Category Archives: Gangs and Crimes

Magnitsky Act, Facts and Putin’s Operatives in the U.S.

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Bill and I have become distant buddies. I asked him for his opening statement before the Senate Judiciary Committee scheduled for July 25, 2017. He granted the request.

As a primer, current domestic spies and retired operatives have all stated that the meetings and or interactions between key Russians and those in the Trump orbit are indeed traditional tradecraft and that also includes several members of Congress meeting with the same.

Hayden told me, “My god, this is just such traditional tradecraft.” He said that he has talked to people in the intelligence community about Mowatt-Larssen’s theory and that “every case officer I’ve pushed on this” agreed with it. “This is how they do it.”

Hayden explained that the Russians would have learned several things from the approach. “Would they take the meeting?” he said. “So, then you get the willingness. No. 2, would they report the meeting?” Hayden suggested that Russian intelligence was sophisticated enough to know whether the Trump campaign reported the meeting to the F.B.I., which it didn’t. So, while Kushner claimed that the meeting was irrelevant, from a Russian intelligence perspective it would have been seen as a clear signal. “At the end, they have established that these guys are willing,” Hayden said, pausing. “How do I put this? They did not reject a relationship.” Read the full summary here.

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Bill Browder’s Testimony to the Senate Judiciary Committee

“I hope that my story will help you understand the methods of Russian operatives in Washington and how they use U.S. enablers to achieve major foreign policy goals without disclosing those interests,” Browder writes.

The financier Bill Browder has emerged as an unlikely central player in the ongoing investigation of Russian interference in the 2016 elections. Sergei Magnitsky, an attorney Browder hired to investigate official corruption, died in Russian custody in 2009. Congress subsequently imposed sanctions on the officials it held responsible for his death, passing the Magnitsky Act in 2012. Russian President Vladimir Putin’s government retaliated, among other ways, by suspending American adoptions of Russian children.

Natalia Veselnitskaya, the Russian lawyer who secured a meeting with Donald Trump Jr., Jared Kushner, and Paul Manafort, was engaged in a campaign for the repeal of the Magnitsky Act, and raised the subject of adoptions in that meeting. That’s put the spotlight back on Browder’s long campaign for Kremlin accountability, and against corruption—a campaign whose success has irritated Putin and those around him.

Browder will testify before the Senate Judiciary Committee on Wednesday in a hearing about Foreign Agents Registration Act enforcement; what follows are the prepared remarks he submitted to the committee. The committee also called as witnesses former Trump campaign chairman Paul Manafort, Donald Trump Jr., and Glenn Simpson, the co-founder of the Fusion GPS research firm that commissioned the Trump dossier. As of Tuesday evening, only Browder is definitely scheduled to appear during that panel.

Chairman Grassley, Ranking Member Feinstein, and members of the committee, thank you for giving me the opportunity to testify today on the Russian government’s attempts to repeal the Magnitsky Act in Washington in 2016, and the enablers who conducted this campaign in violation of the Foreign Agents Registration Act, by not disclosing their roles as agents for foreign interests.

Before I get into the actions of the agents who conducted the anti-Magnitsky campaign in Washington for the benefit of the Russian state, let me share a bit of background about Sergei Magnitsky and myself.

I am the founder and CEO of Hermitage Capital Management. I grew up in Chicago, but for the last 28 years I’ve lived in Moscow and London, and am now a British citizen. From 1996 to 2005, my firm, Hermitage Capital, was one of the largest investment advisers in Russia with more than $4 billion invested in Russian stocks.

Russia has a well-known reputation for corruption; unfortunately, I discovered that it was far worse than many had thought. While working in Moscow I learned that Russian oligarchs stole from shareholders, which included the fund I advised. Consequently, I had an interest in fighting this endemic corruption, so my firm started doing detailed research on exactly how the oligarchs stole the vast amounts of money that they did. When we were finished with our research we would share it with the domestic and international media.

For a time, this naming and shaming campaign worked remarkably well and led to less corruption and increased share prices in the companies we invested in. Why? Because President Vladimir Putin and I shared the same set of enemies. When Putin was first elected in 2000, he found that the oligarchs had misappropriated much of the president’s power as well. They stole power from him while stealing money from my investors. In Russia, your enemy’s enemy is your friend, and even though I’ve never met Putin, he would often step into my battles with the oligarchs and crack down on them.

That all changed in July 2003, when Putin arrested Russia’s biggest oligarch and richest man, Mikhail Khodorkovsky. Putin grabbed Khodorkovsky off his private jet, took him back to Moscow, put him on trial, and allowed television cameras to film Khodorkovsky sitting in a cage right in the middle of the courtroom. That image was extremely powerful, because none of the other oligarchs wanted to be in the same position. After Khodorkovsky’s conviction, the other oligarchs went to Putin and asked him what they needed to do to avoid sitting in the same cage as Khodorkovsky. From what followed, it appeared that Putin’s answer was, “Fifty percent.” He wasn’t saying 50 percent for the Russian government or the presidential administration of Russia, but 50 percent for Vladimir Putin personally. From that moment on, Putin became the biggest oligarch in Russia and the richest man in the world, and my anti-corruption activities would no longer be tolerated.

The results of this change came very quickly. On November 13, 2005, as I was flying into Moscow from a weekend away, I was stopped at Sheremetyevo airport, detained for 15 hours, deported, and declared a threat to national security.

