On April 27, 2017, the U.S. Department of Justice announced that Singaporean citizen Lim Yong Nam, also known as Steven Lim, had been sentenced to 40 months in prison in connection with the export of thousands of radio transmitters from the U.S. to Iran, in violation of longstanding U.S. sanctions against the nation. 14 of these radio transmitters were later found in undetonated improvised explosive devices (IEDs) used against U.S. soldiers in Iraq.

Lim, 43, was extradited to the United States in April 2016 from Indonesia, where he had been held since 2014 pending extradition proceedings. On December 15, 2016, Lim pleaded guilty to a charge of conspiracy to defraud the U.S. by dishonest means. He will be deported to Singapore upon the completion of his sentence.

The radio transmitters used in the fraud had numerous commercial applications; Lim purchased 6,000 transmitters from a Minnesota-based company between August 2007 and February 2008, falsely reporting that he intended to use them for a telecommunications project in Singapore. Instead, he exported the transmitters to Iran, in knowing violation of U.S. law. Lim was not alone in this scheme; the initial indictment, filed in 2010 and unsealed in 2011, charged four co-conspirators, three other Singaporeans and an Iranian national named Hossein Larijani. Two of those Singaporeans, Lim Kow Seng and Hia Soo Gan Benson, have already faced prosecution;  Singaporean Wong Yuh Lan and Larijani remain at large.

Once in Iran, these transmitters, which have encryption capabilities and have a range allowing them to transmit data wirelessly as far as 40 miles, were used for varying purposes, some of them dangerous. According to the press release announcing the sentence, during 2008 and 2009, “coalition forces in Iraq recovered numerous modules made by the Minnesota firm that had been utilized as part of the remote detonation system for IEDs.” 14 such recoveries were from the shipment sent to Lim and his associates.

U.S. law enforcement authorities thanked the governments of Singapore and Indonesia “for the substantial assistance that was provided in the investigation of this matter.”

The press release announcing the sentence can be found here: https://www.justice.gov/opa/pr/singapore-man-sentenced-40-months-prison-plot-involving-exports-iran-us-components

As you may know, I am teaching at Texas A&M University’s School of Law in their new online Risk Management  program. This program is available as an LL.M. for lawyers or an M. Jur. degree for non-lawyers; the programs are designed for professionals with significant experience in the field.

The first entering class starts on May 22.  With the flexibility of a part-time online program, Texas A&M has recruited an impressive group of students, who, in the years ahead, will network among themselves and the Faculty.

A few spaces remain in the May 22 entering class. For highly qualified candidates, we will make available the Bruce Zagaris Scholarship, if you apply by May 1 and are admitted to the program.

To take be considered for this opportunity, send a request to our admissions team (katiefay@tamu.edu or 682.233.1014) today. If others in your network are interested in this opportunity please share the information.

Thank you,

Bruce Zagaris

On March 2, 2017, agents representing the U.S. attorney’s office for the Central District of Illinois, the Internal Revenue Service, and two other agencies raided three Peoria, Illinois buildings owned by construction equipment manufacturing company Caterpillar Inc., in relation to Caterpillar’s offshore tax practices. These tax practices involve the use of a subsidiary corporation based in Switzerland, known as CSARL.

In a statement, Caterpillar spokeswoman Corrie Heck Scott confirmed that “law enforcement is present in various Peoria-area Caterpillar facilities executing a search warrant.” She also stated that, “Caterpillar is cooperating” with law enforcement.

Caterpillar CEO Jim Umpleby also released a statement in which he confirmed the raids and apologized to his employees. “This morning, a number of our colleagues in the Peoria area were surprised when federal authorities arrived to execute a search warrant,” the statement read. “I’m sorry that we had to experience this today,”

The tax strategy, designed by the accounting firm then known as PriceWatterhouseCoopers, involved the transfer of the rights to Caterpillar’s profits to CSARL, a wholly-owned subsidiary. Rather than paying the 29 percent effective tax rate it would owe on the profits had they remained in the United States, Caterpillar only paid a rate of 4 to 6 percent that it had negotiated directly with the Swiss government.

These tax practices were the subject of a formal Congressional inquiry in 2014, in which it was concluded that the scheme, in which Caterpillar had transferred over $8 billion in profits to CSARL, allowed Caterpillar to slash its U.S. tax bill by $2.4 billion over the course of 13 years; however, the inquiry did not conclude that Caterpillar’s practices had been illegal.  In 2015, Caterpillar was served with a grand jury subpoena for documents related to the movement of cash between its U.S. business and its Swiss subsidiary.

Caterpillar, whose stock prices fell 4.3 percent on the day of the raid, has been the subject of recent praise from President Trump. While Trump railed against corporate expatriation of profits throughout his campaign, it remains to be seen how his administration intends to deal with the issue.

Malaysian authorities announced March 1, 2017, that they had brought charges against the two women who had been arrested on February 13 for the murder of Kim Jong-Nam, half brother of North Korean leader Kim Jong-Un. Siti Aisyah, 25, of Indonesia, and Doan Thi Huong, 28, of Vietnam, are accused of using a water gun to poison Kim with a deadly nerve agent, called Agent VX.

Simultaneously, the North Korean government has sent diplomatic delegations to Beijing and Kuala Lumpur in an effort to repair the damage caused by the assassination. The North Korean diplomats sent to Kuala Lumpur include the former deputy ambassador to the United Nations, Ri Dong-il; a key objective of the delegation is securing the release of Mr. Kim’s body to North Korea. The delegation to Beijing includes a high-ranking official in Vice Foreign Minister Ri Gil-song — earlier this week, the North Korean government condemned the Chinese government’s decision to adhere to the sanctions regime imposed on the purchase of North Korean coal by the UN.

