“Exclusive: U.S. directs agents to cover up program used to investigate Americans”

August 5, 2013

Reuters on August 5, 2013 released the following:

“By John Shiffman and Kristina Cooke

WASHINGTON – A secretive U.S. Drug Enforcement Administration unit is funneling information from intelligence intercepts, wiretaps, informants and a massive database of telephone records to authorities across the nation to help them launch criminal investigations of Americans.

Although these cases rarely involve national security issues, documents reviewed by Reuters show that law enforcement agents have been directed to conceal how such investigations truly begin – not only from defense lawyers but also sometimes from prosecutors and judges.

The undated documents show that federal agents are trained to “recreate” the investigative trail to effectively cover up where the information originated, a practice that some experts say violates a defendant’s Constitutional right to a fair trial. If defendants don’t know how an investigation began, they cannot know to ask to review potential sources of exculpatory evidence – information that could reveal entrapment, mistakes or biased witnesses.

“I have never heard of anything like this at all,” said Nancy Gertner, a Harvard Law School professor who served as a federal judge from 1994 to 2011. Gertner and other legal experts said the program sounds more troubling than recent disclosures that the National Security Agency has been collecting domestic phone records. The NSA effort is geared toward stopping terrorists; the DEA program targets common criminals, primarily drug dealers.

“It is one thing to create special rules for national security,” Gertner said. “Ordinary crime is entirely different. It sounds like they are phonying up investigations.”

THE SPECIAL OPERATIONS DIVISION

The unit of the DEA that distributes the information is called the Special Operations Division, or SOD. Two dozen partner agencies comprise the unit, including the FBI, CIA, NSA, Internal Revenue Service and the Department of Homeland Security. It was created in 1994 to combat Latin American drug cartels and has grown from several dozen employees to several hundred.

Today, much of the SOD’s work is classified, and officials asked that its precise location in Virginia not be revealed. The documents reviewed by Reuters are marked “Law Enforcement Sensitive,” a government categorization that is meant to keep them confidential.

“Remember that the utilization of SOD cannot be revealed or discussed in any investigative function,” a document presented to agents reads. The document specifically directs agents to omit the SOD’s involvement from investigative reports, affidavits, discussions with prosecutors and courtroom testimony. Agents are instructed to then use “normal investigative techniques to recreate the information provided by SOD.”

A spokesman with the Department of Justice, which oversees the DEA, declined to comment.

But two senior DEA officials defended the program, and said trying to “recreate” an investigative trail is not only legal but a technique that is used almost daily.

A former federal agent in the northeastern United States who received such tips from SOD described the process. “You’d be told only, ‘Be at a certain truck stop at a certain time and look for a certain vehicle.’ And so we’d alert the state police to find an excuse to stop that vehicle, and then have a drug dog search it,” the agent said.

“PARALLEL CONSTRUCTION”

After an arrest was made, agents then pretended that their investigation began with the traffic stop, not with the SOD tip, the former agent said. The training document reviewed by Reuters refers to this process as “parallel construction.”

The two senior DEA officials, who spoke on behalf of the agency but only on condition of anonymity, said the process is kept secret to protect sources and investigative methods. “Parallel construction is a law enforcement technique we use every day,” one official said. “It’s decades old, a bedrock concept.”

A dozen current or former federal agents interviewed by Reuters confirmed they had used parallel construction during their careers. Most defended the practice; some said they understood why those outside law enforcement might be concerned.

“It’s just like laundering money – you work it backwards to make it clean,” said Finn Selander, a DEA agent from 1991 to 2008 and now a member of a group called Law Enforcement Against Prohibition, which advocates legalizing and regulating narcotics.

Some defense lawyers and former prosecutors said that using “parallel construction” may be legal to establish probable cause for an arrest. But they said employing the practice as a means of disguising how an investigation began may violate pretrial discovery rules by burying evidence that could prove useful to criminal defendants.

A QUESTION OF CONSTITUTIONALITY

“That’s outrageous,” said Tampa attorney James Felman, a vice chairman of the criminal justice section of the American Bar Association. “It strikes me as indefensible.”

