“US seizes top Bitcoin exchange as crackdown begins”

May 16, 2013

RT on May 15, 2013 released the following:

“The US Department of Homeland Security seized a payment processing account Tuesday belonging to Mt. Gox, the largest international Bitcoin trader, claiming the monetary exchange service falsified financial documents.

The American government has previously made it clear that officials are watching Bitcoin, a decentralized economic currency that international regulators have not yet been able to control. Many of those who favor Bitcoin use Dwolla, an Iowa-based startup that allows customers to transfer their dollars into Bitcoins.

Unfortunately for those consumers, the Department of Homeland Security issued a warrant Tuesday effectively shutting down Dwolla’s ability to process Bitcoin payments, as reported by CNET. Whether because of the DHS’ charge of operating an “unlicensed money transmitting business,” the sudden timing of the allegations, or another reason, Dwolla and Mt. Gox officials have been reluctant to comment.

“In order not to compromise this ongoing investigation being conducted by ICE Homeland Security Investigations Baltimore, we cannot comment beyond the information in warrant, which was filed in the District of Maryland [Tuesday],” said Nicole Navas, a representative for US Immigration and Customs Enforcement.

The warrant claims Mt. Gox CEO Mark Karpeles did not disclose he operated a financial transfer site when he opened a new bank account for the business. Money transmitting services, according to Gawker, are required to register with the Department of Treasury’s Financial Crimes Enforcement Network (FinCen). Mt. Gox, which is involved in roughly 63 per cent of all Bitcoin purchases, has not done so.

Despite the technicalities skeptics are wondering if Bitcoin’s friction with the Treasury department is the cause of this recent scrutiny. Senator Chuck Schumer (D-New York) said the anonymity afforded by the service provided an “online form of money laundering” and campaigned for its downfall.

“Literally, it allows buyers and users to sell illegal drugs online, including heroin, cocaine, and meth, and users do sell by hiding their identity through a program that makes them virtually untraceable,” Schumer said during a 2011 news conference. “It’s a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It’s more brazen than anything else by light years.”

Most notably, proponents have asserted that Bitcoin would be impermeable in instances where WikiLeaks, for example, saw its funding evaporate as the federal government pressured PayPal to cut off the whistleblower site’s support network. Bitcoin would be more resistant to a crackdown of that nature.

Jerry Brito, a scholar at the libertarian Mercatus Center at George Mason University, told the Washington Post Bitcoin could reduce the cost of financial services by pioneering new business formats.

“Bitcoin has the potential to be a boon to the economy and a boon to merchants,” he said, adding that it could “disrupt traditional payment networks that have not been innovative for a very long time.”

A blind governmental crackdown would only serve to push Bitcoin further underground, Brito argued.

“You can’t put the genie back into the bottle,” he continued. “I hate to say it, but the Bitcoin community needs to start lobbying. It needs to start educating policymakers, lobbyists and influencers about the pros of Bitcoin and the impossibility or the difficulty in getting rid of all the bad uses.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


U.S. Customs officer arrested on alleged federal bribery charges in scheme to avoid taxes on imports coming from China

October 26, 2012

The U.S. Immigration and Customs Enforcement (ICE) on October 25, 2012 released the following:

“LOS ANGELES – Federal authorities arrested a U.S. Customs and Border Protection (CBP) supervisory officer Thursday morning on charges of accepting bribes to allow others, including his ex-wife, to smuggle goods into the United States so they could avoid paying duties and taxes.

Sam Herbert Allen, 51, of Diamond Bar, was arrested after being indicted Wednesday by a federal grand jury on charges of conspiracy, bribery and making false statements to investigating agents with the Department of Homeland Security.

The probe was conducted by U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility, ICE’s Homeland Security Investigations (HSI), and the U.S. Customs and Border Protection Office of Internal Affairs.

According to the five-count indictment, Allen served as a supervisory officer assigned to oversee the examination and release of cargo entering the United States. After he was transferred to other duties within CBP, Allen convinced his ex-wife to operate an import business that would avoid paying duties on shipments coming from the People’s Republic of China. The import business – technically a “foreign trade zone” – would falsely claim that the shipments from China were not imported, but were instead immediately sent to Mexico. The indictment alleges that Allen promised to make the shipments appear to CBP as if they had been exported to Mexico, this in exchange for bribe payments of $2,000 per shipment.

During the course the scheme, which operated from at least September 2009 until March 2010, Allen allegedly received more than $100,000 in bribe payments. The indictment alleges that the scheme caused the United States to suffer a loss of at least $781,000 in unpaid customs duties and taxes.

“When public servants break the law, it leaves behind an indelible stain,” said United States Attorney André Birotte Jr. “The indictment alleges that Officer Allen violated the public trust by using his position in a government agency to line his pockets and deprive the United States of legitimate taxes owed in the normal course of business. The criminal charges reflect our commitment to rooting out and punishing corrupt officials.”

The indictment goes on to allege that Allen encouraged his ex-wife to lie – and that Allen himself lied – to federal law enforcement personnel investigating and prosecuting this scheme. Allen is also charged with lying to investigators when he denied discussing a separate scheme to smuggle cocaine into the United States from Mexico.

An indictment contains allegations that a defendant has committed crimes. Every defendant is presumed innocent until and unless proven guilty.

Allen is expected to be arraigned on the indictment Thursday afternoon in U.S. District Court in Los Angeles.

If he is convicted of the five counts in the indictment, Allen would face a statutory maximum penalty of 35 years in federal prison.