In addition to the arrests of Aisyah and Huong, Malaysian authorities have also arrested Ri Jong-chol, a North Korean national, and are said to be seeking seven other North Koreans for their involvement in the assassination. There has been widespread speculation, and accusations from the South Korean government, that the killing of Kim Jong-Nam was orchestrated by the North Korean government at the behest of Kim Jong-Un in an effort to consolidate power. There is no word on whether the Malaysian government intends to levy charges on Ri or the seven others suspected of involvement.

On February 27, 2017, the Department of Justice announced that the Takata Corporation, a major global supplier of automotive safety equipment, had pleaded guilty to one count of wire fraud and agreed to pay $1 billion in relation to its marketing and selling of defective airbags. Takata, a multinational corporation based in Japan but with production facilities on four continents, admitted to defrauding customers and automakers by manipulating airbag inflator test data to make its airbags seem more safe than they in fact were.

“For over a decade, Takata lied to its customers about the safety and reliability of its ammonium nitrate-based airbag inflators,” said Acting Assistant Attorney General Blanco. “Takata abused the trust of both its customers and the public by allowing airbag inflators to be put in vehicles knowing that the inflators did not meet the required specifications. Today’s sentence shows that the department will work tirelessly to hold responsible those who engage in this type of criminal conduct.”

The plea agreement is structured thusly: $850 million will be paid by Takata to a fund for airbag replacement and recall costs incurred by auto manufacturers who had been given defective airbags. $125 million will be given to those who had been physically injured by Takata’s defective airbags (and have not already reached a separate settlement with the company). In addition, Takata will pay a $25 million fine, and has been given three years probation.

At least 16 deaths have been attributed to the defective airbags, which have led to the recall of a record 42 million vehicles. The press release announcing the settlement can be found here: https://www.justice.gov/opa/pr/takata-corporation-pleads-guilty-sentenced-pay-1-billion-criminal-penalties-airbag-scheme.

Ex-CIA officer Sabrina De Sousa, convicted in an Italian court in absentia for her role in the extraordinary rendition of Egyptian cleric Osama Hassan Mustafa Nasr (also known as Abu Omar), had her sentence partially commuted by order of Italian President Sergio Mattarella. After announcing that De Souza’s sentence had been commuted by a year, from four years to three, the Italian government announced on March 1, 2017 that they would no longer seek extradition of De Souza, thereby allowing for her release.

De Souza, who was born in India holds both U.S. and Portuguese citizenship, was arrested and detained by Portuguese authorities as she was attempting to return to India to visit her ailing mother. Though she denied involvement in the plot, De Souza was one of 23 Americans convicted in absentia for the kidnapping of Abu Omar on a street in Milan on February 17, 2003. De Souza, whose sentence had initially been set for seven years before being reduced to four, had been in a battle over her extradition to Italy for several years.

In announcing the commutation, President Mattarella stated he had based his decision on “the attitude of the sentenced party, the fact that the United States has discontinued the practice of extraordinary renditions and the need to weigh up the penalty with that of others convicted of the same offenses.” Abu Omar, in a telephone interview with Adnkronos Internation, stated he was “satisfied” with President Mattarella’s decision, and that “De Sousa has suffered enough.”

The act of imprisoning De Sousa for an act committed while acting in an official capacity as an agent of the United States would likely have strained the relationship between the U.S. and Italy in a time of great uncertainty regarding the strength of the U.S.’ commitment to its European allies.

On February 21, 2017, the U.S. Supreme Court heard oral arguments in Hernández v. Mesa. In this case, a U.S. border patrol agent (Mesa) fired a bullet from the U.S. side of the U.S.-Mexican border, striking and killing an unarmed and nonthreatening 15-year old Mexican national, Sergio Hernández, while Hernández was in Mexico. At issue in this case: whether the protections against the unjustified use of deadly force by law enforcement under the Fourth Amendment can be extended extraterritorially to a cross-border killing of a non-U.S. citizen. Within the oral arguments of the petitioners (delivered by notable Texas plaintiff’s lawyer Robert C. Hilliard), the petitioners attempted to narrow the scope of the decision. As the court tried to examine the broad extraterritorial application of the Fourth Amendment, Mr. Hilliard tried to focus that application on the narrow set of circumstances of the case, discussing how the extraterritoriality should be mitigated by the shooting’s proximity to the border and the fact that the border agent’s actions all occurred in the United States, and how concerns raised about the legality of drone strikes could be sidestepped in this instance because this was an action taken by civilian border patrol agents and not by the military.

This narrow approach suggests that the court can and should apply or not apply individual parts of Fourth Amendment doctrine to non-citizens abroad depending on whether doing so would be “impracticable or anomalous,” as the petitioner’s brief states — essentially, leaving the courts to decide the applicability of the Fourth Amendment to non-citizens on a case-by-case basis. This approach has drawn criticism from those who wish to see a more formalist interpretation of the Fourth Amendment’s application to non-citizens. In 1990, the Supreme Court decided in United States v. Verdugo-Urquidez that the Fourth Amendment did not apply to searches of non-citizens; Fourth Amendment rights, in the view of the court, are created as part of a social contract between a citizen and the government. The petitioners’ approach would erase that bright line test, and institute a piecemeal approach rather than a new bright line test which would expand Fourth Amendment protections to non-citizens more broadly.

A full transcript of the oral arguments can be found here: https://www.supremecourt.gov/oral_arguments/argument_transcripts/2016/15-118_3e04.pdf.