GOVERNMENT RESPONDS TO REZA ZARRAB'S MOTION FOR RECUSAL OF TRIAL JUDGE

District Judge Richard Berman

The US Attorney's Office for the Southern District of New York has filed a 21-page document, captioned Government's Memorandum of Law in Opposition to Defendant Reza Zarrab's Motion to Recuse. The memo makes several persuasive arguments regarding what it regards as defects in the defense motion to remove the trial judge, Richard Berman, from the case.

The memorandum convincingly argues that the motion fails, both as a matter of procedural, as well as substantive, law. The issues presented:

(1) The defense motion is untimely, and amounts to a waiver. It was not presented until more than four months after the Court, at the defendant's first appearance in the Southern District, disclosed information about a seminar that he had attended, two years prior, in Turkey. Defense counsel at that time did not move for recusal. Furthermore, the defense had participated in the filing of three pre-trial motions, with the filing of extensive memoranda of law. Prompt application for recusal, once information surfaces, which would give rise to such a motion, is required, under existing case law.

(2) the defendant's motion does not raise a reasonable question about the Court's impartiality. The Court's mere attendance at a conference, and public statements made at that time, about judicial independence and impartiality, do not demonstrate antagonism towards the defendant. Also, statements uttered by the Court, are overcome by the presumption that the judge will set his opinions aside, and rule, when on the bench, according to the law. There is no judicial bias; also, the Court never mentioned the defendant by name, in any public remarks he made at the seminar. Both the facts and the law are argued in support of opposition to the motion.

The memorandum contains extensive citations to what the US Attorney considers relevant case law on both points. Until the Court rules upon the recusal motion, we doubt that the pending motion to dismiss will be heard.

CAYMAN INSIDER SAYS GOVERNMENT ORDERED RCIPS TO IGNORE CAYMAN GANG OF FOUR $450m FRAUD FOR POLITICAL PURPOSES

A reliable local source in Grand Cayman, who has a contact inside the Cayman Islands Monetary Authority (CIMA), has asserted that he has been advised that a senior official in the Government has given a direct order to the Royal Cayman Islands Police Service, telling it not to charge any of the locally-based financial professionals, popularly known as the Cayman Gang of Four, with their $450m theft of securities and bank accounts of Canadian pensioners, in 2014 and 2015.

The source has learned that none of the foreign nationals are to be charged with the massive fraud, for purely political reasons. There has been serious scrutiny, by agencies of the United Kingdom, of the increasing amount of financial crime, and Cayman officials rightly fear possible intervention, at a number of levels. The local impact, of the UK action in the Turks & Caicos Islands, on Cayman, and other British Overseas Territories, should not be underestimated; Caymanians fear intervention, of some type, and are concerned that a prominent criminal case, involving Gang members Ryan Bateman, Derek Buntain, and Sharon Lamb, who are two Canadians, and a national from the Isle of Man, could further expose the Cayman Islands to UK action.

It is no accident that three of the most senior positions in the RCIPS have recently been given to law enforcement professionals from the United Kingdom and the Republic of Ireland, when promotion from within the ranks would have been more in line with the principles of community policing, where local officers, who come from, and therefore better understand the community they are working in, generally ascend to senior positions, through merit.

Rumors, emanating from other quarters, indicate that RCIPS management was bluntly told to conduct a thorough and extensive investigation, but not to proceed to indictment, which places political agendas before the protection of the public. One observer claims that the RCIPS will not charge any foreign national with financial crime, again to maintain a low profile for UK observers, and not to give them any excuse to interfere in what Caymanians view as purely internal affairs. Sharon Lamb was allegedly told to leave Grand Cayman, so that questions about her arrest would not be asked; Ryan Bateman was long gone, he having failed to return to face criminal charges. Derek Buntain is in hiding, somewhere in Canada, so there are no Gang members still residing in Grand Cayman.

Let us hope that you find all this as offensive as I do. 

DID LEON FRAZER COMPLIANCE OFFICER COMMIT PERJURY IN AFFIDAVIT ?

