Asset Freeze Against Former Monk Accused of Defrauding Chinese Investors Highlights EB-5 Visa Program

Posted: 12:38 am EDT

 

Via Securities and Exchange Commission:

Washington D.C., Aug. 25, 2015 —The Securities and Exchange Commission today announced an asset freeze obtained against a man in Bellevue, Wash., accused of defrauding Chinese investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program by investing in his companies.

The SEC alleges that Lobsang Dargey and his “Path America” companies have raised at least $125 million for two real estate projects: a skyscraper in downtown Seattle and a mixed-use commercial and residential development containing a farmers’ market in Everett, Wash.  But Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use including the purchase of his $2.5 million home and cash withdrawals at casinos.

“We allege that Dargey promised investors their money would be used to develop specific real estate projects approved under the EB-5 program, but he misused millions of dollars to enrich himself and jeopardized investors’ prospects for U.S. residency,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

According to the SEC’s complaint filed yesterday in U.S. District Court for the Western District of Washington:

  • Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers.
  • Dargey and his companies obtained investments from 250 Chinese investors under the auspices of the EB-5 program.  Path America SnoCo and Path America KingCo operated as regional centers through which EB-5 investments could be made.
  • Dargey told U.S. Citizenship and Immigration Services (USCIS) and EB-5 investors that he would use investor money only for the Seattle skyscraper and Everett, Wash., projects.
  • Dargey and his companies misled investors about their ability to obtain permanent residency by investing in the Path America projects.  For example, Dargey knew that USCIS can deny investors’ residency applications if investor money is used for a project that materially departs from the approved business plan presented to USCIS.  Dargey failed to tell investors that he and his companies had departed from the business plan by using investor money for personal expenses and unrelated projects.

Late yesterday, the court granted the SEC’s request for an asset freeze and issued an order restraining Dargey and his companies from soliciting additional investors.  The SEC also was granted an order expediting discovery, prohibiting the destruction of documents, and requiring Dargey to repatriate funds he transferred to overseas bank accounts.

The SEC’s investigation was conducted by Brent Smyth and Michael Foley of the San Francisco office and supervised by Steven Buchholz.  The SEC’s litigation will be led by Mr. Smyth and Susan LaMarca.  The SEC appreciates the assistance of the USCIS.

According to the Seattle Times, citing a civil fraud suit filed Monday by the Securities and Exchange Commission (SEC), Dargey, a former monk, allegedly diverted millions to spend on a $2.5 million home, other real-estate investments and gambling at 14 casinos across the West. The report notes that the EB-5 visa program allows wealthy foreigners to invest at least $500,000 in a commercial enterprise that creates at least 10 full-time jobs, in exchange for a permanent-residency visa or green card. China dominates the list of countries from which immigrant investors hail.

Department of Homeland Security’s USCIS administers the Immigrant Investor Program, also known as “EB-5,” created by Congress in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors. Under a pilot immigration program first enacted in 1992 and regularly reauthorized since, certain EB-5 visas also are set aside for investors in Regional Centers designated by USCIS based on proposals for promoting economic growth. As of August 3, 2015, USCIS had approved approximately 697 regional centers. Regional centers can operate in multiple states.

In its adjudication policy memorandum dated May 30, 2013, USCIS writes on how adjudication of EB-5 petitions and applications must only adhere to the “Preponderance of the Evidence Standard“:

As a preliminary matter, it is critical that our adjudication of EB-5 petitions and applications adhere to the correct standard of proof. In the EB-5 program, the petitioner or applicant must establish each element by a preponderance of the evidence. See Matter of Chawathe, 25 I&N Dec. 369, 375-376 (AAO 2010). That means that the petitioner or applicant must show that what he or she claims is more likely so than not so. This is a lower standard of proof than both the standard of “clear and convincing,” and the standard “beyond a reasonable doubt” that typically applies to criminal cases. The petitioner or applicant does not need to remove all doubt from our adjudication. Even if an adjudicator has some doubt as to the truth, if the petitioner or applicant submits relevant, probative, and credible evidence that leads to the conclusion that the claim is “more likely than not” or “probably true”, the petitioner or applicant has satisfied the standard of proof.

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What’s Next For Former FSO Michael Sestak, Plus Some Unanswered Questions

Posted: 2:05 pm EDT

 

On August 14, 2015, former FSO Michael T. Sestak was sentenced to 64 months imprisonment for receiving over $3 million in bribes in exchange for visas at the U.S. Consulate General in Ho Chi Minh City, Vietnam.

The Preliminary Consent Order of Forfeiture filed in the District Court of Columbia includes forfeiture of a) “any property, real or personal, which constitutes or is derived from proceeds traceable to the offense;” and  b) “a money judgment equal to the value of any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.”

The consent order identifies 1) any and all funds and securities seized from Scottrade Account #XXXX001S, held in the name of Anhdao Thuy Nguyen (“Scottrade Account”); and 2) $198,199.13 seized from the Department of Treasury from the Treasury Suspense Account under Seizure Number 38l30010—O1 (“Treasury Account”); and 3) a money judgment in the amount of at least $6,021,440.58, for which the defendant (Sestak) is jointly and severally liable with any co-conspirators ordered to pay a forfeiture money judgment as a result of a conviction for either offense.

In the plea agreement, Sestak agreed to sell nine properties in Thailand and that the proceeds would be paid to the United
States to satisfy a portion of the money judgment entered against him. The consent order also notes that “upon entry of a forfeiture order, Fed. R. Crim. P. 32.2(b)(3) authorizes the Attorney General or a designee to conduct any discovery the Court considers proper in identifying, locating, or disposing of property subject to forfeiture.”

In a pre-sentencing filing,  Mr. Sestak requested that any term of incarceration occur in a Camp-level facility. Specifically, at FCI Miami or if that’s not available, FCI Pensacola.  Defense justification is based on Sestak’s “lack of criminal history, the non-violent nature of the crimes, his cooperation with the Government, his lifetime of public service, his age, education, and status as a trustee during his pretrial confinement at Northern Neck Regional Jail.”‘

We had a chance to ask a few questions from his lawyer, Gray Broughton; we wanted to know where will be the location of his incarceration.

“The Bureau of Prisons will ultimately make a determination as to where Mr. Sestak is incarcerated,” said Mr. Broughton.  The defense lawyer again cited the nonviolent nature of the crimes and Mr. Sestak’s “clean criminal history.”  Mr. Sestak should be housed in a lower security level facility, according to his lawyer and that his prior employment with the U.S. Marshal will be taken into consideration by the Bureau of Prison.
We asked about the plea deals received by Sestak and main co-conspirator Bihn Vo.   Sestak’s lawyer believed the government made the best deal it could:

Mr. Sestak received a sentence of 64 months – 32 months less than codefendant Binh Vo, who received a sentence of 96 months. The Government will end up getting roughly $5M from Binh Vo – the $3M it already seized and the $2M he has agreed to pay in the next year. Binh Vo’s money (and his wife) are all currently outside of the U.S., so the U.S. doesn’t have any control over either. It made the best deal it felt it could with Binh Vo.

We were also interested in the duration of the sentence. By our calculation, Mr. Sestak would be almost 50 by the time he completes his sentence.  Mr. Broughton, however, told us that “assuming good behavior, Mr. Sestak would serve 85% of the sentence.” He will reportedly also get credit for the 27 months he has been in jail since his arrest, towards his sentence. We’re not sure if he’ll get credit for the full 27 months. But if that’s the case, and if our math is correct, he’d be out between 2-3 years.

We asked what happened to the 500 visa applicants that Mr. Sestak had issued visas to in Vietnam. And if Mr. Sestak was asked to help track or account for the applicants who paid bribes for their visas. Mr. Broughton said, “I don’t know what happened to the visa applicants. I am not aware of any efforts by the US Government in that regard.”

Mr. Broughton also released the following statement after the sentencing:

**
Michael Sestak received a fair, well-reasoned sentence today. The Court had the unenviable task of taking a multitude of opposing factors into consideration in devising Mr. Sestak’s sentence. 

As counsel for the U.S. Government readily admitted during Mr. Sestak’s sentencing hearing, Binh Vo was the mastermind of the visa fraud conspiracy. Binh Vo also had the largest pecuniary gain and will likely have millions of dollars waiting for him upon his release – along with his wife Alice Nguyen, who was able to avoid prosecution as a result of Binh Vo’s plea agreement. The Court appeared to appreciate that a sentence greater than or equal to Binh Vo’s sentence of 8 years would be fundamentally unjust for Michael Sestak, even though the U.S. Sentencing Guidelines recommended a sentence of approximately 20 years.
 
