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Diplomacy in Action

2009 INCSR: Law Enforcement Cases


Bureau of International Narcotics and Law Enforcement Affairs
Report
February 27, 2009

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Lloyds of London Violates IEEPA

Lloyds TSB Bank, a United Kingdom corporation headquartered in London, has agreed to forfeit $350 million to the United States and to the New York County District Attorney’s Office in connection with violations of the International Emergency Economic Powers Act (IEEPA). The violations relate to transactions Lloyds illegally conducted on behalf of customers from Iran, Sudan and other countries sanctioned in programs administered by the Office of Foreign Assets Controls.

A criminal information was filed in the U.S. District Court for the District of Columbia charging Lloyds with one count of violating the IEEPA. Lloyds waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its criminal conduct. Lloyds agreed to forfeit the funds as part of deferred prosecution agreements with the Department of Justice and the New York County District Attorney’s Office.

Under the IEEPA, it is a crime to willfully violate, or attempt to violate, any regulation issued under the act, including the Iranian Transactions Regulations, which prohibit exportation of services from the United States to Iran, and the Sudanese Sanctions Regulations, which prohibit exportation of services from the United States to Sudan.

According to court documents, beginning as early as 1995 and continuing until January 2007, Lloyds, in both the United Kingdom and Dubai, falsified outgoing U.S. wire transfers that involved countries or persons on U.S. sanctions lists. Specifically, according to court documents, Lloyds deliberately removed material information—such as customer names, bank names and addresses—from payment messages so that the wire transfers would pass undetected through filters at U.S. financial institutions. This process of “repairing” or “stripping,” as Lloyds commonly referred to it, allowed more than $350 million in transactions to be processed by U.S. correspondent banks used by Lloyds that might have otherwise been blocked or rejected due to sanctions regulations or for internal bank policy reasons. According to court documents, the criminal conduct by Lloyds was designed to evade, and to assist its customers in evading, U.S. economic sanctions imposed against Iran, Sudan and other countries.

“For more than 12 years, Lloyds facilitated the anonymous movement of hundreds of millions of dollars from U.S.-sanctioned nations through our financial system,” said Acting Assistant Attorney General Matthew Friedrich. “More than $350 million moved from places such as Iran through locations around the world because Lloyds stripped identifying information from international wire transfers that would have raised a red flag at U.S. financial institutions and caused such payments to be scrutinized. The Department will continue to use criminal enforcement measures against the knowing and intentional evasion of U.S. sanctions laws, particularly where such conduct has the potential to finance terrorist activities.”

The bank’s forfeiture of $175 million to the United States and $175 million to New York County will settle forfeiture claims by the Department of Justice and the state of New York related to the misconduct. In light of the bank’s remedial actions to date and its willingness to acknowledge responsibility for its actions, the Department will recommend the dismissal of the information in two years, provided Lloyds fully cooperates with, and abides by, the terms of the agreement.

The case was prosecuted by the Department of Justice Criminal Division’s Asset Forfeiture and Money Laundering Section and was investigated by the IRS-Criminal Investigation’s Washington Field Division.

Holy Land Foundation Revisited

On November 24, 2008, in the Northern District of Texas, all defendants in United States v. Holy Land Foundation were found guilty by a jury of all counts charged. On November 12, 2008, the jury began deliberating. The defense rested its case on November 6, 2008, and closing statements began on Monday, November 10, 2008. Holy Land Foundation (“HLF”) was a Hamas front organization that received start up assistance from Mousa Abu Marzook—a leader of Hamas and a specially designated terrorist—and raised millions of dollars for Hamas over a thirteen-year period. The new trial results from a mistrial declared on October 22, 2007, in the Northern District of Texas, when a jury found defendant Mohammed El-Mezain not guilty as to most charges, but failed to reach a verdict on a material support count against him, and deadlocked on the remaining counts against the other defendants. All other defendants at trial—Shukri Abu Baker, Ghassan Elashi, Mufid Abdulqader, and Abdulraham Odeh—and all counts resulted in a mistrial. The case was re-assigned for retrial in 2008. HLF received start up assistance from Mousa Abu Marzook, a leader of Hamas. It was the largest Muslim charity in the United States until it was declared a Specially Designated Terrorist Organization in 2001 and shut down. HLF raised millions of dollars for Hamas over a 13-year period.

