IELR Blog

Official Blog of the International Enforcement Law Reporter

The U.S. To Return Artifacts to Iraq Stolen After the Invasion

by Leave a Comment

On August 3, 2021, Iraq announced that the U.S. would return more than 17,000 looted artifacts, some of which were stolen during the 2003 invasion.

 

 Artifacts Seized from DC- Museum and Cornell University

 

Thousands of artifacts went missing after the 2003 U.S. invasion of Iraq. ISIS, which controlled the region from 2014 to 2017, allegedly destroyed, stole and sold thousands of Iraqi artifacts. The U.S. returned the artifacts primarily held in DC-based Museum of the Bible and Cornell University.

 

According to the Washington Post, the Museum of the Bible held 12,000 of the stolen artifacts. An evangelical Christian family, who also owns craft store giant Hobby Lobby, founded and funds the Museum. displayed in the Museum were supposed to provide background into the Old Testament. Among the other artifacts returned include cuneiform tablets, clay seal impressions or bullae, and ancient cylinder seals—some of which were the basis of the 2011 government fine against Hobby Lobby.

 

In 2015, the Justice Department investigated and fined Hobby Lobby for looting artifacts from the Middle East for their Museum—some of the artifacts returned recently from that looting instance. As a part of the lawsuit agreement, the supply chain store agreed to implement stricter acquisition procedures. Also, after a voluntary review of their artifacts, it identified thousands of suspect artifacts.

 

Hobby Lobby’s president claims that he was unaware that the artifacts were stolen when he purchased the artifacts for the Museum. The current museum director said that the pieces were bought in lots with thousands of pieces that said that paperwork was “vague that the museum did not know what it was getting,” according to a Washington Post article.

 

The more than 5,000 artifacts returned were found in Cornell University. The collection has artifacts from the Sumerian city of Garsana, which archeologist believe came from the south of Iraq. Allegedly, Cornell received the artifacts as a donation from an American collector. In 2013, the Justice Department went after Cornell to pressure the university to return the artifacts allegedly stolen in the 1990s from Iraq. Cornell has used the artifacts as basis for the study for the “cultural benefits of the Republic of Iraq.”

 

In an optimistic press statement, the Iraqi foreign minister stated that the Iraqi government would “spare no effort to recover the rest of our cultural heritage throughout the world.”

 

U.S.’ Efforts to Combat Illicit Antiquities Trade

 

Earlier this year, the U.S. passed revision to the Anti-Money Laundering Act (AMLA 2020) that would apply the same due diligent requirements used for financial institutions antiquities dealers. The amendments to the law amend the definition of financial institutions in the AMLA, under Section 6110(a), to include art and antiquities traders, thereby holding them to the same reporting standards as financial institutions under the BSA. Much like the drug or arms trade, art and antiquities, too, can be a source of money laundering. This type of illicit trade can is linked to international terrorism, persecution of cultural groups, and criminal networks.

 

 

The August IELR will have an in-depth discussion of this topic.

U.S. Returns Additional $452 Million in Forfeited 1MDB Funds to Malaysia

by Leave a Comment

On August 5, 2021, the United States Department of Justice announced it has returned an additional $452 million in embezzled 1Malaysia Development Berhad (1MDB) funds it has forfeited to the people of Malaysia.  The U.S. has now returned over $1.2 billion in forfeited 1MDB funds.[1]

Court documents show the funds from 1MDB, formerly Malaysia’s investment development fund were laundered through major financial institutions worldwide, including in the U.S., Switzerland, Singapore, and Luxembourg.

DOJ Civil Forfeiture Actions

Starting in 2016, the Money Laundering and Asset Recovery Section (MLARS) of the Justice Department’s (DOJ) Criminal Division and U.S. Attorneys’ Office filed 41 civil forfeiture actions in the U.S. District Court for the Central District of California and one in the U.S. District Court for the District of Columbia.  The suits led to the seizure of over $1.7 billion in stolen assets.  This recovery is the largest to date under the DOJ’s Kleptocracy Asset Recovery Initiative.  The funds include both funds finally forfeited and funds the DOJ helped in recovering and returning.  The DOJ continues to litigate actions against additional assets allegedly linked to this scheme.

