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Aaron Brecher is a litigator at Lane Powell in Seattle. He focuses his practice on investigations, compliance and white collar defense as well as privacy and data security. He’s passionate about helping individuals and companies through some of their most difficult and sensitive challenges: investigations that could lead to government enforcement actions and resulting litigation. In addition to his compliance and enforcement work, he represents clients in antitrust, intellectual property, and securities litigation as well as qui tam litigation under the False Claims Act.

There’s been a slew of white collar enforcement actions in the Pacific Northwest and around the country in the last six weeks:

  • Don’t lie to federal agents. Some false statement charges in Oregon and Alaska. The Oregon case involves $6.4 million in fraudulent billings for work that wasn’t performed  for the Oregon National Guard, as well as false statements in related documents. Also a sad case from Alaska with false statements charges against a suspect in the kidnapping and murder of a child.
  • Seriously, don’t lie to federal agents. Charges in Washington for a conspiracy to sell fraudulent cell phone unlocking services to allow customers to unlock AT&T cell phones without paying AT&T. One employee allegedly took bribes to participate. That’s bad. Also bad to not report the illegal income on tax returns, which can support a false statements charge.
  • Once more for anyone who didn’t hear, don’t lie to federal agents!  A Hawaii litigator indicted in Oregon for tax evasion and false statements. Interestingly, the false statements charge is for lying about renter’s income in a filing in a civil case. It’s pretty rare for the government to prosecute false statements made in the course of civil litigation. Maybe because of the other criminal conduct the defendant is accused of, or maybe because the alleged false statements were in a lawsuit he brought against a federal agency.
  • Charges in Oregon for evading importing taxes and fraudulently inducing the government to purchase firefighter boots through falsely certifying to qualify for disadvantaged business programs.
  • Don’t sell your company’s Superbowl tickets and pocket the proceeds.
  • Here’s something you don’t see every day: conspiracy charges, theft of U.S. property, witness tampering, and removal of a paleontological resource in Alaska . The conspiracy was to steal a fossilized woolly mammoth tusk. But Alaska delivers again, with charges against someone else related to smuggling walrus tusks.
  • In more national news, we couldn’t resist flagging this one. Jersey Shore‘s The Situation sentenced in New Jersey for tax crimes.
  • Farewell, United States Attorneys’ Manual. Hello, Justice Manual. At the end of September, DOJ unveiled its first major overhaul of the U.S. Attorneys’ Manual in 20 years, complete with a fancy new name.
  • No matter how hard you squint at it, it’s hard to frame a private suit under the Alien Tort Statute as a white collar matter. But I can’t help talking about this Ninth Circuit decision from last week that again breathed life into a suit against U.S. chocolate companies for allegedly aiding and abetting child slavery in the Ivory Coast for the sake of cheaper cocoa. Perhaps the most interesting part is the separate concurrence by Eastern District of Washington Judge Shea, sitting by designation. His opinion reads in its entirety “I concur in the result.” I suppose if the decision were non-precedential, I could see why you wouldn’t feel the need to share your reasons for reaching the same result as your colleagues. Same thing if you were affirming the district court—a reader might assume you simply agreed with the reasoning below. But this is a published opinion reversing the district court, and Judge Shea agrees with the rest of the panel that the district court got it wrong, but won’t sign on to their reasons. He just doesn’t say why. Nothing wrong with that. I’d just be interested to know his thinking about the case.

 

You might have heard the term “hawala” mentioned over the last few weeks. Maybe you saw it discussed while watching Amazon’s new Jack Ryan series, or maybe you’re more of a C-SPAN fan, and caught it a few times while watching the House Financial Services Committee’s Subcommittee on Terrorism and Illicit Finance hearing on September 7th on terrorist groups and their means of financing.

Hawala is a trust-based informal value transfer system (sometimes called parallel banking) that is widely used for perfectly legitimate purposes across parts of South Asia, West Africa, and the Middle East, and for facilitating transactions between communities there and people in other parts of the world, like Europe and North America. Its attraction to money launderers and terrorist financers is driven in large part by the difficulty of tracing the transactions and the limited means of regulatory enforcement. Notably, hawala is generally unlawful in countries like Pakistan and India, and in some U.S. states.

Continue Reading Financing Terrorism Through the Hawala System

I’m assuming there weren’t any big legal news items that we missed in our absence . . .

Some highlights from recent weeks:

  • Finally word that the Senate has confirmed a new AAG for the Criminal Division. But as this Financial Times piece points out, the Criminal fraud section still has seven out of its nine leadership positions unfilled.
  • An announcement this past week of a new inter-agency task force focused on market integrity and consumer fraud
  • An indictment last week in Seattle alleging a scheme to defraud food and beverage manufacturers by representing that a business would destroy unsaleable items or convert it into agricultural feed, but instead resell the products to discount grocery stores and other consumers
  • Sentences in Alaska for members of a mail theft ring

Back on May 9, I suggested that a future post on whether the Fifth Amendment’s guarantee against self-incrimination applies to non-citizens abroad was forthcoming.  Though I’ve been a bit distracted by trial the last few weeks, I have not forgotten that commitment.

As a general matter, foreign nationals outside the United States are not entitled to constitutional protections, including due process protections. This limitation might extend to non-citizens interrogated abroad by U.S. law enforcement, or non-citizens without status in the United States giving interviews to U.S. consular officials in an effort to obtain a visa. But there’s a good case for arguing that the right against self-incrimination embedded within the Fifth Amendment’s text would preclude the use of any incriminating statements given without procedural warnings in a subsequent criminal prosecution. Such an argument would not depend on an extraterritorial application of the Fifth Amendment, but rather a domestic one.

