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Sulemane v. Mnuchin

United States District Court, District of Columbia

January 2, 2019

STEVEN T. MNUCHIN et al., Defendants.



         In 2010, the Treasury Department (the “Department”) designated Plaintiff Mohamed Bachir Sulemane a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act, thereby freezing any assets he may have had in the United States. In 2015, the Department denied his request for reconsideration of his designation. The following year, Sulemane brought this lawsuit, challenging the Department's denial of his request for reconsideration. In his Complaint, Sulemane alleges seven violations of the Administrative Procedure Act. In the first six, he claims the Department erred in various ways in reaching its decision to deny his request for reconsideration. In the seventh, he claims the Department did not give him adequate notice under the APA when it refused to provide him the classified and law enforcement-privileged information supporting his designation. Sulemane also requests a writ of mandamus requiring the Department to rescind his designation or disclose this classified and privileged information to him.

         Defendants moved to dismiss Sulemane's claims or, in the alternative, for summary judgment. ECF. No. 7. Sulemane then moved for summary judgment on all claims. ECF No. 9. For the reasons explained below, the Court will grant Defendants' motion and deny Plaintiffs motion.[1]

         I. Background

         A. Statutory Background

         In 1999, Congress enacted the Foreign Narcotics Kingpin Designation Act (“Kingpin Act”). See 21 U.S.C. §§ 1901-08. “The Kingpin Act was modeled on a specific, successful application of a similar statute, the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701- 07 . . . [and] IEEPA itself is closely analogous to the antiterrorism provisions of the Antiterrorism and Effective Death Penalty Act of 1996, 8 U.S.C. § 1189 (AEDPA) .” Zevallos v. Obama, 793 F.3d 106, 109-10 (D.C. Cir. 2015). “Under all three statutes, the President can designate individuals or entities as posing a threat to the security of the United States or its interests and impose sanctions on them.” Id. at 110.

         The Kingpin Act targets “significant foreign narcotics traffickers, their organizations, and the foreign persons who provide support to those significant foreign narcotics traffickers and their organizations, whose activities threaten the national security, foreign policy, and economy of the United States.” 21 U.S.C. § 1902. “Narcotics trafficking” means “any illicit activity to cultivate, produce, manufacture, distribute, sell, finance, or transport narcotic drugs, controlled substances, or listed chemicals, or otherwise endeavor or attempt to do so, or to assist, abet, conspire, or collude with others to do so.” Id. § 1907(3).

         The Kingpin Act authorizes the designation of foreign persons that “play[] a significant role in international narcotics trafficking, ” Id. § 1907(7), as “significant foreign narcotics traffickers, ” Id. § 1903(b). In addition, it permits the designation of foreign persons who “materially assist[] in . . . the international narcotics trafficking activities” of significant foreign narcotics traffickers or are “owned, controlled, or directed by” those traffickers as “specially designated narcotics traffickers.” 21 U.S.C. § 1904(b)(2)-(4); 31 C.F.R. § 598.314. Persons and entities designated under the Kingpin Act “are added to the ‘Specially Designated Nationals and Blocked Persons List,' 31 C.F.R. § 501.807(a), and all their assets in the United States or under the control of any person who is in the United States are ‘block[ed],' 21 U.S.C. § 1904(b), or effectively frozen.” Zevallos, 793 F.3d at 110 (alteration in original).

         A person or entity designated under the Kingpin Act “may seek administrative reconsideration” of the designation by submitting “arguments or evidence that the person believes establishes that insufficient basis exists for the designation.” 31 C.F.R. § 501.807. A reconsideration request “may include arguments or evidence rebutting Treasury's ‘basis . . . for the designation,' or ‘assert that the circumstances resulting in the designation no longer apply.'” Zevallos, 793 F.3d at 110 (omission in original) (quoting 31 C.F.R. § 501.807, 807(a)). “As part of the agency's reconsideration process, designated individuals may request disclosure of the administrative record supporting the designation decision.” Fares v. Smith, 901 F.3d 315, 319 (D.C. Cir. 2018).

