KEEPING FOREIGN CORRUPTION OUT OF THE UNITED STATES: FOUR CASE HISTORIES

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY............................................................................................... 1

A. Findings...................................................................................................................... 5

(1) Lawyers............................................................................................................... 5

(2) Realtors............................................................................................................... 5

(3) Escrow Agents..................................................................................................... 5

(4) Lobbyist.............................................................................................................. 5

(5) Offshore Corporations......................................................................................... 5

(6) University............................................................................................................ 5

(7) Personal Accounts............................................................................................... 5

(8) Government Accounts......................................................................................... 5

(9) Correspondent Accounts..................................................................................... 6

(10) Vendor PEP Lists................................................................................................. 6

B. Recommendations...................................................................................................... 6

(1) World Bank PEP Recommendations.................................................................... 6

(2) Real Estate and Escrow Agent Exemptions......................................................... 6

(3) Attorney-Client and Law Office Accounts.......................................................... 6

(4) U.S. Shell Corporations....................................................................................... 6

(5) Immigration Restriction...................................................................................... ..... 6

(6) Visa Restriction.................................................................................................. ..... 6

(7) Professional Guidelines...................................................................................... ..... 7

(8) FATF Recommendations..................................................................................... 7

II. FOREIGN CORRUPTION AND MONEY LAUNDERING........................................ 8

III. OBIANG CASE STUDY: USING U.S. LAWYERS, REAL ESTATE AND ESCROW AGENTS, AND WIRE TRANSFER SYSTEMS TO BRING SUSPECT FUNDS

INTO THE UNITED STATES..................................................... ............................. 16

A. Background................................................................................................................ 19

B. Obiang Use of Attorneys To Bring Suspect Funds Into the United States.................... 27

(1) Attorney MichaelJ. Berger................................................................................... 27

(a) Incorporating Shell Companies and Paying Bills........................................... 28*

(b) Bringing In and Moving Suspect Funds........................................................ 29

i. Union Bank of California..................................................................... 31

. ' ii. Bank of America................................................................................. 36

iii. Citibank................................................................................................... 44

iv. PayPal..................................................................................................... .... 46

'< (c) Compensation.......................................................................................... .... 47

(2) Attorney George I. Nagler.................................................................................... .... 48

(a) Incorporating Shell Companies................................................................... .... 49

(b) Bringing In and Moving Suspect Funds........................................................ 52

i. Cal National Bank................................................................................ 53

ii. City National Bank............................................................................... 55

iii. Pacific Mercantile Bank.......................................................................... 63

(d) Awareness of the Suspect Origins of Obiang Funds..................................... 71

(3) Analysis............................................................................................................ 72

C. Obiang Use of Real Estate and Escrow Agents to Purchase U.S. Property With

Suspect Funds............................................................................................................ 75

(1) Real Estate Agent Neil Baddin............................................................................. 76

(2) Real Estate Agent John Kerrigan.......................................................................... 83

(3) Analysis............................................................................................................... 86

D. Obiang Use of a U.S. Escrow Agent to Purchase a Private Jet with Suspect Funds..... 87

E. Obiang Use of U.S. Wire Transfer Systems To Move Millions of Dollars in

Suspect Funds............................................................................................................. 99

(1) $73 Million Wired through Wachovia Bank........................................................ 100

(2) $37 Million Wired Through Citibank................................................................... 103

F. Conclusion.................................................................................................................. 107

BONGO CASE STUDY: USING LOBBYIST, FAMILY, AND U.S. TRUST
ACCOUNTS TO BRING SUSPECT FUNDS INTO THE UNITED STATES.............. 108

A. Background................................................................................................................. 108

B. Bongo Use of U.S. Lobbyist To Purchase Armored Cars and C-130 Aircraft............. 112

(1) Purchase of Armored Cars................................................................................... 116

(2) Purchase of C-130 Aircraft.................................................................................. 122

(3) Conduit for Suspect Funds................................................................................... 141

(4) Analysis............................................................................................................... 144

C. Bongo Use of a Daughter's U.S. Bank Accounts to Move Suspect Funds Into the

United States............................................................................................................... 144

(1) HSBC Bank......................................................................................................... 145

(2) Commerce Bank.................................................................................................. 147

(3) JP Morgan Chase................................................................................................. 160

(4) Analysis............................................................................................................... 160

D. Bongo Use of U.S. Trust Account............................................................................... 161

(1) Fidelity Investments............................................................................................. 163

(2) HSBC Bank.. . . ,................................................................................................. 167

(3) Analysis............................................................................................................... 172"

E. Conclusion.................................................................................................................. 173

ABUBAKAR CASE STUDY: USING OFFSHORE COMPANIES TO BRING
SUSPECT FUNDS INTO THE UNITED STATES........................................................ 174

A. Background................................................................................................................. 175

B. Using Offshore Corporations to Bring Suspect Funds into the United States............... 189

(1) Citibank............................................................................................................... 190

(2) Chevy Chase....................................................................................................... 203

(3) Wachovia Bank................................................................................................... 212

(4) Eagle Bank.......................................................................................................... 222

(5) Suntrust Bank...................................................................................................... 223

(6) Overview of Offshore Funds.............................................................................. 227

C. American University and AUN................................................................................... 233

D. Conclusion................................................................................................................. 242

ANGOLA CASE STUDY: EXPLOITING POOR PEP CONTROLS........................... 244

A. Background................................................................................................................ 245

B. An Angolan PEP: Moving Millions of Dollars for An Arms Dealer............................ 248

(1) Background......................................................................................................... 250

(2) Falcone Accounts at Bank of America................................................................. 253

(3) Analysis............................................................................................................... 262

C. An Angolan Government Official: Moving $50 Million at the Request

of the Governor of the Angolan Central Bank............................................................ 270

(1) Background......................................................................................................... 271

(2) First Attempt to Transfer the $50 Million............................................................. 273

(3) Second Attempt to Transfer the $50 Million........................................................ 283

(4) Analysis............................................................................................................... 300

D. An Angolan Financial Institution: Moving Hundreds of Millions of Dollars For

Banco Africano de Investimentos............................................................................... 301

(1) Background......................................................................................................... 301

(2) HSBC USA Accounts.......................................................................................... 303

(3) BAI's Hidden Owners.......................................................................................... 305

(4) BAI's Missing AML Policies and Procedures....................................................... 314

(5) BAI Credit Cards................................................................................................. 317

(6) No SCC Designation Despite PEP Involvement................................................... 321

E. Conclusion................................................................................................................. 325

•# # #

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V. ABUBAKAR CASE STUDY: USING OFFSHORE COMPANIES

TO BRING SUSPECT FUNDS INTO THE UNITED STATES

Jennifer Douglas Abubakar, a U.S. citizen, is the fourth wife of Atiku Abubakar, the former Vice President of Nigeria and a former candidate for the Presidency of Nigeria. This case history examines how, from 2000 to 2008, Ms. Douglas helped her husband bring over $40 million in suspect funds into the United States, including at least $1.7 million in bribe payments from Siemens AG, a German corporation, and over $38 million from little known offshore corporations, primarily LetsGo Ltd. Inc., Guernsey Trust Company Nigeria Ltd., and Sima Holding Ltd.

Over half of the suspect funds, nearly $25 million, were wire transferred by the offshore corporations into U.S. bank accounts opened by Ms. Douglas. For most of the time period examined, the U.S. banks with those accounts were unaware of Ms. Douglas' PEP status, and allowed multiple large wire transfers into her accounts from the offshore corporations. As, over time, each of the banks began to question the wire transfers into her accounts, Ms. Douglas indicated that all of the funds came from her husband and professed little familiarity with the offshore corporations actually sending her money.

Bank records indicate that Ms. Douglas used most of the funds placed into her accounts to support a lavish lifestyle in the United States, paying credit card bills and household expenses in the range of $10,000 to $90,000 per month, including substantial legal and accounting bills. She also transferred funds to accounts she opened for the Gede Foundation, a nonprofit corporation she established in 2002, and the American University of Nigeria (AUN), a university that Mr. Abubakar founded in 2003, and whose name reflects its association with American University in the United States.

An additional $14 million of the suspect funds were wire transferred by two of the offshore corporations, LetsGo and the Guernsey Trust Company, to American University to pay for consulting fees related to AUN. American University officials told the Subcommittee that they understood the funds came from Mr. Abubakar and never inquired why the wire transfers were sent by unfamiliar offshore corporations. At least another $2.1 million was wire transferred by the Guernsey Trust Corporation to accounts controlled by Edward Weidenfeld, a U.S. lawyer who provided legal services to Ms. Douglas, Mr. Abubakar, and AUN. Mr. Weidenfeld explained that the funds paid for the Abubakars' legal expenses and an account set up for AUN, and that he had assumed the funds came from Mr. Abubakar.

Over the years, questions have been raised about the source of Mr. Abubakar's wealth. He spent twenty years in the Nigerian Customs Service, and then worked in the private sector for ten years, before serving as Vice President of Nigeria from 1999 to 2007. While Vice President, Mr. Abubakar was the subject ©f corruption allegations relating to the Nigerian Petroleum Technology Development Fund. In December 2008, the U.S. Securities and Exchange Commission alleged in a formal complaint against Siemens AG, a German company, that, among other actions, in 2001 and 2002, Siemens wire transferred $2.8 million in bribe payments to a U.S.)' bank account belonging to Ms. Douglas as part of a scheme to bribe Nigerian officials. In response to this and other legal actions, Siemens admitted to engaging in widespread bribery

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payments, pled guilty to criminal violations and settled civil violations of the U.S. Foreign Corrupt Practices Act, and agreed to pay over $1.6 billion in civil and criminal fines. Ms. Douglas has denied any wrongdoing, but the Subcommittee has obtained financial records showing the transfer of over $2 million from Siemens AG to Ms. Douglas' account at Citibank.

Mr. Abubakar has attributed his substantial wealth to fortunate investments. His wealth is attributable in part to a 16% ownership interest he held in Integrated Logistics Services Inc. ("Intels"), an oil services company formed in the 1980s, which has now become one of the largest Nigerian companies in the oil industry in Africa. When Mr. Abubakar took office in 1999, he placed his Intels shares in a blind trust. Instead of selecting an independent trustee from a financial firm, however, Mr. Abubakar appointed as trustee of the blind trust Orleans Invest Holding Ltd., a Panamanian corporation that is active in the oil industry in Africa, is closely associated with Intels, and is owned in part by Gabriele Volpi, Mr. Abubakar's trusted friend and business partner. Orlean served as trustee of the Abubakar Blind Trust from 1999 to 2003, when the trustees exchanged the Intels shares for shares in Orlean, thereby making the trust part owner of its own trustee. Orlean then resigned from the Abubakar Blind Trust and was replaced by Guernsey Trust Company Nigeria Ltd., a Nigerian shell company that was formed the day before the appointment. Mr. Volpi is one of three trustees of the Guernsey Trust Company whose sole activity is managing the Abubakar Blind Trust.

From 2003 to 2008, the Guernsey Trust Company wire transferred over $10 million into the United States, including about $7 million into Douglas and AUN accounts; $2.1 million into the Weidenfeld law firm and AUN accounts; and $900,000 into American University accounts. Two other offshore corporations, LetsGo Ltd. and Sima Holdings Ltd., both of which are private corporations beneficially owned by Mr. Volpi and his family members, wire transferred nearly $27 million into the United States, including about $8 million into Ms. Douglas' accounts; $5.5 million into AUN accounts; and $13.1 million into American University accounts. Mr. Volpi told the Subcommittee that LetsGo and Sima Holdings sent millions of dollars to Ms. Douglas in connection with Mr. Abubakar's ownership interest in Intels and a line of credit that LetsGo had extended to the Bind Trust.

A. Background

Nigeria. Nigeria is lqcated on the west coast of Africa, on the Gulf of Guinea. With more than 145 million citizens, it is the eighth most populous country in the world, and the most populous nation on the African continent. ⁵⁴ Nigeria has a diverse ethnic make-up, with three majorethnic groups, the Hausa, Ibo, and Yoruba, comprising nearly 40% of the population.⁹⁵The official language of Nigeria is English, and the official currency is the naira. The predominant religions are Christianity and Islam, with Islam predominant in the north of the country, and Christianity predominant in the south.

United Nations, Department of Economic and Social Affairs, 2008 Population Report

http://www.un.org/esa'populatioii/publications/\vpp2008/wpp2008 text tables.pdf.

⁹⁵⁵ Embassy of Nigeria, http://www.ni aeriaembassyusa.org/thisisnigeria.shtml.

⁹⁵⁶ The New York Times, "Deadly Nigeria Clashes Subside," November 30, 2008; see online at
http://www.nytimes.com/2008/12/01/world/africa/01nigeria.htm17hp.

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Nigeria gained its independence from the United Kingdom on October 1, 1960, and now operates as a federal republic of 36 states. Following years of military rule, Nigeria elected its first President in 1999, Olusegun Obasanjo, who was re-elected in 2003. Mr. Abubakar was his Vice President. In 2007, Umaru Yar'Adua won election as President over Mr. Abubakar and another candidate, marking the first peaceful civilian transfer of power in Nigeria. International observers nevertheless criticized the 2007 election, citing vote rigging and fraud. The European Union described the election as "not credible," and the United States described it as "deeply troubling."⁹⁵⁸ The President of Nigeria holds a maximum of two, four-year terms. The country also has a bicameral legislature and 36 state governors.

Nigeria ranks among the top ten nations in the world in proven oil reserves,⁹⁶⁰ and is the second largest oil producer in Africa.⁹⁶¹ It is one of the world's largest exporters of oil, and its economy is highly reliant on oil revenues, which make up about 95% of generated revenues in the country.⁹⁶² Its oil production facilities are concentrated in the Niger Delta region, which is an impoverished area despite its oil reserves. Militants have staged numerous attacks against the area's oil production facilities, demanding that a greater share of oil proceeds be allocated to the region. A World Bank report notes that 80% of Nigeria's oil wealth benefits only 1% of the population,⁹⁶ and the United Nations currently ranks Nigeria as among the world's worst performing countries in life expectancy and infant mortality rate.⁹⁶⁴ In addition, the 2008 U.S. State Department's Human Rights Report characterizes Nigeria's human rights record as "poor" and states that "government officials at all levels continued to commit serious abuses."

Corruption. Nigeria has long had a problem with corruption. The U.S. State Department's most recent Human Rights Report provides the following description of the corruption problem in Nigeria during 2008:

• "Corruption was massive, widespread, and pervasive, at all levels of government and society. The constitution provides immunity from civil and criminal prosecution to the president, vice president, governors, and deputy governors while in office."

• "Police mistreated civilians regularly to extort money."

• "According to the Swiss-based Centre on Housing Rights and Evictions, authorities demolished more than 800,000 homes in the Abuja area since 2003. There was widespread opinion that the demolitions were primarily motivated by corruption and

¹⁵⁷ CIA World Factbook, https://www.cja.gov/librarv/publications/the-woiid-factbook/geos/ni.html.

⁹⁵⁸ The Guardian, "Ruling Party Named Winner in Disputed Nigerian Election,"April 24, 2007; see online at

http://www.guardian.co.uk/world/2007/apr/24/chrismcgreal.intemational.

⁵ CIA World Factbook, http://www.nigeriaeiTibassvusa.org/tliisismgeria.shtml.

⁹⁶⁰ U.S. Department of Energy, Energy Information Administration, World Proved Reserves of Oil and Natural Gas,
Most Recent Estimates, .March 3, 2009; http://www.eia.doe.gov/emeu/inteniational/reserves.htnil.

⁹⁶¹ Africa: The Good News, "Africa's Major Oil Producers," February 17, 2009,
http://www.africagoodnews.com/energy/africas-niaior-oil-producers.html.

Embassy. of Nigeria, http://www.ni geriaembassvusa.org/thisisnigeria.shtinl. ⁹⁵³ Frontline (PBS), "Nigeria: The Hidden Cost of Corruption," April 24, 2009; see online at http://www.pbs.org/front lineworld/stories/bribe/2009/04/ni geria-the-hidden-cost-of-corruption.html. ⁹⁶⁴¹ The United Nations World Population Prospects: The 2008 Revision. ⁹⁶⁵ U.S. State Department, "2008 Human Rights Report: Nigeria" February 25, 2009;

http://www.state.gov/g^,'drl/rls/'hrrpt/2008/aiy 119018.htm.

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discrimination based on socioeconomic class, since mostly lower and middle class persons lost their homes and property, which was sold to wealthy persons with connections to government officials once vacated." • "The EFCC's anticorruption efforts waned, with little progress on prosecutions of federal, state, and local officials accused of comaption."⁹⁶⁶

The latest Transparency International Corruption Perception Index ranks Nigeria 121 out of 180

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countries.

In 2002, then-President Olusegun Obasanjo created the Economic and Financial Crimes Commission (EFCC) to investigate and prosecute corruption. Nuhu Ribadu was appointed as the first EFCC chair and experienced significant success, including prosecutions of government officials and the recovery of over $5 billion in stolen assets.⁹⁶⁹ During one investigation of the Governor of the Niger Delta state, Mr. Ribadu was offered a $15 million dollar bribe, seized the money, and brought criminal charges against the Governor. ⁷ Mr. Ribadu was removed from his post soon thereafter, and experienced two attempts on his life. In a recent interview, Mr. Ribadu estimated that more than $380 billion had been lost to corruption in Nigeria since its

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independence.

Until recently, Nigeria was considered non cooperative in the battle against money laundering. In 2001, the Financial Action Task Force on Money Laundering (FATF) identified Nigeria as non-cooperative in the fight against money laundering. The next year, in 2002, the U.S. Department of Treasury issued an advisory informing U.S. banks of the "serious deficiencies in the counter-money laundering systems of the Federal Republic of Nigeria" and warning that "banks and other financial institutions operating in the United States should carefully consider, when dealing with transactions (especially those involving large sums of money, whether in cash or by wire transfer), originating in or routed to or through Nigeria, or involving entities organized or domiciled, or persons maintaining accounts, in Nigeria, how the lack of adequate counter-money laundering controls in Nigeria affects the possibility that those transactions are being used for illegal purposes."⁹⁷³ In 2006, due to Nigeria's enactment of AML laws, FATF removed Nigeria from its list of non-cooperative countries. In May 2007, Treasury withdrew its advisory to U.S. financial systems.⁹⁷⁴

⁹⁶⁶ Id.

⁹⁶⁷ See Transparency International, 2008 Corruption Perception Index,
http://www:transparencv.org/policy__researcli/survevs_indices/cpi/2008.

⁹⁶⁸ See Economic and-Financial Crimes Commission (Nigeria) website, http ://www. efccni geria.org/.

⁹⁶⁹ Washington Post, "Corruption Cop: A Conversation with Nuhu Ribadu, Anti-Corruption Crusader," May 24,
2009; see online at http://www.washingtonpost.conVwp-dvn/content^/artic]e/2009/05/22/AR2009052202025.1]tmJ.

⁹⁷⁰ Id. - .

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BBC News, "Nigerian Leaders 'Stole' $380bn," October 20, 2006, http://riews.bbc.co.Uk/2/lii/africa/6069230.stm.

April 2002, FinCEN Advisory, Transactions Involving the Federal Republic of Nigeria. ' ³ April 2002, FinCEN Advisory, Transactions Involving the Federal Republic of Nigeria.

May 2007, FinCEN Advisory Withdrawal re Transactions Involving Nigeria.

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Atiku Abubakar. For about twenty years, until 1989, Atiku Abubakar worked in the Nigerian Customs Service, rising to the rank of Deputy Director.⁹⁷⁵ For the next ten years, he worked in the private sector with interests in oil, media, agriculture, pharmaceuticals, and publishing.⁹⁷⁶ Mr. Abubakar has been quoted in the media as stating that he became wealthy "through wise investments, hard work and sheer luck of being at the right place at the right

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time.

In the 1980s, Mr. Abubakar entered into a business venture with Gabriele Volpi through a company formed to provide oil and natural gas services at African ports. According to a biography of Mr. Abubakar, which was written with "his support and encouragement,"⁹'⁹ Mr. Abubakar and Mr.. Volpi formed this oil logistics company in the early 1980s, as a Nigerian corporation called Nigeria Container Services Inc. ("NICOTES").⁹⁸⁰ Mr. Volpi told the Subcommittee that he founded NICOTES in the early 1980s and invited Mr. Abubakar to become a director and shareholder in 1989.⁹⁸¹ Some sources indicate that the company had a third founder as well, the late General Shehu Musa Yar'Adua, a political mentor to Mr.

OR?

Abubakar and the elder brother of the current President of Nigeria, Umaru Musa Yar' Adua.

According to the Atiku Biography, in 1996, Sani Abacha, then President of Nigeria, seized control of the NICOTES shares belonging to Mr. Abubakar and Mr. Yar'Adua, and

⁹⁷⁵ See, e.g., Atiku: The Story of Atiku Abubakar, by Adinoyi Ojo Onukaba (African Legacy Press, 2006), available
from the Library of Congress, No. DT 515.844.058 (hereinafter, "Atiku Biography"), at 155, 161-62. See also BBC
News, "Profile: Atiku Abubakar," January 25, 2007, http://news.bbc.co.Uk/2/hi/africa/6292141.stm.

⁹⁷⁶ See Atiku Biography; BBC News, "Profile: Atiku Abubakar," January 25, 2007
http://news.bbc. co. uk/2/hi/africa/6292141.stm.

⁹⁷⁷ BBC News, "Nigeria VP to run for president" November 25, 2006, http://news.bbc.co.Uk/2/hi/africa/6184156.stm
(quoting an Abubakar autobiography that has yet to be published). See also Atiku Biography at 136; BBC News,
"Huge win for Nigeria's Yar'Adua," April 23, 2007, http://news.bbc.co.Uk/2/hi/africa/6584393.stm.

⁹⁷⁸ According to the Atiku Biography, Mr. Abubakar formed this company while he was a Customs official. While a
1991 Nigerian law bans public officers from engaging in private business activities (unless their public service
employment is part time or the business relates to farming), that law was not in effect in the 1980s. See Code of
Conduct Bureau and Tribunal Act, 2 Laws of the Federation of Nigeria (LexisNexis Butterworths) Cap. C15,
§6(b)(current through Mar. 2006)(official source).

⁹⁷⁹ Atiku Biography, at viii. The author of the biography, Adinoyi Ojo Onukaba, was Mr. Abubakar's media
adviser during his tenure as Vice President of Nigeria. In the book's acknowledgement, Mr. Onukaba wrote: "I
would like to thank Vice President Atiku Abubakar for entrusting me with the story of his life and for his support
and encouragement." He also thanked a number of Abubakar family members, friends, and associates for their
assistance with the book. Id.

⁹⁸⁰ Atiku.Biography, at 136-37, 161, 187-88, 256-57, 302-303 ("Of all the businesses into which Atiku would
venture, the most successful and the most lucrative would be a small oil servicing company he set up with an Italian
business man in the early 1980s. ... NICOTES would transform Atiku from a struggling civil servant and
businessman to a fabulously wealthy man." Atiku Biography at 136-37).

⁹⁸¹ 1/29/10 letter from Mr. Volpi's legal counsel to the Subcommittee (hereinafter "1/29/10 Volpi letter"), at 4.

⁹⁸² See, e.g., Africa Energy Intelligence, December 21, 2005, "Nigeria: Intels Hit by Political Squabbles" ("Intels
was paying the price of being too closely connected to vice president Atiku Abubakar, who had a hand in setting up
the group inl988 with general Shehu Yar'Adua"), and June 27, 2007, "The Yar'Adua Family's Oil Holdings"
(Shehu Yar'Adua ... took part in founding the oil logistics and port concern Intels"); Point Blank News, "President
Yar'Adua, Wife, Linked with Oil Smuggling, Bunkering," December 7, 2009,

www.pointblanknews.com/os1057.html. According to the Atiku Biography, however, Shehu Yar'Adua was not a founder of the company, but was invited to become a 20% shareholder of NICOTES about a decade after the company was created. See Atiku Biography at 8, 156, 187-88, 195.

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renamed the company Integrated Logistics Services Inc. ("Intels")-'⁸' After Mr. Abacha's death two years later in 1998, Mr. Volpi returned the shares to Mr. Abubakar.⁹⁸⁴ Mr. Volpi confirmed this description of the company's development, stating through his legal counsel that Mr. Abubakar "was stripped of his financial interests in NICOTES" by General Abacha and that "Mr. Volpi made a moral agreement with Mr. Abubakar to restore Mr. Abubakar's forfeited financial interest as soon as the political circumstances would permit." According to Mr. Volpi's legal counsel: "In 1999, Mr. Volpi and Mr. Abubakar agreed that Mr. Abubakar could reclaim a 16% holding of the issued share capital of Intel Services (Integrated Logistics Services)

Limited, a Nigerian company and the successor NICOTES West Africa Services, Ltd.. In

2003, Mr. Volpi and Mr. Abubakar agreed to reinstate Mr. Abubakar's full financial interest."⁹⁸⁶

Mr. Volpi is currently the managing director and chief executive officer of Intels. Gian Angelo Perruci of Italy and Daniel Sigaud of France are also reported to be senior managers of die company.⁹⁸⁷ Intels is now one of the largest Nigerian companies in the African oil industry, operating oil terminals and oil services zones at ports in several countries including Nigeria, Angola, Equatorial Guinea, Gabon, and Sao Tome and Principe.⁹⁸⁸ ExxonMobil told the Subcommittee, for example, that in less than three years, from 2006 to the fall of 2008, it paid more than $245 million to Intels West Africa Inc. and Intels Nigeria Inc., two Intels affiliates, for providing oil services in Nigeria.⁹⁸

⁹⁸³ Atiku Biography, at 256-57, 302-03. See also, e.g., Africa Energy Intelligence, December 21, 2005, "Nigeria:
Intels Hit by Political Squabbles" ("When general Sani Abacha seized power in 1993 he allowed cronies to take
control of Intels. The company was returned to its founders on Abacha's death in 1998."); Point Blank News,
"President Yar'Adua, Wife, Linked with Oil Smuggling, Bunkering," December 7, 2009,
www.pointblanknews.com/osl057.html.

⁹⁸⁴ The biography states that Mr. Volpi secretly agreed to return the seized shares to the true owners "as soon as the
situation was right." The biography quotes Mr. Abubakar as follows: "Volpi behaved honorably. ... For the two
yeas that the Abacha and his men held the company and collected dividends worth millions of dollars, Volpi was
still making secret payments to us." Atiku Biography at 257.

⁹⁸⁵ 1/29/10 Volpi letter at 4.

⁹⁸⁶ Id. at 4-5.

⁹⁸⁷ See, e.g., Africa Energy Intelligence, "The Yar'Adua Family's Oil Holdings, "June 27, 2007, and "Angola: An
Old Hand Back in Business;" November 7, 2007, http://www.nigeriavillagesquare.com/articles/dr-gary-k,-
busch/linza-mi-da-wu-ta-ma-ganin-mahaukacin-3.html.

⁹⁸⁸ See, e.g., July 5, 2006 Africa Energy Intelligence "Nigeria: Intels in Charge Again," and "Nigeria: Intels,"
October 1, 2008 (describing Intels as having a "near monopoly ... in the oil logistics and ports sector in Nigeria").
See also Intels website-, http://www.intelseryices.com. Intels has also, at times, been the subject of allegations that it
is involved with smuggling crude oil out of Nigeria. See, e.g., Point Blank News, "President Yar'Adua, Wife,
Linked with Oil Smuggling, Bunkering," December 7, 2009, www.pointblanlaiews.corn/osl057.html.

⁹⁸⁹ 8/6/08 ExxonMobil written responses to Subcommittee questions, PSI-Exxon_Mobil-06-0001. Exxon told the
Subcommittee that it made these payments through two Exxon subsidiaries: Mobil Producing Nigeria Unlimited
(MPN) and Esso Exploration and Production Nigeria Limited (EEPN). Exxon-Mobil Attachment 5, (Nigeria)
Payments to senior foreign political figures, their relatives, or entity owned or controlled by such persons, PSI-
Exxon-0118-19. • Exxon identified these payments to Intels-related companies from 2006 to 2008:

Payee	2006 USD	2007 USD	2008 USD (through September)
Intel West Africa Lts.	10,170,959.43	9,460,437.42	8,013,785.32
Intels Nigeria Ltd.	98,768.72	281,406.69	813,084.78
Intel West Africa Ltd.	37,429,643.95	118,776,151.71	29,862,791.83
Intels Nigeria Lts.	406,472.15	22,236,104.99	7,898,653.11
Total	48,105,844.25	150,754,100.81	46,588,315.04

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After ten years in the private sector, in May 1999, Mr. Abubakar was elected Vice President of Nigeria under President Obasanjo. He held that position for eight years until May 2007. By the time he took office, Nigerian law banned full-time public officials from engaging in private business activities other than farming.⁹⁹⁰ On July 22, 1999, Mr. Abubakar established a "Blind Trust" under Nigerian law.⁹⁹¹ According to the trustees, the Blind Trust was formed to hold and manage his "assets, businesses], and investments."⁹⁹² The sole asset placed in the trust was Mr. Abubakar's Intels shares, then representing "a 16% holding in the issued share capital of Intel Services (Integrated Logistic Services) Limited."

Normally, blind trusts are managed by a trustee who is independent of both the grantor who places assets into the trust and the trust beneficiaries.⁹⁹⁴ After appointment of the trustee, the trust grantor and beneficiaries are typically unable to monitor the trust assets - hence the

⁹⁹⁰ Nigerian law states that a public officer is not to "engage or participate in the management or running of any
private business, profession or trade." See Code of Conduct Bureau and Tribunal Act, 2 Laws of the Federation of
Nigeria Cap. CI5 §6(b)(current through Mar. 2006)(official source). Business is defined as "any profession,
vocation, trade or any adventure or concern in the nature of trade, and excludes farming." In addition, the Nigerian
Constitution states that public officers are "not to put themselves in a position where [their] personal interests]
conflict with [their] duties and responsibilities." The Constitution of the Federation of Nigeria, 5 Schedule § 1
(enacted 1999). See also Law Library of Congress, "Nigeria: Restrictions on Business Activities of Public
Officers," No. 2010-003703, January 2010.

⁹⁹¹ See 7/22/99 "Deed of Trust (Blind Trust)," PSI-Volpi-03-00007-16.

⁹⁹² See 11/11/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee, EW000001-03, at 01.
The letter stated in part:

"Our client is a Trust Corporation incorporated on the 9th of October 2003 and empowered pursuant to a Deed of Blind Trust dated 22nd July 1999 ("the Blind Trust") to hold as trustee and manage the assets, business and investments of Atiku Abubakar, a citizen of the federal Republic of Nigeria, and a former holder of the office of Vice-President of the Federal Republic of Nigeria. At the current time, the principal asset or investment held by our client as trustee for the said Atiku Abubakar is 16% of the shareholding equity in Orlean Invest Holdings Limited, ("Orlean") a company registered under the laws of Panama."

⁹⁹³ Abubkar Blind Trust at 6, See also 11/11/09 letter from Guernsey Trust Company's legal counsel to the
Subcommittee, EW000001-03, at 02; 1/29/10 Volpi letter at 2; 8/6/08 ExxonMobil written responses to
Subcommittee questions, PSI-Exxon_Mobil-06-0001. The trust makes no reference to any other Abubakar business
interests.

⁹⁹⁴ According to the Congressional Research Service, a blind trust "is a device employed by a federal official to
hold, administer and manage the private financial assets, investments and ownerships of the official, and his or her
spouse and dependent children, as a method of conflict of interest avoidance. In establishing a qualified blind trust
upon the approval of the appropriate supervisory ethics entity, the official transfers, without restriction, control and
management of private assets to an independent trustee who may not communicate information about the identity of
the holdings in the trust to the official. The trust is considered 'blind' because eventually, through the sale of
transferred assets and the purchase of new ones, the public officer will be sliielded from knowledge of the identity of
the specific assets in the trust. Without such knowledge, conflict of interest issues would be avoided because no
particular asset in the trust could act as an influence upon the official duties that the officer performs for the
Government.'* Congressional Research Service, "The Use of Blind Trust by Federal Officials," September 23, 2005,
No. Cod RS21656, September 23, 2005. See also, Business Dictionary,

http://www.businessdictionarv.coni-'defmition/'blind-trust.html, ("Blind trusts are created to avoid any potential conflict of interest between the duties of a public officeholder and his or her choice of investment portfolio. The trust funds are placed at the full discretion of a trustee (such as a trust company) independent of the trustor in name and reality.").

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name "blind trust." In the case of the Abubakar Blind Trust, however, Mr. Abubakar did not appoint an independent trustee from a financial institution, but instead appointed corporations associated with Mr. Volpi, who has been described by Ms. Douglas and Mr. Abubakar's legal adviser, Edward Weidenfeld, as Mr. Abubakar's "trusted friend and business partner."⁹'

The initial trustee of the Blind Trust, appointed in 1999, was a Panamanian corporation called Orlean Invest Holdings Ltd.⁹⁹⁵ Orlean is another oil services company that is headquartered in London, has subsidiaries in several west African countries, and is closely associated with Intels.⁹⁹⁷ Mr. Volpi has told the Subcommittee that he is the Chairman of Orlean, and that the Volpi Family Trust currently owns 63% of the company through Sima Holdings and a Liechtenstein trust called Adiana Stiftung.⁹⁹" The Subcommittee was told that, from 1999 to 2003, Orlean managed the Abubakar Blind Trust, including the Intels shares and "the profits generated thereby were utilised in developing new business initiatives and investments, particularly in Nigeria, Angola, Congo (Brazzaville) and the Ivory Coast."

According to the Guernsey Trust Company's legal counsel, in 2003, Orleans re-organized and "acquired Atiku Abubakar's beneficial interests in Intels Services Limited, for Orlean's benefit, and issued in consideration therefore, 16% of the shares in Orlean to the Blind Trust for the benefit of Atiku Abubakar."¹⁰⁰⁰ In other words, Mr. Abubakar exchanged his 16% ownership interest in Intels for an equivalent ownership interest in Orlean. His acquisition of the Orlean shares meant that he became a part owner of the trustee of his Blind Trust. Orlean also became a major shareholder of Intels.¹⁰⁰¹

The Subcommittee was told that, after this exchange of shares, Orlean retired as the trustee of the Abubakar Blind Trust and, on October 10, 2003, was replaced by Guernsey Trust Company Nigeria Ltd. ("Guernsey Trust Company"), a shell company formed one day earlier under the laws of Nigeria.¹⁰⁰² Legal counsel to the Guernsey Trust Company told the

⁹⁵ 11/13/09 written response from Mr. Weidenfeld's legal counsel to Subcommittee questions, PSI-Abubakar_&_Weidenfeld 01-0031; 11/13/09 written response from Ms. Douglas Abubakar's legal counsel to Subcommittee queations, PSI-Abubakar_&_Weidenfeld 01-0020.

⁹⁹⁶11 /11 /09 letter from Guernsey, Trust Company's legal counsel to the Subcommittee, EW000001 -03, at 01. Mr. Volpi told the Subcommittee that this company was incorporated in Panama in 1984 under the name Bivo Financial S.A., was renamed Orlean Invest Holding S.A. in 1985, was re-domiciled in 2004 in the British Virgin Islands, and was renamed again in 2004, as Orlean Invest Holdings Ltd. 12/22/09 Volpi letter at 3.

⁹⁹⁷ See 12/22/09 letter from Mr. Volpi's legal counsel, Venable LLP, to the Subcommittee (hereinafter "2/22/09
Volpi letter"); www.orleaninvest.com (viewed 12-8-09); 2005 Business Week Special Advertising Section,
"Africa's Energy Boom," at 1-2, 4 ("Another major operator in Nigeria is Orlean Invest Services Ltd. which through
one of its subsidiaries, Intels (Integrated Logistics Services) plays a major role in an exciting project aimed at
stimulating trade and export activities and attracting direct foreign investment. Intels is a worldwide leader in
oilfield logistics with operational bases and service centers throughout the West African coast.").

⁹⁹⁸ 12/22/09 Volpi letter at 3.

⁹ 11/11/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee at 2. .

¹⁰⁰⁰ Id. See also 8/6/08 ExxonMobil written responses to Subcommittee questions, PSI Exxon Mobil 06-0001,
describing this .exchange of shares..

¹⁰⁰¹ Mr. Volpi told the Subcommittee that Orlean currently owns 70% of Intels Nigeria Ltd. but did not disclose
Orlean's ownership share in the parent company, Integrated Logistics Services Inc. 12/22/09 Volpi letter at 3.

¹⁰⁰² 11/11/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee, EW000001-03, at 01. Mr.
Volpi told the Subcommittee that thename of the company did not refer to the island of Guernsey but was "merely a
name" with "no special significance." 1/29/10 Volpi letter at 2.

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Subcommittee that this company has three beneficial owners who provide the trustee services required by the Abubakar Blind Trust: Gabriele Volpi, Uyiekpen Giwa-Osagie, and Fati Akintola Kekere-Ekun.¹⁰⁰³ Mr. G iwa-Osagie is the managing partner in the Nigerian law firm, Giwa-Osagie & Associates, which provides legal advice to the Guernsey Trust Company. Mr. Kekere-Ekun is the chief executive officer and managing director of Habib National Bank Ltd. in Nigeria, a trustee on the AUN board of trustees, and was chosen in part due to "his reliability and relationship with Mr. Abubakar."¹⁰⁰⁵ The sole trust that is managed by the company is the Abubakar Blind Trust.

The Blind Trust states that it "shall operate for so long as the Beneficiary holds Government office in the Republic of Nigeria," and that upon his leaving office, "the Trustee shall transfer the ownership of record and management of the investment interest... to the Beneficiary or as the Beneficiary shall designate at that time."¹⁰⁰ Despite this provision, the Blind Trust continued in existence after Mr. Abubakar left office in May 2007, continuing to send, for example, wire transfers to banks in the United States.

The Subcommittee has been told that the Abubakar Blind Trust has had a single asset over time - shares of stock. The Subcommittee has also been told that, through dividends, those shares generated millions of dollars in cash revenues that were then used to send a steady stream of wire transfers to bank accounts in the United States.

From 2003 to 2008, for example, the Guernsey Trust Company wire transferred at least $10 million into the United States, including at least $7 million to Douglas-related accounts at several U.S. banks, $2.1 million to the Weidenfeld law office and AUN accounts at Suntrust Bank, and $900,000 to American University accounts. Ms. Douglas, Mr. Weidenfeld, and American University each told the Subcommittee that they had no information about the Guernsey Trust Company, were unaware of its relation to the Abubakar Blind Trust, and did not deal with the Guernsey Trust Company trustees. Each indicated that they had simply assumed the funds sent by the Guernsey Trust Company belonged to Mr. Abubakar.

