ALLEN STANFORD FILES A REPLY BRIEF IN HIS APPEAL TO THE FIFTH CIRCUIT

For those who are following Allen Stanford's Federal criminal case, Here are the issues that he has framed in the Reply Brief, which was filed in the appeal* that he has pending in the Fifth Circuit. Remember that he is Pro Se in his appeal, though obviously he is receiving jailhouse lawyer assistance from someone not well versed in the appropriate level of objectivity that appellate briefs require; judge for yourself.

His points, which I quote here verbatim :

(1) The erroneous legal strategy employed by the SEC, which resulted in the criminal prosecution of Stanford, was private-sector designed by two disgruntled former Stanford employees.

(2)The SEC did not have jurisdiction, or regulatory authority, over Stanford International Bank, or its certificates of deposit.

(3) The Government failed to respond to Stanford's jurisdiction argument.

(4) The parallel civil and criminal proceedings in the case violated the Double Jeopardy and Takings Clause.

(5) the Government cannot claim the Good Faith Exception.

In his conclusion, Stanford asserts that the Court should not affirm "a conviction that was obtained by and through:

"A wrongful and extraterritorially-applied [sic] interpretation of the Federal securities laws of the United States.

A civil and criminal investigation which were unlawfully coordinated, and conducted as one.

 An original and superseding indictment which were originally founded on non-existing statutory authority, then made duplicitous and constructively amended, and did not name or otherwise identify a single victim or specific loss, and this were fatally and incurably defective.

The undeniable collusion between a Federal Prosecutor (now a Fifth Circuit Judge), and a trial judge, to conceal the substantive differences between the original and Superseding Indictments, in order to expedite and begin trial, a mere five days after arraignment on the latter.

A trial that was in violation of no less than FOUR Constitutional rights, all challenged by the Defense and denied.

An Allen Charge that was unduly coercive, and instructive that the only proper verdict was guilty.

A Sentencing that was unsupported by the facts, and based entirely on supposition**."

We shall continue to report on all major developments in Stanford's appeal; stay tuned.
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* Stanford v. United States, Case No.: 12-20411 (5th Cir.).
**Reply Brief at 15-16.

KENYA SHUTS DOWN DAHABSHILL AND TWELVE OTHER FOREX BUREAUX, ALLEGING THAT THEY FINANCE TERRORISM

It appears that the controversy surrounding Dahabshill Money Transfer Company Limited is not over; the Government of Kenya has ordered its Kenyan branches, and a dozen other forex/money transfer company/MSBs, closed, under the authority of the Proceeds of Crime and Money Laundering Act of 2009. Additionally, there are charges of piracy-related activities against some of these companies; Al-Shabaab, an SDGT, conducts a lucrative piracy operation in the Indian Ocean, earning many millions of dollars in ransom payments annually.

The other companies named, according to published reports, are:

(1)  Amal Express Money Transfer Ltd.
(2)  Amana Money transfer Limited
(3)  Bakaal Express Money Transfer Ltd.
(4)  Continental Money Transfer Ltd.
(5)  Flex Money Transfer Limited
(6)  Hodan Global Money Remittance and Exchange Limited
(7)  Iftin Express Money Transfer Limited
(8)  Juba Express Money Transfer Limited
(9)  Kaah Express Money transfer
(10) Kendy Money Transfer Limited
(11) Tawakal Money Transfer Limited
(12) UAE Exchange Money Remittance Limited

All the accounts accounts of these MSBs, in Kenyan banks and micro-finance institutions, have reportedly been frozen, with the Kenyan banks warned to forthwith deny the provision of financial services, and to render transaction reports to the Central Bank, within 48 hours.

We have previously reported on a recent court decision, handed down in the Netherlands, which found there was no factual basis for the allegations that Dahabshiil was connected to Al-Shabaab. It is not known what evidence the Government of Kenya relied upon in taking this action, but we are most anxious to review it.

Compliance officers should be aware that the Kenyan action was administrative, and that there have been no findings of fact, conclusions of law, or adjudication, by a court of competent jurisdiction, of the guilt or innocence of these entities. That being said, consider carefully whether any continued relationship with any of the above entities should be suspended, pending a definitive court decision, for risk management purposes.

