This past Tuesday, OFAC designated two individuals and two entities pursuant to the Foreign Narcotics Kingpin Designation Act (“the Kingpin Act”) with alleged ties to Los Urabeños, a drug trafficking organization in Colombia.  Victor Alfonso Mosquera Perez and Alveiro Feo Alvarado were identified as high-ranking members of Los Urabeños and designated, along with two of Mosquera Perez’ companies – De Expomineria S.A.S., a mining company based in Medellin, Colombia, and Joyeria MVK, a jewelry business based in the Urabá region in Northern Colombia.

Los Urabeños has been on OFAC’s radar since at least 2013. In May of that year, the organization was designated under the Kingpin Act. According to OFAC, Los Urabeños is currently the largest criminal group (“BACRIM,” or banda criminal) operating in Colombia, and is comprised of small affiliated groups acting on behalf of the larger organization.  The basis for the Kingpin Act designation of Los Urabeños stems from a wide range of activities, including cocaine and arms trafficking, money laundering, extortion, and drug debt collection.

Mosquera Perez and Feo Alvarado are also facing criminal indictments in the Southern District of Florida. The indictment against Mosquera Perez was returned on May 9, 2014, and the indictment against Feo Alvarado was returned June 4, 2015 (OFAC’s reference in its press release to a September indictment is incorrect, but they seem to have the correct indictment included on the chart accompanying the designations. What remains unclear is the correct spelling of Feo Alvarado’s first name, which is spelled differently in the indictment from OFAC’s designation, but we’ll leave that to the government to sort out). Interestingly, both indictments are devoid of a description of any factual allegations as to Mosquera Perez and Feo Alvarado’s conduct and/or involvement in narcotics trafficking. Rather, the indictments merely charge both with conspiracy with intent to distribute a controlled substance under 21 U.S.C. § 963, and add nothing more to substantiate the charges alleged.

The OFAC designation and bare-bones indictment leave Mosquera Perez and Feo Alvarado in quite a predicament. On the one hand, they can seek to contest their Kingpin Act designations administratively through submissions to OFAC; however, the mere existence of an indictment serves to substantiate OFAC’s basis for the designation. Thus, in order to support a request for delisting, a designee would presumably require access to the discovery in the criminal matter in order to contest it. However, a designee is foreclosed from obtaining such evidence short of making an appearance in U.S. district court, which would likely lead to an arrest and incarceration pending trial.

While a criminal defendant has certain rights to the evidence against them pursuant to the Federal Rules of Criminal Procedure, this does not necessarily hold true in an administrative reconsideration case. Courts have ruled that OFAC should, at the very least, release portions of the unclassified administrative record relied upon to support the designation, or in the alternative, a summary of the classified portions of the record. See Holy Land Found. for Relief & Dev. V. Ashcroft, 333 F.3d 156, 163-64 (D.C. Cir. 2003); Al-Haramain Islamic Found. v. U.S. Dept. of the Treasury, 686 F.3d 965, 983-984 (9th Cir. 2011). Courts have reasoned that the disclosure of such records is consistent with due process requirements and affords a designee a meaningful opportunity to respond to the evidence against them.

In a best case scenario, and only upon request, OFAC will comply with the above and release an evidentiary packet containing information that was relied upon in substantiating the initial designation, but much of this information is usually deemed classified, redacted, or only touches the surface of the evidence relied upon. This leads a designee to play a sort of guessing game as to the evidence against them when trying to contest the designation by showing that an insufficient basis exists to uphold the designation, or that the circumstances have changed to warrant delisting.  

The lack of access to the evidence in either the OFAC or criminal matter prevents a designee from adequately addressing the basis of their designation. Moreover, as long as the criminal case stands, OFAC can rely upon it as evidence that a designation should be upheld. Thus, designees subject to the dual impact of an OFAC Kingpin Act designation and a criminal indictment, such as Mosquera Perez and Feo Alvarado, are facing an extremely difficult and delicate task when seeking removal from the SDN List. This may be an unintended consequence by OFAC, but in the eyes of defense counsel, the failure to provide substantiated evidence to a designee is a undeniable problem that should be remedied.

The author of this blog post is Margaret Ververis, an OFAC attorney specializing in sanctions compliance and criminal defense matters. If you have any questions, please contact her at 202-440-2581 or ververis@ferrariassociatespc.com.