If You Don’t Think the FBI is Busy, N Korea Investigation

Posted on August 22, 2017August 22, 2017 by Denise Simon

Frankly, $11 million is not much considering what North Korea and the Kim regime are doing in the illicit activity realm.

Meanwhile Kim issued yet another threat to President Trump:

North Korea vows merciless retaliation in response to drills

FNC: President Trump is pictured looking out over a Guam graveyard cluttered with crosses in a photoshopped image from the newest propaganda film — and grim warning — from North Korea.

The regime followed the video with a statement posted through its KCNA news agency, saying Trump “spouted rubbish” and frequently tweeted about “weird articles of his ego-driven thoughts” and attacking South Korea’s “puppy-like” Defense Minister Song Young-moo for “pinning hope on that mad guy.”

But the picture of a graveyard believed to be in Guam may be the most rattling in the video, given dictator Kim Jong Un’s repeated threats to strike the U.S. territory with a missile. The video also features Vice President Pence engulfed in flames. More here.

FOR IMMEDIATE RELEASE

Tuesday, August 22, 2017

United States Files Complaints to Forfeit More Than $11 Million From Companies That Allegely Laundered Funds To Benefit Sanctioned North Korean Entities

WASHINGTON – The United States filed two complaints today seeking imposition of a civil money laundering penalty and to civilly forfeit more than $11 million from companies that allegedly acted as financial facilitators for North Korea, announced U.S. Attorney Channing D. Phillips, Michael DeLeon, Special Agent in Charge of the FBI’s Phoenix Field Office, and Michael J. Anderson, Special Agent in Charge of the FBI’s Chicago Field Office.

The actions, filed in the U.S. District Court for the District of Columbia, represent two of the largest seizures of North Korean funds by the Department of Justice. One complaint seeks $6,999,925 associated with Velmur Management Pte Ltd., a Singapore-based company. The other seeks $4,083,935 from Dandong Chengtai Trading Co. Ltd., also known as Dandong Zhicheng Metallic Material Co., Ltd., a company in Dandong, China.

The lawsuits follow a similar complaint, filed in June 2017, seeking more than $1.9 million from Mingzheng International Trading Limited, a company based in Shenyang, China.

The complaints allege that the companies have participated in schemes to launder U.S. dollars on behalf of sanctioned North Korean entities. According to the complaints, the companies participated in financial transactions in violation of the International Emergency Economic Powers Act (IEEPA), the North Korean Sanctions and Policy Enhancement Act of 2016, and federal conspiracy and money laundering statutes. Today’s complaints are the first filed actions based on the 2016 North Korean Sanctions and Policy Enhancement Act.

“These complaints show our determination to stop North Korean sanctioned banks and their foreign financial facilitators from aiding North Korea in illegally accessing the United States financial system to obtain goods and services in the global market place,” said U.S. Attorney Phillips. “According to the complaints, these front companies are supporting sanctioned North Korean entities, including North Korean military and North Korean weapons programs. Working with our law enforcement partners, we will vigorously enforce vital sanctions laws.”

“The complaints allege that these companies are assisting North Korea in evading sanctions, which is in direct conflict with our national security interests,” said Special Agent in Charge DeLeon, of the FBI’s Phoenix Field Division. “We will continue to use the necessary resources to expose these types of actions and investigate those who utilize the U.S. banking systems for illegal activities.”

U.S. v. Velmur Management Pte., Ltd. (Velmur) and Transatlantic Partners Pte. Ltd. (Transatlantic)

This complaint alleges that Velmur and Transatlantic Partners Pte. Ltd. (Transatlantic) laundered United States dollars on behalf of sanctioned North Korean banks that were seeking to procure petroleum products from JSC Independent Petroleum Company (IPC), a designated entity. The complaint also seeks a civil monetary penalty against Velmur and Transatlantic for prior sanctions and money laundering violations related to this scheme.

