Some Governors Think Busing and Flying Migrants to Other States Is Good Political Theater.  In Some Cases, It May Also Be Kidnapping.

In recent months, three governors – Greg Abbott of Texas, Ron DeSantis of Florida, and Doug Ducey of Arizona – have aggressively implemented policies to transport large numbers of migrants to other states, reportedly “to protest what they say are inadequate federal efforts on southern border security.”  Governor Abbott’s office recently stated that Texas has bused more than 7,900 migrants to Washington, D.C. since April, more than 2,200 migrants to New York City since August 5, and more than 300 migrants to Chicago between August 31 and September 6.  Arizona has sent 46 buses carrying 1,677 migrants to Washington, and Governor DeSantis – who has said for months that he would be relocating migrants to Delaware or Martha’s Vineyard – made good on that promise this week by sending two planeloads of migrants to Martha’s Vineyard.

While mayors of cities to which migrants have been shipped have decried the practice, and the Biden Administration is considering unspecified “litigation options” to halt it, the governors and their supporters so far appear unfazed, even emboldened, by the criticism and appear to enjoy what some critics call the political theater.  One aspect of the busing-and-flying program, however, should give the governors pause.

According to New York City Mayor Eric Adams, some of the families that were bused to New York “were forced on the bus with the understanding that they were going to other locations that they wanted to go to, and when they tried to explain they were not allowed to do so.”  Governor Abbott retorted that migrants were given voluntary consent waivers in multiple languages before boarding the  buses.  However, any evidence that migrants were forced onto buses or planes, or were induced to board by false promises (such as promises of being taken to other destinations or being able to get work papers) could raise a more serious issue for the governors: the possibility of federal kidnapping violations.

Title 18, Section 1201(a)(1) and (3), of the United States Code makes it a federal felony for anyone who, among other acts, “unlawfully seizes, confines, inveigles, decoys, [or] kidnaps” another person when that person “is willfully transported in interstate or foreign commerce” or “any such act against the person is done within the special aircraft jurisdiction of the United States.”  That language makes clear that kidnaping can occur without gun-to-the-head type coercion.  “Confin[ing]” migrants on a bus by force or threats of force, “inveigl[ing]” (in everyday language, “achiev[ing] control over someone in a dishonest but skillful way, especially so that they will do what you want”), or “decoy[ing]” (“trick[ing] or confus[ing] people into doing something or going somewhere”) is just as much an offense under section 1201 as seizing or kidnapping them.  And under Title 18, Section 2 of the United States Code, anyone who causes or aides and abets another person to engage in kidnapping is equally guilty of that kidnapping.

If any state or local authorities are found to have forced migrants onto interstate transportation, or lied to them to get them to board, those authorities might think that they were not engaged in kidnapping because they did not have a pecuniary motive for their actions, or because they themselves did not transport or accompany the migrants across state lines.  They would be wrong on both counts, under long-established Supreme Court decisions. 

In a 1964 decision, United States v. Healy, the Supreme Court held that section 1201 is not limited to kidnapping for pecuniary gain.  And in a 1999 decision, United States v. Rodriguez-Moreno, the Court held that federal kidnapping under section 1201 “is a unitary crime” that “once begun, does not end until the victim is free.”  In other words, a person who compelled or lied to migrants but stayed behind after the bus leaves can be just as guilty of federal kidnapping as a human trafficker who grooms a vulnerable person into getting into a car but stays behind as another trafficker drives across a state line with the intended victim.

To be sure, the mere transportation of migrants to other states does not constitute kidnapping under section 1201.  If state and city officials can establish that they gave complete and truthful information to each bus- or planeload of migrants about the circumstances of their shipment to other states, and that no coercion or force was used to get them on board, that busing or flying of migrants, however callous, is no crime.

