OFAC Targets Sports & Entertainment Figures

Jill Williamson, Partner, Rimon, P.C.

On August 9, 2017, the Office of Foreign Assets Control (OFAC) at the U.S. Treasury Department, issued a Press  Release and identified Mexican national Raul Flores Hernandez and the Flores Drug Trafficking Organization (Flores DTO) as Significant Foreign Narcotics Traffickers pursuant to the Foreign Narcotics Kingpin Designation Act, also known as the Kingpin Act. OFAC also designated a large number of individuals and 42 entities for involvement with, and acting as fronts for, Raul Flores Hernandez.

Many of these individual and entities are in the sports and entertainment industries, including  professional soccer player, Rafael Marquez Alvarez (Rafa Marquez), Mexican singer Julio Cesar Alvarez Montelongo (Julion Alvarez), Mexican Soccer Club Club Deportivo Morumbi and the Grand Casino Guadalajara.

As of the issuance date of these designations, no U.S. persons, companies, nor any individuals in the US, are allowed to conduct transactions with these individuals or entities.  Penalties under the Kingpin Act can run as high as $10MM per violation, with individual violators subject to imprisonment for up to 30 years.  Even civil penalties for inadvertent violations can run over $1M per violation.  It is worth noting that OFAC violations are based on strict liability.

If you would like more information, a better understanding or need guidance regarding compliance with these regulations, contact Jill M. Williamson, a Rimon Law Partner based in Washington, DC. Of course you can always contact me, Joe Rosenbaum, or any of the lawyers at Rimon with whom you regularly work.

Legal Entity Identifiers Require More Invasive Information

Robin Powers, Partner &  James Ballard, Paralegal

The Global Market Entity Identifier Utility issues Legal Entity Identifiers (LEI) which are unique 20-digit alpha-numeric identification codes, based on standards developed by the International Organization for Standardization.  Many regulatory authorities require financial market participants that engage in certain transactions to obtain an LEI. Read more about the LEI.

In the past, an entity could simply provide self-identifying information (i.e., “Level 1 Data”), but now GMEI Utility is requiring Level 2 Data – information relating to the parent companies of its registered entities, based on the accounting relationship of the entities.

This reporting requirement will permanently link data collected in relation to an entity’s LEI to all of its daughter entities. If the parent does not have its own LEI, other identifying information (parent’s legal name, address and registration authority information) is now being required. There are some exceptions or allowable reasons for opting out of providing certain information, but it is clear that LEI issuers are seeking additional scrutiny of parent companies.

Could an enterprise reorganize in order to avoid reporting by qualifying for an exclusion? Perhaps. Could contractual restrictions on disclosure allow for an opt-out?  It’s possible. Could accounting and financial restructuring dis aggregate the basis for the connection? Maybe. Whatever the consequences and reactions, legal counsel should be consulted to assess the risks of providing such additional information in this context.

You should contact Robin Powers and James Ballard directly if you have questions and they have prepared a more detailed client alert you can read:  Maintaining Your Legal Entity Identifier Just Got More Invasive.

Of course, if you need assistance or more information, you can always contact me, Joe Rosenbaum or any of the attorneys are Rimon Law with whom you regularly work.

The Paradox of Illumination

I first heard about the paradox of illumination from Lee Loevinger, an extraordinary gentleman I was privileged to know professionally.  Lee was a multi-faceted, multi-talented, thought-provoking lawyer whose sage advice and stimulating ideas continue to resonate with those honored to have known him, and everyone else wise enough to read his work and the words he left behind.

In a nutshell, the paradox of illumination is extraordinarily complex, but simple to describe.  Much like Albert Einstein who, when asked about his theory of relativity and the notion that time is not constant, described it in personal terms: if a man is at dinner for 10 minutes with a beautiful woman, it seems like a fleeting instant; but sit on a burning hot stove for 10 minutes and it seems like an eternity :).

The paradox of illumination can similarly be described on a personal level.  Sit in completely dark room.  Really.  Completely dark.  What can you see?  Nothing.  You know little about your surroundings and can only sense your own body – in fact, you don’t even know how far your surroundings extend beyond your immediate sensations.

Now light a match.  The circle of illumination allows you to see a little of what is around you – but the perimeter and beyond are still dark.  Now light a candle.  The circle of what you can see illuminated by the light is larger than before, but the size of the perimeter beyond which you cannot see is also a lot larger than before.  The larger the light, the larger the area of illumination, but larger by far is the perimeter beyond which we know nothing.

The more we can see and the more we know and understand about the world around us, the larger the amount becomes that we don’t know.  In other words, as the circle of our knowledge grows, so does the amount of knowledge we cannot see and don’t know.  The paradox of illumination is the paradox of knowledge.  Perhaps that is why Michelangelo, when he was more than 87 years old, still said, “Ancora Imparo” (I am still learning).

A Brief History of the U.S. Income Tax

Although income taxes were imposed for a brief time during the Civil War and again in the 1890s, it was not until 1913, upon passage of the 16th Amendment to the Constitution of the United States, that federal income tax became a permanent fixture for U.S. citizens and residents. Since Congress then was invested with Constitutional authority, they acted quickly to legally formalize taxes imposed on the income of individuals and corporations.

If you are a U.S. citizen or resident (indeed, if you reside anywhere income taxes are collected), consider what it takes to comply and make the necessary filings today.

Now take a look at the form that individuals were required by the Internal Revenue Service to file in 1913, the year permanent taxation started: 1913 Form 1040.

Do we really need to say anything more? Happy April 15!!

If you need advice or guidance about income taxes, in the United States or anywhere, please don’t contact me, Joe Rosenbaum.