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Wednesday, September 30, 2015

Antiquities Trafficking Investigation Reveals Suspected Ties to Terrorism and Money Laundering -- "Seize and Send" Outcome Flags Need for Special Prosecutors

cultural heritage law enforcement and prosecutions
ICE returned smuggled antiquities to Afghanistan
during a photo-op held in Washington, DC in 2013.
No prosecutions resulted from the case.
Newly obtained documents released by Immigration and Customs Enforcement (ICE) reveal that ICE Homeland Security Investigations (HSI) investigated a suspicious shipment of cultural heritage objects imported into the United States, but no prosecutions resulted.

In 2011, U.S. Customs and Border Protection (CBP) and the HSI New York El Dorado Task Force (EDTF) seized a falsely labeled package that bore the hallmarks of antiquities trafficking. ICE investigators voiced concern about the possibility of money laundering, ties to terrorism, and how the same importers already had been involved in previous investigations. Meanwhile, they openly spoke about artifacts pouring out of Afghanistan and Pakistan. Authorities seized the goods because of violations of federal law, including the commission of felony crimes.

Yet the investigation produced no arrests, no indictments, no prosecutions, and no convictions even for those who lied on the customs forms. In fact, the newly released documents confirm that no prosecutor was assigned to the case.

ICE is the investigative arm of the Department of Homeland Security (DHS). It is tasked with conducting criminal investigations; combating transnational crimes that exploit legitimate trade, travel and financial systems; enforcing the customs and immigration laws; and protecting the nation against criminal and terror organizations. HSI was formed in 2010 through the unification of ICE's former Offices of Investigations, Intelligence and International Affairs.

While the police agency routinely announces numerous arrests and prosecutions in cases ranging from child exploitation, illegal narcotics, human trafficking, financial crimes, contraband cigarettes, and more, ICE rarely generates criminal prosecutions in cultural property cases.

CHL readers will recall, for example, the highly publicized return of an Assyrian limestone head fragment earlier this year when ICE ambiguously reported "one arrest" related to Operation Lost Treasure--a police program focused on antiquities smuggling--but announced no arrests, indictments, prosecutions, or convictions connected with the illegal importation of the $1.2 million head from Iraq. The object had been brought to the United States illegally in 2008 from the United Arab Emirates.

This "seize and send" policy is starkly revealed in ICE's 2011 antiquities trafficking investigation, the details of which have now been revealed by documents disclosed under the Freedom of Information Act (FOIA). CHL filed the FOIA request in September 2013.

ICE's investigation was part of the touted Operation Lost Treasure program. In place of grand jury indictments, ICE held a photo-op ceremony in Washington, DC in September 2013, returning the evidentiary fruits of its investigative work to Afghanistan.

The carefully redacted and cherry-picked documents released on July 31, 2015 show that authorities intercepted a small shipment passing through New Jersey's international airport during March 2011. The package contained a pitcher and ancient gold objects, and HSI had reason to suspect a link to terrorism.

After the shipment arrived at the Central Air Cargo Examination Facility (CACEF) at Newark Liberty International Airport, CBP notified the HSI Special Agent in Charge New York (HSI SAC/NY), "requesting assistance with the importation of possible smuggled cultural property via express consignment (Fed Ex)," according to a police report dated April 21, 2011.

The customs paperwork accompanying the package obscurely declared, "Brass Jug, Plated Pendants, Unmanifested Gold Pieces" from Great Britain. "No Antique Statement nor provenance supplied," a CBP officer noted.

According to a document titled "Case Agent Cultural Property Art and Antiquities Repatriation Checklist," the import consisted of more than simple housewares and jewelry from England. Instead, there were cultural heritage objects that included:
Oinochoe seized by ICE and sent to Afghanistan.
1. A late Roman oinochoe, or wine pitcher, 5th-8th century A.D. of ovoid form with reeded body and central band of figures within arched reserves, shaped handle Height 4 (sic) 
2. Three (3) Scythian gold repousse, foil appliques. 5th century B.C., each depicting Antelopes. Height of each: 4 inches. Width of each: 3-1/4 inches 
3. Two (2) antique coiled gold ornaments, possibly 17th century. Height of each 3.8 inches. Weight of each: 2 ounces (approximate)
Authorities retained an appraiser who found that the retail values of the objects totaled $29,000 USD, almost 30 times greater than the trifling £650 GBP ($1,048.94 USD) claimed by the importer on the customs paperwork.