Eighteen months after my expulsion a pair of simultaneous raids took place in Moscow. Over 25 Interior Ministry officials barged into my Moscow office and the office of the American law firm that represented me. The officials seized all the corporate documents connected to the investment holding companies of the funds that I advised. I didn’t know the purpose of these raids so I hired the smartest Russian lawyer I knew, a 35-year-old named Sergei Magnitsky. I asked Sergei to investigate the purpose of the raids and try to stop whatever illegal plans these officials had.

Sergei went out and investigated. He came back with the most astounding conclusion of corporate identity theft: The documents seized by the Interior Ministry were used to fraudulently re-register our Russian investment holding companies to a man named Viktor Markelov, a known criminal convicted of manslaughter. After more digging, Sergei discovered that the stolen companies were used by the perpetrators to misappropriate $230 million of taxes that our companies had paid to the Russian government in the previous year.

I had always thought Putin was a nationalist. It seemed inconceivable that he would approve of his officials stealing $230 million from the Russian state. Sergei and I were sure that this was a rogue operation and if we just brought it to the attention of the Russian authorities, the “good guys” would get the “bad guys” and that would be the end of the story.

We filed criminal complaints with every law enforcement agency in Russia, and Sergei gave sworn testimony to the Russian State Investigative Committee (Russia’s FBI) about the involvement of officials in this crime.

However, instead of arresting the people who committed the crime, Sergei was arrested. Who took him? The same officials he had testified against. On November 24, 2008, they came to his home, handcuffed him in front of his family, and threw him into pre-trial detention.

Sergei’s captors immediately started putting pressure on him to withdraw his testimony. They put him in cells with 14 inmates and eight beds, leaving the lights on 24 hours a day to impose sleep deprivation. They put him in cells with no heat and no windowpanes, and he nearly froze to death. They put him in cells with no toilet, just a hole in the floor and sewage bubbling up. They moved him from cell to cell in the middle of the night without any warning. During his 358 days in detention he was forcibly moved multiple times.

They did all of this because they wanted him to withdraw his testimony against the corrupt Interior Ministry officials, and to sign a false statement that he was the one who stole the $230 million—and that he had done so on my instruction.

Sergei refused. In spite of the grave pain they inflicted upon him, he would not perjure himself or bear false witness.

After six months of this mistreatment, Sergei’s health seriously deteriorated. He developed severe abdominal pains, he lost 40 pounds, and he was diagnosed with pancreatitis and gallstones and prescribed an operation for August 2009. However, the operation never occurred. A week before he was due to have surgery, he was moved to a maximum security prison called Butyrka, which is considered to be one of the harshest prisons in Russia. Most significantly for Sergei, there were no medical facilities there to treat his medical conditions.

At Butyrka, his health completely broke down. He was in agonizing pain. He and his lawyers wrote 20 desperate requests for medical attention, filing them with every branch of the Russian criminal justice system. All of those requests were either ignored or explicitly denied in writing.

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After more than three months of untreated pancreatitis and gallstones, Sergei Magnitsky went into critical condition. The Butyrka authorities did not want to have responsibility for him, so they put him in an ambulance and sent him to another prison that had medical facilities. But when he arrived there, instead of putting him in the emergency room, they put him in an isolation cell, chained him to a bed, and eight riot guards came in and beat him with rubber batons.

That night he was found dead on the cell floor.

Sergei Magnitsky died on November 16, 2009, at the age of 37, leaving a wife and two children.

I received the news of his death early the next morning. It was by far the most shocking, heart-breaking, and life-changing news I’ve ever received.

Sergei Magnitsky was murdered as my proxy. If Sergei had not been my lawyer, he would still be alive today.

That morning I made a vow to Sergei’s memory, to his family, and to myself that I would seek justice and create consequences for the people who murdered him. For the last seven and a half years, I’ve devoted my life to this cause.

Even though this case was characterized by injustice all the way through, the circumstances of Sergei’s torture and death were so extreme that I was sure some people would be prosecuted. Unlike other deaths in Russian prisons, which are largely undocumented, Sergei had written everything down. In his 358 days in detention, Sergei wrote over 400 complaints detailing his abuse. In those complaints he described who did what to him, as well as where, how, when, and why. He was able to pass his hand-written complaints to his lawyers, who dutifully filed them with the Russian authorities. Although his complaints were either ignored or rejected, copies of them were retained. As a result, we have the most well-documented case of human rights abuse coming out of Russia in the last 35 years.

When I began the campaign for justice with this evidence, I thought that the Russian authorities would have no choice but to prosecute at least some of the officials involved in Sergei Magnitsky’s torture and murder. It turns out I could not have been more wrong. Instead of prosecuting, the Russian authorities circled the wagons and exonerated everybody involved. They even went so far as to offer promotions and state honors to those most complicit in Sergei’s persecution.

It became obvious that if I was going to get any justice for Sergei Magnitsky, I was going to have to find it outside of Russia.

But how does one get justice in the West for a murder that took place in Russia? Criminal justice is based on jurisdiction: One cannot prosecute someone in New York for a murder committed in Moscow. As I thought about it, the murder of Sergei Magnitsky was done to cover up the theft of $230 million from the Russian Treasury. I knew that the people who stole that money wouldn’t keep it in Russia. As easily as they stole the money, it could be stolen from them. These people keep their ill-gotten gains in the West, where property rights and rule of law exist. This led to the idea of freezing their assets and banning their visas here in the West. It would not be true justice but it would be much better than the total impunity they enjoyed.

In 2010, I traveled to Washington and told Sergei Magnitsky’s story to Senators Benjamin Cardin and John McCain. They were both shocked and appalled and proposed a new piece of legislation called The Sergei Magnitsky Rule of Law Accountability Act. This would freeze assets and ban visas for those who killed Sergei as well as other Russians involved in serious human rights abuse.