But if there are credible reports of lying or coercion to get migrants on board buses or planes for interstate travel, the Federal Bureau of Investigation and the U.S. Department of Justice need to investigate those reports and take appropriate action.  Both agencies have substantial expertise in investigating kidnapping of all types.  For their part, the governors need to convey unambiguously to those conducting the migrant shipments that there must be no show or threat of force, and no false or deceptive statements, to get migrants on board.  And if drivers or flight crews involved in transporting those migrants witness specific instances of such lying or coercion of migrants, their employers need to authorize them to refuse to transport those migrants.  No transportation contract, no matter how lucrative, and no political advantage are worth becoming complicit in possible federal kidnapping violations.

IUCN-NGO Traffic Report Indicates Decline in Overall Rhino Poaching Rates Since 2018

For nearly 90 years, nations around the world have sought, with varying degrees of success, to combat illegal wildlife trade.  Yet even after the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) entered into force in 1975, wildlife crime remains a blight for many countries. The U.S. Department of Justice even declared that illegal trafficking in wildlife, plants and timber, and marine creatures “has reached epidemic proportions.”

Several species that have been especially heavily targeted by poachers, because of the heavy demand for their use in traditional Chinese medicine, are African and Asian rhino.  From the start of the 20th century to 1970, the African and Asian rhino population plummeted from 500,000 to 70,000, and in just the last decade, nearly 9,900 African rhinos have been lost to poaching.

An August 22 report by the International Union for Conservation of Nature (IUCN) and the NGO Traffic seeks to strike a cautiously positive note.  The report, which covers the period 2018 through 2021, states that “[o]verall rhino poaching rates have declined since 2018, and trade data suggests the lowest annual estimate of rhino horns entering illegal trade markets since 2013.”  One significant variable that evidently affected rhino poaching rates was the COVID pandemic.  According to the report, “global lockdowns and restrictions due to the COVID-19 pandemic saw several African countries experience dramatically reduced poaching rates in 2020 compared to previous years.” But “as COVID-19 travel restrictions lifted, some range states reported new increases in poaching activities – for example, South Africa reported 451 and Kenya six poached rhinos in 2021. However, these numbers are still significantly lower than during the [poaching] peak in 2015.”

At the same time, the report cautioned that threats to rhinos “are at a global – transnational scale, and include environmental change and social drivers”, and that “[t]he risks of these additional threats to global rhino conservation outcomes is unclear.”  It also noted that “illegal trade in rhino horn is still considered the primary threat to the persistence of rhinos.”

Government officials and corporate compliance teams whose mandates include wildlife crime and corruption should read the report closely, while recognizing that several variables may well contribute to an increased incidence of rhino poaching later in 2022 and beyond.  For example, the reportedly lower incidence of COVID in Africa and Asia may contribute to increased travel and tourism to those regions, including an upsurge in poaching.  In addition, South Africa, which can boast the world’s largest rhino population, is set to see an increase in rhinos killed for the second straight year, as poachers have shifted their focus to the country’s KwaZulu-Natal province.  Faced with these disturbing trends, all of the 184 CITES signatory nations will need to redouble their efforts to sustain the decline in rhino poaching.

Emirati Money Launderer Sentenced to Nine Years’+  Imprisonment for £104 Million Laundering Operation

It is sometimes said, in the money-laundering field, that “cash is king.”  It may be more appropriate to say that cash is a Sisyphean burden that many professional criminals must bear (or find professional money launderers to bear for them) in order to realize long-term benefits of their criminality.  Street-level transactions in crimes such as drug trafficking, arms sales, and human trafficking, generate tremendous volumes of smaller-denomination bills that must be exchanged for higher-denomination bills.  Even after exchange, large masses of those higher-denomination bills cannot easily be deposited in banks attentive to money laundering risks. As a result, major criminal operations remain dependent on bulk cash smuggling networks to begin the laundering process in less attentive jurisdictions.

