Never miss a post! Enter your email address below to subscribe today.

Thursday, August 23, 2018

Baltimore Test Case: Fourth Circuit Rejects Ancient Coin Collectors' Claims

Fourth Circuit Court of Appeals
The United States Court of Appeals for the Fourth Circuit has issued a unanimous decision rejecting the Ancient Coin Collectors Guild's (ACCG) effort to strike down U.S. import controls that protect ancient coins from transnational looting and trafficking.

"Having already received two hearty bites at the proverbial apple, .... we are satisfied to reject each of the Guild’s contentions on appeal," wrote the appellate court in the case of U.S. v. Three Knife-Shaped Coins; 7 Cypriot Coins; 5 Other Chinese Coins.

Memoranda of Understanding (MoU) between the United States and Cyprus and China—adopted respectively in 2007 and 2009 and authorized by the terms of the Convention on Cultural Property Implementation Act (CPIA)—approved American import restrictions on at-risk archaeological and ethnological material from each of these countries. Both bilateral agreements included protections for ancient coins. The ACCG objected, prompting the trade group "to manufacture litigation by deliberately importing restricted ancient Cypriot and Chinese coins into the United States," said the appeals court.

In its August 7, 2018 ruling, the appellate court wrote that "the Guild has never made a good faith effort to comply with the applicable regulations. In fact, the Guild admits that it 'deliberately' and 'purposefully' imported ... ancient coins, knowing that they were subject to import restrictions, in seeking to engineer this forfeiture action. ... The Guild simply implemented a scheme designed to knowingly contravene, and subsequently challenge, a federal law that it opposed."

The appeals court explained that "[t]he Guild opposed the Cypriot and Chinese MOUs, believing that State Department officials had acted in bad faith .... That belief was bolstered by what the Guild perceived as failures of government officials to comply with the CPIA."

While noting that the ACCG was "founded ... in 2004 in an effort to preempt the imposition of CPIA restrictions on ancient coins," the circuit judges highlighted that, in 1974, the U.S. became a signatory to the 1970 Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership and Cultural Property (the 1970 UNESCO Convention), which was "designed to eradicate the clandestine excavation and illicit trade of 'cultural property,'" including "'antiquities more than one hundred years old, such as . . . coins.'"

President Ronald Reagan gave effect to the 1970 UNESCO Convention when he signed the CPIA into law in 1983.

The ACCG sued to contest the CPIA's import control regimen in 2010, filing its claim in the District Court of Maryland in the case of Ancient Coin Collectors Guild v. U.S. Customs and Border Protection; U.S. Department of State; Assistant Secretary of State, Educational and Cultural Affairs. The test case challenged U.S. Customs' detention of ancient Cypriot and Chinese coins that the ACCG imported into Baltimore in 2009 from an overseas London dealer.

The district court rejected the ACCG's legal arguments in 2011, 2014, and again in 2015. The district judge again rejected similar arguments in 2017 in the subsequent forfeiture case of U.S. v. Three Knife-Shaped Coins. Appeals court judges also said no to the trade group's arguments in 2012 when the case went to the Fourth Circuit Court for the first time. Also in 2012, the circuit court judges denied the group a rehearing. The U.S. Supreme Court, meanwhile, refused to take up an appeal by the ACCG in 2013.

But the Fourth Circuit left the door open to the ACCG to dispute the seizure and forfeiture of the specific coins it imported into Baltimore, while closing the door to contesting the CPIA's import controls in general. Nevertheless, the ACCG took advantage of the opportunity and renewed its opposition to the CPIA in the case of U.S. v. Three Knife-Shaped Coins, filed by lawyers in the U.S. Attorney's Office for the District of Maryland in April 2013 in order to forfeit the ancient Cypriot and Chinese coins.

In that case, the Maryland District Court ruled on summary judgment that the CPIA's import regulations covering ancient coins would remain intact and that the government was entitled to forfeit fifteen ancient coins that Customs detained. The court, meanwhile, handed the ACCG a victory by ordering the government to return seven ancient coins to the group.

The ACCG appealed, prompting the Fourth Circuit to hear the Guild's case a second time, and leading to this month's appellate decision.

In its opinion of August 7, 2018 (docket 17-1625), the court of appeals again rejected the ACCG's "first discovery" argument, which the trade group consistently advanced throughout its eight years of litigation. It is the argument that the government must prove that coins seized by Customs were, in the appellate court's words, "(1) first discovered within and hence subject to the export control of the State Party for which restrictions were granted ("first discovery"); and (2) illegally removed from the State Party’s control after those restrictions were granted ("illegal removal")."

The Fourth Circuit noted, "The Guild correctly stresses that, under the CPIA, the executive branch can only impose restrictions on archaeological or ethnological material that was first discovered within the State Party that requested the restrictions, i.e., the State Party’s cultural patrimony." But the appellate court concluded that the ACCG was wrong "in asserting that the government must prove the first discovery element at every stage of the CPIA process—initially in the promulgation of the designated lists [specifying the types of archaeological and ethnological material covered by CPIA import restrictions], then in the detention of the restricted items by Customs, and again as part of establishing a prima facie forfeiture case." The court of appeals wrote, "Contrary to the Guild’s erroneous reading of the CPIA, the first discovery requirement only delimits what material the executive branch can place on a restricted list. Once the material is properly included on a list, or, in other words, 'designated,' the government no longer must establish the first discovery element with regard to particular imported material."

The appeals court also rejected the ACCG's claim that the government must prove the illegal removal of the seized coins from Cyprus and China. "Simply put," the court wrote, "we reject the Guild’s interpretation of the CPIA on this point."