Forfeiture Allegations

The civil forfeiture complaints allege that, from 2009 through 2015, high-level officials of 1MDB  and their associates, and Low Taek Jho (aka Jho Low), allegedly misappropriated more than $4.5 billion in funds belonging to 1MDB through a criminal conspiracy involving international money laundering and embezzlement.  The forfeiture complaints allege some of the embezzlement proceeds were used to pay bribes.

While the Malaysian government established 1MDB to promote economic development in Malaysia through global partnerships and foreign direct investment, instead the funds held by 1MDB and proceeds of bonds issued for and on behalf of 1MDB.  The funds were taken and used to buy various extravagant items, including luxury homes and properties in Beverly Hills, New York, and London; a 300-foot superyacht; and fine art by Monet and Van Gogh.  The funds were invested into numerous businesses, including a boutique hotel in Beverly Hills, a movie company that made “The Wolf of Wall Street” while the embezzlement scheme    transpired.  The scheme also invested in the redevelopment of the Park Lane Hotel in Manhattan and shares in EMI, the largest private music-rights holder.

Analysis

In March, U.S. District Judge Dale Fischer in Los Angeles denied the DOJ’s efforts to seize $325 million from an oil exploration joint-venture linked to the 1MDB scandal.  Judge Fischer granted Petrosaudi’s request to dismiss the DOJ’s forfeiture claim on the basis that the government had failed to make an adequate allegation between the money and any criminal offense.[2]

U.S. firms were involved in the 1MDB scandal.  Goldman Sachs entered into corruption-related settlements in both the U.S. and Malaysia for its role in raising funds.  Large U.S. law firms were involved in helping the alleged embezzlers make investments in the U.S.

[1]    U.S. Department of Justice, Over $1 Billion in Misappropriated 1MDB Funds Now Repatriated to Malaysia, Press Rel. 21-740, Aug. 5, 2021.

[2]    Hugo Miller and Jonathan Browning, 1MDB Case Hits Setback as Judge Rules Against U.S. Justice Department, Bloomberg, March 25, 2021,

Alleged Rhino-horn Kingpin and a Hunter Arrested & Granted Bail for Illegal Possession of Rhino Horns

by Leave a Comment

On Wednesday, July 21, 2021, A rhino kingpin and game hunter were arrested while illegally transporting rhino horns valued over R2.6-million. The duo was charged with illegally possessing and selling horns and was granted bail later that week.

 

The Crime

 

The two suspects are alleged rhino horn kingpin Johannes Groenewald, 53, and professional big game hunter Schalk Steyn,48. The duo was arrested in the process of illegally transporting 19 rhino horns in two separate vehicles. The arrest was made in Mpumalanga, which is a province in eastern South Africa. They were charged for possessing and selling the rhino horns.

 

The arrest was made part of a multidisciplinary operation controlled by the Hawks’ wildlife trafficking counter-intelligence unit.

 

The suspects’ initial court appearance a day after their arrest, July 22. Their crime is categorized as a Schedule 5 offense, which includes violent crimes such as treasons, murder, and corrupt involving monetary amounts “R500 000 for an individual and R100 000 if it is alleged that the offense was committed by a person, group of persons or syndicate acting in common purpose or conspiracy,” according to Mail & Guardian, Africa-based newspaper. A Schedule 5 offense carries with it a minimum of 15 years imprisonment.

 

The duo was released on bail under certain conditions that they do not communicate with any witnesses. Steyn had already given up his passport as part of a bail condition in a separate case.

 

 

Delay in Prosecution

 

The rhino-horn kingpin has a history of evading jail time and staying above the law. Previously, he was arrested, and nine other co-conspirators after an excavation investigation revealed that he had rhino carcasses. The investigation also revealed that the suspects removed the horns before they buried the animals.

 

Though the defendants were charged with illegal hunting, money laundering, racketeering, organized crime of rhino horns, they never had their day in court as the trial date was postponed.

 

According to the Daily Maverick, one reason for the delay in prosecution was that the court was awaiting “a Constitutional Court ruling that finally confirmed the lifting of South Africa’s moratorium on domestic trade in rhino horn. The outcome was that the State dropped about 60 charges against the accused, and an amended charge sheet was subsequently served on the group.”

 

In 2018, the trial date was postponed to 2021, and the alleged suspects still have not had their day in court.

