Bruce Zagaris, Author at IELR Blog

4th Circuit Court of Appeals Permits Emoluments Case against Trump to Continue

May 15, 2020 by Bruce Zagaris Leave a Comment

On May 14, 2020, the United States Court of Appeals, sitting en banc, by a 9-6 decision, overturned the decision of a smaller panel of the court, to allow the case to continue.

The District of Columbia and the State of Maryland (“Respondents”) filed the action in the District of Maryland against the President in his official capacity. They allege that the President is violating the Foreign and Domestic Emoluments Clauses of the U.S. Constitution by accepting prohibited “emoluments” from foreign and domestic governments. The Foreign Emoluments Clause provides:

“No Title of Nobility shall be granted by the United States: And no Person

holding any Office of Profit or Trust under them, shall, without the Consent

of the Congress, accept of any present, Emolument, Office, or Title, of any

kind whatever, from any King, Prince, or foreign State.”

U.S. Const. art. I, § 9, cl. 8. The Domestic Emoluments Clause provides:

“The President shall, at stated Times, receive for his Services, a

Compensation, which shall neither be encreased nor diminished during the

Period for which he shall have been elected, and he shall not receive within

that Period any other Emolument from the United States, or any of them.”

Id. art. II, § 1, cl. 7.

The district court granted the President’s motion to dismiss, except insofar as the complaint pertained to the Trump International Hotel three blocks from the White House.

The President moved for certification to take an interlocutory appeal pursuant to 28 U.S.C. § 1292(b), seeking appellate review of four questions: (1) the correct interpretation of the term “emolument”; (2) whether Respondents had an equitable cause of action to bring the suit; (3) whether Respondents had Article III standing; and (4) whether any court has the ability to issue equitable relief against the President in these circumstances.

The district court declined to certify an interlocutory appeal.

In response, the President petitioned this court for a writ of mandamus. He asked the appellate court either to direct the district court to certify an interlocutory appeal or to order the district court to dismiss the complaint with prejudice. A panel of this court granted the President’s petition for a writ of mandamus and found Respondents lacked standing and so “reverse[d] the district court’s orders” and “remand[ed] with instructions to dismiss the complaint with prejudice.” In re Trump, 928 F.3d 360, 364 (4th. Cir. 2019).

The entire Fourth Circuit subsequently agreed to hear the case en banc, vacating the panel opinion. In re Trump, 780 F. App’x 36 (4th Cir. 2019).

In her decision for the majority , Judge Diana Gribbon Motz explained that a petitioner seeking mandamus relief bears the burden of showing that he has satisfied three requirements. Judge Motz explained the Supreme Court gas repeatedly rejected contention that a naked error of law amounts to an abuse of discretion entitling a petitioner to mandamus relief. In this regard, Judge Motz said notwithstanding the President’s vigorous assertion that the court erred in its legal analysis, he does not contend that the district court denied certification for nonlegal reasons or in bad faith. As a result, he is not entitled to a writ of mandamus compelling the district court to certify its orders for interlocutory review under § 1292(b).

The court rejected the President’s secondary argument. The President contended that, even if the court “conclude that the district court’s certification discretion under § 1292(b) was sufficiently broad that a writ of mandamus directing certification is unwarranted,” it “nevertheless should grant mandamus directing the district court to dismiss [Respondents’] complaint.” Judge Motz ruled to obtain this relief, the President must establish that it is not merely likely, but “clear and indisputable,” that the entire action cannot lie. She found he has not done so.

Judge Motz did not agree with the President’s argument that “emoluments” indisputably include only “profit arising from office or employ” (that is, payment for services rendered in performance of a formal job) and explained courts have not ruled on whether emoluments include income from the President’s business (e.g., his lease on the D.C. hotel).

Judge Motz rejected the President’s argument that the court must issue a writ of mandamus because this suit subjects the Executive Branch to “intrusive discovery.” Judge Motz explained that the discovery in the instant case — business records as to hotel stays and restaurant expenses, sought from private third parties and low-level government employees — does not implicate Executive power. The court does not believe the requests pertaining to spending at a private restaurant and hotel threaten any Executive Branch prerogative.