The appeals court helpfully clarified the burden of proof in a CPIA cultural property forfeiture case, explaining that "the government must establish the following ... : (1) that the material [seized] is covered by an MOU ...; (2) that the [archaeological and ethnological] material is 'listed by regulation under [CPIA] section 2604'...; and (3) that the listing is 'sufficiently specific and precise' to ensure both that 'the import restrictions . . . are only applied to the archeological or ethnological material covered by the [MOU],' and that 'fair notice is given to importers and other persons as to what material is subject to such restrictions' ...." If the government satisfies these requirements in its prima facie case, then the burden shifts to the importer to prove that the cultural heritage material is not subject to forfeiture.

The ACCG also failed to convince the appeals court that an importer lacks adequate notice of exactly which imports are restricted and which are permitted by the CPIA. In the case at hand, Guild claimed that the CPIA's companion regulations at 19 C.F.R. § 12.104, specifically describing the import restrictions on cultural heritage material, necessarily conflicted with the CPIA's terms found in 19 U.S.C. § 2601(2). The court ruled that there was no violation of the ACCG's due process rights to fair notice and that there was no drafting error within the rules. In so ruling, the court offered a pointed observation:
In any event, the Guild’s asserted conflict ... fails to make the government’s import restriction scheme so vague and ambiguous that a reasonable person would not know which ancient coins are subject to the restrictions. Indeed, the Guild concedes that it used the Cypriot and Chinese Designated Lists as guideposts in deciding which ancient coins were likely to be seized by Customs. The fact that the Guild—with the assistance of [the London dealer]—correctly identified the coins subject to the import restrictions, shows beyond peradventure that importers of ordinary intelligence are able to ascertain the conduct that contravenes federal law.
Meanwhile, in a footnote, the court of appeals answered "no" to the question "Do CPIA Import Restrictions Constitute an Embargo?," commenting that it is proper for a federal district court to hear a CPIA import control case as opposed to the Court of International Trade (CIT) in New York. The CIT is the court that has "embargo jurisdiction."

Judge Robert Bruce King wrote the appeals court decision in U.S. v. Three Knife-Shaped Coins. Circuit Judges G. Steven Agee and Stephanie Dawn Thacker joined.

Amici filing briefs in support of the ACCG included Professional Numismatists Guild, American Numismatic Association, International Association of Professional Numismatists, Association of Dealers and Collectors of Ancient and Ethnographic Art, Committee for Cultural Policy, and Global Heritage Alliance.

The court's decision appears below. You can scroll the pages or click on the pop-out box at the top right to view the document in full screen.

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.


Tuesday, June 19, 2018

Preemptive Rulings Sought in Moon Dust and Bronze Horse Cases

Note reportedly written by Neil Armstrong.Source: court papers filed in Cicco v. NASA
“To Laura Ann Murray – Best of Luck – Neil Armstrong Apollo 11.” This message accompanied a vial of moon dust that Laura Cicco (neé Murray) received from her mother when she was about ten years old. The first man to set foot on the moon scribbled the note on the back of a business card carried by Cicco's father, who was friends with Armstrong.

These are some of the claims Cicco makes in a declaratory judgment (DJ) pleading her lawyer filed in Kansas federal court on June 6.

Cicco's suit against the National Aeronautics and Space Administration seeks a declaration that she is the bona fide owner of the moon dust. The case of Cicco v. NASA (2018-cv-01164) invokes the Declaratory Judgment Act 28 U.S.C. § 2201, which allows a party to petition a federal court for a binding ruling that resolves the petitioner's rights in a case that is ripe with controversy.

Meanwhile, in the Southern District of New York, both the Barnet family and Sotheby's auction house filed a DJ action on June 5 in response to legal threats made by the Greek government to seize a Greek horse sculpture dating to the 8th century BC. The plaintiffs want the federal district court to declare the family the lawful owner of the ancient bronze statue.

The vial of moon dust in dispute in Cicco v. NASA.
Source: court papers filed in Cicco v. NASA
In the moon dust suit, Cicco's lawyer writes in the court complaint that NASA "has taken the position that all lunalogic material is the property of NASA," pointing to the recent Central District of California case of Joann Davis v. United States (2013-cv-0483).

The Davis case concerned the ownership of a speck of moon rock placed in a paperweight. Neil Armstrong purportedly gave the paperweight to Joann Davis' husband, a former manager of North American Rockwell's Apollo program, and Joann Davis inherited the paperweight upon her spouse's death. But NASA took possession of the moon rock speck when its investigators conducted an undercover operation that seized the paperweight during a sting that lured the 73 year old widow to a Denny's restaurant. The court awarded the lunar material to the space agency.

Notwithstanding the result in Davis, Cicco's lawsuit asserts, "There is no law against private persons owning lunar material. Lunar material is not contraband. It is not illegal to own or possess." NASA likely will counter, as it did in the Davis case, that the National Aeronautics and SpaceAct of 1958 and NASA Policy Directive 1387 vest ownership of moon rocks and dust to the U.S. government.

Greek bronze horse in the Barnet collection.
Source: Sotheby's
Like the moon dust suit, the DJ action in New York seeks to stave off the seizure of an artifact. Greece's Ministry of Culture and Sports requested that the Barnet family turn over the ancient bronze horse or face legal consequences, including criminal penalties. (Although unmentioned, other legal consequences might have included a replevin suit launched by Greece to recover the cultural property or, more probably, a seizure and forfeiture of the archaeological object by U.S. authorities at the Greek government's request.)

Petitioners filed the case of 2012 Saretta Barnet Revocable Trust and Sotheby's v. Ministry of Culture and Sports of the Hellenic Republic (18-cv-4963) to preclude action by the Greek government. The DJ suit alleges that Howard and Saretta Barnet displayed the Greek horse in their Sands Point, NY home for over two decades after the couple bought it from antiquities dealer Robin Symes in November 1973 for approximately £15,000. Before then, the statue had been auctioned in 1967 at Münzen und Medaillen in Basel, Switzerland, according to the court complaint, and Jean-Louis Zimmerman of the University of Geneva later featured the Barnet's statue in the 1989 book, Les Chevaux de Bronze dans L’art Geometrique Grec.

