PONZI SCHEMER'S BIZARRE APPEAL CONTINUES TO HAVE PROCEDURAL PROBLEMS

We are still waiting to see the initial appellate brief of convicted Ponzi schemer, Joel Steinger, who strangely filed two appeals from his conviction and sentence, in which he entered a guilty plea, and received a 20-year sentence. Upon what legal authority does he base these bizarre appeals ?

The latest procedural error: he failed to file his brief & appendix when due in December, and the Court gave him until the end of January to seek leave to file late. When his counsel did make that request, he failed to attach a copy of the brief and appendix to his motion, committing yet another error of procedure. Is his attorney so unfamiliar with appellate procedure, and local rules, that he continues to make mistakes ? His last one, seeking to add a transcript to the Record on Appeal, when the appropriate procedure is to seek to have it added at the trial court level, indicates a possible lack of knowledge of basic appellate procedure.

Anyway, if the appellant's brief is ultimately admitted, we shall analyze it in detail,  

ROTHSTEIN PONZI VICTIM SEEKS TO COLLECT ON $67m JUDGMENT AGAINST TD BANK

 

Coquina Investments, who recovered a $67m judgment* against TD Bank, for the bank's role in facilitating Scott Rothstein's $1.4bn Ponzi scheme, has asked the trial judge to apply the bank's supersedeas bond, which stayed enforcement while the bank brought an unsuccessful appeal, so that it can recover upon the judgment. The bank has declined to satisfy the judgment, and it appears that some of its actions could be viewed as purely dilatory, to unduly delay the matter after the bank had exhausted all its legal remedies.

The plaintiff, who filed its civil suit in 2010, has asserted that none of the bank's pending motions are relevant, or have any legal merit, which justify any further delays. The case is a textbook lesson for banks; they must always look past lucrative clients, to determine whether there are any red flags which indicate that their client is not operating legitimate business, and could be perpetrating financial crime, with the assistance of the bank. In the Rothstein case, all TD Bank had to do was check the litigation dockets in South Florida courts, and they would have learned that the number of lawsuits in which the Rothstein firm was counsel of record were inconsistent with the volume of deposits.  Ponzi schemes working out of your bank can result in finger pointing at the bank, as a facilitator, when the Ponzi implodes, leaving the victims angry, and bent on justice.

Ponzi schemes must be identified early on, and the account relationship terminated, to avoid the nightmare of a major lawsuit in the aftermath of a Ponzi scheme; The TD Bank case should make all bankers take notice of the consequences of failure to do so.
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Case no.: 10-cv-60786-MGC (SD FL).

LACK OF AML FOR REAL ESTATE FACILITATES PURCHASES OF LUXURY CONDOMINIUMS IN MANHATTAN BY CORRUPT PEPS

A major investigative article came out yesterday in the New York Times, detailing the large number of multi-million dollar residences in New York City, that are being purchased through LLCs owned by foreign white-collar criminals, and corrupt PEPs. While the information was quite informative, it failed to explain how these transactions evade AML. The answer, which may surprise you, is in two parts:

(1) These eight-figure transactions are not subject to any meaningful bank AML, because there is no mortgage qualification process; the buyers are wiring in full payment for the units they purchase, and are thus not subject to bank compliance due diligence. The purchasing entities are LLCs created by attorneys specifically to keep their clients' names out of the limelight, and they are rarely known.
                                               

(2) In truth and in fact, there is NO statutory or regulatory requirement that real estate agents and brokers file Suspicious Activity Reports (SARs) on troubling transactions. In fact, they assume personal risk if they do so, so don't blame them. Here is the official warning, verbatim, from the National Association of Realtors website, on the page discussing money laundering issues:

 "It is important to note that, while the bank Secrecy Act contains a safe
   harbor, shielding financial institutions from civil liability in connection with
   the filing of a SAR, there is no precedent to suggest that the safe harbor
   would extend beyond financial institutions to real estate processionals.
   Therefore, a real estate agent should be prudent and file a suspicious
    activity report only after thoroughly evaluating the circumstances
    surrounding the suspicious activity, and additionally should consider
    consulting an attorney on the matter prior to filing a SAR. otherwise, a real
    estate agent could subject themselves to civil liability as a a result "
    Anti-Money Laundering Guidelines for Real Estate Professionals

To date, the powerful real estate lobby has prevented its industry from being subject to what we call best practices in AML. You may recall it was the US banking lobby that killed five proposed AML/CFT bills in Congress. I know this because in 1999 and 2000, I testified in favor of three of them, before Congressional committees. Those bills later became the nucleus of the US PATRIOT Act of 2001. Does real estate now need its own version ? Of course.

