[00:00:01] Speaker 00: Case number 17-5075, Abdul-Muhammed Waikere Fares et al. [00:00:08] Speaker 00: Appellants versus John E. Smith and his official capacity as Acting Director, Office of Foreign Assets Control of the Department of the Treasury. [00:00:17] Speaker 00: Mr. Gillewater for the Appellants, Mr. Riley for the Appellees. [00:00:56] Speaker 05: Good morning. [00:00:57] Speaker 02: Good morning. [00:00:58] Speaker 05: May it please the court, I'm James Gellenwater from Williamson Connolly for the appellants. [00:01:02] Speaker 05: Abdulwockit spent nearly 40 years building one of the largest retail businesses in Latin America. [00:01:07] Speaker 05: There were 5,000 employees, hundreds of millions of dollars in annual revenue, and over 200 stores in 11 countries. [00:01:14] Speaker 05: This business was effectively destroyed with the stroke of a pen when OFAC designated the appellants as drug money launderers under the Kingpin Act. [00:01:23] Speaker 05: When Abdelwad had challenged those designations administratively with the agency, he received an administrative record that looked like this, a black box. [00:01:32] Speaker 05: That's the genesis of this due process lawsuit. [00:01:34] Speaker 05: It was only after the lawsuit was filed that OFAC disclosed summaries, a two-paragraph summary in August 2016 and then a three-page summary in October. [00:01:44] Speaker 03: Ofex Disclosure violates... Below, I don't see any indication that you challenge the redactions, that you challenge the basis for the redaction. [00:01:55] Speaker 05: We did not, and we're not challenging here the executive's privilege or prerogative to enforce law enforcement sensitive privilege information and withhold that. [00:02:05] Speaker 05: What we're challenging, and that's not mutually exclusive of OFAC's obligation to disclose evidence in a nonprivileged way, and that's what we're challenging. [00:02:13] Speaker 05: OFAC's disclosure violates due process for two reasons. [00:02:16] Speaker 05: It's silent as to evidence. [00:02:17] Speaker 05: And independently, it lacks specific factual allegations that are amenable to meaningful challenge. [00:02:23] Speaker 03: The upshot of your argument is that it violates due process to withhold classified or law enforcement sensitive information. [00:02:33] Speaker 05: No, I would frame it another way, Judge Wilkins. [00:02:35] Speaker 05: The upshot is that it violates due process not to make an evidentiary disclosure. [00:02:40] Speaker 05: That's an immutable principle that the Supreme Court, in the Goldberg case that we signed on page three, [00:02:47] Speaker 05: What OFAC's saying it's done here is redacted all evidence from the administrative record, and then it's disclosed a summary of fact findings. [00:02:54] Speaker 03: In other words... You said below in your opposition to the motion for summary judgment, you said, whether OFAC's blanket redactions are appropriate is irrelevant for the purposes of this motion. [00:03:11] Speaker 03: the requirement that OFAC provide designated persons with an adequate basis to understand their designations is absolute, even if some or all of the evidence underlying the designations is classified or privileged. [00:03:26] Speaker 03: It's page 12 of your brief. [00:03:31] Speaker 03: So how is that different than saying that due process requires that [00:03:39] Speaker 03: an OFAC-designee receive classified or law enforcement-sensitive privileged information? [00:03:47] Speaker 05: We're not requesting access to the classified or law enforcement-sensitive evidence. [00:03:52] Speaker 05: We're requesting access to a non-classified or non-privileged explanation of that evidence. [00:03:58] Speaker 05: OFAC's been able to provide that in every one of its sanctions cases in which this Court has found due process satisfied. [00:04:03] Speaker 03: You didn't even ask the District Court to review [00:04:06] Speaker 03: the redacted, the unredacted versions in camera, right? [00:04:13] Speaker 05: Respectfully, we didn't know what that said. [00:04:15] Speaker 05: We requested a non-privileged explanation of that evidence. [00:04:20] Speaker 03: The answer to my question is no, right? [00:04:23] Speaker 03: You didn't ask for that. [00:04:24] Speaker 05: That's correct. [00:04:26] Speaker 03: And that's because, in your view, it didn't matter whether, post deprivation, an independent court, Article III court, could review the evidence. [00:04:41] Speaker 03: What your claim is, is that due process requires you to be able to respond [00:04:48] Speaker 03: to every, I guess, allegation that's made against your client, right? [00:04:56] Speaker 05: Due process requires the opportunity to challenge evidence. [00:05:00] Speaker 05: And that's what the Goldberg case said. [00:05:02] Speaker 05: It drew a clear distinction between fact findings and evidence saying that when the agency relies on its fact findings, in other words, its conclusion after its unilateral review of the evidence, it must disclose that underlying evidence to the designated person so that that person can challenge it. [00:05:16] Speaker 05: That immutable principle applies in the sanctions context, as this Court found in 2000. [00:05:21] Speaker 04: We have said again and again, and usually it's been in the terrorist designation case, but it would be parallel to this, that the government does not have to disclose classified information. [00:05:31] Speaker 04: Now the difference between this case and those is that, and I think every one of the others, the government has said we've got enough non-classified [00:05:39] Speaker 04: to where we can establish what we need to establish without disclosing the classified. [00:05:45] Speaker 04: But in a case in which the government is not making any sort of assertion with respect to non-classified evidence, what is the alternative to the government unless you're saying you cannot withhold classified evidence? [00:05:58] Speaker 04: Isn't it necessary that you ask the judge to review it in camera if you can't see the classified? [00:06:05] Speaker 05: The government properly may rely on law enforcement. [00:06:08] Speaker 05: There's no classified evidence here. [00:06:09] Speaker 05: It's all law enforcement sensitive. [00:06:11] Speaker 04: The cases which this has parallel have been classified. [00:06:13] Speaker 05: Right. [00:06:14] Speaker 05: The government can redact law enforcement sensitive information, but it has to make an effort to disclose that in a nonprivileged way. [00:06:20] Speaker 05: That effort hasn't been made here. [00:06:22] Speaker 04: The summary says... I don't understand what that means, disclose that in a nonprivileged way. [00:06:26] Speaker 05: description, even a non-privileged description of sources, of where those sources come from, dates, places. [00:06:33] Speaker 02: So, Mr. Gell and Walter, I know it feels like we're talking past each other, but just to really simplify, let's say this were just a case of one duty-free shop and [00:06:45] Speaker 02: one individual who works there who goes to the government and says there's money laundering going on through the studio free shop and that individual is presumably that the identity of that individual is protected as law enforcement information. [00:07:01] Speaker 02: Now when the government turns around and says [00:07:03] Speaker 02: your client is designated and generally there's some money laundering going on here. [00:07:09] Speaker 02: If they get more specific, then they reveal, even without naming the individual, the risk is that they in fact, when you say evidence, if they have testimony of the person and the day that person was on the ship, let's say, [00:07:27] Speaker 02: that is going to identify the very law enforcement sensitive information that the government you've conceded has a prerogative to protect. [00:07:36] Speaker 02: So then the question becomes, how does your client get information that is meaningfully concrete so that you know what's being claimed, but the government nonetheless gets to protect that? [00:07:51] Speaker 02: And when we hear you saying we need evidence, [00:07:55] Speaker 02: One might translate using my very simplified example that you need to know who, when, where, with a level of specificity that may be in conflict with the maintenance of this law enforcement sensitive information. [00:08:11] Speaker 05: Right, and I appreciate the question and the example, but we don't even have that here. [00:08:16] Speaker 05: We don't even