As the discovery phase, in the Canadian civil case styled Lawrence Heath, et al vs. Leon Frazer and Associates, Inc., unfolds, we have examined what appears to be a very disturbing document, filed in the case. It is an affidavit, containing information submitted by, and executed by, Leon Frazer's current  compliance officer, Alexander Adeniyi, that is sworn to be true, but this does not appear to be the case.

Perhaps a little background is in order; Lawrence Heath QC, a 90-year old retired Canadian lawyer, had his investments placed with William Tynkaluk, his personal financial advisor at Leon Frazer & Associates, Inc., an Ontario-based wealth management firm. The suit involves $10.2m, of the plaintiff's investments and cash, which is missing and unaccounted for. Leon Frazer had a fiduciary responsibility to safeguard the assets of the plaintiff.

The plaintiff's counsel sought to obtain copies of his accounts at Leon Frazer, in November 2015, and the firm's Chief Compliance Officer, Esida Selfo, represented and confirmed, both orally and in emails, that she had retrieved, from firm archives, 14 to 16 boxes of files and documents, pertaining to the plaintiff. Selfo assured counsel that it would be receiving copies of all documents.

Subsequently to the failure of Leon Frazer to produce the relevant documents and files, notwithstanding its prior repeated promises, and undertaking that it would comply, only a small number of documents were made available to counsel, and these were now represented to be the sum total of the files of the plaintiff. Obviously, this is not only a violation of discovery procedures, but verges upon Obstruction of Justice. The document produced do not even cover a fraction of the period during which the plaintiff held accounts at Leon Frazer.

Ms. Selfo's position, as Chief Compliance Officer at Leon Frazer, was terminated, allegedly due to her " serious illness," or "pregnancy"*, and counsels' efforts to secure the documents promised to them were answered then by a new employee (joined 2016), Alexander Adeniyi, who identified himself as her successor, and as the individual who would be handling the matter. Calls from counsel to Leon Frazer executives were universally ignored.

Chief compliance Officer Adeniyi

Taking into account the facts that you have just read, explain how Compliance Officer Adeniyi then files a detailed affidavit, controverting his predecessor's statements, and claiming that she was mistaken, regarding the books and records, stated that the small quantity of records produced were the sum total of what the company found. In truth and in fact, the affidavit is obviously untrue, given the other verified information on hand, and is either perjury, or failure to conduct due diligence, if the facts were concealed from the compliance officer, by Leon Frazer, and he signed a sworn affidavit, containing material misstatements of fact.

Spoliation of evidence occurs when it is intentionally withheld, hidden, fabricated, altered or destroyed. I will let readers who are lawyers decide which category to place Leon Frazer & Associates in, but, clearly, there are issues of honesty and truth,  or the lack thereof.

We shall continue to follow the progress in the litigation, and report back to our readers upon all developments, as they occur, and are reflected in court filings.
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* First, Leon Frazer staff stated that Ms. Selfo left her employment due to a serious illness; later, the allegation changed; it was stated that she left due to a pregnancy. The circumstances of her departure appear to be suspicious.  

REGIONAL CLONES OF ESTABLISHED NEWS RESOURCES MAY NOT BE TRUSTWORTHY

Most compliance officers conducting due diligence investigations rely extensively upon what they consider to be objective news sources for reliable information. these generally include establishment Western news publications, be they newspaper or newsmagazine.

This is not always true, however, when we rely upon sources that are spin-offs of the real thing. The authoritative Newsweek has been regarded as reliable source of information, but in 2015, the newsmagazine's ownership sold naming rights to a dubai-based Pakistani media mogul, who formed Newsweek Middle East*. The Middle East edition, which admittedly trades upon the international branding, and reputation of the parent, is something quite different: its staff is not practicing the objective journalism we require for compliance purposes. Several commentators have joined in concluding that the news coverage is slanted; if it's going to be like Al-Jazeera, it should not pretend to be something else.

Article about how the Gulf countries will not like if Americans can sue them for 9/11

This publication, specifically targeting for a regional audience, with local editorial staff, who describe themselves as having non-Western viewpoints, actually displays not only anti-American sentiments, in its news coverage, it has been known to favor specially designated global terrorist organizations. How does anti-Western sentiment figure into objective journalism.

