[00:00:02] Speaker 00:
Case number 14-5059, Fernando Zavales, appellant, versus Barack Hussein Obama, and his official capacity as President of the United States at L. Mr. Ferrari for the appellant, Mr. Schultz for the appellee.

[00:00:16] Speaker 02:
Good morning.

[00:00:16] Speaker 02:
Good morning, Your Honor.

[00:00:19] Speaker 02:
It may please the Court.

[00:00:21] Speaker 02:
Eric Ferrari on behalf of the appellant, Fernando Melisades Ceballos.

[00:00:24] Speaker 02:
I will endeavor to reserve two minutes for rebuttal.

[00:00:27] Speaker 02:
Your Honor, as the Kingpin Act is meant to dismantle narcotics trafficking networks and bankrupt Kingpins, it is not meant as an indefinite punishment, nor is it meant to effectively block someone forever.

[00:00:38] Speaker 02:
This case is less about a man trying to get his name removed from a list, as it is a case of overreach by the executive in maintaining a designation relying upon criteria outside of the scope of the Kingpin Act and relying on evidence which the appellant was never offered an opportunity to respond.

[00:01:00] Speaker 02:
When reviewing an agency action under the APA, the court must consider whether the decision was based on the relevant factors.

[00:01:06] Speaker 05:
You say never given an opportunity to respond.

[00:01:08] Speaker 05:
I thought at any time, including right now, he could bring challenges, right?

[00:01:13] Speaker 02:
That's correct, Your Honor, but the reason why we've elevated this case to this level is because we believe the agency is relying on factors which are outside the scope.

[00:01:21] Speaker 04:
So it wouldn't be accurate to say he's not had a chance to respond.

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He's had a chance.

[00:01:26] Speaker 02:
Judge Santel, what we mean by that is he hasn't had an opportunity to respond to the evidence OFAC relied upon in June 2013.

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He has had an opportunity to respond to the information that was provided to him in 2005, as well as to a questionnaire that was provided in 2009.

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When reviewing an APA action, the court will look to the relevant factors.

[00:01:47] Speaker 02:
But just on that, he could respond now to that, right?

[00:01:50] Speaker 02:
Your Honor, he could, but again, we have the situation where we believe the agency is relying upon factors that are outside the scope of the Kington Act, and that's why we pursue litigation in this matter.

[00:01:58] Speaker 04:
It might have been better to have said that rather than saying, yeah, and then a chance to respond.

[00:02:03] Speaker 04:
Studies are relying on factors outside the Kington Act, and then you won't have it quibbling with you over the way you make character out of it.

[00:02:10] Speaker 02:
Understood, Your Honor.

[00:02:13] Speaker 02:
When reviewing the APA action, the court should look at the relevant factors and determine whether there was a clear error of judgment.

[00:02:19] Speaker 02:
The relevant factors here being whether or not Mr. Zavayas meets the definition of a significant foreign narcotics trafficker under the statute.

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And the definition there says it applies to any foreign person who plays

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a role in international narcotics trafficking, and the Kingpin Act defines international narcotics trafficking as any illicit activity to cultivate, produce, manufacture, distribute, sell, finance, or transport controlled substances or narcotics.

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There's no discussion of Mr. Zavios' ability to do so in the future being a criteria to meet that definition.

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There is no discussion of his prior conduct alone being a relevant factor in satisfying that definition.

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And we believe the lower court was wrong here because that's what it based its decision on.

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If you look at 583 of the appendix, what the lower court says is that Mr. Zavios

[00:03:13] Speaker 02:
is not off the radar and is still able to communicate with family members and other potential narcotics traffickers.

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And in order to continue drug trafficking, but more importantly, to continue wandering and managing ill-gone proceeds from his prior drug trafficking activities, thus OFAC has substantial evidence.

[00:03:36] Speaker 02:
I would ask the court, because I know the appellees and the lower court have relied upon this extensively in the Holy Land Foundation case, which is out of the Circuit 2003 case.

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The government has tried to draw the parallel.

