{"id":25867,"date":"2016-09-30T00:29:42","date_gmt":"2016-09-30T05:29:42","guid":{"rendered":"http:\/\/law.marquette.edu\/facultyblog\/?p=25867"},"modified":"2016-09-30T01:21:18","modified_gmt":"2016-09-30T06:21:18","slug":"my-client-was-accused-of-violating-the-cuba-trade-embargo-but-what-trump-did-was-worse","status":"publish","type":"post","link":"https:\/\/law.marquette.edu\/facultyblog\/2016\/09\/my-client-was-accused-of-violating-the-cuba-trade-embargo-but-what-trump-did-was-worse\/","title":{"rendered":"My Client Was Accused of Violating the Cuba Trade Embargo (But What Trump Did Was Worse)"},"content":{"rendered":"

\"800px-havana_-_cuba_-_1366\"<\/a>I received a phone call\u00a0from Larry Dupuis of the Milwaukee Office of the American Civil Liberties Union\u00a0in November of 2003.\u00a0 He described a Wisconsin resident\u00a0who had contacted the ACLU after receiving a PrePenalty Notice from the Department of Treasury.\u00a0 In severe language, this form\u00a0accused\u00a0this individual\u00a0of violating the Cuban Assets Control Regulations which were promulgated pursuant to two federal statutes: the Trading With the Enemy Act and the Cuban Democracy Act.\u00a0 In essence, by sending him this notice, the Treasury Department wanted\u00a0this individual to admit that he\u00a0had traveled to Cuba and that while there he had spent money\u00a0in violation of the Cuba Trade Embargo<\/a>.\u00a0 Technically, any financial transaction between a U.S. citizen and\u00a0a Cuban national was a violation of U.S. law, no matter how small.\u00a0\u00a0If he didn’t respond to the formal Requirement to Furnish Information (RFI), and thereby admit to violating the Cuba Trade Embargo, then he would be fined $10,000.<\/p>\n

Larry asked me to consider taking on this individual as a pro bono client, and represent him in administrative proceedings before the Treasury Department.\u00a0 The case raised some interesting\u00a0constitutional issues.\u00a0\u00a0There were\u00a0possible issues relating to a Fifth Amendment right not to be punished for the failure to admit to having spent money in Cuba.\u00a0 In addition, the Treasury Department regulations seemed to provide that the only way to dispute the RFI was to do so in person in front of an administrative law judge\u00a0in Washington, D.C., an expensive proposition that raised due process concerns.\u00a0 The ACLU was hoping to find a “test case” that would challenge the Treasury Regulations on constitutional grounds.\u00a0 I agreed to take the case.<\/p>\n

Soon after, I met with my client, a\u00a0retiree on a fixed income.\u00a0 He was a soft-spoken man, who had gone to\u00a0Cuba in 1998 on a trip with a church group.\u00a0 While there, he\u00a0had spent a few\u00a0days\u00a0with his fellow church members bicycling around the island and meeting locals.\u00a0 This was a goodwill trip, intended to foster greater understanding between the people of Cuba and the people of the United States.\u00a0 Several years after his return, he received the RFI from Treasury Department alleging that while in Cuba he had spent money that went to\u00a0Cuban nationals, in violation of the Cuba Trade Embargo, and demanding that he provide further information about the monies spent\u00a0or else pay a\u00a0fine.<\/p>\n

The law in 1998 was clear.\u00a0 Under the statutory provisions and Treasury Regulations that governed all economic transactions between U.S. citizens and Cuban nationals,\u00a0any travel by U.S. citizens to Cuba had to receive advance approval and a license from\u00a0the U.S. government, the trip had to be sponsored by a charity or similar humanitarian organization, and, most relevant to my client,\u00a0the organization that was the sponsor of the trip had to pay all of the expenses of participants (rather than participants spending any money directly while in Cuba).<\/p>\n

The government action against my client was part of a broader effort by the Administration of President George W. Bush to punish even minor violations of the Cuba Trade Embargo.\u00a0\u00a0 As noted by this\u00a0Congressional Research Service Report<\/a> from August 2016:<\/p>\n