Last week, a journalist described as being a senior editor was outed for giving a number of television news reports that, frankly, glorified Hezbollah. Her statements, collected over a period of time, and rebroadcast online, sounded like typical Hezbollah pro-Iran, pro-Syria propaganda. Furthermore,  Newsweek Middle East, while it carries a number of its parent's articles, censors, or, as they call it, "curates" the content for Arab audiences. One staff member confessed that the publication had to check local (UAE) law, before printing an article written by an individual from Israel. Do I really think I can get factual accuracy from a publication like this ?

Compliance officers do NOT wants news sources slanted to pander to a specific viewpoint, censored to remove any potentially sensitive or "objectionable" content, and supporting any sanctioned entity. You may want to draw a lesson from this story, and always check your sources carefully, to verify that you are actually accessing the information resource you want, and not its clone, successor, poser, or pretender; Always use the real McCoy.

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* Note how the "Middle East" portion of the magazine's name is conveniently lower case.

WHY WON'T CONGRESS EVER PASS THE BENEFICIAL OWNERSHIP DISCLOSURE BILL ?

H.R. 4450, The Incorporation Transparency and Law Enforcement Assistance Act of 2016, was introduced on February 3, 2106. It has languished in committee since that date, and one Congressional observer has given it a very slim (2%) chance of passage this term. It provides for a mandatory means of identifying the beneficial owners of corporations, at the point of corporate formation, and it will probably expire when the current term of Congress ends, as did three prior versions of this bill, in this decade.

This bill, if it ever becomes law, would close one of the major loopholes that money launderers employ, in the United States, to move, launder, and invest, dirty money in America, if the special interests can ever be sufficiently elbowed aside, to allow it to pass. No wonder the rest of the developed world considers the United States one of the best places to launder criminal proceeds, and to place the clean results into real estate investments.

HAVE YOU SEEN THIS PERSON IN THE LAST 30 DAYS ?

Sharon Lexa Lamb is missing from her residence in Grand Cayman, and is believed to be on the run. The retired Canadian attorney who has brought a suit against her, in the Grand Court of the Cayman Islands, has offered a reward, the details of which appear in the poster above.

If you have seen Miss Lamb, in the last 30 days, you are urged to contact the number listed. She could possibly be in the Isle of Man, or Belize, the Republic of Cuba, the Bahamas, or Bermuda. Do not attempt to approach her. If you have any relevant information, kindly call the toll-free number shown.

THE SANCTIONED PANAMANIAN WAKED ORGANIZATION SUES OFAC IN US DISTRICT COURT

Relatives and business associates of the indicted Panamanian money launderer, Nidal Waked, have brought a civil suit (Case No. 16-01730), in US District Court for the District of Columbia, seeking relief from the seventy-six OFAC SDN sanctions, imposed upon the Waked business organization, and its senior leadership. Abdul Mohamed Waked Fares, and Mohamed Abdo Waked Darwich are the lead plaintiffs. The Government has referred to their group as the 'Waked Money Laundering Organization," in the criminal indictment.

 The suit, which was brought against the Office of Foreign Assets Control, and John E Smith, OFACs Acting Director, in his official capacity, seeks access to the Government's records, for the purposes of a review of the sanctions, and potential delisting. It alleges that the "defendants have wrongfully denied the plaintiffs adequate access to the records, or to the details underlying their designations"*.

The plaintiffs' Counts allege:

(1) Violation of Procedural Due Process.
(2)  Violation of the Administrative Procedure Act.

They are requesting a judicial determination that OFAC's conduct violates the plaintiffs' Due Process and statutory rights, and are demanding an unredacted copy of their administrative record, or similar document, to provide them with "adequate post-designation notice." Issues relating to the Court's rulings on the existence, or lack of it,  of Due Process rights of foreign individuals, and entities, not resident within the United States, will be central to the resolution of the case.

The plaintiffs filed a motion for summary judgment early on, and the defendants have now filed an unopposed motion to stay their response to that motion, until the time for the filing of a response to the complaint has elapsed. A summary judgment motion can only be granted when the movant has established that there are no issues of fact, and he is entitled to a judgment as a matter of law. It appears that there are a number of constitutional, as well as factual, issues, which may preclude a summary judgment at this early stage in the litigation.