have one assertion according to a confidential source. [00:08:20] Speaker 04: That would make a difference according to a confidential source as opposed to... Assuming, though, that assuming that this is properly law enforcement sensitive information, parallel to class vet and the tariff cases, and it's all the evidence that they have, you seem to be saying they have to disclose the evidence to you. [00:08:37] Speaker 04: But if you do it by saying, John Smith, or if you do it by saying an employee told us this is what happened, either way you've got the information that is law enforcement sensitive. [00:08:48] Speaker 05: But we don't even have the assertion that it's a confidential source as opposed to an investigation, an audit, a newspaper article. [00:08:55] Speaker 05: We can't even challenge that. [00:08:58] Speaker 04: So that we're coming down again to where Doug Wilkins started. [00:09:02] Speaker 04: Did you ask for the alternative of the [00:09:05] Speaker 04: looking at this in camera to see whether it's properly privileged information and to see whether it meets the requirements of the statute. [00:09:14] Speaker 05: We did not. [00:09:14] Speaker 05: We asked for the agency to meet its obligation to disclose evidence. [00:09:19] Speaker 04: And if it is all privileged and then so that you have the obligation but ahead with the privilege, [00:09:29] Speaker 04: What happens then? [00:09:30] Speaker 05: Importantly, the government doesn't concede that they cannot make a disclosure in a nonprivileged way of the evidence that they've redacted here. [00:09:37] Speaker 04: They say they don't have to. [00:09:38] Speaker 04: They do not claim that they have enough nonprivileged information to establish the requirements of the statute without using privilege information. [00:09:48] Speaker 05: They haven't made that assertion. [00:09:49] Speaker 05: They're making the assertion that they're not required to disclose evidence, but rather that fact findings is sufficient. [00:09:54] Speaker 05: It's not a semantic quibble. [00:09:55] Speaker 05: The Zavallo's case in 2016 provides a great example of that. [00:09:59] Speaker 05: There, despite them invoking the same law enforcement-sensitive privilege they invoke here, direct you to page 25 of the appendix. [00:10:06] Speaker 05: This is a report from the DEA. [00:10:09] Speaker 05: It includes foreign court documents, witness statements, news articles. [00:10:13] Speaker 05: with targeted redactions to project the name of those sources, but there's a description, Fernanda Zavayas transports cocaine, an affirmative description backed up by time, dates, places, sources. [00:10:23] Speaker 02: So, Mr. Zavayas, what's a little perplexing to us, I think, is I can imagine being in your shoes in the trial court and saying, wait a minute, [00:10:31] Speaker 02: All that 21 USC 1903E protects is the identity of individuals. [00:10:40] Speaker 02: And indeed, don't those people have to be so determined by the attorney general in coordination with the director of the FBI? [00:10:50] Speaker 02: All these pages that are blacked out, they're all the identity of individuals. [00:10:54] Speaker 02: And yet, you didn't push back on that. [00:10:56] Speaker 02: You just said, sure, we're assuming all of that. [00:11:00] Speaker 02: is covered by 1903 and so we're in this appellate position of thinking why did you do that and one assumption might be because you thought that if the district judge actually looked at the underlying information that they would realize that [00:11:17] Speaker 02: There's plenty of ground for this, and I understand that someone in your position, you know, ex parte in camera inspection is not your first line of due process rights, but it is perplexing why you wouldn't have pushed for narrowing of that, instead just admit it. [00:11:36] Speaker 05: Respectfully, that's shifting the burden to push for evidence onto the designee rather than on the agency to affirmatively disclose that in a nonprivileged way. [00:11:46] Speaker 05: So what? [00:11:48] Speaker 05: We're already in a world of extreme deference to the agency here. [00:11:52] Speaker 05: There's no pre-deprivation notice. [00:11:54] Speaker 05: There's no hearing. [00:11:55] Speaker 05: It's all on a post deprivation. [00:11:57] Speaker 04: We went through all that. [00:11:58] Speaker 04: So what are you adding by saying we're putting a burden on you to ask for the judge to do an in-camera review? [00:12:03] Speaker 04: I saw that already. [00:12:05] Speaker 04: We already know they blanked out everything. [00:12:06] Speaker 04: We already know they're going to stick to Alvin Gates. [00:12:08] Speaker 05: I see my time has expired. [00:12:09] Speaker 05: Can I shift from this evidence report to make up? [00:12:12] Speaker 02: We're interested in asking questions in here. [00:12:14] Speaker 02: We want to give you time to answer that question. [00:12:16] Speaker 05: OK, the question of? [00:12:17] Speaker 04: What's wrong with, in the case of necessity, shifting the burden to you to ask for the in-camera review? [00:12:27] Speaker 04: Why couldn't you call upon the district court to do that? [00:12:29] Speaker 05: To be fair, the agency hasn't complied with its constitutional obligations in the first instance. [00:12:34] Speaker 05: We could have here, but we push for a disclosure that's constitutionally required. [00:12:40] Speaker 04: And having not achieved that in the district court, it's not at all clear to me why you didn't then ask, well, there are cases that refer to the possibility of an in-camera review. [00:12:51] Speaker 04: Can we have that, Your Honor? [00:12:53] Speaker 04: I don't tell you why you didn't do this. [00:12:58] Speaker 02: To be fair, you did ask for a privilege log, which I guess is one way of trying to get some of this granularity from the government and the district. [00:13:07] Speaker 05: And just to add a little color to that, the OFEX conceded that this summary consists of hypotheticals. [00:13:15] Speaker 05: And I'm referring specifically to, on page 390 of the appendix, a bullet point list of an example [00:13:24] Speaker 05: What people would do, and they've acknowledged this is a hypothetical illustration rather than a fact. [00:13:30] Speaker 05: So this is untethered to any sort of evidentiary guidepost that would allow us to distinguish whether the rest of the allegations in here are fact or hypothetical. [00:13:38] Speaker 03: That alone should give the court policy. [00:13:42] Speaker 03: Our investigation has revealed a hundred different instances of money laundering, and we're going to summarize one of those for you, and they give an account of one of those. [00:13:56] Speaker 03: Are you saying that that violates due process because you're entitled to a summary of the other 99? [00:14:03] Speaker 05: But that's not what they're doing here. [00:14:04] Speaker 05: They're providing something that never happened. [00:14:06] Speaker 03: Answer my question, please. [00:14:07] Speaker 03: I'm trying to understand the import of the test [00:14:11] Speaker 03: that you want us to adopt here. [00:14:15] Speaker 05: As I laid out at the beginning, this is an extremely large organization. [00:14:18] Speaker 05: There needs to be more specifics about transactions and about individuals with whom they transacted business. [00:14:23] Speaker 05: A great example of that is the Kinehart's case. [00:14:26] Speaker 03: That's out of the northern division. [00:14:28] Speaker 03: You're not answering my question. [00:14:29] Speaker 03: I'm going to make you answer my question. [00:14:31] Speaker 03: Yes, I'd like to. [00:14:32] Speaker 03: So on page 14 of your brief, you say that what the case law shows [00:14:40] Speaker 03: is that OFAC is required to provide designates with the unclassified evidence upon which it relied, and then an explanation of why it thought this evidence supported a potential designation. [00:14:54] Speaker 03: But that's not the legal test that you argue on the very next page of your brief, where you say that due process requires you to [00:15:08] Speaker 03: be able to meaningfully rebut the evidence against you and that's inconsistent also with what you said below in summary judgment that the kind of redactions were [00:15:21] Speaker 03: and the propriety of them was irrelevant because you're entitled to know what the evidence is against you so that you can rebut it. [00:15:31] Speaker 03: So I'm gonna go back to my hypothetical is if they said we have