FORMER ANTIGUAN FINANCIAL SERVICES DIRECTOR SEEKS REVIEW OF EXTRADITION TO US TO FACE THE MUSIC IN STANFORD PONZI SCHEME CASE

Leroy King, the former head of the Financial Services Regulatory Commission of Antigua, this week sought judicial review of the Extradition warrant signed by Antiguan Prime Minister Baldwin Spencer. Citing bogus constitutional and other patently spurious grounds, interposed clearly only for the purposes of delay, King still seeks to evade the long arm of the American criminal justice system.

He is charged in Federal Court with 21 counts of:
(1) Conspiracy to Commit Money Laundering.
(2) Securities Fraud.
(3) Wire Fraud,
(4) Mail Fraud.

Why is such a high-profile defendant, wanted in the US, still in Antigua ? It is generally believed that King can implicate senior Antiguan government officials, at the highest level, in the Stanford case. His extradition, mired in dilatory procedural issues for the last two years, could come soon. He allegedly misled both investors, and American regulators, seeking information on Stanford International Bank, and is accused of obstructing the early discovery of the Ponzi scheme by misleading and delaying investigations.

Why is he so reluctant to go to trial in America ? He could spend the rest of his life in a US prison.

                                     Will we ever see Mr. King in an American courtroom ?

APPEALS COURT SAYS STANFORD CLAIMANTS CAN PURSUE CLASS ACTION AGAINST STANFORD'S LAWYERS

The lawyers who allegedly assisted convicted Ponzi schemer Allen Stanford by delaying  Federal investigations of Stanford Bank have been dealt a setback. The Fifth Circuit Court of Appeals* has held that Federal laws that prohibit state court class actions involving securities did not prevent the filing of  a case seeking to recover damages for losses arising out of Stanford's Ponzi scheme.

The Court found that securities were only "tangentially related" to the fraudulent scheme that resulted in massive losses. The bogus Certificates of Deposit, which were issued offshore, were not covered by Federal Securities Law.

The underlying cases involve actions against two major law firms. It is alleged that a former SEC attorney  representing Stanford helped him cover up his crimes by aiding and abetting his fraud, specifically by:

(1) Delaying and obstructing SEC investigations.
(2) hiding documents from the SEC.
(3) Omitting to disclose the existence of a formal SEC investigation.
(4) Hiding behind Antigua's confidentiality laws.

These class-action cases, pending in state court in Texas, can now proceed. Since these are intentional torts, will there be a denial of coverage by the law firms' insurors ?  And just how much in the way of monetary damages will be the result ? The moral is, know your client. If you think that he's a Ponzi schemer, you had better withdraw from representation forthwith.
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*Roland v. Green et al,  Case No.: 11-10932, Fifth Circuit Court of Appeals, __F.3d __, 2012 WL 898557 (5th Cir. 2012). 

VIKTOR BOUT APPEALS HIS CONVICTION

The New York attorney for convicted arms trafficker Viktor Bout has filed a Notice of Appeal from his District Court conviction*. Bout, who was sentenced to 25 years on one of the four counts, has also had a $15m final judgment entered against him, in Forfeiture. He is also required to serve five years of Supervised Release after he serves his sentence.

The sentencing judge made a number of favourable recommendations to the Bureau of Prisons (BOP):

(1) That he be designated a correctional facility as close to New York City as possible. This was probably made to facilitate regular contact with his lawyer in the preparation of his appeal.

(2) That he be placed in inmate general population of the facility to which he is designated, and that he not be placed into Solitary Confinement. You will recall that the Court disputed that he was a security or escape risk prior to trial, and had him moved in general population**.

(3) That the BOP take notice that he spent fifteen months in pre-extradition custody in Thailand, where condition of confinement are severe.

(4) That, based upon the Court's determination that the defendant poses a low risk of future substance abuse, he not be subject to drug testing.

We shall be reporting on the progress of the appeal in due course.

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*United States vs. Viktor Bout,  Case No.: 08-cr-00365-SAS (SD NY).
**Viktor Bout ordered transferred from Solitary Confinement

ANOTHER MONEY LAUNDERING "TOY STORY" IN LOS ANGELES

Remember the Angel Toys case in Los Angeles, two years ago ? A toy company, Angel Toy Corp.,  was laundering narcotics profits. Well, after the principals went to prison, some of the employees moved over to Woody Toy, Inc., also in LA. And, yes, it happened again, readers; now this second company's executives have been indicted. What's the old saying, "If at first you don't succeed, try, try again."