A recent criminal prosecution shows the extent to which bulk cash transportation remains an essential service in money laundering operations.  On July 28, the Isleworth Crown Court in London sentenced Abdulla Mohammed Ali Bin Beyat Alfalasi, an Emirati national, to nine years’ and seven months’ imprisonment, after he pleaded guilty to removing criminal property from England and Wales in violation of section 327(1) of the Proceeds of Crime Act.  The Crown Prosecution Service (CPS) stated that Alfalasi arranged a service designed to transport cash that constituted criminal proceeds of crime out of England and Wales.  According to the National Crime Agency, which investigated the operation, first Alfalasi, and then a number of “couriers” whom he recruited, transported a total of £104 million in cash on at least 83 occasions between November 2019 and October 2020.

The NCA stated that Alfalasi’s operation collected cash from criminal groups around the United Kingdom and took it to counting houses, usually rented apartments in Central London.  Alfalasi’s money laundering method consisted of four steps: (1) filling suitcases each with around £500,000 in cash; (2) spraying each suitcase “with coffee or air fresheners in an effort to prevent them being found by Border Force detection dogs”; (3) Alfalasi or a courier flying business class to Dubai, which allowed increased baggage allowance, and checking in as late as possible to avoid detection of the cash; and (4) declaring the cash on arrival, supported by a letter from a company that Alfalasi owned, saying that the couriers were authorized to carry that amount of cash.  Alfalasi set up the company, Omnivest Gold Trading LLC, specifically to legitimize the funds.

At the time of Alfalasi’s arrest, officers of the National Crime Agency recovered three phones that contained numerous messages between him and others that discussed the collection, consolidation, and movement of the cash.  According to the CPS, the phones “also contained pictures of suitcases filled with cash, a read-out from a money counting machine and an itinerary for one courier’s journey, with Alfalasi checking in at every stage of the process to ensure the money was delivered safely to Dubai.  Credit cards were also recovered from Alfalasi’s home which had been used to buy the flight tickets.”

The Times reported that one of Alfalasi’s couriers “travelled from Heathrow to Dubai three times in August and September 2020, checking in 19 suitcases with a combined weight of almost half a tonne. She returned a few days after each trip with the same baggage weighing significantly less each time.”  To date, four of Alfalasi’s couriers reportedly have been convicted as part of Alfalasi’s operation and others remain under investigation.  The CPS deemed the case one of the largest money laundering cases that it has ever prosecuted.

This set of prosecutions shows why both customs authorities and airlines need to maintain vigilance in watching for bulk cash-smuggling operations.  As the Alfalasi case shows, experienced money launderers can be counted on to try to exploit situations in which that vigilance can weaken – such as the temptation to clear passengers and luggage quickly when departures are imminent.  Moreover, that temptation is likely to increase in the near term, as international air travel continues to grow apace despite rising ticket prices.  Bulk cash-smuggling launderers will readily bear those costs so long as they can successfully run the gauntlet and deposit their customers’ cash in jurisdictions that fail to implement effective anti-money laundering measures.

Crypto Fraud and Theft Trends Continue Unabated

At a time when public interest in cryptocurrency is greater than ever – with total crypto transaction volume growing to a high of $15.8 trillion in 2021, according to Chainanalysis – it is important to note that cryptocurrency-based crime also reached an all-time high in 2021, with illicit addresses receiving $14 billion. 

Within the past week, a series of events demonstrated the continuing and substantial risk of losses to  crypto-related fraud and theft schemes:

  • On March 24 and 25, hundreds of officers with the Latvian State Police and the Lithuanian Police, including special intervention teams, raided a total of three call centers belonging to a single organized crime group that offered would-be investors fake investments in bitcoin, commodities, and foreign currencies.  The European police organization Europol stated that the call-center operation employed up to 200 fake “traders”, speaking English, Russian, Polish and Hindi to their intended victims.  Latvian and Lithuanian Police detained more than 100 individuals, and seized cash, bank accounts, and luxury vehicles as well as €95,000 in cryptocurrencies.
  • On March 28, the United Kingdom law firm Pinsent Masons reported that in 2021 there were 9,458 cases of complaints about alleged cryptocurrency investment fraud in the United Kingdom – a 64 percent increase over 2020 (5,758).  Common crypto-related schemes reported included bogus investments and social media posts that promoted fake websites and apps through which individuals allegedly could invest in digital currencies.
  • On March 29, Blockchain project Ronin stated that hackers stole cryptocurrency now worth almost $615 million from its systems.  It reported that on March 23, unidentified hackers used stolen private keys to steal approximately 173,600 ether tokens and 25.5 million USD Coin tokens.  It also noted that it was working with Chainalysis to trace the stolen funds, most of which were then still in the hacker’s digital wallet.  The Ronin loss represents the second-largest crypto theft ever reported.