Two other companies beneficially owned by Mr. Volpi and his relatives as explained below, LetsGo and Sima Holding, sent nearly $27 million into the United States, including about $8 million to Ms. Douglas' accounts, $5.5 million to AUN accounts, and $13.1 million to American University accounts. When asked about these wire transfers, Mr. Volpi told the Subcommittee through legal counsel that the funds sent to Ms. Douglas "related to a moral agreement by Mr. Volpi with Mr.. Abubakar to acknowledge Mr. Abubakar's financial interests"

¹⁰⁰³ 11/11/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee, EW000001-03, at 03. Mr.
Volpi, however, described these three individuals as the directors of the corporation and the trustees of the Abubakar
Blind Trust, and Mr. Abubakar as the sole beneficial owner of the Guernsey Trust Company. 12/22/09 Volpi letter
at 2, 5.' ■ '.

¹⁰⁰⁴ See 11/1.1/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee, EW000001-03;
12/22/09 Volpi letter at 5.

loos.i/29/io Volpi letter at 5. See also 12/22/09 Volpi letter at 5.

¹⁰⁰⁶ Abubakar Blind Trust at 5. See also 11/11/09 letter from Guernsey Trust Company's legal counsel to the Subcommittee, EW000001; 8/6/08 ExxonMobil written responses to Subcommittee questions, PSI-Exxon Mobil 06-0001 (ExxonMobil states that the Abubakar Blind Trust was designed to end when Mr. Abubakar left office).

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in Intels after General Abacha had seized Mr. Abubakar's shares.¹⁰⁰⁷ These payments, which are in addition to those generated by the shares held by the Abubakar Blind Trust, provided a separate revenue stream to Ms. Douglas outside of the trust that was supposed to separate Mr. Abubakar from his interests in the oil industry. Mr. Volpi's legal counsel also told the Subcommittee that LetsGo had provided a line of credit to the Abubakar Blind Trust, and that some of the payments made by LetsGo to Ms. Douglas reflected that credit extension. In addition, Mr. Volpi told the Subcommittee that he had made donations and extended a separate line of credit to AUN, and that some of the payments sent by LetsGo to AUN and American University accounts reflected those funding commitments.

Mr. Abubakar served as Vice President of Nigeria from 1999 to 2007. In 2006, President Obasanjo attempted to amend the Nigerian Constitution to allow him to run for a third term. Mr. Abubakar opposed that effort, leading to a falling out between the two.¹⁰¹⁰ After President Obasanjo's effort failed, an election for a new President was scheduled, and Mr. Abubakar announced his candidacy. In response, the Nigerian Independent National Electoral Commission ruled that he was disqualified from running for President, because he was under investigation for corruption.¹⁰¹¹ A few months later, on March 12, 2007, the Federal High Court of Nigeria ruled that the Commission had no authority to disqualify candidates.¹⁰¹² Mr. Abubakar's name was added to the ballot at the last minute. The official results showed that he took third place behind two other candidates, with about seven percent of the vote.

During the presidential campaign, the Nigerian Economic Financial Crimes Commission (EFCC), under the leadership of Nuhu Ribadu, initiated a corruption investigation of several Nigerian government officials, including Mr. Abubakar.¹⁰¹³ The EFCC issued a report which found that Mr. Abubakar had used his influence over Nigeria's Petroleum Technology Development Fund ("PTDF") to disburse money from the Fund to promote business ventures for himself and his friends, and that he had engaged in fraudulent conversion of funds, corrupt practices, and money laundering.¹⁰¹⁴ In February 2007, a Nigerian ad hoc Senate Committee was formed to examine the EFCC charges. Mr. Abubakar made a presentation to the Committee.

⁰⁷ 1/29/10 Volpi letter at 4.

¹⁰⁰⁸ Id. at 4-5. This explanation suggests that Mr. Volpi directed LetsGo to send the borrowed funds directly to Ms.
Douglas instead of providing them to the actual borrower, the Abubakar Blind Trust, and allowing the trustees to
direct use of the Trust's funds.

¹⁰⁰⁹ Id. at 5-6. "^: ' •

¹⁰¹⁰ See, e.g., Africa Energy Intelligence, "Nigeria: Campaign and Corruption," September 20, 2006 ("incumbent
president Olusegun Obasanjo and his vice^:president Atiku Abubakar have accused one another of stealing public
funds").

¹⁰¹¹ See Action Congress v. Independent National Electoral Commission. Suit No: FHC/ABJ/CS/3/2007 (Federal
High Court of Nigeria, Abuja Judicial Division), Judgment issued on March 12, 2007.

¹⁰¹² Id.

¹⁰¹³ The EFCC is the leading anti-corruption investigative unit in the Nigerian government. According to its
website, the EFCC is designed "to combat financial and economic crimes. The Commission is empowered to
prevent, investigate, prosecute and penalize [sic] economic and financial crimes and is charged with the
responsibility of enforcing the provisions of other laws and regulations relating to economic and financial crimes."
http://www.efccnigeria.org/index.php?option=com content&task=view&id=12&ltemid^:=30.

¹⁰¹⁴ See Mr. Abubakar's defense of his actions, "PTDF: The Facts, The Fiction: Presentation to Senate Ad-Hoc
Committee on Investigations into the Affairs of the Petroleum Technology Development Fund," (2006), at 3,
available at the Library of Congress, HD 9577.N52 A85 (hereinafter "Abubakar PTDF Defense"). See also, e.g.,
BBC News, "Nigeria Senate urges action on VP," February 27, 2007, http://news.bbc.co.uky2/hi/africa/640224 l.stm.

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asserting in part that the allegations v» ere a bid to prevent him from running for office. The Senate Committee subsequently called for Mr. Abubakar to be "sanctioned," because he had "abused his office by aiding and abetting the diversion of public funds in the sum of $145 million" as loans to his friends.¹⁰¹⁶ The Subcommittee found no evidence, however, that the full Senate imposed such a sanction on Mr. Abubakar.

On August 5, 2009, U.S. Congressman William Jefferson was convicted by a federal jury of soliciting bribes, money laundering, depriving citizens of honest services as a member of Congress, and operating his Congressional office as a racketeering enterprise. During his trial, a videotape was shown in which the Congressman made a reference to Mr. Abubakar when the Congressman was seeking money from another person, but no evidence was introduced showing that Mr. Abubakar had actually sought or accepted a bribe from the Congressman. Mr. Abubakar asserted his innocence, and that his name had been invoked in the matter to ruin his reputation and prevent him from winning the Presidency in Nigeria.

Currently, Mr. Abubakar does not hold political office in Nigeria, but has resumed his business career. The Subcommittee contacted him through his legal counsel, but he declined to participate in an interview.

Jennifer Douglas. Jennifer Elizabeth Douglas, who has also gone by the names Jennifer Iwenjiora, Jamila Abubakar, and Jennifer Douglas-Abubakar, is the fourth wife of Atiku Abubakar. According to the Atiku Biography, Ms. Douglas was born in Nigeria as Jennifer Iwenjiora, worked as a television journalist at the Nigerian Television Authority, and dated Mr. Abubakar in the early 1980s, before leaving for the United States.¹⁰¹⁹ She lost touch with Mr. Abubakar while attending Howard University.¹⁰²⁰ She subsequently married in the United States, took the married name of Jennifer Douglas, and later divorced,¹ ²¹ becoming a naturalized U.S. citizen during this time period:¹⁰²² Ms. Douglas eventually renewed her relationship with

¹⁰¹⁵ Abubakar PTDF Defense, at 3.

¹⁰¹⁶ Nigerian Senate Committee report as quoted in BBC News, "Nigeria Senate urges action on VP," February 27,
2007, http://news.bbc.co.Uk/2/hi/africa/6402241 .stm. See also, e.g., BBC News, "Nigeria Senate urges action on
VP," February 27, 2007, http://news.bbc.co.Uk/2/hi/africa/6402241.stm; BBC, Profile: Atiku Abubakar, January 25,
2007, http://news.bbc.co.uy2/hi/africa/6292141.stm ("In a probe ordered by Mr Obasanjo, the vice-president was
accused of diverting $125m from a public development trust fund into his personal businesses."); Voice of America,
"Nigerian Vice President Charged, with Corruption," October 10, 2006, http://wwwl.voanews.com/english/news/a-
13-2006-10-10-voa39.html.

¹⁰¹⁷ See United States v. William J. Jefferson (USDC EDVA, June 4, 2007), Criminal No: 1:07CR209. See also
Times Picayune, "William Jefferson's attorneys ask for 2-week sentencing delay," October 8, 2009,
http://www.nola.com/politics/index.ssf/2009/10/post_37.html.

¹⁰¹⁸ Press reports discussing the Jefferson videotape and the allegations involving Mr. Abubakar were published as
early as 2005 and the matter was referenced during the 2007 Nigerian campaign. See, e.g., BBC News, "US probes
Nigeria vice-president," August 29, 2005, http://news.bbc.co.Uk/2/hi/africa/4192186.stm ; Washington Post, "FBI
Says Jefferson Was Filmed Taking Cash - Affidavit Details Sting on Lawmaker," May, 22, 2006. See also news
stories collected by Chevy Chase, JDJ)04176 -4301.

¹⁰¹⁹ Atiku Biography at 260-61 „

¹⁰²⁰ See 6/26/00 Citibank account opening application, B00007799-801 (2000 Citibank account opening
documentation in which Ms. Douglas indicates she attended Howard University); Atiku Biography at 262.

¹⁰²¹ Atiku Biography at 261.

¹⁰²² See SEC v. Simens Aktiengesellschaft, (USDC DC), Case No. 1:08-cv-02167-RJL (Dec. 12, 2008), Complaint,
at paragraph 50 (describing Ms. Douglas as a dual citizen of Nigeria and the United States).

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Mr. Abubakar who came to visit her in the United States. According to the Atiku Biography, from late 1995 to early 1998, while Sani Abacha was in power in Nigeria, Mr. Abubakar "spent

1023

most of his time in Maryland" with Ms. Douglas, making occasional visits to Nigeria. In or around 2000, Ms. Douglas became a doctoral student at American University¹⁰²⁴ and, in 2007, received her doctorate degree in international relations. According to the Atiku Biography, Ms. Douglas and Mr. Abubakar "married officially in 2003."¹⁰²⁵ In July 2003, Ms. Douglas made a $1 million donation to the American University School of International Service Building Fund.¹⁰²⁶

Since 2000, Ms. Douglas has resided in a luxury home in Potomac, Maryland, a wealthy suburb of Washington, D.C. In bank account opening documents and tax documents, she has listed her occupation as "student," "homemaker," and "unemployed." She has consistently told the banks where she opened accounts that her husband, Mr. Abubakar, provided the funds for her accounts. For example, in a November 21, 2003 letter provided to Citibank, she stated that she received "a yearly maintenance income from spouse of $500,000."¹⁰²⁸ She also said that she received dividends and interest from various accounts and investments totaling about $ 1,600 per month. In addition, she had access to $5 million in assets in a Jennifer Douglas Abubakar (JDA) Family Trust.¹⁰²⁹

The letter also stated that Ms. Douglas received a salary of about $62,000 per year from the Gede Foundation, which Ms. Douglas had established in 2002, to advance various charitable causes, including health problems in Nigeria. Ms. Douglas told Citibank that she received "a minimal income" of about $1,000 per month and "an agreed yearly bonus" of $50,000 "paid in [a] lump [sum] yearly after every fundraising."¹⁰³⁰ Ms. Douglas also served as an unpaid trustee on the board of trustees of the American University of Nigeria (AUN), which was founded by Mr. Abubakar in 2003, to provide an American-style university in northern Nigeria where he was born. Documents indicate that Ms. Douglas helped convince American University to assist with the establishment of AUN and used her personal bank accounts to pay some AUN expenses.

¹⁰²³ Atiku Biography at 263. Sani Abacha unexpectedly died of a heart attack on June 8, 1998.

¹⁰²⁴ See 6/26/00 Citibank account opening application B00007799-801 (Ms. Douglas indicates she was then a PhD
student at American University),..

¹⁰²⁵ Atiku Biography at 263. The biography states that prior to the marriage, Ms. Douglas converted to Islam "and
took the name, Jamila." Id.

¹⁰²⁶11/21/03 American University Gift Agreement to Jennifer Douglas Abubakar, PAU026519; 8/19/08 internal American University email, PAU0108929.

¹⁰²⁷ Maryland property records indicate that Ms. Douglas purchased the house in December 1999, for $1.75 million,
and the deed was recorded in January 2000. See also 6/26/00 Citibank account opening application, B00007799-
801 (Ms. Douglas indicates she has lived at her Maryland residence for 6 months). See also 3/19/09 Citibank's
written responses to Subcommittee questions, PSI-Citi-34-0002; 2004 Residential Appraisal Report, B00007944-
7954 (valued property at $2.7 million); November 2003 letter by Ms. Douglas in Citibank files, B 00007910 (valued
property at $3 million). See also Atiku Biography at 263 (indicating that Mr. Abubakar and Ms. Douglas purchased
the house together).

¹⁰²⁸ 11/21/03 letter from Ms. Douglas "To Whom It May Concern RE: Explanation of Income," B 00007910-11.

¹⁰²⁹ Ms. Douglas told Chevy Chase Bank that this trust had been funded with a financial gift from her husband.
JD_000209.

¹⁰³⁰ 11/21/03 letter from Ms. Douglas "To Whom It May Concern RE: Explanation of Income," B 00007910-11.

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Bank documents show that most of the funds in Ms. Douglas' U.S. bank accounts came from wire transfers provided by offshore corporations. When her banks asked about these corporations, Ms. Douglas consistently told them that she was unfamiliar with the nature of the offshore corporations sending her money. In 2009, when the Subcommittee asked her about the Guernsey Trust Company, LetsGo, Sima Holding, and China Castle Investments, Ms. Douglas responded through her legal counsel that she "has no personal knowledge of these entities. To the extent that any of these entities were the source of deposits into her accounts or the AUN account, she understood that all such deposits came from her husband."

In December 2008, the U.S. Department of Justice and the U.S. Securities and Exchange Commission (SEC) filed criminal and civil pleadings alleging that Siemens AG, a major German company traded on the New York Stock Exchange, violated the U.S. Foreign Corrupt Practices Act (FCPA) by making bribery payments to obtain business in multiple countries, including Nigeria.¹⁰³² Siemens pleaded guilty to violating the books and recordkeeping provisions of the FCPA, and agreed to pay combined criminal and civil fines totaling more than $1.6 billion. One of the allegations in the SEC civil complaint against Siemens was that "approximately $2.8 million of the bribe payments was routed through a bank account in Potomac, Maryland, in the name of the wife of a former Nigerian Vice President."¹⁰³⁴ The Subcommittee has obtained wire transfer documentation substantiating this allegation, as explained below. Through her legal counsel, however, Ms. Douglas denies any wrongdoing.

Ms. Douglas currently resides primarily in the United Arab Emirates, employed as a professor of political science at the American University of Sharjah. When contacted by the Subcommittee, Ms. Douglas voluntarily produced documents and answered written Subcommittee questions, but declined to participate in a Subcommittee interview. Mr. Abubakar, through his legal counsel, declined to answer any questions from the Subcommittee.

American University of Nigeria. In addition to opening U.S. bank accounts for her personal use, Ms. Douglas opened several U.S. bank accounts on behalf of American University of Nigeria (AUN), which was founded by Mr. Abubakar in 2003. Originally called ABTI University, the school changed its name in September 2004, to ABTI American University of

¹⁰³¹ 11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PSI Abubakar_
&_Weidenfeld 01-0003.

¹⁰³² See United States v. Siemens Aktiengesellschaft, (USDC DC), Case No. Cr. 08-368 (Dec. 12, 2008); SEC v.
Simens Aktiengesellschaft, (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12, 2008), Complaint. German
authorities also filed charges.

¹⁰³³ See United States v. Siemens Akticagesellschaft, (USDC DC), Case No. Cr. 08-368 (Dec. 12, 2008),
Information, Plea Offer; SEC v. Simens Aktiengesellschaft. (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12,
2008), Consent of Defendant Siemens Aktiengesellschaft; Department of Justice press release, "Siemens AG and
Three Subsidiaries Plead Guilty to Foreign Corrupt Practices Act Violations and Agree to Pay $450 in Combined'
Criminal Fines," No. 08-1105 (Dec. 15, 2008).

¹⁰³⁴ SEC v.Simens Aktiengesellschaft, (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12, 2008), Complaint, at
paragraph 50.

¹⁰³⁵ Subcommittee interview with Ms. Douglas' legal counsel, April 1, 2009. See also The Times-Picayune,
"Conspiracy figure in Rep. William Jefferson case took bribes, SEC says," January 1, 2009,
http://www.nola.com/crime/index.ssiy2009/01 /conspiracy figure in rep^vdjlijriml.

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Nigeria, and then changed its name again in May 2007, to American University of Nigeria.¹⁰The university is located in Yola, which is the capital of Adamawa State in Northern Nigeria, where Mr. Abubakar was born. It opened its doors to at least 110 students in 2005, and saw its first graduates in 2009.¹⁰³⁷

The AUN website describes the school in the following manner:

"American University of Nigeria was created in response to the demand for high-quality, American-style higher education in West Africa. Each year, thousands of West African families send their sons and daughters to universities in the United States. Many of these students would prefer to study here, in Nigeria, if a comparable education were available. Now these students do have a new option: AUN.

The mission of AUN is to offer an education that is in every way the equal of what a student would experience at the best universities in the United States. The majority of the distinguished faculty are American; the campus facilities are world class-superior even to those found at most American campuses. The academic programs are built on the American model and are consistent in every way with US accreditation standards.

The University was created in partnership with the American University in Washington, D.C., an institution with an international reputation for excellence."¹

Information reviewed by the Subcommittee indicates that Ms. Douglas played an active role in AUN's establishment and operation. She approached American University in 2002, where she was a doctoral student, for assistance in establishing the university and acted as a liaison between the university and her husband. Since the university's inception, she has served as an unpaid trustee on the AUN board of trustees. In addition, Ms. Douglas was tasked by her husband to help pay AUN bills, in particular the salaries of AUN professors who agreed to teach at AUN but requested payment in U.S. dollars.

Bank records obtained by the Subcommittee show that AUN utilized several accounts at U.S. financial institutions, including personal accounts opened by Ms. Douglas at Citibank and Wachovia, and an account opened by Mr. Weidenfeld's law firm at Suntrust Bank. Funding for those accounts came primarily from three offshore corporations, the Guernsey Trust Company, LetsGo, and Sima Holdings. In 2008, AUN also opened accounts at Standard Chartered Bank in London and apparently is now in the process of closing its remaining U.S. accounts in favor of its London accounts. Bank records show that AUN also has accounts at several banks in Nigeria

From 2003 to 2007, American University accepted about $14 million in multiple wire transfers from LetsGo and the Guernsey Trust Company, to pay consulting fees for its work related to AUN. After receiving an inquiry from the Subcommittee about the source of these

¹⁰³⁶ 5/28/07 Nigerian Corporate Affairs Commission, Certificate of Incorporation of a Company, JD F 00430;
9/29/04 letter from the Nigerian National Universities Commission to AUN, JD F 00431.

¹⁰³⁷ Subcommittee interview of American University, April 14, 2009.

¹⁰³⁸ AUN website, http://www.aun.edu.ng/about.htm.

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funds, American University negotiated a new consultancy agreement with AUN in 2008, in which AUN agreed to provide fees to AU directly from AUN's own bank accounts.

Edward Weidenfeld. Edward Weidenfeld is a U.S. lawyer who practices in the Washington, D.C. area, and has provided legal counsel to Ms. Douglas, Mr. Abubakar, and AUN. Mr. Weidenfeld first met Ms. Douglas in 2002, when he provided her with estate planning services. He then had infrequent contact with her until 2004, when he provided additional legal services. ¹⁰⁴° In August 2005, after her residence was searched in connection with the Congressman Jefferson investigation, he recommended a criminal defense attorney and worked as co-counsel in that matter.¹⁰⁴¹ Mr. Weidenfeld also provided legal advice to Mr. Abubakar related to his 2006-2007 presidential campaign in Nigeria.¹⁰⁴² At the request of Mr. Abubakar and Ms. Douglas, he has also provided legal advice related to their interactions with U.S. banks, helped advise AUN, and provided legal advice in connection with the Subcommittee's inquiry.¹⁰⁴³

Documents reviewed by the Subcommittee show that when Citibank closed the Douglas-related accounts in 2007, Mr. Weidenfeld helped her open accounts at Wachovia Bank. Wachovia already provided banking services to American University and knew Mr. Weidenfeld. He provided a letter of recommendation for Ms. Douglas and served as a cosignatory on the AUN account she opened at that bank. When Wachovia indicated it planned to close the accounts, he persuaded the bank to grant Ms. Douglas additional time so that she could look for another bank. In 2008, he helped establish an AUN account at Suntrust Bank, opening it in connection with his law firm which already had accounts at the bank and agreeing to serve as the account signatory. During the first eight months of 2008, Mr. Weidenfeld accepted over $1.3 million in wire transfers into his law firm account from the Guernsey Trust Company to pay the Abubakars' legal bills, and has on occasion transferred funds to other accounts for them. He accepted another $2 million in offshore wire transfers into the AUN account for which he was a signatory. He told the Subcommittee that he never dealt directly with the Guernsey Trust Company and no information about the company that sent him millions of dollars, but simply assumed it was providing funds supplied by Mr. Abubakar.

Mr. Weidenfeld cooperated with the Subcommittee's inquiry by voluntarily producing documents and answering written questions from the Subcommittee.

Gabriele Volpi. Gabriele Volpi, 63, is a citizen of Italy, a billionaire, and a businessman associated with numerous ventures, including Orlean Invest Holdings Ltd. and Intels, which are active inthe oil industry in western Africa. Mr. Volpi told the Subcommittee that he is currently the chairman of Orlean.¹⁰⁴⁴ He is also the managing director and chief executive officer of

11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee,, PSI-Abubakar_&_Weidenfeld-01-0022-32, at 22.

¹⁰⁴⁰ Id. See also 9/11/02 email from Ms. Douglas to Chevy Chase Bank, Chevy Chase 4, JD_004302/004762
(changing her attorney to Mr. Weidenfeld).

1041 J i/i 3/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee,, PSI-
Abubakar_&_Weidenfeld-01-0022-32, at 22.

¹⁰⁴² Id.

¹⁰⁴³ Id. '

¹⁰⁴⁴ 12/22/09 Volpi letter at 3.

189

Intels, which owns oil terminals and oil services zones at multiple ports in Africa. ~ He is known for his ownership of a luxurious 60-meter yacht and an internationally recognized water polo team in Italy.¹⁰⁴⁶

Mr. Volpi is closely associated with the three offshore corporations, the Guernsey Trust Company, LetsGo, and Sima Holding, that collectively sent over $38 million to the United States in connection with this matter. He is one of the three directors and trustees of the Guernsey Trust Company, which is located in Nigeria.¹⁰⁴⁷ LetsGo is a Panamanian corporation which "receives and disburses funds for personal and business use from companies owned or controlled by Mr. Volpi," and it is beneficially owned by Mr. Volpi and his wife.¹⁰⁴⁸ Sima Holdings is a British Virgin Islands corporation that is beneficially owned by Mr. Volpi, his wife, and sons through a family trust.¹⁰⁴⁹

Mr. Volpi cooperated with the Subcommittee investigation by voluntarily answering a number of questions through his legal counsel.

B. Using Offshore Corporations to Bring Suspect Funds into the United States

From 2000 to 2008, Mr. Abubakar and Ms. Douglas used a network of accounts at U.S. financial institutions to bring over $40 million in suspect funds into the United States, through multiple wire transfers supplied by offshore corporations located in Germany, Nigeria, Panama, the British Virgin Islands, and Switzerland. Nearly $25 million of those funds were wire transferred to more than 30 U.S. bank accounts opened by Ms. Douglas in her own name or in the name of the Jennifer Douglas Abubakar Family Trust, the Gede Foundation, or American University of Nigeria (AUN). She opened 18 of those accounts at Citibank, four at Chevy Chase Bank, six at Wachovia Bank, and three at Eagle Bank in Maryland, among other financial institutions. These five banks opened accounts for Ms. Douglas in most cases without being aware of her PEP status, at times relying on third party vendors using incomplete PEP databases or inadequate due diligence procedures. Over time, as each financial institution began to ask questions about the offshore corporations sending her funds and decided to close her accounts, she opened new accounts at other financial institutions, at times with the assistance of her U.S. lawyer, Edward Weidenfeld. Mr. Weidenfeld also accepted $3.4 million from offshore entities to pay the Abubakars' legal bills and to fund an AUN account he opened at Suntrust Bank.

To analyze these accounts and transactions, the Subcommittee subpoenaed documents from a number of U.S. financial institutions. In most cases, the Subcommittee obtained bank documents covering a five-year period, from 2003 to 2008, although it obtained records for some earlier transactions as well. The Subcommittee did not attempt to trace all of the funds that went into or out of the accounts discussed below, nor did the Subcommittee examine every U.S. bank

¹⁰⁴⁵ Mr. Volpi's legal counsel, January 12, 2010.

¹⁰⁴⁶ See, e.g.,Visit-Montenegro.com, "The owners of Pro Recco' in the Bay of Kotor," June 17, 2009, www.visit-
m6ntenegro.com/article-mne-21720.htm.

¹⁰⁴⁷ 12/22/09 Volpi'letter at 2.

¹⁰⁴⁸ Id.

190

account opened by Ms. Douglas.¹⁰⁵⁰ Instead, the Subcommittee focused its analysis on more than 30 accounts at five U.S. banks, as detailed below. The resulting analysis, while limited, shows how Mr. Abubakar and Ms. Douglas used offshore corporations to bring suspect funds into the United States and provides a conservative estimate of the amount of funds they actually introduced into the U.S. financial system to advance their interests.

(1) Citibank

From 2000 to 2007, Mr. Abubakar and Ms. Douglas opened 18 different accounts at Citibank in Potomac, Maryland, and brought nearly $20 million in suspect funds into the United States through the bank. These accounts consisted of five personal checking accounts, five savings accounts, two brokerage accounts, a home equity account, three accounts in the name of the Gede Foundation, and two additional personal checking accounts that were later expanded to reference both Ms. Douglas and AUN.¹⁰⁵¹ Ms. Douglas also maintained four Citibank credit card accounts, three of which were for herself or her husband, and one of which was for the Gede Foundation. Over the nearly seven years these accounts were open, Ms. Douglas received multiple wire transfers totaling nearly $20 million from Siemens AG, LetsGo, Guernsey Trust Company, Sima Holding, China Castle Investments, and a few unidentified "clients." For most of the seven years, Citibank was unaware of Ms. Douglas' PEP status. In 2007, Citibank learned of Ms. Douglas' PEP status, and began closing her accounts. By August 2007, all of her accounts were closed.¹⁰⁵²

Initial Personal Accounts. Ms. Douglas opened her first two accounts with Citigroup on June 28, 2000, Checking Account No. 52096374 and Savings Account No. 52096382.¹⁰⁵³ In the account opening documentation, Ms. Douglas identified herself as a U.S. citizen residing in Maryland, and supplied a social security number.¹⁰⁵⁴ Citibank told the Subcommittee: ''Nothing in Ms. Douglas's initial application referenced or suggested that she had any connection to a foreign country or had a relationship with any foreign official. As a result, consistent with applicable law, Ms. Douglas was not considered to be a 'politically exposed person' or 'PEP.'"¹⁰⁵⁵ During her seven years with Citibank, this initial personal checking account was the one that received the bulk of the wire transfers from offshore corporations.

¹ ⁵⁰ For example, Ms. Douglas had two accounts at Riggs Bank from September 1999 through May 2005, Checking Account No. 24-776-946 and Money Market Account No. 64-838-355, which received over $5.2 million in deposits. When PNC purchased Riggs Bank, it provided Ms. Douglas with a new account, No. 53-0100-7567, from May 2005 to May 2008, which received deposits totaling nearly $1.1 million, including four $100,000 wire transfers from the Guernsey Trust Company in Nigeria. See list of Douglas accounts prepared by her legal counsel and related wire transfer documentation, no bates number. The Subcommittee did not attempt to trace these funds or determine how they related to the accounts examined in this Report.

¹⁰⁵¹ See list of accounts, B00008784.

¹⁰⁵² 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0002. The Subcommittee's
subpoena to Citibank concerning the Ms. Douglas accounts was sent on July 5, 2007.

¹⁰⁵³ See list of accounts, B00008784; 3/19/09 Citibank's letter in response to Subcommittee questions, PSI Citi-34-
0001.

¹⁰⁵⁴ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0002.

¹⁰⁵⁵ Id.' The 2001 Patriot Act, which is the key statute requiring enhanced due diligence of PEP accounts, was
enacted a year after the first Douglas account was opened.

191

Credit Card Accounts. Also in 2000, Ms. Douglas opened two personal CitiCard credit card accounts.¹⁰ⁱ⁶ One credit card account, opened in June 2000, listed both her and Mr. Abubakar as authorized signatories and identified Mr. Abubakar as her husband, but did not identify him as a foreign official.¹⁰⁵⁷ A second credit card account, opened in July 2000, also listed both her and Mr. Abubakar as authorized users, and was linked to a third credit card account held solely in Ms. Douglas's name and for which Ms. Douglas was financially responsible.¹⁰⁵⁸ The first credit card account was closed in March 2005. The second remained open until all the Douglas-related accounts were closed in 2007. Citibank told the Subcommittee that these credit card accounts were "the only Citigroup accounts indentified to which Ms. Douglas's husband had a direct connection."¹⁰⁵⁹

Smith Barney Account. In June 2000 and January 2001, Ms. Douglas opened two brokerage accounts at Citibank's affiliated broker-dealer, Smith Barney, Account No. 62H-07385 and Account No. 168-24253 (later renumbered 232-75087).¹⁰⁶⁰ The 2000 account was apparently never funded; the 2001 account was initially funded with a $500,000 cashier's check and engaged in a number of investments, but did not grow substantially larger and essentially went dormant in September 2006.¹⁰⁶¹

Household Account. On August 8, 2001, Ms. Douglas opened a second personal
checking account at Citibank, Checking Account No. 1209003581, which she deemed her
"household account."¹⁰⁶² At first, this checking account was linked to a high-yield savings
account, IMMA No. 1208951651, which was initially funded with about $50,000, and a
Certificate of Deposit No. 1679323897, which was initially funded with about $100,000.¹⁰⁶³ By
late 2001, however, all the funds in the savings account and certificate of deposit, which then
totaled about $300,000, were withdrawn, and the household checking account continued on its
own.¹⁰⁶⁴ Over the six years this account was open, Ms. Douglas wrote numerous checks each
month to pay a variety of household expenses, relying primarily on deposits from her other
accounts for funds and, beginning in 2004, on loans from a home equity account described
below. Altogether in a month, Ms. Douglas wrote checks that totaled anywhere from $10,000 to
$90,000.¹⁰⁶⁵ This account remained open until all the Douglas-related accounts were closed in
2007.¹⁰⁶⁶ ■ ..

192

Home Equity Account. In April 2004, Ms. Douglas opened a home equity account at Citibank, Equity Source Account No. 7707591587.¹⁰⁶⁷ She used this account to obtain a line of credit from Citibank, secured by her Maryland residence.^10fo Her borrowings rose from about $159,000 in April 2004, to more than $350,000 during 2006 and 2007. Ms. Douglas told the Subcommittee she used these funds to support her "household and charitable activities."¹⁰⁶⁹ Ms. Douglas made regular payments on the home equity loan from April 2004 until the account was closed in August 2007,¹⁰⁷⁰ paying a total of about $975,000.¹⁰⁷¹ Ms. Douglas told the Subcommittee: "All monies used to make the repayments on the line of credit, as well as all monies used to pay her expenses, and to fund her contributions to AUN, GEDE Foundation, and American politicians and political groups, came from her husband."¹

Gede Foundation Accounts. In February and March 2002, Ms. Douglas opened three bank accounts in the name of the Gede Foundation Inc., Checking Account No. 17581251, Checking Account No. 17581366, and Savings Account No. 17581278.¹⁰⁷³ Six months later, in September 2002, the Foundation also received a Citicard credit card.¹⁰⁷⁴ The account opening documentation shows that Gede Foundation provided a copy of its certificate of incorporation, a W-8 BEN form, and a copy of Ms. Douglas' Maryland driver's license.¹⁰⁷⁵ Ms. Douglas provided "Abubakar" as her married name.¹⁰⁷⁶ Citibank told the Subcommittee that it later revised its policy towards nonprofit organizations to require more enhanced due diligence for

• • 1077

organizations providing services outside of the United States.

AUN Accounts. On April 4, 2005, Ms. Douglas opened Checking Account No. 1209739556, initially under her own name, but later, on an unspecified date, changed the account name to "Jennifer Douglas/ABTI American University."¹⁰⁷⁸ "ABTI American University" refers to AUN by an earlier name. Citibank told the Subcommittee that when Ms. Douglas added the

1067 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0004.

¹⁰⁶⁸ 6/14/04 Citibank Deed of Trust, B 00007851-7860; also see 2/11/04 Citibank Account Agreement and
Disclosure, B 00008085-91.

1069 j 1/13/09 written response from Mr. Weidenfeld's legal counsel to Subcommittee questions, PSI-Abubakar &
Weidenfeld 01-0030.

¹⁰⁷⁰ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0004.

¹⁰⁷¹ Subcommittee interview of Citibank, April 24, 2009. See B00008796-9 for complete list of advances received
by Ms. Douglas and payments made by Ms. Douglas.

1072 j i/i 3/09 written response from Mr. Weidenfeld's legal counsel to Subcommittee questions, PSI-
Abubakar_&JVeidenfeld 01-0019.

¹⁰⁷³ See list of accounts, B00008784.

¹⁰⁷⁴ Id; B00001440-42.

¹⁰⁷⁵ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0002.

¹⁰⁷⁶ Id.

¹⁰⁷⁷ Id. at PSI-Citi-34-0003 ("If the Gede Foundation accounts had been opened after 2006, they would have been
required to provide information relating to its purpose, the exact geographical area it serves, its organizational
structure, its funding criteria, its affiliation with other entities, governments or groups, as well as its financial
information including internal controls and audits. In addition, the entity and its principals would have been subject
to background checks in World Check or a comparable database, which may have revealed further information
about Ms. Douglas's background.").

1078 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0003. AUN opened its doors to
students for the first time in September 2005.

193

university to the account, it should have been re-categorized as a business account, and that its continuing to operate as a personal account was "inconsistent with [Citibank] practice." ^0/

Seven months later, on January 13, 2006, Ms. Douglas opened another personal checking account that was also used by AUN, Checking Account No. 1208993341.¹⁰⁸⁰ This account initially referred solely to Ms. Douglas who was the only signatory.¹⁰⁸¹ Later, on an unspecified date, she changed the account name to: "Jennifer Douglas/ABTl-American University," which again refers to AUN by an earlier name.¹⁰⁸² On February 27, 2006, Buford George Peterson, AUN's Vice President of Finance and Administration,¹⁰⁸³ was added as a co-signatory on the account. In March 2006, the account name was changed a third time, to "Buford George Peterson/ABTI-American University."¹⁰⁸⁵ Citibank told the Subcommittee that, like the first AUN account, "this account remained incorrectly categorized as a personal checking account following the title change."¹⁰⁸⁶

Additional Personal Accounts. In 2005, Ms. Douglas opened five more personal accounts, three of which were opened for only a short period. The short-term accounts were Checking Account No. 1209739572, which Ms. Douglas opened on April 5 and closed six months later on Oct. 31, 2005; and a Checking Account No. 1209763257 and savings account bearing the same identifying number, both of which were opened on May 12 and closed four months later in September 2005.¹⁰⁸⁷ These accounts held minimal funds. The two longer term accounts were Checking Account No.1208896250 and Savings Account No. 1208896269, both of which were opened on September 22, 2005, and closed in 2007.¹⁰⁸⁸ The checking account held limited funds which were transferred over the course of six months to the Gede Foundation; the account then went dormant until it was closed. The savings account was opened in the name of Ms. Douglas and one of her sons. At times it had minimal funds, but from mid-2006 to mid-2007, a few large transfers went into and out of the account each month, involving $100,000 to $200,000 at a time.¹⁰⁸⁹

Safe Deposit Boxes. In addition to her financial accounts at Citibank, in December 2001 and January 2004, Ms. Douglas opened two safe deposit boxes at the bank.

⁰⁷⁹ Id.

⁰⁸⁰ See list of accounts prepared by Citibank, B00008784.

⁰⁸¹ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0003.

⁰⁸² Id.

⁰⁸³ See 9/21/06 internal American University memorandum, PAU0108924

⁰⁸⁴ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0003.

⁰⁸⁵ Id;

⁰⁸⁶ Id.

⁰⁸⁷ See list of accounts, B00008784. Citibank told the Subcommittee that the signature card for Account No.
1209763257 could not be located. 7/24/08 letter from Citibank to the Subcommittee, PSI-Citi-32-0001.

⁰⁸⁸ See list of accounts, B00008784.

⁰⁸⁹ S.ee, e.g., May 2006 account statement, B00006085 ($100,000 deposit); June 2006 account statement,
B00006083 ($100,000 deposit and $200,000 in withdrawals); October 2006 account statement, B00006077
($130,000 in deposits); December 2006 account statement, B00006075 ($200,000 deposit and $75,000 in
withdrawals).

¹⁰⁹⁰ See list of accounts, B00008784.

194

Citi Account Activity. From 2000 to 2007, Ms. Douglas accepted multiple large wire transfers into her accounts, totaling nearly $20 million, from offshore corporations, including Siemens AG, LetsGo Ltd. Inc., Guernsey Trust Company Nigeria Ltd., Sima Holding Ltd., and China Castle Investments Ltd. Most of the incoming funds were wire transferred into her initial persona] checking account. In 2001 and 2002, for example, Ms. Douglas accepted wire transfers totaling nearly $2.2 million in suspect payments from Siemens AG. On January 30, 2003, she received a single wire transfer for $500,000 from China Castle Investments. Citibank told the Subcommittee that it had no further information about this company and deemed the transfer "questionable."¹⁰⁹¹ From 2003 to 2007, another $17 million was wire transferred into her account by LetsGo Ltd., the Guernsey Trust Company, and Sima Holdings Ltd. Banking and credit card records show that, over the years, Ms. Douglas spent much of the money she received to support a lavish lifestyle as well as supporting the Gede Foundation and AUN.