The complaint adds that Saretta Barnet maintained sole ownership of the bronze after her husband's death in 1992. She displayed the piece in her Park Avenue apartment from 1997 until the time she passed away in March 2017. During this period, the Saretta Barnet Revocable Trust (Howard J. Barnet, Peter L. Barnet and Jane L. Barnet  trustees) acquired title in 2012 to the ancient horse. The family thereafter consigned the horse to Sotheby's in July 2017 for auction on May 14, 2018 at "The Shape of Beauty: Sculpture from the Collection of Howard and Saretta Barnet" (Lot 4), which displayed an estimated price tag of between $150,000 and $250,000.

"The Bronze Horse was acquired lawfully and in good faith by the late Howard and Saretta Barnet 45 years ago and has been part of their collection ever since," the plaintiffs' attorneys write. They protest that "one business day before Bronze Horse was to be auctioned, Sotheby’s received a letter by e-mail, from the Ministry of Culture ... marked 'URGENT,'” and "asserted that the Bronze Horse is cultural property that had been stolen from Greece in violation of Greek patrimony laws, asserted Greece’s ownership of the Bronze Horse, and threatened that persons in the United States involved in the sale of the Bronze Horse would be subject to criminal prosecution in Greece."

The plaintiffs say that Greece gave no evidence the statue had been stolen but, as a conseuquence, "Greece’s claim to ownership of the Bronze Horse, however meritless, has impaired Sotheby’s ability to sell it on behalf of the Barnet Family."  So plaintiffs withdrew the horse from the auction and petitioned the federal district court to declare the Barnet family the true owner of the artifact and to rule that there is "no basis for the forfeiture or repatriation of the Bronze Horse under U.S. or international law" so that Sotheby's can sell the artifact.

While the plaintiffs' DJ complaint acknowledges that antiquities dealer "Symes was accused of trading in looted antiquities," that was "[d]ecades later," well after the Barnet's purchased the bronze horse, adding that "the documented provenance of the Bronze Horse pre-dates Symes’ alleged acquisition of the object. Therefore, Symes’ involvement with the Bronze Horse lends no support to Greece’s claim of ownership to the Bronze Horse," the petitioners insist.

The DJ action filed by the Barnet family and Sotheby's is uncommon and likely will compel Greece to hire private counsel in the U.S. to defend its claim to the bronze horse. This scenario differs from the usual pattern where an alarm is raised over suspected stolen antiquities offered for sale, prompting intervention from American prosecutors and police who seize the artifact, sue to forfeit title, and then send the cultural object to the county of origin--the seize and send strategy. Think of the case of United States of America v. A 10th Century Cambodian Sandstone Sculpture Currently Located at Sotheby's, for example, with which Sotheby's in New York has direct experience.

The Cicco matter, like the bronze horse case, also is preemptive and uncommon. That DJ action almost certainly will forestall any effort by authorities to conduct an undercover police sting like the one undertaken in the Davis case.

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Wednesday, June 6, 2018

Importer Restored Ancient Mosaic. FBI Seized It. Now U.S. Attorney Seeks Forfeiture.

Defendant mosaic seized by the FBI that prosecutors say measures
18 ft. x 8 ft. and weighs approximately 1 ton.
In a recently filed civil forfeiture case involving cultural property, prosecutors in the U.S. Attorney’s Office for the Central District of California say that an importer failed to meet the obligations of 19 U.S.C. §§ 1481 and 1484, which require true and accurate information on invoices and entry documents.

Government lawyers allege in United States v. One Ancient Mosaic (18-CV-04420) that the importer failed to supply an accurate description of the ancient mosaic, listed a false value for the artifact, entered a false country of origin, failed to classify the mosaic under the correct Harmonized Tariff Schedule, and failed to declare the artifact as an antiquity. Simply put, prosecutors say that “the defendant mosaic was illegally imported and entered into the United States in violation of United States law.”

The forfeiture complaint identifies the large mosaic as a third or fourth century Roman Empire artifact from the Byzantine Period, “a ‘rare’ piece that probably originated from northern or central Syria,” according to an expert retained by the government. The expert inspected the artifact and examined pictures that had been supplied to an auction house, concluding that the object “was consistent with the iconography of mosaics found in Syria, in particular in and around the city of Idlib, Syria” and that such mosaics “were typically [found] on the floor.” According to the court complaint, the expert reported that “since approximately 2012, there had been an increase in illegal excavations in Syria involving cultural property, and that looted Syrian archeological items were routinely routed through Turkey.”

The importer, Mohamad Alcharihi, identified the mosaic as Greek, labeled the object as the "Eleventh Labor of Hercules," and produced a restoration report suggesting that the artifact had a history going back to the 1960's/1970's, according to papers filed in a related court matter.

Meanwhile, the forfeiture complaint filed by the government on May 23 grew out of an investigation begun by the FBI in 2015, which led to the agency seizing the artifact as well as documents and computers from the home of Alcharihi on March 19, 2016. A federal magistrate judge issued a search warrant for the house, and the FBI executed the warrant with assistance from Homeland Security Investigations (HSI).

Alcharihi protested the FBI’s confiscation of the piece. On his behalf, Attorney Henry Nasif Mahmoud sent a memo dated May 20, 2016 to an FBI special agent demanding the return of the mosaic. “We do not know what was told to the federal judge to have the Warrant issued, but an exhaustive investigation of the facts and the law show conclusively that … you have no case against [Alcharihi].”

