to individuals that they planned to interview, with the aim that they ultimately become fact witnesses for the defense. Counsel then conferred with the Assistant US Attorneys handling the case, seeking some sort of agreement on modifying the Protective order.

The Government declined to agree to such a loosening of the Protective Order, but reportedly changed the grounds for its refusal, now no longer asserting that ongoing investigations must be protected, or that there were safety considerations, but that the Order could not be modified, for the reason that there were national security interests at stake. When pressed, Government prosecutors refused to be more specific, refraining from naming the documents, or categories of documents produced, which, if disclosed, would  threaten such national security interests. At that point, defense counsel sent the letter which is the subject of this article.

While there may be classified reasons to prevent third parties, especially third parties located outside the United States, from gaining access to the Discovery, produced by the Government, a blanket national security objection, not verified by the Court, perhaps through in camera inspection, or testimony. An order declining the defense request could end up denying the defendant a fair trial, through a failure to allow counsel present an effective defense. If the fact witnesses, or prospective defense witnesses, cannot see the evidence to be admitted at trial, they may be at a disadvantage when testifying.

The letter to the Court was sent on October 19, 2016; The following day, the Court ordered the Government to respond by noon, on October 24th, which is tomorrow. Thus far, this case has presented issues of great public interest, and it continues to hold the interest of the legal community, and of the public at large. Still unresolved is the motion to suppress evidence seized when the defendant was detained, upon arrival in the United States, while on vacation.

COMMENTARY: ANTIGUA MUST GET ITS OWN HOUSE IN ORDER, TO AVOID THE CONSEQUENCES OF DERISKING

Antigua's Sir Ronald Saunders, the Ambassador to the United States, has warned that escalating derisking, which affects Antiguan financial institutions, on the part of American banks, could have serious economic consequences for the United States. In his opinion, American workers could lose their jobs, American tourists could suffer travel issues, and American products will no longer be sold in the Carribbean region, if widespread derisking takes effect.

While I certainly am sympathetic to the plight of expats, from Antigua & Barbuda, who cannot cheaply send money home to relatives, compliance officers as American banks see Antigua as a complex problem, and are, frankly, justified in closing correspondent accounts, when operating a risk-based AML/CFT compliance program.

Here are just a few of the many issues North American bankers see, when considering whether to keep corespondent relationships with banks from Antigua:

(1) Several years after the United States asked for the extradition of Antigua's banking regulator, who faces an indictment in the Stanford International Bank Ponzi scheme, the government intentionally allows the case to remain in legal limbo, and extradition will probably never happen, for the reason that the official corruption that existed during "Sir" Allan Stanford's financial domination of the country reached as high as the Prime Minister, and the ruling elite.

(2) The long running WTO dispute with the United States, which has outlawed online gambling, in the face of the gaming industry's firm foothold in Antigua, is an open wound, that fuels risk factors.

(3) Antigua's flawed economic citizenship program, which allegedly has instances of unqualified individuals receiving passports, including diplomatic passports, and reports of bribes paid to speed up processing, together with suspicious cases of knighthood being conferred quid pro quo, scare compliance officers, who fear abuses, and the potential use of purchased citizenships for criminal or terrorist funding acts.

(4) Antigua has still, 25 years later, not caught up to North American and EU levels of banking best practices, and Americans still remember when it was a tax haven, encouraging the arrival of suspicious and openly dirty money, while others assert that "flight capital" still finds a way to enter local banks.

Unless these, and other issues, can be resolved, look for increasing derisking efforts, directed as banks located in Antigua and Barbuda. Ambassador, I understand your situation; please reduce the above risks at home, so that Antiguan banks will continue to have access to the New York banking structure. 

YET ANOTHER REASON TO RAISE COUNTRY RISK ON SPAIN: ITS STAND ON GIBRALTAR

                 

Franco: gone but not forgotten

If you read this week's article on why Country Risk should be increased upon Spain, due to its Gulag-style treatment of Vladimir Kokorev, and his family, the recent Spanish pronouncement on the British Overseas Territory of Gibraltar reinforces this position. Is Spain, a democratic country, never going to cease to seek to acquire Gibraltar, notwithstanding that it, in a mutual exchange of territorial claims, gave it up, in perpetuity, over 300 years ago ? The UK gave up its claims, in exchange for the Rock, but apparently someone in Madrid was not paying attention in history class.

