The United States Department of the Treasury Office of Foreign Assets Control (OFAC) has designated seven individuals and one entity under the Foreign Narcotics Kingpin Designation Act (Kingpin Act). These individuals are: Nicandro Barrera Medrano, Servando Gomez Martinez, Dionico Loya Plancarte, Jose de Jesus Mendez Vargas, Nazario Moreno Gonzalez, Enrique Plancarte Solis, and Jose Arnoldo Rueda Medina. The entity is: Transportadora Purepecha S.A. DE C.V.

According to the U.S. Department of the Treasury, the designated individuals are alleged to be seven key leaders of the international drug trafficking organization La Familia Michoacana (La Familia). The designated entity is alleged to be owned or controlled by one of La Familia’s lieutenants. As result of this designation, the assets of these individuals and the entity that are subject to U.S. jurisdiction have been blocked. In addition, U.S. persons can no longer engage in transactions with these persons.

La Familia is accused of being an extremely violent drug trafficking organization operating primarily in the State of Michoacán, Mexico. OFAC’s actions here constitute the first derivative designation against La Familia since that entity was designated as a significant narcotics trafficker in April of 2009.

Nazario Moreno Gonzalez, has already been indicted for drug trafficking in a U.S. district court in Texas in 2003, and Jose de Jesus Mendez Vargas is alleged to have been involved in the smuggling of large shipments of methamphetamine and cocaine into the United States.

As noted above, U.S. persons are prohibited in engaging in any transactions with these individuals or the entity. Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million. Criminal fines for corporations may reach $10 million. Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

President Obama promised a more focused approach in fighting Central and Southern American drug cartels and the use of economic sanctions has been a large part of that. There has been a rash of designations under the Kingpin Act since President Obama took office over a year ago. While these individuals have no right to appeal the designation in U.S. Courts, they may ask OFAC for a reconsideration under 31 C.F.R. 501.807. If successful, the designated party can be removed from the SDN list. However, these types of removals are difficult to achieve given the complex nature of the sanctions regulations and the internal workings of OFAC. To successfully remove an individual or entity from the OFAC SDN list, you need to contact a lawyer who is experienced not only in OFAC and the sanctions programs they administer, but also in these specific removal proceedings.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC litigation. If you have any questions please contact him at 202-280-6370 at 202-351-6161 or ferrari@ferrari-legal.com.