Lawrence Lustberg, a New Jersey defense lawyer, said any systematic government effort to conceal the circumstances under which cases begin “would not only be alarming but pretty blatantly unconstitutional.”

Lustberg and others said the government’s use of the SOD program skirts established court procedures by which judges privately examine sensitive information, such as an informant’s identity or classified evidence, to determine whether the information is relevant to the defense.

“You can’t game the system,” said former federal prosecutor Henry E. Hockeimer Jr. “You can’t create this subterfuge. These are drug crimes, not national security cases. If you don’t draw the line here, where do you draw it?”

Some lawyers say there can be legitimate reasons for not revealing sources. Robert Spelke, a former prosecutor who spent seven years as a senior DEA lawyer, said some sources are classified. But he also said there are few reasons why unclassified evidence should be concealed at trial.

“It’s a balancing act, and they’ve doing it this way for years,” Spelke said. “Do I think it’s a good way to do it? No, because now that I’m a defense lawyer, I see how difficult it is to challenge.”

CONCEALING A TIP

One current federal prosecutor learned how agents were using SOD tips after a drug agent misled him, the prosecutor told Reuters. In a Florida drug case he was handling, the prosecutor said, a DEA agent told him the investigation of a U.S. citizen began with a tip from an informant. When the prosecutor pressed for more information, he said, a DEA supervisor intervened and revealed that the tip had actually come through the SOD and from an NSA intercept.

“I was pissed,” the prosecutor said. “Lying about where the information came from is a bad start if you’re trying to comply with the law because it can lead to all kinds of problems with discovery and candor to the court.” The prosecutor never filed charges in the case because he lost confidence in the investigation, he said.

A senior DEA official said he was not aware of the case but said the agent should not have misled the prosecutor. How often such misdirection occurs is unknown, even to the government; the DEA official said the agency does not track what happens with tips after the SOD sends them to agents in the field.

The SOD’s role providing information to agents isn’t itself a secret. It is briefly mentioned by the DEA in budget documents, albeit without any reference to how that information is used or represented when cases go to court.

The DEA has long publicly touted the SOD’s role in multi-jurisdictional and international investigations, connecting agents in separate cities who may be unwittingly investigating the same target and making sure undercover agents don’t accidentally try to arrest each other.

SOD’S BIG SUCCESSES

The unit also played a major role in a 2008 DEA sting in Thailand against Russian arms dealer Viktor Bout; he was sentenced in 2011 to 25 years in prison on charges of conspiring to sell weapons to the Colombian rebel group FARC. The SOD also recently coordinated Project Synergy, a crackdown against manufacturers, wholesalers and retailers of synthetic designer drugs that spanned 35 states and resulted in 227 arrests.

Since its inception, the SOD’s mandate has expanded to include narco-terrorism, organized crime and gangs. A DEA spokesman declined to comment on the unit’s annual budget. A recent LinkedIn posting on the personal page of a senior SOD official estimated it to be $125 million.

Today, the SOD offers at least three services to federal, state and local law enforcement agents: coordinating international investigations such as the Bout case; distributing tips from overseas NSA intercepts, informants, foreign law enforcement partners and domestic wiretaps; and circulating tips from a massive database known as DICE.

The DICE database contains about 1 billion records, the senior DEA officials said. The majority of the records consist of phone log and Internet data gathered legally by the DEA through subpoenas, arrests and search warrants nationwide. Records are kept for about a year and then purged, the DEA officials said.

About 10,000 federal, state and local law enforcement agents have access to the DICE database, records show. They can query it to try to link otherwise disparate clues. Recently, one of the DEA officials said, DICE linked a man who tried to smuggle $100,000 over the U.S. southwest border to a major drug case on the East Coast.

“We use it to connect the dots,” the official said.

“AN AMAZING TOOL”

Wiretap tips forwarded by the SOD usually come from foreign governments, U.S. intelligence agencies or court-authorized domestic phone recordings. Because warrantless eavesdropping on Americans is illegal, tips from intelligence agencies are generally not forwarded to the SOD until a caller’s citizenship can be verified, according to one senior law enforcement official and one former U.S. military intelligence analyst.