Furthermore, Spain has failed to free its African enclaves in Morocco, claiming that Spaniards living there should be under Spanish rule; Gib residents have always voted to remain British. What's the difference between the two ? Nothing.

Here's the latest news: the acting Spanish Foreign Minister has threatened to close the common frontier with Gibraltar, and an external "hard border," after Brexit is completed. That means that the approximately 20,000 Spanish citizens who work on the Rock will lose their jobs. I gather nationalistic, even, dare we say, Francoist, politics now trump (no pun intended) sound economic policies. Has the Government of Spain forgotten its runaway unemployment ?

Apparently, Spain is now offering to share sovereignty with the UK, as a solution, but curiously, is not saying whether that is the intermediate step to complete Spanish sovereignty in an uncertain future. When a nation, even those within the EU, engages in threatening conduct, we wonder what else its government will dream up, and adjust its level of Country Risk, accordingly, upwards.  

LEON FRAZER ACTS IN BAD FAITH IN STONEWALLING REQUEST FOR INFORMATION IN LAWSUIT

Lawyers are required, under most codes of professional ethics, to zealously represent their clients, but sometimes they forget that they are, themselves, officers of the court, and engage in dilatory tactics, seeking to delay legal proceedings, especially when they know the evidence is against them, and their clients will ultimately face a harsh justice. Many members of the judiciary consider these tactics to be bad faith conduct, which can result in serious penalties, both for the client, and more often, for the lawyers as well.

Regular readers of this blog know that we are following the events of the Cayman Gang of Four scandal, which involves the theft of hundreds of millions of dollars, owned by Canadian pensioners and retirees. A civil suit is presently pending, in Grand Court of the Cayman Islands, against Dundee Merchant Bank, the custodian of the funds, and one of its former officers, Sharon Lexa Lamb. Counsel for the plaintiff is seeking evidence, to be used in that case, to prove up liability, and damages.

A suit, brought several months ago, by the plaintiff, Lawrence Heath, against Leon Frazer & Associates, Inc., is solely seeking account documents of the plaintiff, a former investment client of the defendant wealth management firm, in its possession. The plaintiff was forced to file the suit, after the defendant, by and through its attorneys, failed to produce its client files, after months of delay; Here's why.

First, defendant's compliance officer stated, in writing, that there were several boxes of client files and documents, and that she would produce them, in the ordinary course of business. Then, suddenly, the compliance officer is replaced by another, who immediately claims that there are no such extensive records, and who only produces a small, obviously inadequate, set of documents, and takes an adversarial posture with the request.

Bad faith, in the course of litigation, occurs when multiple events, when taken together, demonstrate a deliberate intent to ignore the reasonable requests of opposing counsel, to move the cause forward, and a blatant disregard for the rules of civil procedure. These specific acts leave no doubt in my mind that the defendant, acting through his counsel, has engaged in a course of conduct designed to delay the proceedings indefinitely, with the ultimate aim that they take so long that the plaintiff, or major witnesses, pass away, or become too ill and infirm to testify at trial. Sources close to the plaintiff report that the stress of the delays in this case have had an effect upon his health, and they believe that they have shortened his life; he is 90 years old.

Any one of these acts, all of which have occurred in the case, is sufficient, in my book, to constitute dilatory practice; all of them together constitute bad faith:

(1) the defendant corporation has failed to timely file an answer or response, on the merits, to the Notice of Application. The plaintiff can now, at any time, seek an Order of Default against the defendant. What lawyer or law firm does that, if not to delay the proceedings ?

(2) Back in August, two attorneys representing the defendant advised that they were going on vacation for two weeks, and would address the issues upon their return, notwithstanding that a third attorney has been solely handling the defense. Does this sound like dilatory practice to you ?

(3) Also, back in August, defense counsel indicated that they were opposing the Application, and were going to file a motion. Counsel asked for, and received a half-day appointment, in November, to have the Master hear the motion. No motion, or any other pleading, other than a notice of hearing, has ever been filed with the Court, notwithstanding counsel's promise to file it. Two months later, with no motion, we must deduce that securing the hearing was a bad faith effort to delay the proceedings for months, as was the claim that it would take a half-day to settle a controversy that could be resolved by the Court in fifteen minutes. The Master request was merely a ploy.