Siemens Payments. As explained earlier, in December 2008, the U.S. Department of Justice (DOJ) and U.S. Securities and Exchange Commission (SEC) filed criminal and civil pleadings alleging that Siemens AG had violated the U.S. Foreign Corrupt Practices Act (FCPA) and engaged in a wide-ranging pattern of paying bribes to foreign officials to advance its interests in several countries.¹⁰⁹² Siemens pled guilty to violating the books and recordkeeping requirements of the FCPA.¹⁰⁹³ One provision in the SEC complaint alleged as follows:

"[Approximately $2.8 million of the bribe payments was routed through a bank account in Potomac, Maryland, in the name of the wife of a former Nigerian Vice President. The Vice President's wife, a dual U.S.-Nigerian citizen living in the United States, served as the representative of a business consultant that entered into fictitious business consultant agreements ... but did no actual work for Siemens. The purpose of these payments was to bribe government officials. Other corrupt payments included the purchase of approximately $172,000 in watches for Nigerian officials designated in internal Siemens records as 'P.' and 'V.P.,' likely referring to the President and Vice President of Nigeria."¹⁰⁹⁴

¹⁰⁹¹ See B00007059; 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0004. China
Castle Investments did not appear again in the Douglas-related banking records.

¹⁰⁹² See United States v. Siemens Aktiengesellschaft, (USDC DC), Case No. Cr. 08-368 (Dec. 12, 2008); SEC v.
Simens Aktiengesellschaft. (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12, 2008), Complaint. German
authorities also filed charges. See also Department of Justice press release, "Siemens AG and Three Subsidiaries
Plead Guilty, to Foreign Corrupt Practices Act Violations and Agree to Pay $450 in Combined Criminal Fines," No.
08-1105 (Dec. 15, 2008) (DOJ Acting Assistant Attorney General said: "Today's filings make clear that for much
of its operations across the globe, bribery was nothing less than standard operating procedure for Siemens." SEC
Director of Enforcement said: "This pattern of bribery by Siemens was unprecedented in scale and geographic
reach. The corruption involved more than $1.4 billion in bribes to government officials in Asia, Africa, Europe, the
Middle East and the Americas.").

¹⁰⁹³ See United States v. Siemens Aktiengesellschaft, (USDC DC), Case No. Cr. 08-368 (Dec. 12, 2008),
Information, Plea Offer; SEC v. Simens Aktiengesellschaft. (USDC DC), Case No. 1:08-cv-02167-RJL (Dec. 12,
2008), Consent of Defendant Siemens Aktiengesellschaft; Department of Justice press release, "Siemens AG and
Three Subsidiaries Plead Guilty to Foreign Corrupt Practices Act Violations and Agree to Pay $450 in Combined
Criminal Fines," No. 08-1105 (Dec. 15, 2008).

¹⁰⁹⁴ SEC v. Simens Aktiengesellschaft, (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12, 2008), Complaint, at
paragraph 50.

195

The Subcommittee contacted Siemens about this allegation and also reviewed the Citibank account records. The Subcommittee identified Citibank records showing three wire transfers from Siemens AG, in 2001 and 2002, that together provided over $1.7 million to Ms. Douglas' personal checking account at Citibank. This chart identifies those wire transfers.

Siemens Wire Transfers to Douglas Account at Citibank: 52096374 Using Citibank Wire Transfer Records
Wire Transfer Directed To	Date	Amount	Bates
J.E. Douglas	4/12/01	$450,703.79	B00007975, B00007962-63, B00007972
J.E. Douglas	10/01/01	$461,440.92	B00007979, B00007965-66
J.E Douglas Steradian Co. UK	1/28/02	$860,500.00	B00007989, B00007968-69, B00007984
SOURCE: Citibank		TOTAL: $1,772,644.71

Chart prepared by Subcommittee

When contacted by the Subcommittee, Siemens confirmed the information in the SEC complaint and said that the allegations in the complaint referred to payments made by the company to Ms. Douglas and to wire transfers sent to her checking account at Citibank in Potomac, Maryland.¹ ⁹⁵ Siemens told the Subcommittee that it had asked an outside law firm, Debevoise & Plimpton, to conduct an independent investigation into corruption allegations, which included a review of the payments made by Siemens related to Ms. Douglas. Siemens told the Subcommittee that the law firm confirmed not only that Siemens AG had sent wire transfers to Ms. Douglas' account at Citibank, but also that it had sent a wire transfer to her at another bank and made nearly $2 million in additional cash payments to her over a three-year period, from 2000 to 2003. Siemens told the Subcommittee that those wire and cash payments had been made to "J.E. Douglas" or two companies she beneficially owned, "J.E Douglas Steradian Co. UK L," or "Peniel Inc. UK Ltd."

The Subcommittee contacted the SEC for additional information related to its complaint, but the SEC declined to elaborate due to an ongoing investigation into individuals involved in the Siemens misconduct.¹⁰⁹⁶ The Subcommittee also showed the Citibank wire transfers to Ms. Douglas' legal counsel and requested an explanation of the $1.7 million in wire transfers from Siemens to her account. Her legal counsel did not provide an explanation.

Siemens Payment and Gede Foundation. According to Citibank records, one of the Siemens wire transfers for $860,500 was deposited into Ms. Douglas' personal checking account on January 28, 2002. Three days earlier, on January 25, 2002, Ms. Douglas had fomied the Gede

Subcommittee interviews of Siemens AG, January 14 and 22, 2010. Subcommittee interview of SEC, January 12, 2010.

197

04/25/03	$299,965.00	B 00007078	mm	11/03/06	$349,980.00	B00000812
07/02/03	$249,965.00	B 00007094		12/06/06	$349,980.00	B 00000813
10/14/03	$149,965.00	B00007114		12/08/06	$50,000.00	B00000814
11/03/03	$249,965.00	B00007119		12/29/06	$350,000.00	B 00000820
02/12/04	$249,965.00	B00007133		01/31/07	$350,000.00	B00000819
09/08/04	$149,980.00	B00007167		03/06/07	$350,000.00	B 00000818
11/12/04	$249,985.00	B00007178		04/02/07	$350,000.00	B 00000815
12/09/04	$249,965.00	B00007183		04/30/07	$449,980.00	B 00000817
01/06/05	$99,980.00	B00007188		05/31/07	$350,000.00	B00000816
02/08/05	$199,980.00	B00007192		TOTAL: $3,049,940.00
03/10/05	$199,980.00	B00007197
04/11/05	$100,000.00	B 00007202
05/09/05	$275,000.00	B 00007207
07/07/05	$150,000.00	B 00007218
07/12/05	$100,000.00	B00007219
09/07/05	$200,000.00	B 00007228
10/11/05	$250,000.00	B 00000978
11/14/05	$250,000.00	B 00007239
12/05/05	$450,000.00	B 00007245
01/11/06	$299,980.00	B 00007251
02/21/06	$300,000.00	B 00000979
03/06/06	$300,000.00	B 00000966
04/03/06	$300,000.00	B 00000958
05/04/06	$299,980.00	B 00007277
06/01/06	$300,000.00	B 00000957
07/10/06	$300,000.00	B 00000965
08/04/06	$300,000.00	B 00000975
09/05/06	$300,000.00	B 00000962
10/05/06	$350,000.00	B 00000956
TOTAL: $7,424,620.00

Chart prepared by Subcommittee

Another $5.5 million in wire transfers from LetsGo were deposited into the first Douglas/AUN checking account at Citibank. AUN first opened its doors to students in September 2005; these wire transfers began in mid-2005 and continued for the next two years, providing the account with a large sum every montli or two, beginning with $100,000 and eventually increasing to $300,000 per payment. This chart identifies those wire transfers.

Wire Transfers from LetsGo Ltd. to Douglas/AUN Account at Citibank: 1209739556
From LetsGo Account at Wegelin & Co.
Date	Amount	Bates
05/09/05	$100,000.00	B 00006533
06/07/05	$100,000.00	B 00006529
09/07/05	$150,000.00	B 00006520
10/06/05	$150,000.00	B 00006515
11/14/05	$150,000.00	B 00006510

198

01/11/06	$150,000.00	B 00006499
02/21/06	$150,000.00	B00006496
03/07/06	$200,000.00	B 00006491
04/03/06	$200,000.00	B 00000959
05/04/06	$300,000.00	B 00000954
06/01/06	$300,000.00	B 00006481
07/10/06	$300,000.00	B 00000953
08/08/06	$300,000.00	B 00000967
09/05/06	$300,000.00	B 00000964
10/05/06	$300,000.00	B 00000955
11/03/06	$300,000.00	B 00000977
12/06/06	$300,000.00	B 00000974
12/29/06	$300,000.00	B 00000976
01/31/07	$300,000.00	B 00000972
03/05/07	$300,000.00	B 00000960
04/03/07	$300,000.00	B 00000970
05/03/07	$300,000.00	B 00000963
05/31/07	$300,000.00	B 00000969
SOURCE: Citibank	TOTAL: $5,550,000.00	1

Chart prepared by Subcommittee

In addition, from 2004 to 2005, Sima Holdings sent four wire transfers totaling nearly $700,000 to Ms. Douglas. Most of these funds were deposited into her personal checking account, but also, on one occasion, provided funds to the Douglas/AUN account. This chart identifies those wire transfers.

Wire Transfers from Sima Holding Ltd. to Douglas and Douglas/AUN Accounts at Citibank
Citibank Account No.	Date	Amount	Bates
52096374 (Douglas)	06/08/04	$249,965.00	B00007152
52096374 (Douglas)	06/08/05	$100,000.00	B 00007213
52096374 (Douglas)	08/11/05	$200,000.00	B00007223
1209739556 (Douglas/AUN)	08/11/05	$150,000.00	B 00006525
SOURCE: Citibank		TOTAL: $699,965.00

Chart prepared by Subcommittee

In addition to the wire transfers from these five offshore corporations, Ms. Douglas received several large wire transfers in 2003, totaling nearly $500,000, from unidentified persons, This chart identifies those wire transfers.

Wire Transfers from Unidentified Originators to Douglas Account at Citibank: 52096374
Originator of Wire	Date	Amount	Bates
, "A"Client"	02/06/03	$184, 970	B 00007064
"A Client"	02/14/03	$159,970	B 00007065
"A Client"	02/21/03	$154,970	B 00007065
SOURCE: Citibank		TOTAL: $499,610

Chart prepared by Subcommittee

199

Ms. Douglas used much of the offshore funds sent to her personal checking account to pay personal bills and expenses, including roughly $50,000 per month in credit card bills, and $20,000 to $30,000 per month to the Weidenfeld law firm and her accountants, Penn, Schoen, Beiiand Associates. In early 2002, she also transferred funds to the Gede Foundation accounts at Citibank and Chevy Chase Bank. In addition, over five years, from the university's inception to the closing of her Citibank accounts, Ms. Douglas transferred a total of about $763,000 to various American University and AUN accounts.

The following charts show the $763,000 that Ms. Douglas transferred on behalf of AUN, including about $330,000 that Ms. Douglas transferred from her Citibank personal checking account to an American University account at Chevy Chase Bank, and another $47,000 from her personal checking account to an AUN account at Guaranty Trust Bank in Nigeria. In addition, she transferred about $384,000 from the second Douglas/AUN account at Citibank to the AUN account at Guaranty Trust Bank in Nigeria.

Transfers from Douglas Personal Checking Account at Citibank: 52096374 to AUN Accounts
To AU account at Chevy Chase Bank			To AUN account at Guaranty Trust Bank
Date	Amount	Bates	Date	Amount		Bates
04/21/03	$100,000.00	B00007078 1	08/07/06	$12,400.00		B 00007295
04/28/03	$100,000.00	B00000906 1	08/07/06	$12,030.00		B 00007295
08/05/03	$100,000.00	B00000858 1	08/07/06	$8,730.00		B 00007295
09/13/05	$1,045.00	B00007229 1	01/17/07	$1,750.00		B 00007329
02/08/06	$2,000.00	B00007257 1	05/03/07	$2,250.00		B 00007357
10/31/06	$221,36	B00007309 I	05/03/07	$10,520.00		B 00007357
01/22/07	$2,186.00	B00007329 \|	SOURCE: CITIBANK		TOTAL: $47,680.00
05/04/07	$26,000.00	B00007357 \|
Source: Citibank	TOTAL:$331,452.36

Chart prepared by Subcommittee

Wire Transfers from Douglas/AUN account at Citibank: 1208993341 to AUN account at Guaranty Trust Bank
Date	Amount	Bates
04/03/06	$16,599.24	B 00006612
05/01/06	$6,244.43	B 00006607
06/01/06	$7,196.65	B 00006602
07/31/06	$5,853.62	B 00006598
10/31/06	$21,162.03	B 00006585
12/04/06	$1,000.00	B 00006574
12/28/06	$44,716.77	B00006576
02/01/07	$45,957.00	B 00006565
03/13/07	$36,100.00	B 00006559
03/29/07	$54,435.64	B 00006561
04/30/07	$50,000.00	B 00000900

200

06/04/07	$2,030.82	B 00006543
06/04/07	$92,798.70	B 00000898
SOURCE: Citibank	TOTAL: $384,094.90

Chart prepared by Subcommittee

Account Concerns. Citigroup told the Subcommittee that it was aware of the offshore wire transfers going into the Douglas accounts and, at various points during the seven years the Douglas-related accounts were open, investigated specific transactions before deciding to close all the accounts in 2007.^u02

One such account review took place in 2003, when LetsGo and China Castle Investments sent multiple wire transfers to Ms. Douglas' personal checking account totaling nearly $1.7 million. Citibank told the Subcommittee that it had deemed these transactions "questionable."¹¹⁰³

At one point, Ms. Douglas provided an explanation of the source of the funds in her accounts in a letter that was retained in her Citibank account files.¹¹⁰⁴ In the letter dated November 21, 2003, addressed "To Whom It May Concern," Ms. Douglas wrote:

"I am stating exactly how I get my income. From Gede, I accept a minimal income of 1076.23, with an agreed yearly bonus of $50,0000.00, [sic] paid in [a] lump [sum] yearly after every fundraising. I receive a yearly maintenance income from spouse of $500,000.00. Monthly dividends and interest from account excluding the Neuberger Berman account is $1,657.50. I also have an investment trust fund with Neuberger Berman with a standing balance of 5 million dollars plus."¹¹⁰⁵

She also wrote that her home was valued at $3 million, with no outstanding mortgage. ^l The Douglas letter did not provide any information, however, about the offshore corporations sending funds to her accounts or explain the source of the funds provided by her husband.

Three years later, in 2006, Citibank raised additional questions about the Douglas/AUN accounts. Citigroup told the Subcommittee that routine account monitoring had detected what appeared to be business activity in what was supposed to be Ms. Douglas' personal checking account, including wire transfers involving LetsGo and the Guernsey Trust Company. Citigroup told the Subcommittee: "[B]usiness activity in a personal account raises questions because it is inconsistent with the information the customer provided the bank at the time of account opening."¹¹⁰⁸

¹¹⁰² 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0004 (Citibank wrote: "Beginning
in 2001 through 2007, Citigroup identified and investigated various issues in Ms. Douglas's accounts.").

¹¹⁰³ Id.

^1,04 11/21/03 letter from Ms. Douglas addressed "To Whom It May Concern," B 00007910.

¹¹⁰⁵ Id. - ~-

¹¹⁰⁶ Id.

¹¹⁰⁷ 3/19/09 Citibank's letter,in response to Subcommittee questions, PSI-Citi-34-0004. Citi told the Subcommittee
that it had not identified any transactions of concern involving Sima Holding Ltd during investigations of Ms.
Douglas' accounts.

201

Citibank told the Subcommittee that it spoke with Ms. Douglas concerning the Douglas/AUN accounts and told her that she needed to open business accounts in order to continue conducting transactions involving AUN.¹¹⁰⁹ Citibank said Ms. Douglas "responded that she had tried to open a business account but was unable to do so because she lacked the proper documentation."'^uo

According to Citibank, in early 2007, it learned for the first time that Ms. Douglas was married to a foreign official.¹¹¹¹ Mr. Abubakar was then finishing his second term as Vice President of Nigeria. On April 2, 2007, Ms. Douglas wrote to two AUN and AU officials that "Citibank wrote to me requesting that 1 close the ABTI [AUN] account because it is a business account being run from an individual account. They requested the account be closed by April 17, but 1 am trying to get an extension to enable us [to] look elsewhere to open an account."¹¹¹

On April 9, 2007, a Citibank compliance officer wrote to the Citibank branch manager about the Douglas/AUN accounts as follows:

"[P]lease find out from customer what type of company/business is 'Letsgo Limited Inc' located in Panama and which has accounts with a bank in Switzerland. Also, what type of company is Guernsey Trust Company Nigeria. These two companies sent multiple large ($300,000-) wire transfers to our customer's account. We would like to thoroughly understand in what activities the customer is involved before we extend the close out and establish a new business account."

The Citibank branch manager replied:

"I have spoken to Ms. Douglas and she has informed me that Letsgo Limited and Guernsey Trust are both oil services companies. Since her husband is the owner of both companies, and is a very public figure, the trust accounts run those businesses for him. In turn, the funds from both companies are used to pay the salaries for the teachers in the ABTI-American University account. Funds from those businesses] also go into her personal accounts as well. She has expressed a desire for her personal account to remain open, and has said,she will move the ABTI-American University account elsewhere."

This Citibank email states that Ms. Douglas told the bank that LetsGo and Guernsey Trust Company were both owned by her husband. But LetsGo is beneficially owned by Mr. Volpi and his relatives, not by Mr, Abubakar. The Guernsey Trust Co. manages the Abubakar Blind Trust, and the Subcommittee has been told that Mr. Abubakar was not and is not an owner of the company, although he is a beneficiary of the trust it manages.

In 2007, Citigroup decided to close not only the AUN accounts, but all of the accounts related to Ms. Douglas. It told the Subcommittee:

¹¹⁰⁹ Id. at PSI-Citi-34-0005. ^11,0 Id. atPSI-Citi-34-0005.

¹¹¹¹ Subcommittee interview of Citibank, April 24, 2009.

¹¹¹² 4/2/07 email from Ms. Douglas to American University, PAU107446

¹¹¹³ 4/9/07 internal Citibank email, B 00008102

¹¹¹⁴ 4/16/07 internal Citibank email, B 00008535-6.

202

"Because the business activity in her personal account continued after that discussion [in 2006], and because in early 2007, CB was aware of Ms. Douglas's status as the wife of the Vice President of Nigeria, as well as certain allegations surrounding Ms. Douglas and her husband, CB Compliance instructed the branch to close Ms. Douglas's accounts."¹¹¹⁵

In an undated internal document, Citibank expressed the following concerns with Ms. Douglas's accounts: "Wires that originate from businesses where relationships with the customer cannot be established, followed by transfers of the funds between accounts that ultimately end in the funds being sent to various individuals and businesses appears suspicious."¹¹¹⁶ In addition, an internal email dated August 10, 2007, from a Citibank fraud investigator stated:

"Suspicious activity with advances from employer directly to Citibank accounts (to pay out bonus income). Still need to prpbe into documents received to review the 500k received yearly maintenance income from spouse. At this time have not been able to locate the documentation to verify the spousal maintenance. Highly suspect that someone claiming 30k in income to the IRS could obtain a 2.7 million dollar home with no mortgages. Lifestyle of the borrower is not reflected on the tax returns."¹ ¹⁷

Edward Weidenfeld, Ms. Douglas' legal counsel, told the Subcommittee that, in the spring of 2007, he learned that the Citibank AUN accounts would be closed. He told the Subcommittee that he also learned at that time "that salaries of expatriate faculty and staff were paid by wire transfer" from the Douglas/AUN Citibank accounts, and "without this or a similar account, the ability of AUN to retain and recruit non-Nigerian staff would be severely

1118

limited." He said that on behalf of the Abubakars and AUN, he "engaged in intensive discussions urging AU to provide this payment facility for expatriate staff and faculty," but "American University's financial office would not open such an account because AU wanted to maintain the separate identities of each institution."

Citibank told the Subcommittee that it ultimately gave Ms. Douglas additional time before closing the Douglas/AUN accounts, because Ms. Douglas was out of the country, and granting an extension would permit all account closings to occur at the same time. Citibank closed her checking and savings accounts by the end of June, and closed all remaining accounts by the end of August 2007.^mo

¹¹¹⁵ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0005. On March 30, 2007, a
Citibank Compliance Office, expressed concern about the ".. .sensitive nature of this closeout and the reputational
risk it may cause." See 3/30/07 internal Citibank email, B 00008106.

¹¹¹⁶ Undated internal Citibank document, B 00008425.

¹¹¹⁷ 8/10/07 internal Citibank email, B 00008369.

¹¹¹⁸ A3/09 written response from Mr. Weidenfeld's legal counsel to Subcommittee questions, PSI-Abubakar and
Weidenfeld 0\ -0023.'

¹¹¹⁹ 3/19/09 Citibank's letter in response to Subcommittee questions, PSI-Citi-34-0005.

¹¹²⁰ Id.

203

(2) Chevy Chase

A year after opening accounts at Citibank, Ms. Douglas also opened one account at Chevy Chase Bank in Potomac, Maryland, and three accounts at Chevy Chase Trust Company, then a subsidiary of Chevy Chase Bank. These accounts were active for about seven years, from 2001 to 2008. Three of the accounts were opened in July 2001, as investment accounts for the Jennifer Douglas Abubakar (JDA) Family Trust. The account at the bank was opened six months later, in February 2002, for the Gede Foundation which had been formed the prior week. Chevy Chase Bank told the Subcommittee that it did not realize for five years that the two sets of accounts were related, since the JDA Family Trust accounts listed "Jennifer Douglas-Abubakar" as the trust beneficiary, while the Gede Foundation listed "Jennifer Douglas" as one of two account signatories. In addition, Chevy Chase Bank opened all of these accounts without being aware of Ms. Douglas' PEP status.¹¹²¹ In 2004, after Chevy Chase Bank determined that Ms. Douglas qualified as a PEP client, it increased its monitoring of the JDA Family Trust account, but not the Gede Foundation account. It took another three years, until 2007, for the bank to realize that the Gede Foundation account was linked to the same Ms. Douglas.

None of the Chevy Chase accounts associated with Ms. Douglas received large wire transfers from offshore corporations as happened at other banks. The JDA Family Trust Account, for example, did not receive any new funds; it simply invested $5 million in preexisting trust proceeds. While the Gede Foundation did receive new funds, they came primarily from the Gede Foundation account at Citibank, and Chevy Chase Bank had no reason to know the Citibank Gede account was receiving funds that came from offshore corporations and the suspect Siemens payments.

In 2006, after hearing Ms. Douglas and her husband Mr. Abubakar mentioned in connection with the investigation of U.S. Congressman Jefferson, Chevy Chase Bank grew concerned about the source of funds in the JDA Family Trust account and decided to resign as trustee. Chevy Chase Trust Company told Ms. Douglas that it intended to close the account, but was persuaded by her and her lawyer to continue to hold the trust funds as a custodian until a new trustee was found -. a process that took two years until 2008. In 2007, Chevy Chase Bank learned as a result of a Subcommittee inquiry, that Ms. Douglas also controlled the Gede Foundation account. The bank and the trust company closed all four Douglas-related accounts in 2008.

JDA Family Trust Accounts. According to a copy of the trust instrument in Chevy Chase Bank records, the JDA Family Trust was established in October 2000, by the Merrill Lynch Trust Company which served as the sole trustee and investment manager. " The purpose of the trust was "to make gifts to Jennifer Douglas-Abubakar and her family, to promote

¹¹²¹ At the time it opened the accounts in July 2001, Chevy Chase Bank verified that Ms. Douglas Abubakar was a
U.S. citizen and did not appear on the OF AC SDN list. 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer
Brown* to the Subcommittee, PSI Chevy Chase -6-0002. At that time, the Patriot Act of 2001 was not yet enacted
into law, and its provisions calling for enhanced monitoring of PEP accounts would not become legal requirements
until 2002.,,'

¹¹²² See 10/10/00 JDA Family Trust instrument, JDJ)00002-30; 9/5/08 letter from Chevy Chase Bank's legal
counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-06-0002.

204

the well being of those persons, to preserve and enhance their financial assets, and to offer a framework for family governance."¹¹²³ Chevy Chase described the Trust internally as "designed to permanently move funds to a trust for the benefit of Ms. Douglas-Abubakar and her children" and to provide "a nest egg to protect Jennifer Douglas-Abubakar and her children from negative life events concerning Mr. Abubakar."¹¹²⁴ According to Ms. Douglas, her husband provided the

1 1 9S

initial funding for the trust as a gift to her, and she used that money to fund the trust.

Ms. Douglas served as the Trust grantor, "protector," and one of its beneficiaries.¹¹²⁶ The other beneficiaries were her children. hi her role as Trust Protector, Ms. Douglas was given authority to remove or replace the trustee. The trustee was given discretion to invest the trust funds and make trust distributions.¹¹²⁸ After Merrill Lynch apparently invested the trust funds aggressively and reduced the trust principal from $6 million to $5 million over six months, Ms. Douglas decided to find a new trustee, and to split the trustee and investment management functions.¹¹²⁹ On July 20, 2001, she removed Merrill Lynch and appointed Chevy Chase Trust Company as the replacement trustee.¹¹³⁰ Ms. Douglas had intended to appoint her brother, Francis Iwenjiora as a co-trustee along with Chevy Chase Trust Company, but he was apparently out of town, and was added as a co-trustee a year later on July 31, 2002. She also selected the Neuberger Berman Trust Company, which is associated with the Lehman Brothers, as the investment manager.'' ²

On July 25, 2001, the JDA Family Trust opened three investment accounts at Chevy Chase Trust Company:^x ¹³³ Fixed Income Account No. CH200121; Value Equity Account No. CH200122; and Blend Equity Account No. CH200123.¹¹³⁴ During the time the trust accounts were at Chevy Chase, no new funds were added; the bank simply accepted the trust funds transferred from Merrill Lynch and allowed the Neuberger Berman Trust Company to determine the specific investments.

¹¹²³ 10/10/00 JDA Family Trust instrument, JD J)00003.

¹¹²⁴ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase 06-
0007.

¹¹²⁵1/30/06 internal Chevy Chase Bank memorandum, JD_004360.

¹¹²⁶ 5/8/07 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase -
CL000003.

¹¹²⁷ Chevy Chase Box 1, JD_000243-000319.

^1,2810/10/00 JDA Family Trust instrument, JD_000003.

¹¹²⁹ See 8/18/04 internal Chevy Chase email discussing account, JD_004176.

¹¹³⁰ See "Revocation of Prior Appointment and New Appointment of Successor Co-Trustees," JD_000218;
"Removal of Trustee and Appointment of Successor Co-Trustees," JDJ300031. 9/5/08 letter from Chevy Chase
Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase 06-0002; 8/18/04 internal Merrill
Lynch email, JD_004176,

¹¹³¹ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase 06-
0002.

¹¹³² See Chevy Chase memorandum about the JDA Family Trust, JD_000219; 10/26/01 letter from Neuberger
Berman.Trust Company to Ms. Douglas, JD_000221.

¹¹³³ 7/25/01 Chevy Chase Trust Account Acceptance Form, JDJ)00108-09.

5/8/07 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase CL 000003. Several Chevy Chase managers then handled these accounts. Chevy Case Box 1, JDJ300227-000242. See also 8/18/04 internal Chevy Chase email discussing account, JD_004176.

205

Gede Foundation Account. About six months later, on February 1, 2002, Ms. Douglas opened a commercial checking account at Chevy Chase Bank for the Gede Foundation, Checking Account No. 196430326-5.^n?i The Gede Foundation had been formed the prior week under the laws of the District of Columbia. The account opening documentation listed two account signatories: Cynthia Ticao, the Gede Foundation executive director, and "Jennifer Douglas," the Gede Foundation president.*^13<s Because Ms. Douglas did not use the name "Abubakar" when opening this account, Chevy Chase Bank apparently did not realize that she was the same person who had opened the JDA Family Trust account.

Ms. Douglas initially funded the Gede Foundation account with a $250,000 check from her personal checking account at Citibank."³⁷ As shown in an earlier chart, three days earlier, on January 28, 2002, Ms. Douglas' checking account had received a wire transfer in excess of $860,000 from Siemens AG, a payment which was part of a pattern of bribery payments Siemens made to advance its business interests around the globe. The timing of this Siemens payment, followed by the wire transfer to the Gede Foundation account, suggests that the Foundation account was initially funded with suspect funds, but there would be no reason for Chevy Chase Bank to know the transfer was suspicious.

Over the next six years, from 2002 to 2008, Ms. Douglas provided a steady stream of wire transfers from her Gede Foundation account at Citibank, totaling at least $535,000 altogether, to the Gede Foundation account at Chevy Chase Bank. Chevy Chase told the Subcommittee: "During the course of the [Gede Foundation] relationship, the account has been funded through a regular pattern of incoming wires that have averaged approximately two per month. Wire instruction infonnation indicates that all incoming wires originated from a Gede Foundation account at Citibank."¹¹³⁸ Because the funds were wire transferred from an account at another U.S. bank, Chevy Chase Bank did not know the true source of the funds, which came either from offshore corporations or the suspect Siemens wire transfers. From 2002 to 2008, the account paid out a total of about $215,000, with the largest single expenditure, about $75,000, for a fundraising event at a hotel.

This chart identifies seven transactions involving $50,000 or more involving the Gede Foundation account at Chevy Chase Bank.¹¹³⁹ After 2003, none of the wire transfers into or out of the account exceeded $50,000.

Gede Foundation Account at Chevy Chase Bank
Date .	Amount	Originator	Beneficiary	Bates
2/1/02- '	$250,000.00	Check from Douglas personal checking account at Citibank	Gede Foundation	GF_000002-03
9/15/03	$50,000.00	Wire from Gede Foundation Citibank 17581366	Gede Foundation Chevy Chase	GF_000016-17

^1,35 See Chevy Chase Bank Signature Card, GF_000001.

¹¹³⁶ Id.

¹¹³⁷ Copy of Douglas personal check for $250,000, GF 000002-03; Chevy Chase account statement, GF_000006.
¹¹³⁸5/8/07 letter^from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase
CL000001-05,at05..

¹¹³⁹ See 4/9/07 Chevy Chase wire transfer receipts, GF 000028-39; GF 000040-209.

206

9/17/03	$50,000.00	Wire from Gede Foundation Citibank 17581366	Gede Foundation Chevy Chase	GFJ300018-19
9/18/03	$60,000.00	Wire from Gede Foundation Citibank 17581366	Gede Foundation Chevy Chase	GF_000020-21
9/29/03	$75,000.00	Check from Gede Foundation Chevy Chase	Marriott Wardman Park Hotel	GF_000026-27
10/08/03	$50,000.00	Wire from Gede Foundation Citibank 17581366	Gede Foundation Chevy Chase	GF_000022-23
TOTAL: $535,000.00		SOURCE: Chevy Chase Bank

Chart created by Subcommittee

$400,000 Loan. In early 2004, Ms. Douglas transferred $400,000 from the JDA Family Trust account to her personal checking account at Citibank, describing it as a "loan" needed to fund charitable work in Nigeria. Ms. Douglas alerted the bank to her plans for the loan in a December 10, 2003 email sent to the Chevy Chase Trust Company:

"Just want to alert you of a possible withdrawal on the account. I am trying to open a HIV/AIDs center (that would incorporate testing, counseling, and HIV/AIDS awareness education) in Nigeria. ... I have applied to my bank for the loan. They have not turned me down but in the event they do, I will have to withdraw the sum of $400,000 (four hundred thousand) to buy the equipments needed for the center. The monies will be returned as well."

1140

At first, Chevy Chase Trust Company expressed concern that the loan would be contrary to the terms of the JDA Family Trust. In a December 12, 2003 email, Chevy Chase wrote to Ms. Douglas:

"There are some issues I believe we should discuss regarding this matter. As you know, the JDA Family Trust was established to provide benefits for you and your family. The purpose of the withdrawal, as I understand it, is to fund a foundation to help people in need outside of your family. As wonderful a goal as that is, there are legal restrictions on the use of trust funds that may prevent us from making such a distribution. I am reviewing the trust language now to see what it says in that regard."

Ms. Douglas responded: "The money is a loan to me and I have a right to request that. I could have equally said that I need it to make a purchase for something. ... Kindly send the money to the account that I have suggested and consider it a loan to be repaid back." She further stated that the money is for an "HIV/AIDS center (that would incorporate testing, counseling, and HIV/AIDS awareness education) in Nigeria. I need certain equipments for the center. While we have gotten over a million in funding, we need extra money to buy our equipments, until other promised funding comes in").

¹¹⁴⁰ 12/10/03 email from .Ms. Douglas to Chevy Chase Trust, JD_000255.

¹¹⁴¹ 12/12/03 email from Chevy Chase Trust to Ms. Douglas, JD_000253.

¹¹⁴² 12/12/03 email from Ms. Douglas to Chevy Chase Trust, JD_000257.

¹¹⁴³ 12/10/03 email from Ms. Douglas to Chevy Chase Trust, JD_000256.

207

Chevy Chase ultimately allowed the loan and provided Ms. Douglas with the funds. Chevy Chase noted that "the terms of the JDA Family Trust entitle Ms. Douglas-Abubakar to request the distribution of funds that are in her best interest," and allow "a distribution 'to acquire, begin or operate a business or to engage in a profession."'¹¹⁴⁴ Chevy Chase reported that because Ms. Douglas-Abubakar's "stated purpose for borrowing from the trust was to support a center she was running ... [a] loan for this purpose met the conditions of the trust."''⁴⁵

On January 10, 2004, Chevy Chase authorized the $400,000 loan from the JDA Family Trust to Ms. Douglas.^U45 On January 12, 2004, Ms. Douglas signed a promissory note promising to repay the loan.¹¹⁴⁷ On January 14, 2004, Chevy Chase sold funds from the trust investments, and then wire transferred $400,000 from the JDA Family Trust account to Ms. Douglas' personal checking account at Citibank. The $400,000 was sent to her Citibank Account No. 52096374 in two installments, one transfer of $280,000 on January 14, 2004,ⁿ⁴⁸and another for $120,000 on January 21, 2004.¹¹⁴⁹ Ms. Douglas then transferred the funds from her account to the Gede Foundation account at Citibank, Account No. 17581366, with $260,000 on January 15,¹¹⁵⁰ and $120,000 January 21.^U51 It is unclear why she failed to transfer the loan proceeds directly from the JDA Family Trust account to the Gede Foundation account, and instead routed the funds first through her personal account.

Soonafter receiving the funds, the Gede Foundation account at Citibank subsequently dispersed them by international wire transfer and check. On January 16, 2004, the Gede Citibank account wired out $72,223, on January 22^nd the account wired $63,985.85, on January 26^th the account wired $81,208.07 and on January 26^th the account wrote a check for

$135,981.¹¹⁵²

Ten months later, in October 2004, Chevy Chase asked about the loan which had not been repaid. Ms. Douglas responded that she was "forcing to see about the repayment from the foundation for the loan they were given. Some of their grants didn't come through yet because the studies will start next year so the grants are still on hold by the funding organization. But, it will be paid back."¹¹⁵³ As of 2008, the loan had not yet been repaid.¹¹⁵⁴

PEP Status. For the first three years her accounts were open, from 2001 to 2004, Chevy Chase did not know that Ms. Douglas was a PEP client and did not provide enhanced monitoring of her accounts, in part because the Patriot Act's PEP requirements were not in effect when the account was opened. When they did take effect in 2002, Chevy Chase initially rated the JDA

¹¹⁴⁴ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI Chevy Chase 06-
0006.

¹¹⁴⁵ Id. .

¹¹⁴⁶1/10/04 Citibank loan authorization agreement from the JDA Family Trust, JD_000283. ¹¹⁴⁷ 12/12/04 "Non Negotiable Promissory Note," JD_0000267-68. ^1,48 January-2004 Citibank account statement, B 00007129. ¹¹⁴⁹ 1/21/04 Citibank transaction record, B 00000853. ¹¹⁵⁰1/15/04 Citibank transaction record. B 00000854.

¹¹⁵¹ 1/21/04 Citibank transaction record, B 00000853.

¹¹⁵² January 2004 Citibank Gede Account Statement, B 00006040

¹¹⁵³ 10/20/04 email from Ms. Douglas to Chevy Chase Bank, JDJ)00316.

¹¹⁵⁴ Subcommittee interview of Chevy Chase Bank, 7/18/08.

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Family Tmst account as a "low risk account" that did not warrant enhanced monitoring, because the bank viewed irrevocable trusts as presenting few money laundering risks and no new funds were being added to the trust.¹¹⁵⁵

During the summer of 2004, a Chevy Chase associate general counsel asked several questions about the trust and requested biographical information for Mr. Abubakar.¹¹⁵⁶Apparently, the bank quickly learned that Mr. Abubakar was then Vice President of Nigeria. In an August 18, 2004 memorandum, a Chevy Chase compliance officer wrote: "The Abubakar's are PEPs, and with the exception of this account, no other account relationships exist with the Bank. This account is considered high risk."^115V The memorandum did not mention the Gede Foundation account, because the bank had not realized at that point Ms. Douglas' connection to that account.¹¹⁵⁸ The memorandum called for enhanced monitoring of the JDA Family Tmst accounts "to ensure activity is normal and commensurate with the type of activity expected for the Tmst. Source of funds should be clearly identified and evaluated for reasonableness." Later that same month, the bank officially designated Ms. Douglas, her children, and the JDA Family Tmst as PEP clients due to their "association with a foreign political official,"¹¹⁶⁰ and assigned a "high risk" rating to the tmst accounts.¹¹⁶¹

According to Chevy Chase, the accounts were then subjected to monthly monitoring to ensure the account activity was "normal and commensurate with that expected for the tmst." The first review took place in September 2004, with monthly reviews and reports to the Chevy Chase Tmst Committee thereafter.¹¹⁶³

Account Concerns. For the next year, from 2004 to 2005, Chevy Chase Bank conducted enhanced monitoring of the JDA Family Tmst account without incident. In late 2005, however, media reports began mentioning Mr. Abubakar in connection with the ongoing criminal investigation of Congressman Jefferson. After learning of these media reports, the tmst company decided to resign as tmstee from the JDA Family Tmst and close the tmst accounts.

¹¹⁵⁵ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-
06-0002. Chevy Chase noted that the Patriot Act regulations on Customer Identification Procedures, including with
respect to trusts, did not go into effect until October 2003.

¹¹⁵⁶ Id. at PSI-Chevy_Chase-06-0004.

¹¹⁵⁷ 8/18/04 internal Chevy Chase Bank memorandum, JD_004350.

¹¹⁵⁸ Chevy Chase told the Subcommittee: "The fact that Ms. Douglas-Abubakar used two different names prevented
Chevy Chase Bank from tying the Gede Foundation account to the JDA Family Trust Account at Chevy Chase
Trust." 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-
Chevy_Chase-06-0004.

¹¹⁵⁹ 8/18/04 internal Chevy Chase Bank memorandum, JD_004350.

