Sanctions News Stories 10

FINANCIAL CRIME NEWS

SANCTIONS NEWS

By Stephanie Ayres
28 December 2016
Anchorage, Alaska

In 2011 an individual named Kenneth Zong allegedly began to use his South Korea-based company as a conduit to transfer Iranian funds frozen in certain South Korean banks to Iranian shell companies in Iran and Dubai, according to a December 15 statement from the US Attorney’s office in Alaska.

Zong is accused of working with several associates in Korea and Iran to fabricate purchase orders, bills of lading, and other documents intended to fool Korean financial regulators into accepting Zong’s story that a couple of Iranian companies owed his company large sums of money for construction materials that had been shipped to the Iranian company – invoices that remained unpaid.

According to the US Attorney’s statement, Zong and his accomplices managed to persuade Korean authorities to release the funds needed to cover his billings from the Iranian funds being held in South Korean banks. After this, Zong allegedly transferred the money out of Korea to bank accounts in the names of Iranian shell companies in Dubai, from which the money made its way to Iran.

Zong was charged with 43 counts of money laundering and one count of money laundering conspiracy. According to the US Attorney’s statement, a portion of the Iranian funds withdrawn from South Korean banks were sent by Zong to an accomplice in Alaska who apparently assisted with further laundering activity.

Curiously, “Reuters” reported in 2013 on a scheme to spirit about $1 billion in frozen Iranian funds out of two South Korean banks – Industrial Bank of Korea (IBK) and Woori Bank. These two banks had reportedly been designated to receive payments on Iran’s behalf from certain South Korean purchasers of Iranian petroleum products before this trade was halted.

The “Reuters” story cited South Korean prosecutors who had arrested a Korean-American identified only as “Chung” for using false invoices to gain access to the Iranian funds frozen in IBK and transferring the money out to recipients in third countries. The bank was persuaded to release the funds by a document presented by “Chung” that appeared to be from South Korean authorities.

It is unclear whether there is a connection between “Chung” and Zong or if they were both involved in the same scheme.

By Stephanie Ayres
12 October 2016
Rio de Janeiro, Brazil

Prosecutors in Rio Grande do Sul, Brazil have alleged that Forjas Taurus, one of the largest weapons manufacturers in South America, sold guns to an individual subject to US and United Nations sanctions who transferred the arms into Yemen’s civil war in 2013. International news reports of the affair say that a second shipment to the same individual was attempted in 2015, but was intercepted before reaching its destination.

The intended recipient of both shipments was allegedly Fares Mohammad Hassan Mana’a, reputed to be a long-time Yemeni arms dealer who served as governor from 2011 to 2014 of Yemeni territory controlled by the Houthi faction. Forjas Taurus claimed to have followed the law and received authorization for its shipment in 2013, but according to prosecutors, the approval was for a shipment of guns for police use in Djibouti, not a shipment to Yemen. Once having arrived in Djibouti, say prosecutors, the arms were diverted to Yemen by Mana’a.

Mana’a was sanctioned by the United States and the United Nations in 2010 over arms trafficking in Somalia. Forjas Taurus is said to supply many of the guns used by police in Brazil and also exports handguns to other countries in the Americas, including the United States.

By Stephanie Ayres
12 September 2016
Los Angeles, California

A report issued by international nonprofit entity NACLA claimed that US sanctions imposed on a large Belize banana farm in 2012 had an unintended side effect of causing job losses for hundreds of migrant workers from other Central American countries and contributing to a major drop in sales of one of Belize’s most important export crops. (1)

The trend apparently started in 2012 when the US Office of Foreign Asset Control (OFAC) designated a major banana grower, John Zabaneh, his nephew, and an associate for their alleged collaboration with the Sinaloa Cartel of Mexico in smuggling drugs. The OFAC statement of August 7, 2012 also designated several companies owed by Zabaneh and/or his associate, Daniel Moreno, including Mayan King Ltd., Mid-South Investments Ltd., Crown Paradise Enterprises Ltd., and Belize Chemicals Ltd.

The designations against Zabaneh and his companies were made under the Foreign Narcotics Kingpin Designation Act.

Mayan King, the banana operation, was a major banana producer in Belize. A report in “Reuters” noted that at the time of the sanctions, the US Treasury Department worked with Belize officials to find a manager to take over the banana production operation while removing Zabaneh from control.

This seemed to be a viable solution for awhile. The Irish agricutural company Fyffe’s, a major buyer of Belize agricultural products, continued to buy bananas from Mayan King until a revelation in 2015 that Zabaneh had told local media that he was still involved in Mayan King management on behalf of his mother, who he claimed was the new owner of the farm under the post-sanctions arrangement. At that point, Fyffe’s reportedly stopped buying from Mayan King, which, with this loss of its largest customer, was forced to close down, leading to the migrant displacement and steep decline in Belize’s banana exports. reported by NACLA and the Belize government in 2016.

NOTES

(1) Mark Aumann, “Watching the Fruit Fall,” NACLA, December 7, 2015

By Stephanie Ayres
10 April 2016
New York, New York

Prominent Turkish-Iranian businessman Reza Zarrab (also known as Riza Sarraf) has been charged along with two associates in federal court in Manhattan with engaging in numerous transactions that violated the US International Emergency Economic Powers Act (IEEPA) barring financial transactions between US persons and the Government of Iran or Iranian entities designated under related US executive orders.

According to a March 21 statement from the US Attorney’s office for the Southern District of New York, Zarrab and his associates used a network of companies and fronts to conceal the nature of fund transfers through the US financial system that related to transactions benefitting seven Iranian entities named in the indictment:

  • Bank Mellat, a bank owned by the Iranian government;
  • Mellat Exchange, a money services business owned by Bank Mellat;
  • National Iranian Oil Company (NIOC), an entity which OFAC designated as an agent or affiliate of the similarly-designated Islamic Revolutionary Guard Corps;
  • Naftiran Intertrade Company Ltd., a UK-based entity that allegedly acts on behalf of NIOC;
  • Naftiran Intertrade Company Sarl, a Switzerland-based entity that allgedly cts on behalf of NIOC;
  • Hong Kong Intertrade Company, a Hong Kong-based entity that allegedly acts on behalf of NIOC: and
  • MAPNA Group, an Iranian construction and power plant company

Most of these companies had previously been designated as Specially Designated Nationals, a status that has since been terminated, but leaving them still treated as “blocked parties” subject to US Government approval for interaction.

The defendants are accused of using a group of mostly Turkish companies as fronts for the transactions that allegedly were carried out for the benefit of the Iranian entities.

Reza Zarrab and co-defendants Camelia Jamshidy (also known as Kamelia Jamshidy, based in Iran) and Hossein Najafzadeh (based in Iran) were charged with conspiracy to defraud the US, to violate the IEEPA, to commit bank fraud and money laundering.

International press reports noted that the arrest of Zarrab in connection with these charges caused a stir in Turkey, where he is known both for his marriage to Turkish pop entertainment celebrity Ebru Gundes and for his reputed ties to Turkish government officials.

By Stephanie Ayres
22 June 2007
Dallas, Texas

The US Attorney’s office in Dallas announced on October 13 the sentencing of Infocom Corporation, Basman Elashi, Ghassan Elashi, and Bayan Elashi for their convictions on charges of making illegal shipments of computer equipment to Libya and Syria and the transmission of money to Hamas, an organization with “specially-designaed terrorist” status in the United States.

Infocom Corporation, now defunct, was sentenced to two years probation. Basman Elashi received a sentence of 80 months in federal prison, while Ghassan Elashi and Bayan Elashi received prison terms of 80 months and 84 months, respectively.

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