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* Complaint at 2.

PANAMA'S POSTER BOY FOR CORRUPTION FAILS TO SHOW UP FOR HIS MONEY LAUNDERING HEARING

Mayer Mizrachi, the son of fugitive Aron Mizrachi, and himself deported from Colombia, to face corruption and money laundering charges in Panama, failed to attend a mandatory hearing this week, on the money laundering aspect of his criminal case. The fact that no warrant was issued for his arrest  demonstrates the sheer power of the country's Sephardic organized crime syndicate, which virtually rules Panama, through bribes & kickbacks, and the placement of its members in all levels of the government.

Mayer's attorney, who did attend the hearing, is Ana Isabel Belfon Vejas, who was the Attorney General under the administration of Panama's now-fugitive former President, Ricardo Martinelli. Belfon has been accused of failing to bring criminal charges, in the Financial Pacific scandal, and killing the investigation, of ignoring Panama's rampant money laundering for five years, and of failing to return $4.2m, taken from a defendant who was acquitted, all during her tenure as Fiscal. I once had the dubious pleasure of seeing her have lunch, in public, with a Venezuelan national with known criminal links. She didn't care who saw her.

If Mayer Mizrachi is not convicted, and imprisoned, for his role in cheating the Government of Panama out of millions of dollars, the country's criminal justice system, riddled with corruption, will be further exposed as a sick joke played upon the people it is supposed to protect. We can only hope that the United States extradites him, to face the music, for laundering his criminal proceeds through American banks. The judges in the United States actually arrest defendants who fail to appear in court.

COMPLIANCE DILEMMA: BLACK PROTEST GROUPS THROW IN THEIR LOT WITH DANGEROUS BEDFELLOWS

If you are closely watching the rhetoric coming from Black activist groups of late, you know that they have aligned themselves with Middle Eastern and Arab organizations, and as a result, are now making policy statements against Israel, in support of BDS (which is now illegal in several states), and proclaiming pro-Palestinian, anti-Israel, and at times, even anti-semitic, dogma.

These positions, which vilify Israel, and by derivation, Jews, claiming that Israel is a "colonial" usurper of its national territory, which cause the Black movement to lose credibility with mainstream Americans, as history teaches us that Arab Palestinians' arrival in the region they now claim only occurred in the twentieth century, but Biblical Israel existed 3500 years ago, and Jews have lived in what is now Israel, continuously, since that time. Arabs are native solely to the Arabian Peninsula, and not to any other area of the Middle East, or North Africa, where they themselves displaced the local indigenous populations; they are the only true colonial power in the region, not Israel. The other argument, that Israel is, like the US, racist, which has no basis in fact, when the country has two million Arabs living freely with its borders, is merely a restatement of Arab enmity towards Israel.

Somewhere, Dr. Martin Luther King, who was a strong supporter of a democratic Israel, which practices freedom of religion, and whose American Civil Rights struggle was supported by American Jewish organizations, is turning over in his grave; the present group of activists gets an "F" grade in Black History; they have forgotten their old friends. If you choose to move too far to the left, you may acquire strange bedfellows you will regret onboarding later.

You are free to agree, or disagree, with my interpretation of the the Arab-Israeli conflict, but here in the United States, financial institution compliance officers must deal with the looming and ever-present threat of terrorist financing, and the consequences of conducting transactions with individuals, or entities, labeled by OFAC as SDGT, or SDN, due to terrorist affiliations.

The fear is that, while becoming more and more enmeshed with their new Arab Palestinian allies, that one or more of the Black activist organizations will, knowingly, or unwittingly, accept funding from Hamas, the Palestinian Islamic Jihad, or other OFAC-sanctioned groups, through front organizations, or intermediaries, and by doing so, violate American sanctions, which prohibit any transactions with designated terrorist organizations.

Hamas, among others, has a long history of seeking to raise funds in the United States, through charitable entities that front for it. Remember the Holy Land Foundation for Relief and Development ? Making a contribution to an American activist group, through a front not publicly identified as such, is easier than you think, especially when the US-based group, eager to receive funds, will not be looking too closely as donors.