Judge Motz disagreed with the President and dissenters over the fact that the separation of powers give the President discretion with respect to having to abide by the emoluments clause. Rather than vesting the President with any duty to execute the law. they foreign emoluments clause impose restraints on the President. The dissents disagree, arguing that this duty is not only an official executive duty, but also one that encompasses the discretionary function of determining the meaning of “emolument.”

In response to the dissenters, Judge Motz explained the idea that the President is vested with unreviewable power to both execute and interpret the law is foreign to our system of government. The Framers dispersed the authority to enforce the law and the authority to interpret it. Otherwise, the President alone has the ultimate authority to interpret what the Constitution means. Allowing the President to be the final arbiter of both the interpretation and enforcement of the law — as the dissents would — would gravely offend separation of powers.

The dissenting opinions are more than three times as long as the majority’s and characterize their colleagues in the majority as “partisan warriors.”

A Department of Justice spokesman confirmed that the President would appeal the case to the Supreme Court. If the Supreme Court accepts the case, the arguments may occur in the fall, at the height of the Presidential campaign.

In a separate case at the U.S. Court of Appeals for the D.C. Circuit, the court dismissed due to standing an action by the Democratic members of Congress. They have decided not to seek a rehearing by the full complement of judges. They have until July to decide whether to ask the Supreme Court to review the appellate court’s decision.

EU Publishes AML/CFT Action Plan

May 8, 2020 by Bruce Zagaris Leave a Comment

On May 7, 2020, the European Commission issued an Action Plan to provide concrete measures over the next 12 months. It will strengthen its enforcement, supervision and coordination of the EU’s rules to combat money laundering and terrorist financing.

The Commission issued what it characterized as a more transparent, refined methodology to identify high-risk third countries with strategic deficiencies in their anti-money laundering and counter-terrorist financing (AML/CFT) regimes. The methodology is meant to enhance its engagement with third countries and bring more cooperation with the Financial Action Task Force (FATF).

The Commission also issued a new list of third countries with strategic deficiencies in their AML/CFT frameworks.

The Action Plan has six pillars. Each is designed to improve the EU’s overall effort to combat ML and TF, and to strengthen the EU’s global role in this area. The six pillars are intended to better harmonize and make the EU regime more effective.

Six Pillars of the Action Plan

The six pillars are as follows:

Effective application of EU rules: The Commission will continue to monitor closely the implementation of EU rules by EU Members to ensure that national rules are consistent with the highest possible standards. The plan encourages the European Banking Authority (EBA) to use its new powers to combat money laundering and terrorist financing. The timeline is ongoing.
A single EU rulebook: The integration of the EU’s internal market and financial system should be matched by a single set of AML/CFT rules. Diverging interpretations of the rules cause loopholes in its systems. Criminals can exploit the loopholes. The Commission will propose rules in Q1 of 2021.
EU-level supervision: In the first quarter of 2021, the Commission will propose to establish an EU-level supervisor. At present, each EU Member individually supervises EU AML/CFT rules. The Commission will propose rules in Q1 of 2021.
A coordination and support mechanism for EU Member Financial Intelligence Units (FIUs): FIUs in EU Members play a critical role in identifying transactions and activities that could be linked to criminal activities. The Commission will propose rules in Q1 of 2021.
Enforcing EU-level criminal law provisions and information exchange: Rapid and trustworthy information-exchange is crucial. EU rules facilitate cooperation and exchanges of information between law enforcement authorities. The future Financial Crime Center of Europol will promote combating money laundering and terrorist financing. The Commission will issue guidance on the role of public-private partnerships to clarify and enhance data sharing. The Commission will issue guidance in Q1 of 2021.
The EU’s global role: The EU is determined to increase its efforts to that it is a single global actor in the AML/CFT area. The EU will adjust its approach to third countries with deficiencies in their regime concerning AML/CFT. Pending the application of its new methodology issued with its Action Plan, the updated EU list ensures better alignment with the latest FATF list.

The Commission initiated a public consultation when it issued its Action Plan. Authorities, stakeholders and citizens have until July 29 to provide their feedback.

Updated List

The EU Anti-Money Laundering Directive requires the Commission to identify high-risk third countries with strategic deficiencies in their regime regarding AML/CFT. The Commission issued a new list, The list is supposed to be better aligned with the lists published by the FATF.

Countries which have been listed are: The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe.

Countries which have been delisted are: Bosnia-Herzegovina, Ethiopia, Guyana, Lao People’s Democratic Republic, Sri Lanka and Tunisia.