“If the FBI and AUSA [Assistant U.S. Attorney] had probable cause for an arrest then the Client would have been arrested on the scene,” the memo argued, adding that the “the elements for smuggling are not present in the case” because “the shipping documents show that the customs duties were paid and all shipping documents were in order and all costs and expenses were properly paid.”

The memo concluded, “There was no intent or attempt to evade customs duties and introduce uninspected items into the United States. No false or forged documents were used to bring the items into the United States.” “It is believed that this action has been taken against [the Client] based on sheer Islamophobia and racism.”

A restoration report submitted in support of the memo demonstrated that the mosaic may have been removed from its base in the late 1960's or 1970's because of the kind of glue used to hold a fabric attached to the artifact's surface. There also was evidence that the mosaic had been rolled like a carpet following its removal. A photograph published in the restoration report (seen here) shows a fold.

On May 27, 2016, Attorney Mahmoud sent another memorandum to the FBI that enclosed "items of documentary evidence to establish the claim of ownership." These documents included an invoice dated Spring 2015 from a Turkish supplier selling sculptures, mosaics, and paintings, which listed two mosaic tables measuring approximately 15 ft. x 7 ft., together weighing a total of 617 lbs., and described as natural cut stone flooring.

In a further effort to reclaim the mosaic from the FBI, on October 3, 2016 Alcharihi petitioned the federal district court in Central California (Mohamad Yassin Alcharihi v. U.S.A. and Department of Justice, 16-CV-7391) to say that he “imported the property, paid customs duties, and then one item, a Greek Mosaic, (which was close to trash and in need of restoration) was restored to value by the Petitioner [Alcharihi].” He added that the FBI raid “destroyed Petitioner's business of restoring items and conserving items which he legally acquires” and that “Petitioner paid a specialist in New York to come to California to restore the Mosaic to turn it from an item of low value close to trash now it is transformed to a precious item of great value.” He argued that he “needs to perform further restoration on the Mosaic and the FBI is unskilled, inexperienced and abysmally careless when it comes to preserving antiquities such as the Mosaic….” “This seizure,” Alcharihi continued, “is causing a loss of goodwill and the risk of permanently losing the interest of potential buyers of the Mosaic….”

On May 4, 2017, the court denied Alcharihi’s petition, writing that the search warrant permitted the seizure of “looted and/or stolen antiquities appearing to originate from Syria and/or Turkey, including mosaics and records related to antiquities,” and the mosaic fit this category. In the opinion of the court, “Petitioner identified the Mosaic as a ‘Turkish Mosaic’” during previous administrative forfeiture proceedings begun by the government on May 17, 2016. “In addition, Petitioner submitted a copy of a Certificate of Origin … reflecting Turkey as the country of origin of the Mosaic.”

The court in Alcharihi v. U.S.A. et al. ruled that the mosaic would not be given back because the petitioner failed to satisfy three of the five requirements of 18 U.S. C. § 983(f)(1). First, despite the petitioner’s claims that the mosaic’s detention by the FBI prevented further restoration of the artifact and created a loss of interest among potential buyers, these assertions were not “sufficient to outweigh the Government’s interest in ensuring that smuggled antiquities are kept out of the stream of commerce.” Second, the petitioner announced that he wanted to sell the archaeological object, “which will make it unavailable in the event that the Government files a forfeiture proceeding,” the court declared. Third, the Assistant United States Attorney told the court that the mosaic would be “used as evidence of a violation of law.”

One year after the court issued this order and two years after the seizure, the U.S. Attorney’s Office for the Central District of California filed its complaint that claims the mosaic is subject to forfeiture under U.S.C. § 1595a(c)(1)(A) because the artifact
was smuggled or clandestinely introduced through the knowing use of false and fraudulent documents or paper through a custom house, in violation of 18 U.S.C. §§ 542 entry of goods by means of false statements] and 545 [smuggling]. Further, following such illegal introduction, the defendant mosaic was concealed by Alcharihi at his residence in violation of 18 U.S.C. § 545.
Prosecutors contend in their complaint that “the statements submitted on CBP’s Entry Summary form were materially false because: (1) the form and various shipping documents misrepresented what was actually in the shipment; (2) the form and shipping documents did not provide the defendant mosaic’s true country of origin; and (3) the items listed and the values of the items were under-reported. Instead, the shipment contained the defendant mosaic, which Alcharihi has admitted he did not truthfully report the value of or describe as an antiquity.” Prosecutors specifically allege:
In or about August 2015, Alcharihi hired a third party company based in California, [a customs broker], to process paperwork and import certain items, including the defendant mosaic, into the United States. The shipment containing the defendant mosaic and other items arrived at the Port of Long Beach on or about August 13, 2015. On the U.S. Customs and Border Protection (“CBP”) Entry Summary Form 7501 that [the customs broker] submitted to CBP on behalf of Alcharihi, the description of the merchandise in the shipment was: 82 pieces of “Ornamental Art Oth. Materia[l]” with gross weight of 1450kg [3,197 lbs.] and assigned HTS 6913.90.500 valued at $1,808; and “Ceramic, Unglazed Tiles, Cub” with gross weight of 313kg [690 lbs.] and assigned HTC 6907.10.000, valued at $391.
The U.S. Attorney’s Office asserts that Alcharihi provided the customs broker with a “purported invoice for Alcharihi’s purchase of approximately 81 vases and 3 mosaic Items,” purchased in April 2015 from a Turkish dealer for the reported price of $2,199.23. This price of $2,199 equals the $1,801 plus $391 listed on the import entry paperwork. According to the forfeiture complaint, “Alcharihi … is alleged to have sent ‘two wires … in October 2015’ and ‘admitted to law enforcement agents that he paid … $12,000 total for the defendant mosaic and vases, but that he only reported ‘twenty four hundred or something like that’ on the Customs entry documents to pay less duties.”

