US DOJ Secures Funds with Cooperation from RAK Investment Authority

Posted on 01/06/2021

The U.S. Justice Department announced the United States has collected $7 million of Iranian funds that will be allocated to provide compensation to American victims of international state-sponsored terrorism. The funds are the United States’ share of a civil forfeiture investigation that is part of the government’s pursuit of a complex international conspiracy which spanned the globe. The U.S. has international economic sanctions against the Iran regime and several Iranian nationals.

According to the press release, “Beginning in 2011 and continuing up to 2014, the conspirators, including three Iranian nationals and, allegedly, one U.S. citizen, defrauded South Korean banks by submitting false documents purporting to show that Iranian companies were doing legitimate business with Korean companies. Based on these false documents, the conspirators succeeded in unlawfully transferring approximately $1 billion worth of Iranian-owned funds out of South Korea and into the world’s financial markets.

The American who is an alleged conspirator, Kenneth Zong, was indicted in December 2016 in the District of Alaska, for 47 counts of violating the International Emergency Economic Powers Act (IEEPA) and the Iranian Transaction and Sanctions Regulations (ITSR), providing unlawful services to the Government of Iran, conspiracy to commit money laundering, and money laundering. Kenneth Zong remains in South Korea, where he recently completed serving a sentence of longer than five years for violating Korean law as part of the same scheme.

The conspirators transferred the Iranian-owned funds to accounts worldwide, including to Anchorage, Alaska. In 2018, a federal judge sentenced Mitchell Zong (i.e. Kenneth Zong’s son) to two and a half years imprisonment for his role in laundering approximately $968,000 of Iranian-derived funds, knowing the funds came from his father’s illegal transactions with Iranian nationals. In a separate forfeiture civil action, Mitchell Zong and other members of his family were ordered to forfeit to the United States approximately $10 million in assets, which were purchased with funds traceable to Kenneth Zong’s 2011 illegal IEEPA activity in Seoul, South Korea.

In addition to the prosecutions of Kenneth Zong and Mitchell Zong, the U.S. Attorney’s Office filed a forfeiture complaint seeking to seize money held in a sovereign wealth fund in the United Arab Emirates. These funds, which are also traceable to the scheme, were part of a down-payment made by the Iranian co-conspirators for the purchase of a Sheraton Hotel in Tbilisi, Georgia in 2011 and 2012. The agreement announced today resolves that forfeiture case with a proposed order that $7 million be forfeited to the United States. The forfeiture case, Civil No. 3:20-cv-00126-JMK, was filed and remains pending in the U.S. District Court for the District of Alaska.

The $7 million will be allocated to the U.S. Victims of State Sponsored Terrorism Fund, which Congress established to provide compensation to certain individuals who were injured in acts of international state-sponsored terrorism, including victims of the 1979 U.S. embassy hostage situation in Iran, among others.”

The DOJ filed a lawsuit in U.S. District Court of Alaska with the defendant being funds in the amount of 73,293,750 AED in the possession and control of Ras Al Khaimah Investment Authority (RAKIA). RAKIA is in possession of roughly US$ 20 million of funds paid to RAKIA by the uncharged conspirators in connection with the failed attempt to purchase a hotel owned by RAKIA in Tbilisi, Georgia. The Agreement announced by the U.S. Justice Department entitles RAKIA to retain US$ 12 million of the funds in its possession.

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