What made things difficult for the Court in determining an appropriate sentence is that Mr. Sestak was an essential component to the conspiracy and a public servant who had taken an oath of loyalty to his Country. It was Mr. Sestak’s status as a public official and the theory that would-be criminals will think twice before committing similar crimes that caused the Court to sentence Michael Sestak to something greater than time served.
 
Ultimately, the Court balanced these countervailing factors by issuing a sentence of 64 months – 32 months less than codefendant Binh Vo, who received a sentence of 96 months.
 
Michael Sestak is a good man who made made a huge mistake. Even after his release from prison, Mr. Sestak’s actions – and the shame that follows – will haunt him forever.
**

 

With the case concluded for all charged co-conspirators, we thought we’d asked the State Department what systemic changes had Consular Affairs instituted at USCG Ho Chi Minh City and worldwide following the Sestak incident.

The State Department, on background says this:

The Bureau of Consular Affairs takes all allegations of malfeasance seriously and continually works to improve its operations. Following any detection of vulnerabilities, CA works to improve management controls and guidance to the field. After the incident in Ho Chi Minh City, the management controls at post were comprehensively reviewed to determine what improvements could be made to their processes. As a matter of policy, we do not discuss the specifics of internal management controls.

Most of the Sestak visa cases were allegedly previous refusals. If true, we don’t quite understand how one officer could overturn so many visa refusals and issue close to 500 visas without red flags, if consular management controls worked as they should.  We wanted to know what consequences will there be for supervisors, embassy senior officials and principal officers who fail to do their required oversight on visas. And by the way, what about those who also do not follow the worldwide visa referral policy, particularly, Front Office occupants? The State Department would only say this:

As a matter of policy we do not discuss specific internal personnel actions. Protecting the integrity of the U.S. visa is a top priority of the U.S. government. We have zero tolerance for malfeasance. We work closely with our law enforcement partners to vigorously investigate all allegations of visa fraud. When substantiated, we seek to prosecute and punish those involved to the fullest extent of the law.

We imagined that the Bureau of Consular Affair’s Consular Integrity Division would be tasked with reviewing procedures and lessons learned on what went wrong in the Sestak case. We wanted to know if that’s the case and wanted to ask questions from the office tasked with the responsibility of minimizing a repeat of the Sestak case. Here is the official response:

The Consular Integrity Division regularly reviews incidents of malfeasance or impropriety and makes recommendations for procedural changes to reduce vulnerabilities and updates training materials for adjudicators and managers based on the lessons learned, including the case in Ho Chi Minh City. The Consular Integrity Division also does reports on the management controls at overseas posts, as well as reports that review global management controls issues, which inform CA leadership about any issues of concern.

No can do.  So far, we’ve only learned that the CID reviewed incidents of malfeasance including the Sestak case but it doesn’t tell us if it did a specific report on HCMC and what systemic changes, if any, were actually made.

We tried again. With a different question: According to in country reports, USCG Ho Chi Minh City received a letter from a jilted man in central Vietnam that helped DS crack the Sestak case. ConGen Ho Chi Minh City is one of the few consular posts that actually has a Regional Security Officer-Investigator, dedicated to visa investigations. If this case started with this reportedly jilted lover, the question then becomes how come neither the RSO-I or the internal consular management controls did not trip up the FSO accused in this case? If there was no anonymous source, would the authorities have discovered what was right under their noses?

As a matter of policy, we do not discuss the details of investigations. Protecting the integrity of the U.S. visa is a top priority of the U.S. government. We continually work to improve its operations, both in the field and here in Washington DC.

Ugh! Sestak was charged in May 2013. In July that year, the State Department told Fox News it was reviewing thoroughly alleged “improprieties” regarding a consular official in Guyana allegedly trading visas for money and possibly sex. In another article in 2014,  former Peace Corps, Dan Lavin,  said, “The State Department makes millions off of the poorest people in the world just by selling them the opportunity to fill out the application.” He also made the following allegation: “There are people at the embassy who can get you a visa,” Lavin said. “If you’re a Sierra Leonean, you go to a man called a ‘broker’; you then pay that ‘broker’ $10,000 and he personally gives that money to someone at the embassy who in turn gets you a visa.”  Apparently,  when asked about the accusations, a spokesperson at the U.S. embassy in Freetown declined to comment.

In any case, we also wanted to know if there were systemic changes with the State Department’s RSO-I program and how they support consular sections worldwide? Or to put it another way, we were interested on any changes Diplomatic Security had implemented in the aftermath of the Sestak case. Here is the amazing grace response, still on background:

It is the mission of DS special agents assigned as Assistant Regional Security Officer-Investigators (ARSO-I) to find fraud in the countries where they serve.

Sigh, we know that already. We thought we’d also ask about those 489 Vietnamese who got their visas under this scheme. What happened to them? Did Diplomatic Security, DHS or some other agency tracked them down?

The Bureau of Consular Affairs conducted a review of visas issued by Mr. Sestak. The Department revoked those visas that were improperly issued. If the visa holder had already travelled to the United States on the improperly issued visa, the Department of State notified the Department of Homeland Security so that agency could take action as appropriate.

We don’t know how many “improperly issued” visas were revoked. All 489?

We don’t know how many of those able to travel to the U.S. were apprehended and/or deported to Vietnam.

Frankly, we don’t really know what happened to the 489 Vietnamese nationals who paid money to get visas.

Calvin Godfrey who covered this case from Vietnam writes:

State Department investigators managed to track down and interrogate a few, though they wouldn’t say how many. The Washington DC office of the US Immigration and Customs Enforcement Agency didn’t respond to a list of questions about their efforts to track them down.

We also don’t know how much was the total proceed from this illegal enterprise. The USG talks about $9.7 million but one of the co-conspirators in an email, talked $20 million. Below via Thanh Nien News:

Prosecutors only put the gang on the hook for a $9.7 million — a “conservative estimate” they came up with by multiplying $20,000 by 489. Statement written by Hong Vo the middle of the illicit ten-month visa auction:

“I can’t believe Binh has pretty much made over $20m with this business,” she wrote to her sister, identified only as Conspirator A.V. “Slow days… are like 3 clients… and that’s like 160k-180.”

 

Then there’s the individual who purportedly started this ball rolling in Vietnam. Below excerpted from Thanh Nien News:

The State Department was quick to crow over Vo’s sentencing, but it remains deeply disingenuous about how this case came about and what it means.

“This case demonstrates Diplomatic Security’s unwavering commitment to investigating visa fraud and ensuring that those who commit this crime are brought to justice,” crowed Bill Miller, the head of the Diplomatic Security Service (DSS) in a press release generated to mark Vo’s sentencing.

The problem there is that the whole case didn’t come about through careful oversight; it came about because a sad sack from Central Vietnam loaned his pregnant wife $20,000 to buy a US visa from Sestak and the Vos. Instead of coming home with their baby boy, she disappeared, married another man and blabbed about it on Facebook. The sad sack wrote rambling letters to the President and the State Department’s OIG trying to get his wife and money back.

That Vietnamese informant reportedly is a recipient of threats from some of the Sestak visa applicants. Poor sod. So, now, one of the co-conspirators got 7 months, another 16 months, Sestak got 5 years, Vo got 8 years,  one alleged co-conspirator was never charged, and we don’t know what happened to close to 500 visa applicants. Also, the USG gets less than half the $20 million alleged gains. It looks like, at least Vo, will not be flipping burgers when he gets out of prison.

Now life goes on.
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Clinton Email Controversy Needs Its Own Cable Channel, For Now, a Timeline

Posted: 1:42 am EDT

 

“[T]he system we used was set up for President Clinton’s office. And it had numerous safeguards. It was on property guarded by the Secret Service. And there were no security breaches.”
Hillary Clinton, March 10, 2015

It’s hard trying to keep track of the highs and lows of the Clinton email debacle. Since this is not going away anytime soon, or going away quietly, we thought we’d build a timeline, to keep the details we find relevant for our reference. Feel free to scroll.  We’ve written previously —  in this whole email mess at the State Department —  it must be said that this might not have happened if not enabled by senior bureaucrats in the agency. We do not believe for a moment that senior officials were not aware about the email practices of then Secretary Clinton or the record retention requirement. But hey, if the practice was done for four years over the protests and dissent of officials at “M”, “A”, the Legal Adviser or the CIO, we’d like to see that email trail. We will update the timeline, as needed.