[00:03:48] Speaker 02:
Well, since we've relied on

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Because of the deference afforded to the agency, Holy Land would control here, but there's a big difference between Holy Land and this case.

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Holy Land had a different authority, and I'm not just talking about the IEPA statute, but the executive order that was issued in that case, which was 13224.

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That executive order allowed for designations based on a party who materially assisted in or posed a significant risk.

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to engage in terrorist activities.

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That's not the authority at play here.

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If you look at the language of the King-Con Act, it speaks to present conduct.

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And we don't have present conduct in this case.

[00:04:26] Speaker 03:
The Supreme Court has held that when an agent... When someone's convicted in a foreign court of drug trafficking offenses, doesn't that take...

[00:04:37] Speaker 03:
the government a long way towards what it needs to show in a case like this?

[00:04:41] Speaker 02:
I think it would take the government a long way to show that he at one point met the criteria.

[00:04:45] Speaker 02:
But what about in 2013 when the agency made its decision?

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If we were to allow them to consider that fact alone, then you would... But that would mean as soon as you're imprisoned in a foreign country, you're automatically off the list, which defies common sense to think that should happen so quickly at war that the activities are ended once you're in prison.

[00:05:07] Speaker 02:
And that's a point the government's made.

[00:05:09] Speaker 02:
But what we're saying is not that his being in prison warrants him being delisted.

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What we're saying is it's dubious that, given his current state of incarceration, he could meet this definition.

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Not saying he couldn't, absolutely, or someone who is incarcerated from our country.

[00:05:24] Speaker 05:
What are you requiring of the government to be able to show that he's still a danger?

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Some evidence that has a temporal proximity between the decision reached

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and the actual conduct of narcotics trafficking as defined in the statute.

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And the government goes into great detail about what he did in the late 90s, in the early 2000s, even up into the mid 2000s.

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But once you reach the point where OFAC is making a decision in 2013, we don't have a lot of evidence about what was occurring around that time.

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So that's what we believe the agency should base its decision on.

[00:06:01] Speaker 05:
The news reports that they rely on, what was the time period of those?

[00:06:05] Speaker 02:
Well, Your Honor, there's a lot of news reports in there.

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But what they're relying on principally is found in Appendix 425, and it's the continuing control of assets in the cell phone.

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The cell phone is a May 2013 article.

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And there's several articles about continuing control of assets.

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The Panamanian accounts, I believe, is from 2009.

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The Peruvian assets is from 2010, saying that his family controls certain assets.

[00:06:31] Speaker 05:
And then there is an argument.

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In your view, those are too far removed in time to make a current determination?

[00:06:38] Speaker 02:
Yes, Your Honor.

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And I would also state that.

[00:06:40] Speaker 05:
So we have somebody who was convicted by a Peruvian court.

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And there's some evidence that as recently as 2013, he may be involved in this conduct.

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And that's too far removed in time?

[00:06:54] Speaker 02:
Well, Your Honor, I think to the 2013 articles, what we would argue is that that evidence doesn't rise above the scintilla, because all the 2013 article on the cell phone said he had a cell phone.

[00:07:04] Speaker 02:
We have this newspaper article where Uruguayan drug traffickers are continuing to use cell phones from prison to continue narcotics trafficking activity.

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There's no connection drawn between Mr. Zavio's using that cell phone for anything, much less narcotics trafficking.

[00:07:17] Speaker 04:
So we would argue... If you are relying on incapacity,

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In so far as you are to say, well, he's in prison, he can't be doing drug trafficking now, why isn't that evidence that it is possible to be doing drug trafficking under the circumstances of die for operation?

[00:07:35] Speaker 02:
Well, Your Honor, we're saying it is possible for him.

[00:07:37] Speaker 02:
We just, we find that proposition to be dubious, given the state he's in, and no fact we don't believe has provided sufficient evidence.

[00:07:43] Speaker 04:
That's why you found it to be dubious, but I'm not sure why you found it to be dubious.

[00:07:49] Speaker 02:
Well, given the fact that he's restricted by his incarceration from communicating to the outside world.