Allen’s ex-wife, Wei Lai, was charged with crimes related to her role in the smuggling scheme in July 2011. She has pleaded not guilty to the charges and is scheduled to go to trial with another defendant Feb. 19, 2013.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Federal Prosecutors: Ga. company schemed to avoid millions of dollars in import taxes on Chinese paper

October 23, 2012

The Washington Press on October 22, 2012 released the following:

“By Associated Press,

ATLANTA — A company in suburban Atlanta schemed to avoid paying millions of dollars in import taxes on cheap notebooks and loose-leaf paper from China by falsifying records and bribing customs officials in Taiwan, federal prosecutors said in an indictment.

Jennifer Chen, chief financial officer of Apego, Inc., entered a not guilty plea on Monday in federal court in Atlanta. The indictment handed down by a grand jury last week also charges her ex-husband, company CEO Chi Cheng “Curtis” Gung, and Apego with conspiracy and 12 counts of importing notebooks and filler paper from China using false documents.

A judge granted Chen $25,000 cash bond on the condition that she surrender her passport and agree to electronic monitoring. A lawyer for Gung told prosecutors that his client traveled to Taiwan last week to be treated for a grave medical condition and plans to surrender voluntarily next month.

Three Chinese paper manufacturers, a Taiwanese company, and their CEOs are also named in the indictment and face conspiracy and fraudulent importation charges. They are: Forth Wu, 69, a Taiwanese citizen who owns and operates Fromus Psyche International, Inc.; and Zuoru He, 66, a Chinese citizen who controls and partly owns three companies that make up The Watanabe Group.

Wu and He are believed to be in Taiwan and China, respectively, prosecutors said. The U.S. does not have extradition treaties with either nation.

“They are accused of avoiding over 20 million dollars in ‘anti-dumping’ duties by shipping stationery made in China through Taiwan, bribing Taiwanese customs officials, and exporting the goods from there into the United States, falsely relabeled ‘Made in Taiwan,’” U.S. Attorney Sally Quillian Yates said.

In 2005, the U.S. Department of Commerce began investigating whether Chinese companies that make notebooks, loose-leaf paper and other lined paper products were selling their goods at an artificially low price, sometimes even below cost. Foreign companies sometimes engage in the practice, known as dumping, with the aim of doing so long enough to put competitors out of business. Once the competition is eliminated, a foreign firm can then raise prices to recover the temporary cost of the scheme. Dumping is a prohibited and unfair trade practice under U.S. law.

The Department of Commerce and U.S. International Trade Commission determined in 2006 that Chinese manufacturers had been dumping certain lined paper products in the U.S. To offset the artificially low prices in the U.S. market, Chinese paper manufacturers were ordered to pay anti-dumping import tariffs of between 76 and 258 percent. There are no such duties on lined paper from Taiwan.

To skirt the anti-dumping tariffs, Apego, Fromus and the companies in The Watanabe Group came up with a scheme to move large shipments of paper from China through Taiwan, prosecutors say. Authorities allege that they hired temporary workers in Taiwan to put “Made in Taiwan” labels on loads of Chinese paper destined for an American national retailer that wasn’t named in court papers. As Apego gained more customers and large orders, company officials began paying bribes to Taiwanese customs officials to look the other way when containers full of paper from China came into ports already labeled “Made in Taiwan,” according to the indictment.

Prosecutors say the scheme began to fall apart in the summer of 2007 when U.S. container security officers based at a Taiwanese port noticed suspicious documentation on shipments of paper bound for the U.S. and alerted other customs officials in the U.S. and Taiwan. The full extent of the conspiracy was discovered when Apego fired Gung’s executive assistant, who gave a copy of the hard drive from her company laptop to the Department of Homeland Security, authorities say.

Apego was incorporated under the laws of Texas and was based in the Georgia community of Lilburn until October 2006, when it moved its headquarters to Lawrenceville. Officials say that in 2007, the company began operating as Aclor, Inc., and relocated to the Texas-Mexico border.

The maximum penalty for a conviction on the conspiracy charge is 5 years in prison, a $1 million fine for a corporation, a $250,000 fine for an individual, and three years of supervised release. The maximum penalty for the fraudulent importation charges is 2 years in prison, a $1 million fine for a corporation, a $250,000 fine for an individual, and one year of supervised release for each count.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Christopher Tappin, extradition’s forgotten victim who is awaiting US trial, talks of his strange life in Texas

October 22, 2012

The Telegraph on October 21, 2012 released the following:

“By Philip Sherwell

As he strolled off the fairway with his scorecard at the 18th hole, the white-haired man in blue polo shirt and khaki shorts could have been just another relaxed late-afternoon golfer.

But a closer look revealed two pieces of extra “kit” not needed by his playing partners at the country club in the affluent leafy suburbia north of Houston.

Inside the white sock on his left foot was the bulge of an ankle bracelet, while a satellite GPS tracking device blinked in a holster on his belt.

For this was Christopher Tappin, the retired British businessman, former president of the Kent Golf Union and epitome of Home Counties respectability who will go on trial in two weeks [NOV 5] in a Texas courtroom charged with conspiring to supply batteries for Iranian missiles.

His case made headlines as he fought extradition from Britain for five years, under the lopsided treaty passed by the Labour government after the Sept 2001 terror attacks.

This requires evidence of “probable cause” before an American is extradited to Britain, a far higher standard of proof than the “reasonable suspicion” that suffices to send a Briton to trial in the US.