2008

November 21, 2008: NY Times says Hillary Clinton accepts US Secretary of State position

December 1, 2008: President-Elect Barack Obama announces Hillary Clinton as Secretary of State (video)

2009

January 13, 2009:  Internet records show that the domain ‘clintonemail.com’ was created and had Network Solutions LLC as registrar. http://www.whois.com/whois/clintonemail.com

January 13, 2009:  Senate Confirmation Hearing for Secretary of State Nominee Hillary Clinton

January 15, 2009: Senate Foreign Relations Committee votes 16–1 to approve Clinton.

January 21, 2009:  Clinton is confirmed by the U.S. Senate as President Obama’s secretary of state by a roll call vote of 94–2.

January 21, 2009Clinton takes the oath of office of Secretary of State administered by Associate Judge Kathryn Oberly with Bill Clinton in attendance.  She resigned from the Senate the same day. (Hillary Clinton, the 67th Secretary of State)

July 31, 2009: State/OIG issues Review of the Information Security Program for Sensitive Compartmented Information Systems at the Department of State (CLASSIFIED) aud-it-09-21.pdf

November 2, 1009: NARA Notes on State Department State Messaging and Archive Retrieval Toolset (SMART) system rollout. Per IPS, people are “using the record email function” but huge issues with memos. Appears that the Executive Secretariat (S/ES) will be establishing its own recordkeeping system as the follow on to STARS. (view in pdf).

2010

January 21, 2010: Clinton give remarks on Internet Freedom, launches 21st Century Statecraft.

April 19, 2010:  Computer World reports that Network Solutions LLC is hacked, injected with malicious JavaScript and the affected sites redirecting unsuspecting users to a Ukrainian attack server.

December 22, 2010NARA Bulletin 2011-03 | December 22, 2010 – Guidance Concerning the use of E-mail Archiving Applications to Store E-mail

2011

June 28, 2011:  State Department releases cable on Securing Personal Email Accounts (Via FoxNews)

October 19, 2011“Classified” Information Contained in We Meant Well – It’s a Slam Dunk, Baby!

2012

March 12, 2012State Department Chief Freedom of Information Act Officer Annual Report | March 12, 2012

August 10, 2012: State OIG issues review of US Embassy Kenya, dings Ambassador Scott Gration, among other things, for use of commercial email (see State/OIG Releases Ambassador Scott Gration’s Embassy Report Card – And Look, No Redactions!)

August 24, 2012: OMB/NARA issues Managing Government Records Directive, OMB M-12-18 (pdf)

September 11, 2012: Ambassador Chris Stevens and three others killed in Benghazi, Libya

September 2012: State/OIG Inspection of the Bureau of Administration, Global Information Services, Office of Information Programs and Services Report Number ISP-I-12-54

October 2, 2012After a Year of Serious Roars and Growls, State Dept Officially Retires FSO-Non Grata Peter Van Buren (despite allegation that “two pages of the book manuscript we have seen contain unauthorized disclosures of classified information.”)

November 20, 2012State Dept FOIA Requests: Agency Ranks Second in Highest Backlog and Here’s Why

December 11, 2012: NARA Chief Records Officer Paul M. Wester Jr. Email to NARA’s Margaret Hawkins and Lisa Clavelli on how they “should delicately go about learning more” about the transition plans for Secretary Clinton’s departure from State. Concerns that “there are or maybe plans afoot to taking her records from State to Little Rock.” Invokes the specter of the Henry Kissinger experience vis-a-vis Hillary Clinton (view email in pdf)

December 19, 2012: Accountability Review Board (ARB) Singles Out DS/NEA Bureaus But Cites No Breach of Duty

2013

February 1, 2013:  Clinton leaves the State Department (Photo of the Day: 67 Says Goodbye to Foggy Bottom)

Early 2013:  After HRC left government service in early 2013, the Clintons decided to upgrade the system, hiring Platte River as the new manager of a privately managed e-mail network. The old server was removed from the Clinton home by Platte River and stored in a third party data center.[…] “The information had been migrated over to a different server for purposes of transition,” from the old system to one run by Platte River, said Barbara J. Wells, a Denver lawyer who represents Platte River Networks Inc., recalling the transfer that occurred in June 2013. (Via WaPo)

March 5, 2013: State Department publishes Foreign Affairs Manual updates on 12 FAM 540 Sensitive But Unclassified Information (SBU) View pdf file here.

March 20, 2013: Clinton’s private email address, hdr22@clintonemail.com, is made public by Romanian hacker named ‘Guccifer’  (real name is Marcel Lazăr Lehel) after hacking into Clinton adviser Sidney Blumenthal’s AOL email account. (via Gawker; emails published in full here via RT).

May 28, 2013:  House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) announced the issuance of a subpoena for  “documents and communications referring or relating to the Benghazi from ten current and former State Department officials. See House Oversight Committee Subpoenas Benghazi-Related Documents To/From Ten State Dept Officials.

June 2013  Hillary’s team shifts control of the email network to an outside IT contractor in Denver called Platte River Networks, and sends the original server hardware to a data center facility in New Jersey, where it is erased. (Via Daily MailVia WaPo)

June 27, 2013After 1,989 Day-Vacancy — President Obama Nominates Steve Linick as State Dept Inspector General

August 1, 2013: House Oversight Committee issues two subpoenas, 1) State Department documents that had been covered but not produced after earlier requests, and 2) documents related to the Benghazi Accountability Review Board.

August 19, 2013The Other Benghazi Four: Lengthy Administrative Circus Ended Today; Another Circus Heats Up

August 29, 2013: NARA Bulletin 2013-02 |  All Agencies, Guidance on a New Approach to Managing Email Records

September 9, 2013: NARA Bulletin 2013-03 | Guidance for agency employees on the management of Federal records, including email accounts, and the protection of Federal records from unauthorized removal

September 30, 2013Senate Confirms Steve Linick; State Dept Finally Gets an Inspector General After 2,066 Days

2014

January 16, 2014: State/OIG issues Management Alert – OIG Findings of Significant, Recurring Weaknesses in Dept of State Info System Security Program 220066.pdf

May 8, 2014: The House of Representatives adopted H. Res. 567, Providing for the Establishment of the Select Committee on the Events Surrounding the 2012 Terrorist Attack in Benghazi, Libya. Rep. Trey Gowdy, R-S.C., is named chairman.

August 5, 2014: State Department updates 12 FAM 530 STORING AND SAFEGUARDING CLASSIFIED MATERIAL.  Officers are reminded that Department-issued materials not codified in the Foreign Affairs Manual or its supplemental Foreign Affairs Handbook series generally have no regulatory validity (see 2 FAM 1115.2)

August 11, 2014: The State Department sends its first group of documents to the new Select Benghazi committee, a partial response to a previous subpoena. The production contains a few — less than 10 — emails either to or from Clinton. Committee staffers notice immediately that the emails are from a previously unseen address, hdr22@clintonemail.com. Meanwhile, the committee presses State to meet its legal obligation to fully respond to the pair of subpoenas originally issued in August 2013. (Via Washington Examiner)

August 28, 2014: State Department U/S for Management sends memo to department principals on Senior Officials’ Records Management Responsibilities (view memo pdf). See State Department issued instructions for Preserving Email of Departing Senior Officials (view memo p.13 pdf)

September 15, 2014: Former State Dept DAS Raymond Maxwell Alleges Benghazi Document Scrub Pre-ARB Investigation

September 15, 2014: NARA Bulletin 2014-06 | All Agencies, Guidance on Managing Email

September 16, 2014:  State Department Denies Raymond Maxwell’s Document Scrub Allegations. Peeeeriod!!!!

September 19, 2014:  State Dept on Former DAS Raymond Maxwell’s Allegations: Crazy. Conspiracy Theory. What Else?

September 30, 2014: State/OIG Audit of the Information Security Program for Sensitive Compartmented Information Systems at the Department of State for FY 2014 (CLASSIFIED) aud-it-14-36.pdf

October 10, 2014:  William Fischer, the Department of State agency records officer, sends message to NARA with a draft email policy to update State’s Foreign Affairs Manual (5 FAM 447). Requests for limited distribution within NARA to those “with equities in this issue.” (View email in pdf)

October 30, 2014: Memo to the Field (All Diplomatic and Consular Posts) from Under Secretary for Management, Patrick F. Kennedy re: State Department Records Responsibilities and Policy, October 30, 2014

November 4, 2014:  Jason Leopold submits a FOIA request for “any and all records that were prepared, received, transmitted, collected and/or maintained by the Department of State (DOS) mentioning or referring to or prepared by Secretary of State Hillary Clinton or any member of the Office of the Secretary (S) from January 21, 2009 to February 1, 2013.”  (source here- pdf).