Background

The Commission’s Anti-Money Laundering Package of July 2019 underscored various weaknesses in the EU AML/CFT framework. The Package motivated the Action Plan.

Analysis

The EU announcement underscores a major problem with blacklists. On subjects such as AML/CFT there are multiple sources of listing. They include informal groups, such as FATF, and even individual countries. In addition, significant overlap exists in the subject matter of the OECD’s Global Forum on Tax Transparency and Exchange of Tax Information. The OECD, FATF, the EU, the World Bank Group, and governments make small jurisdictions spend a disproportionate amount of time meeting their engagement and evaluation schemes.

Given the scandals and/other problems that have occurred recently with Danske Bank, Swedbank, Banca Privata d’Andorra, FBME in in Cyprus, conducting supervision at an EU-level makes sense.

The next (May) issue of the IELR will have a more comprehensive discussion of the Action Plan.

ABA Issues Opinion Confirming Obligations of Lawyers to Avoid Counseling or Assisting in a Crime or Fraud in Non-litigation Matters

May 2, 2020 by Bruce Zagaris 1 Comment

On April 29, 2020, the American Bar Association’s Standing Committee on Ethics and Professional Responsibility issued Formal Opinion 491 on “Obligations Under Rule 1.2(d) to Avoid Counseling or Assisting in a Crime or Fraud in Non-Litigation Settings.”

Model 1.2(d) prohibits a lawyer from advising or assisting a client in conduct the lawyer “knows” is criminal or fraudulent. A lawyer or bar trying to discipline a lawyer will infer from the circumstances such knowledge, including a lawyer’s willful blindness to or conscious avoidance of facts. Hence, if facts known to the lawyer show a high probability that a client seeks to use the lawyer’s services for criminal or fraudulent activity, the lawyer has an obligation to make addition inquiring in order to avoid advising or assisting such activity.

Even if information obtained in the course of a preliminary interview or during a representation is not adequate to establish “knowledge” under Rule 1.2(d), other rules may require the lawyer to make more inquiries to help the client avoid crime or fraud, to avoid professional misconduct, and to advance the client’s legitimate interests. These include the duties of competence, diligence, communication, and honesty under Rules 1.1, 1.3, 1.4, 1.13, 1.16, and 8.4.

If the client or prospective client refuses to provide information necessary to determine the legality of the proposed transaction, the lawyer must ordinarily decline the representation or withdraw under Rule 1.16.

The issuance of the opinion comes in the content of media reports adverse to the reputation of lawyers, disciplinary proceedings for assisting clients in criminal activities, such as money laundering, criminal proceedings, and increased reports about the involvement of lawyers in efforts by foreign corrupt officials to launder money into the United States.

The opinion highlights the need of lawyers to meet their obligation to inquire when they have a client who may be seeking to use the lawyer’s services in a transaction to commit a crime or fraud. The opinion concedes that determining whether a client seeks to use the lawyer’s services for prohibited activities can be sensitive. Lawyers generally must believe their clients and investigating the client’s intention can be both expensive and time-consuming. The opinion discusses a lawyer’s obligation to inquire when faced with circumstances giving rise to suspicions about a prospective or existing clients activities is required by authority interpreting Rule 1.2(d) and in the rules on competence, diligence, communication, honesty, and withdrawal.

The opinion explains failure of a lawyer to make a reasonable inquiry is willful blindness punishable under the actual knowledge standard of the Rule. Whether the lawyer must inquire further depends on the circumstances. Rule 1.2(d) states that a lawyer “shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent.” Even where Rule 1.2(d) does not require further inquiry, other Rules may.

These Rues include the duty of competence under Rule 1.1., the duty of diligence under Rule 1.3, the duty of communication under Rule 1.4, the duty to protection the best interests of an organizational client under Rule 1.13, the duties of honesty and integrity under Rules 8.4(b) and (c), and the duty to withdraw under Rule 1.16(a). Making further inquiry ensures that the lawyer will be able to give the informed advice and assistance to which the client is entitled, that the representation will not result in professional misconduct, and that the representation will not involve counseling or assisting a crime or fraud.