HAVE YOU SEEN ANY OF THE MISSING BILLION DOLLARS FROM MOLDOVA ?

Unless you routinely access financial news from Eastern Europe, you are probably unaware of the fact that a billion dollars was stolen from three of the biggest banks in the Republic of Moldova. This money, which reportedly amounts to 15% of the small country's GDP, may constititute the region's largest corruption scandal to date.

Three banks were victims, though the facts suggest that some bank staff may have been involved. They are:

(1) Banca de Economii.

(2) Banca Sociala.

(3) Unibank.

Some sources allege that $600m was transferred to four Russian banks; others state that the money was transferred to certain unnamed offshore entities, in tax haven jurisdictions. Have you observed any substantial transfers from Moldova during the past six months, or more recent suspicious transfers from Russian banks ? It is humbly suggested that compliance officers take the time to ascertain whether there are any transfers that fit either of these categories; if so, enhanced due diligence is called for.

COMPLIANCE OFFICERS: CHECK YOUR STATE LAWS FOR SANCTIONS IN EFFECT AGAINST IRAN

Should there be a partial lifting of some of the sanctions in effect against Iran, and you are a compliance officer at entity where public or pension funds are invested, you are reminded that many states have their own sanctions laws, and only a total lifting of US sanctions, and Iran's removal from the State Sponsors of Terrorism list, will apparently end those sanctions.

This is an obscure topic, to be sure, and if you work at an investment banking house, or some other financial entity that handles public or pension funds, you are urged to consult with your legal counsel regarding state laws that prohibit investing in companies that trade with Iran. Do not rely solely upon the chart depicted above; it is best to obtain a written opinion of counsel. 

ATTENDEES AT SUMMIT OF THE AMERICAS EXPRESS CONCERN ABOUT PANANA'S MONEY LAUNDERING AND CORRUPTION

If you read the mainstream media about the issues that delegates at the Seventh Summit of the Americas in Panama are talking about, you think that the concerns involve Cuban/American relations, the lack of human rights in Venezuela, and other international topics. However, there are other issues that have not appeared, but are still on the minds of the attendees.

Those issues involve the republic of Panama, and many of them were voiced this weekend among the delegates. Here are the questions many have been asking:

(1) How will Panama deal with its money laundering problems ? The new "reform" government has been in office for not quite 10 months, but has made absolutely no progress in this matter. Remember, Panama is not only on the so-called FATF Grey List, of noncooperative jurisdictions, but is in danger of being placed onto the actual Black List, unless it gets its house in order. There has been not one  money laundering charge laid at the door of the country's dirty banks, since the new government took over last Summer. The delegates are asking why ?

(2) Corruption among government officials, though the subject of multiple pending criminal investigations, and criminal charges brought in 2015, remains a sore spot. Why have not more of those known to have accepted bribes and kickbacks been terminated with extreme prejudice ?

(3) The judiciary, most of whom can be bought, still remain in office, though much of the Supreme Court of Justice have been turned out. Trial judges remain in office, notwithstanding their known propensity for taking money to fix cases. Many of the delegates consider Panama to have the most corrupt judicial system in all of Latin America, which speaks volumes about the amount of corrupt activities.

(4) Accountability of the former Martinelli government, including its fugitive leader. Why isn't ex-President Ricardo Martinelli, as well as his former ministers, in custody, and awaiting trial ? Will their massive theft of Panama's money go unpunished ?

As you can see, the delegates have much more on their mind than photo opportunities; they want to know when Panama will clean up its act.

A GUN-SHY HSBC DECLINES TO ONBOARD A CHILDREN'S CHARITY

HSBC in Hong Kong has reportedly refused to open an account for a well-established French charity whose goal is to support children in Cambodia, citing money laundering concerns. Is everyone in compliance at the bank now so gun-shy that they will not accept legitimate charitable business ?

Pour Un Sourire D'Enfant (For a Children's Smile) was formed 20 years ago, a Cambodian charity with a new Hong Kong branch, sought to open an account at HSBC. Guillaume Ponticelli, the charity's local president in Hong Kong, who has had personal accounts at HSBC for 15 years, has publicly questioned the validity of the bank's position.