According to the complaint, designated North Korean banks use front companies, including Transatlantic, to make U.S. dollar payments to Velmur. The complaint relates to funds that were transferred through four different companies and remitted to Velmur to wire funds to JSC Independent Petroleum Company (IPC), a Russian petroleum products supplier. On June 1, 2017, the Department of the Treasury’s Office of Foreign Asset Controls (OFAC) designated IPC. The designation noted that IPC had a contract to provide oil to North Korea and reportedly shipped over $1 million worth of petroleum products to North Korea.

The United Nations Panel of Experts reported in 2017 on the methods used by North Korean banks to evade sanctions and continue to access the international banking system. Specifically, despite strengthened financial sanctions, North Korean networks are adapting by using greater ingenuity in accessing formal banking channels. This includes maintaining correspondent bank accounts and representative offices abroad which are staffed by foreign nationals making use of front companies. These broad interwoven networks allow the North Korean banks to conduct illicit procurement and banking activity.

An FBI investigation revealed that Velmur’s and Transatlantic’s activities mirror this money laundering paradigm. Specifically, companies identified in the complaint and Transatlantic act as front companies for designated North Korean banks.

The government is seeking to forfeit $6,999,925 that was wired to Velmur in May 2017. The U.S. dollar payments, which cleared through the U.S., are alleged to violate U.S. law, because the entities were surreptitiously making them on behalf of the designated North Korean Banks, whose designation precluded such U.S. dollar transactions. The government also is seeking imposition of a monetary penalty commensurate with the millions of dollars allegedly laundered by Velmur and Transatlantic.

U.S. v. Dandong Chengtai Trading Co., Ltd. (Dandong Chengtai), also known as Dandong Zhicheng Metallic Material Co., Ltd.

This complaint alleges that Dandong Chengtai and associated front companies controlled by Chi Yupeng, a Chinese national, comprise one of the largest financial facilitators for North Korea. According to the complaint, Dandong Chengtai conspired to evade U.S. economic sanctions by facilitating prohibited U.S. dollar transactions through the United States on behalf of the North Korean Workers’ Party, a sanctioned entity.

The complaint further alleges that the North Korean government relies on exports of coal as its primary means of obtaining access to foreign currency, and that the North Korean military controls the amount of coal produced and its subsequent export. The North Korean government uses proceeds of coal sales to fund its weapons of mass destruction program and missile programs. Coal generates more than $1 billion in revenue per year for North Korea. The investigation revealed that Dandong Chengtai is one of the largest importers of North Korean coal in China, and has continued to engage in illicit U.S. dollar transactions related to its coal sales to benefit North Korea.

The complaint alleges that Dandong Chengtai facilitated wire transfers denominated in U.S. dollars for purchases of goods that are well outside the scope of a mineral trading company. Financial records reveal that purchases of bulk commodities such as sugar, rubber, petroleum products, and soybean oil, among others, were in fact destined for North Korea.

As reported in findings by the Treasury Department and the United Nations Panel of Experts, North Korean financial facilitators frequently establish and maintain offshore U.S. dollar accounts for the purposes of remitting wire transfers denominated in U.S. dollars on behalf of sanctioned North Korean entities. These broad interwoven networks allow sanctioned North Korean entities to conduct illicit procurement and banking activity.

The government is seeking to forfeit $4,083,935 that Dandong Chengtai wired on June 21, 2017 to Maison Trading, using their Chinese bank accounts. The investigation revealed that Maison Trading is a front company operated by a Dandong Chengtai employee. These U.S. dollar payments, which cleared through the United States, are alleged to violate U.S. law, because the recent North Korean sanctions law specifically barred U.S. dollar transactions involving North Korean coal and the proceeds of these transactions were for the benefit of the North Korea Worker’s Party, whose designation precluded such U.S. dollar transactions.

This case relates to a previously unsealed opinion from Chief Judge Beryl A. Howell of the U.S. District Court for the District of Columbia, which found that probable cause existed to seize funds belonging to Dandong Chengtai.