The objects had been devalued significantly, probably to bypass the formal customs entry, the kind of entry typically used when importing goods for commercial or resale purposes and the kind of entry that would have required more oversight. The importer likely knew that devaluing the objects below $2000 would cause the shipment to be less eye-catching. The value threshold today for an informal customs entry is $2500.

According to the appraiser, the values that should have been listed on the customs form were:
  • Oinochoe, Fair Market: $4,000; Retail: $8,000
  • 3 Gold Repoussé, Fair Market, $6,000; Retail: $12,000
  • 2 Gold Ornaments, Fair Market, $6,000; Retail: $9,000
A federal investigator confirmed, "It is ... suspected from prior case experience ... that this shipment is being imported improperly as an informal entry versus a formal entry. ... Cultural Property smugglers often utilize this tactic to avoid having their express consignments garner added scrutiny. Formal entries are required to have Harmonized Tariff Schedules, proper provenance or affidavits, invoices, shipping documentation, etc. The failure to provide adequate paperwork also makes this shipment subject to seizure and forfeiture according to 19 CFR 145.11 and 145.1218 USC 54218 USC 54519 USC 1595a (c) 1(a)." Such forfeitures are predicated on individuals committing illegal conduct, especially prosecutable crimes.

An email sent by the CBP Supervisory Officer assigned to Newark Liberty International Airport and dated April 22, 2011 explained that officials actually seized two shipments in March 2011. In addition to the oinochoe and the gold objects, which the customs officer initially believed to have been from the first century, authorities seized Iranian artifacts:
On April 21, 2011 Officer from CACEF-FedEx/UPS along with Special Agents from SAC/NY, El Dorado Task Force (EDTF) Financial Group VI seized two cultural property shipments. 
In one shipment UPS officers targeted and examined a shipment listed as ''Antique Decorative Persian Metalwork". Research by CBPO ... and ICE SA ... determined that the items were from around the 12th century and the actual origin of the shipment to be Iran. The items were being shipped in violation of the 1987 United States Executive Order 12613 imposing an import embargo on Iranian origin goods and services.
In the second shipment FedEx officers targeted and examined a shipment coming from Great Britain that was manifested as "BRASS JUGS PLATED PENDANTS". 
Examination of the shipment revealed a brass jug, gold colored embossed plates and two gold colored pieces. Research by CBPO ..., ICE SA ... determined that these items were being brought in with a false country of origin, undervalued and were from approximately 100 B.C. These items were seized for being violation of 18 USC 545 - Smuggling Goods into the United States." 
Supervisory Special Agent  
Intellectual Property Art and Antiquities Investigations 
Department of Homeland Security
The released documents reveal nothing further about the Iranian objects.

With regard to the shipment containing the jug and gold items, not only did the importer provide bogus descriptions and phony values on the customs paperwork, the importer also misleadingly claimed that the goods originated from Britain. Because the package had been shipped from the Walthamstow neighborhood in London, the importer probably hoped that he could get away with this misrepresentation.

An April 21, 2011 investigative report expounded on this legal violation. "On April 18, 2011, the SME [subject matter expert] further elucidated that none of the items in this shipment could have had Great Britain as a country of origin." As a result, the report recorded that "[t]his importation contained a material false statement related to the country of origin," It pointedly added, "Individuals who smuggle cultural property often utilize false countries of origin to avoid Customs scrutiny in order to import controlled antiquities. Listing a false country of origin is a violation of 18 USC 542 (Material False Statement). If this shipment was destined to an antiquities dealer, they should know and would be responsible to know the country of origin. In this instance [it] is suspected that the false country of origin listed as Great Britain was a known false statement and a violation of 18 USC 545 (Smuggling). The shipment would be subject to seizure under 19 USC 1595 a (c) (Introduction Contrary to Law)."