From my compliance perspective, Cambodia is neither a high-risk jurisdiction, nor is it a known location for money laundering. How on earth can an account which merely sends funds to support children be declined, especially when the reasons cited have no basis in fact ? Perhaps HSBC should take a hard look at what's going on.

THIS WEEK'S PICTURE IS WORTH A THOUSAND WORDS

Freedom of speech issues, regarding whether a certain photograph should be allowed to be shown, in connection with advertising placed in public bus transportation ads opposing radical Islam, gives us this week's photograph. Unless you were a history major in college as I was, you may be unaware of the close relationship between Middle East Arab leaders, and Nazi Germany. Much of the details have been consigned to the dustbin of history, but there was an alliance, and the photograph verifies it in graphic detail.

What you are seeing is the Grand Mufti of Jerusalem, Haj Amin Al-Husseini, and Adolf Hitler. The Mufti lived in Nazi Germany during the war, and assisted in the formation of a Bosnian SS unit, whose members sported a fez as part of their dress uniform. Apparently this photo is too embarrassing in certain quarters in the United States, as there have been objections lodged to its display.

IS PANAMA'S FUGITIVE SECURITIES REGULATOR COOPERATING WITH US LAW ENFORCEMENT ?

Ignacio Fabrega de Obarrio, the Republic of Panama's former supervisor of its securities regulation agency, SMV, who is facing multiple criminal charges, has become a fugitive from justice. He is believed to have fled Panama, and a rumor is racing around Panama City this week that he is in the United States, and is cooperating with an unspecified American law enforcement agency.

Fabrega, who allegedly collected large bribes, in exchange for which he would torpedo potential, or pending, investigations into violations of Panama's securities laws, is known to have incriminating information regarding:

(1) Government officials currently in office, as well as Martinelli's former ministers, who are accused of participating in the Financial Pacific insider trading scandal, and securities fraud.
(2) Senior members of Panama's organized crime syndicate.
(3) American businessmen (expats) involved in securities fraud. This information would be of particular interest to the Securities & Exchange Commission, as many of the victims of securities crimes in Panama are US investors.

Obviously, Fabrega has committed several securities offenses under US law; he may also have violated the Foreign Corrupt Practices Act. He is considered armed and dangerous, and is alleged to have been responsible for a number of violent acts committed under his direct orders, including a homicide, in Panama.

 As soon as additional information is made public, we shall update our readers.

US STATE DEPARTMENT RECOMMENDS CUBA BE REMOVED FROM LIST OF STATE SPONSORS OF TERRORISM

Notwithstanding the substantial risks* to American businesses that choose to conduct business in Cuba, the US State Department has reportedly completed its review, and has recommended to President Obama that cuba be removed from the list of State Sponsors of Terrorism.  An aide to the US Senate Foreign Relations Committee confirmed this information today; This presents a major problem.

There are rumors that the President will make the announcement in Panama this weekend, at the Summit of the Americas. A large number of American companies have already made preliminary plans to enter the Cuban market as soon as existing legal impediments are removed; the terrorism designation is a major obstacle to business operations.

Removal creates a massive headache for American companies. Compliance officers at these US corporations do not presently possess sufficient access to data on the SDGTs who maintain offices and staff in Havana, and since much of the necessary information is either classified, or when available, appears only in the Arabic language, will be unable to cull out terrorist agents, or their corporate entities, from legitimate Cuban nationals and businesses.

Many of the terrorists have genuine identity documents from countries that cooperate with them, such as Venezuela, but those aliases have been classified by the US Government agencies who are aware of them, and not available to the banking industry. In short, American compliance officers are woefully unprepared to separate members of terrorist organizations from legitimate entities inside Cuba.

Unfortunately, the American intelligence community, and the Federal law enforcement agencies, keep the identities of known terrorists operating in the Western Hemisphere confidential, and quietly monitor the activities of those individuals. This does not help the North American financial community, as those agents, not known by the banks to be  terrorist organization members, gain access to the US banking structure.