November 07, 2014: State/OIG posts online Audit of Department of State Information Security Program | aud-it-15-17.pdf

November 12, 2014: Letter to Hilary Clinton’s representative, Cheryl Mills re: the Federal Records Act of 1950, November 12, 2014; to Colin Powell, to Condoleezza Rice; to Madeleine Albright;

November 2014: The Benghazi committee asks the State Department for a larger batch of Clinton’s emails and receives about 300 that relate to the Libya saga, amounting to 850 printed pages  (Source: Washington Examiner)

December 5, 2014:  Clinton’s aide Cheryl Mills says that in response to a request from the State Department, they have handed over (about 55,000 pages) her work-related emails (comprising 30,490 messages); Response to Under Secretary of State for Management, Patrick F. Kennedy from Hilary Clinton’s representative, Cheryl Mills re: the Federal Records Act of 1950, December 5, 2014

December 29, 2014: Updates to Foreign Affairs Manual 5 FAM 440 Electronic Records, Facsimile Records, and Electronic Mail Records published with the following notation:  “In October, 2014, the Department issued an interim directive superseding some text in this section. This subchapter will be revised to reflect the new guidance – Refer to Department Notice 2014_10_115 for more information.” (View pdf, department notice available here.)

2015

January 25, 2015: Leopold v. State Department (view lawsuit here- pdf).

February 13, 2015 The State Department sends the Benghazi committee another 850 pages of Clinton’s emails, including some from two different accounts on the private ‘clintonemail.com’ server  (Source: Washington Examiner)

February 27, 2015  State Department staffers tell Benghazi committee aides that Clinton had used her private address exclusively during her tenure at the agency, and that they don’t have any of her emails other than those she provided voluntarily. (Source: Washington Examiner)

February 27, 2015:  Mike Schmidt, reporter with The New York Times contacts NARA General Counsel requesting off the record chat on regulations for government employees who use their personal email addresses to conduct government business. Gary Stern tells his boss “I am happy to talk to him about what the law is (there are no regulations at this time).” (View email here)

March 2, 2015: NYTimes broke the news that Hillary Clinton exclusively used a personal email account to conduct government business as secretary of state.

March 2, 2015: NARA Legal Counsel talks to State Department Deputy Legal Advisor on the use of personal email accounts (View email from NARA Records Officer Wester to State/DAS Margaret P. Grafeld)

March 3, 2015: NARA puts together ‘Talking Points’ on Clinton emails. (View pdf). Talking Points available here.

March 3, 2015: NARA Acting IG asks NARA: “[W]ho is the NARA liaison with the State department for records management? Were we aware the gov email system was not being used by Ms Clinton. If we were not aware why not. What checks and balances do we have in place to ensure the gov email systems are being used. (View email)

March 4, 2015:  Clinton tweeted, “I want the public to see my email. I asked State to release them. They said they will review them for release as soon as possible.”

March 6, 2015: Marie Harf, a State Department spokeswoman, said the Foreign Affairs Manual was a department document and didn’t carry the force of law. She also said a memo to diplomatic staff around the word bearing Mrs. Clinton’s name and discouraging the use of personal emails was “colloquial guidance,” not a mandate. (Via Wall Street Journal)

March 10, 2015: Clinton holds a presscon at the UN, admits that she deleted more than 30,000 emails that she says were personal in nature, says she turned over everything work-related to the State Department, while insisting that “I did not email any classified material to anyone on my email.” (Ex-Chief Information-Disclosure Guru on Hillary’s Email Defense and the Folks Asleep at the SwitchFormer Secretary Clinton talks about her state.gov private emails)

March 10, 2015:  “I don’t have the FAM in front of me. I can certainly check and see if there were certain policies, if there were regulations. The FAM is not a regulation; it’s recommendations,” said Jennifer Psaki, State Department Spokesman during the Daily Press Briefing.  NewsFlash: “The FAM is not a regulation; it’s recommendations.” Hurry, DECLINE button over there!

March 11, 2015: The Associated Press sues the State Department to force the release of Clinton’s emails and other documents that the agency has failed to turn over following a Freedom Of Information Act request. The legal action comes after repeated requests filed under the U.S. Freedom of Information Act have gone unfulfilled. They include one request the AP says it made five years ago and others pending since the summer of 2013.

March 12, 2015: Senators Burr, Corker, Johnson sends a letter to State/OIG to coordinate “with the Inspector General for the Intelligence Community, and any other appropriate Federal entities, conduct a thorough audit related to electronic communications by State Department employees, including former senior officials, that were principally carried out on non-government-owned, or non-government-protected, information networks.” (View letter here via freebeacon.com).

March 25, 2015: Letter from Secretary of State, John Kerry to State Department IG, Steve Linick re: review of records management, preservation, and transparency practices, March 25, 2015

April 12, 2015: The former secretary of state announced her second presidential campaign in a video released online. (Video)

May 18, 2015: Leopold v. State Department – Court Declaration of State Depart FOIA official John F. Hackett (view in pdf)

May 21, 2015:  The Department releases a set of 296 of Clinton documents which previously had been provided in February 2015 to the House Select Committee on Benghazi. May Release via foia.state.gov. This is the first batch of Clinton’s emails made public by the State Department; roughly 850 pages, captures concerns over Libya (Via NYTimes).

May 27, 2015:  U.S. District Court Judge Rudolph Contreras set particular targets for the State Department to meet each month as it wades through the roughly 30,000 emails totaling about 55,000 pages. (The percentages set for each disclosure can be viewed in the judge’s written order, posted here.) Scheduled every 30 days, setting monthly targets for State so the work is completed by January 29, 2016 (Via Politico).

May 29, 2015: State Department updates its Foreign Affairs Manual 5 FAM 480 CLASSIFYING AND DECLASSIFYING NATIONAL SECURITY INFORMATION—EXECUTIVE ORDER 13526

June 2015: State Department releases more emails. June Release via foia.state.gov

June 25, 2015: State Department updates 12 FAM 530 STORING AND SAFEGUARDING CLASSIFIED MATERIAL

June-July 2015:  | Potential Issues Identified by the Office of the Inspector General of the Intelligence Community Concerning the Department of State’s Process for the Review of Former Secretary Clinton’s Emails under the Freedom of Information Act (pdf)

July 23, 2015: Charles McCullough, the inspector general for the U.S. intelligence community tells members of Congress in a letter that a limited sampling of 40 Clinton emails turned up four that “should have been marked and handled at the SECRET level.” (View memo here via Politico)

July 24, 2015: Andrea Williams, a spokeswoman for the inspector general for the Intelligence Community, told NPR’s Carrie Johnson that at least four emails that were sent through Clinton’s private email network “were classified when they were sent and are classified now.” 

July 25, 2015:  “I am confident that I never sent nor received any information that was classified at the time it was sent and received,” Clinton told reporters in Winterset, Iowa, after news emerged this week that a federal watchdog had asked the FBI to review whether potentially classified material in her e-mails had been jeopardized during a State Department review of the messages ahead of public release. (Via Bloomberg).

July 27, 2015: Select Committee on Benghazi Chairman Trey Gowdy announced the State Department’s pledged to produce 5,000 new pages of documents to the Committee. As a result of the forthcoming production, the Chairman accepted Mr. Finer’s request to postpone the compliance hearing. (see State Dept to Release 5,000 Pages to Benghazi Panel, No Hearing With Kerry Top Aide For Now)

July 27, 2015: The State Department issues enhanced guidance for speaking, writing, teaching and media engagement for its employees, retirees, externs, interns and others. The clearance requirement covers  testimony provided in Congress even in an employee’s private capacity.  See State Dept Releases New 3 FAM 4170 aka: The “Stop The Next Peter Van Buren” Regulation

July 31, 2015: The second installment of emails from Hillary Clinton’s private server, released Friday by the State Department, includes 41 messages that reviewers determined contained classified material. (Via Daily Mail).