The claims made in the complaints are only allegations and do not constitute a determination of liability.

The FBI’s Phoenix Field Office is investigating the case involving Velmur Management Pte Ltd. and Transatlantic Partners Pte., Ltd. The FBI’s Chicago Field Office is investigating the case involving Dandong Chengtai Trading Co. Ltd. Both investigations are being supported by the FBI Counterproliferation Center.

Assistant U.S Attorneys Arvind K. Lal, Zia M. Faruqui, Christopher B. Brown, Deborah Curtis, Ari Redbord, and Brian P. Hudak, all of the U.S. Attorney’s Office for the District of Columbia, are prosecuting both cases. Paralegal Specialist Toni Anne Donato and Legal Assistant Jessica McCormick are providing assistance.

N. Korea’s Chemical Weapons to Syria Intercepted

Posted on August 21, 2017August 21, 2017 by Denise Simon

Under Barack Obama, an Executive Order was signed in 2015, adding sanctions to entities in North Korea. One such sanction was on KOMID:

Korea Mining Development Trading Corporation (KOMID): KOMID is North Korea’s primary arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons. KOMID, a North Korean state-owned entity, was previously listed in the annex to E.O. 13382 on July 1, 2005 for its role in North Korea’s proliferation of weapons of mass destruction. It was also sanctioned by the United Nations in April 2009. KOMID has offices in multiple countries around the world and facilitates weapons sales for the North Korean government.(Note this does specifically not mention chemical weapons but rather weapons of mass destruction)

Further there is Burma: the head of Burma’s Directorate of Defense Industries (DDI), Thein Htay, remains on the SDN list for arms deals with North Korea–presumably through KOMID which facilitates arms sales for North Korea. Several companies in Burma also are sanctioned for facilitating the import of materials to DDI from North Korea.

Additionally, KOMID is complicit with evidence here: Reportedly has assisted Syria in producing weapons, including reverse-engineered versions of the Kornet anti-tank guided missile originally supplied to Syria by Russia; in 2009, reportedly sought to procure equipment for transporter erector launchers (TELs) for Scud missiles intended for a ballistic missile project in Yemen; in 2008, reportedly sought, in cooperation with China-based New East International Trading Ltd., to transfer three Japanese-origin cylindrical grinding machines to Burma using false end-use statements; in 1999, reportedly supplied 12 missile engines to Iran. More here.

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Now the United Nations has this additional report:

UNITED NATIONS (Reuters) – Two North Korean shipments to a Syrian government agency responsible for the country’s chemical weapons program were intercepted in the past six months, according to a confidential United Nations report on North Korea sanctions violations.

The report by a panel of independent U.N. experts, which was submitted to the U.N. Security Council earlier this month and seen by Reuters on Monday, gave no details on when or where the interdictions occurred or what the shipments contained.

“The panel is investigating reported prohibited chemical, ballistic missile and conventional arms cooperation between Syria and the DPRK (North Korea),” the experts wrote in the 37-page report.

“Two member states interdicted shipments destined for Syria. Another Member state informed the panel that it had reasons to believe that the goods were part of a KOMID contract with Syria,” according to the report.

KOMID is the Korea Mining Development Trading Corporation. It was blacklisted by the Security Council in 2009 and described as Pyongyang’s key arms dealer and exporter of equipment related to ballistic missiles and conventional weapons. In March 2016 the council also blacklisted two KOMID representatives in Syria.

“The consignees were Syrian entities designated by the European Union and the United States as front companies for Syria’s Scientific Studies and Research Centre (SSRC), a Syrian entity identified by the Panel as cooperating with KOMID in previous prohibited item transfers,” the U.N. experts wrote.

SSRC has overseen the country’s chemical weapons program since the 1970s.

The U.N. experts said activities between Syria and North Korea they were investigating included cooperation on Syrian Scud missile programs and maintenance and repair of Syrian surface-to-air missiles air defense systems.

The North Korean and Syrian missions to the United Nations did not immediately respond to a request for comment.