We do not even know whether all of the NGOs that comprise the Black activist groups have designated, full-time compliance officers, and access to commercial off-the-shelf databases of known terrorists, and OFAC-sanctioned, individuals and entities. Their records do not appear to be transparent, and perhaps they should be.

The bottom line: unless the Black activist organizations now adopt banking best practices AML/CFT compliance programs, there is a substantial risk that Hamas, or some other terrorist group, will drop in funding, with potentially harmful consequences, not only for the activists, but for their banks as well.  

LEST WE FORGET: 9/11 FIFTEEN YEARS AFTER

2606 in the World Trade Center, and on the ground surrounding the buildings.
125 in the Pentagon.
265 on board the four aircraft.

Rest in peace.

HAMAS OPENS AN OFFICE IN ALGERIA

Hamas, which, as most compliance officers know, is designated a global terrorist organization by many Western countries, including the United States and Canada, has announced, on Algerian television that it has opened a representative office in Algeria. This action is a direct challenge to the existing Palestinian "embassy" currently operated there by the Palestinian Authority.

Please note that Hamas reportedly receives monetary support from the local Muslim Brotherhood affiliate in Algeria, the Movement of Society for Peace, or MSP, and the Algerian Muslim Scholars. Whether this new office in Algeria will be conducting terrorist operations in Europe, or the Middle East, such as those funded and directed by the Hamas office in Turkey, is a distinct possibility. There is one other Hamas office in existence, in Qatar, where a number of senior Hamas officials live a lavish lifestyle, but which has not yet been identified with specific terrorist actions; terrorist financing and finding activities are said to be the primary mission of the Qatar office.

For compliance purposes, the risk that dual-purpose goods might be imported into Algeria, by a Hamas front, and then transshipped into Gaza, through circuitous means, should be increased, for Country Risk assessment. Hamas leader Mohammed Othman has been named, in Middle Eastern media, as the initial supervisor of the Algerian office.

IN WAKE OF DIVERSION OF ITS FUNDS TO HAMAS, WORLD VISION TERMINATES ITS GAZA CONTRACTORS

In the Aftermath of the arrest, in Israel, of the Gaza manager of the Christian charity, Global Vision, on terrorist financing charges, the charity has announced that it is terminating all its Gaza-based contractors. Approximately 120 individuals are reportedly affected, and all Gaza programs of World Vision have been suspended, according to the charity's spokesperson.

The Global Vision operations manager for Gaza, Mohammad El Halabi, is accused of illegally diverting approximately $7m a year, of the Charity's funds, to Hamas. The diverted funds were used to purchase arms & ammunition, pay Hamas members, build fortifications, including an oceanfront military facility, and repair homes of Hamas agents. One source claims that Hamas intentionally directed that El Halaby become a World Vision employee, and if that is true, then all charitable entities operating in the Palestinian Territories should immediately ascertain whether any of their staff are members of any specially designated global terrorist organizations.

World Vision bank accounts in Jerusalem have been frozen by Israel, according to the charity, and it can no longer pay its Gaza contractors. A number of Western countries, who are donors, abruptly cut off aid to World Vision, after El Halaby was arrested and charged.

Questions have been raised about World Vision's defective global auditing procedures, since the massive diversion of funds took place over a period of several years, and whether illicit diversion of donated funds, by terrorists, is occurring in other countries where the charity operates.

RAISE COUNTRY RISK FOR ANTIGUA & BARBUDA DUE TO CONTINUING CORRUPTION

Corruption in government continues to be a major problem in Antigua. The government and the judiciary have intentionally delayed the extradition of its former banking regulator, Leroy King, since 2009. King, who was the last participant in Stanford's massive Ponzi scheme, Stanford International Bank, is wanted in the US, but Antigua, which fears that all its senior leadership from that period will be named, as recipients of dirty money, including the man at the top, refuses to obey the rule of law. Unless the US ultimately receives Mr. King, relations between it and Antigua will be permanently damaged.

The Citizenship through Investment Program, which is the sale of passports to wealthy investors, notwithstanding their unsuitability, is a national scandal, and many government officials are now said to have repeatedly taken bribes and kickbacks in that program. Compliance officers, and immigration officials, in North America and the EU, now look carefully at all Antiguan passports.