Despite the White House’s desire to reset relations with Russia at the time, this case shined a bright light on the criminality and impunity of the Putin regime and persuaded Congress that something needed to be done. In November 2012 the Magnitsky Act passed the House of Representatives by 364 to 43 votes and later the Senate 92 to 4 votes. On December 14, 2012, President Obama signed the Sergei Magnitsky Act into law.

Putin was furious. Looking for ways to retaliate against American interests, he settled on the most sadistic and evil option of all: banning the adoption of Russian orphans by American families.

This was particularly heinous because of the effect it had on the orphans. Russia did not allow the adoption of healthy children, just sick ones. In spite of this, American families came with big hearts and open arms, taking in children with HIV, Down syndrome, Spina Bifida and other serious ailments. They brought them to America, nursed them, cared for them and loved them. Since the Russian orphanage system did not have the resources to look after these children, many of those unlucky enough to remain in Russia would die before their 18th birthday. In practical terms, this meant that Vladimir Putin sentenced his own, most vulnerable and sick Russian orphans to death in order to protect corrupt officials in his regime.

Why did Vladimir Putin take such a drastic and malicious step?

For two reasons. First, since 2012 it’s emerged that Vladimir Putin was a beneficiary of the stolen $230 million that Sergei Magnitsky exposed. Recent revelations from the Panama Papers have shown that Putin’s closest childhood friend, Sergei Roldugin, a famous cellist, received $2 billion of funds from Russian oligarchs and the Russian state. It’s commonly understood that Mr. Roldugin received this money as an agent of Vladimir Putin. Information from the Panama Papers also links some money from the crime that Sergei Magnitsky discovered and exposed to Sergei Roldugin. Based on the language of the Magnitsky Act, this would make Putin personally subject to Magnitsky sanctions.

This is particularly worrying for Putin, because he is one of the richest men in the world. I estimate that he has accumulated $200 billion of ill-gotten gains from these types of operations over his 17 years in power. He keeps his money in the West and all of his money in the West is potentially exposed to asset freezes and confiscation. Therefore, he has a significant and very personal interest in finding a way to get rid of the Magnitsky sanctions.

The second reason why Putin reacted so badly to the passage of the Magnitsky Act is that it destroys the promise of impunity he’s given to all of his corrupt officials.

There are approximately ten thousand officials in Russia working for Putin who are given instructions to kill, torture, kidnap, extort money from people, and seize their property. Before the Magnitsky Act, Putin could guarantee them impunity and this system of illegal wealth accumulation worked smoothly. However, after the passage of the Magnitsky Act, Putin’s guarantee disappeared. The Magnitsky Act created real consequences outside of Russia and this created a real problem for Putin and his system of kleptocracy.

For these reasons, Putin has stated publicly that it was among his top foreign policy priorities to repeal the Magnitsky Act and to prevent it from spreading to other countries. Since its passage in 2012, the Putin regime has gone after everybody who has been advocating for the Magnitsky Act.

One of my main partners in this effort was Boris Nemtsov. Boris testified in front of the U.S. Congress, the European Parliament, the Canadian Parliament, and others to make the point that the Magnitsky Act was a “pro-Russian” piece of legislation because it narrowly targeted corrupt officials and not the Russian people. In 2015, Boris Nemtsov was murdered on the bridge in front of the Kremlin.

Boris Nemtsov’s protégé, Vladimir Kara-Murza, also traveled to law-making bodies around the world to make a similar case. After Alexander Bastrykin, the head of the Russian Investigative Committee, was added to the Magnitsky List in December of 2016, Vladimir was poisoned. He suffered multiple organ failure, went into a coma and barely survived.

The lawyer who represented Sergei Magnitsky’s mother, Nikolai Gorokhov, has spent the last six years fighting for justice. This spring, the night before he was due in court to testify about the state cover up of Sergei Magnitsky’s murder, he was thrown off the fourth floor of his apartment building. Thankfully he survived and has carried on in the fight for justice.

I’ve received many death threats from Russia. The most notable one came from Russian Prime Minister Dmitry Medvedev at the World Economic Forum in Davos, Switzerland, in 2013. When asked by a group of journalists about the death of Sergei Magnitsky, Medvedev replied, “It’s too bad that Sergei Magnitsky is dead and Bill Browder is still alive and free.” I’ve received numerous other death threats from Russian sources through text messages, emails, and voicemails. U.S. government sources have warned me about a planned Russian rendition against me. These threats were in addition to numerous unsuccessful attempts that the Russian government has made to arrest me using Interpol or other formal legal assistance channels.

The Russian government has also used its resources and assets to try to repeal the Magnitsky Act. One of the most shocking attempts took place in the spring and summer of last year when a group of Russians went on a lobbying campaign in Washington to try to repeal the Magnitsky Act by changing the narrative of what had happened to Sergei. According to them, Sergei wasn’t murdered and he wasn’t a whistle-blower, and the Magnitsky Act was based on a false set of facts. They used this story to try to have Sergei’s name taken off of the Global Magnitsky Act that passed in December 2016. They were unsuccessful.

Who was this group of Russians acting on behalf of the Russian state? Two men named Pyotr and Denis Katsyv, a woman named Natalia Veselnitskaya, and a large group of American lobbyists, all of whom are described below.

