The funds are the United States’ share of a civil forfeiture
investigation that is part of the government’s pursuit of a complex
international conspiracy which spanned the globe. The conspiracy’s
purpose was to violate the United States imposed international economic
sanctions regime on Iran and included several Iranian nationals and
others, who fraudulently transferred approximately $1 billion worth of
Iranian-owned funds to accounts around the world.
“The funds subject to today’s stipulation had been destined to
benefit criminal actors who engaged in an elaborate scheme to violate
U.S. sanctions against Iran, one of the world’s leading state sponsors
of terrorism,” said Acting Assistant Attorney General David Burns of the
Justice Department’s Criminal Division. “Thanks to assistance from our
foreign partners and the combined efforts of the Criminal Division, the
U.S. Attorney’s Office for the District of Alaska, the FBI, and the
IRS, the forfeited funds will instead be used to directly compensate
victims of state sponsors of terrorism.”
“I thank our law enforcement partners for their long-term and
dedicated diligence in securing these funds for victims of
state-sponsored terrorism,” said U.S. Attorney Bryan D. Schroder for the
District of Alaska. “The United States also acknowledges and
expressed appreciation for the cooperation of UAE authorities, the Dubai
Police Department’s Anti-money Laundering and Financial Crimes Division
and the Government of Ras al Khaimah, the Office of the Prosecutor
General of Georgia, and the Supreme Prosecutor’s Office and Ministry of
Justice of the Republic of Korea, without whom this resolution would not
have been possible.”
“The FBI will aggressively pursue those who aid terrorist financiers
and those who abuse the U.S. financial system in the process,” said
Special Agent in Charge Robert Britt of the FBI’s Anchorage Field
Office. “Due to the collaborative effort put forth by the FBI and our
partners, it is with great satisfaction that a portion of these
successfully forfeited funds will go to American victims of
international state-sponsored terrorism.”
“IRS-CI special agents are experts at tracing the flow of funds and
throughout this investigation their skills were on display,” said
IRS-Criminal Investigation (IRS-CI) Special Agent in Charge Justin
Campbell. “We are pleased that victims of state sponsored terror will
receive these funds, and we will continue working with our partners to
unravel financial transactions that promote terrorism.”
Beginning in 2011 and continuing up to 2014, the conspirators,
including three Iranian nationals and, allegedly, one U.S. citizen,
defrauded South Korean banks by submitting false documents purporting to
show that Iranian companies were doing legitimate business with Korean
companies. Based on these false documents, the conspirators succeeded
in unlawfully transferring approximately $1 billion worth of
Iranian-owned funds out of South Korea and into the world’s financial
markets.
The American who is an alleged conspirator, Kenneth Zong, was
indicted in December 2016 in the District of Alaska, for 47 counts of
violating the International Emergency Economic Powers Act (IEEPA) and
the Iranian Transaction and Sanctions Regulations (ITSR), providing
unlawful services to the Government of Iran, conspiracy to commit money
laundering, and money laundering. Kenneth Zong remains in South Korea,
where he recently completed serving a sentence of longer than five years
for violating Korean law as part of the same scheme.
The conspirators transferred the Iranian-owned funds to accounts
worldwide, including to Anchorage, Alaska. In 2018, a federal judge
sentenced Mitchell Zong (i.e.
Kenneth Zong’s son) to two and a half years imprisonment for his role
in laundering approximately $968,000 of Iranian-derived funds, knowing
the funds came from his father’s illegal transactions with Iranian
nationals. In a separate forfeiture civil action, Mitchell Zong and
other members of his family were ordered to forfeit to the United States
approximately $10 million in assets, which were purchased with funds
traceable to Kenneth Zong’s 2011 illegal IEEPA activity in Seoul, South
Korea.
In addition to the prosecutions of Kenneth Zong and Mitchell Zong,
the U.S. Attorney’s Office filed a forfeiture complaint seeking to seize
money held in a sovereign wealth fund in the United Arab Emirates.
These funds, which are also traceable to the scheme, were part of a
down-payment made by the Iranian co-conspirators for the purchase of a
Sheraton Hotel in Tbilisi, Georgia in 2011 and 2012. The agreement
announced today resolves that forfeiture case with a proposed order that
$7 million be forfeited to the United States. The forfeiture case,
Civil No. 3:20-cv-00126-JMK, was filed and remains pending in the U.S.
District Court for the District of Alaska.
The $7 million will be allocated to the U.S. Victims of State
Sponsored Terrorism Fund, which Congress established to provide
compensation to certain individuals who were injured in acts of
international state-sponsored terrorism, including victims of the 1979
U.S. embassy hostage situation in Iran, among others.
The Justice Department commended the FBI and IRS-CI for the successful investigation.
The forfeiture case and the case against Mitchell and Kenneth Zong
were litigated by Assistant U.S. Attorneys Steven Skrocki and Jonas
Walker. Former Deputy Chief Woo S. Lee and Senior Trial Attorney
Michael Olmsted of the Criminal Division’s Money Laundering and Asset
Recovery Section handled the prosecution. The Justice Department’s
Office of International Affairs provided valuable assistance in this
matter.
An indictment is merely an allegation. A defendant is presumed
innocent until proven guilty beyond a reasonable doubt in a court of
law.
For more information regarding the U.S. Victims of State Sponsored Terrorism Fund, see U.S. VICTIMS OF STATE SPONSORED TERRORISM FUND (usvsst.com).
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