One year ago, the United States Department of Justice announced a series of indictments against major figures of the Venezuelan regime lead by Nicolas Maduro, including of Mr. Maduro himself. One significant case involves a Colombian businessman, Alex Saab, who has been described in the press as “Maduro’s financier.” Just two weeks ago, a court in Cape Verde, West Africa, ordered Mr. Saab to be extradited to the United States, just as another regional court ordered that he be freed. He has resisted extradition based on an appointment by the Venezuelan government as a “diplomat” on a “humanitarian mission” to Iran.
This Teleforum will give listeners an update on where these cases stand as well as background on the nuances of prosecuting them. The speakers include Ryan Berg, a regional specialist at the American Enterprise Institute, and Michael Nadler, a partner with the firm SFS Law in Miami, Florida, and former Assistant United States Attorney in the Southern District of Florida and who served as lead counsel in the cases against Mr. Saab as well as other Maduro-regime figures.
Ryan Berg, Research Fellow, American Enterprise Institute
Michael B. Nadler, Partner, SFS Law
Moderator: Harout Samra, Of Counsel, DLA Piper
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Dean Reuter: Welcome to Teleforum, a podcast of The Federalist Society's Practice Groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of Practice Group Teleforum calls, become a Federalist Society member today at fedsoc.org.
Nick Marr: Welcome, everyone, to this Federalist Society Teleforum conference call, as this afternoon, April 22, 2021, we've got a Teleforum program panel discussion on "International Corruption and the Venezuela Indictments: The Case of Alex Saab."
I'm Nick Marr, Assistant Director of Practice Groups here at The Federalist Society. As always, please note that expressions of opinion on our call today are those of our experts.
Now, we're joined by a great group. I'll just introduce our Moderator and give the floor to him. And we're joined this afternoon -- we're very pleased to be joined this afternoon by Mr. Harout Jack Samra. He's Of Counsel at DLA Piper.
This podcast has been sponsored by our International and National Security Law Practice Group and our Criminal Law and Procedure Practice Group. So with that, Harout, thanks very much for being with us. I'll give the floor to you.
Harout J. Samra: And thank you so much, Nick. And it's really a pleasure to do another Teleforum on an important topic like this one. As we've said in some of the materials that those of you who are joining me have seen about today's program, you'll all remember, of course, that it was only about a year ago, just almost exactly a year ago, that the U.S. Department of Justice announced a series of major indictments against important figures of the Venezuelan Regime, including Nicolas Maduro himself. One of the significant cases, of course, that's arisen more recently, one of many, it's fair to say, is that of Alex Saab, who among other things has been described in the press as Maduro's financier.
Just a few weeks ago, those who follow these stories will remember that the Court in Cape Verde where Mr. Saab has been residing now for some time, which is in West Africa, ordered that he be extradited to the United States, just as another regional court ordered quite the opposite, that he be free. He's resisted extradition now for some time based on an appointment by the Venezuelan government as a diplomat as part of what they describe as a humanitarian mission to Iran.
The purpose of today's Teleforum is going to be to give some of our listeners an update on where these cases stand over the last year, how they've developed. To put this all in context, as well as some background and sort of the nuances of prosecuting cases that are sensitive like these, we have, I think, a really fantastic panel that will allow us to delve into some of these issues.
I'm pleased to introduce them both. Our first panelist is Michael Nadler, who's a Partner in a law firm of Stumphauzer Foslid Sloman Ross & Kolaya based in Miami. He counsels and defends corporations and individuals on a broad range of regulatory criminal and civil matters including in matters involving the Foreign Corrupt Practices Act through the FCPA, as well as money laundering, healthcare fraud, securities violations, and white-collar defense.
Previously, Michael was a federal prosecutor for almost 10 years in the Southern District of Florida where he specialized in prosecutions and investigations involving sophisticated international and domestic money laundering and FCPA cases. He was selected, in fact, to be part of the district's newly created group targeting money laundering and foreign corruption. His cases covered, really, the whole world, ranging from matters involving corrupt officials in Venezuela, the Middle East, Africa, and Europe.
In fact, Michael has pretty widely been recognized in the press as one of the leading figures in these prosecutions. He was the lead prosecutor in some of these matters including very significant money laundering and FCPA prosecutions, including, really, some of the largest money laundering and FCPA prosecutions in South Florida. And in on case alone, Michael's prosecution of the former Treasurer of Venezuela resulted in a $1 billion dollar, with a B, forfeiture, one of the largest forfeitures ever ordered.
Our second panelist is Doctor Ryan C. Berg, who's a Research Fellow at the American Enterprise Institute, where he focuses on transnational organized crime, narcotics trafficking, and illicit networks. He also studied Latin American foreign policy and development issues. Before joining AEI, Dr. Berg served as a research consultant at the World Bank, a Fulbright scholar in Brazil, and a visiting doctoral fellow at the Graduate Institute of International and Development Studies in Geneva, Switzerland.
He's also worked in Peru, in Sao Paulo, Brazil, really, throughout the region. Dr. Berg obtained a PhD and a masters in philosophy, political science, and an MSC in global governance and diplomacy from the University of Oxford. And previously, he was a graduate of Georgetown University.
So with those introductions, I'd like to quickly open up today's discussion with some context, really, trying to put this all into the broader picture. And I think, Ryan, you may be best suited to do that. Of course, as I mentioned earlier, DOJ announced these indictments, really very significant indictments, over a year ago. Where do things stand now? How have things progressed over the last year?
