" Brought to Life and Controlled by Others." Joseph Muscat as the Golem, by Twitch
According to reliable US government sources, the massive Libyan Fuel Smuggling Scheme was not only operated with the approval and consent of Malta's Labour government, its senior government officials personally profited from it, through the payment of bribes. The most prominent individuals who reportedly received regular payments included former Prime Minister Joseph Muscat and Finance Minister Edward Scicluna. These two leaders also knew that the illicit profits were being regularly deposited in two of Malta's "dirty"banks, and allowed the practice so long as they were covertly compensated.
Given the overt nature of the operation of the fuel smuggling business within Malta, and its obscene level of profits, the decision has been made to treat the scheme as a RICO operation, which stands for Racketeer-Influenced Corrupt Organization. That's a maximum sentence of Life in Prison, Mr. Muscat. Given that a criminal operation on this scale could not have been conducted without government officials insuring that there would be no law enforcement or regulatory interference, specifically Muscat's blessing, He is to be charged accordingly.
Malta's officials have additional problems within their own European Union. Since the open storage in Malta of gasoil smuggled from Libya in tanks and other facilities resulted in the illegal mixing with other petroleum products, and ultimate illegal sales within the EU of a fuel prohibited for motor vehicles, law enforcement agencies within the European Union (Italy, France and Spain) intend to bring criminal charges against them in those countries. We now know why there are investigations in progress across the EU.
To summarize, in addition to the money laundering (Venezuela, Iran, Azerbaijan, etc.) investigations, the Malta targets are looking at separate exposure for the Libya Fuel Smuggling Scheme. We trust that their local legal counsel are competent to advise them, but wish to point out that some of those lawyers may end up as defendants themselves, as they were advisors in matters that were criminal in nature. Maybe Muscat and his Labour friends may wish to engage new attorneys, lest they find they have been further implicated by their (former) lawyers looking for immunity themselves. Let us all remember well the Crime or Fraud exception to the Attorney-Client Privilege.
On the third anniversary of the murder of Daphne Caruana Galizia, information has surfaced that may give investigators leads in their investigation into the massive corruption scheme that most likely ordered her death. A Swiss newspaper has identified two offshore companies that reportedly paid money into 17 Black, which is alleged to be a clearinghouse for the distribution and payment of bribes and kickbacks to senior officials in the Government of the Republic of Malta, and which Daphne outed before her death. That entity has been linked to former Maltese government officials Konrad Mizzi and Keith Schembri. The two companies, CROWBAR HOLDINGS SA and SOCAR TRADING SA, were apparently known to Maltese law enforcement agencies, which has repeatedly refused to publicly name them.
The information appeared today in the Swiss-German newspaper Tages-Anzeiger, more commonly known as TA, which is published daily in Zurich. While the criminal investigation into Daphne's murder is proceeding, many legal observers believe that the senior government officials who were involved in plotting her murder will never be charged in Malta, or if charged, never enter a prison cell, due to the systemic corruption that infects all aspects of government, including the judiciary, whether those officials will nevertheless face justice in an American or British courtroom is another story.
The existence of multiple law enforcement investigations, but within several countries of the EU, and outside it, involving money laundering, corruption, and even terrorist financing may guarantee that, even if those senior officials in Malta are never charged with murder at home, they will pay the price abroad for their sins and transgressions. While Malta's corrupt court system may allow them to cheat justice in Valletta, they will be serving their penance in a foreign prison, during what should be an extended period.
Given that there was more than $100,000,000 at issue in the Pilatus Bank money laundering case, I find the sentence calculation to be between 23.5 years and Life without Parole (there is no Parole in the US since 1987). But, if you add the Terrorism Enhancements to the calculation, for Providing material Support to a Specified Terrorist Organization, it reads 30 years to Life in Prison, and I am not even counting the other possible charges which have been thrown around of late in the media.
Additionally, there may be additional enhancements for Muscat:
(1) Being an organizer or leader of the criminal activity.