¹¹⁶⁰ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-
06-0003; see also PSI-Chevy_Chase-06-0001 ("Jennifer Douglas-Abubakar was identified as a PEP because she is
the wife of Alhaji Atiku Abubakar, then Vice President of Nigeria.").

¹¹⁶¹ 5/8/07 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-
CL000004.

¹¹⁶² Id.

¹¹⁶³ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-
06-0003.

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An internal Chevy Chase Trust Company memorandum dated January 30, 2006, recommended resigning from the JDA Family Trust for the following reasons:

" 1) Mr. Abubakar's source of wealth is impractical to verify. Under the US PATRIOT Act, Chevy Chase Trust is obligated to conduct enhanced due diligence on its high risk accounts. Since Politically Exposed Persons (PEPs) are high risk, Chevy Chase Trust must develop a reasonable belief that the source of funds is not derived from illegal activities. Obtaining sufficient proof in Mr. Abubakar's situation may not be possible. Failure to adequately document the source of funds for this relationship would increase the regulatory risk to the Trust Company.

2) The ongoing criminal investigation of Rep. William Jefferson could spread to Mr. Abubakar and his wife. If she were to be indicted, Chevy Chase Trust would be serving as co-trustee with person involved in suspected bribery of a US public official. Given the high degree of media that these cases are receiving currently, Chevy Chase Trust could be at increased reputation risk;

1164

With regard to the source of the trust funds, Chevy Chase noted that it "understood that Abubakar family wealth, principally that of Alhaji Atiku Abubakar, was the source of funds for the JDA Family Trust when it was established at Merrill Lynch."¹¹⁶⁵ Chevy Chase noted that the trust had been fully funded prior to its coming to the bank, and thus Chevy Chase "did not undertake additional efforts to identify the source of funds in the account." ¹ The memorandum also noted:

"Prior to becoming Vice President, Mr. Abubakar was the chairman of seven Nigerian companies involved in oil services, insurance, pharmaceuticals, agriculture and the print media. From 1969 to 1989, he served in the Nigerian Customs and Excise service. Given the business practices that existed in Nigeria over this timeframe, the ability of the [Chevy Chase] Trust company to determine that his wealth was achieved through legal means is suspect."¹¹⁶⁷

On January 20, 2006, Chevy Chase sent a letter to Ms. Douglas' legal counsel, Edward Weidenfeld, resigning from the trust. The letter stated: "It is with sincere regret that I advise you, as we discussed on the phone this morning, that we must resign as Trustee of the JDA Family Trust. As I discussed the new regulatory obligations imposed on the Bank by the federal government are so onerous that the Bank has chosen not to continue the relationship." The letter offered "a reasonable time to you to locate a successor and work with the successor to effect a smooth transition" ¹¹⁶⁸

¹¹⁶⁴1/30/06 internal Chevy Chase Trust memorandum, JDJ304360-1; see also 5/8/07 letter from Chevy Chase

Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-CL000004; 1/30/06 internal Chevy

Chase Trust memorandum, JD 000208-000210.

¹¹⁶⁵ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-

06-0003.

¹¹⁵⁶ Id. " ' '

¹¹⁶⁷ 1/30/06 internal Chevy Chase Trust memorandum, JD_004359.

^U68l/20/06 letter from Chevy Chase Bank to Mr. Weidenfeld, JD_000205.

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Five months later, in May 2006, Chevy Chase Bank also became concerned about the Cede Foundation account. By then, the bank had made the connection between the Foundation and Ms. Douglas.¹¹⁶⁹ Chevy Chase Bank told the Subcommittee that one of the Trust Department's compliance officers read news accounts of the FBI search of Congressman Jefferson's home and offices, found a copy of the search warrant, and noticed that it referenced possible use of a charitable foundation in the wrongdoing:

"While Chevy Chase Trust's monthly monitoring continued to show no unusual activity in the JDA Family Trust accounts, the Trust Compliance Officer, through online searching was able to obtain a redacted copy of the search warrant. According to the search warrant, a confidential witness revealed that Representative Jefferson intended to funnel monetary bribes to the confidential witness, and ultimately to Nigerian officials through a charitable foundation. The Trust Compliance Officer became concerned that that the charitable foundation in question could have been the Gede Foundation and the JDA Family trust loan to Jennifer Douglas Abubakar could have been connected to the scheme. However, a review of account activity, monthly statements, and checks issued by the Gede Foundation showed no activity that indicated that the Gede Foundation was the recipient of the loan funds issued by the JDA Family Trust or that distributions were made from the Gede Foundation to Representative Jefferson or to other parties listed on the Subpoena. All disbursements and other transactions of $50,000 or more reflected in the JDA Trust Account records are associated with securities purchases or sales, or are consistent with Chevy Chase Trust's role under the Trust agreement."¹¹⁷

Closing the Accounts. Chevy Chase told the Subcommittee that, even though the Gede Foundation account "did not trigger any alerts for unusual activity" and "had no indications of

1171

improper activity," the bank decided to close the account in May 2007. Mr. Weidenfeld told the Subcommittee that he surmised the Gede Foundation account was closed due to its association with Ms. Douglas.

Chevy Chase told the Subcommittee that it tendered its resignation from the JDA Family Trust in January 2006, and intended to close the account soon after, but Mr. Weidenfeld had informed Chevy Chase that he was having a difficult time finding a replacement trustee. Mr. Weidenfeld told the Subcommittee that he contacted the following institutions which declined to

¹¹⁶⁹ Chevy Chase Bank told the Subcommittee that it did not make this connection until receiving a Subcommittee
inquiry about both the Foundation and Ms. Douglas in 2007, but the 2006 bank documents show that at least some
bank officials had made the connection a year earlier.

¹¹⁷⁰ 5/8/07 letter from Chevy Chase's legal counsel to the Subcommittee, PSI-Chevy_Chase-000003-05.

¹¹⁷¹ 9/5/08 letter from Chevy Chase Bank's legal counsel, Mayer Brown, to the Subcommittee, PSI-Chevy_Chase-
06-0004

¹¹⁷²11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar & Weidenfeld 01-0030

¹¹⁷³ 9/5/08 letter from Chevy Chase's legal counsel to the Subcommittee, PSI-Chevy_Chase-06-000-07, at 05. Mr.. Weidenfeld's legal counsel also told the Subcommittee: "With the Citibank account closing, a replacement facility was urgently required. At approximately the same time, Chevy Chase Bank gave notice it would no longer serve as trustee for the Jennifer Douglas Family Trust ("the JDA trust"), and the money manager for the JDA trust announced their intention t'O resign. Tbe Abubakars requested that Mr. Weidenfeld find a new money manager, as well as a new trustee to replace Chevy Chase." 11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar & Weidenfeld 01-0023.

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take the trust: PNC Bank, Ashbridge Investments, J.P. Morgan Private Bank, Samson Capital in New York, Neville Rody and Shaw, and Papamarkou Asset Management in New York City, before finding a company that would take the trust.^U14 An internal Chevy Chase email noted: "At least five foreign financial institutions with no presence in the United States have refused to take this business.""⁷⁵ Chevy Chase told the Subcommittee: "Under principles of trust law, Chevy Chase Trust had a duty to continue as the corporate trustee until a replacement trustee was found or Jennifer Douglas Abubakar and Francis Iwenjiora exercised their powers under the trust to remove Chevy Chase Trust."¹¹⁷⁶

$500,000 Wire Transfer to Faibros Investments. More than a year and a half after Chevy Chase tendered its resignation from the JDA Family Trust and while the search for a new trustee continued, a JDA Family Trust request for a $500,000 wire transfer raised new concerns at the bank. In September 2007, the JDA Family Trust requested a wire transfer of $500,000 to Faibros Investments FZ-LLC in Dubai, one of the United Arab Emirates.¹¹⁷⁷ In a September 17, 2007 letter to Ms. Douglas' legal counsel, the Chevy Chase Trust Company declined to complete the wire transfer. The Trust Company wrote:

"[0]ur primary business is the investment management of individual's wealth. We do have trust powers and serve as a fiduciary primarily for our clients for whom we manage their investments. In a few limited circumstances we serve as directed trustee where another entity, well known to us, is the investment manager."¹¹⁷

In response, on September 18, 2007, Ms. Douglas and her brother, Mr. Iwenjiora, sent a letter to Chevy Chase removing it as trustee, appointing Mr. Iwenjiora as the sole trustee, and authorizing the $500,000 transfer to Faibros Investments.¹¹⁷⁹ An internal email shows that Chevy Chase personnel considered the transfer suspicious:

"a) The investment is to an offshore investment with no public information available, and b) The investment appears to be inconsistent with the purpose of the trust. The trust is designed to be a nest-egg to protect an American citizen and her children. To have an illiquid, offshore investment that makes up approximately 7% of the trust would be unusual for a relationship this size and it is not consistent with the prior history of this relationship."

¹¹⁷⁴11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar &

Weidenfeld 01-0024.

¹¹⁷⁵ 11/29/07 email among Chevy Chase officials, JD__005785-86.

^1,76 9/5/08 letter from Chevy Chase's legal counsel to the Subcommittee, PSI Chevy Chase 06-000005; see also

5/8/07 letter from Chevy Chase's legal counsel to the Subcommittee, PSI Chevy Chase CL000004; 10/10/00 JDA

Family Trust instrument, JD000012.

¹¹⁷⁷ See JD_00574-5 for letter from Francis Iwonjora and Jennifer Ms. Douglas Abubakar requesting that $500,000
be transferred from the trust to Fabros Investments FZ LLC in Dubai UAE. Iwonjora is Douglas' brother. 11/13/09
letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar_&_Weidenfeld -
01-0019.

¹¹⁷⁸ 9/14/07 letter from'Chevy Chase Bank to Mr. Weidenfeld, JD_005476-7.

¹¹⁷⁹ 9/18/07 letter from Ms. Douglas and Mr. Iwonjora to Chevy Chase Bank, JD_005483-4.

¹¹⁸⁰ 9/25/07 internal Chevy Chase Bank email, JDJ305703-6.

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Despite these concerns, on September 27, 2007, Chevy Chase wire transferred the $500,000 to Faibros Investments and continued to maintain the trust account.¹¹⁸¹

When asked about this transfer, Ms. Douglas told the Subcommittee through legal counsel that she was the beneficial owner of Faibros Investments, that the company had been created to invest in property, and the $500,000 transfer was to fund an investment. Mr. Weidenfeld's legal counsel told the Subcommittee that "he understood that the transfer was for the purpose of funding an investment, and he believes, though he is not certain, that he understood that the investment was in Dubai. In general, he recalls strongly urging Chevy Chase to make the transfer because he believed Mrs. Abubakar was being unfairly treated as a result of the Jefferson investigation."¹¹⁸³ The Subcommittee understands that Ms. Douglas now resides primarily in Sharjah, a UAE emirate adjoining Dubai, where she works as a professor at American University of Sharjah.

Six months later, in May of 2008, Lynx Investment Services in Washington D.C. apparently agreed to serve as a trustee of the JDA Family Trust.¹ In June 2008, the JDA Family Trust was transferred to Fidelity Investments.¹¹⁸⁵ Chevy Chase told the Subcommittee that, at the time of transfer, the $400,000 loan made four years earlier, in 2004, had still not been repaid.¹¹⁸⁶

(3) Wachovia Bank

After Chevy Chase Bank and Chevy Chase Trust Company indicated, in January 2006 and mid-2007, that they would close the JDA Family Trust and Gede Foundation accounts and, in the summer of 2007, Citibank indicated it would close all of its Douglas-related accounts, Ms. Douglas used the assistance of her legal counsel, Mr. Weidenfeld, to open six new accounts at Wachovia Bank in Potomac, Maryland. She went to Wachovia Bank in part because American University was a longstanding client at the bank, and Mr. Weidenfeld was well known to bank officials and willing to speak on her behalf. In July 2007, Ms. Douglas was able to open two personal checking accounts, two checking accounts for the Gede Foundation, one checking account for AUN, and a personal money market account.

Wachovia opened all of the Douglas-related accounts without designating her as a PEP client, even though Mr. Weidenfeld had described her husband as the recent vice president of Nigeria, and the bank itself had conducted multiple PEP screenings. Over a seven-month period from July 2007 to February 2008, Ms. Douglas used the Wachovia accounts to bring $4.2 million in suspect funds into the United States from the same offshore corporations that caused her accounts to be closed at Citibank. The Guernsey Trust Company, for example, wire transferred $2.4 million into Ms. Douglas' personal checking account at Wachovia, while LetsGo wire

¹¹⁸¹ 9/27/07 email from Chevy Chase Bank to Mr. Weidenfeld, JD_005471, and 9/20/07 email from Chevy Chase Bank to Mr. Weidenfeld, JD_005473.

¹¹⁸²11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar_&_Weidenfeld 01-0019.

¹¹⁸³ Id. at PSI-Abubakar_& Weidenfeld 01-0029.

¹¹⁸⁴ Id. at PSI-Abubakar _&JVeidenfeld 01-0023.

^1,85 Subcommittee interview of Chevy Chase Bank, July 18, 2008. Also, see PSI-Chevy__Chase-06-0005 ¹¹⁸⁶ Subcommittee interview of Chevy Chase Bank, July 18, 2008.

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transferred $1.8 million into the AUN account at Wachovia. After detecting the wire transfers, raising concerns about the source of the funds, and concluding that the accounts were involved in suspicious transactions, Wachovia closed the accounts seven months after they were opened.

Weidenfeld Assistance. Mr. Weidenfeld, made the initial contact with Wachovia Bank regarding opening accounts for Ms. Douglas. In early May, he telephoned the head of Wachovia DC Wealth Management office and informed him that Ms. Douglas was seeking to open accounts at the bank.''⁸⁷ Notes taken by the DC wealth manager regarding the conversation show that Mr. Weidenfeld explicitly disclosed that Ms. Douglas was married to

1 1 SR

Atiku Abubakar, who was then in the process of leaving office as Vice President of Nigeria. The notes also contain a reference to "money in the freezer." The Wachovia DC wealth manager indicated that he did not recall why he wrote that phrase,¹¹⁸⁹ but it suggests that Mr. Weidenfeld discussed the ongoing criminal investigation of Congressman Jefferson, news reports indicating that cash had been found in his freezer, and news reports linking the Congressman to Mr. Abubakar and his wife. In addition, the notes indicate that Mr. Weidenfeld told the bank that Ms. Douglas would like to open an account for her family trust and move the trust's assets, then about $7 million, from Chevy Chase Bank to Wachovia.

After the conversation, Mr. Weidenfeld sent a letter to Wachovia on behalf of Ms. Douglas, attesting to her character and recommending that Wachovia open accounts for her. Mr. Weidenfeld wrote: "Mrs. Abubakar received her doctorate degree from American University two weeks ago and has received a fellowship at AU for the fall. She is a United States citizen married to a non-resident named Atiku Abubakar. Atiku Abubakar is also a friend. Until last month he was the Vice President of Nigeria."¹¹⁹¹

Account Opening. Soon after speaking with Mr. Weidenfeld, the Wachovia DC wealth manager initiated the process of opening an account for Ms. Douglas. He assigned to an assistant the task of entering her information into the Wachovia record keeping system. He also contacted a Wachovia compliance officer about the account, relayed the fact that Ms. Douglas was married to former Vice-President Abubakar, and asked whether Wachovia would be able to open the account.¹¹⁹² He indicated that the compliance officer said she was unsure and would look into it. The compliance officer confirmed that she spoke with the DC wealth manager regarding whether or not the account should be opened, but undertook no additional due diligence prior to the opening of the account.¹¹⁹³

Although Mr. Weidenfeld told the bank orally and in writing that Ms. Douglas was married to the former vice president of Nigeria, the bank did not classify her as a PEP client in the account opening documentation. According to Wachovia, the DC wealth manager claimed that he had informed his assistant about her marriage to Mr. Abubakar, while the assistant

¹¹⁸⁷ Subcommittee interview with Wachovia, September 8, 2008; 6/8/07 email from Mr. Weidenfeld to Wachovia,
JD-A-00026. ',

¹¹⁸⁸ Subcommittee interview with Wachovia, September 8, 2008.

¹¹⁸⁹ Subcommittee interview with Wachovia, September 8, 2008.

¹¹⁹⁰ 6/8/07 letter from Mr. Weidenfeld to Wachovia, JD-A-00026-27.

^1,91 id. ;

¹¹⁹² Subcommittee interview Wachovia, September 8, 2008.

¹¹⁹³ Undated JDA Family Trust Documentation, JDJ)00001.

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claimed that he did not recall being told of any connection between Ms. Douglas and Mr. Abubakar.¹¹⁹⁴ When completing the account opening documentation, the assistant checked "none of the above" in the PEP profile portion of the form, and checked "Medium Priority" rather than "High Risk" in the Risk Assessment portion of the form.'^] ⁹⁵ Wachovia told the Subcommittee that the assistant should have entered Ms. Douglas into its system as a PEP client.¹¹⁹⁶

Once the account opening forms were completed, the next step in the process was for Wachovia to conduct a due diligence review of Ms. Douglas. According to Wachovia, the Wealth Management Group employed a third party vendor, CDC, to perform due diligence reviews of all its prospective clients. Among other steps, CDC screens potential clients against a Factiva database, which includes a list of political figures, to determine whether or not a potential customer is a PEP or PEP associate. On May 7, 2007, the assistant completed a Request for Enhanced Due Diligence form for Ms. Douglas,¹¹⁹⁷ and CDC crosschecked her name against the Factiva database, but failed to identify her as a PEP.

Wachovia told the Subcommittee that when it later asked CDC why it had failed to identify Ms. Douglas as a PEP, CDC indicated that it had been identifying individuals as PEPs only if an individual was the primary focus of a press article, and Ms. Douglas had not met that criterion.¹¹⁹⁸ As a result of the Douglas incident, Wachovia told the Subcommittee that CDC had changed its policy and is now identifying individuals as PEPs even if an individual is not the primary focus but is mentioned in a press article. In addition, according to Wachovia, CDC did not conduct a search for negative press articles with regard to Ms. Douglas when it performed its due diligence review and so did not find the articles linking her to the investigation of Congressman Jefferson. Wachovia told the Subcommittee that problem had been corrected, and such a search was now done on a routine basis for all clients undergoing a CDC due diligence review.

Personal Checking Accounts. On May 11, 2007, Ms. Douglas met in person with the DC wealth manager at a Wachovia branch in Potomac, Maryland.^u" According to Wachovia, she indicated interest in opening several accounts, including a personal checking account, an account for a family trust with $3 to $6 million in assets, and a checking account for the Gede Foundation.

As a first step, in accordance with Ms. Douglas' request, Wachovia opened a personal checking account for her on that day, May 11, 2007, Account No. 1010122288618.

¹¹⁹⁴ Subcommittee interview of Wachovia, September 8, 2008

¹¹⁹⁵ Contacts Rolodex screen, JD-A-00013.

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Wachovia told the Subcommittee that, as a result of Ms. Douglas' not being initially identified as a PEP by the Wachovia Wealth Management Group, the DC wealth manager was held responsible for the actions of the DC Wealth Management office, received a written warning, lost his position as head of the office, and may be penalized monetarily. Wachovia also reported that DC Wealth Management office personnel would be given additional training. Subcommittee interview of Wachovia, September 8, 2008.

¹¹⁹⁷ 5/07/07 Wachovia Request for Enhanced Due Diligence, JD-A-00016.

¹¹⁹⁸ Subcommittee interview of Wachovia, September 8, 2008.

¹¹⁹⁹ Subcommittee interview of Wachovia, September 8, 2008.

¹²⁰⁰ 5/11/07 Wachovia Customer Access Agreement, GF-F-00026.

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Wachovia opened a second personal checking account for her a few days later on May 14, 2007, Account No. 1010122288621.¹²⁰¹ Both accounts were opened through the General Bank Group (GBG) at Wachovia, which handles checking and savings accounts, rather than the Wealth Management Group which handles trust accounts.

When it opened the two accounts, the General Bank Group conducted an additional due diligence review of Ms. Douglas. It required Ms. Douglas to complete account opening documentation in which she described her employment as "housewife."¹²⁰² The documentation did not identify her as a PEP client. Wachovia told the Subcommittee that the DC wealth manager claimed he had told the Potomac branch regional manager that Ms. Douglas was married to Mr. Abubakar, but the bank was unable to confirm that claim because the manager had left the bank.¹²⁰³ GBG also routinely subjected new accounts to a third party vendor, Bridger Insight, which screened client names against a Bridger Insight database that included FBI, CIA, and Interpol lists of foreign officials, but not lists of foreign officials' family members.¹²⁰⁴ That screening, like the Factiva screening by the DC Wealth Management office, failed to identify Ms. Douglas as a PEP. Her checking accounts were thus not subjected to any enhanced monitoring.

Ms. Douglas funded the first checking account with an initial cash deposit of $100. She opened the second with a zero balance and, two weeks later, deposited a Citibank cashiers check with the funds from several of her closed Citibank accounts totaling nearly $182,000. Over the next seven months, the Guernsey Trust Company wire transferred about $1.8 million

i TAT

into the first personal checking account.

Gede Foundation. A month after opening her personal checking accounts, on June 11, 2007, Ms. Douglas opened two checking accounts in the name of the Gede Foundation with the DC Wachovia Wealth Management office. The first was designated Gede Foundation Expense Account No. 2000024527130, and the second as Gede Foundation Donation Account No.

2000024527143.¹²⁰⁸

On the account opening documentation, Ms. Douglas was listed as the President, Cynthia J. Ticao was listed as the Executive Director, and Yoku Shaw-Taylor was listed as the Director.¹²⁰⁹ These three individuals were also signatories for the account.¹²¹ A 2007 Wachovia know-your-customer form estimated that the Gede Foundation then had total assets of $5 to $10 million, which came from "tax deductible contributions from individuals and

¹²⁰¹ See 5/14/07-6/07/07 Wachovia Account Statement, JD-D-00022.

¹²⁰² Contacts Rolodex screen, JD A 00013.

¹²⁰³ Subcommittee interview ofWachovia, September 8, 2008.

¹²⁰⁴ Id.

¹²⁰⁵ 5/11/07 - 6/11/07 Wachovia Account Statement, JD-D-00001.

¹²⁰⁶ See 5/14/07-6/07/07 Wachovia Account Statement, JD-D-00022; copy of Citibank Official Check deposited into
Douglas account on June 1, 2007, JD-F-00082.

¹²⁰⁷ See below for a chart that details these wire transfers.

¹²⁰⁸ See Gede Foundation Expense Account summary, 6/11/07-6/29/07, GF-D-00001; 6/11/07-6/29/07, Gede
Foundation Donation Account summary, GF-D-00017.

¹²⁰⁹'6/l/07 Wachovia Deposit Account Application, GF-F-00054.

¹²¹⁰ 6/1/07 Wachovia Depository Authorization and Agreement Certificate, GF A 00040.

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businesses as well as corporate grants." It also stated that the account's initial funding came from a Gede Foundation account at Citibank.¹²¹¹

On June 5, 2007, prior to opening the account, Wachovia's DC Wealth Management office submitted an Enhanced Due Diligence request to its third party vendor, CDC, for the Gede Foundation.¹²¹² The CDC crosschecked the names of the three signatories against its Factiva database but, once again, did not identify any as a PEP and did not report any negative news with regard to any of the three individuals or the Gede Foundation itself.¹"¹³

Wachovia opened the two checking accounts, and, on June 11, 2007, Ms. Douglas funded both accounts primarily using a Citibank cashier's check for $66,800.45, which deposited funds from the closed Gede Foundation account at Citibank. She deposited about $56,000 into the Expense Account and about $13,000 into the Donation Account.¹²¹⁴

AUN Account. A month after opening the Gede Foundation accounts, on July 23, 2007, Ms. Douglas opened a fifth account at Wachovia, this one in the name of the American University of Nigeria (AUN), Checking Account No. 2000028808282.¹²¹⁵ The account opening documentation listed two signatories: Ms. Douglas Abubakar and Edward Weidenfeld. The account address was that of the Weidenfeld law firm.¹²¹⁶ By this point, Mr. Weidenfeld was

1/17

providing legal representation to AUN as well as the Abubakars.

Prior to opening the account, Wachovia obtained information on both AUN and how the account would be used. A Wachovia banker, in an internal document, gave the following "business reason" for opening the account:

"AU of Nigeria is affiliated through a management consultancy contract to American University in Washington DC[,] a long time client of Wachovia. AU/US provides curriculum professors and senior management staff to AUN through the contract. The purpose of the account at Wachovia is for payment of salaries for AU professors who are US citizens, teaching at AUN. AUN is represented in the US by Ed Weidenfeld, a

1 91 R

respected DC attorney, and a person well known to the bank."

1211 -

¹²¹² 6/5/07 Request for Enhanced Due Diligence on Gede Foundation, GF-F-00282-285.

¹²¹³ 6/6/07 Gede Foundation Enhanced Due Diligence results, GF-A-00008 (no negative news reported); 6/6/07
Gede Foundation EDD results for all associated contacts (Jennifer Douglas, Yoku Shaw-Taylor, Cynthia Ticao),
GF-A-00042-44, (no PEP identified, no negative news).

¹²¹⁴ See copy of Citibank Original Check, GF-A-00041; 6/11/07-6/29/07 Gede Foundation Expense Account
summary, GF-D-00001; 6/11/07-6/29/07 Gede Foundation Donation Account summary, GF-D-00017.

AUN Account Opening Application, JD-F-00426.

¹²¹⁶ 7/25/07 Wachovia Deposit Account Application, JD F 00426.

¹²¹⁷ See letter from Weidenfeld legal counsel to Subcommittee November 13, 2009; 8/12/08 letter from American
University to the Subcommittee, no bates. Mr. Weidenfeld also provided Wachovia with a copy of a June 2007
resolution by the AUN board of directors authorizing AUN to open a U.S. checking account, and authorizing Mr.
Weidenfeld to act as a signatory on that account when directed to act by an officer or director of AUN in writing.
June 2007, Consent of the Board of Directors of the American University of Nigeria, JD-F-00433; Authority to be
Signatory between AUN and Mr. Weidenfeld, JD-F-00434 R 287.

'²¹⁸ 6/26/07 internal Wachovia document, JD-F-00439.

Undated Wachovia form entitled, "Contact Source of Wealth," GF-A-00005.

217

On July 5, 2007, the DC Wealth Manager wrote to Mr. Weidenfeld requesting documentation to support the new AUN account: "Our compliance department is requesting a copy of the management consultancy agreement between American University, US, and ABTI American University of Nigeria."¹²¹⁹ Mr. Weidenfeld provided the agreement which showed that, as of December 2003, AUN had entered into a five-year licensing agreement with American University, under which AU agreed to provide professionals to AUN and advise AUN on establishing AUN's academic and administrative infrastructure.¹²²⁰ On July 10, 2007, American University sent a letter to the Director of the Wachovia GBG International & High Risk Customer Governance, stating: "You asked how much funding is likely to pass through the AUN account. At the current moment, the amount is roughly $200,000 per month, largely for the salaries of expatriates who are teaching or working at AUN, or $2.4 million per year, but I can anticipate that it might rise to $250,000 per month or roughly $3 million per year."¹²²¹ On July 11, 2007, the Wachovia Director responded: "Wachovia will move forward with underwriting for ABTI-American University of Nigeria's requested deposit account. Please note that because of Bank Secrecy Act and USA Patriot Act obligations for which the bank is subject, accounts] owned by offshore entities must be underwritten prior to establishment. However, that process

1 777

has now commenced."

Wachovia told the Subcommittee that, generally, it does not open accounts for foreign charitable organizations or foreign governmental entities, but has a process whereby an

177^ •

exception can be made if approved by the Wachovia exception committee. Wachovia told the Subcommittee that, in this case, its exception committee granted an exception for AUN, in part due to Wachovia's banking relationship with American University.

The Wachovia Deposit Account Underwriting International (DAU) group actually opened and handled the AUN account. Prior to opening the account, DAU asked CDC to perform a due diligence review of AUN, Ms. Douglas, and Mr. Weidenfeld. As in previous screenings, CDC's August 21, 2007 screening did not identify Ms. Douglas or Mr. Weidenfeld as a PEP client. Wachovia told the Subcommittee that it also spoke with CDC about this incident, and CDC has taken steps to strengthen its PEP screenings.

The AUN account was opened on July 23, 2007, and immediately began receiving and disbursing funds. Over the next few months, the Guernsey Trust Company wire transferred a total of about $1.8 million into the AUN account.¹²²⁴

Money Market Account. A month after opening the AUN account, on August 21, 2007, Ms. Douglas opened a sixth and final account at Wachovia, this time a Personal High Performance Money Market Account No. 1010185917340.¹²²⁵ She initially funded the account

¹²¹⁹ 7/5/07 email from Wachovia to Mr. Weidenfeld, PAU024525.

1220 2/3yo3 Management Consultancy Agreement between AUN and American University Washington D.C.,
PAU030660-72.

¹²²¹ 7/10/07 email from American University to Wachovia, PAU024453.

¹²²² 7/11/07 email from Wachovia to American University, PAU024470.

¹²²³ Subcommittee interview with Wachovia, September 8, 2008.

¹²²⁴ See below for a chart detailing these wire transfers.

¹²²⁵ Undated internal Wachovia document "Jennifer Douglas Abubakar: Summary of Account Relationships," PSI-
Wachovia-08-0001.

218

by transferring $20,000 from her second personal checking account at Wachovia.¹²² ' This account saw little activity before all six Douglas-related accounts were closed.

Account Activity. Soon after opening the Wachovia accounts, Ms. Douglas began receiving substantial wire transfers from two offshore corporations, LetsGo and the Guernsey Trust Company, sent primarily through accounts at a small private bank in Switzerland called Wegelin & Co. Over a six-month period, the Guernsey Taist Company wire transfers sent $2.45 million to her personal checking account, while the LetsGo wire transfers sent $1.8 million to the AUN account.

The following chart lists the Guernsey Trust Company wire transfers to Ms. Douglas's first personal checking account at Wachovia, Account No. 1010122288618, totaling $2.45 million.

Wire Transfers from Guernsey Trust Company to Douglas Personal Checking Account at Wachovia: 1010122288618
Date	Amount	Originator	Bates
7/5/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00004
7/10/07	$350,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00004
7/26/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00008
9/4/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00013
9/27/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00017
10/29/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00059
12/3/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00074
12/21/07	$300,000.00	Wegelin & Co., Private Bankers Switzerland	JD-D-00074
TOTAL: $2,450,000.00		SOURCE: UBS

Chart prepared by Subcommittee

Over the same six-month period, LetsGo Ltd. wire transferred $300,000 every few months into the AUN account at Wachovia for a total of $1.8 million. These wire transfers also came from a Swiss bank account. This chart shows the key wire transfers.

	Wire Transfers from LetsGo Ltd. to AUN Account at Wachovia: 2000028808282
Date	Amount	Originator	Bates
7/26/2007	$300,000	Wegelin & Co., Private Bankers	JD-D-00040
9/4/2007	$300,000	Wegelin & Co., Private Bankers	JD-D-00051
9/27/07	$200,000	Wegelin & Co., Private Bankers	JD-D-00051
10/29/2007	$300,000	Wegelin & Co., Private Bankers	JD-D-00059

¹²²⁶ Id.

219

12/3/2007	$300,000	Wegelin & Co., Private Bankers	JD-D-00074
12/21/2007	[ $300,000	Wegelin & Co., Private Bankers	JD-D-00074
1/22/2008	$300,000	Wegelin & Co., Private Bankers	JD-D-00081
TOTAL: $2,000,000		SOURCE: Wachovia

Chart prepared by Subcommittee

During the six months the Wachovia accounts were open, Ms. Douglas used the $2.45 million sent to her personal checking account to pay for living expenses, including large credit card bills. In addition, she transferred about $73,000 to AUN accounts at other banks. This chart lists the transfers she made to AUN accounts.

Wire transfers from Wachovia Douglas Account No. 1010122288618 to AUN Accounts
Date	Amount	Bates
7/30/2007	$13,029.50 sent to AUN account at Platinum Habib Bank Ltd.	JD-D-00010
8/7/2007	$26,244.20 sent to AUN account at Platinum Habib Bank Ltd.	JD-D-00010
8/29/2007	$26,244.20 sent to AUN account at Zenith International Bank Ltd.	JD-D-00014; JD-F-00076-77
10/31/2007	$8,185.50 sent to AUN account at Guaranty Trust Bank	JD-F-00256-257
TOTAL: $73,713.40		SOURCE: Wachovia

Chart created by Subcommittee

Account Concerns. By September of 2007, Wachovia began to have concerns about the Douglas-related accounts. On September 5, 2007, a Wachovia banker filed a "suspicious internal referral" report concerning a $9,500 check drawn on Ms. Douglas' personal checking account which was presented for payment by an individual without signatory authority on the account.¹²²⁷ The banker wrote: "A non customer [redacted by the Subcommittee] presented a check to negotiate at the Pine Crest financial CTR. I reviewed our customer's account and [there are] frequent transfers between her three accounts that [were] opened four months ago. Also large auto debits to Neiman Marcus and American Express along with wires in and out. Most recent for 300K from Nigeria."¹²²⁸

In response to the suspicious internal referral report, a senior anti-money laundering (AML) investigator at Wachovia was assigned to examine the Douglas accounts. The AML investigator examined account activity involving Ms. Douglas' personal checking accounts and the AUN account, but not the Gede accounts. He determined that some of the account activity appeared suspicious. With regard to Ms. Douglas' first personal checking account, he wrote:

"[A] review of DDA#1010122288618 between dates of 07/01/07-10/11/07 revealed this account was opened on 05112007. The account is funded by wire transfers and account

9/5/07 check for $9,500 made out to individual by Ms. Douglas, JD-F-0053. 9/5/07 Suspicious Internal Referral filed by Coralett James, JD-F-00005.

_c Served between August and September
transfers There were seven account trans fers obse ^^ _were _d _tne

Singed in amounts from $19,000 to. $ ^ ^uring this review period,-re weie

month of August (DDA#8621 -totaling ^W ^ _fom _$13_j029.₅₀ to

seven wire transfers credited tc.this account an g ^ ^ _from _Guemsey Trust

$300,000. It was also observed that fiveofsev^

CompanyoutofNigenaCHighKiS.Country). ^^

On October 11, ^f^^^Z^^ wrote the following:
information about the source of the funds ^ ^ ^ ^^

"I spoke with Jennifer Douglas who advised she^^^^ _fr0m his business,
f So 000 from her husband. She said those W* _if _said _durmg the

_ln _add,Uon, on Koven*,, 6, 2007 ₌ »-- <*"*
«-.«-«W.——«— *" _{st3moIlthsofb}^_state_me_ntsfolthe
"Hi need your assistance. Please order &>£*> 069695366 and Cede

DDAs (5 total) in the names of Jennifer ^°J^^ _a _copy of the KYC file for foundation RRN 054721695. Sen ^^^^ so I would appreciate your Gede. This request comes from the Corporat

immediate attention."

immediate attention.

In November 2007, Wachovia received an inquiry from the Subcommittee regarding Ms. Douglas, Mr. Abubakar, and related entities. In response, on November 14, 2007, a Wachovia

¹²²⁹Wachovia internal review document, JD-F-00006.

¹²³⁰ See transfer summary of Douglas checking account #1010122288618, JD-F-00034, showing two wire transfers

sent to Dubai Islamic Bank Limited for the purchase of a home in Dubai; 10/09/07 wire transfer form, JD-F-00066-

67.

1231 1232 1233 _Td1234

10/11/07 internal Wachovia email, JD-F-00007. Wachovia internal review document, JD-F-00007.

Id.

11/06/07 internal Wachovia email, GF-A-00078-79.

221

AML investigator began examining the Douglas-related accounts. He examined all six accounts, and reviewed the materials from the earlier AML investigator. This AML investigator quickly identified Ms. Douglas as a PEP and found several negative news articles about her. On November 19, 2007, six months after her first Wachovia account was opened, Ms. Douglas was officially added to the Wachovia PEP list. Mr. Weidenfeld was classified as a PEP Associate, and AUN was classified as a PEP Entity.¹²³⁵

The AML investigator again looked at the offshore corporations sending funds to the Douglas-related accounts. He found that the LetsGo website was "under construction." ° He also compared AUN wire transfers naming specific AUN faculty members to an AUN payroll ledger, and found that the two contained con-esponding amounts, but was unable to confirm that the payments were actually salary-related.¹²³⁷

In December 2007, the AML investigator recommended closing the Douglas- related accounts due to the large volume of offshore transactions, discovery of negative news regarding Ms. Douglas, the Subcommittee's investigation, and Ms. Douglas' identification as a PEP. Wachovia told the Subcommittee there were no objections to that recommendation, and Wachovia decided to close all six Douglas-related accounts, even though it did not identify account activity that showed a definite Bank Secrecy Act violation.

Closing the Accounts. On December 14, 2007, Wachovia notified Mr. Weidenfeld that the Douglas-related accounts would be closed.¹²³⁸ On January 3, 2008, Mr. Weidenfeld telephoned the bank and asked whether the accounts were being closed based upon Ms. Douglas' husband or due to money laundering activities. Wachovia informed him that the bank had "made a business decision" to exit the relationship and that all accounts would be closed by January 28th.¹²³⁹ Wachovia notes indicate that Mr. Weidenfeld stated that, with respect to the AUN account, Ms. Douglas "was willing to remove her name from this account if there was the possibility of it being left open."¹²⁴⁰ The bank indicated that the account would not be kept open even without her name.

Mr. Weidenfeld told the Subcommittee that he believed the Wachovia accounts were closed, "because of their association with the Abubakars, and because the AUN accounts were transferring money abroad to accounts in the names of foreigners. ... The unfair allegations

¹²³⁵11/19/07 internal Wachovia document, JD-F-00543-44.

¹²³⁶ Email screenshot of AML investigator's 12/10/07 internet search results for LetsGo Limited, Inc., JD-F-00468-
469.

¹²³⁷ See undated Wachovia transaction record, JD-F-00440-443; 9/28/07 Wachovia Wire Detail Page, JD-F-00128.

¹²³⁸ See also December 14, 2007 letter from Wachovia to AUN advising that account 2000028808282 will be closed,
jD-F-00452. ,

¹²³⁹11/19/07 internal Wachovia report, JD-F-00543-544. The Stassi investigation report cites explanation of account closure as well as screening results.

¹²⁴⁰ Id. See also 11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee , PSI-Abubakar_&_Weidenfeld 01-0024 (Mr. Weidenfeld told the Subcommittee that he "does not have a specific recollection of suggesting that Mrs. Abubakar could be removed as a signatory on this account. If he made that suggestion, he believes that he would have done so because he thought that her signatory authority created an issue for the bank as a result of her unfair association with the Congressman Jefferson investigation. It would have been logical for Mr. Weidenfeld to believe that because the account was maintained for the benefit of AUN, Jennifer did not have to be a signatory on the account, and that if her name was removed, the bank might retain the account.)

