VIKTOR BOUT'S ATTORNEY FILES AN EXPLOSIVE REPLY BRIEF IN APPEAL

Albert Dayan, Viktor Bout's New York criminal defence attorney, has filed a fiery Reply Brief in Bout's Second Circuit* appeal of his criminal conviction. Though short on citation to legal authorities, the brief states boldly that:

(1) Bout is an innocent man who was convicted by an American jury overwhelmed by emotional, political and national feelings for US servicemen and women.

(2) Senior officials at the White House and the State Department doggedly targeted Bout, in their pursuit and prosecution, not for an conceivable law enforcement reason, but for purely political and personal reasons.;Two are specifically named.

(3) There was no evidence Bout ever intended to target US interests.

(4) There was no evidence of unlawful transportation of arms.

The issues framed in the brief are:

(A) The case should be remanded to the District Court to hold a hearing on the violation of Bout's right to due process, resulting from the outrageous governmental pursuit, from the inception through the extradition process.

(B) Conspiracy to Commit Reckless Murder is a non-existent Federal Crime.

The United States has filed a request for Oral Argument, provided that Bout's counsel also requests the same. This means that the Second Circuit Court of Appeals will hold a hearing on the appeal, which will provide additional insight into the issues. We shall continue to follow the appeal.
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* Bout vs. United States, Case No.: 12-1487  (2nd Cir.).

HONG KONG A SOURCE FOR DETAILS ABOUT CORRUPT CHINESE PEPS

It is a given that one cannot obtain any objective information about the activities of prominent Chinese, including the country's  PEPs, due to the total and complete censorship and control that China maintains over its domestic media. If you, as a compliance officer, were requested to conduct an accurate and complete due diligence investigation of a Chinese PEP for account opening purpose, Internet news, and postings, would not tell you whether the individual is corrupt, or has a history of acts in office that would cause you to recommend that they not be served as a client. So, what are you to do ?

Buried in a recent article about Hong Kong is the answer: when mainland Chinese wish to lean the dirt about their public servants, they journey to Hong Kong, where freedom of the press remains relatively intact, due the former British Territory's degree of autonomy, and pick up magazine and books published there, and overseas, in Chinese, that detail the many sins of the country's corrupt PEPs. Reportedly, many Chinese attempt to smuggle those extremely damaging works home, when they return.

Therefore, should you have significant new account business with Chinese nationals, it is suggested that you secure a local firm, to act as information resource, in Hong Kong, for these purposes:

(1) To determine whether a specific prospective Chinese client is a Politically Exposed Person (PEP).
(2) To determine whether the individual, or his entities, have been the subject of negative information, in Hong media, or book published outside China, and exactly what that information is.
(3) To confirm that Chinese clients are not, in truth and in fact, actually military or government staff, who are concealing their true occupations or professions.

 It is strongly suggested that, should the business support it, you engage an individual, inside your Compliance department, with the appropriate linguistic skill, to  review the material you receive, for accuracy and relevancy.

China is a black hole for the negative information that you must have to judge the suitability of these potential clients, and you now have an avenue for your enquiries.

ONLINE REPUTATION MANAGEMENT COMPANIES MAKE INTERNET SEARCHES UNRELIABLE

The explosion of the so-called reputation management industry recently has rendered most due diligence Internet searches useless. These companies, which reply upon placing literally dozens of pages of positive PR into the worldwide web, so as to push any negative information about their clients well to the rear of any search engine enquiry, have so diluted the search results that you need in a due diligence investigation, as to deprive you of the sole important item you are searching for.

While some compliance officers, upon seeing this garbage on the first page of their Internet search results, have taken to searching from the rear forwards, but that is generally not the solution, for that one gem of negative information is buried somewhere within 750 search results, it may not be readily ascertainable from the headings, and you have another 22 names to conduct due diligence upon that day. Manual searching, through an infinite amount of bogus search results is not only labor-intensive, but it is inefficient and causes you to lose your edge later on in the workday.

If anything , there reputation repair firms will proliferate during the future, as more financial criminals realise their worth. Therefore, cast aside the technique altogether, and abandon traditional web searches for software that delivers  strictly negative search results. You can find more information about how that works here.

KYA - KNOW YOUR ATTORNEY

An article discussing the defendants in a major criminal case in the Northeast noted that the attorney for one of the principal defendants had been since suspended from the practice of law in Massachusetts* for three years, due to the fact that he had a felony conviction for Conspiracy to Possess cocaine, with intent to Distribute, in the State of Florida, and had served several years in Federal Prison.

What the article did not tell you is that the attorney was not a member of the New Jersey Bar, but was actively advising clients in that state, and holding himself out on the Internet as a lawyer there. The story does charge that the lawyer had maintained an attorney trust account in New Jersey, which is clearly improper.