July 2015: State Department releases more emails. July Release via foia.state.gov

August 7, 2015: According to Nick Merrill, a Clinton press secretary, “She did not send nor receive any emails that were marked classified at the time.” (Observer.com)

August 10, 2015: Clinton makes court declaration under penalty of perjury per request from U.S. District Court Judge Emmet Sullivan. (Via Politico“While I do not know what information may be ‘responsive’ for purposes of this law suit, I have directed that all my emails on clintonemail.com in my custody, that were or potentially were federal records be provided to the Department of State, and on information and belief, this has been done,” wrote Clinton (view declaration here).

August 11, 2015: McCullough updates his statement to Congress on classified materials on personal electronic storage devices,  saying that Clinton emails reviewed contains information classified up to TOP SECRET//SI/TK//NOFORM. (See pdf file here)

August 12, 2015: Server was transferred to the FBI by Platte River Networks, a Denver firm hired by Clinton (via Associated Press)

August 13, 2015:  Gawker Media has previously requested the release of emails belonging to Philippe Reines, the loyal Hillary Clinton aide and former deputy assistant secretary of state. The department claimed that “no records responsive to your request were located.”  On August 13, lawyers for the U.S. Attorney General submitted a court-ordered status report to the U.S. District Court of the District of Columbia in which it disclosed that State employees had discovered “5.5 gigabytes of data containing 81,159 emails of varying length” that were sent or received by Reines during his government tenure. Of those emails, the attorneys added, “an estimated 17,855” were likely responsive to Gawker’s request (See status report for the court via Gawker).

August 17, 2015: Screeners of the 30,000 Hillary Clinton e-mail messages ordered released by a federal judge in May have flagged 305 of those documents for further review by U.S. intelligence agencies, government lawyers said in court papers. (via Bloomberg)

August 17, 2015: Clinton told reporter Clay Masters with Iowa Public Radio what she thinks will come of her controversial decision to exclusively use private email while secretary of state. “I think this will all sort itself out,” Clinton said. “And in a way, it’s kind of an interesting insight into how the government operates. Because if I had not asked for my emails all to be made public, none of this would have been in the public arena. But I want people to know what we did, I’m proud of the four years I was secretary of state.” (Via Politifact)

August 19, 2015: An email from a top Clinton adviser containing classified military intelligence information, and one from a top aide containing classified information about the Benghazi terror attack, were reportedly the documents that kick-started the FBI investigation into the mishandling of classified information. See the two of the Benghazi-related emails on the server (Via Fox News)

August 20, 2015: U.S. District Judge Emmet Sullivan orders the State Department to work with the FBI to determine if any of Hillary Clinton’s emails on her server during her tenure as secretary of state could be recovered. The State Department has 30 days to comply with Sullivan’s order. (Via Fox News) At a hearing for a Freedom of Information Act lawsuit against the State Department, Judge Sullivan of Federal District Court for the District of Columbia, said that “we wouldn’t be here today if the employee had followed government policy.” (Via NYTimes)

August 21, 2015: Dozens of Clinton emails were classified from the start, U.S. rules suggest (Via Reuters)

August 21, 2015: Clinton attorney David Kendall writes a letter to U/S for Management Patrick Kennedy and explains how, contrary to a Judge Emmet D. Sullivan’s s comment this week, her use of personal email was permitted under the NARA, FRA and FAM guidelines in place at the time she served. (letter here via ScribD)

August 21, 2015:  The lawyer for Huma Abedin, a longtime confidante of Hillary Rodham Clinton, wrote a letter to the State Department disputing concerns that Senator Charles E. Grassley raised about a possible conflict of interest involving her. (read the letter via NYTimes)

August 24, 2015: State Dept. Spokesman John Kirby Tells CNN:  “At The Time, When She Was Secretary Of State, There Was No Prohibition To Her Use Of A Private Email”

 

Sigh … to be continued

October 22, 2015: Clinton is scheduled to appear before the Select Committee on Benghazi.

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P.S. For obvious reasons, the slugfeast ring for this post is disabled.

US Embassy London Local Employee Charged With Cyberstalking, Computer Hacking and Wire Fraud

Posted: 5:50 pm EDT

 

We posted about this case last May (see State Dept Employee Posted at US Embassy London Faces ‘Sextortion’ Charges in Georgia). On August 19, the Justice Department announced that a locally employed staff member of US Embassy London,  Michael C. Ford, 36, was charged by indictment on Aug. 18, 2015, with nine counts of cyberstalking, seven counts of computer hacking to extort and one count of wire fraud.  During the Daily Press Briefing of May 21st, the deputy spokesperson for the State Department informed the press that as of May 18th, this individual is no longer an embassy employee.

Via USDOJ | August 19, 2015:

WASHINGTON—A former locally-employed staff member of the U.S. Embassy in London was charged with engaging in a hacking and cyberstalking scheme in which, using stolen passwords, he obtained sexually explicit photographs and other personal information from victims’ e-mail and social media accounts, and threatened to share the photographs and personal information unless the victims ceded to certain demands.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney John A. Horn of the Northern District of Georgia, Director Bill A. Miller of the U.S. Department of State’s Diplomatic Security Service and Special Agent in Charge J. Britt Johnson of the FBI’s Atlanta Division made the announcement.

Michael C. Ford, 36, was charged by indictment on Aug. 18, 2015, with nine counts of cyberstalking, seven counts of computer hacking to extort and one count of wire fraud.

“According to the indictment, Ford hacked into e-mail accounts and extorted sexually explicit images from scores of victims,” said Assistant Attorney General Caldwell. “As these allegations highlight, predators use the Internet to target innocent victims. With the help of victims and our law enforcement partners, we will find those predators and hold them accountable.”

“Ford is alleged to have hacked into hundreds of e-mail accounts and tormented women across the country, by threatening to humiliate them unless they provided him with sexually explicit photos and videos,” said U.S. Attorney John Horn. “This sadistic conduct is all the more disturbing as Ford is alleged to have used the U.S. Embassy in London as a base for his cyberstalking campaign.”

“The Diplomatic Security Service is firmly committed to working with the Department of Justice and our other law enforcement partners to investigate allegations of crime and to bring those who commit these crimes to justice,” said Director Miller. “When a public servant in a position of trust is alleged to have committed a federal felony such as cybercrime, we vigorously investigate such claims.”

“While the allegations in this case are disturbing, it does illustrate the willingness and commitment of the FBI and its federal partners to aggressively follow those allegations wherever they take us,” said Special Agent in Charge Johnson. “The FBI will continue to provide significant resources and assets as we address complex cyber based investigations as seen here.”

According to allegations in the indictment, from January 2013 through May 2015, Ford, using various aliases that included “David Anderson” and “John Parsons,” engaged in a computer hacking and “sextortion” campaign to force numerous women to provide him with personal information and sexually explicit photographs and videos. To do so, Ford allegedly posed as a member of the fictitious “account deletion team” for a well-known e-mail service provider and sent notices to thousands of potential victims, including members of college sororities, warning them that their accounts would be deleted if they did not provide their passwords.

Using the passwords collected from this phishing scheme, Ford allegedly hacked into hundreds of e-mail and social media accounts, stole sexually explicit photographs and personal identifying information (PII), and saved both the photographs and PII to his personal repository.

Ford then allegedly e-mailed the victims and threatened to release the photographs, which were attached to the e-mails, unless they obtained videos of “sexy girls” undressing in changing rooms at pools, gyms and clothing stores, and then sent the videos to him.

The indictment alleges that, when the victims either refused to comply or begged Ford to leave them alone, Ford responded with additional threats, including by reminding the victims that he knew where they lived. On several occasions, Ford allegedly followed through with his threats by sending sexually explicit photographs to victims’ family members and friends.

During the pendency of the alleged scheme, Ford was a civilian employee at the U.S. Embassy in London, England. He allegedly used his government-issued computer at the U.S. Embassy to conduct the phishing, hacking and cyberstalking activities.

The charges and allegations contained in an indictment are merely accusations. The defendant is presumed innocent unless and until proven guilty.

The case is being investigated by the U.S. Department of State’s Diplomatic Security Service and the FBI. The Criminal Division’s Office of International Affairs and the U.S. Embassy in London provided assistance. The case is being prosecuted by Senior Trial Attorney Mona Sedky of the Criminal Division’s Computer Crime and Intellectual Property Section, Trial Attorney Jamie Perry of the Criminal Division’s Human Rights and Special Prosecutions Section and Assistant U.S. Attorney Kamal Ghali of the Northern District of Georgia.