 

In 2014, the U.S. Justice Department attempted to extradite the defendants to face charges for “conspiracy to sell illegal rhino hunts in South Africa in bid to defraud US hunters,” however a Limpopo court in 2017 blocked their extradition.

 

The arrests received some applaud from the World Wide Fund for Wildlife of South Africa, with the senior manager saying that “We often talk of the need to shift law enforcement focus from the poachers on the ground to the wildlife trafficking syndicate members.”

 

The August 2021 IELR issue will have an in-depth discussion on this matter.

Spanish Court Advises Banco de Chile to Set Aside $103M for Money Laundering from Pinochet Expropriations

by Leave a Comment

On July 29, 2021, the Seventh Court of Guarantee of Santiago (El Séptimo Juzgado de Garantía de Santiago) reopened an investigation into whether the Banco de Chile helped the former dictator Augusto Pinochet launder money.  It notified the Supreme Court of Chile of the reopening of the case and advised the bank, whose ownership in related to the Pinochet family, to set aside $103 million.[1]

The Spanish Court’s Decision

The plaintiffs are led by the President Allende Foundation, named after the former President Salvador Allende, whom Pinochet overthrew in a coup.  The Foundation represents more than 20,000 victims of the Pinochet dictatorship.  The plaintiffs allege the funds were obtained by illegal expropriations by General Pinochet and his associates and transferred to personal offshore accounts.  The complaints allege that the transfers constituted acts of tax evasion and money laundering, which the Banco de Chile assisted.[2]

In 1998, Spanish judge Baltasar Garzon ordered Pinochet detained for crimes against humanity.  Spain requested Pinochet’s extradition from England.  Although the English courts ordered him extradited, the British Home Office ordered that he not be extradited due to humanitarian considerations, namely his age and failing health.  General Pinochet died under house arrest in Chile in 2006 without being tried.

Banco de Chile, the Alleged Enabler, and the Luksić Family

Banco de Chile successfully claimed for years that Chile rather than Spain has jurisdiction to investigate the allegations.  In 2013, the Chilean judiciary closed a money laundering investigation without charging the general or anyone else.  A study commissioned by the Chilean Supreme Court stated only $2 million of the $21 million identified as Pinochet’s personal wealth could be considered clean.

In 2018, Chile’s Supreme Court ordered the return of $1.6 million of Pinochet’s assets.  It convicted three of his former generals for fraud connected to public money.  Banco de Chile paid Chilean authorities $3.1 million in 2009 for administrative irregularities concerning General Pinochet’s money.  However, the bank was never indicted.[3]

Although the court told Banco de Chile it should set aside $103 million to cover potential payments to the victims, it has not yet ordered it to do so.  Banco de Chile has deposits in around ten countries, six in the European Union.

Quiñenco is the majority owner of the Banco de Chile.  The Luksić family has Quiñenco as its holding company.  Vladimir Luksić was the brother-in-law of Augusto Pinochet.

Prosecutor José Morales has also charged Anita María Pinochet Ribbeck, the spouse of former army general, Juan Miguel Fuente-Alba, and Fuente-Alba, with money laundering.[4]

Morales claims that a report of the Financial Intelligence Agency shows the pair increased their wealth more than 280% between 2010 and 2016 by hiding and falsify the illegal source of their funds.  The defendants, represented by Cuatrecasas, one of the largest Spanish firms specializing in tax and money laundering, tried unsuccessfully to dismiss the case.[5]

Analysis

Spain has extraterritorial jurisdiction for Spanish victims.  Already the Spanish courts imposed a penalty against Riggs Banks for alerting General Pinochet’s to move the money in his accounts in London ahead of Garzon’s request that Britain to freeze his accounts.[6]

This case should be watched for its efforts to hold accountable Banco de Chile, the alleged enabler, almost 23 years after the initial charges in Spain.

Spain’s wide-ranging tax collection and enforcement and mutual assistance agreements with the EU countries may play an important role in this case.

The case illustrates the use of extraterritorial jurisdiction when a court believes a foreign court, although exercising jurisdiction, have not properly adjudicated the case.

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

[1]    Raphael Minder, Spain Reopens Pinochet Inquiry Into Tax Evasion and Laundering, N.Y. Times, July 31, 2021, at A7, col.1.

[2]    Spanish court targets Chilean bank linked to Pinochet, July 30, 2021 https://www.hebergementwebs.com/europe/spanish-court-targets-chilean-bank-linked-to-pinochet.

