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Joumaa v. Mnuchin

United States District Court, District of Columbia

April 10, 2019

AYMAN SAIED JOUMAA, Plaintiff,
v.
STEVEN MNUCHIN et al., Defendants.

          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 ...


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