“They do a pretty good job of screening, but it can be a struggle to know for sure whether the person on a wiretap is American,” the senior law enforcement official said.

Tips from domestic wiretaps typically occur when agents use information gleaned from a court-ordered wiretap in one case to start a second investigation.

As a practical matter, law enforcement agents said they usually don’t worry that SOD’s involvement will be exposed in court. That’s because most drug-trafficking defendants plead guilty before trial and therefore never request to see the evidence against them. If cases did go to trial, current and former agents said, charges were sometimes dropped to avoid the risk of exposing SOD involvement.

Current and former federal agents said SOD tips aren’t always helpful – one estimated their accuracy at 60 percent. But current and former agents said tips have enabled them to catch drug smugglers who might have gotten away.

“It was an amazing tool,” said one recently retired federal agent. “Our big fear was that it wouldn’t stay secret.”

DEA officials said that the SOD process has been reviewed internally. They declined to provide Reuters with a copy of their most recent review.”

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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

Federal Mail Fraud Crimes

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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.


Alaska couple admits to plot to kill federal judge and others

August 28, 2012

Reuters on August 28, 2012 released the following:

“By Yereth Rosen

(Reuters) – An Alaska couple pleaded guilty on Monday to charges of conspiring to kill a federal judge in what prosecutors said was a revenge plot over income-tax rulings against them.

Lonnie and Karen Vernon, followers of jailed Alaska militia leader Schaeffer Cox, reached a deal with prosecutors to avoid the need for a trial that had been set to begin next month.

The Vernons and Cox were active in the “sovereign citizen” movement, whose adherents believe individuals are sovereign nations and federal, state and local laws do not apply to them.

The Vernons each entered a guilty plea to a single count of conspiracy to commit murder for their plan to kill Alaska-based U.S. District Judge Ralph Beistline, who presided over a federal income tax case that ultimately cost the couple their home.

The Vernons also admitted in their plea agreement to planning to kill an Internal Revenue Service official and Beistline’s daughter and grandchildren.

The Vernons bought a silencer-equipped pistol and grenades in March 2011 and told the seller of the weapons about their intentions, according to the plea agreement. But the seller turned out to be a confidential government informant, and the Vernons were arrested immediately after the transaction took place.

Despite entering his guilty plea, Lonnie Vernon disrupted Monday’s court proceedings with a number of defiant outbursts.

“If I’m accused of doing anything, I’m accused of freely exercising my First Amendment rights to the max,” he told Judge Robert Bryan, who was brought in from Tacoma, Washington, to preside over the case.

But Bryan told the defendant that he and others with similar political views are mistaken about their responsibilities to obey the law. “You can’t decide, on your own, that you won’t be part of what the government rules are,” Bryan said.

In exchange for the guilty pleas, prosecutors agreed to drop related charges concerning murder threats and illegal weapons, according to the agreement filed on Monday.

Under the plea deal, Lonnie Vernon, 56, faces a prison term of 21 to 27 years when the couple is sentenced on November 14.

Agreement on a specific sentence for Karen Vernon, 66, was not reached, but prosecutors pledged to recommend a sentence of no longer than 15 years and eight months.

Lonnie Vernon also was a top officer in an organization called the Alaska Peacekeepers Militia, founded and led by Cox, 28.

In a separate case, Cox and Lonnie Vernon were convicted in June of conspiring to murder federal and state government officials and of acquiring illegal weapons to use against their targets. Karen Vernon was not a defendant in that case.

Sentencing for Cox and Lonnie Vernon on the militia-conspiracy case is set for September 14. Both men, along with Karen Vernon, have been jailed since they were arrested last year.”

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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.


Feds seized more than 23m documents from Gray donor

June 5, 2012

Washington Examiner on June 4, 2012 released the following:

By Alan Blinder

“Federal agents investigating the activities of Jeffrey Thompson, a major city contractor and a prolific contributor to political campaigns in the District, seized more than 23 million electronic pages of records when they raided his home and offices in March, court records show.