222

against the Abubakars from the Congressman Jefferson investigation, coupled with Mr.

194-1

Abubakar's status as a Nigerian politician, caused the banks to close the accounts."

On January 31, 2008, the A UN and Cede Foundation accounts were closed. Wachovia provided AUN with a check for the remaining balance, and that check was later deposited into the Weidenfeld law firm account at Suntrust Bank.¹²⁴² Wachovia provided a second check with the balance from the two Gede Foundation accounts, and that check was later deposited into a new Gede account at Eagle Bank.¹²⁴³ On February 7, 2008, Ms. Douglas' second personal checking account was closed with no balance owing. On February 11, 2008, her initial personal checking account was closed, and Wachovia provided a check with the remaining balance, which was mailed to Mr. Weidenfeld and later deposited into an account at PNC Bank. On February 20, 2008, Ms. Douglas' money market account was closed with a zero balance.

(4) Eagle Bank

Ms. Douglas did not wait for her accounts at Chevy Chase and Wachovia to close before opening another account at another U.S. bank. In July 2008, she opened a personal checking account at Eagle Bank; in 2009, she opened two more accounts: a money market account and a home equity line.¹²⁴⁵ Eagle Bank is a small state-chartered bank in Maryland with 14 offices in the Washington area. It caters to embassy accounts and promotes its international banking capability.

Soon after opening the mitial account, as at prior banks, Ms. Douglas began to receive large wire transfers from offshore accounts belonging to the Guernsey Trust Company. Most of these wire transfers were for $100,000. Within one year, from October 2008 to September 2009, Ms. Douglas brought over $1 million in suspect funds into the United States from the Guernsey Trust Company. She also received about $189,000 in wire transfers from her brother, Francis Iwenjiora. This chart lists the key wire transfers into Ms. Douglas' account at Eagle Bank over the past year, which together exceed $1.2 million.

Select Wire Transfers into Douglas Account at Eagle Bank
Date	Amount	Sender	Bates
10/10/2008^-1	$99,950.00	Guernsey Trust Company, Nigeria	PSI-JDA-000009
11/03/2008^	$99,950.00	Guernsey Trust Company, Nigeria	PSI-JDA-000012
12/1/2008^	$100,000.00	Guernsey Trust Company, Nigeria	PSI-JDA-000014
12/19/2008	$100,000.00	Guernsey Trust Company, Nigeria	PS1-JDA-000017
1/30/2009	$100,000.00	Guernsey Trust Company, Nigeria	PSI-JDA-000020
3/3/2009	$99,950.00	Guernsey Trust Company, Nigeria	PSI-JDA-000024
4/1/2009	$99,950.00	Guernsey Trust Company, Nigeria	PSI-JDA-000027
5/1/2009	$99,950.00	Guernsey Trust Company, Nigeria	PSI-JDA-000029
5/22/2009	$161,000.00	Francis Iwenjiora Trustee	PSI-JDA-OO0O32
5/28/2009	$28,000.00	Francis Iwenjiora Trustee	PSI-JDA-000033
8/4/2009	$99,950.00	Guernsey Trust Company, Nigeria	PS1-JDA-000039

¹²⁴¹ 11/13/09 letter from Mr. Weidenfeld's legal counsel, London & Mead, to the Subcommittee, PSI-
Abubakar_&_Weidenfeld 01-0025.

¹²⁴² Copy of the official check issued to American University of Nigeria in the amount of $33,570.90, dated 2/1/08,
JD-A-00275

¹²⁴³ Copy of (he official check issued to Gede Foundation in the amount of $3616.07, dated 1/11/08, GF-A-00085

¹²⁴⁴ Copy of the official check issued to Jennifer Ms. Douglas in the amount of $4036.78, dated 2/1/08, JD-A-00033

¹²⁴⁵ Information provided by Ms. Douglas' legal counsel, January 18, 2010.

223

8/28/2009	$90,000.00	Guernsey Trust Company, Nigeria	PSI-JDA-000041
9/29/2009	$100,000.00	Guernsey Trust Company, Nigeria	PSI-JDA-000044
TOTAL: $1,278,700.00		SOURCE: Weidenfeld

Chart prepared by Subcommittee

(5) Suntrust Bank

In 2008, AUN received assistance from Mr. Weidenfeld to open an additional U.S. bank account. On January 28, 2008, a new AUN account was opened at a Washington, D.C. branch of Suntrust Bank, a large U.S. bank with over 1,700 branches.^I246 Mr. Weidenfeld's legal counsel told the Subcommittee that he facilitated the opening of this account.¹²⁴⁷ The Subcommittee was told that Mr. Weidenfeld's law firm was a longstanding customer of Suntrust Bank, and he decided to use that bank after his law firm was hired by AUN in January 2008, to act as an escrow agent for its U.S. funds. His legal counsel told the Subcommittee that Mr. Weidenfeld spoke with the Suntrust branch manager where his law firm did its banking, told her AUN wished to open a checking account to pay its bills, and was able to open an account affiliated with his law firm, entitled AUN Special Account No. [xxxxxx]28.

Bank records indicate that Mr. Weidenfeld initially funded the AUN account by transferring funds from his law firm account at Suntrust. His legal counsel said the funds he used had come from the AUN account at Wachovia which, when it closed, had transferred its funds to his law firm account at Suntrust. Over the next eight months, bank records show that the Guernsey Trust Company made multiple large wire transfers from its Swiss account at Wegelin & Co. into both the AUN and Weidenfeld law firm accounts at Suntrust. From January to July 2008, the Weidenfeld law firm received about $1.3 million from the Guernsey Trust Company, while the AUN account received about $800,000. Another $1.2 million in wire transfers were sent to the AUN account with wire transfers that did not identify the originator, but likely came from the Guernsey Trust Company as well.

This chart shows the $3.4 million in offshore wire transfers sent to the AUN and Weidenfeld law firm accounts at Suntrust Bank. The chart includes four wire transfers totaling 1.2 million which were sent to the AUN account in documents that did not identify the originator, but were likely also sent by the Guernsey Trust Company.

¹²⁴⁶ 8/28/08 internal Weindenfeld office email, PAU100307

¹²⁴⁷ See 11/13/09 letter from Weidenfeld's legal counsel to the Subcommittee, PSI-Abubakar & Weidenfeld 01-
0024. That letter stated: "In January 2008, the Weidenfeld law firm and AUN entered into an escrow agreement,
appointing the Weidenfeld law firm as escrow agent for the American University of Nigeria. To fulfill his role as
escrow agent, Mr. Weidenfeld used a Weidenfeld law firm account with Sun Trust Bank. The account was named
AUN Special Account, No. [xxxxxx]28. He believes that he informed ... the branch manager of SunTrust at 17th &
Eye Streets, N. W., that the purpose of the account was to pay obligations of the American University of Nigeria. On
January 28, 2008, the funds remaining in the Wachovia American University of Nigeria account were transferred to
the Weidenfeld law firm American University of Nigeria account at SunTrust. As escrow agent, Mr. Weidenfeld
directed the payment of expatriate salaries and expenses out of the account at the direction of AUN."

224

Offshore Wire Transfers to Weidenfeld Law Firm and AUN Accounts at Suntrust Bank
Date	Recipient Account	Amount	Originator	Bates
2/5/2008	Weidenfeld Law Firm Account	$150,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
2/29/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSl-Abubakar& Weidenfeld-03-0013
3/31/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
4/30/2008	Weidenfeld Law Firm Account	$100,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
6/26/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
7/25/2008	Weidenfeld Law Firm Account	$49,980.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
8/25/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
9/29/2008	Weidenfeld Law Firm Account	$100,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
10/31/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
11/28/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
12/22/2008	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
1/27/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
2/26/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
3/23/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
4/27/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
5/27/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
6/19/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
7/31/2009	Weidenfeld Law Firm Account	$100,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
8/28/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
9/28/2009	Weidenfeld Law Firm Account	$50,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
10/30/2009	Weidenfeld Law Firm Account	$100,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0013
WEIDENFELD LAW FIRM . _34g _9g() _Q0TOTAL ' '

2/28/2009 ;	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Unknown	PSI-Abubakar& Weidenfeld-03-0010
3/31/2008	Weidenfeld Law Firm Account -AUN Special Account	$275,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0010
4/30/2008	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Unknown	PSI-Abubakar& Weidenfeld-03-0010

226

known in Nigeria that Mr. Abubakar had an ownership interest in the Intels family of operating companies that performed oil logistics services in West Africa, and that Intels was a substantial company. He was also aware that the Abubakars were contributing millions of dollars to fund AUN. As a matter of common sense, it seems absurd to Mr. Weidenfeld that Mr. Abubakar would run proceeds of illegal activity through American banks in order to fund a charitable enterprise, though he does not recall even considering that possibility at the time. ...

Mr. Weidenfeld became personally convinced that Congressman Jefferson's statements about the Abubakars and the Gede Foundation were lies designed to get more money out of Lori Mody. Mr. Weidenfeld also knew the Abubakars personally. He liked and respected them. They did not conceal their involvement in AUN's affairs. Mr. Weidenfeld did not hide their involvement from AU or any banks. It never occurred to Mr, Weidenfeld that he should have any concern about accepting Atiku Abubakar's money to fund a U.S.-style university in the predominantly Muslim Northern region of Nigeria. Mr. Weidenfeld is the unpaid co-Chair of the Board of Visitors of the National Defense University. He considered AUN to be an institution that furthered the national interests of the United States, as well as the interests of Nigeria. ...

As a result of this investigation, Mr. Weidenfeld has come to understand the Subcommittee's ongoing concern with the use of shell corporations to conceal the ownership and source of funds in certain foreign transactions. That concern is entirely understandable and legitimate. Mr. Weidenfeld understands that legislation may be appropriate to address this issue. However, in these unique circumstances, Mr. Weidenfeld did not believe that Atiku Abubakar was concealing his role by using these corporations."¹²⁵⁰

Mr. Weidenfeld told the Subcommittee that, on September 3, 2008, AUN opened additional accounts at Standard Chartered Bank in London.¹²⁵¹ The Subcommittee was told that the Standard Chartered accounts would be used "to cover the expenses of ex Pat salary payments."¹²⁵² Mr. Weidenfeld's legal counsel told the Subcommittee:

"In April 2008, AUN applied for an account with Standard Chartered Bank in the UK. Standard Chartered opened the account on August 23, 2008. ... AUN now pays all expatriate staff and faculty from this account. Mr. Weidenfeld remains a signatory, but an orderly transition to the AUN financial office in Yola is underway."^125j

Still another AUN account appears to have been opened at Oceanic Bank in Yola, Nigeria where AUN is located; this account appears to have paid the AUN July 2008 payroll.

¹²⁵⁰ Id.,

¹²⁵¹ 9/3/08 email from Mr. Weidenfeld to Standard Chartered Bank, PAU100339.
¹²⁵²PAU100348.

¹²⁵³ 9/3/08 email from Mr. Weidenfeld, PSI-Abubakar_&_Weidenfeld 01-0024.

¹²⁵⁴ 9/6/08 email from Mr. Weidenfeld's counsel and himself, PAU100417.

227

(6) Overview of Offshore Funds

During the eight-year period, 2000 to 2008, Ms. Douglas brought nearly $25 million in suspect funds into the United States through accounts she opened at Citibank, Chevy Chase Bank, Wachovia Bank, and Eagle Bank. In addition, during the first six months of 2008, another $3.4 million was deposited into AUN and Weidenfeld law firm accounts at Suntrust Bank. These funds, which exceed $27 million, were supplied primarily by five offshore corporations: Siemens AG, a major German firm which sent funds from a bank account in London; Guernsey Trust Company Nigeria Ltd., which is incorporated and has bank accounts in Nigeria; LetsGo Ltd. Inc., a Panamanian firm which sent funds from bank accounts in Switzerland; Sima Holding Ltd. which is incorporated in the British Virgin Islands and sent funds from a bank account in Switzerland; and China Castle Investments, Inc. which sent funds from a bank account in Switzerland, but whose base of incorporation is unknown.

To trace the flow of funds into and out of these accounts, the Subcommittee requested copies of monthly bank statements, generally going back five years for each account. In a few cases, the Subcommittee obtained records of earlier transactions and, in a few cases, the records did not stretch back five years. The bank records reviewed by the Subcommittee show that, for the period 2003 to 2008, LetsGo provided the most offshore funds, wire transferring a total of nearly $17 million to Douglas-related accounts from 2003 to 2008. The Guernsey Trust Company provided the next highest amount, $10 million, which includes nearly $7 million to Douglas-related accounts from 2006 to 2009. Siemens AG provided four wire transfers in 2001 and 2002, before the five-year time period generally examined by the Subcommittee, for a total of $1.7 million sent to the Douglas account at Citibank. Sima Holding sent four wire transfers in 2004 and 2005, for a total of nearly $700,000. Finally, China Castle Investments sent a single wire transfer in 2003, for a total of $500,000.

This chart summarizes the total amounts of offshore wire transfers sent to the relevant accounts at Citibank, Wachovia, Eagle, and Suntrust banks.¹²⁵⁶

Total Wire Transfers Sent By Offshore Corporations To U.S. Bank Accounts
Originator	Dates Sent	Total Received	Recipient Account
Siemens AG	4//01-1/02	$1,772,644	Douglas personal account at Citi: 52096374
China Castle Investments	1/30/03	$500,000	Douglas personal account at Citi: 52096374
LetsGo Ltd. Inc.	4/03 -10/06	$7,424,620	Douglas personal account at Citi: 52096374
LetsGo Ltd. Inc.	5/05 - 5/07	$5,550,000	Douglas/AUN account at Citi: 1209739556
Guernsey Trust Co.	6/06 - 5/07	$3,049,940	Douglas personal account at Citi: 52096374
Guernsey Trust Co.	7/07 -12/07	$2,450,000	Douglas personal account at Wachovia: 1010122288618
Guernsey Trust Co.	10/08 - 9/09	$1,089,700	Douglas personal account at Eagle Bank
Sima Holding Ltd.	7/07-12/07	$699,965	Douglas personal account and Douglas/AUN account at Citi: 52096374 and 1209739556

¹²⁵⁵ The Subcommittee also obtained accounting opening and closing documentation for all of the accounts.

¹²⁵⁶ No wire transfers are shown for Chevy Chase Bank accounts, because no wire transfers added new funds to the
S5 million transferred from Merrill Lynch for the JDA Family Trust accounts, and all of the funds sent to the Gede
Foundation account came from the Douglas or Gede Foundation accounts already identified in the chart.

228

LetsGo Ltd. Inc.	7/07-1/08	$1,800,000	Douglas/AUN account at Wachovia: 2000028808282
Guernsey Trust Co.	1/08-7/08	Ssoo.ooo¹¹⁵⁷	AUN account at Suntrust
Guernsey Trust Co.	1/08-7/08	$1,300,000	Weidenfeld law firm account at Suntrust
TOTAL: $26,436,869			SOURCE: Multiple

Chart prepared by Subcommittee

Ms. Douglas told bank officials that all of the funds sent to her accounts were supplied by her husband, Mr. Abubakar, and that she was unfamiliar with the particular offshore corporations that sent her wire transfers. She told one bank that she believed the funds were from "her husband's oil company, Oil Logistics."¹²⁵⁸ When the Subcommittee asked her about LetsGo, Guernsey Trust Company, Sima Holding, and China Castle Investments, Ms. Douglas responded through her legal counsel that she "has no personal knowledge of these entities. To the extent that any of these entities were the source of deposits into her accounts or the AUN account, she understood that all such deposits came from her husband."

Mr. Weidenfeld provided a similar response, through legal counsel, when asked about the funds sent to his law firm account and the AUN account he opened at Suntrust Bank - that he believed all the funds came from Mr. Abubakar and that he paid no attention to and performed no due diligence regarding the specific offshore corporations that actually sent the funds.

Information reviewed by the Subcommittee raise a number of questions about the source of the offshore funds. The $1.7 million in wire transfers supplied by Siemens AG is the most troubling, in light of the SEC's description of those transfers as "bribe payments" routed through Ms. Douglas' personal checking account for "[t]he purpose of... brib[ing] government officials" in Nigeria.¹²⁶⁰ The $500,000 from China Castle Investments is also troubling since the Subcommittee was unable to find out anything about this company, and Ms. Douglas says she has no personal knowledge about why it sent her half a million dollars.

The $10 million sent into the United States by the Guernsey Trust Company, including $7 million to Douglas-related accounts at Citibank, Wachovia and Eagle Bank; $900,000 to American University accounts; and $2.1 million to AUN and Weidenfeld accounts at Suntrust Bank, also raises questions. Concerns include why this company, formed in Nigeria, uses "Guernsey" in its name when it has no connection to that jurisdiction; why it did not inform Ms. Douglas in 2003, that it was the trustee of the Abubakar Blind Trust so that she could communicate that information to her U.S. banks; why the trustees of the Abubakar Blind Trust were not independent financial institutions but corporations beneficially owned in part by Mr. Abubakar's trusted friend and business partner, Gabriele Volpi; and why the trustees had no direct interactions with the recipients of its funds. Still another question is how the trust's sole

¹²⁵⁷ The AUN account at Suntrust received four additional wire transfers totaling $900,000 with documentation that

did not identify the originator, but which may be the Guernsey Trust Company.

¹²⁵⁸10/11/07 email from Wachovia investigator, JD-F-00007.

¹²⁵⁹11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PS1 Abubakar^

&_Weidenfeld 01-0003.

¹²⁶⁰ SEC v. Siemens Aktiengesellschaft, (USDC DC), Case No. l:08-cv-02167-RJL (Dec. 12, 2008), Complaint, at

paragraph 50.

229

asset - Intels shares from 1999 to 2003, and then Orlean shares from 2003 to the present --translated into the millions of dollars sent from the account to the United States.

In addition, Mr. Abubakar has been active in business ventures other than the oil industry, but it is not clear whether or to what extent revenues from those other business ventures were included within the Blind Trust. Moreover, as Chevy Chase Bank noted internally: "Mr. Abubakar's source of wealth is impractical to verify." That bank noted further:

"Prior to becoming Vice President, Mr. Abubakar was the chairman of seven Nigerian companies involved in oil services, insurance, pharmaceuticals, agriculture and the print media. From 1969 to 1989, he served in the "Nigerian Customs and Excise service. Given the business practices that existed in Nigeria over this timeframe, the ability of the [Chevy Chase] Trust company to determine that his wealth was achieved through legal means is suspect."¹²⁶¹

Still another set of questions involves LetsGo and Sima Holdings, which together sent more than $27 million in offshore funds into the United States, including $8 million to the Douglas-related accounts, $5.5 million to AUN accounts, and another $13.1 million to American University accounts, as discussed below. Ms. Douglas told the Subcommittee that she was not familiar with either corporation, but simply assumed they were sending funds supplied by her husband. She also told at least one bank that LetsGo was owned by her husband. Mr. Abubakar does not, however, have any ownership interest in either company, both of which are beneficially owned by members of the Volpi family. Mr. Volpi has told the Subcommittee that he sent funds to Ms. Douglas as part of a "moral agreement" acknowledging Mr. Abubakar's financial interest in Intels, after his shares were seized by General Abacha, and pursuant to lines of credit LetsGo had extended to the Abubakar Blind Trust. These revenues, however, provided her with funds outside of the very Blind Trust that was established by Mr. Abubakar to isolate his interests in the oil industry while he was in public office. How these payments were calculated and how they relate to the revenues generated by the shares held by the Blind Trust remain unclear.

The five U.S. banks that accepted substantial wire transfers from LetsGo or Sima Holdings for deposit into the Douglas-related accounts were unable to provide any information about either company to the Subcommittee. A bank that processed many of the wire transfers sent by those companies through its correspondent accounts, however, did have some information. The wire transfer documentation showed that both LetsGo and Sima Holdings sent funds to the United States from accounts at a small, private Swiss bank, Wegelin & Co., which routed the payments through its correspondent account at UBS. LetsGo also used an account at another Swiss bank, Banca Del Gottardo, which routed its wire transfers to the United States through its correspondent account at UBS. When the Subcommittee subpoenaed records from UBS regarding these wife transfers, it learned that on several occasions from 2005 to 2008, UBS had pressed Wegelin & Co. for more information about both companies.

¹²⁶¹ 1/30/06 internal Chevy Chase Bank memorandum, JD_004359.

¹²⁶² See 4/16/07 internal Citibank email from Citibank compliance officer regarding "Account Close-out Extension-
Jennifer Douglas," B00008535.

230

UBS began asking questions about LetsGo when, on June 2, 2005, Sonangol, the state-owned oil company in Angola, wire transferred $30 million from an account at Banco Africano Investimentos to the LetsGo account at Wegelin & Co., through Wegelin's UBS correspondent account.¹²⁶³ The LetsGo account had received funds from Sonangol on other occasions as well, as shown by this chart.

UBS Wire Transfers from Sonangol to LetsGo Ltd. 10/8/04 - 6/2/05
Date	Amount	Ordering Bank	Beneficiary
10/08/04	$377,515.65	Barclays Bank PLC	LetsGo Ltd. Inc. account at Bipielle Bank-Suisse, Chile
03/14/05	$189,453.05	Barclays Bank PLC	LetsGo Ltd. Inc. account at Wegelin & Co., Switzerland
06/02/05	$30,000,000.00	Banco Africano Investimentos, in Angola	LetsGo Ltd. Inc. account at Wegelin & Co., Switzerland
TOTAL: $30,566,968.70			SOURCE: UBS¹²⁶⁴ \|

Chart prepared by Subcommittee

UBS also asked Wegelin & Co. questions about a number of 2005 wire transfers totaling $1.8 million that had been sent from a Sima Holding account at Wegelin & Co. through UBS to various other accounts, including $1.3 million in wire transfers later identified as paying for expenses related to AUN, as shown in the chart below.

On October 5, 2005, a UBS banker sent an email to Urs Buff at Wegelin & Co. requesting information about LetsGo, specifically "the nature of this company's business, the length of time which you have maintained a relationship with this company, that the transactions fit within your customer's profile, etc."¹²⁶⁶ The email requested "the same information" for Sima Holdings.

More than a month later, on November 17, 2005, Debora Sager from Wegelin & Co. replied: "The transfer of USD 30 mil in favor of Letsgo Limited Inc. Panama is due to the selling of a 20% participation in an oil services company."¹²⁶⁷ With regard to Sima, Ms. Sager wrote: "The father of the beneficial owners of Sima is the sponsor of an university in Africa. They got the aim and objective of being one of the finest universities in Africa. He became Member of the Board of Trustees to run the affairs of the university."¹²⁶⁸ Ms. Sager stated that the June 2005 transfers were related to the university project "either for material supply or consultancy fees." She identified other wire transfers from Sima Holding as $335,000 in

¹²⁶³ UBS wire transfer records, UBStLETSGO 00005.

¹²⁶⁴ UBS Spreadsheet, Guernsey Trust and Letsgo LTD.xls.

¹²⁶⁵ 11/17/05 email from UBS to Wegelin & Co., UBSUETSGO 00003-04; 11/10/08 Subcommittee interview with
UBS.

¹²⁶⁶ 10/5/05 email from UBS to Wegelin & Co., UBS: LETSGO 00004.

¹²⁶⁷ 11/17/05 email from Wegelin & Co. to UBS, UBS: LETSGO 00003.

¹²⁶⁸ Id.

231 , , _ht$65 000 for watches, and $100,000 for other personal payments related to the father's yacht, $65,00U

^eXPellSeS'²⁶⁹ • ,._e transfers from Sima Holdings to LetsGo as

This chart identifies the $ 1.8 ^"^Xker's explanation for each such

discussed in the Wegelin email, showing the Wcge __

transfer.

t prepared by Subcommittee _the UBS banker

Uponrecervingthe.ovem^

in Lor of an other company whu,h ism ^ g ^ and travel■***»*

of Letsgo Ltd.," including saknes^rnun* _are _m particular P^X^General

also wrote; "Benefices of ftetta^ _and _bank _deto _s are *£™ *£ _forwarded the

beneficial owner of Letsgo ^d- and the _relatl0nship." The UBS banke

Partner of Wegelm & Co. ^w^^e day.¹²⁷³

Wegelm response to her supenors the ^ ^.^ ^

_Tw0 days later, on January 5, ^^^^S^ ^*£&«
LetsGo and Sima Holdings transactor,. ^ U _has _never »y^^^^

----------- ^:------------------------ " t „ 8 2005 corresponds to a wire

¹²⁶⁹ Id a- „ «i 00 000 for AUN expenses on ^ °, ' _remaining wire

transfers, totaling $1.2 million, wer pp

^r^S-emailfromUBStoWegeliB&Cc^"f^^oL-OS.

»« 1/3/06 email from Wegelin & Co. to VOS,

¹²⁷³ ^ ' ■, ims- LETSGO 00002.

i"⁴ 1/5/06 internal UBS email, UBS. Lb

the UBS banker that, "^^^tsmess, the length of tune wh_1Ch you questions: 'the nature of this company

232

a relationship with this company, that the transactions fit within your customer's profile,

etc.'"¹²⁷⁵

UBS continued to press Wegelin for information. As a result, on February 10, 2006, the UBS banker reported to the UBS compliance officer the following:

"One of the partners of Wegelin called me yesterday to discuss this case. Apparently, both Letsgo and Sima are owned by a wealthy Italian family which is active in the oil business. In other words, the beneficial owners of Letsgo and Sima are the same family. The profits of their business activities go either into Letsgo which is owned by the parents or into Sima which is owned by the two sons. They then distribute their earnings as already explained in previous emails. Two partners of Wegelin personally know the beneficial owners for many years and have a complete understanding of their activities."¹²⁷⁶

On February 14, 2006, the UBS compliance officer prepared an "AML Investigation Report" which included the information from the email exchanges and provided additional analysis.¹²⁷⁷ The AML Investigation Report stated:

"The father of one of the beneficial owners of SIMA is on the Board of Trustees of a university in Africa and from the transactions I determined the name of the university is ABTI-American University. It is a joint venture with American University in DC .... The name of the father of the SIMA BO [Beneficial Owner] is not provided but I ran all trustees, as listed on the site for ABTI, and there were no significant hits on World-Check. ... What is the business of SIMA Holdings that they are transferring this amount of money to ABTI? Is it the father's money held in an account at SIMA? If so, shouldn't he be listed as the Order Party? Otherwise, the actual party to the transfer is disguised and we do not really know the parties with whom we are dealing in such a transaction. ... I think we are concerned that we are guessing they [Sima Holdings] manage the father's money. I am not sure anyone from Wegelin ever say[s] it."

Despite these concerns, the UBS AML Investigation Report concluded that its questions about LetsGo and Sima Holdings were satisfied, because: "Two partners of Wegelin personally know the beneficial owners for many years and have a complete understanding of their activities. All transactions are in line with their profiles."¹²⁷⁹ The AML Investigative Report concluded that no Suspicious Activity Report would be filed with respect to either company or any of the wire transfers.¹²⁸⁰

The information in the UBS email exchanges with Wegelin & Co. and in the AML Investigation Report indicate that the key person associated with both LetsGo and Sima Holdings

233

is the father of a family from Italy; has two sons; is involved with ABTI-American University, now known as American University of Nigeria (AUN); and sits on the AUN Board of Trustees. Together, that information confirms the information provided to the Subcommittee in a letter from Mr. Volpi's legal counsel, that Gabriele Volpi is the key beneficial owner of both LetsGo and Sima Holdings.^I281 Mr. Volpi is also a beneficial owner of Orlean Invest Holding Ltd. which served as the initial trustee of the Abubakar Blind Trust from 1999 to 2003, as well as one of the three beneficial owners of the Guernsey Trust Company which replaced Orlean as the trustee of the Abubakar Blind Trust from 2003 to the present. The documentation indicates that through his associations with LetsGo, Sima Holdings, Guernsey Trust Company, Orlean, Intels, and the Abubakar Blind Trust, Mr. Volpi was involved, directly or indirectly, with many, if not most, of the wire transfers of offshore funds into the Douglas-related accounts. Ms. Douglas and Mr. Abubakar's legal counsel, Edward Weidenfeld, have described Mr. Volpi as Mr. Abubakar's "trusted friend and business partner."¹²⁸³

In 2008, UBS again contacted Wegelin & Co. for more information about LetsGo, Sima Holdings, and other entities associated with wire transfers sent to the Douglas accounts in the United States.¹²⁸⁴ Based upon its 2008 investigation, UBS told the Subcommittee that, in the fall of 2008, it determined that the reviewed wire transfers involved suspicious transactions, and that it would no longer facilitate wire transfers sent by LetsGo, the Guernsey Trust Company, or Mr. Abubakar, but would block their passage through the bank's wire transfer system.

C. American University and AUN

This case history has discussed the nearly $25 million in offshore funds sent to the Douglas-related accounts at Citibank, Wachovia, and Eagle Bank, and the $2.1 million sent to the AUN and Weidenfeld law firm accounts at Suntrust Bank. This section of the Report discusses the $14 million in offshore funds wire transferred to U.S. bank accounts belonging to American University to pay consulting fees related to American University of Nigeria (AUN).

When asked about these funds, American University told the Subcommittee that, over five years, wire transfers sent by LetsGo Ltd. Inc. totaled about $13.1 million, while wire transfers sent by the Guernsey Trust Company totaled about $900,000. American University told the Subcommittee that it "had no dealings with these companies" other than receipt of the funds and had no further information about them.¹²⁸⁶ AU indicated that it had understood Mr.

¹²⁸¹ The letter from Mr. Volpi's legal counsel indicates that LetsGo Ltd. Inc. is beneficially owned by Mr. Volpi a'¹'
his wife, while Sima Holdings is beneficially owned by the Volpi Family Trust, and accordingly by Mr. Volpi, hi?
wife, and their sons. See 12/22/09 Volpi letter at 2, 5.

¹²⁸² 12/22/09 Volpi letter at 3. As explained earlier, Orlean Invest Holding Ltd. is headquartered in London, is a
shareholder of Intels, and provides oil services at ports in Nigeria, Angola, Ivory Coast, and the Congo. See Orl^eInvest Holding Co. website, www.orlean-invest.com.

⁸³ 11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar_&_Weidenfeld 01-0031; 11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar & Weidenfeld 01-0020.

¹²⁸⁴ Subcommittee interview of UBS, 4/22/09.

¹²⁸⁵ Subcommittee interview of UBS, 4/22/09. UBS representatives noted that it did not officially block wire
transfers from Sima Holding, because there had been so few wires coming from that company.

¹²⁸⁶ 7/22/08 letter from American University's legal counsel to the Subcommittee, PSI-American JJniversity-Ol'
0005.

234

Abubakar had supplied the funds and, prior to the Subcommittee's inquiry, saw no reason to question why the funds had been sent by particular offshore corporations. ' Under current law, American University has no legal obligation to examine the source of funds provided to the university and does not do so.

As mentioned earlier, AUN was founded by Mr. Abubakar in 2003, to bring a United States-style university to northern Nigeria where he was bom. At the request of Mr. Abubakar and Ms. Douglas, American University became a partner in the AUN project, providing logistics and educational advice, and even linking its name and reputation to the new school. Originally called ABTI University, the school changed its name in September of 2004, to ABTI American University of Nigeria, and again in May 2007, to American University of Nigeria.¹ The university is located in Yola, which is the capital of Adamawa State in Northern Nigeria. It opened its doors to 110 students in September 2005, and saw its first graduates in 2009.'

Documents show that Ms. Douglas played an active role in encouraging American University to assist in the building, staffing, and operation of AUN. According to her legal counsel, Ms. Douglas was tasked by her husband to work with AU to provide management services for AUN.¹²⁹⁰ As part of that effort, she provided information to American University about AUN, and relayed messages from AU officials to her husband. Ms. Douglas' legal counsel told the Subcommittee that "Mr. Abubakar also tasked his wife with maintaining a U.S. bank account for convenience in paying certain expenses associated with AUN, including paying some employees of AUN who preferred to be paid in dollars," and that her husband "arranged to have money deposited into the account, and Mrs. Abubakar made payments out of the account to cover AUN expenses."¹²⁹¹

When the Subcommittee asked AU why Ms. Douglas was paying the salaries of AUN professors working at AUN out of her checking account at Citibank, AU officials expressed surprise and concern about an AUN trustee paying university salaries and expenses from her own bank account.¹²⁹² Beginning in 2009, AU has instructed AUN that it will no longer accept funds from third parties, but only from AUN accounts.

American University cooperated with the Subcommitte's investigation by producing documents and participating in interviews.

¹²⁸⁷ Id.

¹²⁸⁸ 5/28/07 Nigerian Corporate Affairs Commission, Certificate of Incorporation of a Company, JD-F-00430;
9/29/04 letter from the Nigerian National Universities Commission to AUN, JD-F-00431. Mr. Abubakar had earlier
established other schools in Nigeria under the name ABTI, including ABTI Nursery and Primary School and ABTI
Academy in Yola, Nigeria. Atiku Biography, at 131. "ABTI" apparently referred to two of his children, Abba and
Atiku Junior. Id.

¹²⁸⁹ 8/27/05 email from American University to AUN, PAU101922; Subcommittee interview of American
University, July 13, 2009.

¹²⁹⁰11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar & Weidenfeld 01-0001.

¹²⁹¹ Id. at PSI-Abubakar & Weidenfeld 01-0002.

¹²⁹² Subcommittee interview with American University, August 7, 2008.

235

Creation of AUN. Ms. Douglas was a doctoral student at American University from about 2000 to 2007. In 2002, she approached the AU Dean of the School of International Service about founding a private university in Nigeria, in part because American University had experience with opening a school in another country, the American University of Sharjah in the United Arab Emirates. According to AU, "Mr. Abubakar informed American that he was investing his personal funds into the creation of a private autonomous university in Yola, Nigeria. Given American's international expertise, Mr. Abubakar sought our advice on establishing a university."¹²⁹³

The Dean brought the idea to the AU president, Benjamin Ladner. Robert Pastor, AU Vice President of International Affairs, agreed to spearhead the project and later, in 2007, served one term on the AUN Board of Trustees.¹²⁹⁴

American University told the Subcommittee that it performed several site visits to Nigeria in 2002 and 2003, to determine the feasibility of the project. One of the team members then outlined a series of "positives" and "negatives" with regard to moving forward with the project.¹²⁹' The "Positives" included: "Proprietor has deep pockets, is committed to the project, and appears willing to agree to AU stipulations."¹²⁹⁶ When asked what those stipulations were, Mr. Pastor stated that "the budget process must be completely transparent."¹²⁹⁷ In terms of "Negatives," the team member listed the following: "Political factor. Project is completely dependent on power, authority, commitment, financial support of one person with current political clout. What of the future? ... Khashoggi factor. Is there a risk to AU[']s reputation? Role of rampant corruption and graft in Nigeria is unclear."

Mr. Pastor told the Subcommittee that he was very sensitive to Nigeria's reputation for corruption and explicitly addressed that issue before AU agreed to partner with AUN. Before entering into the project, he said AU personnel consulted with a number of organizations and persons including the EFCC in Nigeria, and were encouraged to move forward. In an email dated June 11, 2007, Mr. Pastor wrote:

"On the alleged corruption of Atiku. We were certainly aware of the different reports about Atiku when he first approached us about helping build the university. [We] sought out all sources, including the US Ambassador and the intelligence community. The US Ambassador said he had never seen anything beyond a rumor, and that was confirmed by

¹²⁹³ 7/22/08 letter from American University's legal counsel to the Subcommittee, PSI-American_University-01-
0001.

¹²⁹⁴ Mr. Pastor told the Subcommittee that he left the board of trustees in October of 2008 after one term. He noted
that the AU president thought he might have a conflict of interest in serving on the board, but when asked to
describe that conflict, Mr. Pastor said that he didn't know. Subcommittee interview of Robert Pastor, April 14,
2009.

¹²⁹⁵ 6/11/03 internal American University report "ABTI University Project - Nigeria," PAU000839.

¹²⁹⁶ Id. ■■ ' '

¹²⁹⁷ Subcommittee interview with Robert Pastor, April 14, 2009.

¹²⁹⁸ 6/11/03 internal American University report "ABTI University Project - Nigeria," PAU000839.

236

other sources. Recently, there are two charges that have been made about his corruption

- on Jefferson and by Obasanjo and the EFCC."¹²⁹⁹

In 2003, Mr. Pastor presented the project to the American University "cabinet," which consists of AU's various vice presidents, and recommended partnering with AUTM to establish the new university in Yola, Nigeria. The AU cabinet approved the proposal, and the AU president made the final decision to support the project.¹³⁰⁰ AUN was established on May 21, 2003.^lj01 In July 2003, Ms. Douglas gave $1 million to the American University School of International Service Building fund.'³⁰²

Consultancy Agreement. In December 2003, AU entered into a consultancy agreement with AUN to develop the new school. AU told the Subcommittee:

"On December 31, 2003, American entered into a five year management consultancy agreement ('2003 Agreement') to provide assistance in recruiting AUN's management team and faculty, developing the curriculum, and advising on architectural drawings and design of the campus master plan."¹³⁰³

The consultancy agreement included a fee schedule. The AU General Counsel told the Subcommittee that AU was concerned as to whether AUN could afford, not only the consulting fees, but also the costs of establishing a new university.¹³⁰⁴ According to AU, the capital costs over ten years to build AUN were estimated to be approximately $400 million. AU told the Subcommittee that, from the inception of the AUN project, it was understood that Mr. Abubakar would provide the needed funding for the school. Mr. Pastor told the Subcommittee that he personally asked Mr. Abubakar whether he had the approximately $75 - $400 million necessary to fund the school properly, and Mr. Abubakar responded that he could fund it. According to

¹²⁹⁹ Atiku Abubakar profile, PAU024731. See also AU newspaper describing the AUN project: "In May, a committee comprised of top University administrators and faculty members traveled to Nigeria, skeptical that establishing a university would be in AU's best interest. Among their concerns was the country's history of instability and corruption as well as ethnic and religious violence, Pastor said. Upon their return to the United States, however, they unanimously recommended that AU proceed." The Eagle "AU May Establish in Nigeria," November 11,2003.

http://media.www .theeagleonline.com/media/storage/paper666/news/2003/11/10/News/Au.May-Establish.ln.Nigeria -553139-shtml. ■

Subcommittee interview of American University, August 7, 2008.

¹³⁰¹ 6/15/05 internal American University email, PAU027604.

¹³⁰² See 11/21/03 American University Gift Agreement, PAU026518-19 (gift was given on July 9, 2003, but the Gift
Agreement to apply the funds to a new School of International Service was signed on November 21, 2003; the
Agreement provided Ms. Abubakar with "a naming opportunity within the new School of International Service
facility") American University told the Subcommittee that, from 1999 to 2004, the Abubakars donated $1,026,110
to American's School of International Service. See 10/10/08 American University's written responses to
Subcommittee questions, PS1 American University 05-0008.