Anyone who believes that they are the victim of hacking, cyberstalking, or “sextortion” should contact law enforcement. Resources regarding hacking and other cybercrimes can be found at: https://www.fbi.gov/about-us/investigate/cyber.

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The Purposeful and Targeted Cultivation of a Relationship with a Consular Officer

Posted: 1:04 am EDT

 

Former FSO Michael T. Sestak was arrested in Thailand on May 7, 2013. He was initially arraigned on September 13, 2013 and pled guilty on November 6, 2013.  He is scheduled to be sentenced on August 14 before Judge John D. Bates at the U.S. District Court of the District of Columbia. The USG is recommending (#303) that Mr. Sestak be sentenced to a term of 84 months of incarceration followed by 3 years of supervised release.

The USG in its memorandum in aid of sentencing writes:

The U.S. State Department is dedicated to administering its visa programs fairly and without graft or corruption. SESTAK and his co-conspirators damaged the reputation of the U.S. State Department by tainting the process and likely preventing deserving applicants from obtaining visas.

This was not a momentary lapse in judgment for any of the conspirators, including SESTAK. This was a sophisticated scheme that exploited a system and made millions of dollars after months of careful planning and substantial efforts to cover their tracks.
[….]
SESTAK has provided substantial assistance to the government from the time of his initial detention on May 9, 2013. On that date, the defendant waived his Miranda rights and agreed to be interviewed. During this initial interview, the defendant acknowledged his guilt and provided investigators with information regarding the conspiracy, including details about how the scheme actually operated and how the proceeds were laundered and moved out of Vietnam. While SESTAK was somewhat naïve and uninformed about the full extent of the conspiracy and the deep involvement of Binh Vo’s family members, he never minimized his own critical role in the scheme.

Mr. Sestak’s lawyer, Gray B. Broughton in his court filing argues that as of August 14, 2015, Mr. Sestak will have already forfeited over twenty-seven (27) months of his liberty in facilities designed for short-term detention and that a thirty-three (33) month sentence will serve as adequate punishment. “As a result of his indictment and conviction, Michael lost his job with the State Department and will never again be able to work in a similar capacity in public service. Even worse than the incarceration and job loss is Michael Sestak’s loss of reputation. The amount of shame and contrition that Michael Sestak continues to carry with him cannot be overstated. The loss of one’s profession and reputation is a severe punishment that serves the retributive goals of sentencing.” 

We will keep tabs on the sentencing set for Friday morning. Meanwhile, below is an excerpt from the court filing which is instructive, particularly, the emails exchanged by some of the conspirators.  If you’re a consular officer and somebody wants to make you an “honorary” brother, or sister, some other pretend relative, or fairy godparent, you gotta run as fast and as far away as possible!

This is what a purposeful and targeted cultivation of a relationship with a consular officer overseas looks like.  Note that this is an excerpt from the defense filing:

When Michael arrived in Vietnam, he had hit a personal low. Michael had become dissatisfied working for the State Department and had contemplated resigning at the end of his assignment to Poland. Michael had witnessed others being promoted who he believed were less deserving than he was. To make matters worse, Michael’s involvement in the fruitless search for WMD throughout Iraq shook his previously unwavering trust in the United States Government.
[…]
Most significantly, when Michael arrived in Vietnam, his personal life was totally unfulfilling. Within his first year assigned to Vietnam, Michael turned 40. Michael was unmarried, had no children, and no serious prospects for finding someone to share life together.  One aspect of being a Foreign Service Officer was that Michael changed countries every two years, usually coming back to Washington D.C. for several months in between for training. In both Spain and Poland, Michael had a girlfriend that he met towards the end of his tour. Unable to further develop these relationships in such a short amount of time, Michael arrived at his next assignment unaccompanied. It was during these transitions that Michael began to question the meaning of life and finding true happiness.
[…]
It was during this time and with this personal baggage that Michael first met Binh Vo. They met at Michael’s very first Consulate event in Vietnam in August 2010. Binh Vo and a Vietnamese businessman approached Michael and started talking. Binh Vo and Michael were approximately the same age; similarly, Binh Vo was American and well-educated.
[…]
Binh Vo slowly became Michael’s closest confident. Their friendship developed to the point where they met almost daily for meals or coffee. Binh Vo introduced Michael to his siblings, who went out of their way to include Michael in “family-only” functions. Binh Vo’s siblings referred to Michael as an honorary “Vo” brother. This circle of new-found friends constituted roughly 80% of Michael’s social activity in Vietnam. As described above, Michael was unable to develop any real friendships with American employees at the Consulate and he didn’t really have any Vietnamese friends; the few Vietnamese men that Michael met who ran in the same circles would ultimately harass Michael for visa “favors.” For the first year and four months of Michael’s time in Vietnam, Binh Vo was the only single male with whom he could communicate and socialize without reporting requirements because Binh Vo was American. Additionally, Binh Vo was always available, had a comparable level of education, and didn’t ask any favors.

Michael felt very fortunate to have stumbled upon a great relationship with Binh Vo and his family. Michael was unaware that Binh Vo and his family had targeted Michael from the onset and that every coffee, meal, family dinner, and drink was an orchestrated, results-driven event with the end goal of executing Binh Vo’s scheme to fraudulently sell non-immigrant visas to Vietnamese citizens.

As the Government stated in its sentencing memorandum for Binh Vo, Binh Vo “purposefully cultivated a relationship with Sestak in order to recruit him to approve visas for the conspiracy.” Government Mem., Doc. 289 at 8. Binh Vo exploited the weakness that Michael tried to hide, but some easily saw.
[…]

The Government’s sentencing memorandum illustrates how Binh Vo and his family preyed on Michael’s weakness and transformed him from a law-abiding officer and government official into a willing participant of the Vo’s scheme to enrich themselves:

The defendant [Binh Vo] orchestrated the visa fraud conspiracy from beginning to end. During the summer of 2011, according to electronic communications between the defendant [Binh Vo]’s sister and another co-conspirator, [Binh Vo] cultivated a relationship with [Michael] Sestak in order to get Sestak to approve visas for their family and acquaintances.

In a Google chat dated June 1, 2011, co-defendant Hong Vo stated to an acquaintance:

[L]ast night we went out with this guy who works at the consulate — he’s the one that approves peoples visas… and he’s this single guy who wants to find someone to be wth [sic]… and my brother knows that – so he’s been trying to get this guy out and introduce him to people… so then later he can do him favors like … have him approve visas for people.

In an email dated June 1, 2011, co-defendant Hong Vo stated to her boyfriend:

This guy who works for the US consulate here came out and joined us for dinner. He’s the guy that approves Visas for Vietnamese people to go to the United States so he’s a really good connection to have. My brother plans on using him to get [a sister-in-law’s] Visa to go to the States so [the sister-in-law] will most likely travel back with me in August . . . he just likes to people watch — he does this with the consulate guy (Mike) and they check out girls.

In a Google chat dated June 27, 2011, co-defendant Hong Vo again discussed the sister-in-law referenced in the above paragraph.

I applied for her Visa … so her interview is July 13th … and i told the consulate guy … so he said he’ll pull her file … but now he knows our family … so he’s more trusting … but she’ll most likely get accepted this time … because Mike will pull up her file … and he considers Binh like his best friend.

In another Google chat dated June 27, 2011, co-defendant Hong Vo discussed Sestak:

I have to go out now… it’s freaking 11P and Binh forgot it was Mike’s birthday… this loser guy who works for the consulate but we have to go out because he’s going to help us get [the sister-in-law’s] visa ugh

The USG in its court filing says that “the conduct that led to the present charges appears to be significantly out of character for the defendant.” It has also credited Mr. Sestak for accepting responsibility for his actions and for expression of remorse:

As far as the government is aware, prior to these offenses SESTAK had an unblemished record first as a as a police officer, then a Deputy United States Marshal, a U.S. Naval Intelligence Officer, and finally as a U.S. Foreign Service Officer. The fact that he immediately accepted responsibility for his actions at the time of his initial detention and agreed to cooperate with the government from that day forward supports the government’s belief that the defendant is not a career criminal. The defendant’s cooperation has included numerous meetings and debriefings and significant assistance with the sale of the condominiums in Thailand that he purchased with the illegal proceeds from the scheme. Since the time of his initial detention in May 2013, the defendant has repeatedly expressed shame and genuine remorse for his actions.

Mr. Sestak faces 19-24 years in prison under federal sentencing guidelines. The USG is asking for 84 months or 7 years and three years of supervised release. Defense is asking for 33 months. We’ll have to wait until August 14 to hear Judge Bates’ decision.