Dr. Ryan C. Berg: Well, thank you very much, Harout. Thank you to The Federalist Society as well for hosting and Michael for agreeing to do this as well. What a great opportunity to speak about this very important case.
In terms of where things stand generally, I think I'll comment first on just, kind of, where things stand in Venezuela to kind of give a scene setter for listeners. And then I'll talk about the case specifically, at least as far as I can from my non-legal vantage point.
First, with respect to Venezuela, as our listeners will be well aware, the United States continues to recognize Interim President Juan Guaido, does not recognize the Maduro regime. The most recent significant development in this battle for political transition in Venezuela has been the December 2020 elections, which the opposition, of course, boycotted because the elections were a mockery. They were not free and fair. They were anything but. And so nothing was really going to come of that.
And the situation that the Venezuelans find themselves in now is unfortunately one that I as a political scientist would consider to be a consolidated dictatorship. In Venezuela, there's really no space for political opposition in the country. The opposition is increasingly in opposition and exile. Many of them are living around the world and trying to communicate digitally with one another to convene meetings, etc. They no longer have access, even, to the official Assembly Building in Caracas. And so the state of things on the ground in terms of the opposition as well as the humanitarian situation in the country continues to deteriorate.
And about a year ago, as you mentioned in your opener, was when the United States decided as part of its overall strategy to issue indictments against Maduro and several of the high level members of the political leadership in Venezuela, mentioning things like participation in organized crime, money laundering, drug trafficking, participation in the so-called Cartel de los Soles, which is the official cartel which takes its name from the starburst insignia on the shoulder patches of the Venezuelan National Army, which has been allegedly quite involved in narcotics trafficking from an official state level in Venezuela.
So the indictments, I think, covered a lot and put additional pressure on the political leadership in Venezuela, definitely limited their ability to travel, to move money, and so forth. But I think what we see on the ground is that the regime controlled by Maduro and a close cohort of criminal actors is still in power. In fact, a repression in the country is growing. And the humanitarian situation in the country is also growing more and more dire.
And so in many of my responses, I'll try to sprinkle in little tidbits as well about the humanitarian situation on the ground because I think it really brings a lot of this home in terms of what's at stake here.
Harout J. Samra: Yeah, and thanks for that introduction, Ryan. In fact, I mentioned for the audience, those who are interested in this topic, if you're interested in maybe going backwards a little bit and considering where things stood almost a year ago, we did have another Teleforum on this very subject, which, of course, is available at The Federalist Society's website. And that featured two other very prominent and I think pretty interesting speakers who addressed some of these issues as well.
So turning back maybe the dial a bit, just to consider some of the legal framework, you mentioned, and of course we discussed, the broader picture here of U.S. government prosecutions for some of the issues involving corruption and other related international money laundering arising in Venezuela by the regime. Michael, having handled some of these cases, if you can maybe set the table for us a little bit. Help us understand what the U.S. legal framework is for bringing these cases, including questions such as jurisdiction and what some of the other relevant statutes might be.
Michael B. Nadler: Sure. I want to thank The Federalist Society for having me on. And, Ryan, it's a pleasure to be on a panel with you.
The framework -- I was taught early on in my career when you're looking at all criminal cases, you go through the whole criminal statute Title 18, and you be broad and expansive. For these types of cases, the sphere head really starts with the FCPA statute, which is Title 15 US Code 78dd. And there's three provisions of that: dd-1, dd-2, and dd-3.
Dd-1 is not really something the individual prosecutor deals with. It's more something geared toward issuers. FCC deals in dd-1 a lot. Whereas dd-2 and dd-3 are two statutes that apply to these types of cases, as long as the provisions are met. In dd-2, it's something has to happen in the U.S. or it's a U.S. person. I'm sorry, dd-2 is something -- an overt act has to occur in the U.S. You have to call someone in the U.S. further. You have to have a meeting in the U.S. And dd-3 is essentially a U.S. person, a domestic concern.
As I go meet somebody in Europe, I'm a U.S. person and I start offering something in exchange for value to obtain or retain business. That's really the FCPA statute. Where we start targeting individuals who don't fall within one of those categories, the money laundering statutes, 1956, really come into play strong. They are a very broad and expansive tool because all you need to do is have someone essentially commit a financial transaction with a certain specified unlawful activity.
In these types of cases, we focus on a violation of foreign law or bribing a foreign official. And for many years, U.S. banks and the U.S. financial system almost had to be used for these transactions. I think over the years, a lot of these individuals have become more sophisticated in an attempt to avoid these types of financial transactions in the U.S. and deal only with banks in the Middle East, banks in China, Malta. So you see less and less. Although, correspondent banks for U.S. dollars are also an avenue for jurisdiction.
And then you have less used statutes. You have the Travel Act. Someone has to travel to the United States to commit a crime. So the legal framework, although we try to be expansive, for these types of cases, because a lot of conduct occurs outside the United States, you really have to be creative in some cases and look at those statutes that would encompass the illegal acts or the illegal conduct you're looking at.
Harout J. Samra: Right. And so having gone through some of this legal structure, I think it's helpful if we maybe turn to this specific case that we're using sort of as a case study for today, which is out of Alex Saab. And we're going to be discussing some things related to this case over the course of the remainder of this hour. And we're going to be touching on some broader issues as well.
And I'd ask the audience, if you do have questions, to reserve them for the end. We'll have about ten minutes at the end where we'll continue to have our conversation, but we'll invite questions from the audience as well.