The oinochoe and gold pieces were supposed to be delivered to a man living in New York City who resided at the same address as a registered New York corporation, referred to here simply as "Bactrian Global Enterprises" (BGE). DHS investigative report number 20 dated October 11, 2011, classified "BGE" as "a business that is suspected of antiquities smuggling and money laundering."

Concerns about smuggling, money laundering, and ties to terrorism almost certainly should have prompted a prosecutor to be assigned to the case. But the documents released by ICE reveal that no prosecutor was assigned. Whether ICE failed to ask for one or whether a U.S. Attorney's Office declined to assign one is unknown. What is known is that no prosecuting attorney was attached to a case flagged as one involving transnational felony conduct. A May 9, 2011 reply to an email sent a few days earlier from a chief CBP paralegal in the Office of Fines Penalties & Forfeitures explicitly confirmed that no attorney had been designated. The Paralegal Specialist asked if there was an Assistant U.S. Attorney involved. "No AUSA" was the dispiriting reply given.

By way of contrast, wildlife trafficking crimes, which are typically investigated by special agents of the U.S. Fish and Wildlife Service (USFWS), have designated prosecutors at the Justice Department's Environmental Crimes Section (ECS) available for consultation. Following the best practice of assigning a prosecuting attorney to a serious or complicated felony-level investigation, the Justice Department points out, "An ECS prosecutor often gets involved early in an investigation, such as when the investigator swears out a search warrant or when a grand jury’s investigative power is needed.  Once the necessary evidence is collected, the prosecutor presents the case to the grand jury for indictment. After indictment, the prosecutor guides the case through complex white collar and environmental law issues and prepares it for trial." ECS prosecutors also partner and coordinate with front-line prosecutors based at U.S. Attorneys' offices.

Repouseé gold foil applique depicting antelope
seized by ICE and sent to Afghanistan
Because ICE failed to arrest, indict, prosecute, or convict any individuals connected with the 2011 investigation, CHL will not identify the names of those who imported the cultural heritage objects or disclose the specific address where the shipment was bound.

With that said, ICE agents paid a visit on September 16, 2011 to the Manhattan address of "BGE" on the pretense of hand-delivering a property seizure notice prepared by a paralegal specialist four days earlier. Delivering it "would be a perfect excuse for an interview," a September 2, 2011 email divulged.

Two federal agents arrived at the Chelsea residence and found an unassuming building, the kind of four-story low-rise that New Yorkers walk by each day and never take a second look. Inside were unspecified antiquities. An agent summarized the encounter in a report dated October 11, 2011. (ICE redacted references to any names in the original report):
On September 16, 2011, Special Agents [   ] and [   ] conducted an interview with [   ] located at [BGE] located at [   ] New York, NY 10011. The interview contained but was not limited to the following topics of conversation: Special Agents [   ] identified themselves [   ] and asked permission to enter… Permission was granted and agents observed the address to be a basement level apartment of approximately two large rooms. One room was set-up as a residential space where two people appeared to be living. The second room appeared to be a large storage room with a computer. Stored in the room there appeared to be large quantities of crafts, jewelry and antiquities. [   ] stated that he lived at the address with his cousin and that the apartment was the location of a jewelry and craft business, and a real estate business. … [   ] relayed that he and his father are in the business known as [BGE] together and he was able to produce a business card attesting to this fact. The card also listed [   ] the cousin living at the address, as an employee of [BGE]. [   ] explained that the business is set-up to predominantly sell costume jewelry and textiles. 
SA [   ] stated he was there to deliver a seizure notice regarding an importation previously destined for [   ] at the address. [   ] stated that he was aware of it but that only his father knows about that specific shipment. [   ] stated that the merchandise for [BGE] comes from Pakistan. When asked specifically where the antiquities come from [   ] interrupted the conversation and stated that the antiquities were all from central Asia. [   ] was able to provide that their Customs Broker's name is [   ]. [   ] also stated that the shipment was sent to his father to sell on consignment and that his father didn't know much about it. SA [   ] explained to [   ] about the seizure notices and the accompanying paperwork and had him sign a sheet acknowledging receipt of the hand carried mail.
That no one knew anything of consequence is a fair summary of this same interview as memorialized by an HSI special agent's supplemental email dated October 5, 2011:
• He and his father are in the business together. They sell costume jewelry and textiles. 
• The father is the one that knows about the shipment.
• He did not know anything about the shipment.
• [   ] is their [customs] broker.
• There was another individual that was a real estate business partner of the father but not with ["BGE"]. Subject name was [   ] unknown proper spelling.
• [   ] stated that the shipment was sent to sell on consignment and that the father didn't know much about it."
Shortly after the interview, and for reasons not explained in the released documents, government information networks rang with alarm. Documents confirm that on Wednesday, October 5, 2011 computer terminals at U.S. border entry points flashed warnings over the Treasury Enforcement Communications System (TECS):
 