[3]    Id.

[4]    They Decide on a Bond for Ana Maria Pinochet, spouse of the Former General Fuente-Alba, after the Money Laundering Charges (Decretan arraigo para Ana María Pinochet, esposa del ex general Fuente-Alba, tras ser formalizada por lavado de dinero, El Mercurio, July 29, 2021).

[5]    Id.

[6]    Spanish court targets Chilean bank linked to Pinochet, supra.

Nigerian High Court Sentenced 10 Pirates for the Hijack of Chinese Vessel

by Leave a Comment

On July 23, 2021, a Nigerian Federal High Court sentenced 10 Pirates for their involvement in hijacking a Chinese Vessel merchant vessel FV HAILUFENG II in 2020. The pirates each received a 12-year prison sentence and a N250,000.00 fine on each count.

 

The FV HAILUFENG II Hijacking

 

In May 2020, ten pirates Frank Abaka, Jude Ebaragha, Shina Alolo, Joshua Iwiki, David Akinseye, Ahmed Toyin, Shobajo Saheed, Adekole Philip, Matthew Masi, and Bright Agbedeyi, allegedly hijacked a Chinese vessel and kidnapped the 18 crew members. The ship was in international waters off the coast of Cote D’lvoire.

 

States in the Gulf of Guinea participated in the rescue mission. They used resources set under the Yaoundé Architecture for Maritime Security. “In a rare victory, the Nigerian Navy was able to interdict the Hailufeng 11 at a position about 140 nautical miles south of Lagos, arriving about two days after the hijacking,” The Maritime Executive reported. The navy rescued the crew members and arrested the pirates.

 

The Federal high court Justice Ayokunle Faji said the pirates’ actions were “an embarrassment to the nation that has impacted the economy negatively.”

 

Hijacking incidents are common in the Gulf of Guinea, which covers several West African Countries. That region has been termed “pirate alley” for the frequent attacks. The International Maritime Bureau reported that last year there were about 22 incidents that accounted for 130 seafarers’ kidnappings.

 

Nigerian lead prosecutor Labaran Magaji said that the conviction is intended to send a strong message Nigeria does not tolerate maritime crimes and that Nigerian institutions are prepared to combat criminal activities.

 

 

 

The 2019 Anti-Piracy Law

 

The July 23 conviction is the first time pirates have been prosecuted under the Suppression of Piracy, and Other Maritime Offences (SPOMO) Act that President Muhammadu Buhari passed in 2019. Previously, three private security company employees were fined under this law after their alleged involvement in aiding a ransom crime. The legislation clarified jurisdictional issues related to armed robbery committed at sea and authorizes exclusive jurisdiction to hear matters related to armed robbery and other illegal acts committed at sea in the Federal High Court. Furthermore, the act prohibits hijacking, vandalism, or destruction of the ship, and the unlawful interference of ship operation, navigation, and installation on the facility.

 

The current (i.e., August) issue of the IELR will have a more comprehensive discussion of this case.

 

 

Exploring Foreign Criminal Procedures Through Film

by Leave a Comment

by Frederick T. Davis*

Since 2017 I have been teaching a course at Columbia Law School called “Comparative Criminal Justice,” which explores the very fundamental differences among criminal procedures around the world.  It focuses particularly on the split between the “common law/accusatorial” world of criminal justice associated with English traditions and the “civil law/inquisitorial” world associated with continental Europe; those traditions are visible around the globe, including of course in the United States but also in many countries in South America, Africa and Asia whose legal traditions, at least in part, derive from one or another system.  The course is fun.  And I believe its message is important: the world is globalizing quickly, and crimes do not respect borders; prosecutors, law enforcement personnel, and others involved in criminal justice are increasingly confronted with legal systems different from the one in which they are trained, and do not always respond appropriately.  My opinion is that many transnational criminal investigations have ended in sub-optimal outcomes because one or another participant did not understand the procedures and dynamics of the system within which an adversary was acting.  Separately, international criminal tribunals hold trials in which important people, including in several instances a former head of state, have been charged with international crimes such as war crimes, torture, genocide, and crimes against humanity; my opinion is that many of those tribunals work inefficiently because they have not developed a coherent set of “international” criminal procedures, but rather tend to use a crude admixture of procedures drawn from very different legal systems that happen to be the only ones its participants understand.