But to develop this case a little bit, Ryan, if you could maybe give us a little bit of background on who is Alex Saab? And he's in the sort of overall headline here for today's Teleforum, and I think it'd be interesting for the audience to maybe have a sense of where he fits in, who he is, and why he's so important.
Dr. Ryan C. Berg: Great. Yeah. He's a figure that's been described in the media as, as you mentioned in your opener, Maduro's financial henchman. He's someone who's been on the scene for at least a decade if not longer now. He's a Columbian businessman of Lebanese descent, who has become a real dealmaker for the Maduro regime.
He's got a long standing with the Venezuelan government. And, really, from the beginning of that relationship has been involved with multiple corrupt and shady deals. And so the first I think that really put him on the map for many of us who focus on Venezuela and focus on the region more broadly was his involvement in housing deals in Venezuela.
And so I believe it was in 2012 and '13, there's a housing company that's connected with Saab that receives a contract that's worth something like $150 million to import housing kits to Venezuela, but something like $3 million of that contract is actually dispensed. And so money, obviously lots of money, goes missing in that deal.
Saab pops up again, perhaps even more prominently, in the Venezuelan food scandals. For those who aren't familiar, Venezuela, under the Maduro regime, uses a program that goes by the acronym of CLAP. In Spanish, it's Comite Locales de Abastecimiento y Produccion. CLAP is essentially government-provided food that the regime has used to keep impoverished citizens politically loyal. And so there's a card called carnet de la patria, which is carried by many citizens in Venezuela and is used to access social services such as CLAP. And the card has a whole bunch of information on it, which can indicate loyalty to the regime and therefore worthiness for these Venezuelan food handouts.
And Saab pops up here as well in receiving some of these no-bid overvalued contracts for the CLAP program that cost the Venezuelan people millions of dollars. The Maduro regime, as I mentioned, used this program to help feed people but also as a mechanism of political control. And in addition, the quality of the food has been widely maligned as well below standards. So not only was there a no-bid contract, but the quality of the food was very low, and it was used as a tool of political repression.
Since then, he's also popped up in a number of other schemes. I've seen his name involved with illegal goldmining, Columbian guerilla groups like ELN and the FARC, moving things to Turkey, for example, where they were regularized into the market. He's been involved in some things with the Minister of Industry and National Productions, Tareck El Aissami, who is another individual indicted, I believe, at the same time as Maduro last March, a U.S. Treasury designated trafficker.
And in a more recent effort, the last big time many of us saw Saab's name pop up in the media was his involvement with two companies last year that were based in Mexico, if I'm not mistaken. One was called Libre Abordo and the other was Schlager Business Group. They continued to dabble in the sale of Venezuelan crude after Treasury had sanctioned Rosneft and TNK Trading International. These are the two Swiss-based intermediaries for Rosneft.
And so Saab's name continues to pop up. He's indicted under the Foreign Corrupt Practices Act for all of his links to the Maduro regime. And I think it's important to mention in the background on him that it's not just the U.S. who's interested in Saab. The Columbians, I believe have an investigation on Saab, Ecuador, Mexico, for his involvement there with the two companies I mentioned, and if I'm not mistaken, Israel also has some sort of an investigation open on Saab for money laundering and terrorist financing. So his name pops up pretty often.
Harout J. Samra: Yeah. And thanks for that overview. And I think one thing that's helpful to understand is this broader network that you described a little bit. You touched on this, Ryan, a little bit, but how does he fit into this network of public and private personalities within the Venezuelan regime but particularly within even the network of folks who have been indicted so far?
Dr. Ryan C. Berg: Yeah. He's a pretty shadowy figure, and so he's popping up periodically and usually ephemerally until he was arrested in June 2020 in Cape Verde. But as far as we understand it, he is one of the go-to men for many in the regime's elite circles for some of their money laundering and illicit financing needs. At least, that's how he's been described publicly by the media and how it's been explained.
The strong U.S. interest in his extradition from Cape Verde to the United States is that he knows a lot. He's involved in a lot of these transactions to skirt U.S. sanctions and U.S. sanctions architecture. And therefore, the U.S. has a strong interest in him because of everything that he knows. And everything that we know about what the Maduro regime has done to break him from his current bind in legal troubles also indicate that they believe he knows a lot and that he will potentially speak if the U.S. does manage to successfully extradite him.
So I think there is reason to believe that he is integrally connected to all of these illicit networks which span the globe and which are involved in a number of various industries. And the regime has expended a lot of resources in a scarce resource environment to bring him home. According to Carlos Paparoni, a member of the National Assembly and close to Guaido, that the regime has spent something like $170 million on Saab's defense. And if true, that would place the regime's investment in Saab's defense at more than its investment in Coronavirus vaccines through the COVAX mechanism.
Harout J. Samra: Yeah, and so you've referred to the Cape Verde angle to this case, which I know we'll discuss shortly but is really one of the very interesting pieces of this. And so we'll come back to you for that, Ryan.
Michael, I know you're obviously, having worked on these cases, fairly limited as to what you can say about them, but if maybe you can give us some background on this case. What's in the public record? I know that you were involved here from fairly, fairly early on and in fact, one of the officials of the DOJ who actually signed the July 2019 indictment in this case. So if you can give us some background about the indictment, how things have progressed, particularly from a public basing standpoint so that we can maybe help our audience understand where this case is, maybe a little bit as well how it fits in with the other prosecutions as well that you may have had.