(4) Last week, it was reported that the defendant, who has twice refused to allow its director, William Tynkaluk, to appear and give sworn testimony, was again objecting to Tynkaluk appearing, but would forward a proposal to opposing counsel, to schedule the testimony of a number of witnesses for both sides, and move the case forward. Defense counsel has not, despite repeated requests, ever delivered a proposal to settle discovery issues. They do not want their director to testify, though he was the personal investment adviser of the plaintiff at LF; they allege his advanced age precludes his appearance, but Tynkaluk was recently staying at a major Canadian resort, which frankly calls into question his infirmities.

Tynkaluk has repeatedly been summoned before the Ontario Securities Commission, to explain allegations made against him, involving insider trading of Leon Frazer stock, in advance of the sale of the company's stock, with nonpublic information. he actually repeatedly solicited the plaintiff, to trade on inside information, given to him by Tynkaluk, but the plaintiff, a retired attorney, declined. Is this what Leon Frazer counsel is afraid may come out during Tynkaluk's testimony ?

I would like the lawyers reading this story to decide whether concerning the conduct of the defense of this case, which is solely seeking documents, and not demanding damages, what you would do, if opposing counsel carried on what can only be interpreted as a deliberate campaign of bad faith practice, as you see here, and since attorneys are bound to follows the orders of their clients, one must ask whether Leon Frazer & Associates, Inc., or its parent, IA, have instructed these attorneys to pursue what must be regarded as an improper defense of a valid Application. I wonder what the opinion of the the Law Society of Upper Canada would be, given this set of facts ?

RAISE COUNTRY RISK ON SPAIN DUE TO MISHANDLING OF KOKOREV CASE

                                           

We are beginning to lose faith in the independence of the court system of Spain, which directly impacts Country Risk. For more than one year, the Russian businessman, Vladimir Kokorev, his wife and son, have been incarcerated in prisons, located in the Canary Islands. Though their imprisonment is allegedly as material witnesses to some as yet unfiled corruption case, involving officials of  Equatorial Guinea (EG).

In truth and in fact, their imprisonment is punitive, and the Kokorevs are being detained, due to money laundering charges, for transactions that took place between ten and fifteen years ago. Spain never charged them, and the Statute of Limitations has long ago expired. They are frankly, being held without trial, in a situation that is more reminiscent of the gulags of the Soviet Union, than that of a member of the European Union. His guilt or innocence is immaterial, because he can no longer be tried there.

Wealthy Spanish industrial interests, unhappy with American participation in EG's oil industry, as the petroleum deposits were not discovered until after Spain granted EG its independence, reportedly want that lucrative business for themselves, and want EG President Obiang out of office, so that they can install a more malleable successor, who will cooperate with them.

The Spanish Government, which lacedt the investigation far from prying eyes in Madrid, is defying the rule of law, to appease its greedy business sector. When you cannot trust the courts, Country Risk must be elevated, for foreign investors who have no access to the courts, to redress civil defaults, or other grievances, should stay out of Spain. If Vladimir Kokorev dies in prison, it will be to late to save him. The EU should act, while it is still possible to remedy this case. Meanwhile, Country Risk for Spain is to be elevated.  

AUDITORS EXAMINING PDVSA FIND $11bn MISSING

Auditors working on behalf of Venezuela's National Assembly have found that more than eleven billion dollars ($11,000,000,000) is missing, and unaccounted for, at PDVSA, the country's petroleum agency, and have pointed fingers squarely at the agency's former head, Rafael Ramirez*, the current Venezuelan ambassador to the United Nations. Ramirez has not responded to the charges.

PDVSA has been reportedly the object of massive corruption, including overpricing of purchases, and diverting the difference to corrupt Venezuelan PEPs, PDVSA managers, and oil industry officials. the agency has also been accused of laundering drug profits, being an illegal source of US dollars, and massive cases of corruption, The agency's profits, which are the property of the people of Venezuela, have disappeared, leaving it unable to service its bond issues, as they come due, and it may actually be insolvent, all due to systemic corruption. As oil revenues are the major source funding of the Venezuelan Government, Country Risk will most certainly increase in 2016.
_________________________________________________________________________
* Ramirez is allegedly the first cousin of the imprisoned Venezuelan terrorist, known as Carlos, "the Jackal," presently serving a life sentence in a French prison; Carlos' real name is Illich Ramírez Sánchez. Rafael has denied that he is related to Carlos.

