“Former Guatemalan President Pleads Not Guilty After Extradition”

May 29, 2013

The Wall Street Journal on May 28, 2013 released the following press release:

“Samuel Rubenfeld
Wall Street Journal

A former Guatemalan president was extradited last Friday to New York to face money laundering charges, the latest in the Justice Department’s heightened efforts to get defendants detained internationally to face corruption charges.

Alfonso Portillo,who led Guatemala from 2000 to 2004, embezzled tens of millions of dollars in state assets, some of which he laundered through U.S. and European bank accounts, prosecutors alleged Tuesday.

Portillo pleaded not guilty on Tuesday in a hearing before U.S. District Judge Robert Patterson. If convicted, Portillo faces a maximum of 20 years in prison.

He has long denied the allegations against him, telling CNN en Español in January the charges are a political witch-hunt borne of his opposition to the U.S.-led Iraq war.

“If deposits were made, they are deposits that first of all come from institutions that are not illicit,” he was quoted by CNN as saying. “In order for there to be laundering, the first requirement is that the money is from an illegal origin or comes from an illegal activity.”

Portillo’s extradition to the U.S. highlights a recently favored tool in corruption cases by law enforcement authorities, in which people are detained overseas and brought to the U.S. to face the charges against them.

The Justice Department built up its capacity and bolstered its relationships with foreign counterparts, allowing it to more frequently pursue cases and defendants internationally, said Peter Carr, a spokesman, in an email.

“The result is we are pursuing the extradition of more defendants, including high-profile defendants, such as [Viktor] Bout and Portillo,” Carr said.

However, the results of these efforts are somewhat mixed, based on a review of recent cases.

Bout was extradited and convicted, and sentenced to 25 years in prison. His associate was extradited to New York last week.

In January, a U.K. businessman was extradited, pleaded guilty and was sentenced in El Paso, Texas, federal court to three years behind bars for trying to help ship missile parts to Iran.

And in April 2012, the leader of a Mexican drug cartel was brought to the U.S. to face racketeering and money-laundering charges, for which he pleaded guilty and was sentenced to 25 years in prison.

But prosecutors are struggling to bring a former Thai official to the U.S. to face money-laundering charges in a case that’s been stayed until March 2014, and their support to Bahamian authorities in another case still ended in failure.

In another case, prosecutors have been trying to extradite a South Korean man since 2009 to face U.S. foreign bribery charges, but court papers from the man’s lawyers say Seoul won’t do it because the people he’s accused of bribing aren’t considered public officials under local law.

Carr declined to comment on the Justice Department’s record of extradition.”

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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.


U.S. prosecutors indict alleged Sinaloa cartel figure

October 8, 2012

Chicago Tribune on October 4, 2012 released the following:

“Marty Graham | Reuters

SAN DIEGO (Reuters) – U.S. federal prosecutors have indicted a man they describe as an important member of Mexico’s Sinaloa drug cartel who organized efforts to build two sophisticated smuggling tunnels under the U.S. border from Tijuana to San Diego.

Jose Sanchez-Villalobos, who is being held in a Mexican jail after his arrest in January on money-laundering charges, was indicted by a U.S. grand jury in February. But prosecutors did not unseal the indictment until Wednesday.

Sanchez-Villalobos, 49, was indicted on 13 counts including conspiracy, building and financing tunnels, and smuggling marijuana through them. He faces life in prison if convicted.

Federal authorities charged Sanchez-Villalobos with leading the construction and use of two of the tunnels, discovered in 2010 and 2011, according to the indictment. The 2010 tunnel bust yielded more than 17 tons of marijuana, while authorities recovered about 26 tons connected to the 2011 tunnel, according to the indictment.

Officials from the Border Tunnel Task Force said the 2011 tunnel was the most sophisticated they had seen, with an elevator, ventilation, electrical wiring, and a rail and cart system to move the marijuana. Immigration and Customs Enforcement agents said the tunnel had cost at least $1 million to build.

Federal investigators from the task force have discovered four tunnels between Tijuana and San Diego since October 2010, ranging in length from 600 feet to nearly a half mile.