Although federal prosecutors have been mum about their probe of Thompson, U.S. District Judge Royce Lamberth revealed details of the searches in an opinion issued last month. The Legal Times first reported the ruling Monday.

Although Thompson has not been charged with any wrongdoing, his lawyers sought to curtail the government’s ability to review the records that investigators seized as a part of their criminal probe.

Thompson’s team argued that some of the documents are protected by, among other legally protected privileges, attorney-client privilege.

But Lamberth ruled that federal prosecutors have taken appropriate precautions to safeguard the applicable privileges, clearing the way for investigators to review the electronic records, as well as more than 60 boxes of physical documents.

As of May 3, Lamberth wrote, the government had not reviewed any of the records, signaling the investigation into Thompson could be far from complete. Brendan Sullivan, Thompson’s lawyer, did not respond Monday to a request for comment.

Thompson has been in the spotlight since agents from the FBI and the Internal Revenue Service descended on his home and 15th Street offices in March. Federal authorities also searched locations linked to Jeanne Clark Harris, a campaign consultant to D.C. Mayor Vincent Gray, the same night.

Soon after the raids, Thompson’s accounting firm, which has long done business with the District, acknowledged the searches were in connection with a probe of campaign finance practices in D.C.

Thompson and a network of family members and friends have contributed hundreds of thousands of dollars through the years to District politicians, including at least 11 sitting members of the D.C Council and Gray. Several lawmakers acknowledged they had received subpoenas from federal prosecutors demanding documents about their links to Thompson.

Thompson’s most meaningful tie to city government, though, hasn’t been through his political giving or his accounting work. Chartered Health Plan, Thompson’s managed care company, helped to run the city’s Medicaid program for years, under a deal worth $322 million annually, the District’s single largest contract.”

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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

Federal Mail Fraud Crimes

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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.


Tax Crimes Least Likely To Be Prosecuted At U.S. Attorney’s Office In Los Angeles

April 16, 2012

Huffington Post on April 16, 2012 released the following:

“By Kendall Taggart

The U.S. attorney’s office in Los Angeles is less likely to prosecute criminal cases referred by the Internal Revenue Service than its counterparts in the rest of the state, according to a California Watch analysis of five years of data.

The eastern district, which includes Sacramento and Fresno, was the most likely to prosecute IRS referrals, the data shows. But the U.S. attorney in Los Angeles was the only office in the state that fell slightly below the national average of prosecuting criminal IRS cases.

Each U.S. attorney has broad discretion over the priorities for his or her district. They determine which criminal cases referred to them by other law enforcement agencies they want to pursue and which cases to close without prosecuting.

It is difficult to determine why the Los Angeles office lagged behind its peers.

“It’s definitely puzzling,” said Terree Bowers, a former U.S. attorney. Since leaving the Los Angeles office, Bowers said he brought a fraud case to the office’s attention and was surprised that it didn’t act on the case.

The agency did not comment specifically on the findings, but Bruce Riordan, a U.S. attorney’s office spokesman, said: “I have been associated with the Department of Justice and the Central District of California for more 20 years, and based on my experience, the Central District has a longstanding and well-deserved reputation, both locally and nationally, for vigorously and successfully prosecuting criminal tax violations.”

The IRS investigates and refers cases about tax fraud, money laundering, narcotics trafficking, organized crime and public corruption.

Compared with the volume of cases it handles, the IRS refers only a small percentage for federal prosecution. Syracuse University’s Transactional Records Access Clearinghouse, which compiled the data analyzed by California Watch, estimated that the odds of having the IRS refer a case to a federal prosecutor were about 12 per million nationwide last year.

In California, the IRS referred about 540 cases to federal prosecutors in the last fiscal year. When adjusted for population, the odds of having a case referred to a federal prosecutor in the state are 15 per million, slightly higher than the national average.

When they do receive cases from the IRS, three of the state’s four U.S. attorneys prosecute alleged offenders at a rate above the national average, the data shows.