Mr Tappin, 65, who has consistently denied the charges, eventually lost that battle in February and was handed over to the US authorities. The next two months were spent in the hellish conditions of a federal prison in New Mexico, much of the time in solitary confinement.

In April, he was released under strict bail conditions – including wearing the ankle bracelet and GPS tracker to ensure that he does not leave the three Texas counties where he is allowed out before his overnight curfew.

And last week, he spoke for the first time about his life since then in a wide-ranging interview with The Sunday Telegraph.

As he finished the 18 holes in a brisk round of 75, the 65-year-old grandfather looked as calm as the new friends he has made among the businessmen and lawyers at the club.

There was no indication of the inner turmoil that he must feel as he prepares to face an agonising dilemma next month in a federal courtroom in El Paso.

If he pleads not guilty and loses in a country with one of the world’s highest conviction rates, then he could be jailed for up to 35 years in the US – effectively a life sentence away from his sick wife, two children and grandson.

But in a common US legal move, prosecutors are expected to offer him a plea bargain that would give him a much shorter prison term and to probably repatriation to a British jail – provided he admits at least some of the charges.

Mr Tappin, from Orpington, owned a freight shipping company and is accused of trying to buy 50 oxide batteries to power Iranian Hawk missiles after a colleague made contact with a front company set up by the Department of Homeland Security.

He has, however, always insisted he was the unwitting victim of an FBI sting operation and believed the batteries were for commercial use in the Netherlands.

For Mr Tappin, the rounds of his beloved golf that he plays most days are a solace and escape. “Without the golf, I’d go raving mad,” he said. “It keeps me from thinking too much about the case, but it’s tough, it’s very tough.”

His failed battle against extradition was one among a series involving Britons accused in the US of alleged crimes that took place on UK soil.

Last week, he heard some bittersweet news about the most high-profile of all such cases during his daily telephone call from his wife [] Elaine, who is in Britain and unable to visit him because she suffers Churg-Strauss syndrome, a severe allergic condition that endangers the body’s vital organs.

She told him that Theresa May, the Home Secretary, had ruled that the Briton, Gary McKinnon, accused of hacking into US military computers and causing 300 of them to crash, would not be handed to the US authorities for trial. Her last-minute decision to block his extradition frustrated US officials, who said publicly that they were “disappointed” but were privately furious.

Mrs May took the decision on medical grounds – Mr McKinnon suffers from Asperger’s, a form of autism and his family had argued that he would not survive life inside an US jail, even awaiting trial.

But she also announced plans to introduce a so-called “forum bar” under which judges would decide whether alleged offences should be tried in Britain rather than in the US. If such a law had already been in place, Mr Tappin might have been tried in Britain rather than in America – and as key evidence was collected from a sting operation, the case could have been thrown out before reaching court.

“I’m delighted for Gary and his mother Janis,” he said. “I’ve met them several times and this is great news.

“Gary would never have survived the prison they slung me into, not in his condition. It was the psychotic screaming throughout the night that got me. And the head-banging. And God help him if he’d had to go through solitary like I did, with the lights on 24 hours and the only human contact when they give you a meal three times a day. He couldn’t have coped.

“I desperately hope this presages a change to the system. Something has to be done with that treaty and we’ve been advocating for a ‘forum bar’ for a long time. It’s got to be changed.

“I hope I am the final Brit to be extradited under this treaty as it stands. My case should never be being tried here in the US, I was living in the UK when these alleged offences took place, the crimes were allegedly committed in Britain and the evidence against me comes from the UK, so why am I not being tried in the UK?”

As Mr Tappin awaits that trial, he is trapped in a “gilded cage” existence, and one that is eating up the money he made running his freight business.

After his release on bail, he initially lived at his lawyer’s $2 million home in an upmarket neighbourhood that is built around a Jack Nicklaus-designed golf course and protected by private guards and security barriers.

He is now renting his own one-bedroom apartment in a nearby gated community in the wealthy suburban belt north of Houston called Woodlands. “There’s a gym and a swimming pool that I use and I try and keep myself physically fit, though mentally is a whole different challenge,” he said.

“It a very nice area with some lovely people, but you pay a heavy price for life in a paradise,” he noted wrily. “I miss my family and friends and home deeply. Life is boring, to be honest. Each day is deja deja deja déjà vu.”

He is not allowed access to email or the internet under the terms of his bail, but talks each day with his wife and friends and also spends several hours writing and answering letters in longhand.

And he does of course have his golf, playing with his own clubs after they were brought out on a visit by his son Neil, the deputy editor of Golf Monthly magazine. “I’m playing well and happy to get my game back after his two months in jail,” he said. “But these are hardly the circumstances in which I’d want to sharpen my game.”

Pointing to his ankle bracelet and GPS device he added: “And of course, I have to wear these things. It’s not comfortable, but you get used to it. The court charges me a $9 fee a day for the honour of wearing them.”

He has to be home each night from 10pm to 6am under a curfew, and most evenings he cooks for himself. So one big plus, he said, was the discovery of Goodwood’s British Market, a nearby store that specialises in foods from Britain. “They’ve got it all, bangers, fish and chips, Heinz baked beans, HP sauce, Robinson marmalade and the like,” he said.

But he is lonely and desperately pines for home. “It’s nice to hear an English accent,” he said during the interview. “At least the heat of summer has relented. This is the only place where I know where they have to chill the outdoor pools with ice.”