Michael B. Nadler: Yes. I am limited to what's in the public record. The investigation before the indictment came out, I could tell you last it was -- had been going on quite some time. Alex Saab had come in our radar early on as an individual of interest related to what we would classify as, at that point, just corruption and bribery stemming out of Venezuela.
I would tell you at the beginning, we didn't have any idea just how big Alex Saab was going to become and has become. We had started working on this. DEA had really spearheaded and uncovered the network associated with Alex Saab and who Alex Saab really was. And they did a fantastic job in methodically building the case against Alex Saab.
Once the case was indicted and we tried to be a little more, I would say, descriptive in these types of cases. A normal money laundering case doesn't need an overt acts or a purpose in means or an explanation to conspiracy. Usually, it just is a description of the statute. In this case, we tried to add more facts and be more descriptive given who he was and what we, I think, expected was going to happen.
You could see shortly after we had filed our indictment, or close to the same time, OFAC began their release and sanctions of Alex Saab and his co-conspirators and compatriots. His number one partner, as you can tell from the indictment, is a guy named Alvaro Pulido. Those sanctions really kind of lay out how large or how expansive Saab's tentacles have become in the upper echelons of the Venezuelan government, the connections to Tareck, Maduro, Cilia, the step kids, and they really did a great job in kind of mapping that web and that network and at least attempting to stop the flow of money.
You know, one of the interesting things with these types of cases, normally you see an OFAC designation as being incredibly restrictive of an individual in terms of the dealings they can do. An OFAC designation pretty much prevents anybody who had financial transactions or financial businesses touching another entity who then connects to the U.S., which in today's day and age is pretty much anybody.
For example, in the narco trafficking cases for a lot of the Columbian narco traffickers, they get on the OFAC list and it's almost as big as a sanction or punishment as an indictment because it completely prevents them from maneuvering and moving their cash. It seems to be, in some instances, almost less restrictive. They just find new front people. They setup new entities. Hopefully, the new law, and we think it will, will change their ability to do that given the requirement to disclose the ultimate beneficial owners. And hopefully the whistleblower part of that will encourage some of these financial institutions to start disclosing this.
So now, as you can see, right when I began to exit the office, the extradition, it was -- Alex Saab's flight to Iran was a last-minute discovery. And a lot of pieces fell into place perfectly to be able to stop him and have him arrested in Cabo Verde. What's happened since is interesting. I think anybody who's involved in this case or was involved in this case wants the rule of law followed and Cabo Verde has done that, and I believe they will continue to do that beyond the pressures.
What you see in the news in the recent weeks about the Nigerians starting these campaigns, some points it's funny, some points, you just can't believe this is happening, the campaign to release him. Whether or not he is a diplomat is something I think will be hard to use throughout his either appearance here or Cabo Verde does take the task and deny him. That will be an ongoing argument whether or not Alex Saab was in fact or had ever been designated before he took that flight as a diplomat or an envoy to Venezuela.
Harout J. Samra: Right. And so having mentioned that, and quickly, to follow up on a couple points before we jump back into the Cabo Verde piece, and I know Ryan, that you'll develop some of that as well. But going back to -- tying what you just described to us, Michael, and maybe some of the legal framework points that we talked about, when we talk about the reach and the financial system of the U.S. and the impact of both that connection, maybe it's worth, just for a few minutes, talking about that.
You mentioned in many ways, it's as hard a sanction as an indictment itself. Can you explain a little bit and develop that a little bit in terms of what you mean and tie that in with the broader reach of the U.S. financial system and why these things have become so impactful?
Michael B. Nadler: So OFAC is the opposite of foreign asset control. It's a division of the Department of Treasury that has the power to issue sanctions after having done an investigation and uncovering evidence, that an individual who's designated, and I'm summarizing drastically here, is prevented from conducting any financial transaction with an entity of the United States or a financial entity of the United States.
So an example is if you pull out your wallet and you look at your credit card, Mastercard, whether you have a credit card that you got from a bank in Europe, Mastercard has a connection to a U.S. financial institution. You will never be able to use Mastercard. Mastercard -- if they do allow you to use it, that financial institution can be fined for doing business with a sanctioned individual.
Most banks have correspondent relationships because they do deal in dollars and then they send money throughout the world. Even if you have a local bank in Columbia, what they will essentially do if you become a designated or sanctioned individual is they will cut you a check for the full amount in your bank account, but you'll never be able to cash that check because almost now every bank or financial institution in the world is connected to the U.S. financial institution. And nobody wants to risk being sanctioned because the sanctions can be significant based on each and every dollar transaction or each and every financial transaction that's conducted.
So as part of the tools that the United States government has to begin to prevent individuals who have committed these types of illegal conduct. So it's either the specially designated individuals who are related to the kleptocracy foreign corruption or there's the other side which to the kingpin, which are the large scale narco traffickers.
These are things that can act as a hammer because, as I said, the extent and reach of the financial institutions in the U.S. touches everywhere. And having or the ability to prevent that, you can imagine. Can you imagine not being able to use a credit card, an ATM card, or having a bank in today's world? You wouldn't be able to pay any of your bills. You wouldn't be able to move money. You wouldn't be able to conduct business, especially if you had a corporation that did international business. Look what's happening to PDVSA right now. They can't sell their oil. It pretty much is just sitting there unless Iran or China or Russia goes and picks it up.
