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Treasury Threatens to Prosecute Reporters Trying to Reveal What Rod Rosenstein and Richard Burr Would Not

WikiLeaks supporters like to claim the May 2019 superseding indictment against Assange uniquely threatens journalism by treating routine journalistic activities — such as requesting sensitive information — as part of a conspiracy to leak.* That’s not entirely true.

As I’ve noted, well before Assange’s superseding indictment, in October 2018, DOJ charged Natalie Sours Edwards — one of several presumed sources for a series of BuzzFeed stories on Suspicious Activities Reports pertaining to those investigated for their ties to Russia — in such a way to treat Jason Leopold as a co-conspirator. Both the complaint justifying her arrest and the indictment include a conspiracy charge that describes how Edwards (and another unindicted co-conspirator) worked with Reporter-1, including one request pertaining to Prevezon captured on Signal.

c. As noted above, the October 2018 Article regarded, among other things, Prevezon and the Investment Company. As recently as September 2018, EDWARDS and Reporter-1 engaged in the following conversation, via the Encrypted Application, in relevant part:

EDWARDS: I am not getting any hits on [the CEO of the Investment Company] do you have any idea what the association is if I had more information i could search in different areas

Reporter-1: If not on his name it would be [the Investment Company]. That’s the only other one [The CEO] is associated with Prevezon Well not associated His company is [the Investment Company]

On January 13, Edwards pled guilty to one charge, the conspiracy one, though without any sign of cooperation.

In fact, Edwards is not the only case charged like this. While he was charged after Assange’s superseding indictment, Henry Frese, a DIA analyst who leaked reports on China to some NBC reporters, was not just charged in a similar conspiracy charge, but was wiretapped to collect evidence implicating the reporters. Because he cooperated, there’s little to prevent Trump’s DOJ from charging the journalists after the election except Trump’s well-established support for an adversarial press.

The way in which DOJ charged Edwards has become newly critical given an announcement Treasury made yesterday, in the wake of reports about how Donald Trump was never investigated for his financial vulnerability to Russia. The unit of Treasury that collects and analyzes Suspicious Activity Reports released a statement threatening “various media outlets” who were planning to publish stories on SARs.

The Financial Crimes Enforcement Network (FinCEN) is aware that various media outlets intend to publish a series of articles based on unlawfully disclosed Suspicious Activity Reports (SARs), as well as other sensitive government documents, from several years ago.  As FinCEN has stated previously, the unauthorized disclosure of SARs is a crime that can impact the national security of the United States, compromise law enforcement investigations, and threaten the safety and security of the institutions and individuals who file such reports.  FinCEN has referred this matter to the U.S. Department of Justice and the U.S. Department of the Treasury’s Office of Inspector General.

BuzzFeed has always treated their source for the Treasury story as a whistleblower, reporting not just a dispute over access to reports for intelligence reports, but also on the damning Russian information that got ignored.

As Edwards has moved closer to sentencing, she developed irreconcilable differences with her original attorneys over what she called a coerced guilty plea. And documents filed in the case provide some explanation why.

While the substance of her appeal is not entirely clear, it’s clear that she claimed legal access to certain documents — presumably SARs — as a whistleblower.

In the appellants “official capacity” as a government employee from 2015-Jan 2020 and as a whistleblower from 2015 to current, the specific documents were used during the Congressional Request Inquires & Letters from 2015-2018, the Office of Special Counsel’s investigations from 2017-2020 and the appellants legal access to the exculpatory material from 2018 to current per 31 C.F.R. § 103 “official disclosures responsive to a request from an appropriate Congressional committee or subcommittees; and prosecutorial disclosures mandated by statute or the Constitution, in connection with the statement of a government witness to be called at trial, the impeachment of a government witness, or as material exculpatory of a criminal defendant.1

As a government employee I could disclose any information in a SAR (including information in supporting documentation) to anyone, up to and including the person who is the subject of the SAR, so long as the disclosure was “necessary to fulfill the official duties of such officer or employee”2 which I did as a whistleblower and as an employee; however, once I medically resigned, 31 C.F.R. § 103 provided the legal exculpatory material as a whistleblower, administrative appellate and criminal defendant to disclose the information in court proceedings. Furthermore, the appellant was adhering to the courts upholding that disclosures must be specific and detailed, not vague allegations of wrongdoing regarding broad or imprecise matters. Linder v. Department of Justice, 122 M.S.P.R. 14, 14 (2014); Keefer v. Department of Agriculture, 82 M.S.P.R. 687, 10 (1999); Padilla v. Department of the Air Force, 55 M.S.P.R. 540, 543– 44 (1992).