Adding to the strain is the deterioration in his wife’s health. Mrs Tappin visited him in June, but is now no longer allowed to fly on doctor’s orders and is awaiting an operation.

“Elaine is very unwell and this whole situation is really aggravating her condition,” he said. “It used to be me who cared for her. That’s now fallen to my daughter Georgina, but it’s a real strain for her.”

No family will be in El Paso on Nov 5 when appears in court – quite possibly in the manacles and jumpsuit that he had to wear for earlier hearings. “It really wouldn’t serve any purpose to have them there,” he said with resignation. “I just need to get home to them.” As the trial date approaches, the strain is taking its toll. “I used to feel OK, that I have a strong case and didn’t worry too much about it. But the nearer it gets the more I worry.”

He has lost weight and runs his hand through his thinning hair as he spoke, sighing and blowing out air as he talks about his exasperation at his plight.

“It’s utterly devastating to be in this situation at my stage in life,” he said. “I should be spending my retirement looking after my wife, enjoying my new grandchild and playing some golf. Extradition was a very bitter pill to swallow.”

He is not only dealing with the enormity of his legal challenge. He is also undergoing a crash course in American culture, and in particular that of its biggest state, as he finds himself living in a country that he only ever visited as an occasional tourist, the last time 10 years ago.

“Texas is a funny old pace and everything’s just so very different from Kent,” he mused. “They go on about road deaths here but there are guns everywhere and they don’t seem to care. There’s even a Gun Channel on the TV, for heaven’s sake.

“I have made some good friends playing golf, but it is difficult to reconcile how nice some of the people are and how harsh the system is. It’s not just me of course. They’re just as harsh on their own people. They don’t call it ‘Incarceration Nation’ for nothing. There is a huge prison population and the prison industry is a big business.”

Mr Tappin talks regularly to David Bermingham, one of the “NatWest Three”, the British bankers who were also controversially extradited to the US for financial crimes allegedly committed in the UK. The men were jailed in the US after admitting a single offence and sent home to serve out their sentences.

“It’s good to talk to someone who has been in this situation,” he said. And he hopes that a change in the extradition treaty will come in time to help Richard O’Dwyer, a 24-year student in Sheffield, who faces jail in the US for hosting a television download website from his bedsit.

Meanwhile, Mr Tappin is tangling with another immediate headache. His passport has been removed so he cannot board a flight. But his bail conditions restrict his movements to two counties in and around Houston, as his lawyer is based there, and El Paso, where he faces trial – but not the swath of Texas through which he would have to drive between them.

“I’m not quite how I’m even going to get to court,” he said. “What a situation.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


FBI gets a broader role in coordinating domestic intelligence activities

June 20, 2012

The Washington Post on June 19, 2012 released the following:

“By Greg Miller, Published: June 19

The FBI has been given an expanded role in coordinating the domestic intelligence-gathering activities of the CIA and other agencies under a plan enacted this year by Director of National Intelligence James R. Clapper Jr., officials said.

The bureau’s highest-ranking field agents now also serve as the DNI’s representatives across the country. The change is intended to improve collaboration, but some officials say it has created new friction between the FBI and CIA.

Army Lt. Gen. Michael T. Flynn, assistant director of national intelligence, said the move is meant to enhance the FBI’s ability to lead efforts by federal, state and local authorities to confront terrorist threats and other domestic security concerns.

“This is a connecting bridge between intelligence and law enforcement,” Flynn said in an interview. He added that the DNI designation does not give regional FBI officials power over other agencies’ operations or personnel.

The program was endorsed by CIA Director David H. Petraeus and officials at other affected agencies. But concerns have surfaced in some regional offices that the FBI is exploiting its new clout at the CIA’s expense.

One former U.S. official said senior FBI agents recently used a meeting with executives from major manufacturing companies on the West Coast to instruct them to cut off contact with the CIA.

The FBI’s message was that “they were now in charge of relationships with the corporate sector, so the folks there should feel no need to deal with the agency,” said the former U.S. official, who spoke on the condition of anonymity because of the sensitivity of the topic. The FBI agents apparently were not aware that a former CIA officer was among the executives in attendance. The former official declined to provide more details about the location of the meeting or its participants.

FBI spokesman Michael Kortan said that officials could not confirm the alleged incident and that such a statement to company executives by an FBI agent would be inaccurate.

Although the CIA is best known for its spy work overseas, the agency has stations in most major U.S. cities. The National Resources Division, as this group is known, routinely debriefs executives, university officials and other Americans who volunteer to share information gathered on their trips out of the country. The CIA is also allowed to approach foreign nationals in the United States and try to recruit them as spies upon their return to their home countries.

The FBI dramatically expanded its domestic intelligence-gathering operations as part of a reorganization after the Sept. 11, 2001, terrorist attacks.

Flynn said the DNI program is not meant to disrupt CIA efforts in the United States. “This program doesn’t change the authorities of the CIA, the Department of Homeland Security or anybody else in the system,” he said. “But there is more of a responsibility to share and work together.”

It is unclear whether the change will require the CIA to disclose more information about its domestic sources. In his memoir, former senior CIA official Henry A. Crumpton writes that during his tenure as head of the National Resources Division, the FBI “repeatedly demanded the identities of NR sources” and he refused.

The new DNI program began as a pilot operation in four cities — New York, Washington, Los Angeles and Chicago — and was expanded to 12 regions covering the entire country this year.