         The Office of Foreign Assets Control (OFAC) at the Department reviews requests for reconsideration and “provide[s] a written decision to the blocked person.” 31 C.F.R. § 501.807(d). If OFAC denies a request for reconsideration, the blocked person may challenge that determination under the APA. See, e.g., Fares v. Smith, 249 F.Supp.3d 115, 129 (D.D.C. 2017), aff'd 901 F.3d 315 (D.C. Cir. 2018); Zevallos v. Obama, 10 F.Supp.3d 111, 123-24 (D.D.C. 2014), aff'd 793 F.3d 106 (D.C. Cir. 2015). The Kingpin Act “provides that, to support its determinations, OFAC may submit classified information ex parte and in camera to any court considering a challenge to a designation.” Fares, 901 F.3d at 319 (citing 21 U.S.C. § 1903(i)).

         B. Factual and Procedural Background

         Sulemane is a citizen and resident of Mozambique. Compl. ¶ 15. On June 1, 2010, the Department designated him a significant foreign narcotics trafficker under the Kingpin Act. AR 442-43.[2] The Department also designated three businesses purportedly owned or controlled by Sulemane-Grupo MBS Limitada, Grupo MBS-Kayum Centre, and Maputo Shopping Centre- as specially designated narcotics traffickers under the Kingpin Act. AR 443. As a result, these designations froze “any assets the three entities may have under U.S. jurisdiction and prohibit[ed] U.S. persons from conducting financial or commercial transactions with them.” AR 472.

         Sulemane subsequently challenged these designations. On August 18, 2010, he submitted a proposed settlement to OFAC through which he offered to undertake certain remedial steps in exchange for his delisting. AR 1146-48. On September 29, 2010, OFAC acknowledged Sulemane's settlement offer but requested that he file a formal petition for reconsideration of his designation. AR 717-18. On November 30, 2010, Sulemane did so. AR 508-44. After receiving his formal request for reconsideration, OFAC issued two questionnaires to Sulemane, dated March 2, 2011, and March 6, 2012, requesting additional information to evaluate his reconsideration petition. AR 734-37, 1334-35.

         On February 7, 2015, Sulemane inquired as to the status of his request and again proposed a settlement. See AR 1323-32. In that letter, Sulemane also requested a copy of the unclassified portions of the administrative record, as well as either unclassified summaries of any classified information in it or outright disclosure of that information to his counsel, who retained a security clearance at the time. AR 1325-27.

         On April 2, 2015, OFAC denied Sulemane's request for reconsideration. AR 1341-43. In a three-page letter, it concluded that “[a]fter reviewing all of the evidence before OFAC, including law enforcement sensitive, diplomatic, classified, and open source information, we do not find Mr. Sulemane's claims that he has not engaged in narcotics trafficking to be credible.” AR 1342. The letter went on to inform Sulemane that “[m]ultiple sources indicate that he has engaged, and continues to engage, in narcotics trafficking.” Id. The letter further explained the basis for its conclusion as follows:

. Sulemane “had financial dealings and relations with persons engaged in narcotics trafficking, such as Dawood Ibrahim, who was identified by the President as a Tier I Drug Kingpin in June 2006.” Id.
. Open source reporting had referred to Sulemane as “a narcotics trafficker who conceals narcotics in trucks importing goods into Mozambique, ” a “drug baron, ” and a “‘drug underworld rival' to several detained and prominent narcotics traffickers in Kenya.” Id.
. OFAC had “reason to believe that Sulemane “engaged in corrupt activities to further his narcotics-related activities, ” such as circumventing port scanners to import narcotics into Mozambique. Id.
. OFAC had reason to believe that Sulemane's “violations of customs procedures, foreign exchange regulations, and tax evasion announced by the Government of Mozambique in September 2011 are related to his involvement in ...

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