My Columbia course was born of some experience in these areas: I am a former federal prosecutor and a New York trial lawyer, a Fellow of the American College of Trial Lawyers,  but in 2006 I moved to France, sat for the Paris Bar, and engaged in quite a few criminal matters in France, including two trials; along the way, I have worked extensively at several of the international criminal tribunals, serving as an advisor to the Prosecutor at the (now former) International Criminal Tribunal for Rwanda as well as for the Prosecutor at the International Criminal Court in The Hague, and I advised a large group of victims in the (successful) prosecution of former Chadian dictator Hissène Habré for crimes against humanity in a trial in Senegal.  I started organizing my comparative course based on this experience, and have enjoyed learning – and in a modest way, contributing to – the limited but useful academic literature on comparative criminal procedures.

My academic career took a huge boost when I stumbled upon 2014 article called A Survey of Comparative Criminal Procedure Through Foreign Films, published in Opinion Juris in Compatione, Vol I, Special Issue (2014) by Samuel W. Bettwy, an Assistant United States Attorney in the Southern District of California and an Adjunct Professor of Law at the Thomas Jefferson School of Law, where he teaches a course – which long anticipated mine! – on comparative criminal procedures.  The article makes a simple but profound point: differences in criminal procedures reflect differences in culture.  It then explores these differences in a visual and concrete way by analyzing films from around the world that portray investigations, interrogations, trials and other criminal procedures – not through documentaries so much as via mass-audience movies that unconsciously but accurately reflect cultural values.  The article contains a clear exploration of the “common law / civil law” dichotomy, as well as variants, and then links them to specific films from around the world.  A few years later Mr. Bettwy developed this article into a book, called Comparative Criminal Procedure Through Film: Analytical Tools and Law and Film Summaries by Legal Tradition and Country, which is available on Amazon and elsewhere.  And in 2019 he took this remarkable work a huge step forward, publishing an “e-book” that not only contains his exploration of various legal traditions around the world, but includes actual, clickable links to over 400 film clips, extracted at great effort from films in 55 countries around the world, organized by the criminal procedure that they involve.  This innovative “book” is available online, and is a unique resource for anyone interested in criminal justice – as well as a source of infinite amusement for film buffs.

On June 30, 2021, Sam Bettwy and I conducted a one-hour webinar on the theme of Comparative Criminal Procedures, Viewed  Through Film, which took place at Columbia Law School; a recording of it is publicly available here.  In it we showed six clips relating to two well-known criminal issues (the right to silence and the role of a judge and counsel during trial), three from England (including clips from two classics – The Paradine Case from 1948 starring Gregory Peck as a London barrister and Witness for the Prosecution, starring Charles Laughton), comparing them with three well-known French films that involved the same procedural issue.  We ended up with an extract from A Separation, a classic 2011 film from Iran that includes some incomparable trial scenes quite different from either of the main Western traditions.

Our one-hour discussion was the barest introduction to the fascinating subject that Sam and I examine in our courses, and which can be explored through his book.  Core criminal principles such as the right to confront witnesses and the right to counsel, as well as crucial procedures such as cross-examination, are not immutable: they are often implemented differently around the world.  It is important to understand that these differences are not a matter of one country’s process being “better” than another, different procedures simply respond to different histories, traditions, and norms.  And there is no better way to visualize this important point than through film.

*Davis is a member of the New York and Paris Bars.  He is a Lecturer in Law at Columbia Law School where in addition to his course on Comparative Criminal Justice he also teaches on International Criminal Investigations, and he teaches or speaks frequently in Europe.  His writings can be found at https://freddavisnylaw.com/

EU Commission Proposes Major Revisions for Countering Money Laundering and Terrorism Financing

by Leave a Comment

On July 20, 2021, the European Commission presented a significant set of legislative proposals to strengthen the EU’s anti-money laundering and countering terrorism financing (AML/CFT) rules.  The proposal will establish a new EU authority to combat money laundering.  The proposals aim to improve the detection of suspicious transactions and activities, and to shut the loopholes used by criminals to launder illicit proceeds or finance terrorist activities through the financial system.