The program is analogous to an arrangement overseas in which CIA station chiefs serve as the nation’s senior intelligence officers and main points of contact with their foreign counterparts. A 2009 proposal to change that policy and give the DNI power to select officers from other spy services prompted a fierce bureaucratic battle that the CIA won.

A CIA spokeswoman said the agency has not opposed the move to elevate FBI agents in the United States. “The CIA endorses and supports the DNI’s decision,” said spokeswoman Jennifer Youngblood. “The decision makes sense, and the program is working well. DCIA Petraeus has already met with several of the domestic DNI representatives and has been impressed with them and with their cooperation.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Mexican Cartel Hides Millions in Horse Races, U.S. Alleges

June 12, 2012

The New York Times on June 12, 2012 released the following:

“By GINGER THOMPSON

Newcomers rarely make it into the winner’s circle at the All American Futurity, considered the Kentucky Derby of quarter horse racing.

Yet in September 2010, a beaming band of men waving Mexican flags and miniature piñatas swept into Ruidoso, N.M., to claim the million-dollar prize with a long-shot colt named Mr. Piloto.

Leading the revelry at the track was Mr. Piloto’s owner, José Treviño Morales, 45, a self-described brick mason who had grown up poor in Mexico. Across the border, Ramiro Villarreal, an affable associate who had helped acquire the winning colt, celebrated at a bar with friends.

As for the man who made the whole day possible, Miguel Ángel Treviño Morales, he was living on the run, one of the most wanted drug traffickers in the world.

Mr. Treviño, a younger brother of José Treviño, is second in command of Mexico’s Zetas drug trafficking organization. Thin with a furrowed brow, he has become the organization’s lead enforcer — infamous for dismembering his victims while they are still alive.

The race was one of many victories for the Treviño brothers, who managed to establish a prominent horse breeding operation, Tremor Enterprises, in the United States that allowed them to launder millions of dollars in drug money, according to current and former federal law enforcement officials. The operation amounted to a foothold in the United States for one of Mexico’s most dangerous criminal networks, the officials said.

Using Miguel Ángel Treviño’s cash, José Treviño’s legal residency and Mr. Villarreal’s eye for a good horse, Tremor bought a sprawling ranch in Oklahoma and an estimated 300 stallions and mares. The Treviño brothers might have kept their operation quiet, given the criminal connection, but their passion for horses and winning apparently proved too tempting. In the short span of three years, Tremor won three of the industry’s biggest races, with prizes totaling some $2.5 million.

The business was “so far out there it’s hard to believe,” said Morris Panner, a former prosecutor who handled drug cases. “Maybe they were using some kind of perverse logic that told them they could hide in plain sight, precisely because people wouldn’t believe it or question it.”

The Justice Department moved against Tremor on Tuesday morning, dispatching several helicopters and hundreds of law enforcement agents to the company’s stables in Ruidoso and its ranch in Oklahoma. Jose Treviño and several associates were taken into custody and were charged later in the day, authorities said.

Miguel Angel Trevino and another brother, Omar, were also charged. The two remain at large in Mexico. Omar Trevino is also a high-ranking member of the Zetas and an F.B.I. affidavit filed in United States district court describes him as participating in the money laundering.

The affidavit said the Zetas funneled about $1 million a month into buying quarter horses in the United States. The authorities were tipped off to Tremor’s activities in January 2010, when the Zetas paid more than $1 million in a single day for two broodmares, the affidavit said.

The New York Times became aware of Tremor’s activities in December 2011 while reporting on the Zetas. The Times learned of the government’s investigation last month and agreed to hold this story until Tuesday morning’s arrests.

The brothers’ activities on either side of the border made for a stark contrast. One week in May began with the authorities pointing fingers at Miguel Ángel Treviño for dumping the bodies of 49 people — without heads, hands or feet — in garbage bags along a busy highway in northern Mexico. The week concluded with José Treviño fielding four Tremor horses in a prestigious race at Los Alamitos Race Course, near Los Angeles.

By then, Mr. Villarreal’s story had come to a fatal, fiery end. Not long after the 2010 victory at Ruidoso, he was detained by the Drug Enforcement Administration and reluctantly agreed to work as an informant. Five months later, his charred remains were found in a burnt-out car on the highway outside Nuevo Laredo.

The buzz around Tremor’s winnings and acquisitions began three years ago, when José Treviño bought an estimated $3 million in quarter horses, including one named Number One Cartel.

Since then he has worked with breeders, trainers and brokers considered pillars of the business. Tremor Enterprises did not always put its name on the horses it owned or the races they ran, presumably to avoid the attention of tax collectors and law enforcement authorities, according to federal agents.

But people inside the financially struggling industry do not need written records to tell them who is doing business with whom. And some of those insiders acknowledged that the subject of José Treviño’s identity, and where he got his money, was treated like so many taboos: people did not ask many questions, either because they did not care, or did not want to know.

“Everyone knows who José Treviño is,” one trainer said. “But all they cared about was whether his checks would clear.”

A Drug Organization Ascends

Made up of rogue members of the Mexican military and police, the Zetas were a protection force for the powerful Gulf Cartel before they set out on their own in 2010. Their ascendancy ignited a spate of massacres and assassinations of elected officials, police chiefs, journalists and others, which turned organized crime from a law enforcement problem to the No. 1 national security threat for Mexico’s fragile democracy.

Miguel Ángel Treviño, known as Zeta-40, or just 40, was never in the military. But he became useful to the Zetas for his experience moving contraband across the border.