The other side, the other big tool we have, is the criminal side. These indictments, and again, Venezuela has become one of those you could call a golden cage, maybe not as much as some others because of all the financial distress going on down there, but someone can survive in Venezuela. And Alex Saab did it for quite some time after his indictment became public. Raul Gorin is still in Venezuela, and he has an indictment.
So as you can see from Alex Saab, the minute you start traveling out of your golden cage, the long arm of the United States government is long. And I think this, unfortunately, may be instructive to those who are in Venezuela or some other country that doesn't allow extradition, they'll think twice about traveling anywhere outside, except for I think a few countries.
Harout J. Samra: Yeah. And part of this is going to be tied just to the fact that the U.S. dollar is just the dominant currency, right, globally.
Michael B. Nadler: Oh, absolutely. Absolutely.
Harout J. Samra: Yeah. Ryan, do you want to maybe, as just a follow up a little bit on this discussion before we turn back to Cabo Verde, do you want to talk a little bit about the importance of OFAC and U.S. economic sanctions in the broader picture here and how it ties in with the very serious indictments and other criminal violations that have arisen as well as some of the maybe broader political strategic considerations here?
Dr. Ryan C. Berg: Sure. Though it's a great question and it's something that many actors in the region consider and quite frankly fear, the unilateral or asymmetric ability of the United States government to sanction them and for them to land on a list coming out of OFAC, something that's seriously circumscribes their ability to maneuver. And so it is something that many criminal actors around the world and especially in a country like Venezuela fear.
It has been the main tool of the United States government in bringing pressure against the Maduro regime. Of course, there was the diplomatic angle, the recognition of Interim President Juan Guaido. There's been the humanitarian support to try to relieve the tremendous human suffering coming out of Venezuela. But in terms of the pressure and how we've been dialing up the pressure, it's been largely focused on sanctions, using it as the primary driver or the primary tool of the U.S. government to limit the room for operations from the Venezuelan regime.
When it comes to their efficacy, I think sanctions are a -- U.S. government sanctions are incredibly effective, especially in the sense of the anecdotal evidence that we have. The Maduro regime is engaged in no fewer than nine negotiations with various parties, extensively about a political transition. Although, many of us think that the negotiations were simply a charade to consolidate further its power.
But if you look at what the regime has been asking for every time it's gotten into negotiations, most of what they -- or pretty much every time, what they've been asking for is a lifting of sanctions. And if we take that as proof of what they want most, that they're not bluffing when it comes to their request, that this is the thing that circumscribes their movement the most, and this is the thing that they want lifted. This is the architecture that the United States has placed on Venezuela is what they want to lift so that they have freedom and maneuverability to engage in the same activities that they did prior to the U.S. wrecking this really incredible sanctions architecture around the criminal Maduro regime.
So if you look at the negotiations, I think that sanctions work and have great effect based on the fact that it's what they ask for every time. They ask for sanctions relief. It's the only request they bring to the table when it comes to negotiations.
Harout J. Samra: And another question, maybe, for you to maybe put in some broader geopolitical context here. Michael referenced a few other jurisdictions, places like Russia, China, we talked about Iran here, and we'll talk about them even more as we really jump back into this extradition and diplomatic immunity topic. But how does the Russian, Chinese, Iranian and other governments play into this broader dynamic, both the financial dynamic as it relates to some of the economic sanctions' issues but more broadly even the geopolitical dynamic as it relates to Venezuela?
Dr. Ryan C. Berg: Sure. So Michael's right in mentioning that part of the power of sanctions is not just the fact that the U.S. dollar is still the world reserve currency, but it's also what he was mentioning with Mastercard which is that many of the world's banks or financial institutions will have corresponding banks in the United States. And so therefore, at one point or another of the transaction, you're likely to touch the U.S. financial system at some point. And so it's at that point that sanctions and asset freezes and all that stuff become relevant.
When we're talking about Russia, China, Iran, we're talking about players in the geopolitical space who still support the Maduro regime and who have some level of financial capability to be able to skirt U.S. sanctions and therefore help the Maduro regime evade, on some levels, the architecture that the United States has constructed around the regime.
And this fits -- sanctions evasion fits within their geopolitical support for the regime, and they've managed to vitiate to -- I think it's debatable how much they've managed to vitiate the sanctions architecture that the United States has erected. There are other analysts who think that they are the reason that the regime has not yet fallen, and we haven't seen a political transition in Venezuela.
But nevertheless, Russia, Iran, and China remain critical in their support for the regime as well as their ability to skirt U.S. sanctions, their willingness to continue, as Michael mentioned in one of his previous answers, their willingness to continue taking Venezuelan crude, their willingness to continue lending to the Maduro regime, their ability to use Venezuela as a spot in the western hemisphere to project power in a geopolitical space that was usually and traditionally a space of U.S. influence and even U.S. dominance.
And so Venezuela has become a very important feather in their cap in terms of ability to project power in what they see as the United States hemisphere or sphere of interest, much in the same way as Russia would claim the United States is involved in its neighborhood in the Baltics and in the Eurasia space. It claims that it's doing the same in Venezuela, and that support has been pretty important for the survival and the resilience of Maduro's authoritarian regime.
Harout J. Samra: Yeah. And I mean that clearly extends to also to things like even just providing a new financial structure, right? Banking services, they go beyond just buying oil because if U.S. banks are effectively closed to business for these individuals, that would also be an important support that many of these jurisdictions could offer to some of these Venezuelan individuals who've been sanctioned or indicted.