Court papers filed in the prior case of Alcharihi v. U.S.A. et al. show that the customs entry summary displayed Alcharihi as the importer of record, “IL” (Israel) as the country of origin, Los Angeles as the U.S. port of entry, a Turkish port as the foreign port of lading, and shipment to the U.S. via containerized vessel. A customs broker invoice listed the shipment as “GARDEN ORNAMENTAL VASE, MOS.”

The government pleads that “the defendant mosaic was illegally imported and entered into the United States in violation of United States law, with the intent to avoid lawful duties owed in connection with the importation.” [Sidebar: there likely would not have been any import duty on the archaeological object because collectors’ pieces of archeological interest are duty-free.] The filed customs entry summary form for the mosaic calculated $0 duty.

Because restoration work had been done on the mosaic after its import, the FBI spoke with two conservation professionals in March 2016. Prosecutors write in their complaint that one restorer did the work for $40,000 and that the piece at that time was characterized as a “Turkish Mosaic.” The lawyers say that Alcharihi told the restorer that he bought the mosaic “along with another mosaic in Turkey, and that it was 2,000 years old.” “Alcharihi further told [the restorer] that the mosaic was peeled off a floor 25 years ago and that it had taken him (Alcharihi) 10 years to get the mosaic out of Turkey because the laws had changed there. Alcharihi told [the restorer] the mosaic had been rolled-up for 25 years.”

A second mosaic restorer, according to the complaint, “stated that it depicted images from Greek mythology and appeared to have been ‘peeled off of something, possibly a floor.’ The mosaic was stored in Alcharihi’s garage and Alcharihi told [this second restorer] that the mosaic was found in Turkey, where it had been removed from a wall about 20 to 25 years before.”

The government’s complaint discloses that investigators discovered two separate bank wire transfer orders to a dealer in Turkey dated in October 2015, one for $2,199.23 and the other for $12,000, and they found a “Legal Statement” dated March 5, 2016 purporting to declare:
To whom it may concern.
I sold a rolled Mosaic carpet to Mr. Mohamad AlCharihi on November 1th [sic] 2009 in a yard sale.
The rolled mosaic carpet belonged to my late father since early 1970s[.]
My father died in 1992, and my mother kept the rolled mosaic carpet since she did not want to give away any of my late father's belongings.
My mother died in October 24th 2009, so we sold the house furniture and the tools along with the mosaic rolled carpet in a yard sale on November 1st 2009[.]
Mr. Mohamad AlCharihi, bought the 15'X7' mosaic rolled carpet which it was in a bad condition because of long time storing in my late father’s garage.
The discovery of the “Legal Statement” prompted authorities to interview the witness who produced it. The forfeiture complaint alleges, “Alcharihi was a neighbor to whom [the witness] had sold a carpet approximately 5 years before. She said the carpet belonged to her father, who had died 6 years before, and she described it as small, light-weight carpet. She stated she understood what a mosaic was, and the rug that she sold Alcharihi was not a mosaic item and was not heavy.” The witness “further stated that approximately two to three weeks prior to talking to the agents, Alcharihi had asked [the witness] if she would sign a letter for him that indicated that she had sold him the carpet.”

Prosecutors say that authorities interviewed Alcharihi on the same day that the FBI executed the search warrant at his home. Alcharihi reportedly told police:
  • “[H]e bought and restored mosaics for sale, but he had not yet sold anything.”
  • “[H]e had recently imported a container with fountains, vases and mosaics from Turkey that he intended to sell.”
  • “He referred to the mosaics as mosaic carpets that were located in Alcharihi’s garage.”
  • “[H]e bought the vases/waterfalls/fountains and mosaics from a friend, who bought these items from a broker in Turkey.”
  • “He claimed to have paid $12,000 total for the mosaic and vases, and had a customs clearance and receipt for the items. When asked how much the shipment was worth as reported on Customs entry documents, Alcharihi said ‘twenty four hundred or something like that.’ When asked why a lower number was reported instead of the $12,000 he had paid, Alcharihi indicated it was to lower the cost. When asked it if was to pay less duties, Alcharihi stated yes.”
  • “When asked where the old mosaic was from, Alcharihi replied ‘Turkey,’ but he did not know what part of Turkey. When asked how he knew the old mosaic was from Turkey, Alcharihi stated that he bought it from Turkey and it was shipped from there. When asked further how he knew the mosaic was from Turkey, Alcharihi eventually admitted ‘Well to be honest with you, I don’t know.’”
  • "When further asked by agents if anything was old . . . Alcharihi admitted one of them was. … When asked how old, Alcharihi said, ‘It’s about two thousand years.’ When asked if he had told the customs broker how old it was, Alcharihi stated, ‘No.’”
Federal agents reportedly obtained a search warrant to examine emails, and the government's forfeiture complaint alleges that, in October 2015, an email was sent from “an account known to be utilized by Alcharihi” to a third party email address regarding the possible sale of the defendant mosaic. The published email communicated that “[t]he mosaic piece was found in a destructed historical building in Ariha county in Idleb city, North western of Syria, the destructed building a land around it is belong to me. … the picture was removed in 2010 by an expert mosaic specialist and transferred to Turkey for restoration after obtaining of a removal and transfer permit. … in 2015 the picture was imported legally to the US.” (Errors in the original).

