Securities Industry Commentator by Bill Singer Esq

March 21, 2018

Iranian National Arrested for Scheme to Evade U.S. Economic Sanctions by Illicitly Sending More Than $115 Million From Venezuela Through the U.S. Financial System (DOJ Press Release)
Ali Sadr Hashemi Nejad (Sadr) was indicted on Tone count of Conspiracy to Defraud the United States; one count of Conspiracy to Violate the International Emergency Economic Powers Act; one count of Bank Fraud; one count of Conspiracy to Commit Bank Fraud; one count of Money Laundering; and one count of Conspiracy to Commit Money Laundering in the United States District Court for the Eastern District of Virginia. The Indictment charges Sadr with participating in a scheme in which in which more than $115 million in payments for a Venezuelan housing complex were illegally funneled through the U.S. financial system for the benefit of Iranian individuals and entities as part of an effort to evade U.S. economic sanctions against Iran, to defraud the U.S., and to commit money laundering and bank fraud. The DOJ Press Release alleges in part that:

The Project was led by Stratus Group, an Iranian conglomerate controlled by Sadr and his family with international business operations in the construction, banking, and oil industries.  In December 2006, Stratus Group incorporated a company in Tehran, which was then known as the Iranian International Housing Corporation (IIHC).  IIHC was responsible for construction for the Project.  Thereafter, IIHC entered into a contract with a subsidiary of a Venezuelan state-owned energy company (the VE Company), which called for IIHC to build approximately 7,000 housing units in Venezuela in exchange for approximately $475,734,000.  Stratus Group created the Venezuela Project Executive Committee to oversee the execution of the Project.  Sadr was a member of the committee and was responsible for managing the Project's finances.

In connection with his role on the Project, Sadr took steps to evade U.S. economic sanctions and to defraud U.S. banks by concealing the role of Iran and Iranian parties in U.S. dollar payments sent through the U.S. banking system.  For example, in 2010, Sadr and a co-conspirator used St. Kitts and Nevis passports and a United Arab Emirates address to incorporate two entities outside Iran that would receive U.S. dollar payments related to the Project on behalf of IIHC.  The first entity, Clarity Trade and Finance (Clarity), was incorporated in Switzerland, and the second, Stratus International Contracting, J.S., aka Stratus Turkey, aka Straturk, was incorporated in Turkey.  Stratus Turkey and Clarity were both owned and controlled by Sadr and his family members in Iran.  Sadr then opened U.S. dollar bank accounts for Clarity and Stratus Turkey at a financial institution located in Switzerland. 

Thereafter, Sadr and others conducted a series of international financial transactions using Clarity and Stratus Turkey for the benefit of Iranian parties in a manner that concealed the Iranian nexus to the payments, in violation of U.S. economic sanctions.  Specifically, between April 2011 and November 2013, the VE Company, at the direction of Sadr and others, made approximately 15 payments to IIHC through Stratus Turkey or Clarity, totaling approximately $115,000,000.  

Branch Office Agreement At Heart Of Industry Arbitration ( Blog)
When things fall apart on Wall Street, they can get nasty. In a recent example, we have a dipsute about a Branch Office Agreement, which prompts, in part, claims of defamation, fraud, tortious interference with business relations, bad faith, and failure to provide services. There's more than enough finger-pointing to go around for both sides of the lawsuit caption.

Watch Out for These 4 Behaviors by Your Financial Professional (FINRA:"The Alert Investor")
The Financial Industry Regulatory Authority informs the investing public, in part, that:

The vast majority of registered financial professionals are trustworthy individuals who act with integrity. Unfortunately, some are not. That's why FINRA encourages investors to "ask and check" with BrokerCheck before investing with a financial professional.

And investors can stay vigilant throughout the course of their relationship with their broker by keeping an eye out for signs of misconduct. There are certain behaviors that FINRA examiners and enforcement staff see time and again that raise red flags and often warrant disciplinary action, and sometimes expulsion from the financial industry.

Often, these red flags aren't too difficult to spot. Here are four behaviors that should have you asking questions.

As presented in FINRA's online post, the four cited behaviors are "Asking for a Personal Loan," "Sales of Promissory Notes," "Using Personal Email," and "Asking You to Write a Check to a Person or Entity Other Than the Firm."

In the Matter of Craig Blattner, Respondent (FINRA AWC  #2017053438501, March 20, 2018).
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Craig Blattner submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted.In accordance with the terms of the AWC, The AWC alleges that in April 2013, Blattner settled a customer complaint away from his firm in violation of FINRA Rule 2010. FINRA imposed upon Blattner a $5,000 fine and a 15 business-day suspension from associating with any FINRA-regulated broker-dealer in any capacity. As set forth in part in the AWC:

Beginning in July 2010, while associated with ICC, Blattner served as the registered representative for customers HM and KM. Between July 2010 and April 2013, the value of HM and KM's joint account declined by approximately $75,000. In April 2013, HM complained, orally and in writing by email, to Blattner about his management of their account and the losses they had suffered. 

Blattner did not disclose HM's April 2013 complaint to ICC, and that complaint was never reported on his Form U4. Instead, Blattner wrote HM and KM a $15,000 check from his personal checking account. Blattner instructed KM to open a new account at ICC and to deposit the $15,000 check into the new account, along with the funds that remained in the joint account, which KM did. Blattner told HM and KM that the purpose of the check was to generate trading profits to recoup the losses they had suffered in the joint account.