Woody Toy's owners, accountants, some of the sales staff, and some of their Mexican clients, were allegedly all involved in a twist on the Black Market Peso Exchange. Here's how it worked:

(1) Drug profits earned in the Continental United States were deposited in bulk, often shrink-wrapped, with Woody Toy staff. They deposited the cash in small amounts, what we call structuring, to evade the reporting requirements.

(2) US Dollar wire transfers were then made to legitimate toy retainers, located in Mexico & Colombia, disguised as legitimate business transactions.

(3) The Latin American toy dealers would pay over to the narcotics traffickers the Peso equivalent of the dollars they paid in California, less certain costs and charges. This enabled the drug traffickers to convert their criminal proceeds to local currency, without exposing themselves to law enforcement attention, due to currency controls and reporting requirements.

I am wondering if the staff are now looking for new employment in yet another toy store.

ARE YOU PERIODICALLY CHECKING YOUR GOVERNMENT CONTRACTOR CLIENTS ?

The US Government's Excluded Parties List System*, which is updated constantly, is a list of entities that have been debarred, suspended, proposed for debarment, excluded or disqualified from government contracts, subcontracts, and certain other government benefits. These drastic actions, which generally occur after major contractor misconduct, may be sufficient grounds for you to exit the client relationship.

It is suggested that, should your clientele include companies that are defense or government contractors or suppliers, you check the EPLS against your active client list  regularly.
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*EPLS

RAISE COUNTRY RISK FOR SINGAPORE

As a compliance officer at an international bank, you know that you must, in your due diligence investigations, rely upon the objective truth about the countries where prospective bank clients reside. Recent governmental actions taken in the Republic of Singapore against Internet postings, which include legal warnings by the Prime Minister himself, and threats of legal proceedings, appear to have increased existing restrictions on free speech. You need the unvarnished truth about corruption, whether governmental, judicial or otherwise, to discharge your compliance obligations properly.

You need to learn all you can about individuals seeking to become bank clients who are Politically Exposed Persons (PEPs), senior government officials or their families, members of the judiciary, and other government functionaries. Governmental interpretation of existing Singaporean Law restricting freedom of expression has deemed these topics forbidden in any form of media:

(1) Questioning the character or integrity of public officials.
(2)  Nepotism, commentary about the placement of relatives in powerful governmental positions that they may not be duly qualified for, in education, training and experience.
(3) Questioning the internal affairs and conduct of government.
(4) The expression of politically sensitive material.
(5)  Comments critical of the judiciary and its rulings, particularly questioning its independence.

Bloggers, or any media for that matter, appear to have been targeted since February; they represent one of your best alternative sources of information that will not be appearing in the local, self-censored media. The possible governmental action contemplated or threatened against them include:

(1) Contempt of Court.
(2) Civil Defamation suits for money damages.
(3) Sedition charges.
(4) Other criminal charges.

Since the minimal unrestricted flow of information on government and PEPs that was available before is now being targeted, and attacked, by government, leaving only the official side, you are at a distinct disadvantage when assessing country risk. This means that you need to take a hard look at any potential exposure you may incur, by on-boarding high net worth clients from this jurisdiction, or by committing financial resources.

Country risk is all about ascertaining objective facts; since the government of the Republic of Singapore has chosen to limit your access to potentially important intelligence, you may now choose to increase country risk for Singapore. Consider all the facts, make your own investigation, and act accordingly.

WHO WILL STOP THE RAIN ?

Venezuelan "flight capital," much of it illicit, continues to flow, unimpeded, into the Republic of Panama, and nothing is being done to stop it. Why is this happening, and what are the long-term prospects ? In this article, we will look for a solution.

Where did the money come from ? A small portion is legitimate capital flight, wealth from Venezuela's business class, leaving a bruised domestic economy, declining in a troubled nation whose political future is clouded, due to the imminent demise of its leader, President Hugo Chavez Frias. However, the source of most of the money is darker:

(1) Public funds stolen by corrupt officials, and those who surround them. Some of the money is looted from PdVSA, the country's oil monopoly, as Venezuelan oil, the national monopoly, is paid for in US Dollars. Other officials receive bribes and kickbacks, as Venezuela has overtaken Haiti as the most corrupt country in the Western Hemisphere. I assure you, it has earned that title. Remember that Chavez himself said that Panama was the safest place for your money. I wonder how many billions he has parked there; it can't all be in Switzerland.

(2) Narcotics profits, much of it earned by senior officers in the military, specifically the National Guard, whose pivotal role was exposed in public by a former drug trafficker, now on trial, who readily admitted that dozens of officers were deeply involved.