After she tried to use the documents in her appeal of a whistleblower complaint, the Treasury Department Inspector General shared them with the prosecutors in her case, who in turn cited them in her presentencing report.

The agency has argued throughout the appellant no longer is an employee of the agency, the pro se appellant agrees. The agency Inspector General should not have been notified of the administrative proceedings of the court because the appellant is not an employee of the agency. There is no statue or policy that gives the agency the right to notify the agency IG of the “procedural motion” prior “to notify the other party”. Regulation 5 C.F.R. § 1201.55(a) does not state “notify Inspector General” rather it does state “to notify the other party”. The pro se appellant argues notifying the Inspector General prior to “the other party” is a violation of the pro se appellants fifth amendment.

[snip]

[T]he agency/agency IG notified the appellants criminal prosecutors of the disclosures in the IRA case. As explained above, the disclosures are permissible per 31 C.F.R. § 103. Due to the agency/agency IG notification to the government prosecutors, the prosecution requested increased sentencing in the sentencing report for the appellant/defendant thus violating the defendants fifth amendment in the criminal proceeding.

Edwards further claimed that the government withheld her original complaint to coerce her to plead guilty.

The Federal Judge found merit and significant concerns in the “letter and substantial documentation” the whistleblower defendant/appellant provided to the court concerning violation of fifth amendment, conflict of interests pertaining to the prosecution/counsel, coercion of the plea deal, criminal referral submitted against agency IG, the letter defendant sent to Attorney General Sessions and Special Counsel Mueller, etc., all elements withheld from the Federal court by both the prosecution and defense counsel.

Edwards has been assigned a new attorney (who may have convinced her not to submit this complaint as part of sentencing), and her sentencing has been pushed out to October.

There’s no way to assess the validity of her complaint or even her representation of what happened with the judge in her case, Gregory Woods. What her complaint shows, however, is that there’s a packet of information she sent to Mueller and Sessions (possibly implicating and/or also sent to Congress), summarizing some reports she believes got ignored.

If those reports show what Rod Rosenstein and Richard Burr worked so hard not to investigate, it might explain why Treasury is threatening legal consequences for reporting on them. And given how DOJ already structured this prosecution, they might well be threatening to treat reporting on the President’s vulnerabilities as a conspiracy to leak SARs protected by statute.


*WikiLeaks supporters also cite the risk of Assange being subjected to US Espionage Act prosecution. While that risk is real, in his case, the most dangerous charges (for leaking the names of US and Coalition informants) would likely be far easier to prosecute under the UK’s Official Secrets Act, which still could happen if he’s not extradited. The actions described in his indictment are arguably more explicitly criminalized in the UK than the US, even if their sentences are not as draconian.

The Reason Treasury Has Never Complied with Reagan’s EO: Rampant Privacy Violations

For years, I’ve been noting that the Treasury Department, virtually alone among intelligence agencies, does not have procedures to comply with EO 12333’s restrictions on spying on American citizens. Today, BuzzFeed explains why: Treasury’s foreign intelligence wing, OIA, has been engaging in domestic spying. Effectively, they’ve been piggy-backing on FinCen’s access through the Bank Secrecy Act to get information on Americans.

The story describes two big violations. First, when OIA gets masked reports, they call banks to learn the identities of the Americans masked in the reports.

Some sources have also charged that OIA analysts have, in a further legal breach, been calling up financial institutions to make inquiries about individual bank accounts and transactions involving US citizens. Sources said the banks have complied with the requests because they are under the impression they are giving the information to FinCEN, which they are required to do.

One source recalled an instance from 2016 in which OIA personnel, inserting themselves into a domestic money-laundering case, sought information from a Delaware financial institution. In other cases, according to a second source, FinCEN gave OIA reports with the names of US citizens and companies blacked out. OIA obtained those names by calling the banks, then used those names to search the banking database for more information on those American citizens and firms

OIA has also been permitting other agencies — it names CIA and DIA — to put temporary duty officers to access classified banking networks.