We’ve posted a couple of the publicly available Sestak documents in the forum’s Document Dump for friends of the blog. Click here to login. It looks like all of Mr. Sestak’s cooperation with the government is related to the cases against the other conspirators and the disposal of properties purchased through illegal proceeds.  We want to know how can the next Sestak be prevented from happening; he maybe in the best position to answer that question. We’ve requested to do an interview with him after the sentencing.  Will keep you posted.

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Binh Tang Vo Gets 8 Years For Conspiring With Former U.S. Consulate Official in Visa Scheme

Posted: 3:42 pm EDT

 

We have previously blogged about the Sestak visa scheme in this blog (see Michael T. Sestak Visa Scandal: Two Co-Conspirators Sentenced to 10 Months and 16 MonthsFSO Michael T. Sestak Pleads Guilty in Visa Fraud-Bribery Case, Faces 19-24 Years in Prison). Last month, the Justice Department announced that Binh Tang Vo, a U.S. citizen and one of the alleged conspirators pleaded guilty and was sentenced to eight years in prison plus forfeiture of nearly $5.1 million. Court records indicate that Michaell Sestak’s sentencing had been rescheduled for this month.

Via USDOJ:

Man Sentenced to Eight Years in Prison for Conspiring With Former U.S. Consulate Official in Visa Scheme | Vietnam-Based Scheme Yielded Millions of Dollars in Bribes

WASHINGTON  Binh Tang Vo, 41, an American citizen who had been living in Vietnam, was sentenced today to eight years in prison on charges of conspiracy to commit bribery and visa fraud, bribery of a public official, and conspiracy to commit money laundering, announced Acting U.S. Attorney Vincent H. Cohen, Jr. and Bill A. Miller, Director of the U.S. Department of State’s Diplomatic Security Service (DSS).

Vo pled guilty to the charges in March 2015 in the U.S. District Court for the District of Columbia. The plea agreement, which was contingent upon the Court’s approval, called for a prison sentence between six and eight years, as well as forfeiture of nearly $5.1 million. The Honorable Emmet G. Sullivan accepted the plea agreement and sentenced Vo accordingly today.

Vo was arrested on Sept. 24, 2013, at Washington Dulles International Airport and has been held without bond ever since.

According to a statement of facts in support of his guilty plea, Vo conspired with co-defendant Michael Sestak and others to obtain visas to the United States for Vietnamese citizens.  Sestak was the Non-Immigrant Visa Chief in the Consular Section of the U.S. Consulate in Ho Chi Minh City, Vietnam from August 2010 to September 2012.

As outlined in the statement of facts, Vo and Sestak conspired with other U.S. citizens and Vietnamese citizens to advertise the scheme and recruit customers. Co-conspirators reached out to people in Vietnam and the United States and advertised the scheme by creating a website and by spreading the word through emails and telephone calls.  The conspirators told potential customers that once the customers obtained a visa from the scheme, they could disappear, get married or return to Vietnam and be assured of receiving visas in the future.

Vo and his co-conspirators received biographical information and photographs from customers and assisted them with their visa applications.  Upon submitting an application, the applicant would receive an appointment at the Consulate, be interviewed by Sestak, and approved for a visa. Applicants or their families generally paid between $30,000 and $60,000 per visa.  Nearly 500 fraudulent visas were issued as a result of the conspiracy.

Applicants paid for their visas in Vietnam, or by routing money to co-conspirators in the United States.  Vo admitted to receiving millions of dollars for arranging for Sestak to approve the visas.  He ultimately moved some of the money out of Vietnam by using money launderers to move funds through off-shore banks.  Co-conspirators also had money laundered through off-shore banks to bank accounts in the United States.

“Binh Vo conspired with a corrupt U.S. Consulate Official to collect bribes in exchange for issuing visas that allowed nearly 500 Vietnamese nationals to enter the United States,” said Acting U.S. Attorney Cohen.  “Binh Vo and his family members recruited bribe-paying customers by telling them that once in the United States they could disappear or get married.  He collected millions of dollars in bribes by undermining the integrity of the process used to screen foreign visitors to our country.  This prison sentence demonstrates our commitment to preserving the integrity of a process that is critical to our national security.”

“The U.S. visa is one of the most coveted travel documents in the world. Foreign nationals who acquire visas fraudulently to enter the United States could do so in order to carry out any number of criminal activities, including terrorism,” said Director Miller. “This case demonstrates Diplomatic Security’s unwavering commitment to investigating visa fraud and ensuring that those who commit this crime are brought to justice.”

Sestak, 44, pled guilty in November 2013 to one count each of conspiracy to commit bribery and visa fraud and to defraud the United States, bribery of a public official, and conspiracy to engage in monetary transactions in property derived from illegal activity. He is scheduled to be sentenced July 1, 2015.

Hong Vo, 29, an American citizen, and Truc Thanh Huynh, 31, a Vietnamese citizen, also pled guilty to conspiring with Sestak and Binh Vo.  Hong Vo is Binh Vo’s sister, and Truc Thanh Huynh is Binh Vo’s cousin. Hong Vo was sentenced in March 2014 to seven months in prison and three months of home detention. Truc Tranh Huynh was sentenced in February 2014 to 16 months of incarceration.

According to the statement of facts, fraudulent visas granted by Sestak were connected to an Internet Protocol (“IP”) address controlled by Hong Vo. Huynh allegedly participated in the visa scheme by obtaining documents necessary for the visa applications, collecting money and providing model questions and answers for visa applicants.  Sestak also allegedly approved a visa for Huynh to the United States, the application for which was submitted by the IP address controlled by Hong Vo.

The case was investigated and prosecuted by the U.S. Department of State Diplomatic Security Service and Assistant U.S. Attorneys Brenda J. Johnson, Alessio D. Evangelista of the National Security Section, and Catherine K. Connelly and Jennifer Ambuehl of the Asset Forfeiture and Money Laundering Section, as well former Assistant U.S Attorneys Christopher Kavanaugh, and Mona N. Sahaf.

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The Iran Hostages: Long History of Efforts to Obtain Compensation

Posted: 12:22  pm EDT

 

We’ve previously blogged about the Iran hostages here (see Supremes Say No to Appeal from US Embassy Iran HostagesJanuary 20, 1981: The Iran Hostages – 30 Years LaterNovember 4, 1979: Iranian Mob Attacks US Embassy Tehran; Hostages Compensated $50/Day).  The following CRS report dated July 30, 2015  outlines the history of various efforts, including legislative efforts and court cases, and describes one bill currently before Congress, the Justice for Former American Hostages in Iran Act of 2015 (S. 868) on the bid to compensate the hostages.

Excerpted from CRS report via Secrecy News:

Even today, after the passage of more than three decades, the 1979-1981 Iran Hostage Crisis remains an event familiar to most Americans. Many might be unaware that the 52 American mostly military and diplomatic personnel held hostage in Tehran for 444 days or their survivors continue to strive for significant compensation for their ordeal. The former hostages and their families did receive a number of benefits under various civil service laws, and each hostage received from the U.S. government a cash payment of $50 for each day held hostage. The hostages have never received any compensation from Iran through court actions, all efforts having failed due to foreign sovereign immunity and an executive agreement known as the Algiers Accords, which bars such lawsuits. Congress took action to abrogate Iran’s sovereign immunity in the case, but never successfully abrogated the executive agreement, leaving the plaintiffs with jurisdiction to pursue their case but without a judicial cause of action.

Having lost their bids in the courts to obtain recompense, the former hostages have turned to Congress for relief.
[…]
The Justice for Former American Hostages in Iran Act of 2015, S. 868, a bill similar to S. 559 (113th Cong.), was introduced in the Senate at the end of March and referred to the Committee on Foreign Relations. Like its predecessor bill, S. 868 would establish the American Hostages in Iran Compensation Fund in the U.S. Treasury to be funded through a 30% surcharge on penalties, fines, and settlements collected from violators of U.S. sanctions prohibiting economic activity with Iran. The 2015 bill, however, would permit payments from the fund to be administered by the plaintiffs’ representative and principal agent in Roeder I, under the supervision of the Secretary of the Treasury. The surcharge would apply to sanctions administered by Department of State, the Department of the Treasury, the Department of Justice, the Department of Commerce, or the Department of Energy. Surcharges would be required to be paid to the Secretary of the Treasury without regard to whether the fine or penalty is paid directly to the federal agency that imposed it or it is deemed satisfied by a payment to another federal agency.