Removing Cuba as a State Sponsor of Terrorism will only further expose American corporations to the risks of Federal criminal charges for unwittingly providing material support to terrorism; the casualties will be US companies whose only crime was an eagerness to do business in Cuba.
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*Removing Cuba from List of State Sponsors of Terrorism exposes American Businessmen

PANAMA'S SECURITIES HEAD FLEES THE COUNTRY

Ignacio Fabrega de Obarrio, the former Supervisor of Panama's securities regulator, the SMV, has fled the country, notwithstanding that his prior conditional release to house arrest was revoked, and an arrest warrant issued against him. Fabrega, considered by investigators to have the most first-hand knowledge of the full extent of the involvement of senior government ministers in taking huge profits, in the Petaquilla Mining insider trading case, is considered to be a critical witness in the scandal. There are other witnesses available, but Fabrega, who quashed all the investigations initiated against Financial Pacific, and who delivered confidential information about the investigation, to the company's leadership, would have been a key part of any future trials.

A judge ordered his release, although he was clearly not qualified to bond out, under Panamanian law, which demonstrates that the country's utterly corrupt judicial system remains. Whether he will be taken into custody again remains to be seen, though he may have been allowed to leave Panama, due to the fact that he possessed incriminating information, regarding widespread violations of securities laws, against a number of prominent, and powerful, Panamanians, some of whom reportedly paid him large bribes to decline to pursue investigations by his agency.  

JUDGE IN ARAB BANK CASE DENIES DEFENSE POST-TRIAL MOTIONS

The US District Judge presiding over the Arab Bank case has, in a 96-page Memorandum Opinion and Order*, detailing all the trial testimony, disposed of all the major post-trial motions filed by the defendant Bank:

1. The Court denied the Bank's Rule 59 Motion for a New Trial, declining to overturn the jury verdict on liability.
2. The Court denied most of the Bank's Rule 50 Motion for Judgment as a Matter of Law; See below for details.
3. The Court denied the Bank's Motion for Certification of an Interlocutory Appeal, pursuant to 28 USC  §1292(b). This means that the bank cannot take an early appeal, but must wait until a final judgment is entered in the case.

The Court did find that 2 of the 24 terrorist  attacks could not be linked directly to the bank, and dropped those two from the case.

The Court found that there was "ample"** evidence to support the jury verdict; It held that there was a "cornucopia***" of circumstantial evidence to demonstrate that the Bank knew, or was willfully blind to, the Hamas connections to the charities receiving money. Families of deceased terrorists each received USD$5300 through the bank.

There was "damning****" circumstantial evidence that the defendant Bank knew that its customers were terrorists. You are invited to review the complete text of the Opinion, to get a sense of the overwhelming evidence presented at the trial; you will also see million dollar payments to individual members of the terrorist leadership detailed in the testimony. Use the hyperlink below to see the document. I warn you that some might find the evidence disturbing.

The trial on damages begins on July 13, 2015, and treble damages are available under the civil liability provisions of the Anti-Terrorism Act.
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* Memorandum Opinion and Order
** Order at 21.
*** Order at 24.
**** Order at 26.

SHOULD CREDIT UNIONS AVOID TRANSACTIONS WITH MONEY SERVICE BUSINESSES DUE TO AML ISSUES ?

In the aftermath of the North Dade Community Development Federal Credit Union scandal, credit unions should seriously consider whether it is wise to conduct any business with, or for, money service businesses. The North Dade case has succinctly illustrated some of the dangers involved, and the NCUA itself, back in December, issued a Supervisory Letter on the subject.

Titled Identifying and Mitigating Risks of Money Service Businesses*, it should be required reading for all compliance officers working at credit unions. Frankly, the primary duty of a credit union is to service its customers, in a safe manner, and allowing any MSB to access the global financial structure through your credit union, and exposing it to money laundering, and terrorist financing, is neither wise, nor part of your core business plan. North Dade did it for greed, which is never appropriate.