1303 7/22/08 letter from American University's legal counsel to the Subcommittee, PSI-American University 01-
0001-02.

¹³⁰⁴ Subcommittee interview of American University, August 7, 2008.

1305 psi.American University 05-0007. In addition, AUN has had the following benefactors: the International Food
Policy Research Institute, the MacArthur Foundation, Mr. Kekere-Akum, and the Oracle Corporation. See 10/10/08
American University's written responses to Subcommittee questions, PSI American University 05-0007.

¹³⁰⁶ Subcommittee interview of Mr. Pastor, April 14, 2009.

237

Mr. Abubakar's attorney, Mr. Abubakar has spent about $150 million in personal funds to establish and operate AUN from 2003 to the present.¹³⁰⁷

Under current law, universities have no legal obligation to examine or inquire into the source of funds provided by a donor.'^,ns AU told the Subcommittee that it did not know the source of Mr. Abubakar's personal funds and did not inquire. One university official told the Subcommittee that he knew Mr. Abubakar was a businessman with multiple businesses, including Intels Nigeria, a profitable oil services firm. Another told the Subcommittee that both the current and past presidents of AU also met with Mr. Abubakar to discuss the AUN project.¹³⁰⁹ Mr. Pastor told the Subcommittee that he felt the AUN undertaking was a bigger financial risk to Mr. Abubakar than to AU, due to the amount of funding required.¹³¹⁰

AU Services. Once the consultancy agreement was signed in December 2003, American University told the Subcommittee that AU's "involvement was continuous" with regard to AUN's development, and that AU advised AUN on "everything."¹³¹¹ American University provided the following examples of work it performed to assist AUN:

-AU helped AUN advertise for and hire university officials.

-AU helped AUN establish a governance structure and provided trustee

recommendations.

-AU helped AUN create a budget and worked with AUN to show it what an appropriate

budget should look like.

-AU helped AUN with IT issues like selecting software.

-AU helped AUN set up major academic units, student programs, and residence halls.

-AU helped AUN set up a human resources department and recruit staff.

-AU helped AUN hire faculty and provide them with on-site training.

-AU helped develop student marketing plans.

-AU helped AUN set up classrooms, buy textbooks, and purchase laboratory equipment.

-AU helped AUN set up its library.

-AU helped AUN monitor its academic collections to make sure AUN is accredited.

-AU helped AUN setup cultural programs.¹³¹²

American University told the Subcommittee that AU's role was to help AUN become a fully operating, accredited educational institution. More than one year after the consultancy agreement was signed, AUN opened its doors in September 2005, with 110 students.

Abubakar Control of AUN Funding. Documents reviewed by the Subcommittee indicate that, from the inception of the university, it has experienced problems establishing

¹³⁰⁷ Subcommittee interview of Mr. Abubakar's legal counsel, April 1, 2009.

¹³⁰⁸ The American Council of Education told the Subcommittee that it was unaware of any law, regulation, or
guidance regarding a university's responsibility to conduct due diligence of gifts or transfers of funds to the
university. Subcommittee interview of American Council of Education, January 11, 2010.

¹³⁰⁹ Subcommittee interview of American University, August 7, 2008.

¹³¹⁰ Subcommittee interview of Mr. Pastor, April 14, 2009.

¹³¹¹ Subcommittee interview of Mr. Pastor, April 14, 2009.

¹³¹² Subcommittee interview of American University, August 7, 2008.

¹³¹³ 8/27/05 email from American University to AUN, PAU101922.

238

reliable funding and a transparent, accurate budget structure due to the level of control exercised by Mr. Abubakar over the university's funding, construction, and expenses. A 2006 audit commissioned by Mr. Abubakar found, for example, that AUN had "no good accounting and Internal Control Systems that would allow complete and accurate reporting of the financial transactions of the University."¹³¹⁴

One key issue was that Mr. Abubakar apparently insisted on providing funding to AUN on a month-to-month basis and did not deposit funds into AUN bank accounts under the control of university officials.¹³¹⁵ Minutes from an October 2006 AUN board meeting described the situation as follows:

"Up until this Board meeting, the Chief Financial Officer (CFO) of the University would seek funding from the Founder [Mr. Abubakar] on a month-by-month basis and also on special cases. At the same time, the Project Manager would work directly with the Founder on the major capital projects. Lately, this relationship had become dysfunctional both because of the strains that occurred because of a specific affair and because of the diminished capacity of the Founder to fund the institution at the same level as before."¹³¹⁶

A 2005 email from the AUN president also expressed concerns about diminishing funding for the university from Mr. Abubakar:

"[T]here is a feeling among some that the flow of revenue to the University will slow dramatically if Atiku's political fortunes continue to wane. The concerns were not eased by the recent effort to reduce the November transfer from the needed N28 million to N20 million, even though we are well under budget even with the larger figure. Construction deferrals/delays have also raised fears that the prospects for the University are inexorably linked to Atiku's political success."¹³¹⁷

Still another concern was that AUN funding for expenses often came from third party accounts unrelated to the university and outside of its control, making it difficult for AUN to track or control expenses. A February 2007 email from the AUN president to AU, when asked about its funding and expenses over the prior two years, is instructive:

"Most of the operating expense and almost all of the building capital expense did not pass through AAUN accounts. Management had no role in the tender process, the process of negotiation with contractors, or the approval of contracts, This was done by the Founder directly - or by Phil Osadtsuk, who reports directly to the Founder. Through a process he characterizes as 'forensic accounting,' George has done the best he can to reconstruct the spending so that the Board will have as complete a picture as we can present. As you

1314

9/14/06 Special Audit Report on Investigation of Financial Improprietary in the Accounts of the University, PAU017743. This audit was commissioned by Atiku Abubkar and performed by Tom Satimehin and Co. , Mr. Pastor told the Subcommittee that the AUN President and Vice-President disputed this audit. Subcommittee Interview with Robert Pastor, April 14, 2009.

¹³¹⁵ Subcommittee interview with Robert Pastor, April 14, 2009.

¹³¹⁶ 10/23/06 Robert Pastor's Memorandum "Results of the Board of Trustees Meeting, October 19-20, 2006 and
Follow Up," PAU102137.

¹³¹⁷ 11/11/06 internal American University email, PAU010272.

239

know, we have had the discussion in the past with both the Board and the Founder about the advantages of having funds designated for A AUN pass through AAUN accounts. However, this is ultimately the Founder's decision. My understanding is that most of the construction funds did not come from Atiku himself, but from other donors. I have heard informally where some of the funds have originated, but I do not have full information regarding who contributed what. If the Board feels that it needs that information, I think that Chairman Joda should approach the Founder directly on that question."

Mr. Abubakar seems to have exercised the same level of control over the Douglas accounts used to pay AUN expenses, sending funds on a monthly basis to enable Ms. Douglas to pay a variety of AUN bills, including the latest payroll expenses for AU professors teaching on the AUN campus. In a December 15, 2006 email, for example, Ms. Douglas wrote to AU officials that her account:

"functions as a 'pay as you go account' in that monies are sent in as it is requested for paying either salaries or purchases the founder approved and asked me to pay. When he was putting together the budget last year, I gave him all the information for all expenditures that I handled up to the end of last year. The only outstanding information is this year's transactions which he at least has the salary information since he provided those. I paid the vendors, but that information too he should have since he negotiates the contracts."¹³¹⁹

Documents reviewed by the Subcommittee indicate that Mr. Abubakar was actively involved in funding and expenditure decisions involving AUN, including determining what expenses would be paid from Douglas and AUN accounts in the United States. The documents reviewed by the Subcommittee do not show any involvement by the trustees of the Abubakar Blind Trust in the decisionmaking process, even though they were nominally in control of disbursements from the Abubakar Blind Trust and the Guernsey Trust Company provided millions of dollars to pay AUN expenses. LetsGo provided additional millions of dollars, which Mr. Volpi told the Subcommittee reflected his personal donations and extensions of credit to AUN. Neither Ms. Douglas nor American University were aware of Mr. Volpi's role, however, instead insisting that all of the funds sent to AU and AUN had come from Mr. Abubakar.

AUN Accounts in the United States. For a four-year period, from 2003 to 2007, Ms. Douglas used her personal checking accounts at Citibank to pay AUN expenses, including, beginning in 2005, paying the salaries of AUN professors who were teaching at AUN in Nigeria but seeking to be paid in U.S. dollars. When the Subcommittee asked AU why Ms. Douglas was paying AUN expenses from her personal accounts, AU expressed concern about this arrangement, in particular because Ms. Douglas was also an AUN trustee. The AU General

¹³¹⁸ 2/13/07 from AUN to American University, PAU033157. "George" refers to George Peterson was the Vice President of Finance and Administration for AUN. 9/21/06 internal American University memorandum, PAU0108924. ¹³¹⁹12/15/06 email from Ms. Douglas to American University, PAU015995.

240

Counsel told the Subcommittee that "a trustee shouldn't have a role in the finances at all." AU summarized the issue as follows:

"In 2005, AUN made American aware that Mrs. Abubakar, on behalf of AUN, paid the salaries of AUN faculty from her U.S. bank account. American was aware that this continued for a two-year period ending in 2007. The reason explained to American as to why Mrs. Abubakar paid AUN faculty and staff from her personal bank account was that AUN was not at that time able to open its own account, yet expatriate staff and faculty still needed to have their salaries wired to their own foreign accounts outside Nigeria."¹³²¹

As early as 2005, AU knew AUN was unable to open accounts in its own name at U.S. banks due to questions about the source of its funding. On August 22, 2005, for example, an outside attorney from Gume Porter & Baulig, which had been hired by AU, wrote to AU officials and the AUN president that she was unable to open an AUN account at Bank of America or Citibank, because:

"They wanted to know where [AUN] was getting the money. My response that the money would likely come from student tuition and other traditional university funding sources did not satisfy them. They indicated that they would need to be able to prove that the money came from tuition or other legitimate sources."¹³²²

Ms. Douglas also alerted AU officials in 2007, when Citibank informed her that it intended to close her accounts at the bank, including two accounts used to pay AUN expenses. On June 3, 2007, for example, Ms. Douglas sent AU officials an email stating: "Just a reminder again that Citibank AAUN salary account will be closed on June 23."'³²³ Mr. Weidenfeld also told the Subcommittee that after learning that the Citibank AUN accounts would be closed and "without this or a similar account, the ability of AUN to retain and recruit non-Nigerian staff would be severely limited," he "engaged in intensive discussions urging AU to provide [a] payment facility for expatriate staff and faculty," but "American University's financial office would not open such an account because AU wanted to maintain the separate identities of each

„H?4

institution.'

After the Citibank accounts closed, Ms. Douglas and Mr. Weidenfeld opened an AUN account at Wachovia Bank, where AU banked, but Wachovia closed that account after seven months due in part to incoming large wire transfers from unfamiliar offshore corporations. Mr. Weidenfeld then used his law firm to open an AUN account at Suntrust Bank. Despite the

¹³²⁰ Subcommittee interview of AU General Counsel, August 7, 2008. Ms. Douglas was a trustee of AUN. 3/1/04
memorandum from AUN to American University, P AU033007. Other trustees of AUN as of 2004 were:
Ambassador Andrew Young, Alhaji Ahmed Joda, Gabriele Volpi. Mike Adenuga, Manuel Vicente, Peter Okocha,
Jackie Chanrai, Adamu Abubakar, Benjamin Lardner, Robert Pastor, and William Jacobs.

¹³²¹ 10/10/08 American University's written responses to Subcommittee questions, PSl-AmericanJJniversity-05-
0008. ,

¹³²² 8/22/05 email from Gume Porter & Baulig to American University, PAU0109008.

¹³²³ 6/3/07 email from Ms. Douglas to American University, PAU026491.

¹³²⁴11/13/09 letter from Ms. Douglas' legal counsel, London & Mead, to the Subcommittee, PSI-Abubakar &Weidenfeld-01-0023; Subcommittee interview of American University, August 7, 2008.

241

closure of the Citibank and Wachovia accounts, AU apparently did not have any concerns about the source of funding of the AUN accounts or how their accounts were functioning.

AU Receipt of Offshore Funds. Over the same time period from 2003 to 2007, AU itself was receiving wire transfers from two offshore corporations, LetsGo and Guernsey Trust Company, to pay for consulting fees incurred in connection with AUN. According to a July 22, 2008 letter from AU to the Subcommittee:

"Mr. Abubakar made payments, through Uetsgo Ltd and Guernsey Trust Company, on behalf of AUN for the services American rendered pursuant to the 2003 Agreement. American received payments from Letsgo totaling $13,149,758 and the Guernsey Trust Company amounting to $900,000. American [University] has had no [other] dealings with these companies.

AU documents show that when some of these wire transfers arrived, the AU treasury operations office noted their unusual origin and had to research their purpose. In September 2004, for example, a member of the treasury operations office sent an internal email stating: "Received a wire today for $100K from Northern Int'l Bank [in] Lugano, Chile .... Originator is S1MA Holding Company LTD. Expecting a gift?" Two weeks later, his colleague asked: "did we ever find out what this was for ...?" Two weeks after that he was told: "The wire ... was sent by ABTI."¹³²⁶ In 2007, a treasury operations officer noted: "we recvd $499,980 incoming wire from Letsgo Ltd FBO ABTI." Her colleague asked: "where do these wires originate ... .what country?" She responded: "This wire originated from Panama."¹³²⁷

When asked if AU was concerned about receiving $14 million from unfamiliar offshore corporations, the AU General Counsel stated that we "weren't concerned until we got the letter from you and now we've put everything on hold."¹³²⁸ AU officials told the Subcommittee that the university knew LetsGo was a Panamanian company, but had no further details about the corporation, including why it was wire transferring the funds for the AUN consulting work to AU.¹³²⁹ AU officials also said they had no information about the Guernsey Trust Company. The documents also show no evidence that the tmstees of the Blind Trust had any formal or informal involvement in releasing Abubakar trust funds to pay AU fees.

AU told the Subcommittee that the University had asked Mr. Abubakar or his assistant about the source of the payments for the consulting fees, and were informed that all of the funds provided to AU in connection with the AUN came from Mr. Abubakar.¹³³⁰ AU officials indicated that they were comfortable with that information and had no legal obligation to inquire into the source of Mr. Abubakar's wealth or the source of the specific funds sent to the university. American University indicated that it did not believe it was the recipient of suspect

¹³²⁵ 7/22/08 letter from American University's legal counsel to the Subcommittee, PSI-American University 01-
0005.

¹³²⁶ September and October 2004 internal AU emails, PAU020271-72.

¹³²⁷ July 2007 internal AU emails, PAU019408-09.

¹³²⁸ Subcommittee interview of American University, August 7, 2008.

¹³²⁹ Subcommittee interview of American University, April 14, 2009.

¹³³⁰ Subcommittee interview of American University, July 13, 2009.

242

funds in the AUN matter. American University also expressed pride in having assisted in the creation of American University of Nigeria.

To prevent future concerns about receiving payments from unfamiliar third parties, American University told the Subcommittee that, in December 2008, it had entered into a new one year consultancy agreement with AUN and, as part of that agreement, required all future payments to AU to be made exclusively from AUN bank accounts.

Disclosure Reports. Although universities have no legal obligation to inquire into the source of funds provided through a gift or transfer, current law does require universities to publicly disclose gifts and contracts from a foreign source if the value is in excess of $250,000, by filing online disclosures with the U.S. Secretary of Education.¹³³² American University told the Subcommittee that, although it had filed these disclosures in the past, and several had been filed with respect to its consulting work for AUN, it had not filed all of the required reports.¹³³When the Subcommittee requested copies of the public disclosures related to AU's consulting work for AUN, American University discovered that it had inadvertently failed to file the required disclosures since 2006. On January 25, 2010, American University filed the missing public disclosures required by law, reporting more than $11 million in additional foreign payments related to its consulting work for AUN.¹³³⁴ The public disclosures do not require American University to identify the source of the foreign payments, so the reports make no reference to Mr. Abubakar, Ms. Douglas, LetsGo, or the Guernsey Trust Company.

D. Conclusion

This case history demonstrates how, over an eight-year period from 2000 to 2008, Ms. Douglas and Mr. Abubakar were able to bring over $40 million in suspect funds into the United States, primarily through wire transfers sent by offshore corporations. Over this time period, Ms. Douglas opened over 30 accounts at U.S. banks, most of which were unaware of her PEP status due to incomplete PEP lists maintained by third party vendors and inadequate due diligence procedures. In one case, a bank failed to document her PEP status even after being told of her marriage to the former Vice President of Nigeria. In two instances, Ms. Douglas used her U.S. legal counsel, Mr. Weidenfeld, to help convince a bank to open an account. At each bank where she opened an account, she described herself as unemployed or a student, soon began receiving large wire transfers from offshore corporations, and explained when asked that she had little or

¹³³¹ Subcommittee interview with American University, July 13, 2009. See also AU/AUN consultancy agreement,

PSI-Arnerican_University-l 2-0007.

¹³³² See, Section 1209 of the Higher Education Act of 1965, codified at 20 USC §101 If. This disclosure requirement
was first enacted in 1986, as part of a reauthorization of the Higher Education Act. The House Committee report on
the legislation explains that the law was "intended to promote clarity of academic purpose by avoiding the distortion
that may occur in an academic program when large gifts are given to the institution from a foreign entity without
public knowledge of that gift." House Committee on Education and Labor Report on H.R. 3700, Higher Education
Amendments of 1985, Rep. 99-383 (Nov. 20,1985), at 87.

¹³³³ American University had filed disclosures related to its consulting work for AUN from 2002 to 2005, disclosing
a total of about $6.3 million in foreign payments related to Nigeria.

¹³³⁴ The AU disclosures now on file with the Department of Education cover all payments related to its consulting
work for AUN from 2002 to 2009, totaling in excess of $17.5 million. This total is higher than the $14 million
discussed in this Report, because it includes payments of more than $3.6 million made during 2008 and 2009, which
occurred outside the scope of the information requests made by the Subcommittee.

244

VI. ANGOLA CASE STUDY: EXPLOITING POOR PEP CONTROLS

Angola, an oil producing country on the coast of western Africa, is known for an ongoing corruption problem, weak anti-money laundering (AML) controls, and a cash-intensive banking system. This case history examines three Angolan PEP accounts, involving an Angolan arms dealer, an Angolan government official, and an Angolan private bank that caters to PEP clients, in which the accountholder gained access to the U.S. financial system and exploited poor U.S. AML and PEP controls.

Pierre Falcone is a notorious arms dealer, known for selling weapons to Angola during its civil war and for his close association with Angolan President Jose Eduardo dos Santos. He has long been the subject of criminal investigations in France, was imprisoned for one year beginning in 2000, was a fugitive from a 2004 French global arrest warrant, was convicted in France in 2007 and again in 2009 on charges of illegal arms dealing, tax fraud, and money laundering, and is now serving a six-year prison sentence. Yet for 18 years, from 1989 to 2007, he and his relatives were able to make use of nearly 30 accounts at Bank of America in Scottsdale, Arizona. Mr. Falcone used personal, family, and U.S. shell company accounts at the bank to bring millions of dollars in suspect funds into the United States and move those funds among a worldwide network of accounts. Although aware of his status as an arms dealer, Bank of America did not treat Mr. Falcone as a PEP, did not designate his accounts as high risk, and maintained the Falcone accounts with few questions asked. In 2007, after receiving a Subcommittee inquiry about the Falcone accounts, the bank conducted a new due diligence review, closed the accounts, and expressed regret at providing Mr. Falcone with banking services for years.

Dr. Aguinaldo Jaime, a senior Angolan government official, was head of Banco Nacional de Angola (BNA), the Angolan Central Bank, when he attempted, on two occasions in 2002, to transfer $50 million in state funds to a private account in the United States, only to have the transfers reversed by the U.S. financial institutions involved. Dr. Jaime invoked his authority as BNA Governor to wire transfer the funds to a private bank account during the first attempt and, during the second attempt, to purchase $50 million in U.S. Treasury bills for transfer to a private securities account. Both transfers were initially allowed, then reversed by bank or securities firm personnel who became suspicious of the transactions despite the reputation of the foreign official involved. Partly as a result of those transfers and the corruption concerns they raised, in 2003, Citibank closed not only the accounts it had maintained for BNA, but all other Citibank accounts for Angolan entities.

Banco Africano de Investimentos ("BAI") is a $7 billion private bank whose largest shareholder is Sonangol, the Angolan state-owned oil company, and which caters to Angolans in the oil and diamond industries and government. Over the last ten years, BAI gained entry to the U.S. financial system through accounts at HSBC in New York, using HSBC wire transfer services, foreign currency exchange, and U.S. dollar credit cards for BAI clients, despite refusing to fully disclose its owners or provide a copy of its AML procedures. BAI's resistance to HSBC oversight, weak AML controls, vulnerability to corruption, and PEP clientele, indicate that BAI

, i , uc nr has failed even to designate ought to be subject to tough U.S. AML and PEP controls, but HSBC has failed BAI as a high risk client warranting enhanced monitoring.

j f t i q financial institutions to Together, these accounts demonstrate, again the need foi ILS. Imanc strengthen their AML and PEP controls to keep foreign corruption out ot the

A. Background

Angola. Angola is located on the west coast of Africa, with a ^^₀fro^y twice the sfze of Texas.¹³³⁵ Its official language is Portuguese, and it has a popu 13 million.

u 11 1Q75 ¹³³⁶ From its

Angola gained its independence from Portugal on ^™b^>£ _q _p _lar

inception, the country was engulfed in a civil war, initially ^J^^Uon of
Movement for the Liberation of Angola (MPLA , the£atom*°*^ _mlTA). _Under the
Angola (FNLA), and the National Union for Total ^Inf P^endence °*_ *^g° hold elections. When
t?91 Biscesse Lord, the MPLA and UNITA agreed to a ceasefire^andTo hold ^ _tQ

!he MPLA won a plurality of the vote UNITA ^%^$££$m spread,
war The 1994 Lusaka Protocol brought about another ceasetue dux _n

Id war continued until 2002. The civil war resulted in the death of as many Angolans and the displacement of 4 million.

Angola held its first presidential election in 1992, ^^^^iSS T^
dos Santos of the MPLA won a plurality of the vote ^™^™X <&*>*> became the
Angola. UNITA rejected the results and returned to war while^^ _Umted _Nations and
recognized government. UNITA's insurgency effort wa*™£eMxA by ^^ _&

United States. In 1993, President Clinton issued Executive O** 2865 ^

national emergency refated to Angola and stated *a ^^^ _sale _or _supply from the
international peace and secunty. The bxecu wejovoe P _ducts _t0 Angola. The

United States of any arms, related material, petro eum and P^oleum p ^

order also specifically prohibited the sale or supply of such commodities

Additional sanctions followed, further tightening United ^S*^-*^^£a offices
targeting UNITA. Executive Order 13069, ^£?^ ^S parts and related
in L Umted States and restricted the sale or supp y of ncrafi:*w P _of ^^

services. Executive Order 13098, issued August 18, ^lW*>^™«* h _watercraft,

1335 ,336 _w1337 1338

• taL 0*r ,2₈₆5 ****** * .993: "Prolans C=«» T*— ***.*<"*.■**>*

1996), 1127 (August 28,1997), 1130 (September 29,1997), 1173 (June 12,

Vittp-/, www, un.org.

Z in mining, motorized vehicles, watercraft, spare ^^^^ecutive Order was mining services, and ground or waterborne transportation services, bac issued in conjunction with U.N. resolutions.

In 1998, the United Nations took action to block trade ^t^Zty and was trade sanctions again targeted UNITA which controlled ^^f^l^TZmct in usmg the proceeds fromdian^^^

Angola. The sanctions made it more difficult to trade in Aiigo _arms.for-diamonds

smuggling schemes ensued, followed by high-profile scandals involving arms

in office today, nearly 18 years after his initial **«. ^ e8ye ^ ^^^ ^ allowed any new election for the presidency, although a presidential e scheduled for 2012.

Angola's economy today is largely reliant on two extractive f^^*^
Angola is currently Africa's second largest oil ^/uc^ ^^b
Angola's exports.¹³⁴⁴ Sonangol is the state owned ^^^^Zb^mc a key
Angolan oil. Since 2004, China, f^"*^^^SXbe China's mam supplier
developer and purchaser of Angolan oil. Angola is now northeastern

of oil^⁶ In addition to oil, Angola has major diamond reserves, located m ^^

diamonds.

region, and is among the world's leading ^^^ _pr0Tetd sell Angolan largest export. Endiama is the state-owned company that neips piou

- see UN Security Council Resdution 1173 ij^^^^^^J^F^ ^

Resolution, "Council Decides Previously Specified ^Me*^su%^AS^a ^^, ₉^

Instead of 25 June," June 24, 1998, ^llW^^ _or factions opposed to legitimate

>³⁴> "Conflict diamonds are diamonds that originate ^^™£y «ti°n in opposition to those

and internationally recognized governments and are used to ru ^ ^^ ^^

governments, or in contravention of the decisions of the Secunty Council, u

httn://w\vw.unoro/peace/africa/Diamcji4Mml. ttntTA rebels " April 19, 2001,

^T^to^rr7TnW^^^ The

!₃tn^www_Jr_ide^^

Ina^eiitT^goTa^^^ Anns V olah⁽^^_BS=S!iSJ_m^M^^

692922.html.. «™/economv html ("As independence was proclaimed in

¹³⁴³ See Embassy of Angola website, h"B^™^^ _after _Nl _ia _and Gabon.
1975, Angola ranked thirdon the list of Africa s mo*^^^S. expected that by next year it will
Angola is currently the second oil producer with .^imJ¹°ⁿ,J^/d °^UtpU '

overtake Nigeria, with a current output of 2.3 million b/fl. j- ._Qll _is _the _backbone of the Angola's

¹³⁴⁴ Embassy of Angola: Economy; Mtr^www^n^ojMjr^co^^ I
economy. This sector makes up over 90% of the Country ^n,Y

¹³⁴⁵ CNNMoney.com, "China's appetite for African oil grow* *«*™^
to^^^ February 9, 2007,

¹³⁴⁶ The Heritage Foundation, "Into Africa: China s Grab ror
i₂h_JvaWw heritage.org/researcli/ajncaMJ006XFM-
^nb^f^ol^^^

247

Despite its oil and diamond reserves, Angola ranks among the world's worst performing countries in life expectancy and infant mortality rates.'^j4' The average Angola citizen can expect to live to only 41.7 years, one of the lowest rates in the world. Almost half of Angolans do not have access to safe drinking water.¹³⁴⁹ The country is also known for human rights abuses. The U.S. Department of State's 2008 Human Rights Report stated: "[T]he government's human rights record remained poor, and there were numerous, serious problems."'⁰⁵⁰ The report cited the following problems:

• "Government security forces tortured, beat, and otherwise abused persons."

• "Police often extorted bribes."

• "The constitution provides for an independent judiciary; however, the judiciary remained understaffed, inefficient, corrupt, and subject to executive and political influence."

• "Authorities arrested, harassed, and intimidated journalists."

Corruption. Angola has long had a problem with corruption. In 2002, an International Monetary Fund (IMF) report found that nearly $1 billion had disappeared from the Angolan treasury in 2001, and over the prior five years, more than $4 billion remained unaccounted for.¹³⁵¹ On November 9, 2006, Angolan police arrested over 100 protestors who marched in the capital city of Luanda to protest corruption in government.¹³⁵² The protestors handed out flyers accusing Angolan officials of siphoning funds from the Angola people to accounts in France. Shortly afterwards, on November 15, 2006, the IMF urged Angola "to tackle deep-rooted governance and corruption issues in the extractive sectors and expressed serious concern that progress on these issues is stalled."¹³⁵³

In 2008, Transparency International ranked Angola 158th out of 180 countries on its annual Corruption Perceptions Index.¹³⁵⁴ The U.S. State Department's 2008 Human Rights Report characterized corruption in Angola as "widespread" yet noted "there were no public investigations or prosecutions of government officials during the year."¹³⁵⁵ The State

¹³⁴⁸ CIA World Fact Book, Country Comparisons - GDP Per Capita; https://www.cia.gov/librarv/publications/the-
world-factbook/rankorder/2004rank.html; The United Nations World Population Prospects: The 2008 Revision.

¹³⁴⁹ UNDP Human Development Index Statistics, http:// hdrstats.undp.org/countries/country_fact_sheets/cty
fs_AGO.html.

^B5° U.S. Department of State, "2008 Human Rights Report: Angola," February 25, 2009, http://www.state.gOv/g/drl/rls/hrrpt/2008/af/l 18985.htm.

¹³⁵¹ International Monetary Fund, "IMF Report: Angola Staff Report for the 2002 Article IV Consultation," March
18,2002, at 9.

¹³⁵² Human Rights Watch, "Angola: New OPEC Member Should Tackle Corruption Not Critics," December 14,
2006, http://www.hrw.ora'en/news/2006/12/14/angola-new-opec-member-should-tackle-corruption-not-critics.

¹³⁵³ IMF press release, "IMF Executive Board Concludes 2006 Article IV Consultation with Angola," ,
Public Information Notice No. 06/133, November 15, 2006,
http://wwvv.imf.org/exteiiial/np/sec/pn/2006/im0AL13Jitin

¹³⁵⁴Transparency International, 2008 Corruption Perception Index, 'http://www.transparencv.org/policv research/surveys indices,cpi/2008. ¹³⁵⁵ U.S: Department of State, "2008 Human Rights Report: Angola," February 25, 2009, http://www.state.gOv/Vdil.rIs/hnT3t/2Q08/af/1 18985.htm.

248

Department also noted serious transparency concerns related to Angola's two major state entities, Sonangol and Endiama.'^33<5

In addition, Angola has long been known for weak anti-money laundering and anti-corruption controls, in 2008, the U.S. State Department's International Narcotics Control Strategy Report described the country as follows:

"Angola currently has no comprehensive laws, regulations, or other procedures to detect money laundering and financial crimes. Other provisions of the criminal code do address some related crimes. The various ministries with responsibility for detection and enforcement are revising a draft anti-money laundering law drawn up with help from the World Bank. ... The Central Bank has the authority to freeze assets, but Angola does not presently have an effective system for identifying, tracing, or seizing assets. ... Angola's high rate of cash flow makes its financial system an attractive site for money laundering. ... These massive cash flows occur in a banking system ill-equipped to detect and report suspicious activity. The Central Bank has no workable data management system and only rudimentary analytic capability. Corruption pervades Angolan society and commerce and extends across all levels of government."¹³⁵⁷Given Angola's turbulent history, corruption problem, and weak AML and anti-corruption controls, some U.S. financial institutions have decided to subject Angolan accounts to enhanced due diligence and monitoring; some have decided not to open such accounts at all.

B. An Angolan PEP: Moving Millions of Dollars for an Arms Dealer Pierre Joseph Falcone is a notorious arms dealer, known for selling weapons to Angola during its civil war and for his close association with Angolan President Jose Eduardo dos Santos. He has long been the subject of criminal investigations in France, was imprisoned for one year beginning in 2000, became a fugitive from a 2004 French global arrest warrant, was convicted in France in 2007 and in 2009, on charges of illegal arms dealing, tax fraud, and other financial crimes, and is now serving a six-year prison sentence. Yet for 18 years, from 1989 to 2007, Mr. Falcone and his relatives used 29 accounts at Bank of America in Scottsdale, Arizona, to bring millions of dollars in suspect funds into the United States to advance their business interests. In the last eight years the Falcone accounts were open, from 1999 to 2007, the Subcommittee was able to trace over $60 million in suspect account activity that either passed through U.S. correspondent accounts or ended up in U.S. bank accounts.

When the accounts were initially opened in 1989, U.S. anti-money laundering laws were limited, and the Falcones had to provide only minimal information to gain entry to a U.S. bank. In 2001, enactment of the Patriot Act tightened AML requirements for accounts held by foreign senior political figures, their relatives, and close associates, a group of persons now known as Politically Exposed Persons ("PEPs"), and made handling foreign corruption proceeds a U.S. money laundering offense. Despite those new legal requirements, and a burst of publicity about

¹³⁵⁶ id. :

¹³⁵⁷ U.S. Department of State, "2008 International Narcotics Control Strategy Report, Volume II Money Laundering and Financial Crimes," March 2008, at 83-84.

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and the Beverly Loan Company, an upscale pawn shop in Beverly Hills, California. The Subcommittee learned that the Beverly Loan Company issues loans secured by fine jewelry, and since 2001, Ms. Falcone had obtained over $7.3 million in loans in her own name and the name of her assistant. These loans were a frequent source of funds for the Falcone accounts from 2001 to 2007.

Many of these transactions occurred prior to the special review of the Falcone accounts conducted by Bank of America in June 2005, yet the bank deemed the account activity as "normal," and failed to designate the Falcone accounts as high risk or to require enhanced monitoring, even after learning he was an international arms dealer. The documents indicate that the bank also failed even to consider designating Mr. Falcone a PEP client. When asked about specific transactions, Bank of America told the Subcommittee that its 2005 review had looked at only 19 months of account activity and did not examine the wire transfers sent by unidentified clients. The bank also said that it did not collect specific information about the AALL Trust and Banking Corp., Cullen Investments, Rego Holdings, Valley Marketing, CADA, or Beverly Loan Company, and had not viewed the high-dollar transfers among Falcone accounts to be of concern. The bank also told the Subcommittee that it did not know Ms. Mendez's relationship to the Falcones, despite her years as a banking customer and the high volume of transfers between the accounts belonging to her and the Falcones. In an interview with the Subcommittee, Bank of America expressed regret for providing years of banking services to a notorious arms dealer. In 2007, Bank of America closed the Falcone accounts.

(1) Background

For many years, Pierre Falcone has been publicly associated with illegal arms trafficking, tax evasion, bribery, and other misconduct. He is most frequently associated with a massive scandal that broke in France in 2000, dubbed "Angolagate" by the media, involving illegal arms sales in Angola at exorbitant prices facilitated by millions of dollars in bribes paid to government officials.¹³⁵¹

During the 1990s, Mr. Falcone worked as a consultant to the French government agency, SOFREMI, which handles foreign amis sales. He helped arrange numerous arms sales to foreign countries, including Angola which was then in the midst of its civil war and subject to a UN arms embargo. Over the years, allegations mounted about his role in conducting illegal arms sales in Angola in violation of the embargo, as well as his alleged involvement with bribes paid to French and Angolan officials. He became the subject of multiple criminal investigations.

In December 2000, Mr. Falcone was detained in a French jail pending an investigation into allegations of his involvement with tax fraud, influence peddling, and corruption of public officials associated with arms sales in Angola.¹³⁵⁹ One year later, in December 2001, he was

¹³⁵⁸ See, e.g., The Telegraph, "Angolagate 'Arms for Oil' Trial Pens in Paris," October 6, 2008,
http://www.telegraph.co.uk/news/worldnews7^urope/fran

Paris.html.; Third World Traveler, "The Influence Peddlers," 2002, http://www.thirdworldtraveler.convWeapons-Influence Peddlers MAK.html.

¹³⁵⁹ See Qrdonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 4. See also In These Times, "The Arms Dealer Next
Door," December 22, 2001, http://www.imhesetimes.com/issue/26/04/feature4.shtml.

251

released from prison, after posting more than 100 million French francs (about $14 million) in bail, surrendering his passport, and agreeing to other travel restrictions.¹¹⁶⁾ In 2002, French authorities initiated a new round of investigations into allegations of wrongdoing involving Mr. Falcone.¹³⁶¹ In June 2003, the Angolan government, under President dos Santos, appointed Mr. Falcone as the Angolan ambassador to UNESCO, and Mr. Falcone asserted diplomatic immunity from criminal prosecution.¹³⁶² He then left the country in September 2003, in violation of his bail restrictions.¹³⁶³ French authorities eventually denied his claim on the ground that his arms trafficking activities were not a function of his diplomatic status.¹³⁶⁴ In the meantime, a French magistrate issued two summons for Mr. Falcone to appear in October and November 2003. When Mr. Falcone did not appear in response to either summons, on January 14, 2004, the

magistrate issued a global warrant for his arrest.^lj66 That arrest warrant remained outstanding

for several years.

In addition to the French proceedings, in 2002, Swiss authorities also initiated an

investigation into Mr. Falcone and the Angolagate scandal.¹³⁶' That investigation was suspended

in 2004, however, by the Public Prosecutor of Geneva, Daniel Zappelli.¹³⁶⁸

About three years after he left, Mr. Falcone returned to France to face multiple charges

related to his work for SOFREMI. In March 2007, he was one of 42 people indicted on charges

related to illegal arms trafficking in Angola, including Jean-Christophe Mitterrand, son of the

¹³⁶⁰See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 4. See also In These Times, "The Arms Dealer Next Door," December 22, 200.1, www.inthesetimes.com; Le Monde, "Pierre-Joseph Falcone a ete remis en liberie apres un an de detention," December 4, 2001; Third World Traveler, "The Influence Peddlers," 2002, http://www.thirdworldtraveler.com/WeiirMiMnfluence Jeddlers^MMJ^^

¹³⁶¹ See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 4. See also Amnesty International, "Undermining
Global Security: the European Union's arms exports," International Action Network on Small Arms website,
http://www.iansa.org/regions/europe/di)CUiriMMmtomining_securitv/brokering...... transport,htm.

¹³⁶² See, e.g., Le Monde, "Un mandat d'arret international a ete delivre contre Pierre Falcone," January 17, 2004;
Amnesty International, "Undermining Global Security: the European Union's arms exports," International Action

Network on Small Arms website, http://www.iansa.org/regions/europe/di>amjg^

¹³⁶³ See, e.g., Le Monde, "Un mandat d'arret international a ete delivre contre Pierre Falcone," January 17, 2004; Le
Monde, "Pierre Falcone a quitte la France grace a son passeport diplomatique angolais, September 23, 2003.

¹³⁶⁴ See Ordonnance De Soit Communique, Tribunal de Grande Instance de Paris, No. du Parquet: 0019292016, No.
Instruction: 2076/00/40 (11/18/2003). See also, Amnesty International, "Undermining Global Security: the
European Union's arms exports," International Action Network on Small Arms website,
http://www.iansa.org/regions/europe/documents/undermining security /brokering transport.htm.

¹³⁶⁵ See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 7. See also Le Monde, "Un mandat d'arret
international a ete delivre contre Pierre Falcone," January 17, 2004.

¹³⁶⁶ See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 6. See also Le Monde, "Un mandat d'arret
international a ete delivre contre Pierre Falcone," January 17, 2004.