Other emails received by the email account allegedly reveal the existence of an “Associate” who, on March 5, 2015, “sent an email to a United Kingdom auction house that specializes in antiquities” to explain that Syria was the country of origin of the mosaic. The auction house replied, “So long as you have documentation/proof that they left Syria before 2010, we might be able to accept these if they are legally shipped to the UK.” Prosecutors do not explain why the auction house referred to the mosaic as “they” in the plural rather than “it” in the singular. As a result, when the forfeiture complaint states, “The auction house reportedly valued 40,000 to 60,000 British Pounds (per historical currency conversion approximately $60,972 to $91,458 in U.S. Dollars),” it is not entirely clear whether the value range applies to the single mosaic sought to be forfeited or to the mosaic plus a additional objects.

The federal district court has ordered the detention of the mosaic and will wait to receive pleadings from anyone who might have a claim to the archaeological artifact. Then the court will consider whether it is proper to forfeit title of the mosaic to the U.S. government.

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Monday, May 21, 2018

Proposed Bill Enlists Art & Antiquities Dealers in the Fight Against Money Laundering

The U.S. House of Representatives will consider a bill that adds art and antiquities dealers to the Bank Secrecy Act (BSA). Introduced last Friday by Representative Luke Messer (R-IN-6), H.R. 5886 would aid law enforcement's effort to uncover money laundering and terrorist financing schemes.

Titled the "Illicit Art and Antiquities Trafficking Prevention Act," the bill replies "yes" to the question, Shouldn't Art and Antiquities Sellers Be Subject to Anti-Money Laundering/Counter-Terrorist Financing Laws?, and it satisfies one of the six proposed recommendations to combat cultural heritage crime.

America's anti-money laundering and counter-terrorist finance laws (AML/CTF) such as the BSA generally require luxury and cash-intensive industries to satisfy recordkeeping requirements to identify and report possible criminal activity. Banks, casinos, and jewelry dealers are just some of the sectors already required to file Suspicious Activity Reports (SARs) with U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). Under the terms of the legislation proposed last week, art and antiquities dealers also would be included.

Law enforcement officials depend on private sector cooperation to expose money launderers and terrorist financiers who thrive on opportunities to wash dirty money inside clean business transactions. As U.S. Treasury Secretary Steven T. Mnuchin pointed out at a FinCEN awards ceremony held on May 8, “Industry reporting under the BSA is critical to supporting law enforcement investigations that combat money laundering and other financial crimes."

Money laundering takes many forms and can be accomplished through a variety of stealthy maneuvers. FinCEN describes money laundering this way:
Money laundering is the process of making illegally-gained proceeds (i.e. "dirty money") appear legal (i.e. "clean"). Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the "dirty money" appears "clean."
With regard to the art market, the Basel Institute on Governance, an independent nonprofit, makes an important observation in 2012 in its Basel Art Trade Guidelines that still holds true today:
In comparison with other trade sectors, the art market faces a higher risk of exposure to dubious trade practices. This is due to the volume of illegal or legally questionable transactions, which is noticeably higher in this sector than in other globally active markets. Far more serious than shady dealings in a legal grey area, the sector’s shadow economy encompasses issues ranging from looted art, professional counterfeiting and fake certificates to the use of art sales for the purpose of money laundering.
Because art and antiquities dealers sell objects that can fetch high prices, are portable, and are part of a marketplace that depends on confidentiality, discretion, and secrecy, their businesses are attractive to money laundering and other crimes, including terror financing. For some of the same reasons, dealers in precious metals, stones, and jewels were included in AML/CTF statutes like the BSA and, in like manner, art and antiquities dealers are fit for inclusion.

In fact, the Financial Action Task Force (FATF)--an inter-governmental body that publishes AML/CTF standards--specifically lists art and antiquities transactions as vulnerable to criminal exploitation. FATF's 2015 report on the Financing of the Terrorist Organisation Islamic State in Iraq and the Levant (ISIL), moreover, flags antiquities trafficking as a source of funding for terror groups when when they exercise control over archaeological sites. The European Parliament earlier this month adopted an AML/CTF resolution that closely aligns with FATF's standards.

The BSA is formally called the Currency and Foreign Transactions Reporting Act of 1970, and its provisions are codified in multiple statutory sections and regulations, the bulk of which can be found in 31 USC § 5311 et seq. and in 31 CFR Chapter X.

Congressman Messer's measure to amend the BSA has been assigned to the House Financial Services Committee for review. Reader's can follow the bill's progress here.

UPDATE 6/15/18: Rep. Bill Foster (D-IL-11) co-sponsored the bill.

Photo credit: Ben Shafer/freeimages.com

Text and any original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Wednesday, May 2, 2018

New European AML/CTF Legislation Includes Art Dealers and Flags Cultural Artifacts Transactions

European Parliament
Members of the European Parliament have adopted a legislative resolution endorsing a December 2017 agreement with the European Council that, for the first time, includes art dealers and auction houses in the European Union's anti-money laundering/counter-terrorist financing (AML/CTF) compliance rules.

Directive (EU) 2015/849 is the EU's primary legal weapon to combat money laundering and terrorist financing. It has been updated four times. The Directive regulates designated high-cash sectors (e.g., banks, casinos) to prevent them from being financially co-opted by organized crime groups and terrorists. The legislation approved by the Parliament on April 19 seeks to broaden the Directive by including cultural property dealers on the list of regulated sectors.

The legislation specifically identifies "persons trading or acting as intermediaries in the trade of works of art, including when this is carried out by art galleries and auction houses, where the value of the transaction or a series of linked transactions amounts to €10,000 [~$12,000 USD] or more." Other named parties are those "persons storing, trading or acting as intermediaries in the trade of works of art when this is carried out by freeports, where the value of the transaction or a series of linked transactions amounts to €10,000 [~$12,000 USD] or more."

Additionally, the legislation updates Annex III of Directive (EU) 2015/849 by flagging particularly high risk financial transactions, particularly including transactions "related to ... cultural artefacts and other items of archaeological, historical, cultural and religious importance, or of rare scientific value, as well as ivory and protected species."

