String of Indictments by DOJ Point to Multiple Global Operations
The Organized Crime Drug Enforcement Task Forces program was established in 1982 as a means to combat increasingly organized drug traffickers.
The OCDETF program is an unusually broad coalition that, as noted by former Attorney General Jeff Sessions, “brings together just about every federal law enforcement agency there is. It’s the Swiss Army knife of law enforcement.”
The program’s strategy, which currently operates under the direction of Deputy Attorney General Rod Rosenstein, aims to “focus federal drug resources on reducing the flow of illicit drugs and drug proceeds by identifying and targeting the major trafficking organizations, and eliminating the financial infrastructure of drug organizations.”
In October 2017, Sessions announced that he was designating the international criminal gang MS-13 as a priority for the OCDETF. Sessions came under some criticism for his actions, with many noting that MS-13 didn’t represent a significant force in the drug-trafficking business. But Sessions himself acknowledged this, while at the same time, noting the strength of the program’s reach:
“MS-13 sells drugs, but they are not primarily a drug-trafficking organization. I have ordered OCDETF to prioritize MS-13 not because of their drug trafficking—but because OCDETF is such a powerful weapon.
“OCDETF is able to hit MS-13 from all angles.”
Interestingly, until early January 2018, the OCDETF operated under the direction of Department of Justice (DOJ) official Bruce Ohr. On Dec. 7, 2017, Ohr was demoted and stripped of his title as associate deputy attorney general. A month later, on Jan. 8, 2018, it was reported by Fox News that Ohr had been removed as the head of the OCDETF, as well.
Ohr was demoted and stripped of his responsibilities after it was learned that the FBI used Ohr as a conduit for unofficial information from former MI6 spy Christopher Steele—who authored the now-infamous dossier on then-presidential candidate Donald Trump—after Steele was formally terminated by the FBI. Ohr hadn’t informed his superiors of this ongoing relationship.
It would later be learned that Ohr’s wife, Nellie Ohr, worked for Fusion GPS, the firm that hired Steele to produce the dossier.
But Ohr’s troubles don’t end there. Fox News confirmed in January 2018 that Ohr, “as the head of OCDETF, was directly involved with Project Cassandra, the interagency investigation spearheaded by the DEA [Drug Enforcement Administration] that tracked a massive international drug and money-laundering scheme allegedly run by Hezbollah.”
Project Cassandra was the subject of a lengthy, detailed, and highly critical Politico report, “The Secret Backstory of How Obama Let Hezbollah Off the Hook,” which examined how the Obama administration may have derailed a “campaign targeting drug trafficking by the Iranian-backed terrorist group Hezbollah.”
Begun in 2008, after the DEA amassed evidence that Hezbollah was engaging in drugs and weapons trafficking, along with other crimes, the investigation traced its way to the “innermost circle of Hezbollah and its state sponsors in Iran.” According to the Politico report, “Hezbollah’s network moved metric ton quantities of cocaine [to] launder drug proceeds on a global scale, and procure weapons and … explosives.”
It was at this point that roadblocks began to appear:
“As Project Cassandra reached higher into the hierarchy of the conspiracy, Obama administration officials threw an increasingly insurmountable series of roadblocks in its way. … When Project Cassandra leaders sought approval for some significant investigations, prosecutions, arrests, and financial sanctions, officials at the Justice and Treasury departments delayed, hindered or rejected their requests.”
The Politico article quoted Katherine Bauer, a former Treasury official in the Obama administration, who had testified to the House Committee on Foreign Affairs:
“Under the Obama administration … these [Hezbollah-related] investigations were tamped down, for fear of rocking the boat with Iran and jeopardizing the nuclear deal.”
Ohr’s demotion occurred on Dec. 7, 2017, following the release of that Politico report. Then, on Dec. 22, Sessions announced that the allegations in the Politico report would be reviewed:
“While I am hopeful that there were no barriers constructed by the last administration to allowing DEA agents to fully bring all appropriate cases under Project Cassandra, this is a significant issue for the protection of Americans. We will review these matters and give full support to investigations of violent drug-trafficking organizations.”
Then, just days after Ohr was removed as the head of the OCDETF in early January 2018, Sessions announced the creation of the Hezbollah Financing and Narcoterrorism Team (HFNT):
“HFNT prosecutors and investigators are tasked with investigating individuals and networks providing support to Hezbollah, and pursuing prosecutions in any appropriate cases. The HFNT will begin by assessing the evidence in existing investigations, including cases stemming from Project Cassandra, a law enforcement initiative targeting Hezbollah’s drug trafficking and related operations.”