Can some brave souls in the US Congress now stand up, and pass legislation requiring that companies in the real estate industry operate an effective AML program, with SAR safe harbors to protect its agents ? Otherwise, foreign PEPs with dirty cash to burn will continue to drive up prices in New York, as they place, and launder, their illicit wealth in America.

HACKERS TAKING PORTIONS OF THIS BLOG AND ATTEMPTING TO CREATE PORNO SITES ON COMSTOCK MORTGAGE PAGES

If you have landed on this blog, following a link from a page other than http:// rijock.blogspot.com , and that page you came from contained x-rated material, read on.

It seems that someone is using my financial crime articles to drive traffic to porno sites.. I have noticed that person or persons unknown, using the mortgage broker website of COMSTOCK MORTGAGE*, which has a web address of:   http://comstockrocket.com/
are taking some of my articles, and are adding links to pornographic material on the pages. I have no control over this activity, but rest assured that I have brought it to the attention of the mortgage company. and have been ignored. Either they have been hacked, or some players working for Comstock have pornography on the brain. Either way, Comstock is responsible. Perhaps if I place the photograph of the senior person at Comstock, Jeff Tarbell, it will get their attention, and they can take down the offending site.

Jeff Tarbell, Comstock Mortgage

Pulling content from this website, and dropping it into another page is not difficult, but appropriating a commercial website URL for illicit ends, and using my content, I cannot accept.

Comstock Rocket logo

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*http://comstockrocket.com/

MAINSTREAM MEDIA IGNORES THE MOST DAMNING DETAILS OF PANAMA'S CORRUPTION SCANDAL

The most sordid details of the corruption scandal unfolding in the Republic of Panama are not being covered by mainstream news sources, for fear, on the part of some journalists, that the information,  some of which is extremely distasteful, cannot be verified or proven, and that former president Ricardo Martinelli, or some of his ex-ministers, will be successful in libel actions. As the direct result, the public is unaware of the depths of depravity and corruption that Martinelli, and his supporters, engaged in. Of course, in this blog, we will not hesitate to cover, in depth, all the sins that the Martinelli group engaged in, lest they literally get away with murder.

One senior staff member of a mainstream publication has been sacked, for failing to obey the orders of management, and expose details of the organized blackmail, sexual battery, and even murder, which has been committed by certain PEPs. It is thought that the risk of a libel suit was the reason that the individual disobeyed a direct order, and, in effect, cleaned up the most objectionable portion of the story, which resulted in his termination.

Admittedly, the details sound more like they belong in a publication that seeks to shock its readers with lurid stories designed to titillate and amuse, rather than inform, them. Details of Martinelli's covert video surveillance of PEPs in hotel rooms, with their subsequent blackmailing, or coercing them into sexual acts, against their will, belongs in a scandal sheet, but the truth, nasty as it is, must be aired, so that the Panamanian public will be sufficiently motivated to insist on criminal prosecutions of all the parties involved, especially the country's former president, and his cabinet.  

APPEALS COURT ADVISES RICHARD CHICHAKLI THAT IT WILL NOT ALLOW STANDBY COUNSEL

The Second Circuit Court of Appeals has granted the motion of Mitchell Dinnerstein, who served as standby counsel, post-trial, for Richard Chichakli, to withdraw from the appeal. The Court has given the appellant thirty days to either advise that he shall proceed Pro Se,  retain counsel, or to request that counsel be appointed, due to his inability to compensate counsel.