The experts said they were also investigating the use of the VX nerve agent in Malaysia to kill the estranged half-brother of North Korea’s leader Kim Jong Un in February.

North Korea has been under U.N. sanctions since 2006 over its ballistic missile and nuclear programs and the Security Council has ratcheted up the measures in response to five nuclear weapons tests and four long-range missile launches.

Syria agreed to destroy its chemical weapons in 2013 under a deal brokered by Russia and the United States. However, diplomats and weapons inspectors suspect Syria may have secretly maintained or developed a new chemical weapons capability.

During the country’s more than six-year long civil war the Organisation for the Prohibition of Chemical Weapons has said the banned nerve agent sarin has been used at least twice, while the use of chlorine as a weapon has been widespread. The Syrian government has repeatedly denied using chemical weapons.

EB-5 Abusers go to Jail, Need More of This

Posted on August 15, 2017August 15, 2017 by Denise Simon

When money buys citizenship, the honor, pride and loyalty fades fast.

Sounded good in theory at the time back in 1990 perhaps, then of course abuse set in:

EB-5 Immigrant Investor Program

USCIS administers the EB-5 Program. Under this program, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a green card (permanent residence) if they:

Make the necessary investment in a commercial enterprise in the United States; and

Plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers.

This program is known as EB-5 for the name of the employment-based fifth preference visa that participants receive.

Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. In 1992, Congress created the Immigrant Investor Program, also known as the Regional Center Program. This sets aside EB-5 visas for participants who invest in commercial enterprises associated with regional centers approved by USCIS based on proposals for promoting economic growth.

There was a time this top democrat said: “I don’t believe that America should be selling visas and eventually citizenship,” said Sen. Dianne Feinstein, a Democrat of California. China is the biggest applicant to the program and no one can produce how many jobs are actually created.

In 2015 for instance, a Chinese national was arrested after investigators found he had obtained an EB-5 visa using stolen money. A 2013 Homeland Security investigation found that an Iranian who was arrested and involved in the EB-5 program had ties to Iranian intelligence operatives, The Times reported.

There has not been a congressional hearing dedicated to EB-5 abuse for more than a year, go here to watch the last one. Shocking.

The 2017 budget, which will continue funding the U.S. government until October, includes the extension of the EB-5 visa program, as lawmakers slipped the extension of the program into the spending bill.

After years of writing about the numerous and substantial frauds in the EB-5 program, I now can report that two people are going to jail for immigrant investor program crimes.

Each of the cases involved more than $100 million in misused EB-5 investments, with the actual thefts involving more than $10 million each. The cases had nothing to do with each other, but both show how badly the EB-5 program is managed by the Department of Homeland Security, an agency whose skill set does not include regulating high finance.

The EB-5 program currently gives a family-sized set of green cards to alien investors who place half-million-dollar investments through a DHS-approved regional center. The program, which keeps getting renewed by Congress for short periods, is due to sunset again on September 30. But the middlemen who benefit from the program (including some of the president’s in-laws) are likely to secure the program’s renewal again without any of the reforms it needs so badly. I hope I am wrong about that.

Earlier this month, Lobsang Dargey, said to be a former Tibetan monk, was sentenced to four years in prison for his crimes as part of a plea agreement. In addition to prison, Dargey agreed, along with associated firm Path Othello LLC, to disgorge $18.4 million. In these cases the question of deportation is handled separately and years later.

Dargey talked scores of investors, mostly from China, into buying into his Seattle real estate ventures.

Earlier in the year a similar conman was sentenced to three years in jail for an even bigger swindle in Chicago. This one was so dramatic that it reached the cover of Fortune magazine, even before sentencing. The promoters said it would be the:

“World’s First Zero Carbon Platinum LEED-certified and 100% Allergen Free convention center and hotel complex.” Lest anyone doubt its global eco-import, the project’s developer was branding it as a “Kyoto Protocol Centre.” At a projected cost of $913 million, it was to include three connected towers — 14, 17, and 19 stories tall — containing five upscale hotels with 995 suites and rooms, four levels of convention space, a green roof with a spa and yoga studio, a miniature golf course, and a 1,720-car “automatic robotic” parking garage.

