On 5 June, the US Department of Justice praised the 'significant assistance' provided by the Office of the Prosecutor General of Georgia in seeking the forfeiture of more than $20 million in assets relating to unlawful use of the US financial system to evade and violate the Iranian sanctions, reported agenda.ge.
The US Department of Justice reported that the civil forfeiture complaint alleges that Kenneth Zong, a U.S. citizen, conspired with three Iranian nationals to evade the prohibitions of the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSR) by engaging in false, fictitious and fraudulent transactions which were designed to unlawfully convert and transfer Iranian owned funds to a Korean financial institution, equivalent to approximately $1 billion.
“These funds were held in Korean bank accounts and converted into more easily tradable currencies, such as USD, through US financial institutions and laundered into and through a host of shell company accounts in multiple jurisdictions, including the United States, the United Arab Emirates and [South] Korea,” stated the DoJ.
Approximately $20 million in funds traceable to this scheme were used by Zong’s co-conspirators to attempt to purchase a hotel in Georgian capital city of Tbilisi in 2011 and 2012. The proceeds of these funds and this attempted transaction are the subject of the forfeiture complaint.
According to the US Department of Justice, Zong’s scheme began in 2011, when he changed the name of his Korean company, “KSI Ejder, Inc.” (KSI) to “Anchore.” Zong used KSI/Anchore as a conduit to convert and distribute Iranian funds into USD and/or euros, by fictitiously selling marble tiles and other construction supplies to an Iranian shell company in Kish Island, Iran. KSI/Anchore fictitiously purchased Italian marble tiles and other construction supplies from “MSL & Co Investment Trading” (MSL Investment Dubai), an Iranian-controlled shell company in Dubai, which were then fictitiously shipped directly to another fictitious company in Iran.
Zong and his co-conspirators created false and fictitious contracts, bills of lading and invoices to show Korean government banking regulators that the Iranian company owed KSI/Anchore for the false marble purchases. This resulted in the transfer of Iranian funds, at the direction of Zong’s co-conspirators, from the restricted Iranian bank account to Zong’s KSI/Anchore account. Zong then transferred the funds to entities and individuals throughout the world.
He was charged with transferring those currencies to more than 10 countries around the world, including the U.S., United Arab Emirates, Switzerland, Germany, Austria and Italy. Zong received payment for these acts from the Iranian nationals in an amount from $10 million to $17 million USD.
In December 2016, U.S. prosecutors from the District of Alaska handed down a 47-count indictment for Kenneth Zong on money-laundering and sanctions-violations charges. Upon the completion of his South Korean jail term, Zong would likely be extradited to the U.S. According to Emanuele Ottolenghi, an illicit finance expert and senior fellow at the Foundation for the Defense of Democracies, Zong’s three associates went on an “investing spree” in Georgia during this same period. As Ottolenghi, who has documented the three men’s activities in Georgia which included “launching the private airline Fly Georgia, trying (unsuccessfully) to buy Tbilisi’s Sheraton Metechi Palace hotel, and creating local companies involved in real estate, investment, holiday packages for Iranian tourists, aviation services, microfinance, currency trade, and prepaid credit cards.” In September 2014, the three men were placed on the Treasury Department’s official list of sanctioned individuals, as were many of their businesses, including the Dubai-based front company Orchidea. Treasury officials accused the three men of “facilitat[ing] deceptive transactions” on behalf of multiple previously sanctioned Iranian financial institutions.