The Court did have an additional point to impress upon the appellant; the Order additionally stated:
"The Court will not entertain any request by Appellant for appointment of "standby counsel," as standby counsel is not customarily granted in the Court of Appeals, and Appellant  has shown no special need for such assistance." Order entered January 26, 2015.

Chichakli indicated, in his Pro Se post-trial motions, that his original standby counsel failed to properly assist him in his defense, though standby counsel, appointed by the trial judge when a non-attorney represents himself, traditionally has a very limited role, generally relegated to procedural, and not substantive, matters. Chichakli alleged that he did not receive the assistance that he required, and that is likely to be one of his points on appeal. The Court of Appeals, having now dismissed his second standby attorney, has indicated that it will not be appointing a successor, in that limited capacity. Chichakli will either represent himself, or have an attorney handle his appeal, no standby counsel permitted.

SELF-CENSORSHIP BY PALESTINIAN MEDIA HIDES NEGATIVE INFORMATION ON CORRUPT PEPs

Palestinian journalists protect their treatment in Gaza

A recent survey confirmed that 80% of the Palestinian journalists, working in the West Bank or Gaza, practice what they call self-censorship in their writing. This means that no news of financial or political corruption in the Territories is ever written, or released to international media outlets for publication.

The reason is simple: Palestinian Authority, and Hamas, agents regularly threaten the lives of any journalists who dare to publish negative news about the corrupt governments in place in the Territories. the PA, and Hamas, and even ISIS/ISIL agents maintain ongoing efforts to censor any and all domestic news that might embarrass corrupt Palestinian leaders. The families of the journalists also fear for their lives, should any information about local corruption be published.

Why is this important to compliance officers at international banks ? When a prospective Arab client, who promises to bring what sounds like lucrative new business to your bank, is a corrupt PEP from the Palestinian Territories, you will want to identify him as such, prior to making a decision about account opening. Many wealthy Palestinian PEPs carry Jordanian, Egyptian, or Lebanese passports, and they may claim to be wealthy businessmen, and conceal their PEP status, and their true nationality, and the fact that they reside within the Territories.

When Palestinian PEPs exercise self-censorship, they refrain from writing articles that might name your new client as a PEP, or complain about his corrupt activities. This puts compliance officers involved with CIP at a distinct disadvantage; they may not identify the individual as a PEP, and later find out that, since his account was deemed low risk, and not subject to monitoring, that he engaged in multiple suspicious transactions, which you failed to catch in real-time.

Some suggestions:

 (1) A prudent policy might be to require that enhanced due diligence be performed on all individuals who could possibly be Palestinian PEPs .

(2) Do you have anyone on staff who is familiar with the accent, and terms, peculiar to Palestinian Arabic speech ? A few minutes, listening to the new client, might reveal his true nationality.

(3) What is the listed place of birth of this individual ? Is it anywhere within what is now the State of Israel ?

Given that Hamas is a designated terrorist organization, and that corruption is universal within the Palestinian Authority, banking any Palestinian PEP, you might be well advised to decline any new account where you cannot conclusively rule out PEP status for the client.  

CANADIAN AND AMERICAN BANKS ARE REFUSING TO TRANSFER FUNDS TO PANAMA

Ricardo Martinelli

Businessmen in Canada and the United States are reporting that several of their banks are declining to execute any wire transfers to banks in the Republic of Panama, if the amount exceeds $5000. Some banks in the European Union have also initiated a block on all substantial funds transfers to Panama.

Sources in Panama have advised that there are criminal charges to be filed in the Republic, against prominent former members of the Martinelli administration, involving money laundering and corruption, and there are unconfirmed reports that sealed indictments already exist in the United States, against some of the individuals responsible for the rampant money laundering that has plagued Panama since Ricardo Martinelli Berrocal came to power in 2009.

Country Risk assessments for Panama has now reached the point where any and all financial commerce, including new investment, could very well be red-lined by compliance officers

SCOTT ROTHSTEIN'S PONZI SCHEME'S "INVESTMENT ADVISOR" CHARGED WITH WIRE FRAUD

Michael Szfranski, an investment advisor who approved million of dollars of his clients' money for placement in Scott Rothstein's bogus court settlement Ponzi scheme, has been indicted on twelve counts of Wire Fraud, in US District Court in Fort Lauderdale. He is the twenty-ninth individual charged in the Rothstein $1.4bn Ponzi case, which sold interests in phantom legal settlements to investors, and promised them high rates of interest.