National Strategy for Combating Terrorist and Other Financing Highlights Gatekeeper Problems

In February 2020, the U.S. Government issued its National Strategy for Combating Terrorist and Other Illicit Financing (“2020 National Strategy”). It identifies and analyzes the threats and vulnerabilities to the U.S. anti-money laundering and counter-financial terrorism (AML/CFT) system. The 2020 Strategy discusses as a major illicit financing risk attorneys, who need not understand the nature or source of income of their clients or potential clients. Attorneys advise on structuring transactions to avoid tax or other implications. In this regard in 2016, the Department of Justice alleged in a civil forfeiture case that lawyer trust accounts held by two large law firms helped launder almost $600 million stolen from the Malaysian government into the U.S. financial system.

OECD Mandatory Disclosure Rules for Addressing CRS Arrangements and Offshore Structures

An area of potential risk to lawyers is inbound investment by investors from countries that participate in OECD automatic exchange of information, known as the Common Reporting Standard (CRS). The OECD has developed mandatory disclosure rules for addressing CRS Avoidance arrangements and offshore structures. Each participating member should have penal or dissuasive sanctions to sanction violations. The 2017 UK Criminal Finances Act illustrates a law implementing the mandatory disclosure rules and imposes criminal sanctions extraterritorially for intermediaries who help taxpayers plan or implement structures violating the Act.

Formal Opinion 491, in addition to heralding the likelihood of new disciplinary proceedings for lawyers failing to make sufficient inquiries for clients who engage in criminal activities, is likely to open the door to prosecutions against U.S. lawyers both by prosecutors in the U.S. and abroad.

U.S. Returns $300 Million to Malaysia from U.S. Forfeitures in 1MDB Case

April 16, 2020 by Bruce Zagaris Leave a Comment

On April 14, 2020, the U.S. Department of Justice announced that it has returned to the Malaysian government approximately $300 million in additional funds misappropriated from 1 Malaysia Development Berhad (1MDB), Malaysia’s investment development fund. The funds were apparently misappropriated and laundered through financial institutions in several jurisdictions including the U.S., Switzerland, Singapore and Luxembourg.

Together with the funds that the DOJ returned to Malaysia in May 2019, the U.S. has returned or helped Malaysia in recovering over $600 million of funds misappropriated from 1MDB. The DOJ says its efforts to recover funds misappropriate from 1MDB.

The first tranche of returned funds included: $57,036,688.68 from Red Granite Pictures, and stems from a March 2018 settlement in California courts. This amount has been received by Malaysia. Subsequently the DOJ returned $139,000,000 from the February 2019 sale of Manhattan’s Park Lane Hotel.

In 2019, the U.S. District Court for the Central District of California entered judgments forfeiting more than $700 million in assets obtained by Low Taek Jho, aka Jho Low, and his family in the U.S., U.K., and Switzerland. At present, DOJ has recovered or helped in the recovery of more than $1 billion in assets associated with the 1MDB international money laundering and bribery scheme. This represents the largest recovery under the DOJ’s Kleptocracy Asset Recovery Initiative and the largest civil forfeiture ever concluded by the Justice Department.

The civil forfeiture complaints allege that, from 2009 through 2015, more than $4.5 billion in funds belonging to 1MDB were allegedly misappropriated by high-level officials of 1MDB and their associates, including Low, through a criminal conspiracy involving international money laundering and bribery. The government of Malaysia established 1MDB to promote economic development in Malaysia through global partnerships and foreign direct investment. The Malaysian government intended to use its funds to improve the well-being of the Malaysian people. The assets subject to the 2019 judgments included high-end real estate in Beverly Hills, New York and London; a luxury boutique hotel in Beverly Hills; and tens of millions of dollars in business investments that Low allegedly made with funds traceable to misappropriated 1MDB funds.

Under the terms of the 2019 settlement, Low, his family members, and FFP, a Cayman Islands entity serving as the trustees overseeing the assets at issue in these forfeiture actions, agreed to forfeit all assets subject to pending forfeiture complaints in which they have a potential interest. The trustees are also required to cooperate and assist the DOJ in the orderly transfer, management and disposition of the relevant assets. From the assets formerly managed by FFP, the United States will release $15 million to Low’s counsel to pay for legal fees and costs. Under the agreement, none of those fees may be returned to Low or his family members.