[00:07:54] Speaker 05:
It's not as if there isn't lots of evidence that that takes place, right?

[00:07:58] Speaker 05:
It doesn't common sense suggest that if someone who has a history of drug trafficking has a cell phone, that he may very well use it.

[00:08:07] Speaker 02:
He could use it.

[00:08:08] Speaker 05:
He could use it, but you said dubious.

[00:08:09] Speaker 05:
Why is it dubious?

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I mean, common sense is that these things take place all the time.

[00:08:14] Speaker 02:
Well, I think it's dubious as to whether or not he meets the definition, given his incarceration, not as to whether or not he's using cell phone.

[00:08:20] Speaker 05:
No, using cell phone for improper illegal activity.

[00:08:23] Speaker 05:
That's what I'm talking about.

[00:08:25] Speaker 02:
I believe that you could draw an allegation from that, but that's not a specific fact that he's actually.

[00:08:32] Speaker 05:
You're saying that's an unreasonable conclusion for them to draw?

[00:08:34] Speaker 02:
I think, one, it is an unreasonable conclusion.

[00:08:37] Speaker 05:
Was it lawful for him to have a cell phone in that prison?

[00:08:40] Speaker 02:
I'm not an expert on Peruvian law, but I would assume it's not.

[00:08:44] Speaker 02:
And we would also say that the fact that he had this cell phone only would speak to ability, which, as I already pointed out, is not a criteria we see under the Kington Act.

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As the Court has said, when enancy action conflicts with a plain reading of the statute, then it's arbitrary and capricious on its face.

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And that's supported by other Supreme Court precedent that says that it will not vacate an agency's decision unless it's relied upon factors which Congress had not intended it to consider.

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And that's what we have here.

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We have consideration of factors

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that were never intended by Congress.

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So in order to allow a Kingpin Act designation to be maintained based on prior conduct and ability alone, it would lead to absurd results.

[00:09:29] Speaker 03:
For example... Your plain language point is plays being present tense?

[00:09:36] Speaker 03:
Correct, Your Honor.

[00:09:38] Speaker 02:
But let's think about the results if we allow them to do this.

[00:09:43] Speaker 02:
If Mr. Tobias, his ability to engage in narcotics trafficking and his prior history of narcotics trafficking is a relevant factor, then he's never going to lose the ability.

[00:09:53] Speaker 02:
So long as he's living and breathing, even assuming he gets out of prison, he'll be able to, given his history, he'll be able to communicate with other narcotics traffickers.

[00:10:02] Speaker 02:
I mean, he'll have that ability.

[00:10:03] Speaker 02:
Or, if you look at it from the perspective of continuing to control assets, this would lead to a result where someone was in narcotics shop for 30 years ago, they purchased the house, they still live in the house, so they meet the criteria today.

[00:10:17] Speaker 02:
And I don't think that's what Congress intended.

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They intended to dismantle networks, they intended to attack current conduct, and in relation to managing of assets, what they were looking at is laundering of funds to finance continued

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Narcotics trafficking activities.

[00:10:33] Speaker 05:
Remind me, the newspaper article talking about him maintaining connections with the members of the family controlling the assets.

[00:10:40] Speaker 05:
What was the date of that?

[00:10:41] Speaker 05:
2010?

[00:10:41] Speaker 02:
Well, there were several articles.

[00:10:44] Speaker 05:
What's the most recent one?

[00:10:45] Speaker 02:
The most recent was the article about the shadow advisor.

[00:10:48] Speaker 02:
That was actually from January 2013.

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And the shadow advisor article talks about that advisor being under investigation since 2011.

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Which goes back to a point that any conduct Mr. Zaviles had in relation to that shadow advisor

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first was only in relation to keeping his house, is what the article alleges, and also would have occurred prior to 2011 or within 2011 and before that time.

[00:11:10] Speaker 02:
Again, I go back to this point about temporal proximity.

[00:11:14] Speaker 02:
As we argued in the brief, it was exactly for these reasons that we requested de novo review.

[00:11:19] Speaker 02:
The Supreme Court itself, de novo review, was warned.