Across the country, close to 54 percent of all IRS referrals are prosecuted. In the eastern district covering Sacramento, that prosecution rate is about 62 percent. For the northern San Francisco and the southern San Diego districts, the prosecution rate is the same: 57.8 percent. For Los Angeles, the rate falls to 51.4 percent.

The IRS has several ways of enforcing tax law, including audits and civil charges.

“The heavy gun of the IRS is criminal enforcement, but it’s a much less frequent event,” said David Burnham, a co-director of the Transactional Records Access Clearinghouse.

The federal tax filing deadline is tomorrow. But in the months leading up to that day, U.S. attorneys sometimes file several tax fraud indictments as a deterrent, Bowers said.

Since January, the U.S. attorney’s eastern district office has announced more than six fraud cases, including charges against three Sacramento women who are accused of trying to claim more than $1.3 million in fraudulent tax refunds. The scheme involved more than 280 false tax returns and numerous identify-theft victims.

According the the U.S. attorney’s office, the women filed fraudulent returns through TurboTax and obtained the tax service’s Green Dot debit cards “loaded with the tax return money.” The actual loss to the IRS was $962,079, out of the $1.3 million claimed by the women using various identities.

And late last month, the Los Angeles office announced that a former Los Angeles Dodgers pitcher, William S. Bene, had signed a plea agreement admitting that he did not pay taxes for an illegal business selling karaoke machines. The U.S. attorney’s office said Bene sold counterfeit karaoke jukeboxes and failed to report $600,000 in sales to the IRS.

As part of his plea agreement, the U.S. attorney said, Bene admitted he had illegally copied and sold karaoke songs on hard drives that each carried about 122,000 songs.

“Intellectual Property crimes are not victimless,” U.S. Attorney André Birotte Jr. said in a statement last month. “As this federal case shows, these crimes of stealth hurt the small businesses that do play by the rules, and they also deprive the federal government of tax revenue that could be put to beneficial use.””

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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 and OFAC SDN Sanctions Removal.

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.


IRS worker charged in an alleged tax refund scam

April 11, 2012

Philadelphia Daily News on April 11, 2012 released the following:

“By Michael Hinkelman

An Internal Revenue Service employee and her boyfriend were arrested this morning and charged in a tax refund scam that defrauded Uncle Sam.

In an indictment unsealed today, federal prosecutors charged IRS employee Patricia Fountain, 34, with conspiring to file false claims, filing 15 false tax returns, extortion and related offenses.

Codefendant Larry Ishmael, 39, was charged with conspiracy to file false claims and aiding in the filing of a false tax return.

Authorities said Fountain and Ishmael, of North Philadelphia, shared a residence, money and assets, including a 2007 Mercedes Benz R350.

Fountain’s job at the IRS was to assist taxpayers with Telephone Excise Tax Refunds or credits (TETRs), the indictment said.

The TETR was a one-time payment individuals, businesses, nonprofits and government entities could claim – typically $30 to $60 – for telephone excise taxes paid from Feb. 28, 2003 to Aug. 1, 2006. (The TETR credit could only be claimed on 2006 federal tax returns.)

Federal prosecutors said that between November 2006 and May 2009, Fountain solicited taxpayers to file false returns claiming the TETR.

The indictment said Fountain directed a person identified only as N.W. and Ishmael to interact with taxpayers on her behalf.

The charging document alleges 21 separate instances in which Fountain allegedly filed false tax returns claiming the TETR, including her own false tax return and Ishmael’s false tax return for the year 2006.

Authorities said Fountain charged taxpayers $400 to file the return and warned that she would “red flag” those who did not pay her fee.

The indictment said Fountain filed amended returns for certain taxpayers whom she believed had not paid the fee, thus reversing refunds that had been previously issued by the IRS.

Fountain also allegedly structured a $11,299 down payment on the financed 2007 Mercedes by paying part in cash and charging the rest to a Mastercard to avoid the reporting requirement by financial institutions for cash transactions in excess of $10,000. (Prosecutors are seeking forfeiture of the luxury automobile.)