The purpose of the fund would be to make payments to the former hostages and their family members who are members of the proposed class in Roeder I, as well as to settle their claims against Iran. The proposed class in Roeder I appears to consist of “Representatives, administrators and/or executors of the estates of all diplomatic and military personnel and the civilian support staff who were working at the United States Embassy in Iran during November 1979 and were seized from the United States Embassy grounds, or the Iranian Foreign ministry, and held hostage from 1979 to 1981.”

Accordingly, it is unclear whether all spouses and children of the former hostages qualify for payments from the fund.

Payments would be made in the following amounts and according to this order of priority:

(A) To each living former hostage identified as a member of the proposed class described in subsection (a)(1), $10,000 for each day of captivity of the former hostage [$4.44 million per former hostage].

(B) To the estate of each deceased former hostage identified as a member of the proposed class described in subsection (a)(1), $10,000 for each day of captivity of the former hostage [$4.44 million per estate of a former hostage].

(C) To each spouse and child of a former hostage identified as a member of the proposed class described in subsection (a)(1) if the spouse or child is identified as a member of that proposed class, $5,000 for each day of captivity of the former hostage [$2.22 million per qualifying spouse or child of a former hostage].

The bill would not appear to provide compensation for former hostages who were released from captivity prior to 1981.

Under the bill, once a class member consents and receives payments from the fund, the recipient would be barred from bringing a lawsuit against Iran related to the hostage crisis. Once all payments are distributed according to the above plan, all such claims against Iran would be deemed waived and released.

Read in ful here: CRS R43210: The Iran Hostages: Efforts to Obtain Compensation.

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State/OIG Reviews Former FSO’s Allegation of Improper Denial of Promotion

Posted: 3:48  am EDT

 

On July 31st, State/OIG posted online its review on an FSO’s allegation of improper denial of promotion:

The Office of Inspector General (OIG) conducted this review to assess a former Department of State (Department) employee’s (complainant) allegations of an improper denial of promotion. Specifically, in September 2013, the complainant alleged that (1) the Department’s Bureau of Human Resources (HR) fraudulently tampered with or manipulated six reconstituted promotion boards conducted in 2010 and 2011 and (2) HR fraudulently altered documents generated by these six boards to prevent the complainant from being ranked for promotion. OIG interviewed former board members and consulted with a forensics expert, and found that the evidence does not support the complainant’s allegations.

According to the footnote in this report, on August 18, 2011, the FSGB issued its final decision, concluding that the Department fulfilled its responsibility of proving that the complainant would not have been promoted during the years at issue even if the alleged procedural errors had not occurred. The complainant appealed to the Federal District Court and challenged both the FSGB interim decision (which resulted from its order to conduct the six final boards), and the FSGB final decision. The complainant filed a Federal appeal in U.S. District Court on January 7, 2011, which has now been temporarily suspended at the complainant’s request.

This case does not include the name of the foreign service officer but we think this is the Joan Wadelton’s case that has been through the Foreign Service Grievance Board and is the subject of a litigation in the U.S. District Court of the District of Columbia.

Reading through this report, we are struck by OIG being “unable to review any notes or score sheets generated by the 2006 boards because Department policy required treating them as working files; as such, they were destroyed once the rankings were finalized.” Although it appears State/OIG reviewed other scoresheets and consulted with a DHS expert to conduct forensic analysis. The report says that the review could not substantiate the complainant’s allegation that HR fraudulently altered documents associated with her 2010 to 2011 reconstituted promotion boards.

We don’t understand this policy of destroying working files, particularly on cases such as promotions. What’s the rationale for doing so? Anyone want to school me on this?

Read it here: ESP-15-06_Improper Denial of Promotion Allegation.

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Related posts:

Clinton Email Staffing Pitches: Loyal and years of successfully making high ranking govt officials look good

Posted: 7:08 pm EDT

 

Another end of the month, another Clinton email dump. Below via foia.state.gov:

The Department is conducting a Freedom of Information Act (FOIA) review of all emails provided by former Secretary Hillary Rodham Clinton. Starting in June 2015, a new set of emails from this collection will be released on this site at the end of each month. These monthly releases will continue until the entire collection of records is reviewed for public release, and all releasable records will be available on this site.

In May 2015, the Department released a set of 296 of these documents which previously had been provided in February 2015 to the House Select Committee on Benghazi. These and additional emails released in coming months from this collection will be available here.

On December 1, 2008, President-elect Obama formally announced that Clinton would be his nominee for Secretary of State. On January 21, 2009, Clinton was confirmed in the full Senate by a vote of 94–2. The emails we have looked at so far from this latest dump are from the start of her tenure with routine staffing issues, folks looking for jobs, people recommending others, stuff like that. There are some interesting ones:

 

This is a June 2009 email to HRC chief of staff Cheryl Mills from an individual (name redacted) seeking other opportunities at the State Department.  Remember this pitch … “years of successfully making high ranking government officials look good.”

cinton email dump july 31 2015

 

Here is an email from an individual (name redacted) “applying for a job” sent to Nicholas Blair, son of former UK PM Tony Blair, forwarded to Cherie Blair, who then forwarded the resume to HRC:

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If the secretary of state wants to hire you, it’s only a question of tasking someone to find a slot for you at WHA, S/P (policy planning shop) or elsewhere, really — but “someone who lacks discretion is not possible.”

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State/OBO’s very difficult time and what looks like a staffing pitch in 2009 from “M”:

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In September 2009, then US Ambassador Susman in London sent an email to Cheryl Mills about a Schedule C appointee referred for a Special Assistant job to the ambassador. Ambassador Susman writes that the individual “was so overqualified for the position we need to fill” and that he appointed the individual to a [REDACTED] which the individual was apparently “very excited about.” Ambassador Susman attached the individual’s letter to him and forwarded it to Ms. Mills.  A Schedule C at every groovy embassy? Since when did we start hiring Schedule C appointees for overseas missions? Is this some big gun or some kid of some big gun, you think?  Schedule C positions are excepted from the competitive service because of their confidential or policy-determining character. Most such positions are at grade 15 of the General Schedule or lower.

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There’s more but gotta make dinner.  In any case as early as May 2009, just four months into her tenure, folks were already talking about 21st statecraft as a “major part of HRC’s legacy.”

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Our favorite email, if we could pick one, is probably the one sent by Huma Abedin to HRC in November 2009 about Kurt somebody who did not want his sleep disturbed:Screen Shot 2015-07-31

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Daniel Rosen, State Dept Official Pleads Guilty to Stalking and Voyeurism Charges

Posted: 1:31 am EDT

 

In February 2015, we wrote about the arrest of a State/CT employee for alleged solicitation of a minor (see  State Dept’s Counterterrorism Official Arrested For Allegedly Soliciting Minor Online.

On March 16, WaPo reported that the same employee was arrested in the District and charged with taking videos of women through the windows of their homes.  According to the same report, Daniel Rosen’s security clearance had been revoked.  Before it was taken down, he indicated on his LinkedIn profile that he was the Director of Counterterrorism Plans, Programs and Policy at the State Department for over six years. As of February 25, the State Department telephone directly lists the Bureau of Counterterrorism’s Director for the Office of Programs and Policy located at 2509 as “vacant.”

On July 29, WUSA has the following update:

Daniel Rosen, 45, pleaded guilty to 11 charges of stalking and voyeurism on Wednesday in the Superior Court of the District of Columbia for incidents that happened between 2012 and 2014. According to law enforcement, he used his cell phone to record women in various stages of undress by aiming his cellular phone through their apartment windows in the areas of Mount Pleasant, the U Street Corridor, and Adams Morgan in Northwest D.C.
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His attorney Bernard Grimm says Rosen is undergoing therapy and showed police the locations after they discovered the videos.

“Beyond shame, talk about a fall from grace here’s a guy who used to work at the State Department has a master’s degree and his life just spiraled out of control,” he said.

Rosen faces up to 11 years or a $11,000 fine when he is sentenced on October 9. Each of the counts of voyeurism and stalking carries a maximum penalty of one year and potential fines. He will be released and under home confinement, which will be very restricted, until his sentencing date.

WaPo citing an assistant U.S. attorney reports that Rosen’s filming stretched over a nearly three-year period, from early 2012 to late 2014, and that “he returned to some women’s homes as many as five times to film videos that, in some cases, lasted minutes.”

His case on soliciting a minor,  a separate charge,  continues in September.
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