Szfranski's function: he acted as the "independent verifier" of Rothstein's legal settlement investments, on behalf of third parties. His specific duties and responsibilities included:

(1) Review of all relevant contracts and documents, to verify the validity of each investment.
(2) Review of Rothstein Rosenfeldt Adler TD Bank trust accounts, to confirm that the funds exists.
(3) Meeting with the plaintiffs and defendants who were parties to the settlements, which were allegedly for sexual harassment, age discrimination, and workplace torts.
(4) Physically examine the parties' government issued identification, to verify their identities.

Obviously, since none of the above existed, as the "investments" were totally fictitious, with fraudulent supporting documents, including forged court orders, and bogus settlement agreements. Szfranski allegedly earned millions of dollars for vetting the bogus investments, because at the same time he was taking money secretly from Rothstein, when he was performing his "duties" as verifier for the hedge funds. He was also paid by the hedge funds and investors he advised about the quality of the Rothstein legal settlements. As of 2010, he was listed as an officer or registered agent of fifteen investment entities and hedge funds.

Initially, Szfranski acted on behalf of hedge funds and investment funds that he was assisting, but later he actively sought out investors, to feed Rothstein's urgent need for fresh investor cash, which was used to pay off older investors, in a classic Ponzi pattern.  He has been released on bond, and his attorney has stated that his client intends to plead not guilty, and demand a jury trial.

PANAMA'S BANKING REGULATOR FAILED TO CURB RAMPANT MONEY LAUNDERING

A Panamanian reader has commented, questioning whether there is any evidence available to support my articles critical of the country's cashiered Superintendent of Banking, Alberto Diamond. Disclosing evidence while an individual is under criminal investigation for corruption is unwise; I suggest that we let the facts speak for themselves:

(1) Superintendent Diamond was appointed to his position, for which he has no professional or educational qualifications, because a member of his family is a relative of former President Ricardo Martinelli. That is called Nepotism.

(2) Diamond's immediate family owns shares of stock in one of Panama's major banks, and one that Diamond was supposed to regulate. That is called Conflict of Interest.

(3) The bank where Diamond family members have an ownership interest is partially owned by members of Panama's Syrian organized crime families. That is called Association with Known Criminal Elements.

(4) During his long tenure as Superintendent of Banking, not only were no banks convicted of money laundering, Diamond actively killed any and all investigations into bank money laundering, including at the bank where his family has an ownership interest. That is called Malfeasance of Office.

(5) Diamond shut down a criminal investigation into the Financial Pacific/Petaquilla Mining Ltd. insider trading scandal, where Martinelli and his ministers took illicit profits, at the expense of other investors. That is called Corrupt Influence or Racketeering.

(6) Diamond publicly bragged that literally of dollars in "flight capital" ($17bn, according to Diamond) flowed into Panamanian banks, from Venezuela, without any compliance checks on Source of Funds or Beneficial Ownership. That is called Willful Blindness.

(7) Diamond used his office to attack financieras who competed with one owned by the family of the Minister of Commerce, and entered bogus charges against businesses owned by opponents of the Martinelli regime. This is called Abuse of Power.

(8) Diamond sought to close down other non-bank financial institutions who failed to pay exorbitant fees and charges that were, in truth and in fact, bribes going into Diamond's pocket. This is called Extortion.

I can go on and on; Diamond utterly failed the people of Panama. Is that sufficient for those who would question whether there is a factual basis for my articles ?  

WHO WERE THE FOREIGN MSBs INVOLVED IN THE $ 2bn THAT MOVED THROUGH A TINY MIAMI CREDIT UNION ?