Continue Reading Self-Incrimination Abroad

A few weeks ago, Justin flagged an Oregon case alleging money laundering through the Black Market Peso Exchange, one of the most successful and efficient laundering schemes in the world.  The Black Market Peso Exchange is a trade-based money laundering technique commonly used by narcotics traffickers based in Colombia and Mexico. The central feature is the use of a money trader to ensure that the revenue from drug sales in the U.S. doesn’t actually cross any borders. Instead, those dollars are used to purchase any number of legitimate commodities from unsuspecting businesses on behalf of legitimate South American businesspersons whose legitimate imports are used to obtain pesos for the drug cartels.

This system involves several key advantages for the trafficker:

  • Avoiding the risk of having large quantities of cash detected at international borders
  • Avoiding the type of large cash deposits that trigger reporting requirements for financial institutions in many jurisdictions
  • Achieving quick access to pesos

Continue Reading Money Laundering Through the Black Market Peso Exchange

Last week, I teased the continuation of a series of posts about the Fifth Amendment.  That’s still coming, but I had to return to another common theme first.  My preview came at the end of a post about both the Fifth Amendment and parallel proceedings, which I’d also written about before. The Inception-ing of the blog continues with yet another brief comment on parallel proceedings, this time inspired by a news item that Justin flagged in last week’s roundup: Deputy Attorney General Rosenstein gave a speech before the New York City Bar Association’s annual white collar crime conference.  The whole speech is worth watching or reading, but the highlight of the address was DAG Rosenstein’s announcement of “a new Department policy that encourages coordination among Department components and other enforcement agencies when imposing multiple penalties for the same conduct.”

Continue Reading Genug with the Parallel Proceedings . . .

News of the last few weeks has prompted me to return to two issues I’ve discussed here before: parallel proceedings and the Fifth Amendment. This time around, the Fifth Amendment issue is not double jeopardy, but instead the constitutional protection against compulsory self-incrimination.

Remember parallel proceedings? By that I mean the government conducting criminal and civil investigations of the same or similar conduct, and bringing related criminal, civil, or administrative enforcement proceedings around the same time. This creates all kinds of problems for defendants, including the difficulty and expense of fending off legal challenges on several fronts and the care needed to ensure that steps taken responding to one enforcement action don’t bite you in the other.

Among the most important dangers are those stemming from offering testimony in a civil or administrative proceeding. You see, “pleading the Fifth” and refusing to answer questions that might incriminate you doesn’t work the same way in civil and administrative settings that it does in the criminal context.

Continue Reading Parallel Proceedings Revisited

  • Last Monday, the U.S. Treasury’s Office of Foreign Assets Control authorized certain transactions winding down or maintaining business with Russian aluminum giant RUSAL through October, after sanctions against the company announced earlier this month hurt industry
  • Charges against two men alleged to have been conspiring to commit economic espionage on behalf of a Chinese company
  • New stats this week from the Administrative Office of the U.S. Courts on the 2017 activities of the Foreign Intelligence Surveillance Court
  • In Portland, a man is charged with conspiring to launder money in furtherance of his drug business
  • Charges in Anchorage for killing Steller sea lions in violation of the Endangered Species Act and the Marine Mammal Protection Act, false statements, and obstructing the investigation
  • In Tacoma, Washington, a woman is charged with wire fraud and identity theft—after being convicted in 2014 of stealing almost $100,000 in an earlier identity theft scheme
  • In Chicago on Thursday, Deputy Attorney General Rod Rosenstein provided appropriate context for Shakespeare’s joke about “kill[ing] all the lawyers” in a speech to the International Association of Defense Counsel’s “Corporate Counsel College”

  • Lance Armstrong settled a False Claims Act case for $5 million. His cycling team was sponsored at one point by the U.S. Postal Service. Apparently doping violates the terms of federal government sponsorship agreements. Who knew?
  • In Texas, the GM of a Venezuelan energy company entered a guilty plea for his role in an international money laundering and bribery scheme
  • Closer to home, former FBI Director James Comey will be in Portland tomorrow to plug his new book. He’ll be in Seattle on Sunday. I’ll be attending the Seattle talk.
  • It’s not just famously fired government officials who are active in the Pacific Northwest. Current prosecutors are busy as well. In Portland, a CPA’s 4/20 plans went up in smoke when the U.S. Attorney’s Office accused him of hiding income and diverting investor money from his accounting business to his marijuana business.
  • In Seattle, the former president and former vault-manager of a King County precious metals business were arraigned this week on charges that they fraudulently obtained millions of dollars from thousands of customers by misrepresenting shipping times for bullion and using bullion and money belonging to customers to fulfill other bullion orders. I can still think of at least one far more ambitious bullion-based criminal scheme:

I was thinking about double jeopardy yesterday. Not the Trebek kind, though that is my favorite tv show. Instead, I was thinking about the somewhat enigmatic statement in the Fifth Amendment to the U.S. Constitution that no person “be subject for the same offence to be twice put in jeopardy of life or limb.” My musings were prompted by yesterday’s news that New York Attorney General Eric Schneiderman has asked New York’s legislature to amend the state’s double jeopardy law to ensure that state prosecutors can go after persons whose conduct violates both federal and state law but who may be pardoned by the President after being prosecuted for federal crimes. I’ll provide some context below, but I don’t want to leave you in suspense about my view: I’m troubled by this.

Continue Reading Dual Sovereignty for $1200, Alex