RUSSIAN HACKER ROMAN SELEZNEV TO BE SENTENCED IN FEBRUARY; WILL APPEAL

Roman Seleznev, the Russian computer hacker who hacked into servers, and stole credit card information, causing millions of dollars in losses, to banks and credit cards companies, will be sentenced on Feburary 17, 2017 in US District Court, in Seattle. Seleznev was convicted, in August, 2016, on 38 counts.

Losses from his criminal activity have been estimated at $168m; testimony at trial confirmed that he hacked over two million credit cards. The case has generated a large amount of public interest in Russia, as his father is a member of Russia's Duma, its Parliament, and the circumstances of his arrest and removal, from the Maldives, in the Indian Ocean, have been questioned by defense counsel, who have stated that the requirements of international law, and his client's rights, were violated. They have stated that his conviction will be appealed to the 9th Circuit Court of Appeals.

Seleznev also faces Federal criminal charges in two other District Courts. 

IS LEON FRAZER TRYING TO SHIELD ITS LONGTIME DIRECTOR FROM JUSTICE ?

If you have been following our coverage of Lawrence Heath vs. Leon Frazer & Associates, Inc.,  a civil suit, filed against a securities firm, to obtain client records, for the Cayman Gang of Four litigation, you know that no less than twice, counsel for the corporation has declined to produce its most senior director, William "Bill" Tynkaluk, from appearing to give testimony.

Tynkaluk was the personal wealth adviser to the plaintiff, and he alone has first-hand knowledge of what happened to the plaintiff's investment account, which was in eight figures. He will also know about an estimated sixty other Leon Frazer clients, who accounts were drained, and transferred; the total amount that is missing is in the hundreds of millions, according to a government agency that has seen some of the filed complaints and claims.

The law firm representing Leon Frazer has stubbornly refused to produce Mr. Tynkaluk, and it is now claimed that he has abruptly retired, and relinquished his directorship, effective last Spring. How convenient for Leon Frazer, however, his sworn testimony is still being demanded. Sooner or later, the Court will order his appearance, but thus far, Tynkaluk is being hidden under the umbrella of one of Toronto's largest law firms, but is it to prevent him from incriminating both himself, and Leon Frazer ?


It is not an accident that one of the lawyers handling the case is an experienced criminal defense attorney, experienced in white-collar cases ; someone is going to need his services.

PANAMA SAYS IT PLANS TO MAKE MONEY LAUNDERING SANCTIONS PUBLIC

In what must be the worst attempt at restoring public confidence in a broken legal system that we have seen in many years, an unknown Panamanian government agency has proposed to hereafter make all anti-money laundering sanctions, imposed upon banks and insurance companies, public. Is this the first salvo from the country's newly-hired public relations experts ? If so, it will not convince Panama watchers one bit, regarding reform of the country's nonfunctional anti-money laundering structure.

The entity, the National Committee against Money Laundering and Financing of Terrorism, and the Proliferation of Weapons of Mass Destruction, which was formed last year, which announced the proposal, has an empty track record, and is regarded by Panamanians in the financial services business as a bad joke, has no record of enforcing Panama's universally ignored AML/CFT laws. In truth and in fact, no bank gets charged with money laundering in Panama City, so there's not much information to make public.

This little exercise in "transparency" is little more than a press release, and one which will not be taken seriously by the financial world; the Superintendent of Banking, and the Superintendent of Insurance and Reinsurance will kindly take note. After the Panama Papers, superficial steps simply will be laughed at, as future potential clients look elsewhere.

PANAMA, HURTING DUE TO PANAMA PAPERS SCANDAL, ENGAGES A SPIN DOCTOR

The Government of Panama, acting through its president, Juan Carlos Varela, has engaged a New York public relations firm, in an attempt to repair the massive damage, to its national reputation, caused by the Panama Papers. Since the ICIJ began releasing information concerning Mossack Fonseca's global corporate clients, who have been shown to be corrupt national leaders and PEPs, international financial criminals, tax evaders, and a wide assortment of the usual suspects, Panama's reputation as an offshore financial center has  seriously declined, as have the number of its new clients.