The Directive, docketed at PE-CONS 72/17, is intended to embrace the Financial Action Task Force's (FATF) standards more closely, which recommends that art dealers identify customers and report suspicious activity so that law enforcement can more readily spot money laundering and terrorist financing. FATF is an independent inter-governmental organization.

Art dealers aren't the only new parties added by the fifth Directive. Tax advisory services, property rental agents, electronic wallet providers, and virtual currency exchange service providers are listed too.

The President of the European Parliament and the President of the Council are expected to sign the measure. After publication in the Official Journal of the European Union, the Directive goes into effect three days thereafter. European member states then have 18 months to incorporate its terms into their own national laws.

For several years, CHL has advocated for art and antiquities sellers to be included in AML/CTF laws in the United States. See, for example, "Shouldn't Art and Antiquities Sellers Be Subject to Anti-Money Laundering/Counter-Terrorist Financing Laws?"

Photo credit: Till Achinger/freeimages.com

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Monday, April 23, 2018

Cultural Property Groups Weigh In on China MoU (including how to watch the May 2, 2018 CPAC hearing live)

China United States cultural property MoU
CLICK HERE TO WATCH CPAC'S PUBLIC HEARING ON MAY 2, 2018 AT 3PM EDT.

The cultural property Memorandum of Understanding (MoU) between the United States and China is up for renewal.

The MoU memorializes the two nations' bilateral agreement--first adopted in 2009 and later renewed in 2014--that imposes American import restrictions on endangered Chinese archaeological objects. These protections are authorized by the Convention on Cultural Property Implementation Act (CPIA), the federal law that gives effect to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property.

The MoU renewal under consideration covers artifacts dating from 75,000 B.C. through 907 A.D., as well as monumental and wall art 250+ years old.

The Cultural Property Advisory Committee (CPAC) will hold a public hearing on the matter on Wednesday, May 2 at 3:00 p.m. EDT. This portion of the meeting is expected to last an hour. You can watch the proceedings on the web by clicking here.

Before next month's meeting, written comments were submitted to CPAC expressing both support and opposition to the renewal of the bilateral agreement.

The Association of Art Museum Directors (AAMD), made up of about 240 major art museum directors in North America, wrote in support of the renewal, emphasizing "the excellent cooperation that exists on numerous levels between American museums and their Chinese peers." But the professional association voiced concern about China's past compliance--or lack thereof--with the existing bilateral agreement. In an eight page statement, the AAMD outlined several problems, including that:
  • China had not used best efforts to allow museum exhibition objects to remain outside its borders for up to two years. "[T]he AAMD has not discovered any Chinese loan to AAMD members (or anyone else) made in the last five years with durations longer than one year, much less two." Short exhibition durations increase loan fees and costs and "make organizing an exhibition in the United States challenging."
  • China had not adequately supplied choice objects for American museum exhibitions. "Though the [current] MOU requires an increase in the percentage of Grade 1 items permitted in an exhibition (currently 20%), the AAMD observed little change."
  • There were high museum loan fees, "which are to some extent mandated by a system in China requiring museums to generate substantial revenue through object loan fees." "Despite [China] being required to encourage museum loans of archaeological material, including recently excavated objects, for research and public display purposes, as well as to facilitate loan exhibitions to the United States, significant barriers remain."
  • The MoU favors the Chinese art market to the disadvantage of the U.S. art market. "[T]he United States should not be a market for looted antiquities, but the United States market should not be restricted in order to advantage other markets."
  • China still has no immunity from seizure law that protects American art loaned to China from government seizure. "China benefits from the immunity from judicial seizure statute in the United States when loans are made to American museums .... While many of the major marketplace countries of the world have adopted immunity from seizure laws ... China has no such protections for works of art entering its borders on loan."
  • The MoU's designated list of protected archaeological objects needs to be rewritten. "The list is overly broad, the categories sometimes incorrect, its descriptions provide little guidance for customs officials, and in many respects, it fails to put importers on fair notice of what can and cannot be imported."
The Antiquities Coalition (AC) voiced strong support for the MoU renewal. Attorney and archaeologist Tess Davis, executive director of the nonprofit whose mission is to combat antiquities trafficking, wrote: "Our organization ​believes that MOUs between the United States and foreign governments like China are an important tool in the fight against cultural racketeerin​g." The AC observed that China "is in effect one large archaeological site," making "this ancient history ... difficult to protect from looters and traffickers."

Davis pointed out that the original MoU, adopted in 2009, came on the heels of a crisis in the illicit trade in antiquities, prompting the publication of an International Council of Museums Red List to spotlight endangered Chinese artifacts. "However, despite much progress in the fight against cultural racketeering, China’s ancient sites remain at risk, and will so long as there is an illicit market for its art and artifacts," she added.

The AC observed that the U.S. is "a major destination for Chinese antiquities, both licit and illicit" with Davis writing that the "American market for Asian art is still the 'Wild, Wild East,'" noting that "one of the most prominent U.S. dealers of Chinese antiquities, Nancy Wiener, is now facing felony charges." "Clearly there is still a need for the U.S.–China MOU," the AC concluded.

Attorney Peter Tompa, writing on behalf of the Committee for Cultural Policy and its sister organization Global Heritage Alliance, voiced opposition to the renewal of the bilateral agreement. "[I]t is impossible to reconcile the MOU's import restrictions with the booming market for Chinese artwork and antiquities in Mainland China," the Washington lawyer and lobbyist wrote. " The rise in demand for Chinese artwork and antiques in China indicates that the Chinese government sees antiques not as something to be protected, but as something to be commodified and enjoyed by Chinese citizens even as the U.S. on China's behalf seeks to restrict the supply of such objects to its own citizens."

