In recent months, the United States Department of the Treasury’s Office of Foreign Assets Control (OFAC) has engaged in a new trend: the designation of parties to the Specially Designated Nationals and Blocked Persons List (SDN List) who are incarcerated and facing extradition to the United States. The latest example of this came a few days ago, when OFAC designated Alfredo Andrade Parra as a Specially Designated Foreign Narcotics Trafficking Kingpin (SDNTK). Parra, a Mexican national who is alleged to have ties to Los Zetas, has had multiple indictments returned against him out of the Western District of Texas, and was recently arrested in Mexico in April 2013.

The designation of Parra reminds me of another recent designation; that of Parviz Khaki under Executive Order 13382. Like Parra, Khaki was designated after he was arrested. In Khaki’s case he had been indicted out of Washington, DC for sanctions violations and was being held in the Philippines awaiting extradition to face those charges. It seems to be a similar set of circumstances in relation to Parra, which would make it the second time OFAC has designated a party pursuant to sanctions authority after they had already been incarcerated in the last month.

Let me explain why this is significant. First, it shows that OFAC is not using sanctions as a tool to compel a change in behavior. OFAC publicly states that it only applies sanctions to change the behavior of individuals engaged in some manner of nefarious activity. Accordingly, once the behavior has been changed, the sanctions should be lifted, and OFAC should get a pat on the back for a job well done. So why are they designating parties that are already detained and facing extradition in the U.S.? Clearly, the behavior has been changed as the incarcerated parties are unable to engage in any activity, much less the nefarious activity for which they have been accused of. It seems clear from OFAC’s actions then that sanctions in these cases are not being used to compel a change in behavior, as the behavior here has clearly been changed due to the circumstances of these particular SDNs’ arrest and incarceration.

Second, and perhaps an unintended consequence, is that the designation of these individuals, whose extradition and prosecution is imminent, denies them immediate access to competent U.S. counsel. The reason for this is that while U.S. lawyers can provide legal services related to the criminal defense of an SDN, in order to be paid OFAC must issue a specific license for such payments. OFAC typically takes 1-4 months to issue licenses for legal representation of SDNs. I can tell you that most competent federal criminal defense attorneys are not going to get involved in complex criminal litigation, such as that which Parra and Khaki find themselves in, without a large retainer being paid. Moreover, prosecutors are unlikely to wait for an OFAC license to be returned so that said competent counsel can obtain his fee and get entered in on the case. One to four months in a criminal case, particularly at the beginning of the case, is the most critical time. This is the time when decisions are typically made about cooperation, which can be necessary in reducing a sentence when dealing with large scale narcotics trafficking cases, and/or sanctions criminal cases. As such, OFAC’s new trend of designating parties who are in jail awaiting extradition to the U.S. appears to impact the ability of those parties to obtain effective assistance of counsel from practitioners who are well versed in sanctions or, to a lesser extent, complex federal criminal litigation. Although Criminal Justice Act Panels and Federal Public Defender offices have very competent criminal defense attorneys, those attorneys might not have the experience in dealing with OFAC/IEEPA violations. Therefore, those defendants such as Parviz Khaki and others, who are charged with sanctions violations and designated under various sanctions programs, may be out of luck when seeking counsel of their choosing.

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.