evidence of 100 different instances of money laundering and we're going to give you, and here's an example of one of them. [00:15:48] Speaker 03: The way I read your brief is that that wouldn't satisfy due process, because you need to have an understanding of all of the other 99 instances. [00:16:01] Speaker 05: To go to your first point, and I think as Judge Billard put it, we're talking past each other, and that's my fault I'm not being clear enough. [00:16:07] Speaker 05: When we say access to the unclassified evidence, that doesn't mean the document itself. [00:16:10] Speaker 05: That means an explanation of that evidence in an unclassified way. [00:16:14] Speaker 05: Again, a description of the source, where it came from, the timeliness. [00:16:17] Speaker 05: And as the Zavallo's court said, due process was satisfied not only because the designee was able to challenge the adequacy of the evidence, but also its propriety. [00:16:26] Speaker 05: You can never challenge the propriety of a conclusion without the underlying evidence supporting it. [00:16:31] Speaker 05: And so your example would not be sufficient because it's uncorroborated by any evidentiary explanation. [00:16:36] Speaker 05: They didn't even make an attempt to do that here. [00:16:39] Speaker 05: They said, according to multiple sources, Abdelwad had started laundering money in 1980 for the Medellin Cartel. [00:16:45] Speaker 02: tough to figure out exactly where. [00:16:47] Speaker 02: This is very unfamiliar territory. [00:16:48] Speaker 02: I think everybody in the room recognizes for court. [00:16:52] Speaker 02: So assume that typically for due process, you need to know who it is. [00:16:58] Speaker 02: You need to be able to cross examine that person. [00:17:00] Speaker 02: But when we're in law enforcement sensitive terrain, you can't necessarily know who the person is. [00:17:06] Speaker 02: Maybe you can't know the date. [00:17:08] Speaker 02: So there's going to be some kind of generalizing. [00:17:13] Speaker 02: The government here thinks it's done exactly what you are asking for. [00:17:17] Speaker 02: They think they've given airbrushing out some of the revealing specifics that they've told you why your client has been [00:17:26] Speaker 02: designated, and I guess just to be somewhat specific, they've said at the Takuman airport and at the Aurora airport that these duty-free shops are money laundering. [00:17:44] Speaker 02: Why isn't that enough for your client to hire an outside firm and do an audit and present that? [00:17:52] Speaker 02: information and say our books are completely conventional. [00:17:58] Speaker 02: doesn't that at least drop out those examples? [00:18:01] Speaker 02: And I have some ideas why that might not be sufficient, but I'd like to hear from you why. [00:18:05] Speaker 05: Just to answer that in two parts. [00:18:05] Speaker 05: First, the government doesn't say it's done what we've asked for, which is disclose evidence. [00:18:10] Speaker 05: It, on page 16 of its brief, draws a distinction itself between evidence and fact findings. [00:18:15] Speaker 05: And the three out-of-circuit cases it's citing, saying you can provide a summary of evidence or fact findings, actually don't say that. [00:18:21] Speaker 05: They cut the other way. [00:18:22] Speaker 05: They all require a disclosure of evidence. [00:18:24] Speaker 05: And the ASSE case is a great example. [00:18:28] Speaker 05: They quote it for the proposition, a summary of evidence may, in certain circumstances, provide sufficient notice to allow meaningful opportunity to respond. [00:18:35] Speaker 05: But one of the circumstances cited in the ASSE case in which it didn't constitute adequate notice is when a summary merely attributes factual allegations to, quote, reliable confidential sources. [00:18:47] Speaker 05: That's not adequate. [00:18:48] Speaker 05: That's not an evidentiary summary. [00:18:49] Speaker 05: And that's more than we got here. [00:18:51] Speaker 05: We just got according to multiple sources. [00:18:53] Speaker 05: That's point one. [00:18:54] Speaker 02: Which case are you referring to where you said the summary citing to reliable confidential sources is insufficient? [00:19:00] Speaker 05: That's the ASSE case citing another Ninth Circuit example where a summary attributable to multiple sources is insufficient. [00:19:10] Speaker 05: I can find that case for you if you'd like. [00:19:11] Speaker 02: I got it. [00:19:12] Speaker 05: I just didn't hear what you said. [00:19:13] Speaker 05: With respect to your second point, [00:19:16] Speaker 05: Could we do an audit? [00:19:17] Speaker 05: Yes, and we did. [00:19:18] Speaker 05: We did a global audit of all the stores. [00:19:21] Speaker 05: We submitted that. [00:19:23] Speaker 05: And it found no evidence of money laundering. [00:19:25] Speaker 05: But that's the exact same audit we would have done had we received no disclosure at all, just generally rebutting allegations of general money laundering. [00:19:33] Speaker 03: When you say you submitted that audience, who did you submit it to and when? [00:19:36] Speaker 05: to OFAC, and this was back in March. [00:19:41] Speaker 05: And it's not part of the record, admittedly, that OFAC cites on page 18, but when OFAC discusses targeted audits we could potentially do to disprove the allegation, it cites four or five, showing that they're not targeted at all. [00:19:55] Speaker 05: And if we disprove the, again, at the Tokumen Airport, there are 40 stores. [00:20:00] Speaker 05: So it's not a small audit. [00:20:01] Speaker 05: If we disprove that, what about the Sinaloa Cartel? [00:20:04] Speaker 05: There are these massive allegations of connections with huge drug trafficking organizations. [00:20:09] Speaker 05: And the Kynar's case is a perfect example of that. [00:20:12] Speaker 05: There, they received analogous disclosure, redacted evidentiary record, three-page summary. [00:20:18] Speaker 05: The court found that it did not comply with due process. [00:20:21] Speaker 05: It was very informative of what OFAC thought that Kind Hearts did, fund Hamas to the tune of hundreds of thousands of dollars. [00:20:27] Speaker 05: It identified specific officers and fundraisers within Kind Hearts and explained how they had coordinated with Hamas officials to fund the entity. [00:20:36] Speaker 05: The court said that's not sufficient. [00:20:38] Speaker 05: Kind Hearts was at least, concededly at least in part, a legitimate charitable enterprise. [00:20:44] Speaker 05: It needed specifics about the transactions. [00:20:46] Speaker 05: How much? [00:20:46] Speaker 05: When? [00:20:47] Speaker 05: It needed specifics about the individuals with whom it did business. [00:20:50] Speaker 05: How they're connected to Hamas. [00:20:52] Speaker 05: Because Hamas doesn't do business under the name Hamas any more than the Sinaloa Cartel does business under the name Sinaloa Cartel or El Chapo. [00:21:00] Speaker 05: To an even greater extent here, we need specifics. [00:21:03] Speaker 05: This is a massive enterprise. [00:21:05] Speaker 05: We need specifics about transactions. [00:21:07] Speaker 05: We need specifics about individuals. [00:21:09] Speaker 05: The government claims we're money laundering. [00:21:11] Speaker 03: Let me go back to my question then. [00:21:13] Speaker 03: Let's suppose the government says our investigation has revealed 100 different instances of money laundering. [00:21:21] Speaker 03: We're going to give you the specifics as to one of those. [00:21:26] Speaker 03: And they give every specific that one can imagine as to one of them. [00:21:32] Speaker 03: Your position is that it still violates due process because even if you have enough specifics to rebut or attempt to rebut that one, you need that information for the other 99. [00:21:47] Speaker 05: I wouldn't go that far. [00:21:48] Speaker 05: I'd say if it's a very specific example, transactions, time, dates, stores, people, but even described in a general, um, uh, nonsensitive way, and it was tethered to an evidentiary explanation, again, where that came from and described in a nonprivileged way, that might be sufficient. [00:22:07] Speaker 05: But we don't have that here. [00:22:08] Speaker 05: We don't have evidence and we don't have specifics. [00:22:11] Speaker 05: We have these generalities. [00:22:12] Speaker 05: We have hypotheticals. [00:22:14] Speaker 02: How do we know when specifics are enough? [00:22:16] Speaker 02: I mean, just for purposes of discussion, there