(2) A manager or supervisor over five or more participants.
(3) Employed sophisticated money laundering techniques.
(4) Employed or accessed special skills.
I cannot even cover the tangential enhancement issues, such as use of violence, explosives, where a homicide occurs, whether the crimes constitute Racketeering (RICO), and whether violations of United Nations and United States sanctions are also factors for enhancement. Perhaps Mr. Muscat might want to consider retaining a qualified professional with the appropriate level of experience regarding the US Sentencing Guidelines, as I believe he's gong to need to consult expert advice and counsel, sooner rather than later.
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The attorneys for the Turkish state-owned Halkbank and the US Attorney's Office in SDNY have both briefed their respective arguments on the issue of whether the case must be stayed while the defendant's appeal of the Court's denial of a dismissal on Foreign Sovereign Immunity Act grounds is pending before the Second Circuit. We present them here in abbreviated form for the convenience of our readers.
First Issue
Government: The appeal is procedurally improper because it does not fall within the Collateral Order Exception, which must be strictly interpreted in criminal cases.
Defense: The Collateral-Order exception is equally applicable in both civil and criminal cases.
Second Issue
Government: The courts have repeatedly rejected interlocutory appeals of orders in criminal cases, denying dismissal on the grounds of subject-matter jurisdiction.
Defense: Sovereign immunity is a right not to be tried.
Third Issue
Government: the Second Circuit has held that FISA does not appear to grant immunity in criminal cases.
Defense: At least one other Circuit Court of Appeal has held that it does.
Fourth Issue
Government: there is no case in this circuit granting an interlocutory appeal on FISA grounds, in a criminal case.
Defense:There is a similar case pending in the 9th Circuit where the Government agreed to a stay.
Fifth Issue
Government: The D.C. Circuit has rejected a interlocutory appeal on FISA grounds.
Defense: the case cited is under seal, and it is impossible to know the Court's reasoning was, and whether it had anything to do with the government's arguments in this case.
A stray issue did surface in the defendant's reply to the government's response : Should the trial Court rule that it retains jurisdiction, it should grant a discretionary stay, due to likelihood of success on the merits, danger of irreparable injury to the defendant and other injury to other parties, and that a stay would be in the Public Interest .
We await the Court's decision.
While you may have been reading our articles about how Wells Fargo affiliates are busy scheming to cheat American property owners out of their homes, here's something else you need to woory about. More than one hundred Wells Fargo staff members have been fired, after management learned that they were all cheating the US Government, and had fraudulently obtained money under COVID-19 Relief programs. We hold bankers to a much higher standard than the rest of us, due to their fiduciary responsibilities with customer assets. One source says the number fined was between 100 and 125 employees. If Wells Fargo staff members, whom we entrust with our financial security, have lapses in their personal morality
These now former employees lied while trying to obtain COVID-19 relief funds from the Small Business Administration. It appears that they made false representations when applying for Coronavirus relief funds for themselves. The Office of the Inspector General of the SBA warned US banks that there were serious concerns of potential fraud surrounding claims against the funds, which were a part of the Economic Injury Disaster Loan Program.
Apparently this fraud was not limited to Wells Fargo; there is a report that dozens at JP Morgan Chase, out of a total of an estimated 500, abused the program. The bank also terminated employees for the same reason. Generally, advances of up to $10,000 do not have to be repaid. One source has identified at least $1.3bn in suspicious payments; it also flagged a possible $45m in duplicate payments.
Law enforcement in Malta closes its eyes to the lucrative Libyan oil smuggling trade, most likely because it has been instructed by government officials linked to the country's banks that profit from the deposits that oil smugglers, who often pose as commercial fisherman, make into their accounts. Most people are familiar with the Satabank scandal; Sata reportedly accepted the profits earned from illegal smuggling of Libyan oil; the OFAC-sanctioned Tiuboda Oil and Gas Services LLC, which faked Bill of Origin certificates, and then sold the oil products in Italy, was at the center of the operation.