If you read my recent article about the $300,000 civil penalty* FinCEN levied against a tiny urban Miami credit union, North Dade Community Development Federal Credit Union, you were probably, like yours truly, wondering who were the 39 foreign MSBs that were engaged in using North Dade as a two-way conduit for billions of dollars. You may also have hoped that FinCEN would disclose those names, so that you could alert your staff accordingly.

You also wanted to know who the lead foreign MSB who worked with North Dade was, as well as the one multi-million dollar individual client who was mentioned in the news release. Alas, none of the identities of the guilty foreign MSBs was revealed; nor were the names of the North Dade officers or directors who were culpable in this major money laundering operation.  They will go to another credit union, with great references, supplied by their associates, of dubious ethics, and could continue their money laundering facilitating elsewhere. like at your bank. Again, thanks FinCEN for declining to name them; I had to research all individuals associated with the entity, but I do not know which ones were guilty of Willful Blindness, or worse. The list includes a local government official, and a number of attorneys. Who, may I ask, was involved ? The credit union only has 5 employees,  but the directors are prominent members of the community.

How can compliance officers protect their banks, and NBFIs from dirty foreign MSBs, if regulators choose to repeatedly refrain from identifying them ?? OFAC may, or may not, designate and sanction them as SDNs, but history shows us that may not happen for years.

Yes, I know the drill; Media sources who have pushed for this information, have been told that law enforcement will not confirm, or deny, that there is a criminal investigation. Come on ! These are foreign entities, and you may indict them, years in the future, but you will not obtain personal jurisdiction, because they are in Latin America, and the Middle East. We need those names in 2015, and not reading them in 2018.

Meanwhile, legitimate financial community is totally in the dark about the identities of these money laundering MSBs, who could very well target them, since North Dade has been exposed. What is the rationale behind concealing important information needed to protect the banks behind the "pending investigation" shield ? Name and shame them. they know that law enforcement is on to them, but the civilian world is blissfully ignorant. 

If you want to know how serious this can get, in the North Dade case, I found, after diligent search and inquiry, that an MSB in the Middle East was forced to shut down when North Dade was exposed, as it was using North Dade as a conduit for foreign clients who held checks drawn on US banks; the MSB was engaging in Remote Deposit Capture. The operators of that MSB will be looking for a new victim in the US, but since FinCEN never identified them, they will probably succeed in continuing to move dirty money into the American financial system. Now, do you understand my concerns ?

Please, US regulators, name & shame the 39, so that American legitimate financial entities can protect themselves from them.
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* The penalty was well deserved; this is what North Dade admitted to:
(1) The credit union repeatedly ignored FinCEN information requests.
(2) It accepted clients outside its specified Field of membership, to the tune of $2bn.
(3) There was NO compliance officer or AML program.
(4) Annual BSA training was inadequate.
(5) There were no risk assessments performed.
(6) There were inadequate or nonexistent internal controls.
(7) No CIP program.
(8) Late or never-filed SARS.

CENTRAL AMERICAN PARLIAMENT: MARTINELLI NEVER HAD IMMUNITY FROM PROSECUTION AS A DEPUTY

Apparently, the Central American Parliament is not a refuge for scoundrels after all. A spokesman has gone on record, declaring that former Panamanian president Ricardo Martinelli was not the recipient of the legal privilege of immunity, when he was abruptly sworn in as a Deputy, immediately after leaving office in Panama.

In order for a Deputy to hold immunity, one must serve in office, with the Central American Parliament,  for a minimum of six (6) months. After hearing this statement, Martinelli, who is facing multiple criminal corruption charges in Panama, had some very vile things to say about the international body.

Martinelli's current whereabouts are a total mystery; he sent his private jet to Europe, without any passengers, in an obvious attempt to deceive those ion Panamanian law enforcement who were tracking his movements. Some sources believe that he has arrived in Paraguay, where he reportedly has purchased a large estate, and which has no extradition treaty with Panama. Other resources assert that he is living in Brazil. Where in the world is Ricardo Martinelli ?