[00:11:21] Speaker 05:
When's the last time we used de novo review for an APA matter?

[00:11:26] Speaker 02:
Your Honor, I don't have that answer offhand, but I know it's... We can only find one instance.

[00:11:29] Speaker 05:
It was a long time ago, and it was far more egregious facts than anything you've alleged here.

[00:11:34] Speaker 05:
That would be striking and remarkable for us to do that.

[00:11:38] Speaker 02:
I do understand that, Your Honor.

[00:11:39] Speaker 02:
I understand it's used sparingly.

[00:11:40] Speaker 02:
We do feel that the facts of this case warranted for the following reasons.

[00:11:46] Speaker 02:
The Supreme Court said it's in relation to severely defective agency procedures, meaning that the impacted party was not afforded an opportunity to respond to crucial facts.

[00:11:56] Speaker 04:
But didn't we already determine that if you have the opportunity, you just don't like the way it came out?

[00:12:02] Speaker 04:
Well, Your Honor, we didn't have that.

[00:12:04] Speaker 04:
Do you think to this day still have a post-action review?

[00:12:12] Speaker 02:
uh... here are we have an opportunity to respond but again if we were to respond at this point in total fact it would be fruitless because relying on factors that are outside of the campaign act statute if you look at it if you can i put your appendix four twenty five you look at all facts what's missing

[00:12:36] Speaker 02:
Well, it's because OFAC, again, I go back to Appendix 425, and what they say there is we are relying upon the fact that he's continuing to control assets in the cell phone.

[00:12:46] Speaker 02:
Well, that evidence was developed after the 2009 questionnaire was sent.

[00:12:50] Speaker 02:
We had no idea that's what they were relying upon.

[00:12:52] Speaker 02:
And again, I go back to Holy Land here.

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If you look at Holy Land, they were designated in December 2001.

[00:12:57] Speaker 02:
They filed suit.

[00:13:00] Speaker 02:
OFAC, and then that was a blocked pending investigation.

[00:13:03] Speaker 02:
OFAC in April of 2002.

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gave them the administrative record they were going to rely upon.

[00:13:08] Speaker 02:
They had 31 days to respond to that administrative record.

[00:13:11] Speaker 02:
And then after their response was made, OFAC upheld the decision.

[00:13:14] Speaker 02:
That's not what happened here.

[00:13:15] Speaker 02:
Mr. Zavios, by the most conservative measures, reinstituted his request for reconsideration in 2009.

[00:13:24] Speaker 02:
OFAC sends a questionnaire, has no mention of cell phones, has no mention of continuing control of assets.

[00:13:30] Speaker 02:
We're talking about procedure right now.

[00:13:32] Speaker ?:
Correct.

[00:13:40] Speaker 04:
Well, you're right.

[00:13:48] Speaker 04:
It's our notice.

[00:13:50] Speaker 04:
You got hearing.

[00:13:51] Speaker 04:
You had both.

[00:13:54] Speaker 04:
Now, pretty action.

[00:13:56] Speaker 04:
No, this is something.

[00:14:00] Speaker 02:
Well, Your Honor, and that is our de novo argument.

[00:14:03] Speaker 02:
The Court feels otherwise.

[00:14:04] Speaker 04:
You're going to want to move on to a different argument.

[00:14:06] Speaker 02:
Yes, Your Honor.

[00:14:08] Speaker 02:
I would just point out one thing for the sake of the record.

[00:14:11] Speaker 02:
The government has stated that de novo review was not granted in the cases we cite.

[00:14:17] Speaker 02:
I think there's just a couple important points to keep in mind there.

[00:14:19] Speaker 02:
In both Citizens Observe Overton Park, as well as the Can't Feed Pits, the inadequate procedure alleged was to the decision rendered.

[00:14:28] Speaker 02:
and inadequacies within the statement of reasons in those findings, but that's not what occurred here.

[00:14:35] Speaker 04:
In fact, obviously... What's the case in which a court has granted Genova a review of one which you can rely on?

[00:14:42] Speaker 02:
Your Honor, I cannot cite you a case where it's been granted.

