Saturday, October 31, 2020

The Office of Foreign Assets Control has issued an Advisory calling for due diligence on the part of dealers, museums, and other high-end market participants to comply with U.S. sanctions regulations on blocked persons.

OFAC art market advisory

When the Office of Foreign Assets Control (OFAC) publishes an Advisory that warns a particular business sector to maintain compliance, that typically means the U.S. Treasury Department's enforcement agency is serious about targeting an identified national security risk. On Friday, OFAC broadcast an alert to "art galleries, museums, private art collectors, auction companies, agents, brokers, and other participants in the art market" when it issued its
Advisory and Guidance on Potential Sanctions Risks Arising from Dealings in High-Value Artwork.

The October 30 Advisory, while not legally binding, strongly indicates OFAC's enforcement posture and its likely response if an art market participant were to commit a sanctions violation. The issuance of the advisory suggests that the agency will take four factors into account when probing an offense, having given notice that
  1. there are "sanctions risks arising from dealings in high-value artwork associated with [blocked] persons ... including persons on OFAC’s List of Specially Designated Nationals and Blocked Persons (SDN List),

  2. "[h]igh-value artwork transactions may play a role in blocked persons accessing the U.S. market and financial system in violation of OFAC regulations,"

  3. "maintaining a risk-based compliance program to mitigate such risks" that applies "risk-based due diligence" is vital, and

  4. "the “Berman Amendment” to the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) does not categorically exempt all dealings in artwork from OFAC regulation and enforcement. " In other words, just because the IEEPA safeguards Americans' rights to exchange "information or informational materials," including "artworks" under 50 U.S.C. § 1702(b)(3), does not mean that the transfer of art is excluded from sanctions enforcement. "[T]o the extent the artwork functions primarily as an investment asset or medium of exchange," OFAC will enforce the sanctions law, according to the advisory.
In sum, OFAC's Advisory recommends that a "U.S. person considering a transaction with a blocked person involving high-value artwork [$100,000+] should seek guidance or a license from OFAC."

Thursday, October 15, 2020

Man who arrived at JFK Airport and indicted for allegedly possessing illicit Egyptian artifacts had unfair jury panel, defense lawyer suggests.

Ancient Egyptian canopic jar lids seized by Homeland Security
Ancient Egyptian canopic jar lids are some
of the antiquities seized by Homeland Security.

"Loose sand or dirt came out of the suitcases as they were opened," and there was the smell of "wet earth," recited the arrest warrant affidavit filed in U.S. v. Eldarir, an antiquities smuggling case pending in a New York federal district court.

Now a veteran defense lawyer has challenged the criminal prosecution by suggesting that the COVID-19 outbreak interfered with the selection of a fair grand jury.

Homeland Security Investigations (HSI) arrested 
Ashraf Omar Eldarir of Brooklyn in February. The court released him on $60,000 bond and placed the case under seal, which has since been lifted.

A grand jury sitting in the Eastern District of New York (E.D.N.Y.) indicted Eldarir five months later 
on two counts of smuggling under 18 U.S.C. § 545, alleging:
On or about April 18,2019, within the Eastern District of New York and elsewhere, the defendant ASHRAF OMAR ELDARIR, also known as "Omar Eldarir," did knowingly, intentionally and fraudulently import and bring into the United States merchandise contrary to law, to wit: one ancient Egyptian polychrome relief [and] ... approximately 590 Egyptian artifacts and pieces thereof.
A grand jury indictment simply initiates a criminal case; it is not a finding of guilt. The defendant is presumed innocent unless the government proves guilt beyond a reasonable doubt.

In addition to criminal penalties, prosecutors seek criminal forfeiture of the cultural artifacts pursuant to 18 U.S.C. § 982, which include ancient Egyptian shabtis, gold artifacts, coins, panels, masks, and canopic jar lids in addition to Greco-Roman rings, stele, and a torso.

Attorney Marietou Diouf, who joined the U.S. Attorney's Office in 2020 and previously served 
as an E.D.N.Y. law clerk, leads the prosecution. She is pitted against experienced Assistant Federal Defender Kannan Sundaram, who has raised the specter of irregularities surrounding the grand jury's selection.

"The unusual circumstances of the indictment—the grand jury sat in Central Islip as opposed to Brooklyn, at a time when most members of the public in the Eastern District of New York were still under a stay-at-home order—may have compromised the defendant’s right to a grand jury selected from a fair cross section of the community," argued Attorney Sundaram in a letter to the court that asked to probe juror records. AUSA Diouf countered that the grand jury "was empaneled ... many months before the start of the pandemic—and has remained empaneled since then. And ... the Grand Jury was selected from a list of residents drawn from all five counties of the Eastern District of New York."