may be situations in which, like my very simplified example, the only evidence is the testimony of an individual. [00:22:28] Speaker 02: There just isn't other evidence. [00:22:30] Speaker 02: And that individual's identity, I think we all would agree, may, with appropriate determinations made by authoritative people, be kept secret. [00:22:38] Speaker 05: Of course. [00:22:39] Speaker 02: So you're not going to get evidence. [00:22:41] Speaker 02: You have to just have something, summaries, other information. [00:22:45] Speaker 02: And the question is, how do we know when the information that's been provided is sufficiently specific to satisfy due process? [00:22:56] Speaker 05: I agree with you, Judge Pillai, that we're sort of in unfamiliar territory here. [00:23:00] Speaker 05: If it's a legitimate drug trafficker, they're not going to challenge the OFAC designation. [00:23:05] Speaker 05: They don't care. [00:23:05] Speaker 05: They don't do business in the United States. [00:23:06] Speaker 05: They sell drugs. [00:23:08] Speaker 05: There are not a lot of challenges under statutes like this. [00:23:11] Speaker 05: So because evidence has been disclosed in every other sanctions case, we haven't had to confront this issue of what's evidentiary and what's not. [00:23:19] Speaker 05: But it's one of those you know when you see it kind of deals. [00:23:22] Speaker 05: And here there's not even been a good faith effort. [00:23:24] Speaker 05: I can't emphasize that enough. [00:23:26] Speaker 05: They don't say according to a source whose identity we can't confirm but that we found to be reliable and corroborated by X, Y, and Z. They haven't even done that. [00:23:35] Speaker 05: It's not a good faith effort. [00:23:36] Speaker 05: It's according to multiple sources. [00:23:38] Speaker 05: That's it. [00:23:39] Speaker 04: How do we draw the judgment or opinion in this case in your favor if we uphold the right of the government to withhold [00:23:49] Speaker 04: And you use the word classified yourself several times, by the way, but the privileged information. [00:23:54] Speaker 04: Yes. [00:23:55] Speaker 04: If the government can withhold that and we find that they have not done what they should have done here, what is our order going to say they should do when we send it back to the district? [00:24:05] Speaker 05: That's the whole purpose of the summary of evidence. [00:24:07] Speaker 05: If you're not disclosing the evidence, you're just disclosing the summary. [00:24:10] Speaker 04: Did I ask you whether that was the purpose or not? [00:24:11] Speaker 04: No, I'm sorry. [00:24:12] Speaker 04: I asked you what the order should say. [00:24:13] Speaker 04: We should tell them to do it. [00:24:14] Speaker 05: The order should say the nature of the privileges isn't challenged, but the government must make an evidentiary disclosure in a nonprivilege way that includes specific allegations with respect to a felon's conduct. [00:24:26] Speaker 04: I'm still wondering what that nonprivilege way means. [00:24:28] Speaker 04: You said that way early in your argument. [00:24:30] Speaker 04: Yes. [00:24:30] Speaker 04: I asked you then what it meant. [00:24:32] Speaker 04: You answered a different question. [00:24:34] Speaker 04: What does that mean? [00:24:36] Speaker 04: What are they supposed to do in a non-privilege way? [00:24:40] Speaker 05: Even the words A, V, words like that are redacted here. [00:24:44] Speaker 05: You can describe a source in a way that wouldn't compromise that source's safety. [00:24:49] Speaker 04: It just generally... How do we know there's some way to describe the source that wouldn't disclose it here? [00:24:53] Speaker 04: We know that... You and I have both, well, I assume you have. [00:24:58] Speaker 04: Many of us have read classified or privileged information before where there'd been blackouts. [00:25:03] Speaker 04: and you could sit there and plug it in yourself based on your own knowledge just to want one end to black out. [00:25:09] Speaker 04: If we just say the employee of the one store that Judge Pillard is asking about, they're going to know who that employee is. [00:25:16] Speaker 04: How do we know that there's a way to make this disclosure without making the disclosure? [00:25:22] Speaker 05: It at least has to be a good faith attempt to describe the evidence in a non-privilege way according to a source that the government, and an explanation, that's what the Kinehart case required, an explanation of why the government relied on that evidence. [00:25:34] Speaker 05: We found it to be reliable. [00:25:36] Speaker 05: It can be very basic. [00:25:37] Speaker 05: That's not even been done here, and we don't know. [00:25:39] Speaker 04: Do you rule out the possibility in the case of this sort of the judge saying, I'm going to look at this ex parte and in camera? [00:25:46] Speaker 04: Do you rule that out as a possible substitute compliance for due process where the information is so privileged that it cannot be broken out? [00:25:57] Speaker 05: Well, that goes back to the PMOI decision in 2010, which called it an open question whether [00:26:03] Speaker 05: a court could ever look at evidence in camera where the entirety of the evidence has not been disclosed to the accused. [00:26:10] Speaker 04: If it's an open question, then answer it for me. [00:26:12] Speaker 04: What are you saying is the status of the possibility of having an ex parte in camera examination by the court? [00:26:20] Speaker 05: The better result, Judge Sintel, is to require the agency to make an evidentiary disclosure in whatever way it can. [00:26:27] Speaker 05: It hasn't done that here. [00:26:28] Speaker 05: It hasn't made any affirmation that it cannot make a non-privilege evidentiary disclosure. [00:26:33] Speaker 05: It says fact-finances on that. [00:26:34] Speaker 04: You don't want to answer the question as to whether it could be done by, you said the better way would be to do it the other way. [00:26:38] Speaker 04: You don't want to give me an answer? [00:26:39] Speaker 04: Of course it could be done. [00:26:40] Speaker 04: It could be done, thank you. [00:26:43] Speaker 05: But the better result, again, is to require evidentiary disclosure. [00:26:47] Speaker 05: And in the Kinehart's case, the court said, look, if you can't disclose anything, let's look at another option like having a lawyer with security clearance come in to review it. [00:26:56] Speaker 05: But that's never had to happen before because, again, in every sanctions case, evidence has been disclosed. [00:27:02] Speaker 05: This needs to be put in context. [00:27:04] Speaker 05: This isn't a terrorism case. [00:27:05] Speaker 05: It's not even a tier one kingpin designation by the president. [00:27:09] Speaker 05: This is a second level designation of a businessman and a 5,000 employee business. [00:27:14] Speaker 05: This is not the case you want to mark the outer bounds to move the goalpost with respect to how little the agency can disclose to a designated person, and it would if the district court's decision is affirmed or if this evidence-free record is found sufficient. [00:27:26] Speaker 03: The problem is you're trying to say that, you know, we might hold something very extreme here. [00:27:32] Speaker 03: But your litigation position has painted you or us into a corner, depending upon how you want to look at it. [00:27:41] Speaker 03: Because your litigation position was extreme. [00:27:44] Speaker 03: You didn't challenge the scope of the redactions. [00:27:47] Speaker 03: You didn't ask for the court to find anything ex parte. [00:27:50] Speaker 03: You said that redactions really was irrelevant because you have an absolute right to know the evidence. [00:28:02] Speaker 02: So, some evidence. [00:28:06] Speaker 05: Don't hold that inartful litigation position against my clients. [00:28:10] Speaker 05: As Judge Santel mentioned, there can be an order. [00:28:13] Speaker 05: remaining to the agency, make an evidentiary disclosure consistent with your invocation of the law enforcement sensitive privilege. [00:28:19] Speaker 05: That's all we're asking for. [00:28:20] Speaker 02: Did you ever offer a cleared counsel to look at the information or seek that? [00:28:28] Speaker 05: We didn't. [00:28:29] Speaker 05: Again, the distinction between classified and law enforcement sensitive, we didn't offer that. [00:28:36] Speaker 05: If the court has no further questions, could I have a time for a bottle? [00:28:39] Speaker 02: We'll