Earlier this week, the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) announced the designation of four individuals under the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”). The four individuals targeted–Cesar Gastelum Serrano, Alfredo Gastelum Serrano, Jaime Gastelum Serrano, and Guadalupe Candelario Gastelum Serrano–are alleged to be involved in the trafficking of cocaine to, and on behalf of, the Sinaloa Cartel, an entity designated under the Kingpin Act in 2009. According to OFAC’s allegations the Serrano brothers moved cocaine through Central and South America to Mexico and North America by means of land, air, and sea. OFAC’s press release states that both the Drug Enforcement Administration (“DEA”) and the Mexican Government coordinated with OFAC in relation to this designation.

OFAC’s press release, as is typical of such announcements, offers little in terms of specifics for which the facts underlying these designation can be understood. However, open source research yields newspaper articles from October of this year that link Cesar Gastelum Serrano with the Los Valles organization in Honduras. That organization was designated under the Kingpin Act in August 2014, and shortly thereafter the connections between Serrano and Los Valles started appearing in Central American news publications. Now, shortly thereafter these newspaper articles have appeared, Serrano and his brothers find themselves designated by OFAC.

This is not surprising at all. Having seen a number of administrative records underlying OFAC Kingpin Act, and other Specially Designated National and Blocked Persons (“SDN”), designations in the course of my practice, I have come to learn that newspaper articles are frequently utilized by OFAC to support a party’s designation. What happens if the newspaper articles is wrong? It’s been my experience that OFAC doesn’t really consider the fact that an article can be based on unverified facts or erroneous reporting. OFAC takes them at face value, and unfortunately, courts often take OFAC’s reliance on them at face value.

That does not mean all hope is lost. Those parties designated under the Kingpin Act can seek to mitigate the impact of such newspaper reports by finding erroneous facts in such articles and developing evidence to counter the assertions made therein. This often takes some time and creativity, however, it may be a necessary step in seeking a removal of a Kingpin Act designation. Therefore, one of the first steps any SDN, Kingpin or otherwise, should undertake when seeking their delisting from the OFAC SDN List, is to research all publicly available articles on them and persons they are affiliated with in order to determine what information OFAC may be relying upon in their designation.

Of course, one could also just ask OFAC for the unclassified portions of the administrative record and wait until OFAC discloses them, but that often takes many months, and sometimes years, for them to do. I have found that SDN designated parties–whose assets have been cut off from the US financial system, had their assets blocked, and their reputations ruined–typically don’t want to wait that long to begin contesting their designations. As such, it only makes sense to seek out such open source information as soon in the SDN reconsideration process as possible.