The tunnels descend more than 60 feet underground and travel under the border from residences and warehouses in Mexico to rented warehouses in the United States.

Tons of marijuana smuggled through the tunnels were transported farther into the United States by trucks.

Sanchez-Villalobos, whom prosecutors describe as the Sinaloa cartel’s regional manager for Baja, Jalisco and Tijuana, was actively involved in the tunnel construction, according to the indictment.”

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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.


Prominent defense lawyer faces US charges

May 29, 2012

The Boston Globe on May 29, 2012 released the following:

“Robert A. George goes on trial today on charges of conspiring to launder money

By Milton J. Valencia

In a recent trial in federal court in Boston, well-known lawyer Robert A. George stood before a jury for his closing arguments, and spoke directly.

“When you’re innocent, you have a right to stand up and say something,’’ he declared in defense of his client, a Dorchester nurse and a mother of five charged with distributing prescription drugs.

But George might well have been speaking for himself – because he, too, is about to stand trial.

The 57-year-old father of three is accused by federal prosecutors of conspiring to help a former client launder drug money, and of restructuring bank deposits in violation of tax laws. Jury selection is slated for Tuesday. The case is a fight for his career and his livelihood.

The arrest of George in March 2011 caused a stir in the legal community, and defense lawyers descended on the Moakley courthouse to show their support.

In the year since FBI agents first swarmed his home, George, known for his testy exchanges with prosecutors, has represented clients just as aggressively as he did years ago when he defended Mafia figures and, later, the trash collector who maintains he was wrongly convicted of murdering Cape Cod fashion writer Christa Worthington.

George has also fought for a new trial for a former Stoughton police chief after finding information about one of the jurors that could have excluded her from serving on the panel in that extortion case. That request is pending in state court.

He has been working on his own case with two of the state’s better known defense lawyers, Robert M. Goldstein and Kevin R. Reddington. With them, he has filed repeated motions.

George has accused prosecutors of retaliating against him, being vindictive because of his defense of a man accused of plotting to kill a federal prosecutor several years ago. He has questioned the propriety of the government’s use of a confidential informant in his case, a man with a lengthy criminal history.

George and his lawyers are even attempting to include US Attorney Carmen M. Ortiz on his witness list.

“He has been laser focused on his clients’ cases, as well as his own,’’ said Thomas Shamshak, a former police chief in Spencer and Winthrop and a Somerville lieutenant who founded his own private investigative firm. He has worked with George on several cases, including this one. “He is a ferocious advocate unlike anyone I have ever worked for.’’

Martin Weinberg, a lawyer who has represented high-profile clients in federal court and who won the acquittal of a lawyer in a racketeering case several years ago in Florida, said the case also demonstrates the quintessential challenge for any lawyer: representing another criminal defense lawyer and the symbolism that comes with it.

“There’s always that added context, that you’re representing the lifestyle,’’ said Weinberg. “You’re representing everything he is.’’

Lawyers in Massachusetts can lose their law license if they are convicted of a felony, but nothing prevents them from carrying out their practice until their case has concluded.

Court rules require only that a lawyer notify his or her clients of the pending charges. A lawyer would have to notify the state Office of Bar Counsel if convicted.

George, who has lived on Cape Cod and the suburbs west of Boston, faces up to 20 years in prison on charges of trying to help a former client launder his drug-dealing profits for a fee, by referring him to a mortgage broker who would help him.

The former client, Ronald Dardinski, was cooperating with authorities, and George alleges he was targeted by authorities because he represented a man who in 2007 plotted to kill prosecutor Jack Pirozzolo.

Prosecutors rejected that allegation, and US District Court Judge Nathaniel Gorton refused to dismiss the case or to hold an evidentiary hearing, saying there was no evidence of retaliation. Prosecutors say they have audio recordings of George setting up the money-laundering scheme.

Rosemary Scapicchio, a friend of George’s, represented him at his initial hearing, before he could hire Reddington, and she lashed out at prosecutors for “investigating a criminal defense attorney who is out there protecting people’s rights. This is outrageous.’’