(3) PEP money; Many Politically Exposed Persons, known in the financial industry by the acronym of PEP, are individuals closely linked to powerful government officials, and who have extremely lucrative contracts, which generate obscene profits. These funds are generally sent offshore, lest the PEP holding the contract fall from favour in official circles, and have his assets confiscated, in a country where the rule of law does not exist, and the judges always find for the government, in civil as well as criminal cases.

How is it getting in ? This is much easier to explain.

(1) Bulk Cash Smuggling; via private light plane and business jet from Venezuela, landing at small, obscure airports in Panama, often under cover of diplomatic status, the money floods into the country.

(2) Financial Instruments; cashier's cheques and other items are being hand-carried in, tucked into envelopes on the person of couriers and businessmen, to be deposited into that small number of banks  and non-bank financial institutions whose officers ask no questions about the Source of Funds, or the identity of the beneficial owner of a corporation, or the persons involved in a Panamanian foundation.

(3) Wire Transfer from Venezuela, or through third countries: Again, they are accepted without question by the minority of financial institutions that practice "Willful Blindness" when it comes to Compliance. They apparently are blinded to the profit picture.

What is the result of all this dirty money ?

Looking around Panama City, at all the huge construction projects, and you would think that you were in Dubai. Who do you think is buying a dozen condominium apartments at a time, or putting up an office building, paying cash ? There is full employment, a building boom, and an expanding economy. No wonder nobody is rocking the boat.

What is the Long-Term risk to Panama ?

(1) Post-Chavez, there could be a democratic government down the road in Venezuela, in a future not clouded with Socialism, and without links to Iran and Cuba. in that scenario, if we are to believe the Venezuelan Opposition, and its expatriates, there will be a massive effort to recover public funds, wherever held, from the accounts and assets of corrupt former government officials and PEPs. This will get ugly, and the media will air all the dirty laundry, which may make Panama less attractive for legitimate investors and businessmen, anxious to avoid a now-controversial jurisdiction. Also, Venezuelan opposition leaders want  to try former officials for Crimes Against the State. Will Panamanian bankers be called to testify, and even be charged with crimes ? Of course.

(2) Does this mean for the future ? Dozens of civil cases being filed in Panamanian courts, against bank accounts and waterfront office buildings ; Criminal money laundering cases, filed in the United States against Panama City bankers ; A domestic economic slowdown in Panama, or even a recession ; Political unrest, due to a weak economy could also occur. Just how far will it go ?  

Unfortunately, neither the governments of Panama nor the United States seems to have any interest in stopping the current Venezuelan exploitation of the Panamanian financial structure. Unfortunately, all this will only become apparent after a regime change in Venezuela. Panamanians, you may ultimately find all that Venezuelan money will give you indigestion.

CALIFORNIA COURT DISMISSES EQUATORIAL GUINEA FORFEITURE CASE

A United States District Judge in Los Angeles* has dismissed, without prejudice and on procedural grounds, the United States' civil forfeiture case against Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea. The Court granted the motion to dismiss, but granted leave for the government to file an Amended Complaint before 11 June.

The case, which has the curious style of United States vs. One White Crystal Covered "Bad Tour" Glove and other Michael Jackson Memorabilia,  seeks forfeiture of Teodorín's multi-million dollar oceanfront estate in Malibu, California, amongst other assets, which the United States claims constitutes:


"The fruit of an international criminal scheme orchestrated by Nguema to engage in public corruption in Equatorial Guinea and then hide, spend, and launder the resulting criminal proceeds through the use of a web of shell companies, intermediaries and straw owners in the United States."

Attorneys for Nguema, in their motion to dismiss, stated:

(1) The conclusory allegations of the compliant are legally insufficient.
(2) The Compliant fails to identify a specific victim.
(3) One seeking civil forfeiture must plead particularised factual allegations of both wrongdoing, and the property's substantial connection to the activity subject to forfeiture.

Meanwhile, the corruption and money laundering case against Nguema in France is moving forward**.

We shall continue to monitor both cases, and bring you all developments as they occur.
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*Case No.: 11-cv-003582-GW-SS (CD CA).
**Arrest Warrant for Money Laundering approved for Teodorin

MEK IS TRAINING IN PANAMA, FUNDRAISING IN VENEZUELA

In the midst of the American investigation* into how many former US government officials were paid to lobby for the removal of the People's Mujahdin Organisation of Iran (a/k/a MEK and PMOI) from  US Treasury designation as a Foreign Terrorist Organisation (FTO), new information has emerged that indicates that the MEK is not only engaged in fundraising in Venezuela, it is training for war in the jungles of Panama.