Hawala, Money Laundering and Terrorism Financing

On November 4, 2008, in the District of Maryland, Saifullah Anjum Ranjha, a Pakistani national residing in Washington, D.C. and Maryland, was sentenced to 110 months in prison, followed by three years of supervised release, for conspiring to launder money and for concealing terrorist financing. The judge also signed a preliminary order forfeiting $2,208,000 of Ranjha’s assets.

Ranjha was born in Pakistan and became a lawful permanent resident of the United States in September 1997. He operated a money remitter business in the District of Columbia known as Hamza, Inc. During the U.S. Immigration and Customs Enforcement (ICE) led investigation, a cooperating witness, acting at the direction of law enforcement, presented himself to Ranjaha and his associates as someone involved in large scale international drug trafficking, international smuggling of counterfeit cigarettes and weapons. He also represented that he was providing assistance and financing to members of al Qaeda and its affiliated organizations and their operatives. From October 2003 to September 19, 2007, the cooperating witness gave Ranjha and his associates a total of $2,208,000 in government funds to transfer the monies abroad through the hawala informal money transfer system, bypassing conventional banking systems and regulations.

The cooperating witness represented that the monies were the proceeds of his purported illegal activities. There were a total of 21 hawala transactions in amounts ranging from $13,000 to $300,000. Most of the monies were turned over to Ranjha in locations in Maryland. On a few occasions the cooperating witness met Ranjha and other co-conspirators at Hamza, Inc. to provide monies for a particular hawala transfer. Ranjha arranged with his associates for the equivalent amount of monies, minus commissions, to be delivered to the cooperating witness, his third party designee, or a designated bank account in Canada, England, Spain, Pakistan, Japan and Australia. Ranjha kept a commission of approximately five percent of the amount of currency transferred. Other conspirators involved in a particular transaction retained an additional commission of between three to five percent of the transaction amount. All the funds transferred abroad were picked up by cooperating individuals and returned to the Government.

Other agencies involved in the investigation included, the Federal Bureau of Investigation and the Internal Revenue Service—Criminal Division. International law enforcement partners included the Spanish National Police, Australian Federal Police, London Metropolitan Police, and Royal Canadian Mounted Police.

NGO Support of a Terror Organization

On August 25, 2008, in the Southern District of Florida, Richard David Hupper was sentenced to 46 months in prison and a $15,000 fine. He had pled guilty on May 21, 2008, to one count of providing material support to Hamas, in violation of 18 U.S.C. § 2339B.

Between December 2004 and September 2006, Hupper, a United States citizen, traveled on numerous occasions to the Middle East. He met and worked with individuals in the International Solidarity Movement (ISM), a pro-Palestinian nongovernmental organization (NGO), and gradually became interested in assisting Hamas. Through his contacts with ISM, Hupper became friendly with a major figure in the ISM and a suspected Hamas member. On several occasions during an approximate two year period of time, Hupper provided money, both in person and via Western Union wire transfer, with knowledge that the funds he gave were going directly to Hamas. These funds were to be used by Hamas in a variety of ways including assisting the families of Israeli-imprisoned Hamas members. Hupper also procured a fraudulent passport using an alias after the government restricted his travel to the Middle East. He was earlier arrested and prosecuted for identity theft. After his arrest on the identity theft charges, Hupper was interviewed and admitted to the illegal conduct to which he later pled.

“Bust-Out” Scheme

In August 2008, in the Central District of California, Reza Bahram Tabatabai was sentenced to 87 months in federal prison and ordered to pay $2,235,801 in restitution.

Tabatabai was found guilty of conspiracy, seven counts of interstate transportation of fraudulently obtained property, six counts of mail fraud, eight counts of wire fraud, conspiracy to commit money laundering and 33 counts of money laundering in connection with a series of “bust-out” schemes in which several companies were taken over and their credit lines were exhausted.

Tabatabai, with the help of several others, purchased established businesses so they could make large purchases of goods using the companies’ existing lines of credit. The goods sold to the companies were re-sold at discounted prices to quickly generate profits for the participants in the scheme. Although some payments were made in order to secure larger lines of credit, lenders to the four companies lost more than $8 million. The evidence at trial showed that Tabatabai and his co-conspirators engaged in a series of complex monetary transactions to both conceal and promote the fraudulent scheme. Tabatabai controlled numerous bank accounts, held in the names of numerous businesses, in which he concealed the proceeds of the fraudulent conduct.