It is not the first time a defense lawyer has been a defendant in federal court in Boston. Last January, for instance, Gorton admonished attorney Lawrence M. Perlmutter before sentencing him to 5 1/2 years for laundering drug profits for his clients.

“You have disgraced not only yourself, but the rest of us who hold our profession in the highest esteem, and for what?’’ Gorton hissed. He is the same judge in George’s case.

George and his lawyers would not comment for this article.

One of George’s last appearances in a federal courtroom was May 9, for the sentencing of Gladys Ihenacho, the Dorchester nurse and wife of a pharmacist. Her husband, Baldwin, who had a different lawyer, was sentenced to 63 months in prison.

Gladys was acquitted of 23 of the 30 charges she faced.

Prosecutors had asked that she serve 27 months in prison, saying she showed greed. But George had asked that she serve no prison time because she had a family to care for, and argued that the charges did not reflect her work as a mother.

She was sentenced to probation, with 10 days of home detention, and went home that day.”

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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.


Beirut Bank Seen as a Hub of Hezbollah’s Financing

December 14, 2011

The New York Times on December 14, 2011 released the following:

“By JO BECKER

BEIRUT, Lebanon — Last February, the Obama administration accused one of Lebanon’s famously secretive banks of laundering money for an international cocaine ring with ties to the Shiite militant group Hezbollah.

Now, in the wake of the bank’s exposure and arranged sale, its ledgers have been opened to reveal deeper secrets: a glimpse at the clandestine methods that Hezbollah — a terrorist organization in American eyes that has evolved into Lebanon’s pre-eminent military and political power — uses to finance its operations. The books offer evidence of an intricate global money-laundering apparatus that, with the bank as its hub, appeared to let Hezbollah move huge sums of money into the legitimate financial system, despite sanctions aimed at cutting off its economic lifeblood.

At the same time, the investigation that led the United States to the bank, the Lebanese Canadian Bank, provides new insights into the murky sources of Hezbollah’s money. While law enforcement agencies around the world have long believed that Hezbollah is a passive beneficiary of contributions from loyalists abroad involved in drug trafficking and a grab bag of other criminal enterprises, intelligence from several countries points to the direct involvement of high-level Hezbollah officials in the South American cocaine trade.

One agent involved in the investigation compared Hezbollah to the Mafia, saying, “They operate like the Gambinos on steroids.”

On Tuesday, federal prosecutors in Virginia announced the indictment of the man at the center of the Lebanese Canadian Bank case, charging that he had trafficked drugs and laundered money not only for Colombian cartels, but also for the murderous Mexican gang Los Zetas.

The revelations about Hezbollah and the Lebanese Canadian Bank reflect the changing political and military dynamics of Lebanon and the Middle East. American intelligence analysts believe that for years Hezbollah received as much as $200 million annually from its primary patron, Iran, along with additional aid from Syria. But that support has diminished, the analysts say, as Iran’s economy buckles under international sanctions over its nuclear program and Syria’s government battles rising popular unrest.

Yet, if anything, Hezbollah’s financial needs have grown alongside its increasing legitimacy here, as it seeks to rebuild after its 2006 war with Israel and expand its portfolio of political and social service activities. The result, analysts believe, has been a deeper reliance on criminal enterprises — especially the South American cocaine trade — and on a mechanism to move its ill-gotten cash around the world.

“The ability of terror groups like Hezbollah to tap into the worldwide criminal funding streams is the new post-9/11 challenge,” said Derek Maltz, the Drug Enforcement Administration official who oversaw the agency’s investigation into the Lebanese Canadian Bank.

In that inquiry, American Treasury officials said senior bank managers had assisted a handful of account holders in running a scheme to wash drug money by mixing it with the proceeds of used cars bought in the United States and sold in Africa. A cut of the profits, officials said, went to Hezbollah, a link the organization disputes.

The officials have refused to disclose their evidence for that allegation. But the outlines of a broader laundering network, and the degree to which Hezbollah’s business had come to suffuse the bank’s operations, emerged in recent months as the bank’s untainted assets were being sold, with American blessings, to a Beirut-based partner of the French banking giant Société Générale.