definitely give you time for a bottle. [00:28:41] Speaker 05: Thank you. [00:29:00] Speaker 01: Good morning. [00:29:01] Speaker 01: Nicholas Riley for the government. [00:29:03] Speaker 01: I'd like to respond to one point. [00:29:05] Speaker 01: I'm happy to answer any questions the court has, obviously. [00:29:08] Speaker 01: But I'd like to just start by responding to one point that came up repeatedly during plaintiff's presentation. [00:29:13] Speaker 01: And that was the idea that these evidentiary disclosures should specifically identify times, dates, specific stores. [00:29:21] Speaker 01: I'd just like to put that in context very briefly here. [00:29:25] Speaker 01: The kinds of organizations that we're dealing with here, the kinds of [00:29:29] Speaker 01: international global drug trafficking cartels that we're talking about here. [00:29:33] Speaker 01: When information is disclosed of this type that plaintiffs are seeking, times, dates, specific transactions, they are not going to go about trying to identify the sources who revealed that information. [00:29:45] Speaker 01: in the way that a government goes about ferreting out the source of a leak. [00:29:48] Speaker 01: They're not going to do due diligence in interviews to find out who specifically released that information. [00:29:54] Speaker 01: If there were five people at a given front company, an accountant, a lawyer, whatever, or two store clerks that had access to a given piece of information that is then eventually revealed, [00:30:05] Speaker 01: Both of those people, all of those people's lives are put in jeopardy. [00:30:07] Speaker 01: So I just wanted to make very clear that the law enforcement sensitive information here. [00:30:11] Speaker 04: Are you taking the position that there is no non-law enforcement sensitive evidence here that could be revealed? [00:30:17] Speaker 04: That's exactly right. [00:30:18] Speaker 04: Every bit of your evidence is law enforcement sensitive. [00:30:21] Speaker 01: I'm sorry? [00:30:22] Speaker 04: Every bit of your evidence is privileged, law enforcement sensitive. [00:30:26] Speaker 01: I wouldn't say every bit of the evidence is law enforcement sensitive. [00:30:29] Speaker 01: There are some articles, I think, that are disclosed. [00:30:32] Speaker 01: Judge Pillard referred to a couple of them in the earlier July disclosures as exhibits that were attached to somebody. [00:30:37] Speaker 04: There is no undisclosed evidence that isn't law enforcement sensitive. [00:30:41] Speaker 01: That's exactly right. [00:30:42] Speaker 01: And the reason why the agency went through and provided the October summary of facts, the August summary of facts, was to provide a more readable and understandable distilled version of all of the [00:30:53] Speaker 01: non-law enforcement sensitive information in the record. [00:30:57] Speaker 02: Mr. Reilly, for some of the reasons that we've discussed, because the way the litigation went on in the trial court, it hasn't really been pressed. [00:31:08] Speaker 02: But where do you get the law enforcement sensitive privilege from? [00:31:14] Speaker 02: And the statutory source that I see limits it to the identity of individuals and indeed limits it to invocation by the director [00:31:23] Speaker 02: of the Bureau, and I'm really at a loss to see how all the redactions in this case could be covered. [00:31:34] Speaker 01: Sure. [00:31:34] Speaker 01: So I think just to the statutory provision that I think you're referencing deals with, as I understand it, reports to Congress. [00:31:43] Speaker 02: So I just want to make... I'm just looking for a source for law enforcement sensitive in the materials that we have. [00:31:49] Speaker 01: Sure. [00:31:49] Speaker 02: And because there's a concession that this is confidential, [00:31:53] Speaker 02: It's not classified. [00:31:54] Speaker 02: None of it's classified. [00:31:55] Speaker 01: Sure, so I think it's helpful to step back and just understand how OFAC goes about providing this evidence. [00:32:02] Speaker 01: OFAC's relying on several other law enforcement investigative agencies, each of which have their own regulations and guidelines for determining what material is law enforcement sensitive that are specific to those agencies' needs and investigative methods. [00:32:18] Speaker 01: The agency, OFAC, is also relying on information that comes from sometimes foreign governments. [00:32:25] Speaker 01: where there are diplomatic concerns at issue in terms of disclosing information that may have been provided to a U.S. [00:32:31] Speaker 01: investigative agency in confidence. [00:32:33] Speaker 01: And I think these are the same concerns that this court has recognized in past cases. [00:32:37] Speaker 01: So in Jiffre, where the court upheld the government's use and withholding of law enforcement-sensitive information, it didn't look to... But Jiffre also had a statutory source for it. [00:32:50] Speaker 02: There was an SSI, you know, which is a known [00:32:53] Speaker 02: It's just, I mean, think about us, the position we're in as a matter of judicial review. [00:33:00] Speaker 02: What role can we have if I don't know what the regulations are of each of the agencies that has applied its own guidelines on what's law enforcement sensitive? [00:33:08] Speaker 02: And I appreciate that you're playing the clearinghouse role. [00:33:11] Speaker 02: You're asking all involved entities, foreign governments, you know, what is [00:33:17] Speaker 02: Bottom line for you, but do you have a role in testing that? [00:33:21] Speaker 02: What role could we possibly have in testing that? [00:33:23] Speaker 02: I mean, you know, the risk, as we all know, is that everybody puts forward their, you know, their full wish list of, I don't really want anybody to see this. [00:33:33] Speaker 02: And, you know, who pushes back on that? [00:33:37] Speaker 01: It's a fair question, Your Honor. [00:33:39] Speaker 01: But just one correction on GIFRI. [00:33:40] Speaker 01: You're right that GIFRI did involve sensitive security information and classified information, both of which are the subject of statutory and regulatory guidelines that this court can apply. [00:33:50] Speaker 01: It also, though, and I think this is important to remember, it also did involve the use of law enforcement-sensitive information, and it upheld the withholding of that. [00:33:58] Speaker 01: And what it cited in the opinion in GIFRI to justify that was a declaration from what I assume was a government agent. [00:34:07] Speaker 01: I'm sorry. [00:34:07] Speaker 02: We have no such declaration. [00:34:09] Speaker 01: Exactly, and I think the reason we don't is because as Judge Wilkins' questions alluded to, and I think your own questions alluded to, the plaintiffs here have not ever sought to challenge the basis for those law enforcement privileged redactions. [00:34:22] Speaker 01: Now, if they had, and I would hope that if the court thinks that that's necessary, that it would give the government an opportunity to provide exactly those declarations and to justify, perhaps in camera, what the basis for those redactions were. [00:34:34] Speaker 01: But that hasn't happened here, and so [00:34:37] Speaker 02: I'm not sure about burden. [00:34:40] Speaker 02: I'm honestly not sure. [00:34:41] Speaker 02: But it would seem to me that it might be good hygiene within the government to make sure that when you are asserting such privileges, that there be somebody who is willing, under oath, to put their name on that assertion, regardless of somebody else's willingness to push back. [00:35:03] Speaker 02: I mean, we have many cases in which [00:35:06] Speaker 02: People choose not to. [00:35:07] Speaker 02: They think it's an uphill battle. [00:35:08] Speaker 02: They can't afford a lawyer. [00:35:10] Speaker 02: But they still have the right. [00:35:12] Speaker 02: you know, to have the information not withheld unless... Sure. [00:35:18] Speaker 01: I mean, I think that sounds right to me. [00:35:19] Speaker 01: And if, you know, that was the practice that this court requires, then I think that's the practice the government would follow. [00:35:25] Speaker 01: I just think it is important to note just how unique the posture of this case is. [00:35:28] Speaker 01: In all of these other cases that we've been discussing, GIFRI, these other lines of cases, the plaintiffs in those cases did not just raise a due process challenge challenging the adequacy of the notice they received and stop