Dr. Ryan C. Berg: Yeah. That's right. I mean, take a country like Russia, for example, which has been sanctioned by the United States many times before and for a long time. The Russians are pretty good at finding ways to maneuver around U.S. sanctions architecture. Sanctions, for those of us who are old enough to remember the game at the arcade, sanctions are often described as a game of whack a mole. And so you hit a few of the heads, of course, on the machine down and a couple seconds later, a couple other of the puppets pop up.
Sanctions can be sort of likened to a similar game sometimes, as Michael alluded, where players occasionally open up new front companies under different names, same operator, same industry, and you just have to be swift enough and aware enough to be able to move immediately to close off those avenues. But it's constantly this game, this kind of shifting game of whack a mole.
Harout J. Samra: Yeah. So, Ryan, thanks for that, and let's turn back, maybe, to one of the topics that Michael referenced towards the end of his overview on some of these -- on the Saab case in particular. And that's this issue of extradition, diplomatic immunity, and the role of the Cape Verde islands.
So if you maybe can give us a little bit of additional context on this, Michael, introduce the topic. And then maybe we can talk about some of the particular parts, things like the diplomatic immunity point and even some of the more recent developments including the conflicting judicial position.
Michael B. Nadler: So in general, as a broad topic, extradition is really seeking an individual who's charged by one country who has been arrested in another. And each country has its own laws related to extradition. In Cabo Verde, you make your initial request through their diplomats and their legal system. To make a request to send this individual, you have to establish a dual criminality which means that there are same or similar laws in that jurisdiction usually and you have to send not just your indictment but essentially an affidavit laying out the facts as the basis to establish the probable cause for which you indicted this individual.
In Cabo Verde, it appears that there's a two-tier system. They go through initially what they call the Supreme Court, and then there's a constitutional court to appeal to. In most instances, it's that one-two step. It appears in Cabo Verde, the constitutional court made a determination that the Supreme Court of Cabo Verde didn’t fully consider this diplomatic issue and essentially restarted the extradition process. I think a couple of weeks ago or last month, the constitutional court again approved his extradition. And now, we are waiting for the constitutional court to affirm or deny that holding.
Harout J. Samra: Yeah. And for those who maybe are interested, Cabo Verde is a small island nation off the coast of West Africa with a population of somewhere in the range of 540,000. And so the headlines that it's received is a consequence of this place have probably put it in -- given it more publicity than it has had over the last many years. And so that's some context so the folks understand where this is.
So maybe, Ryan -- thank you for that, Michael. Maybe, Ryan, if we could turn it back over to you. Do you want to maybe talk a little bit about some of the issues surrounding the extradition question? As Michael described earlier, given the overview of some of the extradition issues and the legal issues around it, but Mr. Saab was flying and was ultimately arrested in Cabo Verde. If you could give us maybe some background on that and how it fits in with the broader story. Ryan?
Dr. Ryan C. Berg: Sure. So he's arrested on his way to Iran. There's a notice put out for him. He's arrested on the runway during a refueling stop. He, of course, claims that he's got diplomatic immunity. There's a question of timing there. There's also a question of timing on the notice, I believe, on the red alert that's been put out with Interpol. That was an issue with the constitutional courts that there was a question over timing, whether it was put out before his arrest or after his arrest. That's just one of those major points that they're going to have to decide, and I think it could be a turning point in the case in how they decide.
And so then this thing has kind of worked its way -- since the United States made the extradition request to Cape Verde, with which it doesn't have any extradition treaty, it's been winding its way through the system. And as Michael said, it remains now for the constitutional court to decide whether the Supreme Court was correct in its judgment.
So far, as I can see it, the only real victory that Saab has won in this legal battle, so far, is with a court under the economic community of West African States, or ECOWAS, as the acronym goes. And it ruled that Cape Verde had to release Saab, drop all extradition proceedings, and I believe they also awarded for him to receive $200,000 for damages. This court rejected the argument that Saab had diplomatic immunity, but they actually ruled in favor of the issue on the red alert. And so the arrest was therefore arbitrary, I think is how their opinion went.
But Cape Verde doesn’t recognize formally the court's jurisdiction, and so this was kind of -- I don’t know if Michael would also describe it this way, but it was kind of a charade or a bit of side theater going on here because Cape Verde doesn’t recognize the court's jurisdiction. But it is, in my opinion, the one major legal victory, if you want to call it that, that Saab has gotten so far in this process, which is really taking quite a long time.
With respect to Cape Verde, yeah, the case has definitely raised the profile of the country, quite a small country off the coast of Africa. But Cape Verde is also in the geopolitical crosshairs as well. The Chinese are increasing their presence. The U.S. has increased its presence over the last couple of years. One of the major U.S. objectives, I think, in a place like Cape Verde is to grow closer to the country for maritime purposes and defense purposes. And so Cape Verde, before Saab and for reasons apart from Saab, has also received quite a bit of attention just because of its geographical location.
It's also received a lot of attention because, again, apart from Saab, it's a major transit point for drugs going through South America and eventually to the European market. It's a good weigh station on the way, on that drug route, out of countries like Brazil, to eventually to European ports and the Netherlands and in Spain. And so Cape Verde has gotten attention for that reason as well from the U.S. [inaudible 44:28]. And so there are reasons for looking at Cape Verde apart from the Saab case, but certainly, the profile of this case and how it fits into the Venezuelan struggle has only increased our attention to this tiny island nation.
Harout J. Samra: Now, you mentioned earlier some of the resources that it's been reported that the Venezuelan government has invested in defending Mr. Saab. A lot of that, really, has been dedicated to this extradition issue, hasn't it?