The man behind the scam, Anshoo Sethi, now in jail, had told his gullible investors (and the equally gullible U.S. government) that he was investing $177.5 million worth of real estate in the project. However, that investment consisted of a modest motel, occupying two-plus acres near Chicago’s O’Hare Airport, that had been purchased by Sethi’s family for $10 million, a fact that any of the investors — or any DHS employee — could have discovered in the city’s land records. But no one checked until years later.

One hopes that these sentences will discourage other would-be EB-5 fraudsters, but while there have been dozens of accounts of similar schemes (as shown on a CIS-created map), so far these are the first to have led to well-deserved prison sentences.

Next, Russia to Annex Belarus Under Zapad 2017?

Posted on August 13, 2017August 13, 2017 by Denise Simon

Northern Fleet announces big-scale exercise

Ships set out from Northern Fleet headquarters in Severomorsk. Photo: mil.ru

It will include about 50 vessels and is held as a preparatory phase to the upcoming «Zapad-2017» drills.

The Northern Fleet, the most powerful of Russia’s five fleets, is unfolding a special exercise which includes key parts of fleet capacities.

The drills will be headed directly by Russian Navy Head Commander Vladimir Korolyev and will last «for several days», the Northern Fleet informs.

Included are about 50 ships, submarines and support vessels. Also aircrafts, helicopters from the Air Force and Air Defense will be deployed, a Navy representative says to Interfax.

The drills are held as several of the most powerful Northern Fleet vessels are on their way home after participation in a Navy parade outside St.Petersburg. Among them are battle cruiser «Pyotr Veliky» and typhoon-class submarine «Dmitry Donskoy».

It is likely that the returning vessels will take part in the exercise.

In the course of the training, antisubmarine and anti-sabotage activities will be conducted along with navigational, hydrographical, anti-mine and search and rescue operations.

According to the Navy representatives, the exercise is held as a preparatory phase to the large-scale joint Russian-Belarus drills «Zapad-2017» scheduled for the period 14-20 September.

***

Russia Plans to Annex Belarus in Military Drill, Says Georgia’s Ex-President

Russia’s leadership is angling to annex its closest western neighbor during upcoming military drills, according to the former leader of Georgia. Mikheil Saakashvili made the comments on the anniversary of his own country’s brief conflict with Moscow that resulted in Russian troops cordoning off Georgia’s two northern regions.

Referring to the much anticipated joint Russian-Belarusian drill in the Baltic region, the former president said: “What we are seeing in Belarus, I think that Russia is planning to take and annex Belarus.” Saakashvili, who is a longtime critic of Russian President Vladimir Putin, spoke to told Baltic news agency BNS ahead of the drill, called Zapad and scheduled for September.

Lithuania, a NATO ally that borders with Russia, has expressed concern that the drill indicates a wider threat to the alliance, constituting a “simulated” attack. NATO has demanded that Russia allows for more transparency in the drill, nominally set to involve around 12,000 troops. However, Russia has previously sparked much bigger exercises to go in tandem with drills such as Zapad, upping the number of troops from the promised levels.

“During the drill, infrastructure will be brought in,” Saakashvili said. “In that sense the threat [from Russia] has not disappeared rather it only grows. It is just that until now Ukrainians have held it at its own borders [with Russia].”

Saakashvili was president of Georgia until 2013, when he lost the election and left the country for Ukraine. He was made a Ukrainian citizen and appointed as governor of Ukraine’s Odessa region in 2015 by Petro Poroshenko after the revolution that brought the pro-Europe, pro-West government to power.