Information is incomplete, but here's what we know so far:

(1) MEK agents are undergoing military training in the Republic of Panama, irrespective of the organisation's longstanding claims that it has renounced violence as an instrument of policy. The MEK is suspected of assassinating Iranian scientists involved in the illegal weapons of mass destruction programme, though no positive proof of its involvement has been made public. The United States is not involved in this training. Panama's government appears to be ignoring the MEK presence; whether officials are being paid to allow the training take place is unverified, but suspected.

 Here is a file photograph of MEK troops in Iraq; the MEK fought on the side of Iraq in the decade-long Iran-Iraq War. It is universally reviled by the Iranian people for that reason, and it is doubtful that it could have a meaningful role in any future democratic Iranian government.

(2) Iranian expatriates and Arabs living in Venezuela report being targets of MEK "fundraisers," whose tactics are said to verge on extortion. There are conflicting reports as whether the MEK maintains a presence inside Venezuela.

The fact that the MEK is still training for military action should be thoroughly investigated by the United States Department of State, which is reviewing the MEK requests for removal from its designated FTO status. The MEK is, frankly, considered a  cult, whose leadership engages in psychological manipulation, including such radical steps as forcing its members to divorce its spouses and to thereafter forego family life, to concentrate upon total and absolute obedience to the MEK cult of personality. It is not an advocate of democracy.
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*Investigation of MEK Supporters reported

For further reading:

Why hasn't the US seized MEK Funds ?
US Opposes Court interference in MEK Terrorist Designation
Agents for Designated Terrorist Organisation trained in USA

ARREST WARRANT FOR MONEY LAUNDERING APPROVED FOR TEODORIN

The Public Prosecutor in Paris has approved the request of the investigating magistrates to issue an arrest warrant against Teodoro Obiang Mangue, the son of President Teodoro Obiang Nguema of Equatorial Guinea (EQ). Mangue, who is generally known as Teodorín, The Equatorial Minister of Agriculture & Forestry, allegedly purchased luxury goods and real estate with public funds.

The case has drawn an ominous response from the EQ government, whose officials have warned France of unspecified consequences if it proceeds with prosecution. It did deport a French national who circulated a French Embassy letter that provided emergency contingency information to expats.

In an obvious effort to shield his playboy son from arrest, President Obiang has reportedly appointed him Permanent Assistant Delegate to the United Nations Educational, Scientific & Cultural Organisation (UNESCO). If confirmed, this would give Teodorín diplomatic immunity from prosecution in France. There have been objections lodged with the EQ Foreign Ministry by nonprofit anti-corruption organisations.

The French investigation, which is said to have also focused on corrupt PEPs from other African nations, again exposes the sordid truth; that the privileged children of corrupt African rulers often rival their parents' wretched excesses, spending public funds on extravagant purchases, living literally like kings. It is refreshing to see someone finally do something about it.

French Police Seize Eleven Luxury Cars in Paris in Money Laundering Investigation

ATTORNEYS FOR NORIEGA SEEK HIS RELEASE FOR MEDICAL REASONS

Attorneys for Panama's imprisoned former General Manuel Noriega, serving a twenty-year sentence in his native country for two murders, are asking that he be released from prison for medical reasons. Noriega, who has already served more than two decades in American and French prisons, was hospitalised earlier this year, as he was was suspected of having contracted influenza, and had a fever.

His lawyers claim that the former dictator, who is 78 years old, and has suffered from heart problems, was  found during a recent examination to have a benign brain tumor, which they say could lead to:

(1) Paralysis
(2) Epilepsy
(3) Convulsions
(4) Sudden death

It has been reported that Panamanian prison authorities claim his health does not warrant release to house arrest, or some other form of non-custodial confinement. Should he be released for humanitarian reasons ? Perhaps it might be wise to consult with the next of kin of his victims; I doubt whether they would be very supportive.

Should Noriega be released from prison, some of his former supporters could destabilise Panama, a situation which must be avoided. The Government of Panama properly followed the rule of law by imprisoning him when he was extradited from France, rather than be released to home confinement. It is submitted that Panama does not need him to reappear on the political scene at this time.

He has been returned to this cell at El Renacer Prison.

PANAMANIAN MINISTER UNDER INVESTIGATION FOR MONEY LAUNDERING

A recent short article in Panama in La Prensa  has exposed an ongoing money laundering investigation targeting a senior Panamanian minister, who allegedly has been associated with Venezuelan nationals involved in narcotics trafficking. The investigation, which is not being conducted by Panamanian law enforcement, but by an American law enforcement agency, could result in the indictment of the minister in the United States. Money Laundering carries a maximum penalty of twenty years in Federal Prison, plus a maximum fine of $500,000. Since Parole has been abolished in the US Federal penal system, a twenty years sentence means a minimum of seventeen years of incarceration.

