ENFORCEMENT INFORMATION FOR March 25, 2015
Life For Relief and Development Settles Potential Civil Liability for Apparent Violations of the Iraqi Sanctions Regulations: Life for Relief and Development (LRD) of Southfield, Michigan, has agreed to pay $780,000 to settle potential civil liability for apparent violations of the former Iraqi Sanctions Regulations, 31 C.F.R. part 575 (the "Regulations"). LRD appears to have violated §§ 575.210 and 575.211 of the Regulations between September 9, 2002, and March 19, 2003, when it knowingly and willfully formed a conspiracy for the purpose of transferring funds from the United States to Iraq, by and through Amman, Jordan, and appears to have made funds transfers pursuant to this conspiracy. OFAC considered three such funds transfers, totaling $236,000, and the formation of the conspiracy itself, in calculating the civil penalty amount. The civil settlement with OFAC is an element of a settlement agreement between LRD and the U.S. Department of Justice.
OFAC determined that LRD did not voluntarily self-disclose the apparent violations, and that the apparent violations constituted an egregious case. The base penalty amount for LRD’s apparent violations was $1,300,000.
The settlement amount reflects OFAC’s consideration of the following facts and circumstances, pursuant to the General Factors under OFAC’s Economic Sanctions Enforcement Guidelines, 31 C.F.R. part 501, app. A: LRD appears to have willfully violated U.S. economic sanctions regulations; prior to the relevant transactions, LRD had written notice from OFAC that such transfers were prohibited and that OFAC did not authorize such transactions; LRD’s highest management levels—i.e., its President—knew of the conduct giving rise to the apparent violations and directed the funds transfers to Iraq via Jordan; U.S. economic sanctions program objectives were harmed because funds were successfully transferred to Iraq; LRD does not have prior OFAC sanctions history, including receipt of a penalty notice or Finding of Violation during the five years preceding the date of the earliest transaction giving rise to the apparent violations; LRD undertook a remedial response to the transactions and agreed to establish an OFAC compliance program; LRD cooperated by waiving the statute of limitations regarding the apparent violations; and the civil settlement with OFAC is an element of LRD’s cooperation agreement with the U.S. Department of Justice.
1) The apparent purpose of charging conspiracy as a separate violation from the underlying substantive violations is that the penalty for only three transfers would have been too low otherwise. This is one of the rare occasions where OFAC explicitly states that it counts avoidance/evasion/conspiracy as a distinct violation when an actual underlying violation was also carried out. (Compare Civil Enforcement Information - Ericsson, Inc. and Ericsson AB (2018)).
2) The reason why the penalty was so large even though the violations predated the 2007 IEEPA Enhancement Act increases is that the Iraqi Sanctions Regulations were issued pursuant to UNPA and the Iraqi Sanctions Act, and had a maximum civil penalty of $325,000.
3) This is the only fraudulent charity case (from 2006 through 12/2020) that was the subject of a civil enforcement action. All others are dealt with solely in the criminal realm.