DEA Administrator Michele M.
Leonhart and United States Attorney for the Southern District of New York Preet
Bharara today announced the seizure of $150 million in connection with a civil
money laundering and forfeiture complaint filed in December 2011 alleging a
massive, international scheme in which entities linked to Hizballah, including
the now defunct Lebanese Canadian Bank (“LCB”), used the U.S. financial system
to launder narcotics trafficking and other criminal proceeds through West
Africa and back into Lebanon.
In September 2011, Société Générale de
Banque au Liban (“SGBL”) agreed to purchase most of the assets of LCB, and at
least $150 million in purchase price funds related to that sale are being held
in escrow in Lebanon at the Banque Libano Française SAL (“BLF”). The seized
funds are substitutes for the money in the LCB escrow account at BLF, and came
from an account at a U.S. bank that is used by BLF to conduct U.S. currency
transactions (the “correspondent account”). The funds were seized pursuant to
seizure warrants issued on August 15, 2012. There are no allegations of
wrongdoing against BLF, SGBL, or the U.S. bank that maintains the correspondent
account for BLF in the U.S.
“As we alleged last year, the Lebanese
Canadian Bank played a key role in facilitating money laundering for Hizballah
controlled organizations across the globe,” Administrator Leonhart said. “Our
relentless pursuit of global criminal networks showed that the U.S. banking
system was exploited to launder drug trafficking funds through West Africa and
into Lebanon. DEA and our partners are attacking these groups and their
financial infrastructure, while establishing clear links between drug
trafficking proceeds and terrorist funding.”
“Money is the lifeblood of terrorist and
narcotics organizations, and while banks which launder money for terrorists and
narco-traffickers may be located abroad, today’s announcement demonstrates that
those banks and their assets are not beyond our reach,” U.S. Attorney Bharara
said. “We will use every resource at our disposal to separate terrorists and
narco-traffickers, and the banks that work with them, from their illicit funds,
even those hidden in foreign accounts.”
According to the Complaint, the
affidavit in support of the seizure warrants and other documents filed in the
case:
From approximately January 2007 to early
2011, at least $329 million was transferred by wire from LCB and other
financial institutions to the U.S for the purchase of used cars that were then
shipped to West Africa. Cash from the sale of the cars, along with the proceeds
of narcotics trafficking, were funneled to Lebanon through Hizballah-controlled
money laundering channels. LCB played a key role in these money laundering
channels and conducted business with a number of Hizballah-related entities.
Hizballah is a U.S. Department of State designated Foreign Terrorist
Organization, a Specially Designated Terrorist and a Specially Designated
Global Terrorist.
On February 10, 2011, the U.S.
Department of the Treasury, Financial Crimes Enforcement Network (“FinCEN”)
issued a finding and proposed rule, pursuant to the USA Patriot Act, that LCB
is a financial institution of primary money laundering concern, based on, among
other things, FinCEN’s determination that there was reason to believe that LCB
had been routinely used by drug traffickers and money launderers operating in
various countries in Central and South America, Europe, Africa, and the Middle
East. FinCEN also determined that there was reason to believe that LCB managers
were complicit in the network’s money laundering activities.
After the FinCEN action, another
Lebanese financial institution, SGBL acquired the assets and liabilities of LCB
for $580 million, $150 million of which is being held in an escrow account at
BLF (the “LCB Escrow Funds”). Because the LCB Escrow Funds are traceable to the
assets of LCB, they are also subject to forfeiture, but since they are in an
account in Lebanon, the U.S. is unable to seize the LCB Escrow Funds directly.
However, pursuant to U.S. law, the U.S. can seize funds located in a bank’s
correspondent accounts in the U.S. if there is probable cause to believe that
funds subject to forfeiture are on deposit with that bank overseas. Based on
this provision and others, the seizure warrants were executed. A total of $150
million was seized from BLF’s correspondent account. These funds will be
transferred to a seized asset account maintained by the United States Marshals
Service pending resolution of the forfeiture action.
*
* *
Mr. Bharara thanked the DEA for its
leadership and praised the New York Organized Crime Drug Enforcement “Strike
Force” (“Strike Force”), for its outstanding work on this investigation, which
he noted is ongoing. The Strike Force is comprised of agents and officers of
the United States Drug Enforcement Administration, the New York City Police
Department, Immigration and Customs Enforcement’s Homeland Security
Investigations, the New York State Police, the United States Internal Revenue
Service Criminal Investigation Division, the United States Marshal Service,
Alcohol, Tobacco, Firearms and Explosive, Federal Bureau of Investigations, and
the United States Attorney’s Office. The Strike Force is partially funded by
the New York/New Jersey High Intensity Drug Trafficking Area, which is a
federally funded crime fighting initiative. Mr. Bharara also thanked the U.S.
Department of State, the U.S. Department of the Treasury, the Federal Bureau of
Investigation, and the New Jersey State Police for their assistance.
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