[00:14:48] Speaker 02:
But assuming arguing that this court believes that both acts procedures were adequate and the factors that they relied upon were within the scope of the Kingpin Act, we would continue to maintain that the evidence they relied upon doesn't rise to the level of substantial evidence.

[00:15:03] Speaker 05:
You're well into your rebuttal time.

[00:15:04] Speaker 05:
We'll give you a couple of minutes back.

[00:15:06] Speaker 05:
Thank you, Your Honor.

[00:15:07] Speaker 05:
Thank you very much.

[00:15:24] Speaker 01:
May it please the court, Benjamin Schultz on behalf of the government.

[00:15:28] Speaker 01:
Fernando Zavallos has been and continues to be a large-scale international drug trafficker.

[00:15:34] Speaker 05:
His illegal activities spend... How do you know he continues to be?

[00:15:36] Speaker 05:
The latest evidence is what, 2011?

[00:15:37] Speaker 05:
I mean, he had a cell phone.

[00:15:39] Speaker 05:
There's no question cell phone.

[00:15:41] Speaker 05:
But what's the most recent evidence that he continues to be a drug trafficker?

[00:15:47] Speaker 01:
Sure.

[00:15:47] Speaker 01:
So the most recent evidence is the cell phone and the continued control of assets.

[00:15:51] Speaker 05:
But it's important to understand that all of... And what's the basis of

[00:15:56] Speaker 05:
the belief that he has exercised continued control of assets and when.

[00:16:00] Speaker 01:
So it's important in looking at that evidence to situate it in its proper context.

[00:16:05] Speaker 01:
And that proper context here starts with an individual whose large-scale drug trafficking enterprises have spanned three decades.

[00:16:13] Speaker 01:
So I think there's, and I don't hear much of a dispute from the other side, that at least as of 2005 when you- Well, that's not enough, though, is it?

[00:16:21] Speaker 05:
I mean, the language is plays, right?

[00:16:23] Speaker 05:
I mean, there's got to be some

[00:16:25] Speaker 01:
Your Honor, the agency here concluded that Mr. Zavayas was currently engaged in drug trafficking.

[00:16:29] Speaker 05:
Yeah, and that's what I've asked you for, on the basis of what evidence when.

[00:16:33] Speaker 01:
Sure, and the way the agency looked at it, which is... And you haven't given me a date yet.

[00:16:37] Speaker 01:
That's what I'm most interested in.

[00:16:38] Speaker 01:
Sure, and I think, let me try and explain the logic, and hopefully that'll become a bit clearer.

[00:16:41] Speaker 01:
Okay.

[00:16:42] Speaker 01:
The agency's logic was, we have someone who has, for many, many, many years, engaged in large-scale international drug trafficking.

[00:16:49] Speaker 01:
and the agency concluded certainly as of 2004 and 2005, this man was a large-scale international drug trafficker.

[00:16:56] Speaker 01:
So at that point, the only question is, has some sort of circumstance changed such that this man's three decades of conduct

[00:17:07] Speaker 01:
should no longer be attributed to him.

[00:17:09] Speaker 01:
Should we infer that he has somehow stopped his drug trafficking activities?

[00:17:12] Speaker 01:
Now, this is not a case in which he's come forward and said, OK, I used to be a drug trafficker, but I've stopped.

[00:17:17] Speaker 01:
This is not a case in which he said, yep, you dismantled my network.

[00:17:20] Speaker 01:
I'm incapacitated.

[00:17:21] Speaker 01:
This is not even a case where, if you look at his filings before the agency, he said, well, I'm in prison now.

[00:17:26] Speaker 01:
I can't do anything.

[00:17:27] Speaker 01:
Instead, his position throughout the administrative process was, I never was a drug trafficker, and I am not one now, period.

[00:17:35] Speaker 01:
And so what the agency said in this case quite reasonably was, look, we don't believe you that you never were a drug trafficker.

[00:17:41] Speaker 01:
We know that's not true.