“In an effort to protect Americans from both threats, the Justice Department will assemble leading investigators and prosecutors to ensure that all Project Cassandra investigations as well as other related investigations, whether past or present, are given the needed resources and attention to come to their proper resolution. The team will initiate prosecutions that will restrict the flow of money to foreign terrorist organizations as well as disrupt violent international drug-trafficking operations.”
On Oct. 15, 2018, Sessions broadened OCDETF’s mandate, and in doing so, designated five different groups as the nation’s top transnational organized-crime threats (notably, Hezbollah made the list):
• Cartel de Jalisco Nueva Generacion, or CJNG
• the Sinaloa Cartel
• Clan del Golfo
• Lebanese Hezbollah
Sessions selected the five groups based on recommendations he received from the FBI, DEA, OCDETF, and the DOJ’s Criminal Division.
Sessions singled out Hezbollah for additional focus in his discussion and specifically noted the previously created HFNT task force:
“The subcommittee on Lebanese Hezbollah will be led by Assistant U.S. Attorney Ilan Graff of the United States Attorney’s Office for the Southern District of New York. AUSA Graff is overseeing the prosecution of two alleged members of Hezbollah’s External Security Organization, the first such operatives to be charged with terrorism offenses in the United States.
“This subcommittee will be led and staffed by members of the Hezbollah Financing and Narcoterrorism Team, which is a group I created in January.
“This team is composed of experienced international narcotics trafficking, terrorism, organized crime, and money-laundering prosecutors who are tasked with investigating individuals and networks providing support to Hezbollah.”
As part of his announcement, Sessions also announced the formation of a “transnational organized crime task force of experienced prosecutors” tasked with coordinating the government’s efforts and developing plans to “take each of these groups off of our streets for good.”
Rosenstein Takes Over
Sessions had, to this point, been the man directing the OCDETF’s efforts. Concurrent with his Oct. 15th announcement, Sessions appointed Rosenstein to lead the new transnational task force and direct OCDETF’s actions. Working underneath Rosenstein are separate subcommittees for each of the target groups, each led by an experienced prosecutor.
This was a major assignment, given the priority that President Donald Trump has given to the topic. It also appeared to indicate a shifting of responsibility as Sessions had previously been leading the prosecutorial effort on MS-13. Notably, the appointment occurred after Trump’s Oct. 8 affirmation of Rosenstein, following their meeting on Air Force One.
Additionally, Rosenstein’s appointment hinted at a pre-planned succession occurring in the weeks prior to Sessions’s formal resignation, which occurred Nov. 7, 2018, following a request by the president.
Targeting Mexican Drug Cartels
Meanwhile, efforts by the OCDETF continue. Immediately following Sessions’s October press conference, 15 indictments, along with new measures aimed at destroying the Cartel de Jalisco Nueva Generacion, were unveiled Oct. 16, 2018.
Money-laundering and fraud activities are also being pursued. On Oct. 31, 2018, a “former executive director at the Venezuelan state-owned oil company, Petróleos de Venezuela, S.A. (PDVSA), pleaded guilty for his role in a billion-dollar international scheme to launder funds embezzled from PDVSA.” Notably, the Politico report highlighted Venezuela’s prominent role in the flow of drugs from Hezbollah:
“In Venezuela, President Hugo Chavez was personally working with the then-Iranian president, Mahmoud Ahmadinejad, and Hezbollah on drug trafficking and other activities aimed at undermining U.S. influence in the region, according to interviews and documents.
“Venezuelan cocaine exports skyrocketed from 50 tons a year to 250, much of it bound for American cities.”
Other Key Investigations
On Dec. 4, 2018, U.S. prosecutors announced criminal charges against four people, including a former lawyer for Mossack Fonseca, the firm highlighted by the leak of the Panama Papers. The leak included 11.5 million documents from Panamanian law firm Mossack Fonseca, then the world’s fourth-biggest provider of offshore services, that detailed secret, offshore accounts.
