Last Friday, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) leveled a Specially Designated Narcotics Trafficking Kingpin (“SDNTK”) designation against the Meza Flores organization and a few of its operatives. OFAC believes Meza Flores to be a drug trafficking organization operating out of the Sinaloa region of Mexico. As a result of this designation any assets coming under the jurisdiction of the United States are to be blocked, and U.S. persons are prohibited from engaging in almost all types of transactions with these designated parties. According to OFAC, the organization is run by Fausto Isidro Meza Flores a/k/a “Chapito Isidro”, a 30 year old, Mexican national.

This designation is more significant than other recent SDNTK designations because it in effect introduces an entirely new alleged drug trafficking organization onto the OFAC list of Specially Designated Nationals and Blocked Persons (“SDN List”). This is important because it means that there will likely be future designations of other SDNTKs for their involvement in supporting the activities of the Meza Flores organization. Even more interesting, however, is that OFAC notes that the designation would not have been possible without the support of the Federal Bureau of Investigation, the Drug Enforcement Administration, U.S. Customs and Border Protect Joint Field Command Arizona, and the U.S. State Department Bureau of Diplomatic Security (“DS”). While the first three of these agencies are no brainers when it comes to sharing intelligence on narco-traffickers with OFAC, it was the last one that had me scratching my head. DS’s role is to protect U.S. embassies and personnel overseas, secure critical information systems, investigate passport and visa fraud, and help fight the war on terror. So why would they be involved here? While this is purely speculation on my part, it could be that information was obtained by DS related to one of those categories of responsibility for which they are charged that assisted in OFAC’s determination to list Meza Flores as an SDNTK. For example, there have been many alleged ties between narco-traffickers and terrorist finance, perhaps there was some evidence of such links obtained by DS. Another possibility is that Meza Flores and its operatives were involved in some sort of immigration related fraud, possibly related to their trafficking activities, and that triggered DS’s involvement.

Speculation on the factual basis of the designation aside, Meza Flores designation is curious on legal grounds. When issuing SDNTK sanctions there are two (2) different tiers of designations: Tier I and Tier II designations. Tier I designations which are imposed by the President on or around June 1st of every year. These designations target significant foreign narcotics traffickers. Tier II designations are imposed by the U.S. Department of the Treasury, and target those parties providing material support to significant foreign narcotics traffickers. It seems from Treasury’s press release concerning this designation, Meza Flores is an alleged stand alone narcotics trafficking organization and is not part of any larger organization or involved in providing support to any other organization. As such, it seems that while OFAC certainly could have designated the Meza Flores operatives and associated entities with a Tier II SDNTK designation, that the entity itself, as a stand alone drug trafficking organization, should have been designated as a Tier I designation. If that is the case, and Meza Flores was improperly designated, then it should follow that the Tier II designations of Fausto Isidro Meza Flores and the others tied to the Meza Flores designation have no legal basis. While this problem could easily be corrected through the President’s next set of Tier I designations on June 1, 2013, for the time being it does seem that there is some legal basis to question last Friday’s designations. However, whether the Meza Flores organization seeks to do so, and if OFAC would even respond to such arguments is in question.

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