[00:17:42] Speaker 01:
And so the only question is, has the mere fact of your incarceration somehow constituted some sort of change circumstance that even you are not acknowledging as a change circumstance such that you're no longer a drug trafficker?

[00:17:54] Speaker 01:
And the answer was no, because one, well, we know that you still have links to your network of contacts because you're managing and controlling assets.

[00:18:01] Speaker 05:
When's the most recent evidence that he's managing and controlling assets?

[00:18:05] Speaker 01:
I believe those are the articles, some from 2010 and I believe also at least one from 2013, that he was continuing to have... But your opponent said the 2013 article was referencing conduct that occurred later than 2011.

[00:18:22] Speaker 01:
You know, I think he's talking about the management of the house.

[00:18:25] Speaker 01:
It's also the case that I think there was a 2013 article.

[00:18:30] Speaker 01:
I can double check that.

[00:18:31] Speaker 01:
It's certainly no further than 2010.

[00:18:35] Speaker 05:
Let's imagine that he's right.

[00:18:36] Speaker 05:
Let's imagine that the most recent evidence the government is relying upon goes back to 2011.

[00:18:40] Speaker 05:
Is that legally sufficient?

[00:18:42] Speaker 01:
It is, because the argument here, and remember, his only argument is, I'm in prison now, there's a changed circumstance.

[00:18:50] Speaker 01:
So the question is, is that in fact a changed circumstance?

[00:18:53] Speaker 01:
And since the agency has post-incarceration evidence that he continues to be involved with his network, he continues to engage in illegal activity, we know that the president isn't incapacitating him.

[00:19:04] Speaker 04:
I'm sorry?

[00:19:15] Speaker 01:
Sure, we're not here to say, and I don't think the agency concluded, that the mere management of assets was why they designated him.

[00:19:25] Speaker 01:
Rather, what the agency said was, you have someone who for three decades was a large-scale international drug trafficker, and that person is not even acknowledging their past history.

[00:19:34] Speaker 01:
So the only question then is, has his incarceration been some sort of changed circumstance such that before he was an international drug trafficker and now he's either given it up... When a specific occurs, the designation will continue as long as he's alive and free.

[00:19:50] Speaker 01:
Well, Your Honor, as long as the agency has a reasonable basis to believe that he's still involved with drug trafficking, and here they did.

[00:19:56] Speaker 04:
Well, that's what we're trying to find here.

[00:20:00] Speaker 04:
The question I asked you was, was the management of assets.

[00:20:07] Speaker 04:
Actually, it was enough.

[00:20:08] Speaker 04:
Because the question he's raising, and you say yes, let me ask several, but the question that the appellant is raising is, is the management of assets that were once connected with drug trafficking

[00:20:25] Speaker 01:
Your Honor, whether or not that's sufficient, the agency concluded not that it was mere management of assets, but rather that that piece of evidence taken with the other evidence in the record was indicative of his continuing drug trafficking in the present.

[00:20:41] Speaker 01:
And the reason was,

[00:20:42] Speaker 01:
Go ahead.

[00:20:42] Speaker 01:
I'm sorry.

[00:20:43] Speaker 01:
The reason was that you start with the fact that this man has been a large-scale international drug trafficker for three decades.

[00:20:49] Speaker 05:
So are you suggesting that if he had said in the past, yes, I did this stuff, I did this stuff, and now I'm paying my debt, if he had said that and then there was evidence of asset management, it would be a completely different case?

[00:21:03] Speaker 01:
It would be a different case and it would be a different inquiry for the agency.

[00:21:07] Speaker 01:
But it's important to understand that those weren't his arguments before the agency.

[00:21:10] Speaker 01:
In fact, you can take a look at what he sent the agency in 2009.

[00:21:14] Speaker 01:
His submission is at pages 328 to 339 of the Joint Appendix.

[00:21:19] Speaker 01:
And the key paragraph is on page 329, where he just makes this offhand remark.

[00:21:24] Speaker 01:
He says, I do not satisfy the definition of a significant foreign narcotics trafficker.

[00:21:28] Speaker 01:
I was not a narcotics trafficker at the time of the designation, nor am I currently a narcotics trafficker.