"INDIVIDUAL IS SUSPECTED OF DEALING IN ILLICIT CULTURAL PROPERTY DETAIN ALL SHIPMENTS AND IF ENCOUNTERED CONTACTED CASE AGENT...."
"BUSINESS IS SUSPECTED OF DEALING IN ILLICIT CULTURAL PROPERTY BEING SMUGGLED FROM AFGHANISTAN AND PAKISTAN. PLEASE DETAIN ALL SHIPMENTS AND CONTACT THE CASE AGENT...."

Before HSI agents actually conducted their interview in Manhattan, they made an effort to secure a search warrant for "BGE." But they never got one. That likely sparked the idea of serving the property seizure notice as a justification for visiting the importer.

Interestingly, ICE went outside the jurisdiction for help with getting a search warrant. Based on the both the substance and style of a conversation archived in an email string sent on the afternoon of May 10, 2011, one unidentified party, who could be an investigative agent based in the jurisdiction of the Southern District of New York (probably Manhattan), and the other unidentified party, who could be a federal prosecutor in the Eastern District of New York (probably Brooklyn), spoke about the matter.

The email string revolves around a request for an email search warrant. The presumed agent wrote that he or she learned that the suspect(s) already had been investigated for possible terrorism ties to Afghanistan, smuggling, and money laundering. Those cases were closed, and now there was a request for a fresh warrant. The emails offer the following exchange:

Agent: "I received this email a couple of months ago from a source and the pieces being offered are straight out of the ground. I recently seized a package in Newark destined for the address of ["Bactrian Global"] but the ultimate consignee was [    ]. When I inspected the shipment in person, the box (not the shipping label) was addressed to [   ] the principle behind ["Bactrian Global Enterprises"].

"The shipment was seized because it contained a false C/O [country of origin], and contained golden antiquities that were not declared. The shipment was seized on 4/21/2011.

"Would this all be recent and good enough for an email S/W [search warrant] in your opinion? If so, would you do it or could you recommend someone? I can send the ROI [report of investigation] related to the seizure and pictures if interested."

Prosecutor: "Is there any connection to the EDNY [Eastern District of New York]? How much do you think these pieces are worth? True CDO [country of declared origin]?"

Agent: "True C/O [country of origin] is most likely Iraq or somewhere in the middle east[,] the expert couldn't give one country 100% but she was 100% certain it was not GB [Great Britain]. Attached is the report. No estimate on value yet, but we are pretty certain it is more than declared because they failed to declare much of the shipment.
"Just learning that the principles (sic) have prior (failed and closed) investigations into them for money laundering, Cult. Prop. [cultural property] smuggling, and possible terrorism ties to Afghanistan.
"Does the same source who worked the UC op [undercover operation] that took place via JFK [Airport in New York] work [in order to form some legal tie to the Eastern District of New York]? Also, most of their shipments are via JFK. This one wasn't but it also used the wrong name on the shipping label."

Prosecutor: "I don't think we have venue here... I hate that there's dirt caked on them. Though it's so dirty, it makes you wonder if they're trying to increase value by faking a find."