Low separately faces charges in the U.S. District Court for the Eastern District of New York for conspiring to launder billions of dollars embezzled from 1MDB and for conspiring to violate the Foreign Corrupt Practices Act (FCPA) by paying bribes to various Malaysian and Emirati officials, and in the U.S. District Court for the District of Columbia for conspiring to make and conceal foreign and conduit campaign contributions during the United States presidential election in 2012. Low is a fugitive and is believed to be in China.

The current issue of the IELR will have a more comprehensive discussion of the case, especially the AML issues for the U.S.

COVID-19 ADDS PRESSURE TO DETENTION, TAX CONTROVERSY, AND FACILITATES FRAUDULENT SCHEMES

April 8, 2020 by Bruce Zagaris Leave a Comment

Covid-19 has impacted several domestic and international enforcement efforts in the U.S. This piece discusses detention battles, the work of the IRS, and the Department of Justice, the latter in trying to stop the incidence of Covid-19 fraud

DETENTION BATTLES

As a result of the coronavirus, there is much litigation concerning pre-trial detention. In this regard, on March 19, 2020, U.S. Magistrate Judge Thomas S. Hixson, U.S. District Court N.D. Ca. issued a 4-page opinion, ordering the release of Alejandro Toledo Manrique, saying he was persuaded that the 74-year old former head of state was in serious risk of death or serious injury unless released. Peru has requested his extradition on corruption-related offenses. Toledo was detained in the San Mateo County jail. Magistrate Judge Hixson observed the absence of testing kits at the jail. Hixson imposed various conditions to mitigate the potential that Toledo may try to flee.

On April 3, 2020, the Attorney General, issued a “Increasing Use of Home Confinement at Institutions Most Affected by COVID-19”.

On March 26, 2020, the Attorney General, issued a memo “Prioritization of Home Confinement As Appropriate in Response to COVID-19 Pandemic”.

2. INTERNAL REVENUE SERVICE (IRS)

On April 3, 2020, due to the coronavirus pandemic, the IRS issued an evacuation notice directing that nearly all of its employees work from home on mandatory telework starting Monday, March 30. Only employees performing “mission-critical duties” will be permitted to come into the office. Access to IRS offices will be restricted, with employees allowed only to pick up work files and mail. Affected employees were instructed to take home whatever they needed to work remotely for the foreseeable future.

This may present a problem for tax confidentiality. Due to confidentiality, most IRS officials refuse to allow communication by email.

The IRS has not communicated about whether call centers would continue to be staffed, or whether mail sent to service centers would be opened and processed. Clearly communication with the IRS, already difficult even for practitioners, will become more challenging.

The IRS has already extended the filing deadline for income tax returns from April 15 to July 15.

The IRS is in charge of distributing economic impact payments. On March 30, the IRS announced it will start in the next three weeks and will be distributed automatically, with no action required for most individuals. However, some seniors and others who do not file returns will need to submit a simple tax return to receive the stimulus payment.

On March 23, The United States Tax Court issued a press release announcing that more trial sessions have been cancelled in light of the COVID-19 pandemic. The Court has cancelled all trial sessions through the end of June 2020.

The IRS will have difficulty making progress in its audits and enforcement cases. It already suffered due to the federal shutdown in January and now because of the need to prioritize its resources in sending economic impact payments.

3. DEPARTMENT OF JUSTICE

The DOJ has issued an alert about criminals trying to exploit COVID-19 worldwide through a variety of scams. There have been reports of:

“• Individuals and businesses selling fake cures for COVID-19 online and engaging in other forms of fraud.

Phishing emails from entities posing as the World Health Organization or the Centers for Disease Control and Prevention.
Malicious websites and apps that appear to share virus-related information to gain and lock access to your devices until payment is received.
Seeking donations fraudulently for illegitimate or non-existent charitable organizations.

Criminals will likely continue to use new methods to exploit COVID-19 worldwide.” https://www.justice.gov/coronavirus

AML experts are warning banks and financial institutions to exercise due diligence to not process suspicious payments that may reflect scams. Financial institutions must exercise more due diligence during the pandemic.

U.S. Attorney General Issues Notice that UK-US CLOUD Act Takes Effect July 8, 2020

March 3, 2020 by Bruce Zagaris Leave a Comment

On March 3, 2020, U.S. Attorney General William Barr, in accordance with the Clarifying Lawful Overseas Use of Data Act (“CLOUD Act”), relating to an executive agreement governing access by a foreign government to electronic data, gave notice that he has determined, and has submitted a written certification of such determination to Congress, that the U.S.-U.K. CLOUD Agreement satisfies the requirements of the CLOUD Act.

