One of the most public OFAC SDN reconsideration cases, that dealing with former Texas resident, Richard Chicakli, has added a new chapter. Yesterday, OFAC penalized Richland Trace Homeowners Association, Inc. of Dallas, Texas, $9,000 USD for dealing in assets in which Mr. Chicakli had an interest. Mr. Chichakli is designated as a Specially Designated National (SDN) under the Former Liberian Regime of Charles Taylor Sanctions Regulations. Mr. Chichakli has repeatedly sought reconsideration of his SDN designation, but to no avail. He maintains a website where he has chronicled these efforts.
OFAC originally proposed a penalty of $9,000 for Richland. In their response to the proposed penalty, Jack Manning, Richland’s attorney, stated that Richland had acted in accordance with their OFAC license to transact in this property and that the OFAC license authorized Richland’s sale of property which Mr. Chichakli had an interest in and the distribution of the proceeds from that sale.
OFAC differed with Mr. Manning’s interpretation of the facts finding that Richland violated 31 C.F.R. §593.201 and that Section II(b) of Richland’s License (LB-126) states that the license’s authorization excludes “any taxes, costs, or legal, administrative, or other fees incurred or accruing prior to the court authorized foreclosure of the Blocked Premises . . . .”
As such, OFAC found that Richland’s use of $9,500 of the proceeds of the sale of the property towards reimbursing itself for past assessments and late fees was not authorized by License LB-126 because it comprised a reimbursement of fees that accrued prior to the court authorized foreclosure of the property that was expressly prohibited by Section II(b) of the license. As a result, it constituted an unauthorized dealing in property in which Richard Chichakli, an SDN, had an interest.
Even with an OFAC license in place, engaging in transactions which an SDN has its pitfalls. First, the license application must be thoroughly drafted to seek authorization for all conceivable uses or transactions that may need to be engaged in under the authorization. Second, the license must be thoroughly understood in order to ensure that the license holder is not acting outside of the authorizations contained in the license. Failure to follow either of these steps could lead one to find themselves in the same position as Richland has.
The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or firstname.lastname@example.org.