The proposals improve the existing EU framework by responding to emerging challenges linked to technological innovation.  They take into account virtual currencies, more integrated financial flows in the Single Market and the global nature of terrorist organizations.  The proposals bring convergence in the AML/CFT rules and establish a more consistent framework to ease compliance for operators subject to AML/CFT rules, especially for those active in cross-border transactions.

The Four Legislative Proposals

The initiatives consist of four legislative proposals:

New EU AML Authority (AMLA) Proposed

The initiatives will establish a new EU Authority (AMLA) to transform AML/CFT supervision in the EU and improve cooperation among Financial Intelligence Units (FIUs).  The AMLA will serve as the central authority coordinating national authorities to ensure the private sector correctly and consistently applies EU rules.  AMLA will also furnish support to FIUs to improve their analytical capacity around illicit flows and make financial intelligence a key source for law enforcement agencies.

The AMLA will:

  • create a single integrated system of AML/CFT supervision throughout the EU, based on common supervisory methods and convergence of high supervisory standards;
  • directly supervise some of the riskiest financial institutions that operate in a large number of EU Members or require immediate action to respond to imminent risks;
  • monitor and coordinate national supervisors responsible for other financial entities, as well as coordinate supervisors of non-financial entities;
  • support cooperation among national FIUs and facilitate coordination and joint analyses between them, to better detect illicit financial flows of a cross-border nature.

One EU Rulebook for AML/CFT

The Single EU Rulebook for AML/CFT will harmonize AML/CFT rules across the EU, including, for instance, more detailed rules on Customer Due Diligence, Beneficial Ownership and the authorities and task of supervisors and FIUs.  The initiatives will connect existing national registers of bank accounts, furnishing faster access for FIUs to information on bank accounts and safe deposit boxes.  The Commission will also supply law enforcement authorities with access to this system, accelerating financial investigations and the recovery of criminal assets in cross-border cases.  Access to financial information will be subject to strong safeguards in Directive (EU) 2019/1153 on exchange of information.

Extending AML/CFT Rules to the Crypto Sector

Currently EU AML/CFT rules apply to only certain types of crypto-asset service providers.  The proposed initiatives will extend these rules to the entire crypto sector, obliging all service providers to conduct due diligence on their customers.  The proposals will ensure full traceability of crypto-asset transfers, such as Bitcoin, and will permit prevention and detection of their possible use for money laundering or terrorism financing.   Additionally, the proposals will fully apply EU AML/CFT rules to the crypto sector and prohibit anonymous crypto asset wallets.

Limit Cash Payments to € 10,000

The Commission has proposed an EU-wide limit of €0,000 on large cash payments.  The limit is high enough not to question the euro as legal tender and recognizes the important role of cash.  In about two-thirds of EU Members limits already exist, but the amounts vary.  National limits under  € 10,000 can remain in place.  Limiting large cash payments makes it more difficult for criminals to launder money.  Additionally, the proposes forbid anonymous  crypto-asset wallets, similar to the prohibition of anonymous bank accounts.

“Black-Lists” and “Grey-lists” for Third Countries

The EU will continue to use a “black-list” and a “grey-list.”  In addition to using the FATF list for its own listing, the EU will have its own list based on an autonomous assessment.

Future

The Commission proposals are in the hands of the European Parliament and Council.  The future AML Authority should be operational in 2024 and will start its work of direct supervision slightly later, once the Directive has been transposed and the new regulatory framework starts to apply.

Analysis

The AMLA with direct authority over institutions with cross-border activities or institutions with problems will contribute significantly to stronger compliance.   The AMLA will help establish a single integrated system of AML/CFT through common supervisory methods and convergence of high supervisory standards.  It will also facilitate cooperation among FIUs and more convergence with respect to their operation.

The extension of AML/CFT rules to crypto-asset service providers and prohibition of anonymous crypto asset wallets will plug a gap in the use of virtual currency to circumvent AML/CFT regulation.

The connecting of existing national registers of bank accounts along with the national beneficial ownership registers for companies and trusts will facilitate financial investigations and asset recovery.

Unfortunately, the use of its own grey and black lists will contribute to the proliferation of such lists internationally, causing more limits and closures of correspondent bank accounts and financial exclusion for persons in small jurisdictions.