Tompa also submitted an opposition letter on behalf of the International Association of Professional Numismatists and the Professional Numismatists Guild urging that "CPAC recommend either suspending the current agreement with the PRC [People's Republic of China] or delisting all bronze 'cash type' coins." Tompa is the attorney pursuing the long-running Baltimore coin test case.

This round's MoU renewal process between the U.S. and China takes place against the backdrop of several flashpoint issues, including a battle between the two nations over tariffs, China's expansion in the South China Sea, the Chinese government's intensified campaign targeting Christian churches, its role in the North Korean nuclear crisis, and its human rights abuses as chronicled by last Friday's U.S. State Department report.

CPAC's role is to give advice the White House when foreign nations petition the U.S. for help under the terms of the 1970 UNESCO Convention to protect cultural heritage in jeopardy of looting. All CPAC's eleven current members were appointed or reappointed by former President Barack Obama.

The MoU renewal is formally docketed as Memorandum of Understanding Between the Government of the United States of America and the Government of the People’s Republic of China Concerning the Imposition of Import Restrictions on Categories of Archaeological Material from the Paleolithic Period through the Tang Dynasty and Monumental Sculpture and Wall Art at least 250 Years Old (DOS-2018-0013-0018).

Photo credit: Lyndon Smith/freeimages.com

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Saturday, March 31, 2018

AUSA Calls Baltimore Test Case "A Numismatic Fantasy"

AUSA Molissa Farber
"It's not a case about coins that the Guild wants. This is a case about regulations that the Guild doesn't want." That's how Assistant United States Attorney Molissa Farber characterized the Ancient Coin Collectors Guild's (ACCG) latest argument before the Fourth Circuit Court of Appeals in the Baltimore test case.

Both the ACCG and federal government offered oral arguments to the appeals court on March 22, marking the case's ninth year winding through the court system.

Listen to the arguments presented in U.S. v. Three Knife-Shaped Coins et al. here. Attorney Peter Tompa argued for the Guild, and Attorney Farber for the government.

The test case started in 2009 when the ACCG imported unprovenanced Cypriot and Chinese ancient coins from a dealer in London. AUSA Farber told the court of appeals that "the Guild wanted to bring this case to pursue a numismatic fantasy of bringing down the CPIA's regulations on ancient coins."

The CPIA is the Cultural Property Implementation Act, the federal law that authorizes import controls safeguarding at-risk archaeological and ethnological objects originating in foreign nations that have signed bilateral agreements with the United States. Both Cyprus and China have such agreements.

AUSA Farber explained to the appeals court that the statutory purpose of the CPIA is "to prevent the importation of looted goods."

But the ACCG complained that the application of the CPIA violates its Fifth Amendment due process property rights, insisting that the government--not the importer--bears the burden to prove that ancient coins were first discovered in or were subject to export control of a State Party to the 1970 UNESCO Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. According to the Guild, federal authorities must satisfy this burden of proof before officials can seize and forfeit at-risk ancient coins under the CPIA's authority.

Farber countered this proposition. "As the district court observed,  looted goods are very unlikely to come with documentation as to their date of export. And ... if you put that burden on the government to show date of export you're allowing looted goods into the United States, which is contrary to the purpose of the statute." She pointed out that the CPIA statute mandates that the importer prove the date of export when that date is not known.

Thus far, the ACCG's many court actions have solidified, rather than weakened, the CPIA's capacity to prevent looted ancient coins from entering America's stream of commerce.
______________

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.

Thursday, March 29, 2018

[VIDEO] A First: Police Make Antiquities Trafficking Arrests in Terrorist Financing Case

Police have arrested two men in Barcelona, Spain for their alleged role in financing ISIS terrorism by acquiring and selling blood antiquities.

Georgi Kantchev of The Wall Street Journal reported that "Spanish police are holding two men suspected of trading in antiquities looted by groups linked to Islamic State, the first publicly announced detentions by Western authorities working to dismantle the terrorist group’s trade in plundered art."

The Ministerio del Interior issued a statement explaining that the men, both Spanish nationals and antiquities experts, were detained on crimes of terrorist financing, belonging to a criminal organization, receiving stolen property, smuggling, and falsification of documents.

Video courtesy of Policia Nacional, Ministerio del Interior, Government of Spain.

"The detainees were part of a network based in Catalonia and international branches dedicated to the acquisition and sale of works of historical-archaeological value from territories that were under siege from groups related to the organization, DAESH," the ministry revealed. DAESH is the Arabic acronym for ISIS.

Authorities raided locations in Barcelona and Argentona, including a conservation laboratory, warehouse, and art gallery. Cultural heritage material seized included mosaics, sarcophagi and Egyptian artifacts. Some of the objects originated from the Libyan region of Cyrenaica, which ISIS controlled from 2011 through 2016.

"Since the end of 2014, the main detainee and expert in ancient art, had woven a network of suppliers around the world that allowed access to archaeological pieces of various civilizations," the ministry alleged, adding that officials first detected the operation in October 2016 after noticing improprieties in import records.

The interior ministry reported that some of the objects "showed imperfections, bumps and marks that indicated violent extraction of the subsoil, without the use of adequate archaeological techniques," pointing out that the suspects "were responsible for a restoration process that would erase these signs as far as possible."

Text and original photos copyrighted 2010-2018 by Cultural Heritage Lawyer, a blog commenting on matters of cultural property law, art law, cultural heritage policy, antiquities trafficking, museum risk management, and archaeology. Blog url: culturalheritagelawyer.blogspot.com. Any unauthorized reproduction or retransmission without the express written consent of CHL is strictly prohibited. The materials presented on this site are intended for informational purposes only and should not be used as legal advice applicable to the reader’s specific situation. In addition, the provision of this information to the reader in no way constitutes an attorney-client relationship.