Law enforcement authorities said the Zetas have been able to rapidly expand their reach beyond Mexico’s borders with the United States and Guatemala. And while other Mexican drug organizations prefer to keep themselves and their money close to home, the Zetas have established outposts as far as South America and West Africa.

“The Zetas are particularly adroit at spreading their tentacles across borders,” said Michael S. Vigil, a former senior official with the Drug Enforcement Administration. He added that the gang’s extensive intelligence and operational capabilities allow it to take control of new territory so quickly that it is difficult for law enforcement to keep up.

Their primary stronghold is Nuevo Laredo, one of North America’s busiest border-crossings and Mr. Trevino’s hometown.

He had grown up there in a large family with six brothers, including José, and six sisters, American authorities said. Like most local residents, the Treviño family treated the border as a kind of imaginary line.

Law enforcement authorities knowledgeable about the family said the siblings learned the tricks of moving easily between the United States and Mexico, using temporary visas and border-crossing cards to start families, buy properties and do business in both countries.

Court records lay out the nature of the brothers’ turn to crime, which dates back at least two decades. In 1995, an older brother, Juan Francisco Treviño, was sentenced on charges of conspiring to smuggle hundreds of pounds of marijuana into the United States.

On the witness stand, Juan Francisco described himself as a struggling entrepreneur who had tried to make a go of a small construction company, Treviño Masonry, but later went into trucking.

Prosecutors argued that those businesses were fronts for the Treviños’ smuggling activities, citing a raft of lapsed business licenses, false identification documents and suspicious wire transfers.

The defendant was sentenced to 22 years in prison, and remains incarcerated. José and Miguel Ángel Treviño were implicated in the case, but were never prosecuted for lack of evidence, said authorities involved in the investigation.

It is unclear whether the two brothers parted ways at that point or continued collaborating. Miguel Ángel Treviño’s rise through the ranks of the Zetas is well known. Jere Miles, an expert on the Zetas at the Department of Homeland Security, said that among the Mexican underworld, Mr. Treviño had gained the notoriety of a cult figure, one who has escaped unscathed from several gun battles against the law, makes deals with no one and seems unafraid to die. Dismembered bodies, dumped by the dozens, have become his calling card.

He also manages the organization’s money, according to George Grayson, a professor at the College of William and Mary who has written a book about the Zetas.

The trail of public information on José Treviño goes cold until 2009, when he began buying expensive racehorses.

“From all appearances, he looked like anyone else interested in quarter horses,” said one person in the industry who knows José Treviño. “But he had a massive amount of money, with no good explanation where it came from. And he had a family name that made a lot of people wonder.”

New Player at the Track

As much as Tremor was a money-laundering operation, the Treviño brothers’ quarter horse venture allowed them to mix business with pleasure. Horses have long been considered a status symbol in Latin America and drug traffickers have been among the region’s most avid collectors.

Law enforcement officials said quarter horse racing was one of Miguel Ángel Treviño’s favorite pastimes, and even while living on the run, he has managed to keep control of several ranches and racetracks in Mexico and Guatemala where he holds match races, known as parejeras.

But Mexican horse racing — like so much else in that country — has been battered by the violence of the drug war. Many Mexican breeders have moved their operations to the United States, where they could buy horses with better bloodlines and compete for bigger prizes, without fearing for their lives.

“Much of the growth in American quarter horse racing is due to those guys,” said one industry expert, referring to the influx of breeders and buyers from Mexico. “They have spent a lot of money. And it’s made a big, big difference.”

The races, centered in the Southwest, pit scrappier, less expensive horses than high-end thoroughbreds in contests that can be over in less than 20 seconds.

To get in on the action at American tracks, Miguel Ángel Treviño needed someone he could trust to pick a winner. For that, he turned to Mr. Villarreal.

Mr. Villarreal was an unlikely horseman, the socially awkward son of a bookkeeper and teacher known for his build and bottomless appetite as “El Gordo,” or “Fatso.” He began attending auctions as a child, and developed an uncanny ability to spot horses that may not have come from the best lineage, but whose stride or attitude suggested an exceptional capacity for speed.

Mr. Villarreal’s parents said he started buying horses as a teenager, mostly borrowing from relatives and friends. Still, he never seemed to have enough to purchase the kinds of horses that could compete for major prizes. Nor did the strikingly effeminate man ever develop the social skills needed to fit into the macho world of breeders and trainers.

In some ways, said one friend, he stopped trying. For awhile, he named his horses after runway models — like Campbell, as in Naomi, and Elle, as in Macpherson — because he was captivated by women’s fashion.

Mr. Villarreal got his big break in 2006, when he cobbled together $10,500 to buy a colt at an auction at Los Alamitos, records show. He took the horse to Mexico, named it “El Sicario” — which means “The Assassin” — and entered it in the parejera circuit, where it began to beat younger, better-rated competitors.

“That horse got 40’s attention,” said one of Mr. Villarreal’s friends. “He told Ramiro, ‘I want you to buy horses for me.’ ”

He did not hesitate, the friend said. “This was his chance to live his dream.”

Mr. Villarreal’s father, who is also named Ramiro, saw it slightly differently.

“If someone like that asks you to do something,” the elder Mr. Villarreal said, “Are you going to tell him no?”

Soon, the younger Mr. Villarreal’s name began appearing on the lists of the top buyers at auctions in California, Texas, New Mexico and Oklahoma. His first champion was Tempting Dash, which won more than $600,000 in 2009, set a track record during the Texas Classic Futurity and gave Tremor its first victory in a million-dollar race.