[00:21:33] Speaker 01:
I did not play a significant role in international narcotics trafficking at the time of the designation and do not do so now.

[00:21:38] Speaker 03:
Suppose he was incarcerated and there was no evidence of continued activity while in prison.

[00:21:47] Speaker 01:
I think that would be a lot harder case, although it would be one for the agency in the first instance.

[00:21:52] Speaker 03:
And if the court concluded that that was the state of the evidence hearing, I don't think that that's... I just assume the government would say just because you're incarcerated does not remove the basis for your designation under this statute, because otherwise it would render it a bit absurd.

[00:22:08] Speaker 01:
That is certainly right.

[00:22:10] Speaker 01:
The government's position is absolutely that if you have been a drug trafficker for three decades and then you suddenly end up in a Peruvian prison, the agency doesn't automatically have to assume, OK, well, I guess that's it.

[00:22:20] Speaker 01:
You've broken all your ties with everyone and you stopped all your illegal activities.

[00:22:24] Speaker 01:
And indeed, they're indicia in this particular case that we affirmatively think that that's not true.

[00:22:33] Speaker 01:
I'd be happy to address any other remaining questions in the case.

[00:22:36] Speaker 01:
Otherwise, we'll rest on our briefs.

[00:22:38] Speaker 01:
Were you able to find any cases in which we exercised de novo review?

[00:22:42] Speaker 01:
I'm certainly not.

[00:22:44] Speaker 01:
I'm not aware of any most campy pets.

[00:22:53] Speaker 05:
We'll give you back two minutes.

[00:22:58] Speaker 02:
Thank you, Your Honor.

[00:22:58] Speaker 02:
Just the two points Mr. Schultz raised.

[00:23:01] Speaker 02:
One is the context and circumstance change and failure to acknowledge its prior history.

[00:23:06] Speaker 02:
Nowhere is that made clear that someone contesting their designation has to acknowledge and admit that they were at one time at the definition.

[00:23:16] Speaker 02:
If you look at the reconsideration or the regulation which governs reconsideration process before OFAC, all it says is

[00:23:23] Speaker 02:
You can submit evidence and arguments to demonstrate either an erroneous designation or a change of circumstances.

[00:23:29] Speaker 02:
There is no requirement in that regulation that you admit to what you've done.

[00:23:33] Speaker 04:
As far as management of acts... What is your best statement of what the change of circumstances is that should compel us to refer?

[00:23:41] Speaker 02:
Your Honor, change of circumstance obviously starts with the fact that he's incarcerated.

[00:23:45] Speaker 02:
There's been no evidence that he has used any of the facilities available to him as far as cell phones, ability to communicate with other people.

[00:23:54] Speaker 04:
But the change of circumstances gives him incarceration.

[00:23:57] Speaker 02:
In part, yeah.

[00:23:57] Speaker 02:
And I would say a large, significant part.

[00:23:59] Speaker 02:
That's correct, Your Honor.

[00:24:00] Speaker 02:
But what else?

[00:24:01] Speaker 02:
What other part is there?

[00:24:02] Speaker 02:
Well, there's the simple fact that he is not engaged in any narcotics trafficking.

[00:24:07] Speaker 02:
There's no evidence that he's been involved in directing laundering of assets.

[00:24:12] Speaker 02:
There's no evidence that he's involved in actually making sure drugs are sold or transported or anything along those lines.

[00:24:17] Speaker 02:
And I think, to Judge Santel's point, is management of assets enough?

[00:24:23] Speaker 02:
And I don't think it is.

[00:24:24] Speaker 02:
I think what Congress intended here is that you're dealing with the management of assets to continue drug trafficking activities.

[00:24:30] Speaker 02:
That's why in the definition of international narcotics trafficking, they use finance as opposed to control over assets from ill-gotten proceeds.

[00:24:41] Speaker 02:
So if there's no further questions from the court, I'll rest.

[00:24:44] Speaker 02:
Thank you very much.

[00:24:45] Speaker 02:
Cases submitted.