Our concern today is that Malta's banks openly accept what are obvious receipts from known fuel smugglers, and no bank in Malta has even been cited by regulators for violating the law. While he has a criminal case pending against him in Italy for that crime, former international Maltese footballer and restaurant owner Darren Debono (don't forget Gorden), whose OFAC-sanctioned Scoglitti restaurant cannot accept US credit cards, only cash, operates his business with impunity. Maltese politicians, some of whom are targets of the Malta Money Laundering investigation, often eat there, and it is doubtful if they ever receive a bill at the end of a meal. In truth and in fact, Debono's commercial fishing boats are smuggling fuel, and falsely recording and invoicing fish catches to cover for the fuel/oil they transport. The oil is then hidden within Malta, its point of origin falsely noted of record, and then it off off to be sold abroad, in Italy, France and Spain.
The Italian Giardia di Finanza, which calls its enforcement program Operation Dirty Oil, warns that this smuggling activity endangers the public; there have been a number of car bomb explosions, targeting rival smugglers disguised as fisherman, but it will take the deaths of innocent victims before there is any action in Malta, if past history is any guide. Some of those "fisherman" also smuggle people, meaning that there are human rights violations issues as well.
At the end of the day, it all comes down to Malta's dirty banks, which operate their money laundering facilities with impunity, due to a hands-off program supervised by senior government officials, who personally profit from it. Until actual enforcement occurs, followed up by reform, occurs Malta's financial sector will continue to get a black eye from Libyan oil.
As one knowledgeable individual recently reminded me, there are a number of major money laundering scandals running around the Republic of Malta, including Pilatus Bank, which moved hundreds of millions of dollars stolen from the Venezuelan government; Satabank, suspected of concealing illegal Libya oil smuggling payments, and other local entities remitting payment to Iran in violation of international oil sanctions. Also, don't forget the bribes and kickbacks accepted by senior government leasers, and laundered, with the intentional ignorance of compliance, through local banks, through a local culture that shouts "Don't ask, Don't tell."
I count three or four compliance officers, directors of compliance, and Money Laundering Reporting Officers (MLRO) who stand a very good change of being indicted, along with the senior officers of their banks or non-bank financial institutions. We wonder whether those compliance officers, formerly employed as gatekeepers, an obligation which they completely ignored, now at their peril, even considered that the long arm of American criminal law would reach out and touch them from across the Pond.
We call it Extraterritorial Jurisdiction; even if the Malta-based compliance officer has never been to the United States, when he or she moved US Dollars through the global financial system, they transited the New York banking center, and jurisdiction attached. US Courts have uniformly validated this principle of law. A non-US citizen can be found liable if any part of a transaction occurs in the United States. Any Dollar transaction which is processed and cleared passes through NY
Add to this Willful Blindness; also variously known as contrived ignorance, or intentional ignorance, it occurs when a person seeks to avoid liability by intentionally keeping oneself unaware of the facts that would render him or her liable or implicated in a wrongful act. Having tunnel blindness whilst money laundering is going on around all around you will get you indicted, and given the special responsibilities of compliance officers, regarding Suspicious Activity Reports, and enhanced Due Diligence, they are required to report such issues, and commit professional malpractice on a civil level when they fail to do so, in addition to the crimes they will be charged with.
Therefore, we caution the four compliance officers to quickly engage the services of a competent American criminal defense attorney or law firm; hire the best lawyers that you can afford, because you are going to need them, especially if you are named in more than one case, in more than one District, which is a logistical nightmare for any defendant, let alone extremely expensive.
This week's FinanceMalta three-day conference, entitled Innovation in Financial Services, is discussing the challenges Malta is facing in 2020, many of whom we have been discussing on this blog, and all of which deserve immediate attention. We hope that positive results will come out of the program.