Whether this investigation is linked to reports that there is a substantial flow of illicit funds into a Panamanian bank, which is reportedly then laundered by converting in into stored value cards, each worth up to $25,000, which are then transported to Venezuela, is unconfirmed, but a number of Panamanian officials at the ministerial level have been forced to resign in the past, when criminal conduct has been exposed.

Will the United States Government ask for the minister's extradition, to face justice in America, and if so, will there be other Panamanians charged ?   

OFAC FINES US COSMETIC FIRM $450,000 FOR IRAN SANCTIONS VIOLATIONS

The US Treasury Department has published its latest edition of Civil Penalties Information, which in the past has usually exposed violations of the Iran Transaction Regulations (ITR) and the International Economic Powers Act (IEEPA). A New York-based Cosmetics firm, Essie Cosmetics Ltd., and an unnamed corporate officer, were sanctioned* for unlicensed exports to Iran. The civil penalty, which was consented to by the company, $450,000, may have been so high due to the fact that the company, according to OFAC, failed to self-report the violation, and that there were "efforts to evade sanctions." You can read the complete text in the hyperlink below.

Are these notices intended to deter future violators ? If so, why are so many American companies being caught trading with Iran ? Don't their compliance officers read the Department of the Treasury website, or is simple greed the issue here ?
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*Enforcement Information

STANDOFF IN SOUTH CHINA SEA COULD RAISE REGIONAL RISK

A territorial dispute between China and the Philippines resulted in an extended standoff this week between opposing naval vessels at Scarborough Shoal, a tiny island in the South China Sea. The Shoal, which is only 128 nm. from the Philippine island of Luzon, is 600 nm. east of China's Hainan island; it is within the Philippines' designated 200 nm. Exclusive Economic Zone, and within the Continental Shelf.

Chinese fishing vessels in the area were intercepted by a Philippine Navy cutter, which was in turn blocked by two Chinese maritime surveillance vessels. The claims of the Philippines to the territory have been disputed by China, which is now claiming sovereignty over the South China Sea, and all the islands contained within. This also includes both the Paracel Islands and the Spratley Islands. Chinese claims overlap those of several other countries in the region, and this has increased country risk since 2011.

The United States, which supports the right of free passage through this strategic waterway between Northeast Asia and the Middle East oil exporting countries, has sought to play a role in the territorial disputes between the Southeast Asia countries and China, much to China's obvious discomfort.

The current situation, which was resolved peacefully, through diplomatic efforts could raise regional tensions, and could raise country risk. We have been covering* the increasing number of incidents, and shall be closely monitoring future developments.
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*Continue to monitor South China Sea Incidents for Country Risk
South China Sea remains unsettled and merits attention for Country Risk purposes

PARTNER AT PONZI SCHEME LAW FIRM CHARGED WITH CAMPAIGN CONTRIBUTION VIOLATIONS

The United States Attorney in Fort Lauderdale, Florida has filed a Criminal Information* against Attorney Steven Lippman, who was a shareholder (law partner) of convicted billion dollar Ponzi schemer Scott Rothstein, charging that Lippman assisted Rothstein perpetrate his massive scheme. Rothstein sold investors financial participation in settlements of employment discrimination and sexual harassment cases that did not exist. The "cases" were ostensibly being handled by lawyers in his firm, the now-defunct Rothstein Rosenfeldt Adler

Whilst charging a single count of Conspiracy to Defraud the United States, the Information recites three separate tactics that Lippman engaged in, in support to Rothstein's bogus investment programme:

(1) Violation of the Federal Election Campaign Act, by improperly bundling, and submitting contributions to the 2008 McCain Presidential Campaign, himself and through third parties. The object was to increase Rothstein's political power and influence; he later became a delegate to the 2008 Republican National Convention.

(2) Kiting cheques; Lippman sent worthless cheques, totaling over $10m, to Rothstein firm accounts, which were later made good by deposits from Rothstein. The object of this activity was to make it appear that Rothstein's law firm was very successful, with a large cash flow.

(3) Defrauding the IRS; Lippman received reimbursement for personal expenses unconnected to the law firm, which were listed as office expenses. He evaded taxes upon concealed income that exceeded $500,000 .

A waiver of a Grand Jury Indictment was apparently executed by Lippman's counsel, and the filing of an Information is generally a signal that the Defendant is cooperating with the authorities. the docket reveals that a change of plea hearing has already been set for 11 May, which confirms that presumption.

The maximum sentence in this single-count case is five years' imprisonment.

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*United States vs. Lippman,  Case No.: 12-cr-60078-JIC (SD FL).