there. [00:35:39] Speaker 01: They also raised [00:35:40] Speaker 01: you know, arbitrary and capricious type challenges, substantial evidence-based challenges that did require potentially in-camera view or some looking at the actual full record. [00:35:51] Speaker 01: That hasn't happened here, and so I think that's part of the reason why there is no declaration from the government. [00:35:58] Speaker 04: Given where you got to below, you reach the point where this case is just about whether [00:36:06] Speaker 04: your statement of the summary is enough to give them notice of what they can reply to for due process purposes. [00:36:13] Speaker 04: It really is hopefully difficult to see how you can say that they could respond in a due process satisfying way to that little summary that you gave. [00:36:24] Speaker 04: If they had asked for it, would it not have been in order for the court below to have provided an in-camera review? [00:36:34] Speaker 01: If they had asked for it, I think that would have been appropriate. [00:36:37] Speaker 01: Although in this case, subject to the usual coordination with government to make sure that disclosures of law and sensitive information aren't made. [00:36:44] Speaker 01: But again, I want to emphasize in this case, because their challenge was just focused on the adequacy of the notice that they received, the court could make that determination as the district court did here based on examining that notice without looking at the record and camera. [00:36:59] Speaker 02: But they're related. [00:37:00] Speaker 02: I mean, their position assumes [00:37:06] Speaker 02: in a sense, the more detailed versions of the argument that we've been articulating from the bench, which is that you have overclaimed on law enforcement sensitive information by saying, hey, you haven't done enough. [00:37:19] Speaker 02: They have really pressed that case. [00:37:22] Speaker 02: You need evidence, you need time, place, at least CI identification. [00:37:29] Speaker 02: I mean, is there not one [00:37:31] Speaker 02: padded invoice that ever could be revealed? [00:37:35] Speaker 02: You know, you talk about this as this vast operation. [00:37:38] Speaker 02: There's not a single document in the record. [00:37:43] Speaker 01: I mean, that's the determination that these investigative agencies made. [00:37:46] Speaker 01: And again, I want to be clear, even the example you've given, that one padded invoice really does run these very real risks for the reasons that I think I identified at the top, which is that if five employees, for instance, had access to that one padded invoice, [00:38:00] Speaker 01: They're all placed in jeopardy. [00:38:01] Speaker 01: It's not necessarily that because the one padded invoice was limited to, you know, like this set of employees that, well, these cartels are just going to sit back and say, well, we can't figure out who it is, you know. [00:38:11] Speaker 02: Believe me, that crosses my mind, too. [00:38:13] Speaker 01: Right. [00:38:14] Speaker 04: Understanding all that, there is still a due process requirement that people who have a deprivation have a right to notice and hearing. [00:38:24] Speaker 04: Now, understanding that in classified cases and in other privileged cases, we have found ways to limit that and still make a post deprivation due process adequate [00:38:39] Speaker 04: The ones I've seen had a lot more information in the non-classified disclosure than what you have in the non-privileged disclosure here. [00:38:48] Speaker 04: We have spent, at least by way of dicta at times, that a judge could use an in-camera proceeding, an ex parte proceeding, as a substitute. [00:38:58] Speaker 04: We suggested that possibility. [00:39:01] Speaker 04: Nobody suggested that below. [00:39:03] Speaker 04: They didn't ask for it. [00:39:04] Speaker 04: You didn't volunteer it. [00:39:06] Speaker 04: Do I hear you saying now that that would have been a way in which you could have provided more due process than what this first summary does? [00:39:17] Speaker 01: I think I don't know that it would have provided more in more information than what's in the summary. [00:39:22] Speaker 01: I think it would have provided. [00:39:23] Speaker 01: I think this is a substitute. [00:39:25] Speaker 01: A substitute, right. [00:39:26] Speaker 01: I think it would have provided grounds for the government to then have to justify the law enforcement-sensitive determinations that it made, either in the form of a declaration or something along those lines. [00:39:36] Speaker 01: So yes, I think it would have provided some grounds for addressing the concerns that they've raised. [00:39:41] Speaker 01: I do want to just push back a little bit on this notion, because I agree, this is a short summary, but I do want to say that... It's very uninformed. [00:39:48] Speaker 04: It really doesn't give them much they can rebut. [00:39:51] Speaker 01: Right, so I'd like to push back against that just a little bit, Your Honor, because I think it does contain several specific allegations. [00:39:58] Speaker 01: They focused on some of the broader ones. [00:39:59] Speaker 01: But Judge Pillard alluded to this, saying that they used the La Riviera duty-free stores in the Takamon Airport in Panama City to smuggle bulk cash in suitcases aboard commercial airlines, and that they used that to launder millions of dollars from Colombia to Panama. [00:40:17] Speaker 01: is very specific, and they have not provided any response to that specific allegation anywhere in their papers to say that that's too vague. [00:40:24] Speaker 01: There are other allegations in the summary that I think are also highly specific. [00:40:28] Speaker 01: The allegations involving Ali Harp, who's a designated narcotics trafficker. [00:40:33] Speaker 01: This is at page 391 of the Joint Appendix. [00:40:36] Speaker 01: It says, in 2014, one of Wauket Forest's major clients was Ali Harp, who we know as a designated trafficker, it says earlier in the summary. [00:40:46] Speaker 01: Waked Forest Supply Harb with home appliances that have been paid for in Panama. [00:40:50] Speaker 01: So we're not just talking about a time period, 2014, and a specific individual who we know has been designated Ali Harb. [00:40:56] Speaker 01: We're also talking about the specific lines of businesses that they use to launder money. [00:41:00] Speaker 01: Now, plaintiffs took issue with the use of the word major clients, and I think they wanted to read that as saying that Ali Harb may or may not have been a client of the home appliance business. [00:41:10] Speaker 01: It's very clear from, I think, reading the summary that clients here refers to clients of the money laundering [00:41:15] Speaker 01: organization and that's a very specific allegation. [00:41:19] Speaker 02: I mean it's this is admittedly difficult and I hear you about the law enforcement sensitive interests but I also you know we're really in a we're in an area of constitutional magnitude and you say these are very specific there are no dates [00:41:41] Speaker 02: The way the government briefs this I don't even know if they're talking about Spain as in Spain or Spain as in Argentina. [00:41:50] Speaker 02: You know China as in China or China as in the Cayman Islands. [00:41:54] Speaker 02: I mean it's really and would when I see somebody testifying in a criminal case about what would happen. [00:42:02] Speaker 02: My my. [00:42:03] Speaker 02: Ears perk up. [00:42:05] Speaker 02: That's not something that person witnessed. [00:42:07] Speaker 02: That person is extrapolating about courses of conduct over time, and it's very unreliable. [00:42:16] Speaker 02: So I'm not sure, so specific. [00:42:20] Speaker 02: I mean, one of the things, for example, if you have a legitimate business that has been designated, what are the, can you list for us, what are the allegations [00:42:32] Speaker 02: that this designation burdens them to refute, and that if they were to successfully refute, they would be undesignated. [00:42:40] Speaker 02: What are those allegations? [00:42:44] Speaker 02: What's the target for them? [00:42:46] Speaker 02: And you said La Riviera, Ali Harb, what else? [00:42:49] Speaker 01: There's allegations, or I'm sorry, there's findings regarding some of their specific real estate ventures, the Soho Mall, Millennium Plaza, the specific types of transactions they used in connection with those real estate ventures. [00:43:02] Speaker 01: This is also at page 391 of the Joint Appendix. [00:43:05] Speaker 