Pyotr Katsyv, father to Denis Katsyv, is a senior Russian government official and well-placed member of the Putin regime; Denis Katsyv was caught by U.S. law enforcement using proceeds from the crime that Sergei Magnitsky uncovered to purchase high-end Manhattan real estate (the case recently settled with the Katsyv’s paying $6 million to the U.S. government). Natalia Veselnitskaya was their lawyer.

In addition to working on the Katsyv’ s money laundering defense, Ms. Veselnitskaya also headed the aforementioned lobbying campaign to repeal the Magnitsky Act. She hired a number of lobbyists, public relations executives, lawyers, and investigators to assist her in this task.

Her first step was to set up a fake NGO that would ostensibly promote Russian adoptions, although it quickly became clear that the NGO’s sole purpose was to repeal the Magnitsky Act. This NGO was called the Human Rights Accountability Global Initiative Foundation (HRAGI). It was registered as a corporation in Delaware with two employees on February 18, 2016. HRAGI was used to pay Washington lobbyists and other agents for the anti-Magnitsky campaign. (HRAGI now seems to be defunct, with taxes due.)

Through HRAGI, Rinat Akhmetshin, a former Soviet intelligence officer naturalised as an American citizen, was hired to lead the Magnitsky repeal effort. Mr. Akhmetshin has been involved in a number of similar campaigns where he’s been accused of various unethical and potentially illegal actions like computer hacking.

Veselnitskaya also instructed U.S. law firm Baker Hostetler and their Washington, D.C.-based partner Marc Cymrot to lobby members of Congress to support an amendment taking Sergei Magnitsky’s name off the Global Magnitsky Act. Mr. Cymrot was in contact with Paul Behrends, a congressional staffer on the House Foreign Affairs Committee at the time, as part of the anti-Magnitsky lobbying campaign.

Veselnitskaya, through Baker Hostetler, hired Glenn Simpson of the firm Fusion GPS to conduct a smear campaign against me and Sergei Magnitsky in advance of congressional hearings on the Global Magnitsky Act. He contacted a number of major newspapers and other publications to spread false information that Sergei Magnitsky was not murdered, was not a whistle-blower, and was instead a criminal. They also spread false information that my presentations to lawmakers around the world were untrue.

As part of Veselnitskaya’s lobbying, a former Wall Street Journal reporter, Chris Cooper of the Potomac Group, was hired to organize the Washington, D.C.-based premiere of a fake documentary about Sergei Magnitsky and myself. This was one the best examples of Putin’s propaganda.

They hired Howard Schweitzer of Cozzen O’Connor Public Strategies and former Congressman Ronald Dellums to lobby members of Congress on Capitol Hill to repeal the Magnitsky Act and to remove Sergei’s name from the Global Magnitsky bill.

On June 13, 2016, they funded a major event at the Newseum to show their fake documentary, inviting representatives of Congress and the State Department to attend.

While they were conducting these operations in Washington, D.C., at no time did they indicate that they were acting on behalf of Russian government interests, nor did they file disclosures under the Foreign Agent Registration Act.

United States law is very explicit that those acting on behalf of foreign governments and their interests must register under FARA so that there is transparency about their interests and their motives.

Since none of these people registered, my firm wrote to the Department of Justice in July 2016 and presented the facts.

I hope that my story will help you understand the methods of Russian operatives in Washington and how they use U.S. enablers to achieve major foreign policy goals without disclosing those interests. I also hope that this story and others like it may lead to a change in the FARA enforcement regime in the future.

Thank you.

 

Abuse of the Civil Asset Forfeiture Law

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Related reading: The Myth of Judicial Activism

The Supreme Court struck down less than 1% of the federal laws passed over a 50-year period.

*** Questions must be asked why is the Justice Department re-applying this program and to what end?

Criminal forfeiture is an action brought as a part of the criminal prosecution of a defendant. It is an in personam (against the person) action and requires that the government indict (charge) the property used or derived from the crime along with the defendant. If the jury finds the property forfeitable, the court issues an order of forfeiture.

For forfeitures pursuant to the Controlled Substances Act (CSA), Racketeer Influenced and Corrupt Organizations (RICO), as well as money laundering and obscenity statutes, there is an ancillary hearing for third parties to assert their interest in the property. Once the interests of third parties are addressed, the court issues a final forfeiture order.

Civil judicial forfeiture is an in rem (against the property) action brought in court against the property. The property is the defendant and no criminal charge against the owner is necessary.

Administrative forfeiture is an in rem action that permits the federal seizing agency to forfeit the property without judicial involvement. The authority for a seizing agency to start an administrative forfeiture action is found in the Tariff Act of 1930, 19 U.S.C. § 1607. Property that can be administratively forfeited is: merchandise the importation of which is prohibited; a conveyance used to import, transport, or store a controlled substance; a monetary instrument; or other property that does not exceed $500,000 in value.

Source: A Guide to Equitable Sharing of Federally Forfeited Property for State and Local Law Enforcement Agencies, U.S. Department of Justice, March 1994.

Participants And Roles

The Justice Asset Forfeiture Program includes activity by DOJ components and several components outside the Department. Each component plays an important role in the Program.

Department of Justice Components

Money Laundering and Asset Recovery Section (MLARS) of the Criminal Division holds the responsibility of coordination, direction, and general oversight of the Program. AFMLS handles civil and criminal litigation, provides legal support to the U.S. Attorneys’ Offices, establishes policy and procedure, coordinates multi-district asset seizures, administers equitable sharing of assets, acts on petitions for remission, coordinates international forfeiture and sharing and develops training seminars for all levels of government.

Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces the federal laws and regulations relating to alcohol, tobacco, firearms, explosives and arson by working directly and in cooperation with other federal, state and local law enforcement agencies. ATF has the authority to seize and forfeit firearms, ammunition, explosives, alcohol, tobacco, currency, conveyances and certain real property involved in violation of law.

Drug Enforcement Administration (DEA) implements major investigative strategies against drug networks and cartels. Enforcement operations have resulted in significant seizure and forfeiture activity. A significant portion of DEA cases are adopted from state and local law enforcement agencies.

Federal Bureau of Investigation The FBI investigates a broad range of criminal violations, integrating the use of asset forfeiture into its overall strategy to eliminate targeted criminal enterprises. The FBI has successfully used asset forfeiture in White Collar Crime, Organized Crime, Drug, Violent Crime and Terrorism investigations. See the FBI Investigative Programs Asset Forfeiture Home Page for more information.

United States Marshals Service as the primary custodian of seized property for the Program. USMS manages and disposes of the majority of the property seized for forfeiture. See their Seized Asset Information page and their National Sellers List for more information.

United States Attorneys’ Offices (USAOs) are responsible for the prosecution of both criminal and civil actions against property used or acquired during illegal activity.

Asset Forfeiture Management Staff (AFMS): Has responsibility for management of the Assets Forfeiture Fund, the Consolidated Asset Tracking System (CATS), program-wide contracts, oversight of program internal controls and property management, interpretation of the Assets Forfeiture Fund statute, approval of unusual Fund uses, and legislative liaison on matters affecting the financial integrity of the Program.

Components Outside the Department of Justice

There are several organizations outside the Department of Justice who participate in the DOJ Asset Forfeiture Program. This list may change as additional agencies and offices become part of the DOJ program. These agencies participate in Judicial forfeitures only.

United States Postal Inspection Service (USPIS) makes seizures under their authority to discourage profit-motivated crimes such as mail fraud, money laundering and drug trafficking using the mail.

Food and Drug Administration FDA’s Office of Criminal Investigations has made seizures involving health care fraud schemes, counterfeit pharmaceuticals, illegal distribution of adulterated foods, and product tampering.

United States Department of Agriculture, Office of the Inspector General USDA’s Office of Inspector General’s (OIG) mission is to promote effectiveness and integrity in the delivery of USDA agricultural programs. Forfeiture is integrated as an important law enforcement tool in combating criminal activity affecting USDA programs.

Department of State, Bureau of Diplomatic Security The Bureau of Diplomatic Security investigates passport and visa fraud and integrates asset forfeiture into our strategy to target the profits made by vendors who provide fraudulent documentation or others who utilize fraudulent visas and/or passports to further their criminal enterprises.

Defense Criminal Investigative Service (DCIS) is the criminal investigative arm of the Inspector General of the Department of Defense. The mission of DCIS is to protect America’s War fighters by conducting investigations and forfeitures in support of crucial National Defense priorities that include homeland security/terrorism, product substitution, contract fraud, public corruption, computer crimes, and illegal technology transfers. ”

The Comprehensive Crime Control Act of 1984 established the Department of Justice Assets Forfeiture Fund to receive the proceeds of forfeiture and to pay the costs associated with such forfeitures, including the costs of managing and disposing of property, satisfying valid liens, mortgages, and other innocent owner claims, and costs associated with accomplishing the legal forfeiture of the property.

The Attorney General is authorized to use the Assets Forfeiture Fund to pay any necessary expenses associated with forfeiture operations such as property seizure, detention, management, forfeiture, and disposal. The Fund may also be used to finance certain general investigative expenses. These authorized uses are enumerated in 28 U.S.C. §524(c). Read more here.

Secret Service has Large Quiet Office in Hoover, Alabama

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Primer: The U.S. Secret Service maintains Electronic Crimes Task Forces, which focus on identifying and locating international cyber criminals connected to cyber intrusions, bank fraud, data breaches, and other computer-related crimes. The Secret Service’s Cyber Intelligence Section has directly contributed to the arrest of transnational cyber criminals responsible for the theft of hundreds of millions of credit card numbers and the loss of approximately $600 million to financial and retail institutions. The Secret Service also runs the National Computer Forensic Institute, which provides law enforcement officers, prosecutors, and judges with cyber training and information to combat cyber crime.

HOOVER, Ala. — The classrooms, tucked above a municipal court here in the Birmingham suburbs, are a long way from the White House. But walk through a set of secured doors and into the futuristic-looking work space, and you will find an important wager by the agency best known for protecting presidents, the Secret Service.

Only it has almost nothing to do with earpiece-wearing agents or armored cars.

Though the Secret Service may be better known for keeping government executives safe, it also has a mandate to investigate and fight financial and other cybercrimes. And in an era of overworked protection details and nonstop cybercrime, it could use some help.

So here at the National Computer Forensics Institute, the pupils are hardened police officers, prosecutors and, occasionally, a judge. Instruction mimics what the agency teaches its own special agents. And tuition is not only free, but the Secret Service throws in travel, room, board and, for police officers, tens of thousands of dollars of technology to set up their own forensics labs back home.

Data is extracted from mobile phones for use in a class on prosecution in Hoover. Kevin D. Liles for The New York Times

In exchange, the Secret Service has quietly empowered a network of thousands of law enforcement officers across the country capable of processing digital evidence and indebted to the agency that taught them.

“The threat nature has increased in the world, and the threats are all more and more integrated with the digital world,” said Ben Bass, the special agent in charge of the institute. “So assimilating that into what we do is really important.”