On November 27, 2019, the Attorney General certified that he had determined that the U.S.-U.K. CLOUD Agreement satisfies the requirements of the CLOUD Act. On January 10, 2020, the Attorney General completed the process of providing his certification to Congress. The U.S.-U.K. CLOUD Agreement will enter into force not earlier than July 8, 2020, unless Congress enacts a joint resolution of disapproval, in accordance with the CLOUD Act.

On March 23, 2018, the CLOUD Act was signed into law. Public Law 115-141, Div. V, 132 Stat. 1213-25. The CLOUD Act removes certain restrictions under U.S. law on companies disclosing electronic data, in response to qualifying, lawful orders in investigations of serious crime, directly to a qualifying foreign government with which the United States has entered into an executive agreement governing access by the foreign government to covered data. Id. at 132 Stat. at 1213-17.

Before an agreement can go into effect, the Attorney General, with the concurrence of the Secretary of State, must determine that the considerations outlined in 18 U.S.C. 2523(b) have been met. The Attorney General must then submit a written certification of his determination to Congress, including an explanation of each consideration required by 18 U.S.C. 2523(b), not later than 7 days after the date on which the Attorney General certifies the executive agreement. 18 U.S.C. 2523(d) (1).

The executive agreement will enter into force not earlier than 180 days after the date the Attorney General notifies Congress, unless Congress enacts a joint resolution of disapproval, in accordance with the CLOUD Act. 18 U.S.C. 2523(d)(2). Under 18 U.S.C. 2523(g), the Attorney General’s determination or certification under 18 U.S.C. 2523(b) must be published in the Federal Register..

Determination and Certification Pursuant to Section 2523(b)

On October 3, 2019, the Home Secretary of the United Kingdom and the Attorney General of the United States signed the U.S.-U.K. CLOUD Agreement. A copy of the U.S.-U.K. CLOUD Agreement is available at: https://www.justice.gov/dag/cloudact. On November 27, 2019, the Attorney General certified his determination that the U.S.-U.K. CLOUD Agreement satisfies the requirements of 18 U.S.C. 2523(b). The Attorney General’s determination was based on the considerations in paragraphs (1), (2), (3), and (4) of 18 U.S.C. 2523(b), as explained in the “Explanation of Each Consideration in Determining that the Agreement Satisfies the Requirements of 18 U.S.C. 2523(b),available at: https://www.justice.gov/dag/cloudact. Secretary of State. Pompeo concurred with the Attorney General’s determination.

The Department of Justice (“Department”) transmitted the U.S.-U.K. CLOUD Agreement certification to the Committee on the Judiciary and the Committee on Foreign Relations of the Senate on December 4, 2019. Due to a clerical error the Committee on the Judiciary and the Committee on Foreign Affairs of the House of Representatives did not receive notice until January 10, 2020.

Non-Reviewable Determination and Certification

In accordance with 18 U.S.C. 2523(c), the determination and certification by the Attorney General described in this notice are not subject to judicial or administrative review.

The Way Forward

The U.S. has also signed a CLOUD Act Agreement with Australia. The U.S. and the Ministers of Justice of the European Union have held discussions over a CLOUD Act Agreement. The U.S. hopes to sign many CLOUD Act Agreements.

Many privacy groups, such as Electronic Privacy Information Center, and human rights groups have opposed the CLOUD Act agreements. They oppose it, among other reasons, because it gives foreign authorities access to information without any judicial authorization, no notice is given to the data subject and no remedies, and unequal minimization and targeting protections exist for U.K. and U.S. citizens

Global Fragility Act Aims to Stabilize Conflict Zones and Prevent Wars

February 21, 2020 by Bruce Zagaris Leave a Comment

On December 19, 2019, the United States Congress adopted the historic bipartisan Global Fragility Act (GFA), establishing the first-ever U.S. government strategy to tackle alarming levels of global violence around the world. The violence is causing unimaginable suffering and instability with almost 70 million people around the world trying to flee the violence.