Dr. Ryan C. Berg: Yeah, that's right. The assemblyman Carlos Paparoni I had mentioned had claimed a few days ago that $170 million had been expended on Saab's defense. And Michael also mentioned this absolutely outrageous moment in time where, I don't know, for about a week or so, we saw lots of social media activity under the hashtag free Saab. And it was a paid Nigerian social media army that had been given money to try to drum up support for Saab's release.
And at some point during this extradition process, I don't remember exactly when, I think it was towards the end of 2020 and moving into 2021, the U.S. actually moved naval assets into the region. An article in the New York Times picked up on this significant naval assets compared to what are usually in the region, just to send a message to some of the powers like China that were perhaps putting pressure on Cape Verde to rule a certain way in the Saab case, or at least it was perceived as that. The U.S. also expended resources by putting naval assets in the region to send a sort of equal and opposite deterrent message.
Harout J. Samra: Yeah, and thanks for that. And so one thing I do want to do -- emphasize, really, is sort of the line between some of the political and geopolitical considerations that we're talking about here with Ryan as well as on the other hand, some of the legal issues and the criminal components to this as well as some of the OFAC and the related sanctions points, which are obviously subject to a totally different track.
And so definitely want to draw that line and help our audience understand that these are things that are happening, maybe in parallel, but they are subject to different processes including a professional legal process that is undertaken by non-political public officials including at the DOJ.
So we are reaching the last ten minutes of today's discussion so I would ask Nick, as we continue to maybe discuss and work through some final questions, if there are any questions, feel free to open the line and to invite any of our audience members to ask them. So if any of you has any questions based on the conversation today or would just like a clarification on any point, please feel free to follow the instructions that have been provided and to ask that question.
So, Nick, feel free to interrupt us if there are any questions, but we'll go on.
Nick Marr: Okay. I'm just going to quickly -- we're going to open the floor so people can request the floor. Back to you. We'll let you know if we've got a question. Thanks.
Harout J. Samra: Okay. terrific. So just to elaborate a little bit on that last point I was making, from a legal standpoint, Michael, you're in a pretty elite group of prosecutors, former prosecutors, who handled cases that are as complex and are as global in their impact as these. Can you tell me -- can you tell us a little bit and the audience a little bit about what's it like and what are some of the things that you experienced as you were working on not just this case but other cases like this one.
Michael B. Nadler: Yes. I'm trying to think. These cases, they're hard. They tend to be incredibly large when you're looking at these types of individuals, especially with political figures who -- or former political figures, depending on who you ask, who are at that level. You have to have an incredibly good agent who is diligent.
These cases are paper cases. You have to have an understanding of the movement of money, the financial background. As Ryan talked about and said it well, these people are sophisticated. They understand how the financial system works, how to create shell companies, LLCs offshore, and move money, especially to jurisdictions that the United States doesn't have as much visibility in.
And when they start doing that or they begin that way and then the money coming out, you have no visibility, tracing it becomes hard. And these people are from a very small elite group that don’t really have conversations. So in some cases where you would need to flip to get that person inside because in order to go after this specific foreign official, not just someone like Alex Saab, you need somebody who's going to say yes, I paid him a bribe because their money, this foreign official money, is so well-hidden, you're not going to find a bank account that says this account belongs to Nicolas Maduro.
On the geopolitical side, as a prosecutor, I never experience that kind of politics that are obviously involved in these types of cases. That could be for the mere reason that in some way shape or form, what I was doing supported or matched what the people in D.C. believes should be happening, but I never felt that. It never became really political until you started looking at what's going on, for example, in a microcosm of Cabo Verde. You have two opposing sides where the United States is going about their business as we normally do, quite succinctly following the law, where on the other side you have an attempt to make it political.
I think Alex Saab is not really political, other than the fact that he's helping somebody who was the former ruler of a country. But for us, it's more about the crime and less about the politics. There is, of course, something about it that something this big and working towards something this big and shutting something down like this that, as everybody can see, has harmed a country so significantly. But with any crime we prosecute, there's also that feeling of accomplishment and doing good and benefitting the world.
Harout J. Samra: Yeah. Yeah. Thank you, Michael.
Michael B. Nadler: Hey, Nick. Did I hear you trying to jump in?
Nick Marr: Yes. Sorry. So we've got three questions in line. We've just got a few minutes left here, so let's go to our first one.
Harout J. Samra: I would just ask our callers to be very succinct with their questions so that we can try to hit all three. So go ahead, caller.
Caller 1: Great. Thanks so much. I hope you can hear me. I'll try to be brief. I had two quick questions, not really that closely related. Number one, I'm not sure if the change in administration has had any impact on how the case is being prosecuted, just if there's an inclination to use international legal institutions which don't seem to have been particularly effective in this case as well as many others, which seems more in keeping with the philosophy of the new administration.
And secondly, this, obviously, seems to turn all around the money, not only in terms of the money laundering at issue but also the ability to get leverage over these individuals. And I'm wondering with the emergence of crypto currencies, the [inaudible 52:10], other things like that, if U.S. statuses reserve currency, if that gets endangered, what the implications for that would be for the ability to do this kind of thing worldwide.
Harout J. Samra: Just maybe as a -- thank you, sir, and just maybe quickly initially because there is some geopolitical pieces to this but, Michael, out of curiosity, if you ever really came across any crypto-currency issues in the years that you were doing this?