Sources also claimed that OIA has opened a back door to officers from other intelligence agencies throughout the government, including the the CIA and the Defense Intelligence Agency. Officials from those agencies have been coming to work at OIA for short periods of time, sometimes for as little as a week, and thereby getting unrestricted access to information on US citizens that they otherwise could not collect without strict oversight.

Dean Boyd has a pretty funny non-denial denial of this charge in the article.

The Defense Intelligence Agency did not respond to a request for comment. CIA spokesman Dean Boyd said, “Suggestions that the Agency may be improperly collecting and retaining US persons data through the mechanisms you described are completely inaccurate.”

I suspect the source of this problem is that Treasury is split into two, with one group doing foreign intelligence and another doing domestic intelligence.

Under a seminal Reagan-era executive order, a line runs through the Treasury Department and all other federal agencies separating law enforcement, which targets domestic crimes, from intelligence agencies, which focus on foreign threats and can surveil US citizens only in limited ways and by following stringent guidelines.

Compare that with FBI, which hasn’t been split in two since the PATRIOT Act, and so can access vast swaths of intelligence on Americans by pretending to be looking at foreigners.  I also suspect the reason this hasn’t been changed at Treasury is because it would piss off the banks, making it clear that the mandated spying assistance under the Bank Secrecy Act implicates their customers too.

The CIA (&etc) Money Orders

NSL v 215Both the NYT (Charlie Savage and Mark Mazzetti) and WSJ (Siobhan Gorman, Devlin Barrett, and Jennifer Valentine-Devries) tell the same story today: the CIA is collecting bulk data on international money transfers. Given that someone has decided to deal this story to two papers at the same time, and given the number of times the Administration has pre-leaked stories to Gorman of late to increasingly spectacular effect (even making most national security journalists forget the very existence of GCHQ’s notoriously voracious taps at cable landings just off Europe) I assume this may be some kind of limited hangout.

It’s not that I doubt in the least that CIA gets and uses financial data. I don’t even doubt the government uses PATRIOT authorities to do so (as both stories assert).

But it would be unlikely that this data comes in through an FBI order and does not also get shared with Treasury and National Counterterrorism Center (if not NSA), both of which would have better infrastructure for analyzing it, and both of which we know to use such data for their known intelligence products. Indeed, in response to a question from both papers about this practice Western Union points to Treasury programs.

 A spokeswoman for one large company that handles money transfers abroad, Western Union, did not directly address a question about whether it had been ordered to turn over records in bulk, but said that the company complies with legal requirements to provide information.

“We collect consumer information to comply with the Bank Secrecy Act and other laws,” said the spokeswoman, Luella Chavez D’Angelo. “In doing so, we also protect our consumers’ privacy.”

And at WSJ a consultant to the industry points even more firmly towards Treasury.

Money-transfer companies are “highly, highly aware of their obligations under the Patriot Act,” said Robert Pargac, a director in global investigations and compliance at Navigant Consulting Inc. who has worked at several such companies. Western Union said last month it would be spending about 4% of its revenue in 2014 on compliance with rules under the Patriot Act, the Treasury Department’s Office of Foreign Assets Control and other anti-money-laundering and terrorist-financing requirements.

We know that, at least until 2008, the FBI maintained that it could share materials that came in through Section 215 with any agency so long as that agency asserted it had a need for the information, and there’s little reason to believe the FBI has changed that policy. So I would assume at least Treasury and NCTC gets this data as well. It may be all this story indicates is that — as they do with much Section 702 data — CIA gets its own access to the data. That’s a minimization story, not a collection story, because we’ve known this data was collected (as WSJ points out).

Then there’s the evidence both papers point to to show that this is a Section 215 program. Read more

WikiLeaks Will Be Nothing Compared to FinCENLeaks

According to Reuters, the Treasury Department is planning on expanding access to FinCEN reports — which include Suspicious Activity Reports from over 25,000 financial institutions — to the intelligence community, including CIA.