These events provide strong indications that the crypto sector still has far to go in combating online fraud and theft schemes.  It is noteworthy that the Latvian and Lithuanian police raids involved substantial international cooperation and coordination.  Europol worked with national investigators from both countries to establish a joint strategy and to organize an intensive exchange of evidence, and the European prosecutors group Eurojust set up a joint investigation team (JIT) into the case within one week.  In contrast, there seems to be little to no collective action within the crypto sector to work with authorities to combat crypto fraud and theft, or to urge crypto industry firms to maintain robust cybersecurity to protect buyers’ and investors’ funds.

In its latest Crypto Crime Report, Chainalysis acknowledged that “$14 billion worth of illicit activity represents a significant problem”, but also asserted that “crime is becoming a smaller and smaller part of the cryptocurrency ecosystem” because the $14 billion figure represented only a 79 percent increase over 2020.  There is no guarantee, however, that that trend will continue.  State actors such as North Korea and organized criminal groups are likely to look at the $15.8 trillion in crypto transactions and redouble their efforts to swindle or steal crypto buyers’ funds however and wherever they can.  Legitimate crypto firms need to anticipate those actions and to build effective public-private cooperative measures to ward off even greater crypto buyer and investor losses.

Justice Department Settles with Credit Union for Servicemembers Civil Relief Act Violations

At a time when media reports trumpet eight- and nine-figure financial penalties for foreign-bribery, sanctions, or other major legal violations, it is important for companies to remember that their corporate compliance programs need to cover not just the highest-visibility legal fields, but all laws and regulations to which they are subject.  Some regulatory fields may carry less onerous penalties, and yet serve important public-policy objectives.

One such field is the Servicemembers Civil Relief Act.  Now nearly two decades old, the SCRA is a federal law directed at easing financial burdens on servicemembers during their periods of military service.  It provides benefits and protections for military members as they enter active duty, and for servicemember dependents.  In particular, it covers issues such as rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments.  Violations of the SCRA can result in the U.S. Department of Justice filing a civil suit to obtain not just civil penalties, equitable relief, and declaratory relief, but also monetary damages on behalf of individual servicemembers.

On March 11, the Justice Department announced that  it had obtained a settlement agreement requiring BayPort Credit Union (BayPort) to pay nearly $110,000 to resolve allegations that BayPort violated the SCRA by charging excessive interest on servicemembers’ loans and repossessing servicemembers’ cars without court orders.  The settlement, which resolved a civil lawsuit that the Department had brought, must be approved by the U.S. District Court for the Eastern District of Virginia.

According to the Department, the lawsuit alleges that BayPort unlawfully charged interest in excess of 6 percent to 21 servicemembers who qualified for and sought SCRA interest rate benefits. In at least one instance, BayPort allegedly told a servicemember “that reducing the interest rate would increase her monthly payment.” The lawsuit further alleges that BayPort unlawfully repossessed three servicemembers’ motor vehicles without court orders.  In at least one of those cases, BayPort reportedly knew about the borrower’s military service,  but repossessed the vehicle from a military base.

Under the terms of this settlement, BayPort must pay nearly $70,000 to the affected servicemembers and $40,000 to the United States as a civil penalty. The agreement with the Department also requires that BayPort “revise its policies and procedures to prevent future SCRA violations and provide SCRA training to its employees.”

Although the BayPort settlement involved only modest penalties, it attracted attention not just regionally but internationally.  Compliance officers at financial institutions should therefore use this settlement in internal briefings and trainings, to emphasize to business executives the importance of maintaining sound compliance programs across the board.