01: Their accounts with development and construction companies, the purchase of supplies and other equipment used in the construction of those projects. [00:43:13] Speaker 01: So I think, you know. [00:43:14] Speaker 02: Do we have time periods? [00:43:16] Speaker 01: Well, for the Ali Harb allegation, you do. [00:43:18] Speaker 02: One year, 2014. [00:43:19] Speaker 01: That's right. [00:43:21] Speaker 02: Do we have time periods for the others? [00:43:23] Speaker 01: We don't, but again, I want to, that's right, we don't, but one, the allegations early in the summary make clear that this was happening over a period of time. [00:43:34] Speaker 01: Now again, we can see that that's not specific, but revealing specific dates, for the reason I said at the top, actually does raise problems here. [00:43:41] Speaker 01: And if I could just address, you alluded, I think Judge Piller, to the hypothetical on page 390 involving Spain. [00:43:47] Speaker 01: I want to be very clear, because this was a point that was raised in the reply brief, [00:43:51] Speaker 01: The district court found, we think correctly, that that hypothetical, and we think it's clear from reading the summary, was intended to communicate the specific methods that were actually used. [00:44:01] Speaker 01: It's an illustrative hypothetical because the details that are filled in there, the location of the drug dealer, the dollar amount, $5 million, the end placement of some of the money, China, those are details [00:44:14] Speaker 01: that were made up to illustrate exactly how this operates, but the methods that were used were in fact used. [00:44:20] Speaker 01: And the government, again, for the reasons I eluded, and I don't want to sound like a broken record here, cannot fill in all of those details for every example, because to do so would compromise... We understand that part. [00:44:32] Speaker 04: You don't have to react to it. [00:44:34] Speaker 04: We know that's why we're here. [00:44:37] Speaker 02: I don't even understand this. [00:44:40] Speaker 02: Summary, can you explain it? [00:44:43] Speaker 02: You say, Colombian drug traffickers, five million dollars in Spain to be collected has, so this is a drug trafficker that has sold drugs and earned this money from that and has in hand a lot of cash. [00:44:56] Speaker 01: That's, I mean, that's one way of, I should just say, there's other ways in which drug trafficker could end up with lots of cash, but yes, that's. [00:45:03] Speaker 02: I'm just trying to understand what you, what the government has written. [00:45:06] Speaker 02: Why don't you explain in your own words what this, [00:45:10] Speaker 02: hypothetical explains. [00:45:12] Speaker 01: Sure, so what it explains is when you have the end product, whatever trafficking activities the drug dealer has engaged in, they're in some other country outside of Panama, outside of Columbia, and in the example of Spain, they have $5 million, typically it's in cash, and that's not a useful form to have $5 million in if you want to use it in large amounts of money. [00:45:33] Speaker 01: And so what they do is they give that money to members of this money laundering network [00:45:39] Speaker 01: in Spain, who then deposit it in a variety of different accounts, dividing it up, that is. [00:45:47] Speaker 02: And meanwhile, the money laundering organization pays them. [00:45:52] Speaker 01: Sometimes we think of money laundering as being the exact same. [00:45:56] Speaker 01: The dollar that I put into the money laundering operation comes out clean and I get it back. [00:46:00] Speaker 01: In fact, that's not how it works. [00:46:01] Speaker 02: Minus a commission. [00:46:02] Speaker 01: Minus a commission, right. [00:46:04] Speaker 01: But what this example is actually showing is what happens is that money in Spain is deposited into various accounts, like I said. [00:46:09] Speaker 01: That money is then used [00:46:11] Speaker 01: and funneled into legitimate businesses that, or legitimate business needs that the money laundering organization, in this case, the Walkhead Ferris organizations and their various lines of businesses might need to purchase, for instance, supplies. [00:46:24] Speaker 01: So if the Walkhead Ferris, say it's Group OESA, needed to purchase [00:46:29] Speaker 01: you know, various goods that it's going to then sell at its duty-free stores in Panama. [00:46:34] Speaker 01: It needed to purchase some of those goods in Europe. [00:46:35] Speaker 01: It would use that money that's already in stain after it's been, again, deposited in different accounts to make it difficult to track to purchase those goods. [00:46:43] Speaker 01: Those goods, then, it would be using this money [00:46:46] Speaker 01: funnel those goods back into its legitimate business lines. [00:46:49] Speaker 02: Meanwhile... But you lost me back in step two. [00:46:51] Speaker 02: So that money laundering organization is going to pay the traffickers. [00:46:55] Speaker 02: In what form? [00:46:56] Speaker 01: Right. [00:46:57] Speaker 01: So this takes various forms, but oftentimes it's paying the traffickers who control front companies in Colombia, in Panama, in various parts of Latin America for the clients that we're talking about here. [00:47:09] Speaker 01: So if you're the say you're the trafficker that in this case starts in Spain, you control various front companies or your associates control front companies or businesses, sometimes they're legitimate businesses in Latin America. [00:47:22] Speaker 01: where you might have this kind of false invoicing regime that we've alluded to, those businesses purchase goods that don't in fact exist and are paid or sell goods that don't in fact exist and are paid money for those goods at those businesses in Latin America. [00:47:36] Speaker 01: I do want to just make clear as I'm saying this, [00:47:39] Speaker 01: there are any number of forms in which this process can take place and that's why we provided an example that filled in some of the details just to make it a little bit easier to understand. [00:47:49] Speaker 01: There are no, you know, we can't obviously identify a specific set of transactions that give rise to a specific incident of money laundering. [00:47:59] Speaker 02: I appreciate that and therefore what this is is simply saying money laundering. [00:48:06] Speaker 02: It's really not saying anything more than that. [00:48:09] Speaker 02: More concrete. [00:48:10] Speaker 01: I don't think that's quite right. [00:48:11] Speaker 01: I think, again, you could fill in the exact illustration that we've been discussing with the very designated companies that are discussed at other points in this summary. [00:48:20] Speaker 01: Grupo Visa, Balboa Bank, the transactions related to the Millennium Plaza and Soho Mall. [00:48:28] Speaker 01: But to do that, [00:48:28] Speaker 01: with specific dollar amounts and on specific dates, I think, again, would compromise law enforcement sensitive information. [00:48:34] Speaker 01: But the information is there. [00:48:35] Speaker 02: We can only show it from different... But I don't take you to be disagreeing with me. [00:48:38] Speaker 02: All this is saying is money laundering by Grupa WISA and the others named. [00:48:45] Speaker 02: It really... I mean, and what you're saying is, yes, that is all it says. [00:48:48] Speaker 02: And it cannot say more. [00:48:51] Speaker 01: Well, I think we're saying yes. [00:48:52] Speaker 01: The second part is certainly true. [00:48:54] Speaker 01: The first part, I think there is saying more than just money laundering occurred. [00:48:58] Speaker 01: It's identifying the institutions that were used to launder this money. [00:49:00] Speaker 02: Money laundering occurred through this business and its major arms. [00:49:05] Speaker 02: It's a duty-free business. [00:49:07] Speaker 02: It's a mall construction business. [00:49:08] Speaker 02: It's a banking business. [00:49:10] Speaker 02: Is there any part of this business that you haven't claimed is involved? [00:49:15] Speaker 01: I guess in fact there there there's the group we said is a it or was at the time of the designation a company that had you know number of subsidiaries that were engaged in various lines of businesses and I do think we're getting a little bit more than just saying it's XYZ lines of business the Ali Harb allegation I think is a good [00:49:32] Speaker 01: example where it talks about a specific line of business at a specific time period, it's a year, it's