The Treasury document outlines a proposal to link the FinCEN database with a computer network used by U.S. defense and law enforcement agencies to share classified information called the Joint Worldwide Intelligence Communications System.

[snip]

More than 25,000 financial firms – including banks, securities dealers, casinos, and money and wire transfer agencies – routinely file “suspicious activity reports” to FinCEN. The requirements for filing are so strict that banks often over-report, so they cannot be accused of failing to disclose activity that later proves questionable. This over-reporting raises the possibility that the financial details of ordinary citizens could wind up in the hands of spy agencies.

There’s so much to say about this batshit crazy plan…

First, when I made fun of John Brennan’s confirmation vow, people assured me CIA doesn’t operate in the US. Maybe not. But now they have free access to all this data on Americans.

And remember that DOJ, as far back as 2002, argued it was legitimate to use FISA to collect information on crimes the government could use to coerce people into becoming informants. Imagine how much easier that will be with access to people’s bank irregularities.

Finally, think of the security nightmare here. While I doubt anyone is going to leak a whole database of FinCEN data to WikiLeaks (though how much fun would that be?!?!), I can imagine a lot of people might avail themselves of this access to profit off the financial information. Maybe that’s how CIA will fund their ops, instead of (or inaddition to?) drug running: profiting off sensitive financial information.

There’s a whole slew of reasons why this is a bad idea. Which is precisely why it is bound to be pushed through regardless.

DOJ Corporate Settlement Dealer Takes Over at FinCEN

In February, here’s what Jennifer Shasky Calvery said in testimony before a House Subcommittee.

These staggering amounts of money in the hands of some of the worst criminal elements create a terrifyingly vicious cycle – money enables [the crooks] to corrupt the economic and political systems in which they operate, thereby allowing them to consolidate and expand their power and influence, which gives rise to more opportunity to commit crime and generate revenue.

Mind you, I’m cherry picking a quote from testimony about Transnational Crime Organizations. But it shows the blindness DOJ (and the Administration generally) have had as they try to repurpose their counter-terrorism tools to combat transnational crime: to some extent, what’s true of drug cartels is also true of the banks that have escaped prosecution even while doing as much damage as the drug cartels.

And yet we never get around to prosecuting our own transnational criminal organizations, the banks.

It’s worth keeping in mind, now that Shasky Calvery takes over at Treasury’s FinCEN, the part of the Agency that makes sure corporations are complying with reporting requirements of suspected financial crimes.

Read more

Only Banks Might Want to Review How Criminal Banks Are

The other day, I noted how–days after his department reported that suspected bankster crimes are growing quickly and terrorist financing crimes are going down–Treasury Department fired FinCEN head, Jim Freis. Given some of the reporting describing the firing, which explained that Treasury wanted to focus on things like terrorist financing whereas Fries had been focusing on things like mortgage fraud, I wondered whether Treasury fired Freis, in part, for showing that the emphasis on terrorism resulted in the neglect of bankster crimes.

Today, FinCEN sent out notice of a survey to determine how useful that report and another yearly report–on Tips and Trends–they produce are (note, the email notice says an invitation to the survey is here, but as of 8:15 it is not).

As a subscriber to e-mail updates from the United States Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), FinCEN invites you to participate in a survey assessing the value of two of our recurring publications:  The SAR Activity Review-Trends, Tips & Issues and The SAR Activity Review-By the Numbers.  This invitation has been sent to you in follow up to FinCEN’s prior e-mail notification.  A copy of that notice and this invitation can be found on FinCEN’s official website at http://www.fincen.gov/hotTopics.html

To participate in this completely voluntary survey, please click on the following link: https://svy.cfigroup.com/cgi-bin/qwebcorporate.dll?idx=HWGKEN   Please note that this link will direct you to a website hosted by the CFI Group, which FinCEN has commissioned to conduct this survey.  FinCEN has obtained permission from the Office of Management and Budget through control number 1090-0007 to conduct this survey in accordance with the Paperwork Reduction Act (44 U.S.C. § 3501-3520) and its implementing regulations (5 C.F.R. Part 1320).

Through the survey, we hope to learn more about your needs and identify opportunities to improve these products.  The results of the survey will be reported to FinCEN only in the aggregate; individual responses will be grouped anonymously along with those of other FinCEN customers.