 In New York, the Federal indictment of an Antiguan ex-diplomat at the United Nations, with ties, again, to senior government officials, and allegations of bribery, meaning reputed payments to the then-Prime Minister, are ignored, and does not result in any action in Antigua.

The vulnerability to money laundering, and other financial crimes, at local financial institutions and money service businesses, reportedly remains high, according to the latest US State Department INCSR report (2016).

The alleged sale, or barter, by government, of National Honors, including Knighthoods, and their subsequent improper use in the United Kingdom, by the recipients, is yet one more national scandal that confirms anything is for sale in Antigua, even royal titles.

Systemic corruption, and deliberate avoidance of the rule of law in the court system, all add up to major exposure, for foreign investors, and even international banks, that decide to do business with, or in, Antigua. Under the circumstances, Country Risk should now be raised to a very high level for Antigua, for the net assessment of the risks involved in the investment of capital, and even conducting routine banking business, are uncomfortably high. Review the facts, and make your own independent determination, but consider carefully the issues shown above, before revising your own calculation of Country Risk.

WHAT ABOUT ALL THE OTHER LAWYERS AT MOSSACK FONSECA ?

The Panama City law firm of Mossack Fonseca, exposed by the Panama Papers as an organization in business to hide the identities of their clients, and their dirty money, behind the shield of bearer share corporations, and bogus foundations, does not proudly share the names of its lawyers (except the two name partners) with the public. Go to the firm's large website, and while the firm extols the training, experience, legal education, and purported professional reputation, it does not, curiously enough, name its lawyers.

I have, in the past, been to the firm's offices, and there were no shingles posted, proudly naming the partners, associates, and of counsel who practice there. Given that these attorneys assist the firm's clerical staff in forming those non-transparent BVI companies, as well as corporations in far-flung, and often obscure, tax havens, for dodgy clients, they are a problem for compliance. Compliance officers should be aware of the names of these MF lawyers, for should they encounter one, while conducting a due diligence investigation, it is a major red flag, given the firm's long and sordid history of facilitating money laundering, tax evasion, and potentially, terrorist financing. As the gatekeeper, you know the dangers these individuals potentially pose to North American and EU financial institutions.

Therefore, since there is no official firm roster of MF lawyers, we will be extracting their names from publicly-available documents and web resources, and publishing them here. Finding any one of these lawyers' names on documents presented at account opening should set off alarms in your head, if not throughout your entire office. Warning: Some of these lawyers have already deserted the sinking ship, and fled the firm for other positions.

Valentin Ureña III
Josette Roquebert
Li An Chong Vieto
Luis Eduardo Concepción
Ana Morales
Edison Teano
Ramses Owens
Daphne Durand

We shall endeavor to obtain the balance of the names and publish them here, as a public service. Remember, when the firm closes, these individuals will all be out there looking to lateral into another Panama law firm. Would you hire a lawyer who formed offshore companies for criminals at his or her last job ?

MAYER MIZRACHI DEPORTED TO PANAMA, TO FACE CORRUPTION CHARGES, POSSIBLE US EXTRADITION

Mayer Mizrachi, the son of Aron "Rony" Mizrachi, the fugitive brother-in-law of ex-President Ricardo Martinelli, has been deported to Panama, from colombia, where his petition for asylum was rejected by the aurthorities. Mayer is wanted in his native Panama in a corruption case, where it is alleged that he received $13.3m, in connection with a government contract, which was never performed by Mayer.

His father, Aron Mizrachi, fled Panama after his role in the illegal surveillance of prominent Panamanians, by the country's national security agency, and the unauthorized purchase of surveillance equipment, became public knowledge. He is believed to be living in Israel.

Mayer also reportedly laundered $200m, some of it through financial institutions in the United States, and there are rumors in Panama City that the United States Department of Justice has plans to charge him, or has already indicted him, for that crime. The possibility of his extradition to the US has been as major topic of conversation in Panama. Given his father's political power, even in absentia, he could evade conviction in Panama's notoriously corrupt courts; extradition, to face justice in Federal Court in America, may be the better choice for the Government  of Panama.