No matter how successful, Mr. Villarreal always showed deference to his boss, calling him “Papi.” When Miguel Ángel Treviño wanted to see Tempting Dash for himself, Mr. Villarreal drove the horse, along with dozens of others, to Mexico.

Getting back was more complicated. To avoid inspections, quarantines and other procedures required for bringing livestock into the United States, Mr. Villarreal had trainers sneak the horses back across the border, herding them just after dawn through the Rio Grande.

“My son used to tell me that his biggest blessing was also his curse,” said Mr. Villarreal’s father. “He would tell me, ‘My problem is that I am good at what I do, so a lot of people ask me to help them. Some of those people are good. Some of those people are bad.”

‘A Great Moment’

As much as Miguel Ángel Treviño relied on Mr. Villarreal, he needed his brother, José, to be the face of his fledgling American horse business.

José Treviño, the clean-cut father of three, with a small tattooed Tremor logo on his hand, almost always attended races with his family at his side. He often credited his success to a combination of divine intervention and dumb luck.

“After a win, he always says that he’s been blessed with an ability to pick the right horses and run them in the right races,” said one person who met him. “He’s always humble. He’s the kind of guy who knows what he doesn’t know, who seems eager to learn, and who isn’t shy about asking for advice.”

At the start, José Treviño seemed reticent in the spotlight, avoiding reporters by pretending he did not speak good English. But the more races he won, the more comfortable he seemed with cameras and microphones. People who knew him said he never sought out the media, but never refused to talk when they called.

And they called often.

“That was awesome, that was awesome,” José Treviño said, beaming before reporters in November 2009, after Tempting Dash won the Texas Classic Futurity. “We were expecting him to run big, but we weren’t expecting something like this, to break the track record like this.”

The following year, when the colt named Mr. Piloto won the All American Futurity in Ruidoso, N.M., racing writers called it the “biggest upset in All-American history,” and marveled at how Mr. Treviño, with a “green-as-grass” horse, could beat competitors with better qualifying times and world-class jockeys.

Then last year, a sorrel filly named Separate Fire swept the Ed Burke Futurity at Los Alamitos, Calif., delivering José Treviño his third race where the top prizes were worth $1 million — a record.

“We’re down-to-the-ground people,” he humbly told Track Magazine after the race last July. “This is a great moment, one we are going to enjoy for a long time. But I think you have to take it as it comes and don’t let it change your life.”

Still, his life did change. Tremor’s winning streak allowed him to hire the most respected jockeys, trainers and sales associates in the business. Last year, said people who know him, José Treviño moved his family from a modest suburban house in Mesquite, Tex., where he said he worked in the construction industry, to a large ranch outside Lexington, Okla.

The 70-acre ranch, Zule Farms, is named after his wife, Zulema, a former secretary who told people that she kept the books for Tremor. A person familiar with the ranch said that Mr. Treviño had converted a manure-filled cattle barn on the property into a breeding facility, with state-of-the-art labs and special stalls where mares are implanted with embryos.

Across the quarter horse industry, people started to whisper about where he was getting his money.

“There’s no way all the money he’s putting into that ranch came from being a brick mason. It’s just not logical,” said a person familiar with Zule Farms.

Nor were José Treviño’s operations always transparent. Records show that on at least a couple occasions, he had other people sign for the company’s major purchases. One deal was signed by a teenager who looked like he was not yet old enough to drive. The other was handled by the scion of a prominent quarter horse family, Tyler Graham, who stunned a packed auction house in Oklahoma by agreeing to pay a record $875,000 for a broodmare named Dashin Follies.

At the time of the sale, Mr. Graham said he was buying the horse on behalf of a client he would only identify as “a Mexico resident.” Shortly afterward, records show, he turned the horse over to Tremor. Mr. Graham has not been accused of any wrongdoing.

An industry expert who attended the auction said the sale prompted more rumors. But he said sketchy deals are not uncommon in an industry where payments are made in cash and records are notoriously — even deliberately — unreliable.

“If someone walks into an auction with hundreds of thousands of dollars, and refuses to give his name, no one is going turn him away,” the industry expert said. “What they’ll tell him is, ‘We’ll register the horse in any name you want.’ ”

A Mysterious Death

As José Treviño’s prominence grew in the quarter horse community, so did Miguel Ángel Treviño’s place in the drug trade. By the end of 2010, he had helped lead a brutal expansion so deep into Mexico that the Zetas became not only a priority for Mexico’s security forces, but also an enemy that inspired other drug organizations to join forces and fight.

Miguel Ángel Treviño’s control over drug warehouses and hit squads across the border also compelled United States authorities to offer a $5 million reward for information leading to his arrest.

At the same time, Mr. Villarreal was falling out of favor with Tremor. He was in debt because the Treviño brothers barely paid him enough to cover travel costs, friends said. Mr. Villarreal began padding his expenses, prompting Miguel Ángel Treviño to suspect him of skimming money from Tremor, the friends said.

In September 2010, Mr. Villarreal was traveling to a horse auction in Oklahoma when he was detained by D.E.A. agents during a layover at a Houston airport. A spokesman for the agency refused to comment on its relationship with Mr. Villarreal.

But several law enforcement officials familiar with the case said agents held him for up to six hours, questioning him about his ties to Miguel Ángel Treviño. Before releasing him, the agents confiscated Mr. Villarreal’s cellphone and computer, and ordered him to meet with them a few days later.

