MEMORANDUM OPINION
TIMOTHY J. KELLY UNITED STATES DISTRICT JUDGE.
The
Treasury Department designated Ayman Saied Joumaa, a Lebanese
and Colombian national, as a specially designated narcotics
trafficker (SDNT) under the Kingpin Act in 2011. As a result
of that designation, any assets Joumaa may have had in the
United States were frozen, and he was barred from conducting
certain commercial and financial transactions with U.S.
persons. Later that year, Joumaa was indicted in the Eastern
District of Virginia for, among other things, coordinating
large shipments of cocaine from Colombia to the United States
for a Mexican drug cartel and laundering hundreds of millions
of dollars in drug proceeds. In 2018, Treasury denied
Joumaa's petition to rescind his designation after
determining that he continued to qualify as an SDNT. Joumaa
has challenged that denial by suing Secretary Steven Mnuchin
and Treasury's Office of Foreign Assets Control
(collectively, “Defendants”), and the parties
have cross-moved for summary judgment. For the reasons
explained below, the Court will grant Defendants' motion
to dismiss or, in the alternative, for summary judgment, and
deny Joumaa's motion for summary judgment.[1]
I.
Background
A.
The Foreign Narcotics Kingpin Designation Act
The
Foreign Narcotics Kingpin Designation Act (“Kingpin
Act”), 21 U.S.C. § 1901 et seq., allows
the President to designate and freeze the assets of persons
involved in international narcotics trafficking. Id.
§§ 1903, 1904. Narcotics trafficking is broadly
defined as “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 authority to designate
persons under the Kingpin Act has been delegated to the
Treasury Department's Office of Foreign Assets Control
(OF AC). 31 C.F.R. § 598.803. OF AC calls such persons
“specially designated narcotics traffickers” and
publishes their names on its Specially Designated Nationals
and Blocked Persons List (“SDN List”).
Id. § 598.314. SDNTs include persons who
“play[] a significant role in international narcotics
trafficking”[2] and “[m]aterially assist[] in, or
provid[e] financial or technological support for or to, or
provid[e] goods or services in support of, the international
narcotics trafficking activities of [an SDNT],
”[3] as well as individuals or entities that
are “[o]wned, controlled, or directed by, or acting for
or on behalf of, [an SDNT].”[4]
OFAC's
designation of a person as an SDNT freezes his assets in the
United States and bars him from conducting certain commercial
and financial transactions with U.S. persons. 21 U.S.C.
§ 1904(b), (c). SDNTs may petition for their removal
from the SDN List, often called “delisting, ”
through an administrative process conducted by OFAC. 31
C.F.R. § 501.807. Through that process, SDNTs may
“submit arguments or evidence that the person believes
establishes that insufficient basis exists for the
designation” and “propose remedial steps on the
person's part, such as corporate reorganization,
resignation of persons from positions in a blocked entity, or
similar steps, which the person believes would negate the
basis for designation.” Id. § 501.807(a).
B.
Factual Background
1.
OFAC's Designation of Joumaa as an SDNT
OFAC
designated Joumaa, as well as the “Joumaa Money
Laundering Organization/Drug Trafficking Organization”
(the “Organization”) as SDNTs in January
2011.[5] AR 2, 23-24, 67. According to OFAC, its
designation was supported by an investigation conducted by
the Drug Enforcement Administration (DEA), which developed
evidence that Joumaa had “coordinated the
transportation, distribution, and sale of multi-ton shipments
of cocaine from South America and [had] laundered the
proceeds from the sale of cocaine in Europe and the Middle
East.” AR 67. Moreover, according to OFAC and the DEA,
Joumaa and the Organization, operating “in Lebanon,
West Africa, Panama and Colombia . . . [continued to] launder
proceeds from their illicit activities-as much as $200
million per month-through various channels, including bulk
cash smuggling operations and Lebanese exchange
houses.” Id.
2.
Joumaa's Indictment in the Eastern District of
Virginia
The
same DEA investigation that led to Joumaa's designation
as an SDNT also produced a criminal case against him. In
November 2011, a grand jury in the Eastern District of
Virginia returned a sealed indictment charging him with one
count of conspiracy to distribute five kilograms or more of
cocaine knowing and intending that it would be unlawfully
imported into the United States, in violation of 21 U.S.C.
§§ 959(a), 960, and 963, and one count of
conspiracy to commit money laundering, in violation of 18
U.S.C. § 1956(h). AR 77-83.
According
to the indictment, Joumaa and his alleged co-conspirators:
(1) “coordinated the shipment of at least tens of
thousands of kilograms of cocaine from Colombia, through
Central America and Mexico, to the United States, including
but not limited to 85, 000 kilograms of cocaine shipped from
Colombia for sale to Los Zetas drug cartel from in and around
2005 through in and around 2007”; (2) “laundered
. . . hundreds of millions of dollars in proceeds of illegal
drug sales in the United States and elsewhere, including but
not limited to [more than] $250 million in drug related
proceeds representing cocaine sales in the United States,
Mexico, Central America, and Europe, which [they] laundered
from in and around 1997 through in and around September
2010”; and (3) “coordinated the shipment of
multi-thousand kilogram quantities of cocaine from Colombia
to Guatemala, Honduras, and Mexico for sale to Los Zetas drug
cartel in Mexico” for ultimate sale in the United
States. AR 79-80.