The institute opened in 2008 as a partnership between the Secret Service and the state of Alabama, which contributed space and money for its construction. At the time, few state and local law enforcement agencies had the capability to process digital evidence found on computers and cellphones, even as it was exploding in volume and importance. That left agencies heavily reliant on the Secret Service and the F.B.I. for processing and created a years long backlog in many cases.

The Secret Service reasoned that it would be critical to the future of its mission — not to mention the effectiveness of local and state law enforcement — to try to change that. The program remains the only one of its kind and scale in the country.

Though its protective mission occupies the public’s attention, the Secret Service has been investigating crimes since 1865, when President Lincoln saw the need to create a small force of investigators within the Treasury Department to combat counterfeit currency that was undermining American markets. That mandate has changed and widened in the decades since, along with threats to the country’s financial systems, and the agency now investigates bank fraud, credit card fraud, identity theft, child exploitation as well as counterfeiting.

It does so with a reasonably small force. The majority of the Secret Service’s 3,300 agents work out of field offices. The F.B.I., by comparison, has more than 13,000. To amplify its effect, the agency relies on dozens of electronic and financial crimes task forces across the country, where local and state law officers and people in academia and businesses work alongside its own agents.

The help has arrived at the right time for the agency, where in recent years low morale, high attrition and more people to protect in more places have conspired to pinch resources. Because protection is a nonnegotiable task, investigations often take the hit.

The effect can be significant. In the 2016 fiscal year, the agency spent 65 percent of its time on protection and 35 percent on investigative work, according to calculations it shared with members of the House Oversight Committee. That was an election year, when protection demands are highest. But it appears the ratio for this fiscal year — which only included the last month or so of the campaign — has not changed much, with 60 percent of time going to protection through the end of May. Typically it would be about 40 percent for a post-campaign fiscal year.

Robert Novy, the deputy assistant director for investigations, said the task forces help ensure that cases continue to move forward regardless of protection demands. He also said that they have begun to free the Secret Service’s own staff to focus on larger-scale cyberthreats and high-dollar financial crimes.

“By elevating their capacities and capabilities, it allows us to focus on finding ways to counter more significant financial threats,” Mr. Novy said.

Still, building the program has proved challenging. A decade after it first opened its doors, the institute trains about 1,100 people a year. But it is running at between 30 percent and 40 percent of capacity because of a shortage of federal funds. For some programs, would-be enrollees can wait as long as three years.

Its financial outlook remains uncertain. President Trump’s 2018 budget proposal zeroed out the program, though Randolph D. Alles, the agency’s new director, told lawmakers last month that he considered it “critical” to the agency and would move money from elsewhere in his budget to pay for it if need be. At the same time, lawmakers in the House and Senate have introduced legislation that could stabilize its funding.

A break room at the institute.
Kevin D. Liles for The New York Times

The institute’s finances appeared to be on few minds on a recent early summer day in Hoover, where a class of two dozen prosecutors sat in neat classroom rows, computers humming beside their feet, as data from the cellphone of a fictitious drug smuggler flashed onto their computer screens. The evidence was all there in ordered folders: call logs, texts, even compromising photographs of a would-be drug dealer, made visible by powerful software and a few patient instructors.

One room away and a few hours later, two dozen police officers packed into a wood-trimmed mock courtroom listened to another instructor hold forth from the witness stand on the ins and outs of being a good forensics witness. The key, he said, is balancing the use of technical details like “master boot records” and “disk partitions” with the bigger picture a less tech-savvy jury can more easily grasp.

“I need to be able to understand it so I can translate it when I go before a panel of 12 people,” said Jennifer Eugene, a prosecutor from New Jersey, describing her experience in front of a jury. “The law has not caught up with where the technology is.”

A five-week course for police on the basics of computer evidence recovery is the most popular, and graduates of the course leave here with $28,000 worth of technology and the ability to search seized computers for evidence of a crime. A similar course on mobile devices is growing in popularity. And more advanced courses cover network intrusion.

A classroom where a course on network intrusion is taught.
Kevin D. Liles for The New York Times

Prosecutors and judges can take shorter courses meant to familiarize them with digital evidence, which is still relatively new to many courtrooms.

But the mutual benefits of the program were on display, too. Frank Garibay, a detective with the San Antonio Police Department who had returned to the institute as a proctor after taking coursework himself, said his training here had transformed what his department could do.

It had also meant that when officials from the Texas Rangers and Homeland Security Investigations zeroed in on an illegal gambling ring in Texas, they could turn to the Secret Service’s San Antonio-based electronic crimes task force, including Mr. Garibay, for help.

The Secret Service paid for members of its task force to travel to the small South Texas town of Falfurrias for a weekend to set up a war room to process digital evidence.

The operation ended up taking down about a dozen illegal casinos, recovered almost $6 million, exposed drug and human trafficing rings, and ultimately public corruption.

 

Now 10 Dead in Smuggled Truck

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Statement from ICE Acting Director Thomas Homan on Human Smuggling

“By any standard, the horrific crime uncovered last night ranks as a stark reminder of why human smuggling networks must be pursued, caught and punished.  U.S. Immigration and Customs Enforcement’s Homeland Security Investigations works year-round to identify, dismantle, and disrupt the transnational criminal networks that smuggle people into and throughout the United States. These networks have repeatedly shown a reckless disregard for those they smuggle, as today’s case demonstrates. I personally worked on a tragic tractor trailer case in Victoria, Texas in 2003 in which 19 people were killed as a result of the smugglers’ total indifference to the safety of those smuggled and to the law.