Of course, a money-laundering operation does not just come out and identify itself. But auditors brought in to scrub the books discovered nearly 200 accounts that were suspicious for their links to Hezbollah and their classic signs of money laundering.

In all, hundreds of millions of dollars a year sloshed through the accounts, held mainly by Shiite Muslim businessmen in the drug-smuggling nations of West Africa, many of them known Hezbollah supporters, trading in everything from rough-cut diamonds to cosmetics and frozen chicken, according to people with knowledge of the matter in the United States and Europe. The companies appeared to be serving as fronts for Hezbollah to move all sorts of dubious funds, on its own behalf or for others.

The system allowed Hezbollah to hide not only the sources of its wealth, but also its involvement in a range of business enterprises. One case involved perhaps the richest land deal in Lebanon’s history, the $240 million purchase late last year of more than 740 pristine acres overlooking the Mediterranean in the religiously diverse Chouf region.

The seller was a jet-set Christian jeweler, Robert Mouawad, whose clientele runs from Saudi royalty to Hollywood royalty. The buyer, at least on paper, was a Shiite diamond dealer, Nazem Said Ahmad.

In fact, according to people knowledgeable about Beirut real estate, the development corporation’s major investor was a relative of a former Hezbollah commander, Ali Tajeddine. The investor, in turn, received money that flowed through the bank from companies the United States has since designated as Hezbollah fronts, and from dealers implicated in the trade in so-called conflict diamonds and minerals, the Americans and Europeans with knowledge of the matter said. The Lebanese Canadian Bank provided a crucial loan.

And the deal fit a pattern, highly controversial in this religiously combustible land, in which entities tied to Hezbollah have been buying up militarily strategic pieces of property in largely Christian areas, helping the movement quietly fortify its geopolitical hegemony.

In a recent interview at his home in Taybeh, just north of the border with Israel — or as the signs here say, “Palestine” — Hezbollah’s chief political strategist and a member of Parliament, Ali Fayyad, denied that his organization was behind the Chouf purchase or other, similar land deals. He dismissed the American drug-trafficking allegations as politically motivated “propaganda,” adding, “We have no relationship to the Lebanese Canadian Bank.” The United States, he said, was simply persecuting innocent Shiite businessmen as a way “to punish us because we won our battle with Israel.”

For the United States, taking down the bank was part of a long-running strategy of deploying financial weapons to fight terrorism. This account of the serpentine, six-year inquiry and what has since been revealed is based on interviews with government, law enforcement and banking officials across three continents, as well as intelligence reports and police and corporate records.

As the case traveled up the administration’s chain of command beginning in the fall of 2010, some officials proposed leaving the Hezbollah link unsaid. They argued that simply blacklisting the bank would disrupt the network while insulating the United States from suspicions of playing politics, especially amid American alarm about ebbing influence in the Middle East. But the prevailing view was that the case offered what one official called “a great opportunity to dirty up Hezbollah” by pointing out the hypocrisy of the “Party of God” profiting from criminal activity.

Certainly the United States had ample cause to want to dirty up Hezbollah, Iran’s armed proxy and a persistent irritant to American interests in a chronically troubled region. (Just last week, in fact, Hezbollah’s long-running feud with the Central Intelligence Agency heated up when the organization broadcast what it said were the names of 10 American spies who had worked in recent years at the embassy in Beirut. )

The time was ripe, too, for taking on Hezbollah — a moment that crystallized its ascent but also its vulnerability. Just weeks before, Hezbollah’s political wing had played Lebanese kingmaker, engineering the fall of Prime Minister Saad Hariri, an American ally, and installing its own choice in his stead. At the same time, though, a United Nations tribunal was preparing to indict Hezbollah members in a spectacular bombing that killed Mr. Hariri’s father, former Prime Minister Rafik Hariri, in 2005.

John O. Brennan, the president’s counterterrorism adviser, recalled the debate in a recent interview. “I thought that if Hezbollah was involved in the drug trade,” he said, “let’s make sure that gets out.”

A State Within a State

Founded three decades ago as a guerrilla force aimed at the Israeli occupation of southern Lebanon, Hezbollah has never before had such a prominent place in the country’s official politics. Yet much of its power, and its ability to operate with some impunity, derives from elsewhere: from its status as a state within the Lebanese state.