Clients should always institute due diligence on any attorney or law firm that they plan on retaining. Though the vast majority of lawyers and law firms can, and do, properly assist you with your legal needs, a very small number of bad actors can:

(1) Take your funds out of their trust accounts, and spend or otherwise misappropriate them.
(2)  Unethically share your confidences and secrets with others, for financial compensation.
(3)  Deliver your privileged information to law enforcement agents, to whom they owe a debt, due to an arrest, a grant of immunity, or some other from of cooperation that they were forced into, due to criminal misconduct they were guilty of. You do not want to be indicted with information furnished by your own lawyer.
(4) Favor your adversaries in a legal settlement, by misrepresenting to you the strengths and weaknesses of your position.

Therefore, it is humbly suggested that you:

(A) Check out your lawyer's license status, including disciplinary history, with the state bar association.
(B) Check his personal litigation history - is he being foreclosed, or sued for malpractice; does he have a handful of Federal Tax Liens, or judgments filed against him ? Those make him unsuitable.
(C) Are there any negative articles in the local media ?
(D) Was he ever arrested, but not yet tried or convicted ?

Always reduce your risks by a pre-engagement check of any and all professionals that you retain, with particular attention to your new lawyer; not knowing negative information could prove to be very expensive, embarrassing or even expose you to criminal charges.


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*In Re: Michael W. Burnbaum,  Case No.: BD-2011-121 (Mass. 2012) Attorney suspended from the practice of law for three years.

IN THE AML TOOLBOX THIS WEEK

If you have visited my Red AML Toolbox this week, you have seen the first chapter, Arrests vs. Convictions. The second article has been posted, entitled The Shortcomings of Search Engines in Due Diligence investigations. This material is designed to assist compliance officers performing customer identification tasks. There will be new articles posted there on a regular basis, so check it at least twice a week.

Click on the Red Toolbox; it will take you to a page which also has the same Toolbox icon. Then click on that to access my articles. 

RAISE COUNTRY RISK FOR CUBA DUE TO INVESTIGATION AND ARRESTS OF FOREIGN BUSINESSMEN

Two prominent Canadian businessmen* are languishing in Cuban jails, one already charged with corruption**, and admitted his involvement, and the other incarcerated for two years without formal charges. The Canadian who had admitted giving large bribes, and gifts, to secure government business, has detailed the depth of rampant corruption in Cuba.

He has gone so far as to reportedly make a video explaining exactly how bribes are paid to high-level Cuban officials, to obtain contracts with government entities, and this program has been shown to a large number of senior officials, as a part of a widespread anti-corruption investigation. The businessman has alleged that virtually all foreigners doing business with Cuba must continually pay illegal compensation, before, and during, the performance of contracts with Cuban agencies and entities.

Businessmen from  Canada, and the European Union, working in and with Cuba, now face possible arrests, seizure of their assets inside Cuba, and closure of their commercial operations, as fallout from the high-profile Canadian cases drives the corruption enquiry. Inasmuch as one must take it as given that all the major foreign businesses have paid illegal compensation, to secure Cuban business, expect a witch hunt in Havana.

Is this a good time to consider doing business in Cuba ? I doubt it, and if you are financially exposed, it might be the appropriate time to reduce risk by divesting yourself of your holdings there, if that is possible.

Compliance officers should review all available material, and decide whether to raise Country Risk on Cuba at this time. I recommend that you do, lest a bank client, or your bank itself, risk a total loss of investment, due to the investigation, and resulting crackdown on corruption,  and/or arrest of your people there.

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*Sarkis Yakoubian abnd Cy Tokmakjian.
** The specific charge is Crimes Against the Security of the State.

WHY MONEY LAUNDERING LAWYERS DO NOT PLEAD GUILTY

The Federal trial of prominent El Paso Attorney Marco Delgado is set for next Monday, but his attorneys are seeking a delay, and are reportedly asking the District Judge to subject their client to a psychiatric evaluation.  The reason will surprise you.

Delgado allegedly has refused to enter a plea in the case, claiming that he is innocent of laundering drug profits for a Mexican Cartel, and of illegally diverting millions of dollars, destined for an energy construction project in Mexico, to his own use, in an account in an offshore financial centre. Considering that the maximum penalty for money laundering is twenty years, you may wonder why he will not agree to a plea bargain, which would result in a lesser sentence.

By now, your curiosity is certainly aroused; Delgado, as a practising attorney, certainly knows that any plea agreement will require him to be extensively debrief, and probably testify against his cartel boss, and some of the lieutenants in the organisation. he know that, wherever he goes in the Federal Prison system, he will in mortal danger of assassination.

His attorneys think he has possible mental problems, because he refuses to plead out, and will forfeit several more years of his life in custody, but Delgado knows that his life would end shortly after he arrived in prison, of he testified against the cartel leader that he worked for. As I always say, money laundering is a white collar crime,  but remember who your clients are.