“The men and women of ICE are proud to stand alongside our law enforcement partners, including locally and at the U.S. Department of Justice, to combat these smuggling networks and protect the public and those who would fall victim to their dangerous practices that focus solely on their illicit profits.  So long as I lead ICE, there will be an unwavering commitment to use law enforcement assets to put an end to these practices.”

The Federal complaint is found here.

*** Texas Public Radio

FNC: A suspect arrested in connection with the deaths of at least 10 people packed into a sweltering tractor-trailer is due in court Monday over his alleged role in the immigrant-smuggling attempt gone wrong.

Federal prosecutors said they planned to bring charges against James Mathew Bradley Jr., 60, of Clearwater, Florida, who is due to appear in federal court at 11 a.m. local time.

U.S. Attorney Richard Durbin Jr. did not say whether Bradley was the driver of the truck, although investigators said earlier that the driver was in custody.

Authorities initially discovered eight bodies Sunday inside the crowded 18-wheeler parked outside a Walmart in the summer heat. Two additional victims later died at the hospital.

Officials feared the death toll could still rise, because nearly 20 others rescued from the truck were in dire condition, many suffering from extreme dehydration and heatstroke, officials told the Associated Press.

Based on initial interviews with survivors of the San Antonio tragedy, more than 100 people may have been packed into the back of the 18-wheeler at one point in its journey, ICE acting Director Thomas Homan said. Officials said 39 people were inside when rescuers arrived, and the rest were believed to have escaped or hitched rides to their next destination.

Four of the survivors appeared to be between 10 and 17 years old, Homan said. Investigators gave no details on where the rig began its journey or where it was headed.

Mexican nationals were among both the survivors and the dead, Mexican Consul General in San Antonio Reyna Torres said, without giving a specific number. Torres said the consulate has been in contact with relatives both in Mexico and in the U.S.

Guatemala’s foreign ministry, meanwhile, said at least two Guatemalans were on the abandoned rig. The two male survivors told Guatemalan consulate officials that they crossed the border by foot at Laredo and boarded the tractor-trailer, according to Tekandi Paniagua, communications director for the foreign ministry. The pair told officials their final destination was Houston, Paniagua added. More here.

Kushner Overlooked 77 Assets, But it Gets Worse

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In part from Examiner: White House senior adviser Jared Kushner on Friday released a revised version of his personal financial disclosure that reveals his initial filing did not include 77 assets, according to a report Friday.

The Wall Street Journal reports that the new disclosure says 77 assets were “inadvertently omitted” from Kushner’s original form, released in March, and were added during the “ordinary review” process with the government ethics office.

In addition to information on Kushner, President Trump’s son-in-law, the new disclosure includes details of Ivanka Trump’s finances.

Ivanka Trump is the president’s daughter, a senior White House aide and Kushner’s wife.

The new financial forms show Kushner and Ivanka Trump collectively have between $206 million and $760 million in assets, the Journal said. Kushner’s initial disclosure valued their assets at between $240 million and $740 million. More here.

***

OCCRP

IN 2014, Prevezon Holdings Limited, was controlled by the son of a Russian political figure. The company had many interests in real estate, including an investment in a venture with a Soviet-born diamond and property magnate named Lev Leviev—who also happened to be one of the developers of 20 Pine.

Starting in late 2009, Prevezon began purchasing units in 20 Pine, acquiring five in total. The company later added three Manhattan commercial spaces to create a $24 million portfolio, which prosecutors sued to seize last year. “While New York is a world financial capital,” U.S. Attorney Preet Bharara said in a press release announcing the action, “it is not a safe haven for criminals seeking to hide their loot.” The lawsuit is here.

Jared Kushner sealed Manhattan real estate deal with oligarch’s firm cited in money-laundering case

Guardian: Donald Trump’s son-in-law bought part of old New York Times building from Soviet-born tycoon, Guardian investigation into Russian money in NYC property market finds

Jared Kushner, the son-in-law of Donald Trump, who acts as his senior White House adviser, secured a multimillion-dollar Manhattan real estate deal with a Soviet-born oligarch whose company was cited in a major New York money laundering case now being probed by members of Congress.

A Guardian investigation has established a series of overlapping ties and relationships involving alleged Russian money laundering, New York real estate deals and members of Trump’s inner circle. They include a 2015 sale of part of the old New York Times building in Manhattan involving Kushner and a billionaire real estate tycoon and diamond mogul, Lev Leviev.

The ties between Trump family real estate deals and Russian money interests are attracting growing interest from the justice department’s special counsel, Robert Mueller, as he seeks to determine whether the Trump campaign collaborated with Russia to distort the outcome of the 2016 race. Mueller has reportedly expanded his inquiry to look at real estate deals involving the Trump Organization, as well as Kushner’s financing.

Kushner will go before the US Senate intelligence committee on Monday in a closed session of the panel’s inquiry into Russian interference in the election in what could be a pivotal hearing into the affair.

Leviev, a global tycoon known as the “king of diamonds”, was a business partner of the Russian-owned company Prevezon Holdings that was at the center of a multimillion-dollar lawsuit launched in New York. Under the leadership of US attorney Preet Bharara, who was fired by Trump in March, prosecutors pursued Prevezon for allegedly attempting to use Manhattan real estate deals to launder money stolen from the Russian treasury.

The scam had been uncovered by Sergei Magnitsky, an accountant who died in 2009 in a Moscow jail in suspicious circumstances. US sanctions against Russia imposed after Magnitsky’s death were a central topic of conversation at the notorious Trump Tower meeting last June between Kushner, Donald Trump Jr, Trump campaign manager Paul Manafort and a Russian lawyer with ties to the Kremlin.