Fountain and Ishmael were to appear before a federal magistrate this afternoon and will likely be released on bail, sources said.”

US v Fountain et al – Federal Criminal Indictment

18 U.S.C. § 286

18 U.S.C. § 287

18 U.S.C. § 1951

26 U.S.C. § 7206

31 U.S.C. § 5324

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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 Crimes Watch 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 and OFAC SDN Sanctions Removal.

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 Agents Raid Calif. Marijuana University

April 4, 2012

MyFoxAtlanta.com on April 2, 2012 released the following:

“TERRY COLLINS, Associated Press

OAKLAND, Calif. (AP) – Federal agents on Monday targeted a San Francisco Bay area medical marijuana training school started by a leading pot advocate who has been instrumental in pushing for ballot measures to legalize the drug.

The doors to Oaksterdam University in downtown Oakland were blocked by U.S. marshals and yellow tape following the early morning raid by agents with the Internal Revenue Service and the U.S. Drug Enforcement Administration.

Agents carted trash bags of unknown materials out of the school as protesters gathered to condemn the action. A museum connected to the school and a nearby medical marijuana dispensary operated by Oaksterdam founder Richard Lee also were raided.

Demonstrators outside the multistory building, some openly smoking marijuana, held signs demanding an end to federal crackdowns on marijuana, which remains illegal under federal law.

Ryan Hooper, 26, of Oakland, wearing an Oaksterdam hat and sweat shirt, said he had finished taking courses at the school in February.

“This is not in the best interest of the city,” Hooper said. “If they close the dispensaries, all of this stuff is going to go back underground.”

Oaksterdam University was founded by Lee, who spent more than $1 million as the main backer of a California ballot measure defeated in 2010 that would have legalized marijuana in the state for recreational use. Lee did not immediately return a message seeking comment.

The school offers classes to would-be medical marijuana providers in fields ranging from horticulture to business to the legal ins-and-outs of running a dispensary. It does not distribute marijuana.

Arlette Lee, an IRS spokeswoman and no relation to Richard Lee, told reporters that agents were serving a federal search warrant but said she could not otherwise comment on the purpose of the raid.

“What we are doing here today is under seal,” Lee said.

Agents also raided Richard Lee’s home and briefly detained him during their search but did not arrest him, said Dale Sky Jones, Oaksterdam’s executive chancellor.

“Clearly, they’re trying to knock down one of the leaders in the cannabis reform movement,” Jones said.

No other arrests were reported, and it was unclear if the raid was prompted by a civil or criminal complaint. Jack Gillund, a spokesman for the U.S. attorney’s office, also declined comment.

The raid was the latest move by the federal government to crack down on California’s thriving medical marijuana industry. Federal prosecutors across the state joined late last year to shut down dozens of dispensaries by threatening to seize landlords’ property if they did not evict marijuana retailers.

The government’s action came as a surprise to medical marijuana advocates because the city of Oakland has been somewhat of a safe haven for pot clinics. The city has long allowed four medical marijuana dispensaries to legally operate under city ordinances and recently awarded permits that would allow four more to open.

“Oakland has one of the most highly regulated systems for distributing medical marijuana in the state,” said Stephen Gutwillig, California’s director for the Drug Policy Alliance. “We think this is a campaign by the U.S. attorneys not just to limit but to kill access to medical marijuana in California.”

Others countered that pot advocates are mistaken if they believe the Obama administration wouldn’t take action.

“This is a warning signal to any city including Oakland that they should tread very carefully when sanctioning an illegal activity,” said Kevin Sabet, a former senior adviser to the president’s drug czar and an assistant professor at the University of Florida. “The brazenness of Oakland and other cities like this has actually made them a target.”

Some observers said the federal government’s decision to go after Oaksterdam shows it’s not going to back down.

“It doesn’t get much more confrontational than that,” said Alex Kreit, a law professor at the Thomas Jefferson School of Law in San Diego.”

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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 Crimes Watch 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 and OFAC SDN Sanctions Removal.

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.