His reputation as a hardline opponent of the Kremlin’s foreign policy and his imposing oratorical style made him popular quickly, and he was tipped to be the country’s next prime minister. But his often combative manner and vows to “clean up” corrupt Ukrainian institutions, put him at odds with established political figures. Ukraine stripped him of his citizenship in 2017 and he became a stateless person. He has dismissed it, and Georgia’s previous decision to strip him of citizenship, as political decisions by governments that have fallen out with him.

Despite enjoying Western support for his hawkish positions on Russia and for his campaigns against corruption, Saakashvili’s leadership of Georgia was not without its critics. The European Union criticized his decision-making during a 2008 political crisis that sparked a five day war with Russia. Under Saakashvili’s command, Georgian forces tried to restore control over two of its regions that have declared independence under Russian military sponsorship.

Belarus’s President Alexander Lukashenko has dismissed concerns that Zapad is anything but a routine defense drill. “We traditionally carry out these drills with Russia,” he said in July. Although strongly reliant on Russia in most regards, the Belarusian government has shown some signs of disagreement with its bigger partner in what the two countries symbolically call “the Union State.”

Despite a Kremlin push to deploy an airbase in Belarus, Minsk has resisted that initiative. The Union State relationship— a post-Soviet branding of Minsk and Moscow’s close relationship—looked in minor jeopardy earlier this year when Russia responded to Belarus’s looser visa-regime for Westerners by starting border checks between the two countries.

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Jamestown has a more detailed summary, in part:

In the exercise scenario used for the Zapad series of exercises, there is undoubtedly a NATO dimension. This stems from Moscow’s response, opposition and complete rejection on political and legal grounds of the 1999 NATO bombing of Serbia. The events of 1999 loom large today in Russian strategic thinking and are also reflected in how the General Staff approaches the planning for a Zapad exercise. Consequently, while there is currently a Western preoccupation with the possibility of a Russian offensive operation against the Baltic States, in Moscow’s view the more likely scenario of conflict erupting on Russia’s periphery with NATO stems from an Allied intervention in Belarus. As a result, the Zapad 2017 exercise will place all operational and scenario activities under a defensive guise in response to foreign intervention, demanding a response to protect the Russia-Belarus Union State (Regnum, July 11).

Some Russian commentaries show awareness of the concern expressed by Alliance members about Zapad 2017 and its potentially aggressive rehearsal of operations against its members from Belarusian territory: these suggestions are, of course, the subject of much derision. However, there are indications of some features of the joint exercise that will come into play in September to which NATO must pay additional attention. The first is the extent to which Zapad 2017 will fine-tune joint operations carried out by the elite airborne and special forces units of Belarus and Russia. Such preparation occurred in early April, with these forces rehearsing joint operations in the Vitebsk Region in Belarus over an area of 12,000 square kilometers. The focus was on parachute landings, reconnaissance, and action to fix and locate enemy forces. During these tactical-level exercises, elite troops were also tasked with establishing the best areas to land the “main force” and coordinating air cover for these forces. On April 11–13, a parachute company from the 106^th Airborne Division (Tula) relocated to Brest and, in close coordination with Belarusian counterparts as well as interior troops, worked on training tasks to block and defeat four groups of “illegal armed formations,” which had broken into strategically important facilities in the region (Nezavisimaya Voyennoye Obozreniye, June 16).

In a related preparation for Zapad 2017, in May, a one-week tactical exercise involved the electronic warfare (EW) forces of Belarus and Russia, using three training grounds in Brest and Vitebsk Regions. Whereas the elite and special forces tactical exercises had an alleged terrorist dimension, the joint EW exercises were clearly aimed against a conventionally armed opponent. They focused upon joint EW operations against a high-technology opponent operating in a “complex electronic environment.” The development of the joint force capabilities to protect the Union State is seen in Moscow as reflecting developments within modern local wars and armed conflicts. The EW component of Zapad 2017 will thus prove to be an integral part of the rehearsal of joint operations (Nezavisimaya Voyennoye Obozreniye, June 16).

Sen. Rubio Has Been Given Double Protection, DC and Miami