The four men, three of whom have been arrested, have been charged with wire fraud and conspiracy to commit tax evasion and money laundering. The DOJ release notes the following:
“For decades, the defendants, employees and a client of global law firm Mossack Fonseca allegedly shuffled millions of dollars through offshore accounts and created shell companies to hide fortunes. In fact, as alleged, they had a playbook to repatriate un-taxed money into the U.S. banking system. Now, their international tax scheme is over, and these defendants face years in prison for their crimes.”
The announcement of the criminal charges came after the prior week’s news that German authorities had raided the offices of Deutsche Bank in an investigation related to the leaks of the Panama papers.
On Dec. 5, 2018, The Associated Press reported that prosecutors were ramping up their investigation of the Podesta Group and Mercury Public Affairs. Both firms were accused of FARA violations resulting from the special counsel’s probe into former Trump campaign manager Paul Manafort.
Mueller had previously referred both cases to the Southern District of New York as they fell outside of the scope of his investigation, but news regarding both cases has become limited in recent months.
According to AP, DOJ prosecutors had begun the process of interviewing witnesses and reportedly contacted lawyers to schedule new questioning relating to both companies.
The Podesta Group registered to lobby on behalf of Russian Sberbank, a firm implicated in the Panama papers, just weeks before the 2016 leak occurred.
Also on Dec. 5, 2018, it was announced that Wanzhou Meng, the chief financial officer of Chinese telecommunications giant Huawei has been arrested in Canada at the request of U.S. authorities on suspicions that she violated U.S. trade sanctions against Iran. Meng was reportedly arrested on Dec. 1, 2018, but the arrest wasn’t made public immediately.
According to Canada’s Globe and Mail, “Since at least 2016, U.S. authorities have been reviewing Huawei’s alleged shipping of U.S.-origin products to Iran and other countries in violation of U.S. export and sanctions laws.”
The investigation into Huawei is being run out of the U.S. attorney’s office in Brooklyn. U.S. intelligence experts have deemed Huawei a security threat to the United States and other nations. Huawei has been the subject of concern for a number of years and was the subject of a House Intelligence Committee investigation in 2012.
Alexander Downer, the Australian diplomat who met with Trump campaign adviser George Papadopoulos in London, was a board member of Huawei until 2014, when he accepted the top diplomat post to London.
Ringing in the new year, on Jan. 4, the DOJ handed down a significant indictment on the former Attorney General for the state of Nayarit, Mexico, Edgar Veytia. Veytia pleaded guilty to one count of international conspiracy to manufacture and distribute heroin, cocaine, methamphetamine, and marijuana.
According to court filings, “from January 2013 until February 2017, Veytia used his official position as State Attorney General to assist and abet drug-trafficking organizations operating in the Mexican State of Nayarit in exchange for bribes.”
Meanwhile, the trial of infamous drug lord Joaquín “El Chapo” Guzmán continues—and as it does, the level of complicity throughout the entirety of the Mexican government, as well as elements within the U.S. government, is gradually being revealed. In a startling turn of events, on Jan. 3, the son of El Chapo’s former partner, Vicente Zambada Niebla, took the stand:
“He told the jurors stories not only about the drug lord’s operations in Mexico, Honduras, and Belize, but also about his suppliers, distributors, bodyguards, assassins, cousins, brothers, and sons.
“He also said that his father routinely bribed a military officer who once served as a personal guard to Mexico’s former president, Vicente Fox.”
Zambada’s tale is particularly intriguing. In 2007, he asked his father and El Chapo for permission to retire from the cartel. What happened next surprised even him:
“Mr. Guzmán made an astonishing proposal: He offered to reach out to his ‘contacts’ in the Drug Enforcement Administration and see if they would meet with the young man.
“American authorities have acknowledged that within two years of floating the idea of leaving the cartel, Mr. Zambada sat down with agents from the D.E.A. at a clandestine meeting in Mexico.”
Although details remain murky, in 2011, Zambada’s lawyer presented his version of events, noting, “the United States government entered into a conspiracy with one of the largest drug cartels in the world.”
These streams of indictments, although seemingly unrelated, are linked through commonalities in the borderless drug trade and money-laundering operations.
Hopefully, someone is asking Bruce Ohr some hard questions concerning Project Cassandra, the international drug trade, and U.S. government involvement during the Obama administration.
Jeff Carlson is a CFA® Charterholder. He worked for 20 years as an analyst and portfolio manager in the high-yield bond market. He runs the website TheMarketsWork.com.