I must confess that I am bothered by the practice of the owners of offshore companies hiring nominee officers and directors, or even shareholders, as front men, whilst they hide in the shadows. Given that these local Maltese receive a fee for their "services" they are the last to act as whistle blowers in the event they discover that the beneficial owners, who are their employers, are engaged in money laundering, other types of financial crimes, or even terrorist financing. They know that if they speak up, the gravy train of fees will come to an abrupt halt.
For example, the Chairman of FinanceMalta, Rudolph Psaila, who addressed the conference at length, and who championed innovation and reputation, shows up in the ICIJ Paradise Papers, as the designated Secretary of seventy (70) offshore corporations. Obviously, he cannot adequately supervise and monitor seventy companies that he is a principal officer of, so who is the gatekeeper on behalf of the the people of Malta, and its laws and regulations ? How in earth can he even find the time to attend corporate meetings, and record the minutes of said meetings ? Who's watching all these companies, Rudolph? You are an officer at so many companies, we cannot fit them all on this article.
To make matters worse, his close relationship with former Pilatus Bank director, Armin Eckermann, who is rumored to being imminently charged with a number of crimes, for personally approving all of Pilatus' money laundering clients, may disqualify Psaila from any officer or director position in any Malta company.
Perhaps FinanceMalta should think about naming a new Chairman, in the true spirit of reputation restoration.
Is the international accounting and consulting firm that approved Ali Sadr Hasheminejad for Malta, after what was supposed to be a thorough enhanced due diligence investigation of his background and qualifications to obtain a license to operate a financial institution, liable,for professional negligence.what we commonly call malpractice ? This issue deserves to be discussed given that Pilatus Bank was operated, from the moment it opened, as a money laundering center. not only the Malta brick-and-mortar facility, but the London letterbox (virtual) branch, which advertised itself to high net-worth individuals, and which was obviously designed to take full criminal advantage of the EU branch banking loophole.
Let's take a hard look at Sadr as a target individual:
(1) He was a young Iranian national, with no prior experience in operating a financial institution. he had no formal education in the field of international banking. His work experience was in operating a shopping center, and setting up an investment business.
(2) His efforts to achieve citizenship in the United States, through his alleged opposition to the regime in Tehran, failed because there was no factual basis for his clam. In truth and in fact, he had traveled into and out of Iran several times, and had not been arrested or even detained. In fact, while he moved his extended family to the US, after an obvious marriage of convenience to an Iranian-American lawyer got him his residency, his wealthy father remained in Iran. No wonder the US denied his petition. The accounting firm did not think this relevant ?
(3) The Source of Funds for the bank was later determined by law enforcement to have been the proceeds of crime. Just how did the accounting firm actually verify that the organizational funding for Pilatus Bank was legitimate ? Where is the firm's work product on its Source of Funds inquiry, we wonder.
(4) Allegations that Sadr paid government officials in Malta bribes to expedite approval of his bank license application, including but not limited to Muscat and Schembri, were apparently common knowledge, How did the accounting firm respond to corruption issues, and how did it rule them out ?
(5) Finally, where is the actual firm Work Product on its Enhanced Due Diligence , meaning its files, copies of materials accessed and obtained, and written conclusions and recommendations. I fear we will either not be able to locate its recommendation document, or there will be some other excuse on why a copy cannot be produced. Where's the file, please ?
When all the dust settles in Malta, after multiple arrest warrants are issued against the Malta money laundering defendants, and some true reformers are placed in power, someone should take a good look at this issue. there may be a cause of action available in a suit for damages, since if someone had done their job properly, Pilatus Bank would never have been granted a license, and millions of dollars of dirty money would not have flowed through Malta. It is humbly suggested that the accounting firm notify its insurance carrier forthwith.
Given that he had been a fugitive from justice for some time, we cannot help wondering whether he is connected to the Portmann Capital/Pilatus Bank cases. Why was such a huge reward offered at this juncture ? He formerly operated out of Miami; two separate cases are pending against him, one in SDNY the other in SDFL.
