Illegal Money Transmitting—Abad Elfgeeh

An immigrant from Yemen has been convicted of illegally transmitting $21.9 million across the world without a license, running an illegal money business, and structuring bank deposits to avoid reporting rules.^[1] Abad Elfgeeh’s ice cream shop was used by a Yemeni cleric—who was convicted earlier this year—to fund al Qaeda and Hamas.^[2] Mr. Elfgeeh was not charged with any terrorism-related charges.^[3] Prosecutors had portrayed Mr. Elfgeeh as the mastermind of a complicated scheme designed to mask a massive outflow of cash.^[4]

Mr. Elfgeeh originally pleaded guilty, but the judge threw the plea out because he didn’t feel that Mr. Elfgeeh understood the terms of the agreement and that he never acknowledged taking part in any conspiracy.^[5] Furthermore, he was originally arrested based on information from Mohamed Alanssi, an FBI informant who set himself on fire in front of the White House to protest what he says is the FBI’s betrayal of him.^[6]

Running an Unlicensed Money Transmitting Business and Illegally Transmitting Money
Under 18 U.S.C. § 1960, whoever conducts, controls, manages, supervises, or owns an unlicensed money transmitting business can be fined, sentenced to up to 5 years in prison, or both.^[7] An “unlicensed money transmitting business” is defined as a money transmitting business which affects interstate or foreign commerce in any manner or degree and—

• is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;^[8]
• fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section;^[9] or
• otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity.^[10]

Structuring Transactions to Evade Reporting Requirements
Under 31 U.S.C. § 5324, it is illegal for a person, for the purpose of evading the reporting requirements of 31 U.S.C. § 5316, to fail to file the report required by section 5316,^[11] or structure the exportation of monetary instruments.^[12] Violating section 5325 can be punished by a fine, imprisonment for up to 5 years, or both.

Section 5316 states that the Secretary of the Treasury must be notified whenever a person transports monetary instruments that are worth more than $10,000 from the United States.^[13]

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[1] Michael Weissenstein, Ice Cream Shop Owner Found Guilty of Illegal Money Transmitting, Associated Press, Sept. 21, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] William Glaberson, Judge Vacates Guilty Plea in Yemeni Case, N.Y. Times, May 12, 2004, available here (subscription required).
[6] Alexandra Marks, Terror Finance: Two High-Stakes Cases, Christian Science Monitor, Dec. 24, 2004, available here.
[7] 18 U.S.C. § 1960(a).
[8] Id. § 1960(b)(1)(A).
[9] Id. § 1960(b)(1)(B).
[10] Id. § 1960(b)(1)(C).
[11] Id. § 5324(c)(1).
[12] Id. § 5324(c)(3).
[13] Id. § 5316(a)(1)(A).

Narcotics Trafficking—Puerto Rico

Immigration and Customs Enforcement [hereinafter ICE] officials in Puerto Rico have seized more than two kilograms of heroin and 400 kilograms of cocaine in two separate incidents.^[1] Dianneris Rodriguez, a citizen of the Dominican Republic, was arrested at the Mayaguez, Puerto Rico port-of-entry.^[2] She stated she had nothing to declare, but “her suspicious behavior” prompted officials to conduct a thorough search of her vehicle, where they found 2.53 kilograms of heroin.^[3] The ICE press release, as of this writing, states that she was charged with violations of 18 U.S.C. § 841 and 952. It is unlikely, as we will show in a moment, that this is accurate.

Three other citizens of the Dominican Republic and one citizen of Venezuela were arrested for attempting to smuggle more than 400 kilograms of cocaine through Fajardo, Puerto Rico.^[4] Sebastian Pita-Almonte, Luis R. Reyes-Gomez, Teodoro Miranda-Severino, and Ramon Graterol-Rodriguez, were arrested when a patrol aircraft spotted their suspicious “yola” near Fajardo, Puerto Rico.^[5] A search of their vessel yielded 16 bales of cocaine.^[6] The press release states that the four men were charged with 18 U.S.C. §§ 841, and 846, but, again, this is unlikely.

18 U.S.C. § 841 codifies various definitions related to the importation, manufacture, distribution, and storage of explosive materials. If explosives were at issue in the case, surely they would have been mentioned. Furthermore, definitions are not crimes with which a person can be charged. 18 U.S.C. § 846 relates to the power of the Attorney General to inspect the site of a fire or explosion, and to create a national repository of arsons. This statute does not contain a crime with which a person can be charged. Finally, 18 U.S.C. § 952 relates to diplomatic codes and the unlawful transfer of those codes to third parties. Nothing in the press release relates to such behavior.

More likely, the individuals are charged under 21 U.S.C. §§ 841, 846, and 952.

Section 841 states that is unlawful for a person to possess with intent to distribute a controlled substance.^[7] The punishment for violating this section with more than one kilogram of heroin,^[8] or more than five kilograms of cocaine,^[9] is imprisonment for no less than 10 years and no more than life, up to $4,000,000 in fines, or both.^[10]

Section 846 states that any person who attempts or conspires to commit any of the drug offenses will be punished as if he had committed the offense.