The Act requires the administration to develop a strategy to prevent violence in fragile states. By creating a process to identify the causes of conflict and reallocating resources to respond to them, the GFA will help prevent violence more effectively and reduce its enormous cost on families and communities.

The GFA directs the State Department to start the Interagency Global Fragility Initiative to stabilize conflict-affected areas and prevent violence globally. It creates funds to support these efforts.

The State Department must prepare a plan for the initiative, including its organizational structure and goals. The State Department must lead in development, humanitarian, and non-security policies. Other departments and agencies, including the Department of Defense, will provide support as required.

The State Department must select priority countries and regions that are especially at risk, and report to Congress 10-year plans for each. The plan must include information, including descriptions of goals, plans for achieving such goals, and benchmarks for measuring progress.

The State Department must report to Congress every two years concerning the initiative’s progress. The Government Accountability Office must consult Congress every two years about opportunities to assess the initiative and recommend improvements.

The Act establishes the Stabilization and Prevention Fund (SPF) to support efforts to stabilize conflict-affected areas, including areas at risk from the Islamic State of Iraq and Syria or other terrorist organizations. The Act authorizes $200 million annually over five years for the SPF.

The Act creates the Complex Crises Fund (CCF) to support programs to address emerging, unforeseen, or complex challenges abroad. The Act authorizes $30 million annually over five years for a CCF.

The current issue of the IELR will have a more comprehensive discussion of the GFA.

The American Society of International Law is holding a panel on the Act on Tuesday, February 25, 2020 from 6:00 -8:00 at the ASIL Headquarters, Tillar House (2223 Massachusetts Ave, N.W.). Registration if free and open to the public. For more information and registration, go to www.asil.org/events.

The Age of Accountability for International Crimes: Lessons for success

February 13, 2020 by Bruce Zagaris Leave a Comment

Thursday, February 20, 2020
TIME: 6:00 – 7:30 p.m.
ASIL Headquarters, Tillar House (2223 Massachusetts Avenue, NW)

International criminal justice mechanisms are experiencing a period of both significant challenge and potential opportunity. Faced with this uncertainty, many see the experiment of international criminal accountability to be at a pivotal moment. Can past successes from previous international tribunals offer input on how to address the current challenges? Or has the global political climate changed so fundamentally that new paths need to be forged? A panel of distinguished experts will discuss these issues and address the challenges of providing accountability for atrocities in the 21st century.

Speakers:

David M. Crane, former Chief Prosecutor of the Special Court for Sierra Leone
Diane Orentlicher, American University Washington College of Law (Moderator)
Tom Sheehy, KRL International, former staff director, U.S. House Committee on Foreign Affairs
Jane Stromseth, Georgetown University Law Center, former Deputy to the Ambassador-at-Large, Office of Global Criminal Justice, U.S. Department of State

Registration is free and open to the public.

For more information and registration, go to www.asil.org/events.

This session is part of the Society’s “Atrocity Prevention: The Role of International Law and Justice” signature topic.

Signed copies of Dr. Crane’s new book, Every Living Thing, will be available onsite.

Co-sponsored by the Center for Victims of Torture and the ABA’s Center for Human Rights and Criminal Justice Section

U.S. Court of Appeals for D.C. Circuit Rules Congress Lacks Standing on Emoluments Case

February 8, 2020 by Bruce Zagaris Leave a Comment

On February 7, 2020, the United States Court of Appeals for the District of Columbia Circuit in a per curiam ruling decided the 215 Members of Congress did not have standing to sue President Donald Trump over alleged violations of the U.S. Constitution’s Foreign Emoluments Clause (Clause).[1]

The opinion reverses the district court’s decision, denying President Trump’s motion to dismiss.

Complaint

On June 14, 2017, the Members filed their complaint. They seek declaratory and injunctive relief against the President in his official capacity. The Members allege that President Trump “has a financial interest in vast business holdings around the world that engage in dealings with foreign governments and receive benefits from those governments” and that “[b]y virtue of that financial interest, [he] has accepted, or necessarily will accept, ‘Emoluments’ from ‘foreign States’ while holding the office of President.”

They allege the President’s failure to seek and obtain congressional consent has “completely nullified,” the votes they are authorized to case to approve or disapprove his acceptance of foreign emoluments.