Its militia is considerably stronger than the national army. Its social service agencies perform many of the functions of government, and it controls the international airport and the smuggling routes along the Syrian border, as well as the budgets of the government agencies charged with policing them.

In an interview, the chief of Lebanese customs’ drug and money-laundering unit, Lt. Col. Joseph N. Skaf, described a Sisyphean task: Passengers are allowed to bring in unlimited amounts of cash without declaring it. He has only 12 officers to search for drugs, and scanners at the airport and seaport do not work. “My hands are tied,” he said.

That this sliver of a country would be a crossroads for all manner of trade owes much to the flourishing of a worldwide diaspora; more Lebanese live abroad than at home. Through criminal elements in these émigré communities, Hezbollah has gained a deepening foothold in the cocaine business, according to an assessment by the United Nations Office on Drugs and Crime described in a leaked 2009 State Department cable.

From a trafficking standpoint, the émigrés were in the right places at the right time. As demand increased in Europe and the Middle East, the cartels began plying new routes — from Colombia, Venezuela and the lawless frontier where Brazil, Paraguay and Argentina meet, to West African countries like Benin and Gambia. From there, drugs moved north through Portugal or Spain, or east via Syria and Lebanon.

According to Lebanon’s drug enforcement chief, Col. Adel Mashmoushi, one path into the country was aboard a weekly Iranian-operated flight from Venezuela to Damascus and then over the border. Several American officials confirmed that, emphasizing that such an operation would be impossible without Hezbollah’s involvement.

In South America and in Europe, prosecutors began noticing Lebanese Shiite middlemen working for the cartels. But the strongest evidence of an expanding Hezbollah role in the drug trade, that it was not just the passive recipient of tainted money, comes from the two investigations that ultimately led to the Lebanese Canadian Bank.

The trail began with a man known as Taliban, overheard on Colombian wiretaps of a Medellín cartel, La Oficina de Envigado. Actually, he was a Lebanese transplant, Chekri Mahmoud Harb, and in June 2007, he met in Bogotá with an undercover agent for the Drug Enforcement Administration and sketched out his route.

Cocaine was shipped by sea to Port Aqaba, Jordan, then smuggled into Syria. After Mr. Harb bragged that he could deliver 950 kilos into Lebanon within hours, the undercover agent casually remarked that he must have Hezbollah connections. Mr. Harb smiled and nodded, the agent reported.

(Jordanian officials, after extensive surveillance, later told the D.E.A. that the Syrian leg of the shipment was coordinated by a Syrian intelligence officer assigned as a liaison to Hezbollah. From there, multiple sources reported, Hezbollah operatives charged a tax to guarantee shipments into Lebanon.)

Soon the cartel was giving the agent money to launder: $20 million in all. But before Mr. Harb could reveal the entire scheme and identify his Hezbollah contacts, the operation broke down: The C.I.A., initially skeptical of a Hezbollah link, now wanted in on the case. On the eve of a planned meeting in Jordan, it forced the undercover agent to postpone. His quarry spooked. In the end, Mr. Harb was convicted on federal drug trafficking and money-laundering charges, but the window into the organization’s heart had slammed shut.

It was “like having a girl you love break up with you,” one agent said later, adding, “We lost everything.”

A New Target

Actually they had not. Before long, a new target emerged.

A call had come in to a wiretapped phone tied to Mr. Harb and the cartel. The caller had arranged for cocaine proceeds to be picked up at a Paris hotel and laundered back to Colombia. The meeting turned out to be a sting.

“He says, ‘I just lost a million euros in France,’ ” recalled one of the agents listening in. “The way he talked — no one loses a million euros and is so nonchalant about it. Usually, there are bodies in the street.”

Agents had known that there was a major money launderer whose phone sat in Lebanon. Now they had a name: Ayman Joumaa, formerly of Medellín, now owner of the Caesars Park Hotel in Beirut. He was a Sunni Muslim, but cellphones seized at the Paris hotel linked him to Shiites in Hezbollah strongholds in southern Lebanon, according to Interpol records.