When Mr. Villarreal returned, the agents said he could either work for them as an informant or face being prosecuted himself, according to the officials. The D.E.A. wanted Mr. Villarreal to help track Miguel Ángel Treviño’s whereabouts and then lure him into the United States.

Mr. Villarreal pleaded that he was too nervous to pull off the ruse, adding that Miguel Ángel Treviño would never trust him enough to follow him across the border.

But the D.E.A. insisted and a beleaguered Mr. Villarreal relented, the officials said.

At least once, Mr. Villarreal tipped off his handlers when Miguel Ángel Treviño went to a racetrack in Nuevo Laredo.

“Mexican authorities took pictures of 40, but they didn’t try to arrest him,” said one of Mr. Villarreal’s friends. “They told Ramiro that they were afraid too many people might get killed. Ramiro told them if they waited any longer, he was going to get killed.”

Sometime around the end of that year, Miguel Ángel Treviño summoned Mr. Villarreal to a meeting. Mr. Villarreal’s friends recounted the following incident as he had described it to them.

A pickup point was arranged in Laredo, where Mr. Villarreal was blindfolded and then driven into the Mexican desert by gang members.

Minutes dragged as Mr. Villarreal waited for Miguel Ángel Treviño to arrive. He saw two vats filled with a liquid he presumed to be acid, one of the trafficker’s preferred methods for disposing of bodies.

“Where’s Papi?” he asked the men.

“Don’t worry,” they answered. “He’s coming.”

Miguel Ángel Treviño arrived about an hour later in a car with more lieutenants and an unknown man, who was also wearing a blindfold.

The trafficker hugged Mr. Villarreal and asked, “You’re not screwing me, are you, Gordo?”

“No, of course not, Papi,” Mr. Villarreal answered.

Saying he would be back “in a minute,” Miguel Ángel Treviño walked over to the unknown man, took off his blindfold, shot him in the head and ordered his men to dump the body in one of the vats of acid.

Mr. Villarreal passed out. He told his friends he did not know how long he was unconscious, but when he awoke Miguel Ángel Treviño was slapping him in the face and laughing.

“What’s wrong, Gordo?” he joked. “You can’t handle seeing me kill someone? Next time, I’m going to have you do it.”

“No Papi,” Mr. Villarreal said. “I don’t want there to be a next time.”

The drug trafficker got back into his car and drove away. Mr. Villarreal was taken back to Laredo and immediately got in touch with the D.E.A., imploring the agents to release him from their agreement.

“When I met him he was a complete mess; profusely sweating, gangrene in one leg, and barely able to walk,” said a former law enforcement official. “He was in between a rock and a hard place: either stay in the United States and risk going to prison, or go back to Mexico and risk getting killed.”

In the end, Mr. Villarreal, 38, continued informing for the D.E.A. and in March, Miguel Ángel Treviño summoned him to another meeting.

On March 10, 2011, Mr. Villarreal’s car was found incinerated outside Nuevo Laredo. There was so little left of him that authorities took DNA samples from the ashes to identify his remains.

One federal law enforcement official said some agents believed his death was an accident, but acknowledged that no investigation was conducted.

Mr. Villarreal’s father said he had little hope of ever finding the truth. Asked who he thought was behind Mr. Villarreal’s death, the round, balding man looked over at his wife, tears streaming down her cheeks, and echoed a refrain heard from so many Mexican crime victims. “If we ask questions, we could be the next ones to die, so for us, this is a closed chapter.”

Whispers of a “mob hit” spread across the quarter horse industry. In March, law enforcement agents even raided Tremor’s stables at Los Alamitos racetrack. But none of it seemed to slow down Tremor’s business.

Last weekend, at Los Alamitos, a Tremor colt named Mr. Ease Cartel ran the second-fastest qualifying time for a million-dollar race scheduled for June 24. When Jose Trevino’s daughter was married recently, guests included well-known figures in the industry and Track magazine covered the “big event” on its Web site.

“If he had been some thug, or the stereotypical person you’d expect to be in a drug cartel, then maybe people wouldn’t have accepted him and done business with him,” a former trainer said of José Treviño. “But he’s a really nice guy, so none of us wanted to believe he could have anything to do with the killing going on in Mexico.””

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Chipotle says prosecutors probing it for securities law violations related to hiring practices

May 23, 2012

The Washington Post on May 22, 2012 released the following:

“By Associated Press

DENVER — Chipotle Mexican Grill Inc. said on Tuesday that federal prosecutors are investigating the company for possible criminal violations of securities laws related to its hiring practices.

The Department of Homeland Security’s immigration enforcement unit is already probing the company for compliance with employee work authorization laws. The company said Friday that the Securities and Exchange Commission has also issued a subpoena regarding its compliance with work authorization requirements.

The company disclosed the latest probe, by the U.S. Attorney for the District of Columbia, in a SEC filing on Tuesday.

The restaurant chain, which is based in Denver, said it is cooperating with the investigations.

In 2010, following questions from federal immigration officials, Chipotle fired about 450 Minnesota employees who couldn’t prove they were eligible to work in the U.S. Federal officials then requested worker authorization documents for employees in Virginia and the nation’s capital. That investigation continues. The company has said that it is following the law.

Shares of Chipotle rose $2.23, less than 1 percent, to close at $395.56 on Tuesday. Shares have ranged from $267.43 to $442.40 in the past 12 months.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

————————————————————–

To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.