For additional information see Questions and Answers:  AntiMoney Laundering and Countering Financing of Terrorism (AML/CFT)  and Factsheet: Stronger EU rules to fight financial crime, Anti-money laundering and countering the financing of terrorism legislative package, and Proposal on centralised bank account registeries.

The next issue (August) of the IELR will have a more comprehensive discussion of the EU Commission’s AML/CFT initiatives.

ABA CJS Int’l Comte Meeting on US-Brazil Jt Settlements et al

by Leave a Comment

The ABA Crim. Just. Sec. Int’l Comte, which I co-chair, will meet on Thurs. Aug. 5 from 2:00-3:00 pm E.S.T. via Zoom as part of the ABA Hybrid Annual Meeting. Everyone is welcome to attend, including non-members.

Join Zoom Meeting
americanbar.zoom.us/j/…

Meeting ID: 977 9733 8444
Passcode: 264266

Find your local number: https://lnkd.in/d2aAsEz

Guest Speakers
Antenor Madruga and Ana Belotto, both of Feldens Madruga, in Brazil, will join us to discuss “US-Brazilian Joint Criminal Settlements: Trends and Implications for Stakeholders”
The panelists will discuss recent joint settlements between the U.S. , Brazil and other countries, including the Amec Foster Wheeler settlements (June 25 in the US and July 2 in the UK), Rolls-Royce, and others. They will discuss the trends and implications for stakeholders of joint settlements and other developments in international criminal cooperation.
Antenor Madruga has a PhD in international Law, is the founding partner at the FeldensMadruga law firm in Brazil. He is recognized as a leading Brazilian lawyer in complex litigations and negotiations involving government criminal and administrative proceedings, particularly in multijurisdictional cases.
Ana Belotto coordinates the Compliance practice at FeldensMadruga with a special focus on AML and anti-corruption matters. Has participated in the negotiation of complex multijurisdictional leniency agreements involving criminal, civil and administrative matters. She is a member of the New York Bar and is a registered Solicitor at the Law Society of England and Wales

Other Agenda Items
The Committee will also discuss other developments in the field and Committee business, such as the proposed resolution on joint settlements, and its recent webinar on “Abusing Interpol’s Resources to Persecute Expatriate Dissidents” on July 14. 

Video Conferencing, Web Conferencing, Online Meetings, Screen Sharing – Zoom

Chilean Woman Living Australia to Face Extradition for Kidnapping Charges

by Leave a Comment

On June 25, 2021, an Australian federal court judge ruled that a Chilean woman living in Sydney must face extradition for her alleged involvement in kidnappings during Augusto Pinochet’s dictatorship.

Adriana Rivas is wanted for seven counts of aggravated kidnapping. These charges stem from her alleged role as an agent for Pinochet, a Chilean dictator, in the 1970s. Chilean authorities claim that Rivas was involved in the disappearance of Victor Diaz, the secretary-general of Chile’s communist party, along with six of his supporters.

While Rivas denied involvement in any kidnappings, she did admit in a 2013 interview with Australian broadcasters that she was a part of the National Intelligence Directorate or Dina, a secret police force that used extreme violence to silence political opponents.

 

Background

Chilean authorities claim that Rivas was the assistant to Manual Contreras, the head of Dina. The Directorate was a secret organization that plotted and carried out violent attacks towards dissidents in the 1970s.

The violent attacks left as many as 3,000 people dead or disappeared. And some 40,000 others were held captive in prison or faced torture at the hands of the government.

Throughout the violent campaign attacks, Rivas allegedly carried out those seven kidnappings. The campaign corresponded with Pinochet’s dictatorship, which was from 1973 to 1990.

The Chilean government now claims that Rivas played a significant role in facilitating these violent attacks; however, her Rivas lawyers argue that she was not involved in the attacks and merely had menial tasks.

However, contrary to Rivas’ claims, BBC reports that in she was in an SBS Australian broadcast interview where she admitted that her years in the Dina were “the best of my life.” In the broadcast interview, she told SBS that she lived a luxurious life as she was provided with clothing allowance, stayed in upscale hotels, and traveled in expensive cars.

As for her alleged involvement in torture, she said in the interview that “they had to break the people – it happened all over the world, not only in Chile.”

 

Extradition

In October 2020, Rivas contested the extradition request, and a Sydney magistrate ruled that she was eligible for extradition. In June 2021, Judge Abraham agreed with the magistrate and said that there was no proof that the lower court “engaged rubber-stamping exercise” concerning her extradition. Judge Abraham also only considered the extradition issue rather than her guilt or innocence.