Don Jr and Manafort have been called to testify before the Senate judiciary committee on Wednesday, at which they are certain to face questions about the Trump Tower encounter.

Two days before it was due to open in court in May, the Prevezon case was settled for $6m with no admission of guilt on the part of the defendants. But since details of the Trump Tower meeting emerged, the abrupt settlement of the Prevezon case has come under renewed scrutiny from congressional investigators.

Four Russians attended the meeting, led by Natalia Veselnitskaya, a lawyer with known Kremlin connections who acted as legal counsel for Prevezon in the money laundering case and who called the $6m settlement so slight that “it seemed almost an apology from the government”. Sixteen Democratic members of the House judiciary committee have now written to the justice department in light of the Trump Tower meeting demanding to know whether there was any interference behind the decision to avoid trial.

Constitutional experts are also demanding an official inquiry. “We need a full accounting by Trump’s justice department of the unexplained and frankly outrageous settlement that is likely to be just the tip of a vast financial iceberg,” said Laurence Tribe, Harvard University professor of constitutional law.

Separately, the focus of investigators on Trump family finances stem from the vast flow of Russian wealth that has been poured into New York real estate in recent years. As Donald Trump Jr put it in 2008, referring to the Trump Organization: “We see a lot of money pouring in from Russia.”

Among the overlapping connections is the 2015 deal in which Kushner paid $295m to acquire several floors of the old New York Times building at 43rd street in Manhattan from the US branch of Leviev’s company, Africa Israel Investments (AFI), and its partner Five Mile Capital. The sale has been identified as of possible interest to the Mueller investigation as Kushner later went on to borrow $285m in refinancing from Deutsche Bank, the German financial house that itself has been embroiled in Russian money laundering scandals and whose loans to Trump are coming under intensifying scrutiny.

Court documents and company records show that AFI was cited in the Prevezon case as a business partner of the defendants. In 2008, Prevezon entered a partnership with AFI in which Prevezon bought for €3m, a 30% stake in four AFI subsidiaries in the Netherlands. Five years later, AFI tried to return the money to the Russian-owned company, but it was intercepted and frozen by Dutch authorities at the request of the US government as part of the Prevezon money-laundering probe.

In Manhattan, Leviev’s firm also sold condominiums to Prevezon Holdings from one of its landmark developments at 20 Pine Street, just a few blocks from Wall Street.

Real estate brochures describe the lavish interior decor of the condominiums, replete with bathrooms bedecked in stone and exotic woods, and boasting “the ultimate in pampering; a sybaritic recessed rain shower”. The 20 Pine Street apartments that Leviev sold to Prevezon were later frozen by US prosecutors seeking to block the flow of what they alleged to be money stolen from the Russian treasury and laundered through New York real estate.

Prevezon’s 20 Pine Street apartments and €3m in assets were all released as part of the settlement in May.

The Guardian contacted both Kushner and Leviev for comment, but they did not immediately respond.

The pursuit of Prevezon Holdings for alleged money laundering took on enormous political significance as it unfolded. For the prosecutors, it was a test case over suspicious Russian money flows designed to show the US was serious about going after money launderers. For the Russians, it was an opportunity to push back against stringent US sanctions that had long infuriated the Kremlin.

In court documents, US prosecutors accused Prevezon and its sole shareholder, Denis Katsyv, of participating in the laundering of proceeds of the vast tax fraud that stole $230m from the Russian treasury and moved it out of the country in chunks. Prevezon was alleged to have received some of the fraudulent spoils through a network of shell companies, hiding the money by investing in Manhattan real estate including the Leviev condominiums in 20 Pine Street.

Prevezon and Katsyv have consistently denied any involvement in money laundering and have dismissed the lawsuit as “ill-conceived”. In a statement released at the time of the settlement, they said they had “no involvement in or knowledge of any fraudulent activities”.

Magnitsky discovered the massive tax fraud, said to be one of the largest in Vladimir Putin’s Russia, in 2007. After he blew the whistle on the scam, he was arrested by the same officials whom he had accused of covering up the racket and imprisoned, dying in jail having been denied medical treatment.

Magnitsky’s death led to a political backlash in the US that in turn spawned tough sanctions on Russia, known as the Magnitsky Act. Russian individuals associated with the lawyer’s demise and other human rights abuses were banned entry to the US.

Veselnitskaya not only acted as Prevezon’s Russian counsel in the money-laundering case, she also was a leading lobbyist against the Magnitsky sanctions. She raised the subject prominently at the meeting in Trump Tower with Don Jr and Kushner, though according to Veselnitskaya the president’s son-in-law left after 10 minutes.

By the time of the Trump Tower meeting, Veselnitskaya was already personally acquainted with Russia’s powerful prosecutor general, Yuri Chaika, and her lobbying against the Magnitsky sanctions had drawn significant attention in government circles.

“Natalia’s main role was coordinating, including regular coordination with Chaika, whom she knew personally,” said a source acquainted with the Prevezon case.

Veselnitskaya told the Guardian: “My meeting with Trump’s son was a private meeting; nobody in the government had anything to do with it.” She declined to answer a follow-up question about whether and how she knew Chaika.

Jamison Firestone, the founder of the Russian law firm that employed Magnitsky at the time that he exposed the fraud, said that Veselnitskaya clearly intended to use the Trump Tower meeting to lobby against the Magnitsky sanctions. “They really made it a state priority to get rid of these sanctions,” he said.