The
indictment also detailed how Joumaa and his co-conspirators
allegedly laundered drug proceeds. Joumaa, it alleged,
“would arrange for the laundering of drug-related
proceeds from Mexico, Europe (predominantly Spain), and West
Africa to Colombia. [His] co-conspirators would contact [him]
via email, Blackberry PIN, or telephone in order to arrange
for the delivery of drug related proceeds to members of [his]
organization.” AR 80. Joumaa “would then launder
these proceeds and return them to the cocaine suppliers in
Colombia, ” charging “a fee of between 8% and
14%.” Id. These drug proceeds
“represented proceeds from the sale of cocaine in the
United States.” Id. Joumaa and his
co-conspirators would also receive bulk deliveries of United
States currency as part of their laundering scheme. AR 81.
“These deliveries of bulk cash, which represented
proceeds of the sale of cocaine in the United States, were
made in Mexico City, Mexico.” Id. “Once
the drug proceeds were delivered to [Joumaa] and his
co-conspirators, the laundered proceeds would be paid out in
Venezuela or Colombia.” Id. Joumaa
“would launder these funds and make payment within 1 to
5 days from the date of delivery of the United States
currency in Mexico. During the course of the conspiracy,
[Joumaa] typically picked up between $2 and 4 million at a
time in Mexico City.” Id. Joumaa and his
co-conspirators would also “pick up drug-related
proceeds in Mexico, Europe, and West Africa . . . [and] pick
up United States currency in Mexico City, Mexico.”
Id. Joumaa “would then launder these proceeds
and repay them to drug traffickers in Colombia and
Venezuela.” Id. The U.S. currency Joumaa
laundered allegedly “represented the proceeds of the
sale of cocaine shipped from Colombia to Guatemala, Honduras,
and Mexico, for sale to the Los Zetas trafficking
organization in Mexico.” Id.
The
indictment was preceded by a sealed criminal complaint filed
against Joumaa in June 2011. AR 69-76. According to an
affidavit executed by a DEA Special Agent in support of the
complaint, the DEA's investigation into Joumaa's
alleged activities involved at least three confidential
sources who participated in those activities, two of which
had pled guilty to unspecified federal charges. Id.
The affidavit also supported a sealed arrest warrant for
Joumaa, which the docket reflects was issued in June 2011. AR
85. In December 2011, the entire case, including the
indictment, was unsealed. Id.
3.
Joumaa's Petition for Delisting
In May
2016, Joumaa petitioned for his removal from the SDN List. AR
87-90. He asserted “that he does not play a role in
narcotics trafficking activities, ” but even if he had
“engaged in certain conduct that gave rise to his
designation under the Kingpin Act, he [was] prepared to work
in good-faith with OFAC to exact a change in circumstances
that would lead to rescission of his designation.” AR
87. He requested that OFAC provide him a questionnaire with
“any and all inquiries or requests for information
necessary to consider a rescission of [his]
designation.” AR 90.
Joumaa's
petition for delisting led to a lengthy dialogue with OFAC.
At OFAC's request, Joumaa submitted information about his
relationships with 55 individuals and 95 entities on the SDN
List. AR 100-05. He also submitted extensive documentation,
mainly about his business activities and his relationship
with three entities designated along with him in 2011: New
Line Exchange Trust Company, Hassan Ayash Exchange Company,
and Goldi Electronics S.A. See AR 106-1392.
In
November 2016, OFAC provided Joumaa a redacted version of the
administrative record relating to his designation. The record
included OFAC's evidentiary memorandum in support of the
designation. AR 26-66. OFAC heavily redacted the portions of
the memorandum related to Joumaa.[6] AR 28-41. OFAC did, however,
provide him a non-privileged and unclassified summary of the
information in the administrative record that it had
redacted. The summary read, in its entirety:
The JOUMAA drug trafficking and money laundering organization
has moved hundreds of millions of dollars in narcotics
proceeds from the United States to Lebanon. Known narcotics
traffickers and money launderers worked with Ayman JOUMAA to
coordinate drug money laundering in Florida. The export of
vehicles from the United States to West Africa was a method
used by the JOUMAA drug trafficking and money laundering
organization to launder drug proceeds. Ayman JOUMAA is the
leader of the JOUMAA drug trafficking and money laundering
organization.
AR 27.
In
August 2017, Joumaa sent a letter to OFAC, arguing that it
lacked a basis to maintain his designation. AR 1394-1403.
Joumaa's counsel added that, at least in his view, Joumaa
had “not been involved in any activities related to the
exchange of currencies” since his 2011 designation. AR
1402. Later that month, Joumaa suggested a “Terms of
Removal Agreement” through which he would agree to take
certain steps in exchange for his delisting. AR 1404-08.
4.
OFAC's Denial of Joumaa's Petition
In
March 2018, OFAC denied Joumaa's petition for delisting.
AR 1612. A week later, OFAC also provided him a partially
redacted evidentiary memorandum in support of its decision,
as well as a “non-privileged and unclassified summary
of the otherwise privileged information” in the
memorandum that supported both its original designation and
its denial of his petition for delisting. AR 1615-17.
In
OFAC's denial letter, it concluded that “[a]fter
reviewing all of the evidence . . . including the information
[Joumaa] provided, and law enforcement sensitive, classified,
and open source information, ” it did not find credible
his claim “that he is not ‘currently engaged in
conduct that contributes to narcotics trafficking or
money-laundering in support of narcotics
trafficking.'” AR 1612. As a result, it denied his
petition because “he continue[d] to meet the criteria
under the Kingpin Act.” Id. OFAC also cited
the allegations in the indictment, noting that Joumaa had
“not faced the charges against him . . . nor [had] he
notified OFAC of his intent or willingness to return to the
United States to face those charges.” Id. And
OFAC asserted that although Joumaa “denied working with
several SDNTs in the laundering of narcotics proceeds,
including Pedro Mejia Salazar, ” OFAC had evidence that
Salazar had “worked with [Joumaa] as ...