I do not buy the argument that a credit union can use an MSB to offer additional services to its members; credit unions can access those services on their own, without incurring the risk of servicing some of the MSBs dodgy customers. Focus on customers, not on maximizing profits by working with MSBs that may, or may not, be in full compliance with the law.
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*http://www.ncua.gov/Resources/cus/pages/LCU2014-10.aspx

  

REMOVING CUBA FROM LIST OF STATE SPONSORS OF TERRORISM EXPOSES AMERICAN BUSINESSMEN

The rumor that President Obama is considering removing the Republic of Cuba from the US list of State Sponsors of Terrorism is disturbing, because if it occurs, American businesses that arrive in a future, unsanctioned Cuba would be at risk of unwittingly conducting business with SDGTs and SDNs who use Cuba as a friendly port. This is more likely than you think. There are valid reasons that Cuba is a designated state sponsor, and we should remember why we named it in the first place.

Although there has always been a reluctance on the part of the US Government to discuss it, the open presence of a number of OFAC-sanctioned global terrorist organizations in Havana has been a fact of life for many years. Meetings between representatives of these sanctioned groups were facilitated by the Castro regime, which welcomed terrorists who may have had arrest warrants outstanding against them, or who were at risk for detention by American, or Colombian, military units.

 Cuba offers a safe haven available nowhere else in the Western Hemisphere, save Isla Margarita in Venezuela, which was the other regular meeting-place during Chavez' reign. Whether it continues to be an illicit venue is not known, but the Maduro government maintains close ties to most SDGTs.

 If you were wondering why terrorist groups would meet together, consider what they do: traffic in narcotics, purchase & sell arms and ammunition, pass counterfeit money, sell bogus liquor or pharmaceuticals, and sundry other fundraising pursuits. Criminal organizations often barter, sell and exchange illicit goods amongst themselves, hence the need to hook up periodically.

Who are you apt to find with an office, and living quarters, in Havana ? You already know that the FARC and the ELN have permanent offices there, as they are engaged in the never-ending peace negotiations with the Republic of Colombia, but they only represent the tip of the terrorist iceberg. Terrorist groups known to have agents and representatives moving into and through Cuba, from time to time, include:

(1) ETA.
(2) Al-Qaeda.
(3) Hezbollah.
(4) Hamas and other Palestinian terrorist organizations.

Why is this a threat to legitimate American companies who dive into Cuban Commerce ?

(A) It would not be difficult for any of the above sanctioned groups to form a corporation or NGO, in Cuba, or the Caribbean tax havens, with front-men, and engage in business with American corporations, to provide material financial support to their headquarters in the Middle East, or obtain goods and services for their operations.  

(B) Most members of terrorist groups have been issued valid Venezuelan passports, and Cédulas, national identity cards, with Spanish names. How can you protect from unknowingly conducting business with a terrorist there ?

(C) In their zeal to open new lines of business, it is feared that American companies will give short shrift to Customer Identification Procedures, due diligence, and other compliance functions. It will all take a back seat to new commerce, and even if you wanted to conduct proper CIP, there is no acceptable commercial off-the-shelf resource available to assist you.

In a nutshell, that is why I oppose the plan to fast-track the delisting of Cuba, as a designated State Sponsor of terrorism. It has been disclosed that Cuba will be required to affirm that it will no longer assist terrorist organizations, but that does not bind the terrorists. 

A PICTURE IS WORTH A THOUSAND WORDS

Food for thought. This "toy" is reported to be offered for sale on the streets of Gaza, and in Ramallah, in the Palestinian Territories. Perhaps those who claimed that the massive street celebration that took place on 9/11, in the Palestinian Territories, was an urban legend, might want to reconsider their position.

WHEN CELEBRITIES ARE MONEY LAUNDERERS

The arrest of Pakistan''s top supermodel at Islamabad Airport, after $500,000 in cash was seized from her suitcase, reminds us that celebrities are routinely allowed unhindered passage strictly because of their status. After interrogation, Ayyan admitted that she had taken 15 unexplained trips to Dubai since 2011, and that she had traveled to many other international capitals. Apparently, she was bulk cash smuggling for her country's power elite.

Remember that the person that you least expect to be engaged in money laundering, due to his or her legitimate occupation or profession, could be a part-time money launderer. When such individuals are caught in the act, some law enforcement agencies flip them, permitting them to continue without arrest, as confidential informants. They then continue to move money, under the watchful eye of their handlers, and your bank staff may be so mesmerized by their status and prestige that they make mistakes in judgment. Anyone can be a potential money launderer.