If you read our recent article Halkbank Again seeks to Delay the Iran Sanctions Violation Case at SDNY, you know that bank counsel has asserted that the interlocutory appeal they filed stops the case from proceeding until the appeal is decided, arguing that the Foreign Sovereign Immunity defense already shot down by the trial judge applies.
The Court has given the Government until noon today to respond. If your vision is good, take a close look at the tiny footnote at the bottom of the page. Defense counsel has diligently observed that they are not, by filing the Notice of Appeal (which I believe to have no merit at law) waiving their pending attempt to have the appeals court grant Mandamus, ordering the trial judge to recuse himself from the proceedings.
Clearly, the bank is trying every possible procedural tactic in this case. You might think they are afraid to go to trial. I know that defense counsel is trying to preserve all possible issues for the eventual appeal, but sooner or later, they will end up agitating the judge, which is not a good idea.
The Page 2 of counsel's letter is below. You will find Page 1 in the article cited above.
What do you so if several members of your corrupt organization are looking at long terms in an American prison, if convicted ? You do your best to see that you are never extradited to face the music in an American courtroom. In the case of a number of past and present government officials in the Republic of Malta, you attempt to play the Anti-American card. Will it work ? We sincerely hope not, for if it does, justice will be denied.
In an Open Letter to the Prime Minister and Cabinet, a number of Leftist intellectuals have vehemently opposed a SOFA Agreement with the United States, asserting that, if implemented, it will not only violate Malta's "Neutrality" as expressed in its Constitution, but it will place the country in danger from outside forces, violate its sovereignty, and possibly result in war crimes.
This is patently false. First, Malta's neutral political stance was drafted during the Cold War, to remove it from the East vs. West conflict. Since the fall of the Soviet Union in 1991, and the freeing of Eastern Europe, it is not longer relevant, and need no longer be held onto as a viable political position. There's no Iron Curtain in Europe any more. Get over it, intellectuals.
Second, the Global War on Terrorism, active since 2001, demands that countries are either allied with the West, or deemed to be opposing it. Does Malta really want to be grouped with Syria, Iran and North Korea ? We doubt it. The presence of US military forces in Malta will actually help protect it from terrorist acts, or assist in in dealing with them, should one occur, in real-time. Does Malta really want to be classified an an opponent of Counter-Terrorism ?
This is obviously a ploy by the Usual Suspects, those Labor Party officials who have grown fat from bribes and kickbacks laundered through local banks, to increase Public Opinion against their eventual extradition to the United States. They are hoping that the same individuals who voted them into power will oppose their extradition on money laundering, racketeering, and other charges. We trust that the people of Malta are too smart for this trick, and will see right through it; Let Justice be served.
We have been searching through court files to locate additional evidence that there are multiple law enforcement investigations in progress in what we are calling the Malta money laundering scandal. Back in the Matthias Krull file, we have found a 2019 reference that Krull, who is cooperating with US law enforcement to reduce 10-year sentence, was to meet at that time with at least two foreign law enforcement agencies. This supports the 2018 Plea Agreement information that we have previously published on this blog. Given this confirmation, for anyone to opine that there are no non-US investigations appears to be without a factual basis.
You may read the court document, which was filed in connection with yet another request by Krull's attorneys to delay his sentencing. Note that it was unopposed by the US Attorney's Office. I refer you to paragraph 4.
Peter, the highly-successful cash sniffing dog employed at Malta International Airport, has interdicted yet another bulk cash smuggler seeking to board a flight for Istanbul, carrying $23,000 that the passenger had failed to declare. Note that they are always going to Istanbul, and always carrying US Dollars. Drug profits most likely.
We wonder why Malta Police are not monitoring Turkish businessmen more closely, given that there are arrests for bulk cash smuggling, same exact story, over and over again. Does this mean that bribes are insuring that drug trafficking can be conducted free of law enforcement interference ? I am quite frankly getting tired of publishing the same stories, again and again, thanks to Peter's diligence. Don't you have any vice detectives on duty ?