Section 952 states that it is unlawful for a person to import any controlled substance or narcotic drug into the United States. Punishment of section 952 falls within the rubric found in 21 U.S.C. § 960, which states that any person who knowingly imports more than one kilogram of heroin, can be punished with imprisonment for no less than 10 years and as much as life, a fine of up to $4,000,000, or both.^[11]

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[1] ICE, ICE Seizes More than 2 Kilos of Heroin and 400 Kilos of Cocaine in Puerto Rico, Sept. 20, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] 21 U.S.C. § 841(a)(1).
[8] Id. § 841(b)(1)(A)(i).
[9] Id. § 841(b)(1)(A)(ii).
[10] Id. § 841(b)(1)(A).
[11] 21 U.S.C. § 960(b)(1)(A).

McNabb in the News

Senior Principal Douglas McNabb has been quoted in the Financial Times related to the extradition of white collar defendants.

The prospect makes you wonder why more of these people don't just get on the first thing smoking out of US jurisdiction.

I called on Douglas McNabb, the lead partner with Washington's McNabb Associates, who specialises in international extradition cases, espionage and other white-collar crime.

"We are seeing an escalation in global US Federal criminal prosecutions," says McNabb, "and that includes white collar crime as well as terrorism. That would include securities fraud, wire fraud, bank fraud and money laundering. They're even getting aggressive about extraditing people for antitrust violations."

In the past, extraditions were allowed by treaty parties on the basis of a "laundry list" of crimes. Now, the rule is an extraditable offence merely has to be a crime in both countries. As McNabb says: "Globally, international extradition cases are very hard to win (from the point of view of the defence counsel for the offender)."

There are very few countries with which the US does not have extradition treaties, and not that many American criminals have made arrangements in advance with the Republic of Cuba or the Islamic Republic of Iran. And where there are no such treaties, as there are none with some Middle Eastern countries, the US Supreme Court has ruled that kidnapping and rendition by Special Forces, CIA or FBI agents is not grounds for the dismissal of an indictment.

Before you have a "red notice" put out on you that identifies you as subject to an international arrest warrant, go to some relatively comfortable and welcoming country that will grant you citizenship in short order. Oh, and hire some thugs to keep the CIA kidnapping teams at bay.

"That is your conclusion," says McNabb, "but not one I would necessarily disagree with."^[1]

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[1] John Dizard, The Pros and Cons of Fleeing the Country: Street Talk, Fin. Times, Sep. 19, 2005.

Money Laundering—Banco Delta Asia

The US Department of the Treasury has accused the Macau-based Banco Delta Asia [hereinafter BDA] of money laundering, a charge that has sent ripples through that country’s financial system.^[1] According the Treasury Department, which designated BDA a “primary money laundering concern” under Section 311 of the USA PATRIOT Act,^[2] the bank “represents an unacceptable risk of money laundering and other financial crimes” and “has been a willing pawn for the North Korean government to engage in corrupt financial activities in Macau.”^[3] By late Saturday, the accusation had caused customers to withdraw roughly US$37.5 million from the bank.^[4]

The Treasury Department lists the following deficiencies which led to its designation:

• Banco Delta Asia has provided financial services for over 20 years to Democratic Peoples Republic of Korea (DPRK) government agencies and front companies. It continues to develop relationships with these account holders, which comprise a significant amount of Banco Delta Asia's business. Evidence exists that some of these agencies and front companies are engaged in illicit activities.
• Banco Delta Asia has tailored its services to the needs and demands of the DPRK with little oversight or control. The bank also handles the bulk of the DPRK's precious metal sales, and helps North Korean agents conduct surreptitious, multi-million dollar cash deposits and withdrawals.
• Banco Delta Asia's special relationship with the DPRK has specifically facilitated the criminal activities of North Korean government agencies and front companies. For example, sources show that senior officials in Banco Delta Asia are working with DPRK officials to accept large deposits of cash, including counterfeit U.S. currency, and agreeing to place that currency into circulation.
• One well-known North Korean front company that has been a client of Banco Delta Asia for over a decade has conducted numerous illegal activities, including distributing counterfeit currency and smuggling counterfeit tobacco products. In addition, the front company has also long been suspected of being involved in international drug trafficking. Moreover, Banco Delta Asia facilitated several multi-million dollar wire transfers connected with alleged criminal activity on behalf of another North Korean front company.
• In addition to facilitating illicit activities of the DPRK, investigations reveal that Banco Delta Asia has serviced a multi-million dollar account on behalf of a known international drug trafficker.^[5]

When the Treasury Department makes such a designation under Section 311, US financial institutions are required to take “special measures” against those designated institutions. The special measures “range from enhanced recordkeeping or reporting obligations to a requirement to terminate correspondent banking relationships with the designated entity.”^[6]

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[1] US Money Laundering Accusation Ignites Resentment in Macao, Asia Pulse via Yahoo!, Sept. 19, 2005, available here; see also Macau Bank’s Customers Withdraw, CNN.com, Sept. 19, 2005, available here;
[2] Codified at 31 U.S.C. § 5318A.
[3] US Department of the Treasury, Treasury Designates Banco Delta Asia as Primary Money Laundering Concern Under USA PATRIOT Act, Sept. 15, 2005, available here [hereinafter DoT].
[4] US Charge Shakes Environment for Macao’s Financial System, Asia Pulse via Yahoo!, Sept. 19, 2005, available here.
[5] DoT, supra note 2.
[6] Id; 31 U.S.C. § 5318A(b).