Under the circumstances, a search warrant probably was not issued from the Eastern District of New York because the suspects were located in Manhattan, in the Southern District of New York. A specially assigned heritage trafficking prosecutor based at the Department of Justice in Washington probably could have facilitated this search warrant request by coordinating with the right U.S. Attorney's office. But no such specialist prosecutor exists.
So what looked like a criminal investigation into antiquities trafficking quickly turned into a seize and send case. Instead of holding the evidence and building the investigation for possible grand jury review, indictment, and conviction after trial or plea, ICE sought title to the antiquities through the forfeiture process, eventually sending the cultural heritage objects back to their country of origin. This seize and send disposition effectively terminated any chance of successfully prosecuting those responsible for lying on the customs entry paperwork.
 
An email dated January 25, 2012 from a Supervisory Legal Specialist at CBP 's Office of Fines, Penalties, and Forfeitures touched on this administrative process: "Please be advised that the cultural property in FP&F Case #: [   ] associated with OI #: [   ] has been administratively forfeited. I have attached the appraisal conducted on the seizure of this merchandise so you can determine the repatriation of these items to their rightful nations as per the seizure narrative of this case."

"Please send the seizure notice and Hold Harmless to [   ] Cultural Attache[,] The Embassy of Afghanistan...," requested an HSI SAC/NY special agent in an email dated April 5, 2013.

How Afghanistan and not Iraq or Pakistan came to be identified as the true country of origin remains unknown from the FOIA-released paperwork. Iraq had been mentioned as a possible country of origin in the police reports, and a special agent from HSI SAC/NY mentioned Pakistan in an email dated April 4, 2013, which pointed to the smuggling problem originating from South Asia. "You should see how much Afghan and Pakistani material we have from the [   ] case," the agent exclaimed. An unclassified but redacted email dated April 2, 2013 by an unknown government official echoed this troubling sentiment, "So much material is flowing out of Afghanistan and Pakistan; it really is a shame."

Although the repatriation essentially concluded the case, one undated document from HSI's Office of International Affairs insisted on the continuing nature of ICE's probe:
HSI New York's Operation Lost Treasure is an ongoing investigation targeting an organization smuggling items of world cultural heritage into the United States. The objects enter the antiquities market and the proceeds are laundered. Antiquities have been traced to Afghanistan, Iraq, Greece, Italy, Egypt and Iran and the funds have been traced to Dubai and London. To date, approximately 50 objects have been recovered with an estimated value of $2.5 million.
Whether ICE has probed this four year old case recently is unknown. What is known is that, according to NYS Department of State Division of Corporations Records, "BGE" today lists its principal office on the Upper West Side in New York City. "BGE," formed in 2006, is listed in the Yellow Pages as a home furnishings business that provides arts and crafts supplies. The company is a likely outgrowth of a preceding import/export company begun in the 1980's and now dissolved. Persons connected with "BGE'" and the 2011 investigation appear to use aliases that are subtle variations of their names, and the Manhattan address where HSI agents once visited currently houses at least four registered real estate corporations and an unregistered soft drink/grocery business, according to open source records. As of last month, an apparent relative of "BGE's" owner appears to have formed a brand new company at that address, which seems to be in the same type of business as"BGE."

HSI Assistant Director John Connolly emphasized during the repatriation ceremony of the artifacts to Afghanistan how HSI is "beating back this illicit trade through dedicated law enforcement efforts." But such a declaration remains inconsequential so long as crimes are committed and no perpetrators are brought before the courts. The participation of prosecutors are needed to do that. A designated group of specialist prosecutors working with HSI on their investigation may even have averted another "failed and closed investigation[]," as ICE put it, of cultural property trafficking.

Wildlife trafficking investigations should serve as a model for cultural heritage trafficking prosecutions. Because successful inroads have been made to combat this transnational crime, now more is being done. For the last five years, specialist prosecutors at ECS and their counterparts across the globe have been supported in their mission by the International Consortium on Combating Wildlife Crime (ICCWC), a group of five international organizations--including INTERPOL and the World Customs Organization. The ICCWC's mission is "to usher in a new era where perpetrators of serious wildlife and forest crime will face a formidable and coordinated response, rather than the present situation where the risk of detection and punishment is all too low." USFWS notes that the consortium "was formed to increase prosecution and punishment for caught smugglers and poachers."

Cultural heritage traffickers need to be prosecuted and punished too, and the inside look into ICE's 2011 seize and send case illustrates the point.
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