PANAMA TO ENACT STRONGER ANTI-MONEY LAUNDERING LEGISLATION, AFTER ITS BUSINESSES ARE BLOCKED FROM US FINANCIAL STRUCTURE

Panama's Minister of Economy and Finance, Dulce De La Guardia, has announced that new, and strong, anti-money laundering legislation is being prepared in Panama's National Assembly, designed to remove Panama from the "Grey List" of the Financial Action Task Force (FATF). This bill is also intended to remedy a serious situation: Panamanian banks, particularly the smaller financial institutions, are finding access to the international financial system, through US banks, delayed, or denied outright.

Panamanian companies have also found that they are unable to make transfers to their international customers or suppliers, as the direct result of the FATF designation, and a notification, by FinCEN, of the country's Grey List status, through an Advisory*. Some companies have reported that US banks are now conducting enhanced due diligence investigations on all major transactions involving Panamanian entities, and obtaining compliance approval, prior to processing them, which could adversely affect any time-sensitive business matters.

 The bill will require Panamanian NBFIs, such as real estate agencies, insurance companies, casinos, attorneys, accountants, money service businesses, notaries public, and precious metals and gemstone traders, will all be required to maintain effective AML/CFT program, through a compliance office, and have procedures in place to identify suspicious transactions, and if appropriate, report them to regulators.

As soon as the details of this bill become public, we shall summarize it on this blog.
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*FIN-2014-A009.

WILL NEW SYRIAN NUCLEAR FACILITY TWO MILES FROM LEBANON AFFECT COUNTRY RISK ?

Aerial photograph of Al-Qusayr nuclear facility

A number of resources that cover the illicit development of nuclear weapons have detailed construction of what it claimed to be a nuclear facility, in Syria, near the town of Al-Qusayr. The facility, which reportedly is mainly underground, is said to be guarded by Hezbollah militants, and is receiving on-site technical assistance from Iranian and North Korean engineers.

Given that Israel has previously destroyed a Syrian nuclear weapons development site, and that al-Qusayr could be an attempt by Iran to create nuclear weapons capability, at a facility off-limits to IAEA inspectors, and Western intelligence agencies, the site could be targeted for an air strike, sabotage, or demolition, to prevent Iran from developing operational nuclear weapons. It could also suffer an accident, which would leak radiation into the atmosphere, following the prevailing westerly winds.

Too close for comfort, if you are a Lebanese ?

The problem: the facility is less than two miles from the frontier with Lebanon; if you remember the Chernobyl disaster, with the resultant effects of radiation upon the environment, individuals tasked with risk assessment may want to take this development into account when computing Country Risk for Lebanon. Whether it occurs as the result of an air strike, or a safety flaw leading to an accident, Lebanon will soon find itself at risk, due to someone else's nuclear toys.  

DUTCH COURT RULES THAT NEGATIVE INTERNET INFORMATION ABOUT DAHABSHIIL WAS FABRICATED

A court in the Netherlands has held that the negative information, appearing on the Internet, about the international money service business Dahabshiil, alleging that it was financing terrorism, is untrue and defamatory, and has ordered it removed, together with the posting of an apology. The court found that the defamatory information was posted, on various websites, by one individual, Dahir Alasow, a Somali national, and that the information was picked up and repeated by other websites, without verification or fact checking.

Unfortunately, any verification of negative information, which was claimed to have occurred in Somalia, a country embroiled in a brutal and divisive civil war for many years, and menaced by a terrorist organization, is impossible. Witnesses are rarely found in a combat zone who are willing to confirm, or rebut, hearsay information; the transitory nature of a population seeking to survive in a time of war, and the perishable nature of documentary evidence in the absence of normal commerce and record-keeping, all contribute to an inability to prove or disprove statements of facts that may, or may not, have occurred in Somalia.

Therefore, one cannot conclude, assuming that the rules of evidence apply, that Dahabshiil is engaged in the financing of terrorism, or any of the other alleged acts attributed to it on the Internet. However, as a compliance officer, the absence of sufficient information increases the level of potential risk to the point where it may not be prudent to engage in any financial intercourse with such an entity. A court of competent jurisdiction has ruled that the allegations against Dahabshiil are untrue;  it is up to each compliance officer to apply the court decision, and the surrounding circumstances, in the assessment of risk.