not a specific date, but a specific time period, and a specific individual, a specific narcotics trafficker. [00:49:42] Speaker 01: So there is linking up some of this information in a way that I think is rebuttable. [00:49:46] Speaker 01: And just to illustrate this point, I think it's helpful to note, and I don't want to go too far out of the record here, but because plaintiffs raised this audit that they submitted to OFAC in March, [00:49:56] Speaker 01: That audit does exactly some of these things. [00:49:58] Speaker 01: It focuses on the specific transactions at some of these duty-free stores. [00:50:02] Speaker 01: And I should note, that audit, although they frame it in their brief as though they undertook this audit at the suggestion of the district court, the audit was submitted in March of 2017, a month before the district court issued its ruling, and obviously the audit [00:50:16] Speaker 01: process had to be commenced much earlier than that. [00:50:18] Speaker 01: So this is at the stage where the only information they have is this summary, and they have gone about trying, even before the district court's decision, to try and find ways to go about rebunding it in exactly the method that we've identified here. [00:50:30] Speaker 02: And they submitted it to the government, but not to OFAC, but not to the district court? [00:50:34] Speaker 01: That's right. [00:50:35] Speaker 01: It was part of, as I understand it, and perhaps they can address this more in rebuttal, as I understand it, it was part of the delisting request, that is their request to be removed from this designation list in March of 2017 while the summary judgment briefs were pending before the district court. [00:50:51] Speaker 01: So that's right. [00:50:51] Speaker 01: It wasn't before the district court. [00:50:53] Speaker 01: And it's not a part of the record here. [00:50:55] Speaker 01: I only brought it up because it had come up in the briefs and during the presentation. [00:50:58] Speaker 01: But I think it does illustrate that there are ways that they do have a target to shoot at. [00:51:01] Speaker 01: There are ways that they can go about trying to rebut some of these specific allegations. [00:51:04] Speaker 02: How and why was the government in a position to delist Ms. [00:51:08] Speaker 02: Romo? [00:51:09] Speaker 01: Yeah, Ms. [00:51:10] Speaker 01: Romo's delisting was based on actions that she took subsequent to the designation to remove herself from the employment of an affiliation with the designated entities and individuals. [00:51:23] Speaker 01: So it was not based on her claim or any evidence she submitted to show that the original substantive money laundering findings weren't accurate. [00:51:33] Speaker 01: It was based on her simply saying, I'm no longer involved with these people. [00:51:36] Speaker 01: And that's what the delisting for her was based on. [00:51:39] Speaker 01: I should just note that this delisting process, just because they came up, the March 2017 delisting request that all the plaintiffs filed, those remain pending before the agency. [00:51:49] Speaker 01: And those are ongoing. [00:51:50] Speaker 01: The agency met with plaintiffs' counsel about those delisting requests. [00:51:54] Speaker 01: In October, I think as recently as last month, Waqed Darwich and Waqed Ferris were still submitting information to OFAC as part of that delisting request. [00:52:03] Speaker 01: That's just a separate parallel proceeding, but since it came up. [00:52:07] Speaker 02: So I don't take you to dispute that the government would be willing to have declarations from the various involved agencies asserting that everything that they have redacted has been redacted at their request is in fact [00:52:24] Speaker 02: necessary to redact because it's law enforcement sensitive. [00:52:28] Speaker 02: That would not be a problem for the government. [00:52:29] Speaker 01: That's right. [00:52:30] Speaker 01: The government, I think, would be more than willing to provide declarations justifying the redaction. [00:52:34] Speaker 01: Again, they haven't done it here, as the court knows, because we didn't take and the district court didn't take plaintiffs to be challenging that. [00:52:40] Speaker 01: But yes, I think that's information that the government could provide. [00:52:42] Speaker 02: And the government would have, would be able to arrange for either this court or the district court or both to look at the information. [00:52:50] Speaker 01: Yeah. [00:52:52] Speaker 01: Right. [00:52:52] Speaker 01: Again, subject to the usual coordination with the law enforcement agencies and the ordinary procedures to ensure that sensitive information isn't disclosed. [00:53:05] Speaker 01: Thank you very much. [00:53:06] Speaker 00: Thank you. [00:53:17] Speaker 05: Just to start with the point that you raised, Judge Ballard, essentially what this is saying is that Grupo Visa laundered money through its various business facets. [00:53:26] Speaker 05: That's exactly what the press release said. [00:53:28] Speaker 05: That's what the designation notice said. [00:53:30] Speaker 05: If that's all that's required, that renders the right to post-designation notice meaningless if you're just giving, repeating what you said in the designation. [00:53:39] Speaker 05: You're right as to time periods. [00:53:40] Speaker 05: This begins beginning in the 1980s, moving to the 90s, moving on to 2000. [00:53:45] Speaker 05: That's as specific as it gets. [00:53:48] Speaker 05: In terms of the specific examples identified by the government, allegations relating to Nadal Walkhead, Balboa Bank, Millennium Plaza, we raise this in our brief, and that's why this is so problematic, this blanket redaction, is when we got this administrative record, it wasn't just redacted. [00:54:07] Speaker 05: Various parts of it were entirely withheld. [00:54:09] Speaker 05: and the justification given for withholding those entire parts were that they related to individuals, Nadal Waqid, Balboa Bank, Millennium Plaza, that were irrelevant to plaintiff's designations. [00:54:20] Speaker 05: The government said that in the briefing below. [00:54:22] Speaker 05: They did not pertain to appellant's designations, which was puzzling at the outset because if they're saying that Abdul Waqid is the co-head of a money laundering organization, how can [00:54:33] Speaker 05: evidence relating to other members of that organization be irrelevant to the designations. [00:54:38] Speaker 05: But now we have this summary. [00:54:40] Speaker 03: Well, again, you didn't challenge those withholdings below. [00:54:45] Speaker 03: And then you didn't ask the district court to, you know, examine that in camera or to, I guess, overturn and compel the government to produce those things that had been withheld, right? [00:54:58] Speaker 05: We're taking the government's representation of face value as we have to, but then we get this evidentiary summary linking every allegation to Nadal Wakid, linking allegations to Balboa Bank, linking allegations to Millennium Plaza. [00:55:12] Speaker 05: We don't know if this is framed disjunctively when it says Abdul Wakid and Nadal Wakid. [00:55:16] Speaker 05: We do know that OFEC said that that's irrelevant to the designations. [00:55:20] Speaker 05: In terms of the allegation with respect to Ali Harb, again, it says that's their most specific allegation. [00:55:26] Speaker 05: And it says that Abdul Wakid sold home appliances to him. [00:55:28] Speaker 05: That's what it says. [00:55:31] Speaker 05: The designee shouldn't have to fill in the gaps here. [00:55:34] Speaker 05: Absent any evidence in the admission of hypotheticals, the government's lawyer said that some of the stuff in here is made up. [00:55:43] Speaker 05: Yes, we have brought a narrow challenge here to the sufficiency of these disclosures. [00:55:50] Speaker 05: That's because the Kingpin Act is an extraordinarily powerful tool. [00:55:54] Speaker 05: We agree with that power. [00:55:56] Speaker 05: We're not challenging that power. [00:55:58] Speaker 05: We're challenging its implementation. [00:56:01] Speaker 05: Precisely because it's so extraordinary, it has to be applied in a responsible constitutional way that gives the designated individuals the opportunity to meaningfully challenge the designations. [00:56:14] Speaker 05: That wasn't done here. [00:56:16] Speaker 05: The district court's order should be reversed and summer judgment granted for the appellants. [00:56:20] Speaker 02: Thank you.