He was also known to Israeli intelligence. Israeli intercepts showed him in contact with a member of Hezbollah’s “1,800 Unit,” alleged to coordinate attacks inside Israel. Mr. Joumaa’s contact, in turn, worked for a senior operative who the Israelis believed handled Hezbollah’s drug operations.

His name was Abu Abdallah, and he had popped up in the Harb wiretaps, too: At one point, as Mr. Harb was complaining about “the sons of whores I owe money to,” a relative from his hometown warned that the “people of Abu Abdallah, the people we do not dare have problems or fight with,” were looking for him, wanting money.

Eventually an American team dispatched to look into Mr. Joumaa’s activities uncovered the used-car operation. Cars bought in United States were sold in Africa, with cash proceeds flown into Beirut and deposited into three money-exchange houses, one owned by Mr. Joumaa’s family and another down the street from his hotel. The exchanges then deposited the money, the ostensible proceeds of a booming auto trade, into the Lebanese Canadian Bank, so named because it was once a subsidiary of the Royal Bank of Canada Middle East.

But the numbers did not add up. The car lots in the United States, many owned by Lebanese émigrés and one linked to a separate Hezbollah weapons-smuggling scheme, were not moving nearly enough merchandise to account for all that cash, American officials said. What was really going on, they concluded, was that European drug proceeds were being intermingled with the car-sale cash to make it appear legitimate.

Hezbollah received its cut either from the exchange houses, or via the bank itself, according to the D.E.A. And the Treasury Department concluded that Iran also used the bank to avoid sanctions, with Hezbollah’s envoy to Tehran serving as go-between.

In Washington, after a long debate over when to act and what to make public, the administration decided to invoke a rarely used provision of the Patriot Act. Since the bank had been found to be of “primary money-laundering concern,” the Treasury Department could turn it into an international pariah by forbidding American financial institutions to deal with it. President Obama was briefed, and on Feb. 10, Treasury officials pulled the trigger.

As for Mr. Joumaa, the indictment announced Tuesday goes beyond the Europe-based operation outlined in the Lebanese Canadian Bank case. It charges him with coordinating shipments of Colombian cocaine to Los Zetas in Mexico for sale in the United States, and laundering the proceeds.

Whether he will ever face trial is an open question. The United States has no extradition treaty with Lebanon, and Mr. Joumaa’s whereabouts are unknown. He did not respond to several messages left at his hotel by The New York Times. Around Beirut, rumors abound.

Growing Skepticism

The Americans had identified only a handful of drug-tainted accounts at the Lebanese Canadian Bank. The search for further trouble began over the summer, after the Société Générale de Banque au Liban, or S.G.B.L., agreed to buy the bank’s assets.

As part of its own agreement with Treasury officials, Lebanon’s Central Bank set up a process to scrub the books. But compliance officers at S.G.B.L.’s French partner, Société Générale, were skeptical of the Central Bank’s choice of investigators. One of them, the local affiliate of the international auditing firm Deloitte, had presumably missed the drug-related accounts the first time around, when it served as the Lebanese Canadian Bank’s outside auditor.

And, according to people knowledgeable about Lebanese banking, the central bank’s on-the-ground representative had been recommended to that post by Hezbollah.

As an extra step, to reassure wary international banks, the chairman of S.G.B.L., Antoun Sehnaoui, commissioned a parallel audit, with the help of Société Générale’s chief money-laundering compliance officer. And to make sure that his bank did not run afoul of Treasury officials by inadvertently taking on dirty assets, he also hired a consultant intimately familiar with the Patriot Act provision used to take the bank down: John Ashcroft, the former attorney general whose Justice Department wrote the law.

Identifying suspicious accounts is not a subjective business. Banks rely on internationally recognized standards and software that contains certain triggers.

For the assets of the Lebanese Canadian Bank, the process worked this way, according to the Americans and Europeans knowledgeable about the case:

Initially, the auditors looked only at records for the past year. As they began combing through thousands of accounts, they looked for customers with known links to Hezbollah. They also looked for telltale patterns: repeated deposits of vast amounts of cash, huge wire transfers broken into smaller transactions and transfers between companies in such wildly incongruous lines of business that they made sense only as fronts to camouflage the true origin of the funds.