Read more

Did Treasury Fire Jim Freis for Showing that Banksters Are a Bigger Problem than Terrorists?

As I noted earlier, a few weeks ago Treasury fired the head of FinCEN, Jim Freis. (FinCEN makes sure that financial institutions report whatever evidence of potential crimes they’re seeing.)

American Banker reported that Treasury wanted “additional focus on international areas such as terrorist financing,” and less focus on “other financial crimes such as mortgage fraud.”

Three days before he was fired, FinCEN released this report, showing in aggregate what all of last year’s Suspicious Activity Reports revealed. It shows that among the SARs from depository institutions (which make up over half of all SARs), reports of terrorist financing and hacking (computer intrusion) are going down, while reports of behavior targeting consumers–mortgage and consumer loan fraud–are going up (though it notes the mortgage loan fraud reports are inflated because some date from years ago).

  • Reports of Terrorist Financing declined 14%, from 711 instances in 2010 to 609 for the same period in 2011.
  • The number of depository institution SARs identifying Mortgage Loan Fraud as a Characterization of Suspicious Activity continued to rise (up 30.6% in calendar year 2011). Quite markedly, Mortgage Loan Fraud is the only summary characterization that has experienced an increase every year since 1996, with the past two years (2010 and 2011) accounting for nearly 37% of all noted instances of this specific activity for the last decade. Note that depository institutions may submit Mortgage Loan Fraud SARs well past the actual date of the activity. This upward spike in mortgage fraud counts is in predominant part attributable to mortgage repurchase demands and special filings generated by several institutions.4
  • Of the eleven reportable suspicious activities that experienced decreases, none saw greater than Computer Intrusion, falling 21% in 2011 as compared to those filed in 2010. For the second year in a row, this drop is amongst the largest of any of the defined summary characterizations.
  • Though having experienced decreases in 2009 and 2010, the number of reports indicating Consumer Loan Fraud (in whole or part) significantly rose in 2011, up 127% from the prior year.

Such trends are similar to what the report shows in the securities and futures industries, with an even bigger drop in terrorist financing and big gains in futures fraud, embezzlement, and insider trading.

  • Embezzlement/Theft saw the second largest gain of any of the suspicious activities reported in SAR-SF filings, rising 38% in CY2011. However, of the 21 Types of Suspicious Activity listed, Futures Fraud saw the biggest rise (up 85%) for the same year, increasing from 20 instances in 2010 to 37 instances in 2011.
  • Likewise, Insider Trading (+34%) and Forgery (+19%) also experienced double-digit growth, making them the only two distinct activities that have continued to rise every year since 2003.
  • Of those activity types showing a decrease, Bribery/Gratuity (down 74%) and Terrorist Financing (down 59%) both saw a sizeable drop between 2010 and 2011, with the former down from 69 reported instances last year to just 18 in 2011 and the latter falling from 46 instances in 2010 to a low of 19 twelve months later.

Remember, SARs are not a reflection of what Freis demands (nevermind the fact he’s been on the job when things like terrorist financing were higher). Rather, this is what banks and securities firms self report, as mandated by law, about what they’re seeing in their own records.

Jim Freis showed that terrorism is getting better and bankster crimes are getting worse. And then Treasury fired him.

And the report from American Banker suggests that by replacing Freis, Treasury may intend to have FinCEN dictate what financial institutions prioritize. Which will mean terrorism–and not the crimes of banksters–will once again be the focus.

Fincen is likely to take a higher profile when it receives new leadership. In the immediate aftermath of the Sept. 11 attacks, Fincen was very active in dealing with bank regulatory matters, including helping to shape policy on anti-money laundering requirements. But the financial crisis largely pushed Fincen to the side and the agency focused on many of its other responsibilities. Treasury appears to want Fincen to take a larger role in terrorist financing activities and possibly reassert itself in the bank regulatory sphere. In past few years, banks have not had to focus on what Fincen’s agenda was. A more assertive Fincen changes the equation.

FinCEN offers one objective read of the relative prevalence of various forms of financial crime. And last year, it showed that banksters were a growing problem and terrorists a shrinking one.

And that message was so dangerous to the powers that be, it appears, Treasury decided to kill the messenger.