If convicted, Rivas could face up to five life sentences plus 20 years for the remaining two counts.

Rivas can still appeal that decision before the Federal Circuit Court judges.

Arnold & Porter Lawyer Faces Litigation by Denmark Over Tax Controversy

by Leave a Comment

Recently, Denmark claimed Michael Ben-Jacob, an Arnold & Porter partner, designed a scheme that defrauded the country of around $260 million.[1]  The scheme involved setting up sham pension plans to apply for refunds in Denmark and the complaint was filed in the Southern District of New York (S.D.N.Y.).[2]  Denmark’s customs and tax authority (SKAT) stated that the plans submitted at least 364 fraudulent applications involving 630 dividends issued by 13 Danish companies. This blog post will discuss in further detail the scheme and briefly touch on the change of legal climate in relation to enablers in fraud schemes.

The Scheme

Michael Ben-Jacob’s clients are mainly high net-worth individuals, family offices, and “closely held” businesses.[3]  The activity allegedly started around 2011 and ended in August 2015 after Denmark received a tip from a whistleblower and a foreign government.  Ben-Jacob designed a partnership structure that allowed the principles of Argre, a New York-based business, to recruit friends, family members, and colleagues to set up additional plans to submit refund applications.[4]  The partnership structure enabled the principals to retain control of the plans that the recruits agreed to set up and take 90% to 95% of the proceeds that these additional plans obtained from Denmark, after payments to others in the scheme.[5]  Finally, recruits signed the papers necessary to set up one or more allegedly sham companies and allegedly sham pension plans, and appoint one of the principals as the plans’ authorized representative.[6]

The S.D.N.Y. recently ruled against Michael Ben-Jacob a motion on the revenue rule, “a common law principle that prohibits courts from hearing actions by foreign nations to enforce their foreign tax laws, whether directly or indirectly.”[7]  This further adds to the mountainous amount of litigation Ben-Jacob will need to deal with, as Ben-Jacob is already a defendant in 39 actions.[8]

Potential Changes for Enablers

The recent development in this case provides a potential for change for future enablers in fraud schemes.  In this case, associate defendants initially claimed privilege over their communications with Ben-Jacob.  Now, the defendants “announced that they were asserting a reliance-on-counsel defense, waived the claim of privilege and, in January 2021, began producing communications with Ben-Jacob that they had previously withheld.”[9]  As a result, these communications revealed Ben-Jacob’s role in the scheme to defraud SKAT.

SKAT’s allegations against Ben-Jacob’s will definitely put a lot of people on notice.  Enablers of fraud can be found in many forms: accountants, attorneys, bankers, and others.  Potential liability of Ben-Jacob could lead to further investigations and new interpretations by tax authorities and courts alike as to what kind of responsibilities do enablers have in their role in assisting those in fraud schemes.  This topic will be explored in a larger article for the International Enforcement Law Reporter.

 

[1] Bruce Love, Arnold & Porter Partner Faces More Litigation By Denmark Over Tax Controversy, LAW.COM, https://www.law.com/newyorklawjournal/2021/06/17/arnold-porter-partner-faces-more-litigation-by-denmark-over-tax-controversy/, Jun. 17, 2021 (last visited Jul. 16, 2021).

[2] Id.

[3] Love, supra.

[4] SKAT v. Ben-Jacob, 1:21-cv-05339 **at 3 (S.D.N.Y. Jun. 16, 2021).

[5] Id.

[6] Id.

[7] In re SKAT, 356 F. Supp. 3d 300 (S.D.N.Y. 2019).

[8] 1:21-cv-05339 at 4.

[9] Love, supra.

Disclaimer

Nothing in this blog constitutes or is intended to constitute legal advice. Neither transmission nor receipt of such materials creates an attorney-client relationship. Blog readers and subscribers should consult with an attorney. This blog may be considered attorney advertising under the rules of some states. The hiring of an attorney is an important decision that should not be based solely upon advertisements. Prior results do not guarantee similar outcomes.

Pages

Categories

Sign up for our mailing list!
Get the latest blog posts, and an exclusive discount offer for one year's subscription to the International Enforcement Law Reporter.
We respect your privacy.