Owner of downtown Austin clubs, others face drug, money laundering and firearms charges

March 22, 2012

Statesman.com on March 22, 2012 released the following:

“By Gary Dinges

Update: In federal indictments unsealed this afternoon, 11 people reportedly associated with Yassine Enterprises, operator of several downtown nightclubs, are accused of engaging in a variety of crimes, including distributing cocaine, transferring firearms used to commit drug trafficking and money laundering.

Owner and president Hussein Ali Yassine — known as Mike Yassine — is charged with money laundering, according to court documents, as well as conspiracy to launder monetary instruments.

Citing federal money-laundering statutes, federal prosecutors are seeking a court order that would require Mike Yassine, as well as two other defendants, to forfeit $214,500.

Others charged include:

  • Marisse Marthe Ruales — known as Madi: conspiracy to launder monetary instruments and money laundering.
  • Hadi Ali Yassine: conspiracy to launder monetary instruments and money laundering.
  • Mohammed Ali Yassine — known as Steve Austin: conspiracy to distribute 500 grams or more of cocaine, distribution of 500 grams or more of cocaine, transferring a firearm knowing it is to be used in a drug trafficking crime and money laundering.
  • Sami Derder: conspiracy to distribute 500 grams or more of cocaine and distribution of cocaine.
  • Edgar Orsini: conspiracy to distribute 500 grams or more of cocaine and distribution of cocaine.
  • Amar Thabet Araf: conspiracy to distribute 500 grams or more of cocaine and distribution of 500 grams or more of cocaine.
  • Alejandro Melendrez — known as Alex and Cueta: distribution of 500 grams or more of cocaine.
  • Nizar Hakiki — also known as Nino: conspiracy to distribute 500 grams or more of cocaine, distribution of cocaine and transferring a firearm knowing it is to be used in a drug trafficking crime.
  • Karim Faiq: conspiracy to distribute 500 grams or more of cocaine, distribution of 500 grams or more of cocaine and conspiracy to distribute 5 kilos or more of cocaine.
  • An unidentified defendant is also charged with conspiracy to distribute 500 grams or more of cocaine and distribution of 500 grams or more of cocaine.

All of the alleged crimes, according to court records, occurred in 2008 and 2009.

Earlier: Agents from the FBI, Internal Revenue Service and the Texas Alcoholic Beverage Commission are at the offices of Yassine Enterprises, which operates several downtown nightclubs, this morning collecting documents as part of an investigation.

Agents were spotted hauling boxes into the Yassine offices at 213 W. Fourth St. shortly after 10 a.m.

An FBI spokesman called the investigation “usual and routine,” but said he could provide no additional details, while an IRS spokesman said the agency was conducting “official business.”

Austin police police were also on scene. A spokeswoman confirmed police had been called at the FBI’s request. She referred all other questions to the FBI’s spokesman, as did a spokeswoman for the TABC.

The IRS spokesman said there have been “several” arrests made in connection with the case, but declined to elaborate. A federal hearing was slated to be held on the case this afternoon in Austin, the spokesman said.

The federal Drug Enforcement Agency and state comptroller’s office are also part of the investigation, officials said.

Yassine owns Pure, Spill, Kiss & Fly, Stack Burger Bar, Treasure Island, Hyde, Fuel, Malaia and Roial.

The company is the subject of a class-action lawsuit filed this year that alleges more than 200 employees were paid less than federal law requires.

It was not immediately clear if today’s searches are related to the suit.

Jake Webb, a one-time bartender at Roial, claims in legal documents that Yassine was “generally paying no wages at all to tipped employees,” such as bartenders and waiters.

“When (Webb) went to pick up his check, he was told bartenders don’t get paychecks,” Dan Byrne, one of Webb’s attorneys, told the American-Statesman in January. “After talking with him, we had an inkling this was a bigger deal.”

Yassine’s attorneys released this statement after learning of the suit: “Yassine is cooperating in the class action and is committed to complying with all laws regarding the payment of tipped employees.””

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Douglas McNabb – McNabb Associates, P.C.’s
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