After reading the D.C. Circuit Court of Appeals opinion in Zevallos v. Obama, I have to side with the Office of Foreign Assets Control (“OFAC”), something remarkable for me, but, honestly, the case for de-listing made by lawyers for a designated narcotics kingpin, Fernando Zevallos, was, simply put, ridiculous and the D.C. Circuit was overly polite in upholding OFAC’s decision not to delist him.
Zevallos’s lawyer, probably as an early sign of his desperation, argued that the Court of Appeals should review OFAC’s denial of delisting de novo and not under the arbitrary and capricious standard set forth under the Administrative Procedure Act. The court called such a request “extraordinary and rare,” pointed out that the argument was supported by only one case involving demonstrable agency bias, and, with barely muffled contempt, moved on to the merits. Sadly, for Mr. Zevallos, his arguments on the merits were even worse.
Here’s the thing. If you are trying to convince OFAC that you are no longer a narcotics kingpin, it’s best to make the argument while not sitting in a jail cell in Peru serving a twenty-five year sentence for narcotics trafficking and money laundering.
But wait, it get’s worse. It’s also not a good idea to get caught controlling Panamanian bank accounts with drug proceeds through your sister while sitting in that jail cell in Peru.
Now for the real kicker: Zevallos’s lawyers argued, apparently with a straight face, that this evidence relating to the Panamanian drug money accounts was irrelevant and OFAC could not rely on it in justifying its refusal to delist him because “it showed only that his family continued to control assets derived from narcotics trafficking” and that OFAC “may not rely on evidence that he owns such assets because he cannot legally or practically relinquish control of them, given that they are blocked.” No, I’m not making that up; it’s in black and white on page 10 of the slip opinion.
The court, naturally, is sceptical that you can’t renounce blocked assets. And it does not appear from the opinion that Zevallos even tried to do so. It seems to me that a document renouncing any claim to the funds and agreeing to escheat them to the Panamanian government, if unblocked by OFAC, would have worked like a charm.