Because the Foreign Emoluments Clause allegedly requires the President to obtain ‘the Consent of the Congress’ before accepting otherwise prohibited ‘Emoluments,” Plaintiffs, as members of Congress, must have the opportunity to case a binding vote that gives or withholds their ‘Consent’ before the President accepts any such ’Emolument.’” They further allege that the Clause is “unique.”

First, the Clause imposes a procedural requirement (obtain “the consent of the Congress” that federal officials must satisfy before they take a specific action (accept “any” emolument from “any…foreign State”). U.S. Const. art. I, § 9, cl. 8. The failure to obtain Congressional before accepting emoluments deprives the plaintiffs of their right to vote on whether to consent to its acceptance.

Plaintiffs claims that, because President Trump is violating the Clause through his private businesses, without the need for government funds or personnel, Congress cannot use its power of the purse to stop him.

The President moved to dismiss, arguing that (1) the Members lack standing; (2) no cause of action authorized their lawsuit; (3) they failed to state a claim upon which relief could be granted; and (4) the requested relief, an injunction against the President in his official capacity, violates the Constitution.

District Court Decision

The district court bifurcated the issues, addressed standing first. It held that the Members “sustained their burden to show that they have standing to bring their claims. Blumenthal v. Trump, 335 F. Supp. 3d 45, 54 (D.D.C. 2018). The President then moved to certify the district court’s standing order for interlocutory appeal under 28 U.S.C. § 1292(b), which motion was denied on June 25, 2019, Blumenthal v. Trump, 382 F. Supp. 3d 77, 83 (June 25, 2019). During the pendency of the certification motion, the district court denied the remainder of the President’s motion to dismiss. The district court held that the Members had an implied equitable cause of action for injunctive relief and that they had stated a claim under the emoluments clause. Blumenthal v. Trump, 373 F. Supp. 3d 191, 207-09 (D.D.C. 2019).

Appellate Court Decision

The President then petitioned the Court of Appeals for a writ of mandamus. The appellate court granted the interlocutory appeal.

The appellate court explained that “[n]o principle is more fundamental to the judiciary’s proper role in our system of government than the constitutional limitation of federal-court jurisdiction to actual cases or controversies. Standing to sue is a doctrine rooted in the traditional understanding of a case of controversy.” Spokeo Inc. v Robins, 136 S.Ct. 1540, 1547 (2016) (quoting Raines v. Byrd, 521 U.S. 811, 818 (1997). Only 29 Senators and 186 Members of the House of Representatives brought the case. They do not constitute a majority of either body and hence do not have power to approve or deny the President’s acceptance of foreign emoluments. As a result, the appellate court found the plaintiffs lack standing.

The current issue of the IELR will discuss the case in more detail.

[1] Richard Blumenthal v. Donald J. Trump, U.S. Court of Appeals for the District of Columbia Circuit, No. 19-5237 (Feb. 7, 2020).

J5 Chiefs Conduct First Coordinated Tax Enforcement Actions Arising from Investigations into a Central American Financial Institution

January 27, 2020 by Bruce Zagaris 1 Comment

On January 23, 2020, the members of the Joint Chiefs of Global Tax Enforcement (J5) announced on the preceding day its first coordinated set of enforcement actions undertaken on a global scale by the J5. The operation results from a series of investigations in Australia, Canada, the Netherlands, the United States, and the United Kingdom.

For instance, as part of the operation, HMRC officers executed a search warrant in the Stoke area and arrested a man as part of their investigation. The HMRC questioned the man and then released him pending further enquiries. A 59-year-old man, the HMRC arrested him on suspicion of cheating the public revenue.

As a result of the significant information it has collected, the HMRC expects further criminal, civil and regulatory action will occur in each country.

The law enforcement operation took place as a part of a series of investigations in multiple countries into an international financial institution located in Central America. The J5 believes that through this institution a number of clients may be employing a sophisticated system to conceal and transfer wealth anonymously to evade their tax obligations and launder the proceeds of crime.

The operation of the first major operational activity for the J5 illustrates the role played by law enforcement networks, which in this case is an informal group of tax chiefs. An important breakthrough in international enforcement has been the development, as part of regime enforcement, of governmental networks. The identification of governmental networks has arisen in part out of the emergence of a world politics paradigm that conceptualizes transnational relations as transcending the nation-state and broadening the conception of actions to include transnational actors, such as nongovernmental organizations (e.g., J5).