In a filing with the US government, because anyone acting as an agent of a foreign state or power must register with Washington, the New York City public relations firm of Bellwether Strategies, LLC. has indicated that it has a contractual relationship with the Republic of Panama, for the stated purpose of repairing its image, due to the fallout from the continuing release of embarrassing documents, in the Panama Papers scandal. Its website states that Bellwether engages in "National Branding."

The filing shows that Bellwether, which was formed ten years ago, is to receive $50,000 per month, for its services, which are specifically described as the conduct of a public relations campaign, responding to the Panama Papers. The firm has their work cut out for them, for there is now a global focus upon Panama, since the first document and information release.

 Neither the hopelessly corrupt court system, nor the laws, nor the lucrative bearer share industry that attracts dirty money has been reformed, or even tweaked, to start a clean up of the systemic problems facing Panama. Unfortunately, it is just the opposite; cases against corrupt politicians continue to be dismissed, or delayed indefinitely, and massive losses of government funds are not being sought, for they are in the hands of the existing power structure, which includes an organized crime syndicate, and the so-called reformist government of President Varela, is not chasing the members of the country's kleptocracy.

Will the new spin doctors be able to rehabilitate Panama's tarnished image ? We cannot say, but we will be watching.

NEW INCORPORATIONS DECLINE 30% IN BVI, POST-PANAMA PAPERS DISCLOSURES

Considering that much of the government's budget in the British Virgin Islands is funded by incorporation, and related fees and charges, government there must be unhappy that new corporations are down thirty per cent this year, when compared to 2015. BVI this year declined the UK request for a public registry of beneficial owners, only agreeing to respond to government, or law enforcement inquiries, and not forthwith, which may have also contributed to its increasingly negative image abroad, as well as fears that some eventual push back, against BVI companies, could result in targeting them, on the part of the world's major law enforcement agencies, as well as regulators. Who wants a compant with a bull's eye on it ?

There also has been much made of the fact that BVI companies, with their opaque qualities, were the preferred corporate vehicles of the now disgraced law firm of Mossack and Fonseca. Finally, the BVI's harsh treatment of foreign reporters who boldly attempt to seek answers in person in Road Town, and get promptly deported, which is surely a violation of human or civil rights in the United Kingdom, which owns the British Virgin Islands.

Apparently though, BVI corporate service providers are still hawking their products, meaning a BVI corporation, owned by a Belize trust, is still seen as the way to go, if you need to hide your wealth. We will follow up on the BVI issues, and report back on the developing story.

TRIAL JUDGE DENIES REZA ZARRAB'S MOTION TO DISMISS

                             

Reza Zarrab

US District Judge Richard Berman, who recently denied the defense motion for recusal, today denied the motion to dismiss the indictment, filed by Reza Zarrab's team of attorneys. In a Decision and Order, which contains extensive citations to authorities, and reads more like a law review article, the Court dealt with all the issues cited by defense counsel, then argued case law, and dispensed with each and every one in turn, in a 36-page order.

The decision, which specifically stated that it was not ruling upon the merits of the case of either party, the Court upheld the legal sufficiency of Count I, the Conspiracy to Defraud the United States, Count II,  the Conspiracy to violate the IEEPA and ITSR, Count III, Conspiracy to Commit Bank Fraud, and Count IV, Conspiracy to Commit Money Laundering. The opinion was well reasoned, and detailed the undisputed facts, as well as a brief statement of the case. I found it to be very persuasive.

An Order denying a motion to dismiss is interlocutory, and generally not appealable under the Federal Rules, unless the defense team can show the case falls within a very small class of exceptions, but there are a number of genuine issues of law, which could be the basis of an interesting appeal, if a guilty verdict occurs, especially extraterritoriality. On that issue, "the Court finds that the Indictment alleges a domestic nexus, between Zarrab and his co-conspirators' conduct and the United States, i.e. the exportation of services from the United States." Decision at 17. 

The Decision was not unexpected, as most Federal indictments survive a motion to dismiss, due to the fact that all well-pleaded allegations must be taken as true, when considering the motion, but there are bona fide issues raised by the defense. Next, the motion to suppress evidence seized, when the defendant first arrived at Customs in Miami, is still pending.