Previously, in October 1999, Tabatabai was charged in a Superseding Information with one count of conspiracy, in violation of 18 U.S.C. § 371, and one count of providing material support to a designated foreign terrorist organization, the Mujahedin-e-Khalq (MEK), in violation of 18 U.S.C. § 2339B. Tabatabai pled guilty to the charges and was sentenced to 24 months in prison.

Sentencing Hearings Held in CARE International Case

Defendants Emadeddin Muntasser, Muhamed Mubayyid, and Samir al-Monla were charged in a March 8, 2007 superseding indictment with a scheme to defraud various United States agencies of information relating to a Massachusetts charity known as Care International. In January 2008 the defendants were found guilty of charges including a Scheme to Conceal Material Facts and Aiding and Abetting, in violation of 18 U.S.C. §§ 1001(a)(1) and 2; Conspiracy to Defraud the United States, in violation of 18 U.S.C. § 371; and Obstructing and Impeding the Internal Revenue Service, in violation of 26 U.S.C. § 7212(a). Mubayyid was found guilty of three additional counts of Filing a False Tax Return, in violation of 26 U.S.C. § 7206(1), and Muntasser was found guilty of one count of False Statements to the FBI, in violation of 18 U.S.C. § 1001(a)(2). On June 3, 2008, the District Judge dismissed, post verdict, a number of charges against Mubayyid and Muntasser under Rule 29 of the Federal Rules of Criminal Procedure. Defendant Samir al-Monla was acquitted on all charges. The United States Attorney’s Office has filed a notice of appeal.

On July 18, 2008, in the District of Massachusetts, Mubayyid was sentenced to 11 months in prison followed by 3 years of supervised release. Mubayyid was also ordered to pay a $1,000 fine and a $500.00 special assessment. On July 17, 2008, Muntasser was sentenced to 12 months in prison followed by 3 years of supervised release. Muntasser was ordered to pay a $10,000 fine and a $100.00 special assessment.

Muntasser formed Care International in 1993, shortly after another organization with which he was associated, the Al-Kifah Refugee Center, was publicly implicated in the first World Trade Center Bombing. Thereafter, Muntasser, Mubayyid, and Al-Monla filed a number of false documents with the Internal Revenue Service, concealing the fact that Care International was an outgrowth of Al Kifah and was continuing its support of mujaheddin and violent jihad overseas. Al-Monla served as the president of Care from 1996-1998 while Mubayyid is the former treasurer of the organization. After the September 11, 2001 terrorist attacks, the defendants made false statements to the FBI about Care International’s operations, and Muntasser falsely denied on his U.S. naturalization application that he was affiliated with any organization or that he had traveled to Afghanistan.

Money Laundering and Harboring Illegal Aliens

In a U.S. Immigration and Customs Enforcement (ICE) led investigation in Greenbelt, Md., Juan Faustino Solano of Kensington, Md., was sentenced to 15 months in prison, for money laundering and conspiracy to commit alien harboring in connection with the operation of the El Pollo Rico restaurant in Wheaton, Maryland. Juan’s sister, Consuelo Solano, 69, of Arlington, Virginia, was sentenced to two months in prison for money laundering. Both Juan Solano and Consuelo Solano were ordered to forfeit $7.2 million derived from the illegal activities, including 13 bank and investor accounts, a life insurance policy, eight properties in Maryland, three vehicles, collectible coins, and jewelry. Moreover, as part of this amount, Consuelo Solano has to forfeit over $2.1 million in cash found in her home.

Juan Solano conspired with others to employ illegal aliens and undocumented workers at the restaurant from January 1999 to July 2007, paying them in cash and housing them in multiple residences owned by Solano and his co-conspirators in Maryland. To further the conspiracy, Solano did not prepare or maintain Employment Eligibility Verification Forms for those employees, which establish the eligibility of an individual to be employed in the United States legally.

In addition, Consuelo and Juan Solano admitted that they conspired to conceal the proceeds from the illegal employment of aliens. They deposited more than $7 million from the operation of the restaurant into the El Pollo Rico business account from 2002 to 2007. Transfers were made from the El Pollo Rico business account to business and personal accounts. As a result of their roles in alien harboring and in conducting these deposits, transfers, and purchases involving the proceeds of alien harboring, both Juan and Consuelo Solano will receive enhanced sentences for managing and organizing criminal activity.



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