Michael B. Nadler: Not 'til the very end when Maduro started creating the Petro. But the majority of the financial culprits here are a little more old-school and a little more sophisticated as to the traditional business organizations and financial transactions. At this level, I have not seen the use of crypto currency. I imagine that's more because of the volatility. These people are doing what they're doing because they want the money when all is said and done. And the idea of such a new currency, which is incredibly volatile, probably just scares them. That would be my assumption.
Harout J. Samra: That's interesting. Yeah, and so -- and, Ryan, if you want to talk a little bit about the broader question first, maybe beginning would be any anticipated changes with the new administration, we're now about four months in.
Dr. Ryan C. Berg: Sure. I can't speak to the specific case itself because I presume that the, as Michael said, that the Justice Department is to a pretty large extent insulated from the policy making apparatus in D.C. and some of the changes that might be taking place in policy related to Venezuela matters. So I imagine that the extradition of Saab is the same level of priority as it was under the previous administration.
But in terms of changes in our overall posture towards Venezuela, there hasn't been much so far. And mostly my impression on that is it largely has to do with the fact that the administration, with respect to Latin America policies, are completely overwhelmed with Central America issues right now. They haven't gotten their Venezuela team in place. There could be some changes in Venezuela policy, but they don't seem in too much of a hurry to put them in place.
Not even on those set of sanctions that I thought would be the most in the crosshairs, so to speak, or the first to go, which would be the deal swaps. Swaps of crude for much needed diesel in a country which is used not only for transportation but for agriculture and all sorts of other things. And so the regime, of course, has made plenty of claims that it's having effects on food production and all of that. And I thought that that would be one of the first things to go especially since the previous administration implemented those really towards the end of its time. But even in that respect, there hasn't been any real moves to change policies. So far, it's been a continuation of what they had inherited.
Harout J. Samra: Yeah. Nick, if we can maybe take another question.
Nick Marr: Yeah. Great. Next question.
Harout J. Samra: Thank you, Nick. Please, go ahead.
Caller 2: Yes, thank you. If hypothetically it were determined that he had been named as a diplomat before he left, would there be other options to pursue justice or would there be really no options at that point?
Harout J. Samra: So this has to do with the diplomatic immunity defense. Michael, I'm not sure if you can get into some of the contingency planning on this or thinking from a legal analytical standpoint, but I'll maybe throw it to you first.
Michael B. Nadler: Yeah. It's actually a tough question. Frankly, I don't think it matters whether he was a diplomat on that flight to Iran if he stopped in Cabo Verde. The indictment is out of the United States for conduct he committed in the United States when he was not a diplomat. I'm just -- I'm not familiar enough with Cabo Verde law to discuss whether their law gives some kind of open protection for all diplomats passing through. But I think there's a strong argument that whether he was a diplomat on that flight or not, the protections aren't afforded.
Harout J. Samra: Under these circumstances, okay.
Michael B. Nadler: Yeah.
Harout J. Samra: And we've got about a minute left, Nick, if you'd like to ask the last speaker to ask their question, just very, very quickly. And then we can go from there.
Nick Marr: Yeah. Great. Go ahead with your question.
Bob Barker: Hey, everyone. Bob Barker in Atlanta calling. Again, on the crypto currency thing, maybe it's not being seen at Justice, but I certainly see or hear of a lot of people who are trying to evade the AML laws these days by using crypto. And with the Chinese new Yuan based, digital Yuan or whatever that they're talking about, at least there's a lot of fear on the part of people like Peter Thiel that they'll ultimately be successful. Particularly, just state-backed crypto, will that ultimately undermine the AML laws and force us to rethink our OFAC regime?
Harout J. Samra: So if maybe -- thank you, Bob. And if maybe, Ryan, you maybe want to tackle that, if you could do that quickly?
Dr. Ryan C. Berg: Sure. Look, I'm pretty -- I'm not exactly up to speed on China's efforts with their state-backed crypto, but I can speak at least to the Petro, which Michael mentioned previously as the Venezuelan attempt to get a crypto currency up off the ground and backed by its oil reserves. It hasn't been successful so far, and I don't think I've seen any cases of significant work arounds to Anti-Money Laundering laws using the Venezuelan Petro, that doesn't mean that there can't be, but I just think that the volatility and the lack of confidence that many criminal actors have in crypto at this point in time might be one of the biggest inhibitors.
That said, it doesn't mean that from a theoretical level there couldn't be some sort of evasion in future when currencies are more stable and more trusted. But at least in the Venezuelan case, as Michael said, we've seen more traditional financial operations and more traditional maneuvers that are a little bit more easily detected. But when it comes to Chinese state-backed crypto, I can't speak too much to the technicalities of that.
Harout J. Samra: Right. And so thank you. Thank you, Ryan. Thank you, Michael, for really what has been a pretty robust interesting discussion today. I'd like to echo your thanks earlier at the beginning of today's program to the Criminal Law and Procedure Practice Group as well as the International and National Security Law Practice Group of The Federalist Society for sponsoring today's event. And, Nick, I will turn it back to you to close us up.
Nick Marr: Thanks very much. And on behalf of The Federalist Society, I'm going to offer a quick thanks to our panelists and our great moderator for your great discussion, the benefit of your valuable time and expertise this afternoon, of course, to our audience for calling in, for your great questions.
Just a reminder, be checking your email and our website for announcements about upcoming Teleforum calls, Zoom events, and the like. But until next time, until that next event, thank you all for joining us. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.