¹³⁶⁷ See, e.g., Le Monde "Le volet Suisse de l'enquete sur l'affaire Falcone pourrait etre menace," November 21,
2002- Global Witness "Time for Transparency: Coming clean on oil, mining and gas revenues", March 2004, at 42-
45 (citing a February 2002 "Geneva-based investigation into the possible involvement of Pierre Falcone in 'money
laundering, support for a criminal organisation' and 'corruption of foreign public officials'").

¹³⁶⁸ See, e.g., Aktion Finanzplatz Schweiz, the Berne Declaration, and Global Witness, press release, "Geneva
Prosecutor must revive Angola Oil Corruption Probe," February 15, 2008.

252

former French President, and Charles Pasqua, former French interior minister.'"⁶⁹ Among other charges, Mr. Falcone and his business partner, Arkadi Gaydamak, were alleged to have sold 170,000 land mines, 420 tanks, 12 helicopters, six warships, and other weapons to the dos Santos Administration during the Angolan civil war in violation of the UN arms embargo. ^J ' Brenco International, a company beneficially owned by Mr. Falcone and Mr. Gaydamak, allegedly brokered the amis sales, which were valued at $790 million.¹³'¹ In addition, Mr. Falcone was alleged to have ordered bank transfers in favor of Angolan officials that, between 1993 and 2000, totaled at least $54 million.¹³⁷² In October 2009, Mr. Falcone was convicted of illegal arms sales,

1373

tax fraud, money laundering, and embezzlement, and sentenced to six years in prison.

Earlier, he had been convicted in two other cases on charges of tax fraud and misappropriation of

public funds, and received prison terms of one and four years.¹³⁷⁴ He is currently incarcerated in

France.

Despite Mr. Falcone's notorious reputation and involvement in ongoing criminal investigations, he and his family were able to maintain a lavish lifestyle in Arizona since the 1980s.¹³⁷⁵ In 2000, Mr. Falcone purchased a mansion in Paradise Valley, Arizona, for a reputed $9.6 million, then the highest-value residential purchase in Arizona history.¹³⁷⁶ The house is currently on sale for $14.5 million, and is described in a Southeby's advertisement as having over 16,000 square feet of space, seven bedrooms, ten bathrooms, a pool, tennis court, and five-car garage.

Mr. Falcone is married to Sonia Montero Falcone, a former Miss Bolivia International and president of Essante Inc., a Utah company specializing in health and beauty products. On

¹³⁶⁹ See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007). See also "Undue Diligence," Global Witness, March
2009, at 94, citing Angolagate indictment, 5 April 2007.

¹³⁷⁰ See Ordonnance De Renvor Devant le tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 49-50. See also IPS News, "No Angolans at
'Angolagate' Trial," October 1 5, 2009, http://ipsnews.net/news.asp'?idnews=44276.

¹³⁷¹ Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du Parquet:
0019292016, No. Instruction: 2076/00/40 (2007), at 29, 80. See also Wall Street Journal, "French Businessmen Are
Sentenced for Arms Trade," October 28, 2009; The Guardian, "French elite on trial in $791m Angola arms case,"
October 7, 2007.

¹³⁷² See Ordonnance De Renvor Devant le Tribunal Correctionnel Non-Lieu Partiel et Requalification, No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 58-59.

¹³⁷³ See New York Times, "French Power Elite Face a Fall From Grace," October 27, 2009,
http://www.nvtimes.com/2009/10/28/worid/europe/28iht-paris.html: Wall Street Journal, "French Businessmen Are
Sentenced for Arms Trade," October 28, 2009.

See, e.g., "Pierre Fralcone condamne a quatre ans de prison ferme pour fraude fiscale," Le Monde, January 18, 2008; Le Monde, "Pierre Falcone : quatre ans ferme pour fraude fiscal," January 20, 2008; AFP, "Prison ferme pour le fils Pasqua et Pierre Falcone dans le dossier Sofremi," December 11, 2007.

¹³⁷⁵ See The Arizona Republic, "Jet-Setter's Life Marked by Intrigue Arms-Deal Allegations Don't Fit, Many Say,"
January 12, 2001 ("Friends say Falcone, who has lived in the Valley for about 15 years, is the consummate
internationalist. He is described as multilingual, constantly on his cell phone, circling the globe, hobnobbing'with
corporate kings and heads of state.").

¹³⁷⁶ See undated BOA Global AML Operations report on Falcone accounts, BOA-PSI-04698-700; Arizona
Republic, "Valley Socialite Jailed in African Weapons Case," Oct. 27, 2009, and "Jet-Setter's Life Larked by Intrigue,"
January 12, 2001; "Angolan Can of Worms," February 22, 2002.

¹³⁷⁷ See, e.g., Business Wire HealthWire, "From Beauty Queen to Beauty Empire: Former Miss Bolivia Launches
International Health and Beauty...," September 28, 2000.

March 15, 2000, Ms. Falcone formed an ^ £« * _blicly available information from the
account in the company's name at ^.^"ompany as a "legal services" business.
Anzona Corporation Commission describe foecon* y ^ ^ ^,,80 _Bank _of

Arizona State corporation documents ^^ ^ ^^ _which _appears to

America was unable to tell the Subcommittee anyth g , __ £.„„*;a„oH « q shell corooration.

America was unaoie iu icn uu- w have functioned as a shell corporation

have functioned as a sneiicoipuia— _whichwas

■ HirtPdMs Falcone for immigration fraud, which wa
In January 2006, U.S. prosecutors ^™^\^ _ln _March ₂₀07, in an arrangement
uncovered when she applied to become a U.S. c ^ ^^ _&t ^xizona

reached with prosecutors, she pled gurUyto g y ^ US govei^ent deported M

residence and agreed to leave the county In^g ^ ^ ^^ ^ _March ₂₀₀₉, _theFalcone from the United States, and ^^e^ _b _t _received no response.

Subcommittee attempted to contact Mr. Falcon ,

(2) Falcone Accounts at Bank of America ^ ^

M,_Falcone_fi,topen«^

At the time, U.S. «^^^^^^L^ other than their U.S. address, with virtually no personal information about

n ♦ ,nos Bank of America opened 29 accounts for the^

ten for Mr. Falcone's mother, Vmcente

'"9 Arizona Corporation ^rTrn^on Corporations Division, Certificate of D™° ₂₀₀₆. _See _also
B8o _1/5/05 Arizona Corporation «ssion Corp _dc ^ Indictment January 10^2

»« Umted^tate^Falcone, Case No. CR06 "" _on _Fraud _charges, February U,

a&5^p^^^sSS« ^p°^rted ⁱⁿ ^plea ^DeaV ^Augus '

¹³⁸² See East Valley Tribune, "East Valley nw r 2-7220-

httotew^siyju^^ _7/07); 2-3951-3328 (opened 1/98 and cio

accounts were

^^^^^^ (°P^ened ^3/98 *£ ^Cl°_t^SedM_s Falcone wa also a signatory on

7365 (opened 2/98 and closed 7/07), and 2 / ^ _Gasper _D _t ^.Falcone _other

closed 7/07); 2-7392-8383 (opened1/99 ari _and _perrme _F _lcone, and^e other ™*

the accounts were jomt ^ac^^tS'°^IS accounts prepared by Bank of Amenca for the

Eugenia Falcone. Chart of Falcone-related ₂__?477_

rnvestigation,.BAC-PSI 0750 . _dosed _7/07); ₂-7477-6027 (opened 3/99 and closed 1 ^ ^ _and

S« Account Nos. 7676-1391 ^ff⁹^_Q^₅ _(opened 1/01 and closed 10/03) ⁴⁶-⁷⁰⁷^fJ _ci_Osed4/02);

6027 (opened 3/99 and closed 5/04); 46-7427 038 ^ P 46-7748-2837 (opened 2/02 and c

osed 5^P/04); 4024-2120-1476-7987 ^^135^8800-1453-2789 (opened 5/04 and do«dW7> ^ ^ 46-5167-0047 (opened 8/02 ^^f^^f Falcone-related accounts prepared by Bank of Amen 3450 (opened 5/05 and closed 7/07)_pCha

Subcommittee investigation, BAC-FM

254

father, Pierre Falcone Sr;^im six for Iris Mendez de Montero, a relative of Ms. Falcone;^lj87 and one for Monthigne Corp., the Arizona corporation formed by Ms. Falcone. ~ The Falcones also maintained four safe deposit boxes at the bank¹³⁸⁹ and several credit card accounts. ° ^ The first two Falcone accounts were opened in March 1989; the last was opened in May 2005.

Eight of these accounts saw much of the activity reviewed below. They include a joint account for Mr. and Ms. Falcone, Checking Account No. 2-7220-7365, sometimes referred to as the "household account" and used to pay expenses related to the Arizona residence; ^J two accounts used by Mr. Falcone, Checking Account No. 2-7220-6530 and Savings Account No. 76761391;¹³⁹³ an account used by Ms. Falcone, Checking Account No. 8-4603-5538;¹³⁹⁴ a coiporate checking account used by Monthigne Corp., Account No. 4671882187; two accounts used by Mr. Falcone's mother, Vincente Falcone, Account No. 2-7477-6027 and Account No. 46-5902-3450; ^13% and the account primarily used by Ms. Mendez, Account No. 46-7426-9956.

2005 Account Review. For the first fifteen years they were open, the Falcone accounts were subjected solely to routine account monitoring and did not attract any detailed examination by Bank of America, even after enactment of the 2001 Patriot Act which tightened AML controls.

¹³⁸⁶ Account No. 2-7220-7883 (opened 3/98 and closed 4/01). Chart of Falcone-related accounts prepared by Bank
of America for the Subcommittee investigation, BAC-PSI 07505. See also 3/31/98 BOA account opening form,
BOA-PSI-00022-23.

¹³⁸⁷ Account Nos. 2-7245-0445 (opened 6/98 and closed 2/01); 65-2002-6080-0065 (opened 8/98 and closed
U/02);46-7426-9956 (opened 12/00 and closed 4/09); 46-7509-4560 (opened 12/00 and closed 1/01); 91-0000-
3332-1545 (opened 1/01 and closed 2/01) and 46,-7077-1642 (opened 2/01 and closed 3/01). Chart of Falcone-
related accounts prepared by Bank of America for the Subcommittee investigation, BAC-PSI 07505. Bank of
America told the Subcommittee that it did not know the precise familial relationship between Iris Montero and Ms.
Falcone.

¹³⁸⁸ Account No. 46-7188-2187 (opened 4/00 and closed 6/06). Chart of Falcone-related accounts prepared by Bank
of America for the Subcommittee investigation, BAC-PSI 07505.

¹³⁸⁹ Mr. and Ms. Falcone had one joint safe deposit box, 82-5643-2084. Safe Deposit Box Lease Agreement, BOA-
PSI-00038-39; AML Case No. 2007014988 report, BAC-PSI 07620-21. Ms. Falcone had two additional safe
deposit boxes, Box Nos. 82-5602-8151 and 82-5602-8151. Vincente Falcone also had a safe deposit box, Box No.
83-3701-3122. It is unclear whether she shared this box with Mr. Falcone or his father. Compare Chart of Falcone-
related accounts prepared by Bank of America for the Subcommittee investigation, BAC-PSI 07505, with AML
Case No. 2007014988 report, BAC-PSI 07620-21.

¹³⁹⁰ See undated BOA AML Case No. 2007025689, BAC-PSI 07624 (identifying two credit card accounts for Ms.
Falcone).

¹³⁹¹ See Chart of Falcone-related accounts prepared by Bank of America for the Subcommittee investigation, BAC-
PSI 07505. One of the Falcone accounts for Iris Mendez was closed in April 2009. Id.

¹³⁹² See 1998 BOA account opening form, BOA-PSI-00020-21; 1998 BOA Master Agreement and IRS Certification
Statement, BOA-PSI-00010-13. Mr. Falcone and his business associate, Gasper Devita, appear to have been added
as signatories to this account about a month after it was opened. BOA Master Agreement and IRS Certification
Statement, BOA-PSI-00018-19.

¹³⁹³ See 1997 BOA Master Agreement and IRS Certification Statement, BOA-PSI-00004-05.

¹³⁹⁴ See 1994 BOA account opening form, BOA-PSI-00028-29.

¹³⁹⁵ See Bank of America 04054.

¹³⁹⁶ See 4/27/01 BOA account opening form, BOA-PSI-05705-06; 6/17/04 Bank of New York Details of Payment,
BNY 009108.

The review was not initiated until November 2004, a month after the initial

1398

allegations. ' The review was conducted by a Bank of America AML investigator who

1399

summarized her findings in an internal memorandum. ^J The memorandum appears to have been completed in August 2005, ten months after the October 2004 incident that triggered the review.

The memorandum began by noting that an Internet search located many listings for Mr. and Ms. Falcone. With respect to Mr. Falcone, the memorandum stated:

"Mr. Falone [is] a recognized billionaire arms dealer with strong French connections. Falcone served as a consultant to the French agency SOFREMI that is in charge of exporting military equipment under ... the French Interior Ministry. ... Falcone reportedly brokered numerous deals with Africa and South America through a company named Gaydamark, a company owned by a wealthy Russian billionaire and Falcone's business partner. ... Falcone developed a very close and tight relationship with the government of Angola, so much, that he was even granted citizenship. ... Falcone was brought before a French court on charges of corruption for which he was indicted and sentenced to one year in jail. Additional charges were brought against Falcone but none could be substantiated or proven. Falcone was released and now lives with his wife in the most expensive home ever sold in the state of Arizona."¹⁴⁰⁰

The memorandum implied that Mr. Falcone's criminal proceedings were over, but at the time it was written, the 2004 French arrest warrant for Mr. Falcone remained outstanding. With respect to Ms. Falcone, the memorandum described her as a "former beauty queen" and "one of the most sought out socialites in Arizona."¹⁴⁰¹

The memorandum said that the accounts for Mr. and Ms. Falcone and Monthigne Corp. had been reviewed for a 19-month period from December 17, 2003 to July 13, 2005, and the Falcone account activity during that period, including credits and debits, totaled about $17

million. The memorandum also noted numerous, large, incoming and outgoing wire transfers affecting the accounts:

³⁹ See undated BOA Global AML Operations report on Falcone accounts, BOA-PSI-04698-700; Subcommittee interview with Bank of America, March 25, 2009. Bank of America officials did not recall which Falcone family member made the cash withdrawals.

¹³⁹⁸ Undated BOA Master Case Information, BOA-PSI 07701-07, at 07701.

¹³⁹⁹ Undated BOA Global AML Operations report on Falcone accounts, BOA-PSI-04698-700.

¹⁴⁰⁰ Id. at 04698. ■
,4oi _w

¹⁴⁰² Id. According to Bank of America, the bank's review process at the time was to look at only 13 months of past account activity, even though this memorandum reviewed 19 months. The bank reported that it had since changed its policy to require reviews to look at account records for the past 4 -5 years. Bank of America officials also noted

"The account reflects numerous incoming wires originated in France from entities that

are directly related to the Falcone s. Incoming wires are also evident in what appears to be proceeds of real estate sales and from loans obtained through other financial institutions. Debits to the account also show outgoing wires, they were conducted to benefit the Beverly Loan Company, as well as individuals sharing the same last name as the Falcone's. Checks from the account show numerous inter-account transfers that reference 'house account' or 'expenses'."

The memorandum concluded:

The activity for the accounts of the Falcone is not unusual. Although Mr. Falcone appears to have been involved in the dealing and sale of Arms, the activity for the accounts at Bank of America shows activity that is normal for this type of high profit customer. The transaction reported by the branch banking center appears to have been a one-time event."¹⁴⁰³

The memorandum did not express any concern about the large-dollar transfers into the Falcone accounts from offshore jurisdictions or from unfamiliar entities such as AALL Trust and Banking Corp. in the Cayman Islands. It did not view $17 million in account activity within a year and a half as unusual. It characterized the accounts' movement of hundreds of thousands of dollars at a time among a network of Falcone related accounts as "normal," “not unusual,”and related to house expenses. The memorandum did not express any concerns about Mr. Falconee’s conviction on corruption charges, imprisonment, illegal arms dealing, or the sources of hiswealth.

The AML investigator forwarded her report to her supervisor. Together, the two determined that none of the transactions was suspicious.¹⁴⁰⁴ In addition, despite Mr. Falcone’s involvement in arms trafficking, the large volume of account activity, and numerous foreign wire transfers, the two Bank of America officials did not designate the account as high risk or call for enhanced monitoring. They apparently never considered whether Mr. Falcone should be designated as a PEP client due to his close association with the French Interior Ministry, close association with Angolan President dos Santos, or his 2003 appointment as an
Ambassador to UNESCO.

When asked about the 2005 special review, Bank of America told the Subcommittee that the decision not to treat any of the transactions as suspicious was likely due to a number of factors, including that the Falcones were longstanding customers and a prominent family, the accounts did not involve extensive cash transactions; and large account transactions were not unusual for that type of client¹⁴⁰⁵ Bank of America also said that the memorandum “probably should have been escalated” to more senior personnel, but bringing in more senior personnel was

The decision not to treat any of the transactions as suspicious was likely due to fgjU $\.

unusual for that type of client.'⁴⁰⁵ Bank of America also said that the mem°^r^._or f^x

should have been escalated" to more senior personnel, but bringing in mor^e ^r

^ falcon

that the $17 million figure in the memorandum was approximately double the amount m°^v ^te^e' accounts because it took into consideration both credits and debits to the accounts. Subcd¹¹of America, March 25, 2009.

¹⁴⁰³ Undated BOA Global AML Operations report on Falcone accounts, BOA-PSI-04699-

¹⁴⁰⁴ Id.; Subcommittee interview ofBank of America, March 25, 2009.

¹⁴⁰⁵ Subcommittee interview ofBank of America, March 25, 2009.

257

a "judgment call."¹⁴⁰⁶ The internal investigation was closed on August 9, 2005, with no recommendation for any action to be taken with respect to the Falcone accounts.

Two years later, in 2007, after the Subcommittee inquired about the Falcone accounts Bank of America initiated another review of the accounts.¹⁴⁰⁸ The resulting AML Case report described the Falcone accounts as held by persons "that have been named in various news articles as being involved in: arms sales; diamond smuggling and other illegal activities It discussed Mr. Falcone's involvement in the Angolagate scandal. The report also analyzed specific Falcone account transactions stretching over a number of years such as. from 03/13/2003 to 04/04/2007 Sonia Falcone has received 22 wires that totaled $4,950,794 67 "Monthigne Corporation ... a dissolved corporation ... [received] 20 incoming wires that totaled $4,424,750.00 from 03/04/2003 to 02/10/2005"; and "63 wire transfers that totaled $10,040,463.01 from 03/03/2003 to 04/04/2007 [went] to account owned and/or contiolled by members of the Falcone family."

In July 2007 Bank of America decided to close the Falcone accounts.¹⁴⁰⁹ Bank of America expressed regret to the Subcommittee at having maintained accountsfor a known arms dealer who, by July 2007, was under multiple criminal indictments m France.

Suspicious Transactions. To conduct its own review of the Falcone accounts the Subcommittee subpoenaed Bank of America records for the accounts covering **&£* period, 1999 to 2007. These records disclosed a high level of account act ivity ^^udin|^ number of suspicious transactions involving high dollar amounts, ransfers to or^from offshore secrecy jurisdictions, or the quick movement of funds through multiple accounts madttjc money laundering tactic designed to make it difficult for investigators to follow^'^Wtee Because a number of the transactions referenced wire transfers at other bank , the£»b—ttee also initiated a limited review of some of those wire transfers, m particular at HSBC .Equator^ Bank. A number of the transactions reviewed by the Subcommittee, detailed in a chart below, raised concerns.

One of Our Clients. One striking set of transactions involves wire transfers from f^ll^Lm large sums of money into the Falcone ^u^n^^y who Snt the funds is identified in the wire transfer documentation solely as one o£ur clients or "un client." Federal law requires U.S. financral institutions to identify th name ^d address of the originator of each wire transfer, in part as an AML safeguard. Yet from 1999 to 20UJ, BaS of America allowed accounts for Pierre, Soma, and Vincente Falcone to receive over $3.6

258

million in wire transfers from unnamed clients using accounts in such known secrecy jurisdictions as the Cayman Islands, Luxembourg, and Switzerland. ² From September 2001 to December 2003, the Monthigne account also received a series of payments from hidden "clients," ranging from $ 100,000 to $400,000 at a time, most often from "one of our clients" using a UBS account in Singapore. In just over two years, the payments to Monthigne added up to nearly $2.5 million.¹⁴¹³

After Monthigne received one of the UBS Singapore payments, Ms. Falcone, who opened the Monthigne account and was its sole signatory, typically transferred the funds within a day or two to another Falcone account which, at times, transferred it within Bank of America to still another Falcone account, in what appears to be a classic money laundering pattern designed to make it difficult to trace a money trail. For example, as shown on the chart below, on February 15, 2002, the hidden client at UBS in Singapore sent $299,985 to the Monthigne account, which on the same day transferred the same amount to an Iris Mendez account within the branch, and that account, in turn, transferred the $211,000 to a Sonia Falcone account within the branch.¹⁴¹⁴ This pattern of internal bank transfers could have been used to conceal from persons outside of the bank which Falcone account ultimately received the incoming wire transfer.

Altogether, from 1999 to 2003, the Falcone accounts received about $6.1 million in foreign wire transfers from unidentified "clients." When asked about these transactions, Bank of America told the Subcommittee that transactions involving unidentified "clients" could be seen as a "red flag," but that each transaction would have to be examined in detail to determine whether it should be deemed suspicious.¹⁴¹⁵

Offshore Wire Transfers. A second set of troubling transactions involves high-dollar wire transfers from unfamiliar offshore entities into the Monthigne account. These transfers were made by the AALL Trust and Banking Corp. Ltd. which sent funds from the Cayman Islands; Culmen Investments which sent funds from Israel; Rego Holdings Inc. which sent funds from Israel; and Valley Marketing Ltd. which sent funds from the Cayman Islands.¹⁴¹⁶Moreover, the AALL Trust and Banking Corp. Ltd., which is a Cayman Island bank, was sending money to the Monthigne account on behalf of still other entities, which usually were not named but on two occasions were referred to as Apollo LLC, the Valley Trust, and the Alley Trust.¹⁴¹⁷ In most cases, the funds deposited into the Monthigne account remained there for only a day or two, and were then transferred by Ms. Falcone into another Falcone related account. For example, on October 8, 2004, as shown in the chart below, the AALL Trust and Banking Corp. wire transferred $315,000 to the Monthigne account; and later on the same day, Ms.

¹⁴¹² See Subcommittee chart below, Select Transactions Involving the Falcone Accounts At Bank of America, 1999 to 2007.

^14.3 Id.

^14.4 Id.

¹⁴¹⁵ Subcommittee interview with Bank of America, March 25, 2009.

¹⁴¹⁶ See Subcommittee chart below, Select Transactions Involving the Falcone Accounts At Bank of America, 1999
to 2007.

¹⁴¹⁷ See, e.g., 10/4/08 wire transfer for $315,000 from AALL Trust and Banking Corp. through correspondent
accounts at Bank of Butterfield in the Caymans and Bank of New York, to the Monthigne account at Bank of
America, with references to "Apollo, LLC" and "Valley Trust," BOA-PSI-04054-56.

= , ♦ h,r Checking Account No. 2-7220-7365 Falcone wrote a $275,000 check sending the funds to ^h* V,_hold expenses;"'⁴¹⁸The check contained a notation that the funds weie toi

Altogether, fn

.     w   » account received over $2.46 million in
. __„__.., Jom 2002 to 2005, the Monthigne,accou     ^^ ^ ^^
wire transfers from the A ALL Trust and Banking Corp.,           ^ _ftom _Valley Marketing,

Investment; nearly $200,000 from Rego Holdings; andne y ^^^ _told _thefor a grand total of nearly $3.77 million. When asKeu, ^^ ^^ _entities _Qr _the _specificSubcommittee that it did not have any additional informal wire transfers they sent to the Falcone accounts.

*• c that raised concerns involves large Falcone Transfers. A third set of transactions ma ^^ ^^ _intemationai lines.

transfers of funds from one Falcone-related ^accou*"°^a _2QQ1 '_Mr _Falcone, at times sending
For example, as shown in the chart below, from 2004 ^ ^ ^ _$55q₅₀₀₀ _from

wire transfers using his initials PJF, sent funds ranging i ^ _to'_Falcone accounts at Bank of
accounts he held at banks in South Africa, Portugal, ana ' ₅ _Q00 _from _a _Fai_COne account

America in Arizona.¹⁴²⁰ On July 8, 2004, for instance, be s ^ ^ _of _America _m Arizona,
at Coutts & Co. in the United Kingdom to one of his accu ^ ^^ ^ ^ _Angola _tQ _an

On November 17, 2005, he sent $300,000 from an account ^ ^ ^ _he _gent _$550;00o
account held by Ms. Falcone at Bank of America. On in ^ ^^ ^ America. On August

from his account at Banco BPI in Lisbon to that same ace ^ ^ ^^ ^ ^ _H(mg _Rong20, 2007, Mr. Falcone sent $250,000 from his account at L ^ ^ ^^ ^ ^^ to an Iris Mendez account at Bank of America. The reasu

■■■••' _f ■ » transfers from the Falcone accounts in Arizona
Similar questions apply to a series of wne ^ffaJl _Inc _the health and beauty

to a U.S. bank account in Utah opened in the name ot l ^^ ^_f _America _accounts belongmg
business associated with Ms. Falcone. From 2000 to zu , ^ _raui_tipie wire transfers to an
to Ms. Falcone, Vincente Falcone, Iris Mendez, and mo ^^ together providing nearly

Essante account at Zion's First National Bank m Salt La ^ _the _Falcones _sent

$1.2 million to that account. those funds to the Utah company

SI 2 million to that account.¹⁴²¹ Bank of America was unable p

,. , i- i a ,,_ar funding transfers between the Iris Mendez
Also raising questions are multiple high-dollar i ^ ^ ^^ _bdow> _from _Januaryand Sonia Falcone accounts at Bank of America. As si ^ _transfers _from her account to Ms.

2001 to February 2002, Ms. Mendez made multiple rug ^ ₁₄₂₂ _por _examplej _on January

Falcone's account, in amounts ranging from $50,000 to ■^ _M§ _Falcone _0n May

24, 2001, the Mendez account sent $100,000 * the account^ ^^ ^ ^ ^ ^

25, 2001, the Mendez account sent her another $1 O.w ■ ^^ _transfelTed _about $950,000 to $211,000. Then these transfers stopped. Altogether i ■ _Subcommittee _that _it could not

Ms. Falcone in just over a year. Bank of America told explain why these transfers took place.

¹⁴¹⁸10/8/04 Monthigne check for $275,000, BOA-PSI-03828. Subcommittee chart below, Select

¹⁴¹⁹ Undated BOA AML Case No. 2007014988 report, BAC-FM ^ _tQ _2Q07

Transactions Involving the Falcone Accounts At Bank of Africa, ^^ ^^ _A{ _Bwk _of ^enca, 1999

to 2007.

¹⁴²¹ Id.

¹⁴²² Id.

¹⁴²⁰ See Subcommittee chartbelow, Select Transactions Involving

260

These transactions make it clear that the Falcones have an extensive network of bank accounts in the United States and around the world. Their Bank of America records show that they actively moved money throughout this network. The reasons for the high volume of funding transfers are unclear, and Bank of America did not ask or acquire an understanding of them.

CADA Wire Transfers. A fourth set of troubling transactions involves large wire transfers to and from Companhia Angolana de Distribuicao Alimentar Inc., or CADA, an Angolan corporation which, according to the 2007 French Angolagate indictment, was an affiliate of the Brenco Group controlled by Mr. Falcone and Mr. Gaydamak and was involved in their wrongdoing.¹⁴²³

CADA had an account at HSBC Equator Bank until 2001.¹⁴²⁴ HSBC told the Subcommittee that the CADA account signatories were Mr. Falcone, Mr. Gaydamak, and Andre de Fiori, one of their business associates.¹⁴²⁵ Bank of America records show that, in 2000 CADA wire transferred a total of $1,410,000 from its HSBC Equator Bank account to a Falcone account at Bank of America.¹⁴²⁶ In addition, in November 2000, CADA wire transferred $9,030,000, in two installments, from its HSBC Equator Bank account to a Brenco account at Discount Bank and Trust account in Geneva, Switzerland.¹⁴²⁷ In July 2001, the CADA account at HSBC Equator Bank received a wire transfer for more than $20.8 million from Sonangol, the Angolan state oil company, using an account at Lloyds Bank in London.

Given CADA's role in the Angolagate criminal prosecution, its transfers to the Falcones at Bank of America and the Falcone-related company Brenco raise concerns. So does the transfer of over $20 million from Sonangol, the Angolan state oil company, into CADA s account.

Beverly Loan Company. A fifth set of notable transactions involves the Beverly Loan Company. The Beverly Loan Company is an upscale pawn shop specializing m providing large loans secured by fine jewelry and watches.¹⁴²⁹ It has been in business in Beverly Hills,

¹⁴²³ See Ordonnance De Renvor Devant le Tribunal Correctiormel Non-Lieu Part.el et Requahfication No. du
Parquet: 0019292016, No. Instruction: 2076/00/40 (2007), at 101. HSBC told the Subcommittee that Brenco
International was owned by the Atlantic Transangolan Corporation which, in turn, was owned by P.erre Falcone and
Arcadi Gaydamak. Subcommittee interview of HSBC, June 13, 2007.

¹⁴²⁴ Subcommittee interview of HSBC, May 7, 2008. HSBC purchased Equator Bank pic m London and for many
years provided it with a correspondent account in New York. The Subcommittee subpoenaed Falcone-related wrre
transfer records associated with the Equator Bank account at HSBC.

¹⁴²⁵ Subcommittee interview of HSBC, May 7, 2008. The Global Witness report states: Companies House
documents show that CADA Ltd. in London is located at 40 Queen Anne Street, London Wl. CADA Ltd was
established in 1996 and Andre de Fiori is listed as Director. The Company is listed as a subsidiary of a company
called Copper Financial Inc. located in Tortola, British Virgin Islands, die latter havmg been established by Henry
Guderley, who isalso listed as Company Secretary of London-based CADA Ltd." ~~All The Presidents Men~~, Global
Witness, at 20.

¹⁴²⁶ See HSBC Excel spreadsheet, Box 13, CADA, no bates number.

¹⁴²⁸ Id.

1429

See www.beverlvIoan-.com. Loans from Beverly Loan Company work generally as follows. Customers bring to the Beverly Loan Company collateral to be pawned, at winch time it is assessed by resident gemologists. Beverly Loan Company makes a determination of the maximum loan amount, based upon valuation of the product and

261

California since 1938. Bank documents reviewed by the Subcommittee, summarized in the chart below, show numerous transfers between the Beverly Loan Company and the Falcone accounts. For example, from May 2001 to June 2007, Beverly Loan Company made multiple wire transfers to Ms. Falcone, ranging in amounts from $50,000 to $550,000.¹⁴³° In the month of February

2007, it sent her three wire transfers totaling $257,000. It also sent one wire transfer on May 25,
2001, to Iris Mendez for $360,000, and one on July 19, 2001, to Mr. Falcone for $259,700. Ms.
Falcone also sent numerous large wire transfers to the Beverly Loan Company in amounts
ranging from $55,000 to $300,000.

When asked about these transactions, the Beverly Loan Company informed the Subcommittee that Ms. Falcone had been a regular customer since at least 2001, and as of April

2008, had ten outstanding loans in her name or that of her assistant, Elizabeth Kordek.¹⁴³¹According to the Beverly Loan Company, altogether since 2001, Mrs. Falcone had borrowed
over $3.2 million in her own name, and an additional $4.1 million in the name of her assistant,
for a grand total of over $7.3 million, while paying interest charges on those loans in excess of
$777,000.¹⁴³² The Subcommittee was told that, although one Beverly Loan Company check was
made out to Mr. Falcone, no loans had been issued to him. The Beverly loans were a regular
source of funds for the Falcone accounts from 2001 to 2007.

Triang Business Venture. Finally, while examining the Falcone accounts and looking in particular at transactions involving Angola, the Subcommittee interviewed HSBC about a number of wire transfers involving HSBC Equator Bank and Falcone-related entities. As part of that process, the Subcommittee learned that for a seven-year period, from 1997 to 2004, an HSBC affiliate had participated in a joint business venture in Angola with Mr. Falcone through a company called Triang Ltd. According to HSBC, Triang Ltd. was incorporated in May 1997, in the Bahamas, and for the next seven years ran a trucking operation that transported fuel for the diamond industry in Angola.¹⁴³³ HSBC told the Subcommittee that ownership of Triang was as follows: Brenco held a 30% ownership interest; Jose Recio, an Angolan businessman, held a 35% ownership interest; and the final 35% ownership interest was held by Equator Bank Ltd., a Bahamas bank affiliated with HSBC Equator Bank pic in London.¹⁴³⁴ HSBC told the Subcommittee that Brenco was owned by the Atlantic Transangolan Corporation which, in turn,

potential for liquidity in case the collateral is not redeemed and foreclosure is authorized. A police report is filed and the goods are checked to make sure they are not stolen. Customers are given a loan for a requested amount up to the maximum loan amount. The loan is typically disbursed by wire, cashier's check, or bank check.

The initial loan contract is four months in length or roughly 120 days. For loans valued at less than $2,500, the interest rate is capped at 4% per month (48% APR) under California law. The interest rate on larger loans is discretionary. If the property is not redeemed within four months, Beverly Loan Company may foreclose on it, issue another four- month contract, write-off the loan amount, or roll a portion of the residual loan amount into a new loan on different collateral. Collateral may be redeemed by the customer when the loan is paid in full. Subcommittee interview of Beverly Loan Company, March 24, 2008; www.beverlyloan.com .

¹⁴³⁰ See Subcommittee chart below, Select Transactions Involving the Falcone Accounts At Bank of America, 1999
to 2007.

¹⁴³¹ Subcommittee interview of Beverly Loan Company, March 24, 2008.

¹³² Note;, the chart lists numerous payments to and from Beverly Loan but does not contain transactional information, because the Subcommittee does not possess all transactional data. ¹⁴³³ Subcommittee interview of HSBC, June 13, 2007.

262

was owned by Pierre Falcone and Arcadi Gaydamak.¹⁴'" HSBC indicated that Equator Bank Ltd. maintained its ownership interest in Triang until 2004, when it sold its interest to Jose Recio. HSBC told the Subcommittee that, during Equator Bank's ownership of Triang, it also contributed $4 million to its operations, $3.9 million of which was in the form of a loan in 1997.¹⁴³⁶

HSBC told the Subcommittee that it had conducted an investigation of Pierre Falcone during the period 2000 to 2001, and closed his accounts, but did not exit its business relationship with him until 2004.¹⁴³⁷ As noted previously, Pierre Falcone was in jail in France from December 2000 to December 2001, under investigation for illegal arms trafficking, tax evasion, and other misconduct.

(3) Analysis

Each category of transactions just described raises questions about the purpose and source of funds that went through the Falcone accounts at Bank of America. These transactions included wire transfers from known secrecy jurisdictions, the quick movement of funds from one Falcone account to another, and transfers to and from obscure offshore corporations and unnamed clients. Yet none of these transactions, separately or collectively, triggered an account review by Bank of America officials. Even when some of the transactions were examined as part of a 2005 special review initiated for another reason, they were not viewed as raising sufficient red flags to have the account designated as high risk or warrant enhanced monitoring. Nor did they cause Bank of America to treat Mr. Falcone as a PEP client subject to enhanced monitoring.

The following chart presents a selection of troubling transactions involving the Falcone accounts at Bank of America and a few Falcone-related wire transfers which, over an eight-year period, moved over $60 million in suspect funds into or through U.S. banks. These transactions provide concrete evidence that U.S. financial institutions need to establish better account monitoring tools to identify high-risk accounts and high-risk wire transfers. These transactions also demonstrate that U.S. financial institutions need to be on the lookout for PEP clients using retail accounts, rather than accounts in the Private Bank established for wealthy clients.

Select Transactions Involving the Falcone Accounts At Bank of America, 1999 to 2007
Date	Originator	Beneficiary	Amount	Bates
11/16/1999	"un Client" at Banque Intl. A Luxembourg S.A	Vincente Falcone Account	$200,000	BNY 009108
11/24/1999	"un client" at Banque Internationale	Falcone Household Account 272207365	$200,000	BOA-PSI-02426
2/11/2000	Vincente Falcone Account 274776027	Essante Account at Zions First National Bank	$70,000	BOA-PSI-06125

¹⁴³⁶ Subcommittee interview of HSBC, May 2, 2008.

¹⁴³⁷ Subcommittee interview of HSBC, May 7, 2008. HSBC reported that the reason for the three-year delay in
exiting the business venture was because it had difficulty selling its shares in Triang.