Each type of red flag was assigned a point value. An account with 1 or 2 points on a scale to 10 was likely to survive. One with 8 or 9 cried out for further scrutiny. Ultimately, the auditors were left with nearly 200 accounts that appeared to add up to a giant money-laundering operation, with Hezbollah smack in the middle, according to American officials. Complex webs of transactions featured the same companies over and over again, most of them owned by Shiite businessmen, many known Hezbollah supporters. Some have since been identified as Hezbollah fronts.

At the center of many of these webs were companies trading in diamonds, which experts say are fast replacing more traditional money-laundering vehicles because they are easy to transport and are generally traded for cash. Large transactions leave no paper trail, and values can be altered through bogus transactions. A number of these dealers had been implicated in the buying of “conflict diamonds” and other minerals used to finance civil wars and human-rights abuses in Africa.

In some cases, money moved in amounts — tens of millions of dollars at a clip — that made no sense, given the business models and potential sales of the companies involved.

“It’s like these guys no one had ever heard of became the most successful multimillionaires overnight,” said one person with knowledge of the investigation. “It’s Hezbollah’s money.”

Mr. Sehnaoui closed the deal in September. He declined to discuss details, but said: “We bought certain assets of the Lebanese Canadian Bank, and only the clean ones. We did not take any even slightly questionable clients.”

Lawyers for Mr. Ashcroft’s firm said all the problematic accounts had been excised, even though it meant losing nearly $30 million a year in interest and fees. “As current and potential problems have been uncovered, he has not hesitated to act,” Mr. Ashcroft said of his client.

From the Treasury Department’s perspective, the case is a victory, albeit an incremental one, in the battle against terrorism financing. Lebanon’s Central Bank showed that it was willing to shut down the Lebanese Canadian Bank and sell it to a “responsible owner,” said Daniel L. Glaser, assistant Treasury secretary for terrorism financing. An important avenue to Hezbollah has been blocked.

Still, Treasury officials have no illusions that their work here is done. From the beginning, the blacklisting was also intended as a wider warning to a banking industry that, with secrecy to rival the Swiss, forms the backbone of Lebanon’s economy: henceforth, other bankers did business with Hezbollah at their peril.

“What the Central Bank hasn’t fully demonstrated, and the jury is still out, is whether they will use this as a launching pad to ensure that these illicit actors aren’t migrating elsewhere,” Mr. Glaser said.

The signs are not terribly encouraging. The Central Bank governor, Riad Salameh, cut short an interview when asked about the aftermath of the American action, calling it an “old story.” As for those nearly 200 suspect accounts, Mr. Salameh would only say that he does not involve himself in such commercial questions.

Privately, he has played down the findings to the Treasury Department, attributing much of the suspicious activity to peculiarities in the way business is done in Africa. Those accounts he did deem problematic, he told the Americans, have been referred to Lebanon’s general prosecutor. But the prosecutor refused to comment, and his deputy, who handles money-laundering inquiries, said last week that he had received nothing.

In fact, as Treasury officials acknowledge, on Mr. Salameh’s watch, most of the accounts were simply transferred to several other Lebanese banks.”

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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

————————————————————–

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 McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Multiple Defendants Arrested for Allegedly Operating a Prescribtion Drug “Pill Mill”

June 30, 2011

U.S. Attorney’s Office Northern District of Georgia on June 29, 2011 released the following press release:

Owners, Managers, and Doctors at “Atlanta Medical Group” Accused of Illegal Distribution of Hundreds of Thousands of Oxycodone Pills

ATLANTA, GA – JASON COLE VOTROBEK, 27, of Vero Beach Florida; JESSE VIOLANTE, 32, of Vero Beach, Florida; ROLAND RAFAEL CASTELLANOS, 32, of Cartersville, Georgia; TARA ATKINS, 33, of Cartersville, Georgia; and Dr. JAMES CHAPMAN, 61, of Macon, Georgia, were indicted and arrested on federal drug and money laundering charges for their respective roles in operating a so-called “pill mill” pain clinic which served as a front for the illegal distribution of addictive pain killers.