263

2/28/2000	Vincente Falcone Account 274776027	Essante Account at Zions First National Bank	$300,000	BOA-PSI-06125
2/28/2000	"one customer" at Discount Bank and Trust in Geneva, Switzerland	Sonia Falcone Account 846035538	$79,975	BOA-PSI-02918
4/24/2000	Pierre Falcone Account 7676139 writes check	Caesar's Palace	$50,000	BOA-PSI-03746
6/02/2000	Discount Bank and Trust at Israel Discount Bank	Falcone Household Account 272207365	$179,985	BOA-PSI-02451
6/29/2000	Companhia Angolana at HSBC Equator Bank	Falcone Household Account 272207365	$160,000	BOA-PSI-02458
7/14/2000	Pierre Falcone Account 7676139	Steinway Hall	$50,000	BOA-PSI-03748
8/10/2000	"one customer" at Discount Bank Grand Cayman Ltd thru Discount Bank and Trust Company Luxembourg thru Chase Manhattan bank	Sonia Falcone Account 846035538	$119,982	BOA-PSI-07650
8/10/2000	"one customer" at Chase Manhattan Bank.	Falcone Household Account 272207365	$169,982	BOA-PSI-02466
8/16/2000	Pierre Falcone Account 7676139 writes check	Bellagio	$70,500	BOA-PSI-03747
9/28/2000	CADA at HSBC Equator	Argo Particpacoes Ltd. at Bank Safra Brasil	$80,000	Final_Version.xls, CADA tab (HSBC)
10/11/2000	CADAat HSBC	Andre de Fiori at Banque Safra	$100,000	Final_Version.xls, CADA tab (HSBC)
10/12/2000	"one customer" at Chase Manhattan Bank	Falcone Household Account 272207365	$189,982.50	BOA-PSI-02481
11/07/2000	Companhia Angolana at HSBC Equator ........................ wire reference to "CADA pymt"	Falcone Household Account 272207365	$340,000	BOA-PSI-02489
11/7/2000	CADAat HSBC Equator	Pierre Falcone Account	$170,000	Final_Version.xls, CADA tab (HSBC)
11/7/2000	CADA at HSBC Equator Bank	Sonia Falcone Account 846035538	$250,000	BOA-PSI-07566, Final_Version.xls, CADA tab (HSBC)
11/7/2000	CADA at HSBC Equator Bank	Brenco Group at Discount Bank and Trust Co. Geneva	$6,730,000	Final_Version.xls, CADA tab (HSBC)
11/16/2000	CADA at HSBC Equator Bank	Brenco Group at Discount Bank and Trust Geneva	$2.3 MM	Final_Version.xls, CADA tab (HSBC)
12/04/2000	"one customer" at Discount Bank (CI) Limited Grand Cayman thru Discount Bank and Trust Co Luxembourg (thru Chase Manhattan)	Sonia Falcone Account 846035538	$1,299,982.50	BOA-PSI-07572
12/4/2000	"one customer" at Chase Manhattan	Falcone Household Account 272207365	$249,982.50	BOA-PSI-02497
12/14/2000	CADA at HSBC Equator	Pierre Joseph Falcone at Banco Safra, Brazil	$490,000	Final_Version.xls, CADA tab (HSBC)
12/28/2000	Soriia Falcone Account 846035538	Used to purchase cashier's check	$404,920	BOA-PSI-04065
1/24/2001	Iris Mendez Account 4674269956	Sonia Falcone Account 846035538	$100,000	BOA-PSI-07540-07555
1/24/2001'	Sonia Falcone Account 846035538	Essante Account at Zion's First National Bank	$100,000	BOA-PSI-07578
2/22/2001 ''	"by Order of Client" at Bank Luxembourg.	Iris Mendez Account 4674269956	$500,000	BOA-PSI-07664
2/23/2001	Iris Mendez Account	Sonia Falcone Account	$66,813	BOA-PSI-07540-

264

	4674269956	846035538		07555
2/23/2001	Iris Mendez Account 4674269956	Pierre J. Falcone Account 272206530	$50,000	BOA-PSI-07540-07555
2/26/2001	Iris Mendez Account 4674269956	Sonia Falcone Account 846035538	$50,000	BOA-PSI-07540-07555
2/27/2001	Sonia Falcone Account 846035538	Essante Account at Zions First National Bank	$50,000	BOA-PSI-07595
2/28/2001	Iris Mendez Account 4674269956	Sonia Falcone Account 846035538	$100,000	BOA-PSI-07540-07555
3/20/2001	"Order of Client" at Bank Leumi	Iris Mendez Account 4674269956	$200,000	BOA-PSI-07671
3/21/2001	Iris Mendez Account 4674269956	Sonia Falcone Account 846035538	$100,000	BOA-PS1-07540-07555
5/25/2001	Beverly Loan Co.	Iris Mendez Account 4674269956	$360,000	BOA-PSI-07678
5/25/2001	Iris Mendez Account 4674269956	Sonia Falcone Account 846035538	$175,000	BOA-PSI-07540
5/29/2001	Sonia Falcone Account 846035538	Essante Account at Zions First National Bank	$175,000	BOA-PSI-07603
7/13/2001	Iris Mendez Account 4674269956	Essante Account at Zions First National Bank	$100,000	BOA-PSI-07680
7/19/2001	Iris Mendez Account 4674269956	Essante Account at Zions First National Bank	$60,000	BOA-PSI-07682
7/19/2001	Bank of America cashiers check from Beverly Loan Co. written to Pierre Joseph Falcone	Pierre Joseph Falcone	$259,700	BOA-PSI-04075, 07529-07531
7/20/2001	Sonia Falcone Account 846035538	American Express Service Europe Ltd London at Lloyds Bank London "for further credit-Pierre Falcone	$70,000	BOA-PSI-07611
7/20/2001	Sonangol Account at Lloyds Bank London	CADA Account at HSBC Equator Bank	$20,834,269	Final_Version.xls, CADA tab (HSBC)
9/5/2001	"one of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-03984
9/28/2001	"one of our clients" at UBS Singapore	Monthigne Account 4671882187	$199,985	BOA-PSI-03986
9/29/01	Iris Mendez Account 4674269956	Essante Account at Zions First National Bank	$30,000	BOA-PSI-07190
10/1/01	Iris Mendez Account 4674269956	American Express at Lloyds Bank for Pierre Falcone	$15,000	BOA-PSI-06209/07633
10/1/02	"one of our clients" UBS Singapore	Vincente Falcone Account 274776027	$99,985	BOA-PSI-06209/07633
10/17/01	Sonia Falcone Account 846035538	Essante Account at Zions First National Bank	$60,000	BOA-PSI-07616
10/21/01	"one of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-03986
11/6/01	Monthigne Account 4671882187	Iris Mendez Account 4674269956	$82,485	BOA-PSI-07540-07555
11/7/01	Iris Mendez Account 4674269956	Falcone Household Account 272207365	$60,500	BOA-PSI-07540-07555.
11/16/01	Essante Account at Zions First National Bank	Iris Mendez Account 4674269956	$100,000	BOA-PSI-07684
11/23/01	"one of our clients" UBS Singapore	Monthigne Account 4671882187	$118,202	BOA-PSI-03992
11/27/01	Iris Mendez Account 4674269956	Falcone Household Account 272207365	$101,000	BOA-PSI-07540-07555

265

11/27/01	"one of our clients" UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-03990
12/4/01	Monthigne Account 4671882187	Iris Mendez Account 4674269956	$93,985	BOA-PSI-07540-07555
12/26/01	Monthigne Account 4671882187	Iris Mendez Account 4674269956	$99,985	BOA-PSI-07540-07555
1/18/02	Essante Account at Zions First National Banks	Iris Mendez Account 4674269956	$50,000	BOA-PSI-07686
2/6/02	Gota at Bank Hapoalim in Tel Aviv	Sonia Falcone Account 846035538	$199,975	BOA-PSI-07623
2/15/02	"one of our clients" at UBS Singapore	Monthigne Account 4671882187	$299,985	BOA-PSI-03994
2/15/02	Monthigne Account 4671882187	Iris Mendez Account 4674269956	$299,985	BOA-PSI-0740-7555
2/15/02	Iris Mendez Account 4674269956	Falcone Household Account 272207365	$211,000	BOA-PSI-07450-07555
2/15/02	Iris Mendez Account 4674269956	Essante Account at Zions First National Bank	$50,000	BOA-PSI-07688
3/1/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-03996
4/18/02	"One of our clients" at UBS Singapore	Vincente Falcone Account 274776027	$99,985	BOA-PSI-07635
5/6/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,850	BOA-PSI-03998
5/21/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$109,985	BOA-PSI-0400
6/4/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-04002
6/7/02	Monthigne Account 4671882187	Sonia Falcone Account 272206530; check payable to: Sonia M. Falcone/Gasper DeVita	$80,000	BOA-PSI-03772
7/2/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PS 1-04004
7/8/02	Monthigne Account 4671882187	Essante Account at Zions First National Bank	$115,000	BOA-PSI-04006
7/8/02	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$76,000	BOA-PSI-03774
7/30/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-04009
9/4/02	"One of our clients"at UBS Singapore	Monthigne Account 004671882187	$99,985	BOA-PSI-04011
9/4/02	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$92,488.31	BOA-PSI-03776
10/2/02	"One of our clients" at UBS Singapore	Monthigne Account 4671882187	$99,985	BOA-PSI-04013
10/2/02	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$70,000	BOA-PSI-03778
11/20/02	Cashiers check from Beverly Hills Loan Co.	Sonia Falcone Account 846035538	$100,000	BOA-PSI-04084
12/10/02	Carlton at Israel Discount Bank	Sonia Falcone Account 846035538	$199,980	BOA-PSI-07536-7
12/10/02	Sonia Falcone Account 846035538 writes check	Falcone Household Account 272207365	$100,000	BOA-PSI-03779-80
12/11/02	"One of our clients" at UBS AG	Vincente Falcone Account 274776027	$99,985	BOA-PSI-07637
12/11/02	"One of our clients" at UBS	Monthigne Account	$210,985	BOA-PSI-04015

266

	Singapore	4671882187
12/12/02	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$85,000	BOA-PSI-03782
12/13/02	Monthigne Account 4671882187 writes check	Sonia Falcone Account 846035538	$100,000	BOA-PSI-04086
1/31/03	Beverly Hills Loan Co. writes check	Sonia Falcone Account 846035538	$149,000	BOA-PSI-04088-9
2/6/03	Sonia Falcone Account 846035538 writes check	Falcone Household Account 272207365	$170,000	BOA-PSI-03786
2/25/03	Culmen Investment at Bank Hapoalim in Tel Aviv	Monthigne Account 4671882187	$229,975	BOA-PSI-04017
2/27/03	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$132,120.91	BOA-PSI-03788
2/28/03	Monthigne Account 4671882187 writes check	Sonia Falcone Account 846035538	$82,000	BOA-PSI-04091
2/6/03	Gota at Bank Hapoalim	Sonia Falcone Account 846035538	$199,975	BOA-PSI-04070
2/14/03	Carlton Orig. Bank at Israel Discount Bank Ltd.	Vincente Falcone Account 274776027	$99,980	BOA-PSI-07639
3/4/03	Culmen Investment at Hapoalim Bank Israel	Monthigne Account 4671882187	$209,975	BOA-PSI-04019
4/10/03	Culmen Investment at Bank Hapoalim Israel	Monthigne Account 4671882187	$74,975	BOA-PSI-04021
4/10/03	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$52,400	BOA-PSI-03762
5/13/03	Culmen Investment at Bank Hapoalim Israel	Monthigne Account 4671882187	$129,975	BOA-PSI-04023
5/13/03	Monthigne Account 4671882187 writes check	Sonia Falcone Account 272207365	$85,000	BOA-PSI-03784
6/2/03	Pierre Falcone Account 272206530	Beverly Loan Co.	$75,925	BOA-PSI-03871
6/5/03	Unidentified account at Bank Hapoalim in Israel	Monthigne Account 4671882187	$159,975	BOA-PSI-04025
6/5/03	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$112,000	BOA-PSI-03796
7/11/03	Beverly Hills Loan Co. writes check to	Sonia Falcone Account 846035538	$60,000	BOA-PSI-04094-6
8/4/03	Culmen Investments at Bank Hapoalim Isreael	Monthigne Account 4671882187	$299,975	BOA-PSI-04027
8/4/03	Monthigne Account 4671882187	Sonia Falcone Account 84603558	$200,000	BOA-PSI-04097
8/4/03	Monthigne Account 4671882187	Falcone Household Account 272207365	$74,500	BOA-PSI-03798
8/6/03	Sonia Falcone Account 846035538 writes cashier's check	To Beverly Loan Company	$119,000	BOA-PSI-04071
9/16/03	Culmen Investment at Bank Hapoalim Israel	Monthigne Account 4671882187	$99,975	BOA-PSI-04029
9/16/03	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$75,000	BOA-PSI-03691
9/22/03	Rego Holding Inc. at Bank Hapoalim	Monthigne Account 4671882187	$199,975	BOA-PSI-03962
9/22/03 .	Monthigne Account 4671882187 writes check	Sonia Falcone Account 846035538	$67,000	BOA-PSI-036963
10/24/03	Culmen Investment at Bank Hapoalim	Monthigne Account 4671882187	$109,975	BOA-PSI-04033
10/24/03	Monthigne Account	Falcone Household Account	$50,000	BOA-PSI-03804

267

	4671882187	27207365
12/23/03	"One of our clients" at Discount Bank Ltd in the Cayman Islands	Monthigne Account 4671882187	$399,975	BOA-PSI-04035
1/9/04	Culmen Investment at Bank Hapolaim	Vincente Falcone 274776027	$100,000	BOA-PS1-07641
1/26/04	Valley Marketing Ltd. at Discount Bank Ltd Cayman	Monthigne Account 4671882187	$249,975	BOA-PSI-04037
1/26/04	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$158,000	BOA-PSI-04799
2/10/04	AALL Trust and Banking at Bank Butterfield in Cayman Islands	Monthigne Account 4671882187	$500,000	BNY 004685
2/11/04	Monthigne Account 4671882187	Falcone Household Account 272207365	$204,000	BOA-PSI-03810
4/13/04	AALL Trust and Banking Co. at Bank of Butterfield International Cayman Islands thru Bank of NY	Vincente Falcone Account 274776027	$200,000	BOA-PSI-06752
4/19/04	Beverly Hills Loan Co. writes check to	Sonia Falcone Account 846035538	$60,000	BOA-PS1-04101-2
4/21/04	AALL Trust and Banking	Monthigne Account 4671882187	$150,000	BOA-PSI-04039
4/21/04	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$80,367.64	BOA-PSI-03816
5/28/04	AALL Trust and Banking Corp. at Bank of Butterfield International Cayman Islands	Monthigne Account 4671882187	$350,000	BOA-PSI-04042
6/1/04	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$305,000	BOA-PSI-03818
6/4/04	Falcone Household Account 272207365	Beverly Loan Co.	$113,410	BOA-PSI-03875
6/17/04	AALL Trust and Banking Corp. Ltd.	Vincente Falcone Account 4659023450	$200,000	BOA-PSI-07645
7/8/04	Pierre J. Falcone Esquire/Sonia Falcone account at Coutts & Company in England through Bank of New York	Vincente and Pierre Falcone Account Number 76761391	$255,158.34	BOA-PSI-03866
7/16/04	AALL Trust and Banking Corp.	Monthigne Account 4671882187	$100,000	BOA-PSI-04045
7/16/04	Beverly Loan cashier's check	Sonia Falcone Account 846035538	$60,000	BOA-PSI-04102-4
7/19/04	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$77,797.16	BOA-PSI-03820
7/28/04	AALL Trust and Banking Corp.	Monthigne Account 4671882187	$350,000	BOA-PSI-04048
8/2/04	Monthigne Account 4671882187	Falcone Household Account 272207365	$300,000	BOA-PS1-03822
8/2/04	Falcone Household Account 272207365 writes check	Beverly Loan Co.	$62,509	BOA-PSI-035757-8
8/16/04	AALL Trust	Monthigne Account 4671882187	$200,000	BOA-PSI-04051
10/8/04	AALL Trust by order Apollo LLC, Valley Trust	Monthigne Account 4671882187	$315,000	BOA-PSI-04054
10/8/04	-. Monthigne Account 4671882187 writes check	Falcone Household Account 272207365 Check memo says "household expenses"	$275,000	BOA-PSI-04781
11/18/04.	AALL Trust and Banking Corp. By order Apollo LLC and ref: alley trust	Monthigne Account 4671882187	$250,000	BOA-PSI-04057

268

11/18/04	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$225,000	BOA-PSI-03829-30
12/20/04	Pierre Falcone Account 76761391 writes check	Sonia Falcone	$100,000	BOA-PS1-04834
12/22/04	Pierre Falcone Account 76761391 writes check	Sonia Falcone	$100,000	BOA-PSI-04834
1/18/05	Pierre Falcone Account 76761391 writes check	Sonia Falcone	$45,000	BOA-PSI-04836
2/10/05	AALL Trust & Banking Corp.	Monthigne Acount 4671882187	$250,000	BOA-PSI-04060
2/10/05	Monthigne Account 4671882187 writes check	Falcone Household Account 272207365	$250,000	BOA-PSI-04780, 03974
4/4/05	Beverly Loan Co. writes check	Sonia Falcone	$189,000	BOA-PSI-03838
4/12/05	Equity Title Agency Inc. at National Bank of AZ	Falcone Household Account 272207365	$500,000	BOA-PSI-03878
4/12/05	Abecassis Jacques at Banco Nactional de Costa Rica	Falcone Household Account 272207365	$280,000	BOA-PSI-03881
4/15/05	Falcone Household Account 272207365	Beverly Loan Co.	$205,000	BOA-PSI-03884
8/4/05	American Express Ltd. at Banco Portugues de Negocios	Sonia Falcone Account 272207365	$349,960	BOA-PSI-03887
8/16/05	Falcone Household Account 272207365 writes check	Beverly Loan Co.	$55,000	BOA-PSI-03761
9/16/05	Beverly Loan Co.	Sonia Falcone Account 8460355538	$51,319	BOA-PSI-04188
9/21/05	Unidentified account at Firstrand Bank Ltd. at Banco Sol in Johannesburg. Wire info notes "by order PJF Luanda ACC 2811262151."	Falcone Household Account 272207365	$199,980	BOA-PSI-03890
9/23/05	Falcone Household Account 272207365	Beverly Loan Co.	$82,480	BOA-PSI-03893
11/17/05	Banco Sol Sari in Angola "By order PJF"	Falcone Household Account 272207365	$299,970	BOA-PSI-03896
11/18/05	Falcone Household Account 272207365	Beverly Loan Co.	$99,120	BOA-PSI-03899
12/14/06	Levin and Schreder at JPM Chase	Falcone Household Account 272207365	$1,050,000	BOA-PSI-03902
12/15/05	Gitana Finance/American Express Bank Ltd. at Banco Sol Sari in Luanda	Sonia Falcone Account 272207365	$199,905	BOA-PSI-03905
12/20/05	Charleston Hotels Group at Banco de Bogota in Bogota Colombia	Falcone Household Account 272207365	$200,000	BOA-PSI-03908
1/19/06	Charleston Hotels Group Inc.	Falcone Household Account 272207365	$100,000	BOA-PSI-03911
1/26/06	Levin & Schreder at JPM	Falcone Household Account 272207365	$220,000	BOA-PSI-03912
3/3/06	Pierre Joseph Falcone at Citic Ka Wah Bank Ltd. in Beijing	JK Gruner and Associates Ltd. at Suntrust Bank, VA. Instructions note: "for business intelligence services."	$8,000	Pierre Falcone.xls (Deutsche Bank)
4/12/06	PJF Luanda at Banco BPI SA, Lisbon	Falcone Household Account 27220-365	$349,932	BOA-PSI-03915
4/13/06	Falcone Household Account 272207365	Beverly Loan Company	$210,000	BOA-PS1-03918
5/25/06	Beverly Loan Co. writes check	Falcone Household Account 272207365	$120,000	BOA-PSI-90210

269

6/6/06	Beverly Loan Co. writes check	Falcone Household Account 272207365	$80,000	BOA^PSI-03841-2
7/6/06	Pierre Joseph Falcone at Citic Ka Wah Bank Limited in Beijing thru Bank of America NY	Beneficiary not named. Receiving institution is "Asia Return Item."	$228,203	Pierre Falcone.xls (Deutsche Bank)
7/6/06	Pierre Joseph Falcone at Citic Ka Wah Bank Limited in Beijing	JK Gruner and Associates at Sun Trust Bank in VA	$24,000	Pierre Falcone.xls (Deutsche Bank)
7/11/06	Pierre Joseph Falcone at Citic Ka Wah Bank in Beijing	Williams and Connolly at Bank of America, NY	$228,203	Pierre Falcone.xls (Deutsche Bank)
8/21/06	Beverly Loan Co. writes check	Falcone Household Account 272207365	$119,600	BOA-PSI-03843-4
8/29/06	Pierre J. Falcone at Banco Sol Banco at Firstrand Limited in Johannesburg	Falcone Household Account 272207365	$149,975	BOA-PSI-03921
10/6/06	Charleston Hotels Group	Falcone Household Account 272207365	$200,000	BOA-PSI-03927
10/6/06	Falcone Household Account 272207365	Beverly Loan Company	$100,000	BOA-PSI-03930
11/10/06	PJF Luanda Angola at American Express Bank Ltd in Lisbon	Falcone Household Account 272207365	$549,960	BOA-PSI-03933
11/10/06	Falcone Household Account 272207365	Beverly Loan Company	$300,000	BOA-PSI-03936
11/22/06	Beverly Loan Co. writes check	Falcone Household Account 272207365	$125,000	BOA-PSI-03845-6
12/1/06	Falcone Household Account 272207365 writes check For "lawyers fees"	Perkins Cole Brown & Bain of Phoenix	$120,000	BOA-PSI-03765
12/14/06	Levin &Schreder	Falcone Household Account 272207365	$1,050,000	BOA-PSI-03939
12/15/06	Falcone Household Account 272207365	Beverly Loan Co.	$183,646	BOA-PSI-03942
12/18/06	Falcone Household Account 272207365 writes check for "lawyers fees"	Grant Woods	$210,000	BOA-PSI-03764
2/14/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$67,000	BOA-PSI-03847-8
2/21/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$100,000	BOA-PSI-03849-50
2/22/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$90,000	BOA-PSI-03851-2
3/22/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$61,000	BOA-PSI-03853-4
4/12/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$549,700	BOA-PSI-03855-6
4/13/07	Falcone Household Account 272207365 writes check for "lawyers fees"	Perkins Cole	$142,411.45	BOA-PSI-03766
5/21/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$149,700	BOA-PSI-03857-8
6/4/07	Beverly Loan Co. writes check	Falcone Household Account 272207365	$50,000	BOA-PSI-03859-60
6/29/07	Craig Jackson at Wells Fargo writes check	Falcone Household Account 272207365	$255,156	BAC-PSI 07625
8/20/07	Pierre Joseph Falcone at Citic ka wah Bank Ltd. in Hong Kong	Iris Mendez Account 46742699S6	$250,000	BOA-PSI-07694
SOURCES - Multiple TOTAL- $62,075,357.31

Chart Prepared by Subcommittee

270

C. An Angolan Government Official: Moving $50 Million at the Request of the Governor of the Angolan Central Bank

Documents uncovered during the Subcommittee's investigation show that, in 2002, Dr. Aguinaldo Jaime, then head of the Central Bank of Angola, Banco National de Angola (BNA), attempted to transfer $50 million in government funds from the central bank to a private bank account in the United States, only to have the transfer blocked and the funds returned on two occasions by the U.S. financial institutions involved. The transfer of the Angolan funds was characterized at the time as an investment to produce humanitarian aid for the people of Angola, but other documents indicate the transfer was part of a fraudulent "prime bank" investment scheme that likely would have resulted in the funds being lost or stolen.

The participants in the 2002 $50 million transfer include BNA Governor Jaime; Mehenou Satou Amouzou, a Togo citizen living in the United States and owner of MSA Inc., a Florida company that played a role in the first attempted transfer; Charles Shelton, a London-based broker with alleged access to a secretive Swiss trading group; Stanley Wayland, a purported principal in that Swiss trading group; and Jan Morton Heger, a California attorney and owner of Euro-American Investments, LLC, a Nevada company that played a role in the second attempted transfer.

In the first transfer attempt, in June 2002, BNA Governor Jaime ordered the $50 million in Angolan funds wire transferred from a BNA account at Citibank London to a Bank of America account in California which had been opened in the name of MSA Inc. and whose signatories were Mr. Amouzou and Dr. Jaime. Bank of America initially allowed the transfer, but became suspicious and ultimately returned the funds to Citibank and closed the MSA account.

The second attempt took place two months later, in August 2002, when BNA Governor Jaime instructed Citibank London to wire transfer $50 million to HSBC Equator Bank in London, and then opened a BNA account, with himself as the sole signatory, at HSBC USA in New York. At his request, HSBC used the funds to purchase $50 million in U.S. Treasury Bills ("T-Bills") for the New York account. Dr. Jaime then instructed HSBC to transfer the T-Bills from New York to a personal securities account in the name of Mr. Heger at Wells Fargo Investment Services in California. Wells Fargo initially allowed the transfer, became suspicious, returned the T-Bills to HSBC, and closed the Heger account. Undeterred, Dr. Jaime instructed HSBC to transfer the T-Bills to a Heger law office account at Comerica Bank in California. HSBC attempted but was unable to complete the transfer due to incorrect account information. Dr. Jaime then offered to allow HSBC to retain the Treasury bills in New York, on the condition that it provide him with a negotiable "safekeeping receipt" that could be used as a transferable financial instrument. HSBC initially agreed, but apparently never actually provided the receipt. In December 2002, Dr. Jaime took a new government post outside of BNA, and BNA ordered the T-Bills to be liquidated and the $50 million returned to its account at Citibank London.

This case study has a satisfactory conclusion, since the $50 million was returned to the Angolan central bank, but illustrates how even central bank transactions require careful scrutiny by U.S. financial institutions. As a result of the $50 million transfers that went through its

271

accounts and ongoing concerns about corruption in BNA and Angola generally, in 2003, Citibank closed not only the accounts it had maintained for BNA, but all other Citibank accounts for Angolan entities, and shut down its branch in Angola.

In connection with its investigation of this matter, the Subcommittee obtained extensive documents from and conducted interviews with Mr. Amouzou and Mr. Heger. It also obtained documents from and conducted interviews with many of the financial institutions involved. The Subcommittee also met with a representative of Angola's Embassy, explained its investigation and showed key documents it had obtained, and asked to speak with Dr. Jaime or another appropriate Angolan official to obtain their views of the $50 million transfer. After waiting several months, the Subcommittee sent a letter renewing its request, but the Embassy chose not to provide an official for a Subcommittee interview on this matter.

(1) Background

Banco Nacional de Angola. Banco Nacional de Angola, first established after Angola gained its independence in 1975, is wholly owned by the Government of Angola and functions as the country's central bank. BNA is a member of the Association of African Central Banks and the Southern African Development Community.¹⁴³⁸ It serves as Angola's monetary and foreign exchange authority, but is also licensed to do business directly with individual Angolan and foreign clients. BNA has its headquarters in Luanda, Angola's capital city and, in 2002, operated nine branches throughout the country with a total of about 2,000 employees.¹⁴³⁹ In December 2004, BNA held about $1,257 billion in total assets and managed more than $25 million in client funds.¹⁴⁴⁰

Governor Jaime. Dr. Aguinaldo Jaime served as the Governor of Banco Nacional de Angola from May 1999 until December 2002.¹⁴⁴¹ During his tenure, his responsibilities included chairing the BNA Board of Directors, directing BNA's day-to-day management, certifying BNA's financial books, representing BNA before national, foreign, and international institutions, and signing all Angolan banknotes issued by BNA.¹⁴⁴²

On or around December 5, 2002, Dr. Jaime left Banco Nacional de Angola to become an Assistant to the Prime Minister of Angola under President Jose Eduardo dos Santos. Later in 2003, he became Deputy Prime Minister of Angola. After serving in that post for six years, in 2009, he was appointed Chairman of an Angolan commission that promotes private investment in the country, Agenda Nacional para o Investimento Privado ("ANIP").¹⁴⁴³

¹⁴³⁸ 2006 HSBC KYC profile of BNA, 11/13/06, HSBC-PSI 032834.

¹⁴³⁹ 12/18/02 HSBC KYC profile of BNA, HSBC-PSI 037384-86.

¹⁴⁴⁰ 12/21/06 HSBC internal email, HSBC-PSI 032837 (stating that, as of December 2004, BNA's total assets were
about $1.9 billion, its net income was about $63 million, and it held over $127 million in capital and reserves).

¹⁴⁴¹ HSBC-PSI 037185. Dr. Jaime was replaced by Amadeu de Jesus Castelhano Mauricio who remains the BNA
Governor today. African Development Information Services, "Angola Who's Who,"
http://www.afdevinfo.eom/htmlreports/ao92.html#M).

¹⁴⁴² See Angola National Assembly Law No. 6/97, Chapter IV, Section II, Article 58, enacted July 11,1997.

1443

See ANIP website, hlip:/'www.iie-angola-us.org/home.htm.

272

Prime Bank Schemes. "Prime bank" schemes are a type of fraudulent investment scheme that gained popularity during the 1990s. As of 2002, there were over 100 pending federal criminal investigations in the United States related to prime bank schemes. According to the U.S. Securities and Exchange Commission ("SEC"), the fraud revolved around financial instruments referred to as "prime bank instruments" or "prime bank notes," that were often characterized as guarantees of certain funds held by major, well known banks. Promoters claimed that these instruments, when resold several times, produced substantial returns on the initial investment.¹⁴⁴⁶ Promoters also typically told investors that they had special access to secretive trading programs between banks that bought and sold these financial instruments, although, in reality, no such trading programs existed. Some promoters also told investors they were one of a small number of traders licensed by the Federal Reserve to trade in such instruments, when in fact, no such licenses are issued by the Federal Reserve. Investors were often told that their funds would be used to secure and trade in prime bank instruments on international markets, and promised profits of 100% or more with no risk.¹⁴⁴ The U.S. Federal Bureau of Investigations ("FBI") has cautioned that, typically, the real objective of the fraud was to convince investors to transfer money to a foreign bank account under control of the fraudster who would then transfer some or all of the funds to still another, undisclosed offshore

. 1449

account.

Mehenou Amouzou. Mehenou Satou Amouzou is a native and citizen of Togo and lives in the United States. In response to a Subcommittee subpoena, he agreed to produce documents and participate in an interview. Earlier, Mr. Amouzou's office was the subject of a search warrant by the Internal Revenue Service ("IRS") which removed a significant number of documents. Mr. Amouzou gave the Subcommittee permission to obtain those documents from the IRS.

During his interview, Mr. Amouzou told the Subcommittee that he held several advanced degrees ^14S0 and came to the United States in 1991, in pursuit of a doctorate in finance from La

¹⁴⁴⁴ Joel E. Leising and Michael McGarry, "Prime Bank / High Yield Investment Schemes," United States
Attorneys' Bulletin, March 2002, Vol. 50, Number 2.

¹⁴⁴⁵ According to the SEC, prime bank schemes "involve the purported issuance, trading, or use of so-called 'prime'
bank, 'prime' European bank or 'prime' world bank financial instruments, or other 'high yield investment programs'
('HYIPs'). The fraud artists who promote these schemes often use the word 'prime' - or a synonymous phrase, such
as 'top fifty world banks' - to cloak their programs with an air of legitimacy. They seek to mislead investors by
suggesting that well regarded and financially sound institutions participate in these bogus programs. But prime bank
and other related schemes have no connection whatsoever to the world's leading financial institutions or to banks
with the word 'prime' in their names." http://www.sec.gov/divisions/enforce/primebank.shtml.

¹⁴⁴⁶ See Federal Bureau of Investigation - Common Fraud Schemes,
http://www.fbi.gov/maicases/fraud/fraudschemes.htm.

¹⁴⁴⁷ See Federal Reserve Bank of New York, Circular 10858, June 19, 1996.

¹⁴⁴⁸ See SEC, Prime Bank Fraud Information Center,
http://www.sec. go v/divisions/enforce/primebank/howtheywork.shtml.

¹⁴⁴⁹ See FBI - Common Fraud Schemes, http://www.fbi.gov/maicases/fraud/fraudschemes.htm.

¹⁴⁵⁰ He told the Subcommittee that he attended high school in France; obtained undergraduate and Masters degrees
from the European Institute of Management; obtained a certificate in finance and investment from the American
University in Paris in 1987; and another Masters degree in political science and international relations from the
University of Paris' Ecole Hautes Etudes Internationale in 1989. Subcommittee interview of Mr. Amouzou,
5/13/08. See also the credentials listed in a 2002 development proposal, BOA-PSI-05629.

273

Jolla University in San Diego.^I451 Mr. Amouzou told the Subcommittee that he works with African countries to diversify their resources and has worked on business ventures in a number of African countries. Documents reviewed by the Subcommittee disclosed a long history of involvement with failed investments, including investments that referred to prime bank instruments.

MSA, Inc. Mr. Amouzou told the Subcommittee that he formed Mehenou Satou Amouzou, Inc. ("MSA Inc.") as a U.S. corporation to provide consulting and investment management services. " Mr. Amouzou serves as MSA Inc.'s president, chief executive officer, and chairman of the board of directors. ⁵⁴ He provided the Subcommittee with two documents identifying the corporate organization and officers of MSA Inc.¹ ⁵⁵ The documents are identical except that each identifies a different subsidiary: one lists Phoenix Holding International, Inc., while the other lists Delta Holdings International, Inc., formerly known as FranTech Angola Inc.¹⁴⁵⁷ FranTech Angola was incorporated by Mr. Amouzou on January 14, 2002, in connection with his efforts related to Angola.¹⁴⁵⁸ Mr. Amouzou estimated that MSA Inc. currently earns revenues of approximately $120,000 per year.¹⁴⁵⁹

(2) First Attempt to Transfer the $50 Million

In June 2002, Banco Nacional de Angola instructed Citibank to transfer $50 million of Angolan state funds from its account at Citibank London to an account in the name of MSA Inc., at Bank of America in San Diego. Dr. Jaime and Mr. Amouzou were the signatories for the MSA account. Citibank approved the transfer, and Bank of America initially allowed it, but later

¹⁴⁵¹ The Subcommittee was unable to confirm the existence of a university with that name in San Diego. One
document produced by Mr. Amouzou showed that, in 1992, he received a professional guard license, apparently in
connection to his employment by a private security company. BOA-PSI-05529.

¹⁴⁵² See, e.g., "Trade Programs" which appears to be a 41-page instruction manual for a prime bank trading program,
PSI-Amouzou 09-0149-90; documents related to Kramer International, Inc., a corporation formed by Mr. Amouzou,
which is listed in the Los Angeles County Fictitious Business Name Index (No. 00-267100), filed February 23,
2000, http://www.lavote.net/Clerk/Business Name.cfm, and which was involved with prime bank funding for
housing construction in Gambia in 1999, PSI-Amouzou-09-1366; PSI-Amouzou-09-0947; PSI-Amouzou-09-0981;
and prime bank funding for housing construction in Angola in 2000, PSI-Amouzou-10-1390-92; together with
other documents that appear related to prime bank schemes, PSI-Amouzou-10-1403-06; PSl-Amouzou-07-0747;
PSI-Amouzou-10-0672 to 0673; PSI-Amouou-09-1269; PSI-Amouzou-09-1242; PSI-Amouzou-08-0013; PSI-
Amouzou-10-1078;PSI-Amouzou-08-0015.

¹⁴⁵³ The Subcommittee was unable to locate incorporation documents for MSA Inc.

¹⁴⁵⁴ MSA Inc. flowchart, PSI-Amouzou-07-1251.

¹⁴⁵⁵ MSA Inc. flowchart, PSI-Amouzou-07-1251; MSA Inc. flowchart, PSI-Amouzou-08-0834. Both flowcharts
show that MSA Inc. had tliree Vice Presidents: David Naranjo, who was also the Director of Operations and
Treasurer of the Board of Directors; Albert Lee, who was also Director of Resources and Secretary of the Board of
Directors; and Kwesi B. Annan, who was also the Director of Programs. Both charts also list an affiliated trust, the
MSA Trust, and name R. Eason and Adrianne Lewis as "Humanitarian" trustees.

¹⁴⁵⁶ MSA Inc. flowchart, PSI-Amouzou-07-1251.

¹⁴⁵⁷ MSA Inc. flowchart, PSI-Amouzou-08-0834. The officers and structure of Delta Holdings are identical to the
officers and structure of Phoenix Holding. Both list Joseph Ntamushuboro as president, and Matteuw Lee, Bernard
Aziable, Louremco Landorte, and K. Beshun as directors. See also Articles of Amendment to Articles of
Incorporation of FranTech Angola, Inc, PSI-Amouzou-11-0374.

¹⁴⁵⁸ See Florida Secretary of State Letter No. 802A00001990, attesting to the filing of Articles of Incorporation for
FRANTECH - ANGOLA, INC., filed on January 14, 2002; Subcommittee interview of Mr. Amouzou, 5/13/08.

¹⁴⁵⁹ Subcommittee interview of Mr. Amouzou, May 13, 2008.

274

became suspicious that the $50 million transfer was part of a fraudulent prime bank scheme. Bank of America froze the funds while working with Citibank to examine the transfer. After three weeks, Dr. Jaime asked for the funds to be returned to the BNA account at Citibank London. Bank of America returned the funds and closed the MSA account. A few months later, in January 2003, Citibank personnel recommended closing, not only the Citibank account provided to BNA, but also all Citibank accounts provided to Angolan entities. Citibank actually closed the BNA account five months later and, during 2003, closed all other accounts held by Angolan government agencies and Sonangol. Citibank also closed its branch office in Angola.

Amouzou Investment Proposal. Mr. Amouzou told the Subcommittee that, in 1999, he developed a business relationship with the Angolan Minister of Oil, Joao Landoite, who introduced him to Dr. Jaime, then head of the Angolan Central Bank. Mr. Amouzou told the Subcommittee that he presented them with an investment plan for Angola in which, if he were given a large sum of money such as $10 billion, he would generate a monthly return of 5 to 10% by depositing the principal with a major bank, obtaining a "bank guarantee" of the principal, and then using that bank guarantee to generate additional sums that could be placed in high-yield investments.¹⁴⁶⁰

Mr. Amouzou told the Subcommittee that BNA Governor Jaime expressed interest in the proposal which Mr. Amouzou then developed throughout 2001 and 2002. Mr. Amouzou provided copies of several "Funding Agreements" which purported to lay out the investment plan. For example, a February 2001 agreement signed by Dr. Jaime, representing BNA, and Mr. Amouzou, representing MSA Inc.¹⁴⁶¹ stated that Mr. Amouzou agreed to arrange and make available $3 billion, with scheduled payments of $500 million per year over 6 years, to finance development of a number of socio-economic infrastructure projects in Angola. The agreement stated that, to carry out this investment plan, Mr. Amouzou was to be issued a "Bank Guarantee" for $150 million upon execution of the agreement, and would keep that Bank Guarantee for 18 months in a safe deposit account at a bank. Eventually the funding would reach "the total amount requested, which is Three Billion Us Dollars."¹⁴⁶² Meanwhile, BNA was to open up a new bank account to receive the profits from the investment plan, and Mr. Amouzou would disburse the funds from an account at Bank of America.

Mr. Amouzou told the Subcommittee that the Angolan legislative assembly issued a resolution approving the concept and authorizing an MSA Inc. subsidiary, FranTech Angola, to develop the investment proposal further. Mr. Amouzou provided the Subcommittee with additional documents related to the investment project including the following:

-a March 23, 2001 letter from Dr. Jaime presenting a list of projects, including health, infrastructure, and education projects, for which the Government of Angola was seeking financing, a Bank Guarantee, Power of Attorney, and a copy of Dr. Jaime's passport and business cards;¹⁴⁶³

2/15/01 "Funding Agreement" between BNA and MSA, Inc., PSI-Amouzou-08-0143-46.

Id. at 0144.

Letter from BNA Governor Jaime to Mr. Amouzou, 3/23/01, PSI-Amouzou-08-0147-48.

5/28/2008	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0010
6/26/2008	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Unknown	PSi-Abubakar& Weidenfeld-03-0010
7/25/2008	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Unknown	PSI-Abubakar& Weidenfeld-03-0010
8/25/2008	Weidenfeld Law Firm Account -AUN Special Account	$300,000.00	Guernsey Trust Co.	PSI-Abubakar& Weidenfeld-03-0010
AUN ACCOUNT TOTAL $2,075,000.00

SOURCE: TOTAL $3,424,980.00 ... . . , . . ' Weidenfeld