United States Attorney Sally Quillian Yates said of today’s arrests, “The abuse of pain medication has become epidemic and now accounts for more deaths in Georgia than all of the traditional illegal drugs combined. As the problems caused by prescription drug abuse become a focus for many of the communities in our district, our drug prosecutors also are focusing on the primary sources of these dangerous drugs in our state.”

John S. Comer, Acting Special Agent in Charge of the DEA’s Atlanta Field Division said, “The dispensing of addictive prescription pain medication under the guise of a doctor’s care, as occurred in this investigation, is not about the good of the community or an individual’s specific health needs; it is about greed and those involved in “pill mill” activity are in fact drug dealers.”

Atlanta IRS-Criminal Investigation Special Agent in Charge Reginael McDaniel said, “The indictment of these individuals puts a spotlight on organizations that illegally distribute drugs as well as the exemplary coordination among law enforcement, which leads to breaking up these organizations. Our goal is to stop criminal enterprises that profit from the illegal trade of dangerous narcotics and take away any financial benefit they receive from their criminal activity.”

Atlanta FBI Special Agent in Charge Brian D. Lamkin, said, “The FBI, through its Northwest Georgia Criminal Enterprise Safe Streets Task Force, in initiating this investigation in conjunction with the GBI and the Bartow-Cartersville Drug Task Force, is pleased with its role in the successful outcome of this case. Through joint efforts such as this, the community in which we serve benefits while sending a clear message to those that would exploit the addictions of others.”

Bartow County Sheriff Clark Millsap said, “The Bartow/Cartersville Drug Task Force and all other agencies involved have been working diligently to stop this type of illegal drug activity. We want to send a message that we will not stand for any type of drug dealers in this county. Whether it be prescription drugs, marijuana, methamphetamine, cocaine, or any other illegal drug, we will exhaust all our law enforcement resources to stop you.”

According to United States Attorney Yates, the indictment, and information presented in court: In May 2010, working from information from the FBI/ Northwest Georgia Criminal Enterprise Safe Streets Task Force, agents of the Drug Enforcement Administration (DEA), working with the Georgia Bureau of Investigation, Bartow County Sheriff’s Office, as well as agents for the Internal Revenue Service (IRS), expanded an investigation of “Atlanta Medical Group,” after learning that the clinic, located at 16 Collins Drive, Cartersville, Georgia, was prescribing pain pills outside the bounds of legitimate medical practice.

The investigation revealed that VOTROBEK, VIOLANTE, AND CASTELLANOS financed and operated the clinic. ATKINS served as the office manager. CHAPMAN served as the primary doctor. The indictment charges that in their respective capacities, they worked to procure and distribute Oxycodone pills to addicts and illegitimate distributors. The clinic’s doctor was directed by the owners and managers to see as many patients as possible, in order to generate substantial profits through the sale of pills, which were largely dispensed on site. CHAPMAN allegedly did so, however, without conducting sufficient medical examinations. The indictment alleges that at on least one occasion, ATKINS facilitated the filling of prescriptions when the doctor was unable to do so himself. In addition, the amounts of pills distributed to patients were excessive, and with unusual dosage patterns.

The indictment charges that the clinic was really a drug distribution operation with an extremely high volume of patients visiting from surrounding states. Many of those visiting had apparent signs of being addicts. The clinic allegedly engaged in unusual practices, including permitting non-medical staff to assist with medical procedures, including taking blood pressure, to maximize the number of patients to be seen. The defendants allegedly made millions of dollars during the clinic’s approximately one year of operation. The indictment charges that the defendants established multiple bank accounts, many in third-party names, to conceal the windfall profits.

Members of the public are reminded that the indictment contains only allegations. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.

This case was investigated by Special Agents of the Drug Enforcement Administration, Georgia Bureau of Investigation, Bartow County Sheriff’s Office, and the Internal Revenue Service-Criminal Investigation. This case was initiated by the FBI/ Northwest Georgia Criminal Enterprise Safe Streets Task Force.

Assistant United States Attorneys G. Scott Hulsey and Cassandra Schansman prosecuted the case.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

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

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