Under the George W. Bush Administration, the travel regulations were tightened significantly,with additional restrictions on family visits, educational travel, and travel for those involved in amateur and semi-professional international sports federation competitions. In addition, the categories of fully hosted travel and people to people educational exchanges unrelated to academic coursework were eliminated as permissible travel to Cuba. The Bush Administration also cracked down on those traveling to Cuba illegally, further restricted religious travel by changing licensing guidelines for such travel, and suspended the licenses of several travel service providers in Florida for license violations.<\/p><\/blockquote>\n

More recently, under the Obama Administration, the Cuba Trade Embargo and its associated travel restrictions have been relaxed somewhat, but the overall statutory framework remains in place.\u00a0\u00a0The Congressional Research Service Report does a good job of outlining what travel and remittances to Cuba are legally permitted — and not legally permitted — even today.<\/p>\n

My client’s case was therefore not unique.\u00a0 He was one of hundreds of individuals who had traveled to Cuba but who faced possible sanctions because the George W. Bush Administration wanted to make an example of even minor violations of the Embargo.\u00a0 The following case, involving an individual named Zachary Sanders<\/a>, was typical of the type\u00a0of enforcement action being\u00a0brought by the government at this time:<\/p>\n

Zachary Sanders traveled to Cuba in July 1998 and was stopped by Customs on his way back into the US, which put his name into the Treasury Department\u2019s enforcement system. He heard nothing further from OFAC (Office of Foreign Assets Control, the part of Treasury that enforces the embargo) for two years.<\/p>\n

. . . .\u00a0. .<\/p>\n

Two years after that trip, in March 2000, Sanders received a questionnaire from OFAC, entitled \u201cRequirement to Furnish Information\u201d (RFI), asking a series of questions about his travel to Cuba, including demanding itemized receipts for all expenditures in Cuba (all of which are presumptively illegal under the embargo) and other incriminating information, and threatening massive fines if he failed to respond within 20 business days. He made several phone calls to OFAC asking for more time, apparently because he had trouble locating an attorney to respond for him, and eventually failed to respond by the extended deadline. But he heard nothing from OFAC for another two years.<\/p>\n

Meanwhile, President Bush was elected, and ramps up enforcement of the Cuba travel ban. OFAC, which is also the agency responsible for counterterrorism money-laundering enforcement, begins diverting resources to Cuba travel enforcement almost immediately, and enforcement efforts become intense during the summer travel season of 2001.<\/p>\n

In late 2001\/early 2002, OFAC revisits Sanders\u2019 file. But by 2002 it was too close to the five year statute of limitations to go after Sanders for violations of the embargo itself \u2014 that is, for his 1998 travel to Cuba. OFAC\u2019s informal position was that they had to be able to initiate a hearing (by issuing a document called an OIP) within five years of the violation or they would regard the case as lapsed. But his RFI was sent two years later than his 1998 trip. So once OFAC decided to go after Sanders, it made sense to go after his non-response to the RFI rather than his travel itself. So OFAC issued him a \u201cPrepenalty Notice\u201d (dated Feb. 13, 2002) indicating that the government intended to fine him for not responding to the RFI. He got a lawyer and requested a hearing. Nothing more happened for about two years.<\/p>\n

. . . . .<\/p>\n

Sanders received an order sending his case to an Administrative Law Judge (ALJ) for a hearing to decide whether to impose a penalty in 2005. After a day-long hearing on June 27, 2005, the ALJ sat on Sanders\u2019 case for years \u2013 presumably because he was troubled by the constitutional issues we raised \u2026.. but didn\u2019t really know what to make of them and was scared of the consequences of ruling against the government. So three more years pass, and then, just before he leaves his job, on September 4, 2008 the ALJ issues a decision fining Sanders $1000 for not filling out the form.<\/p>\n

In order to bring the constitutional challenges into federal court, Sanders had to appeal to an Treasury appeals officer \u2013 the \u201cSecretary\u2019s Designee.\u201d This had been a formality in most cases where the ALJ had imposed a fine: you ask for review, they typically decide not to review your case, and you move on to federal court. Not here: the appeals officer granted review to the government, took briefing, and issued a decision on January 16, 2009, the very last (business) day of the Bush administration that raised Sanders\u2019 fine ninefold \u2013 to $9000. There is hardly any reasoning in the opinion other than that the original fine was too low to discourage people from ignoring RFIs in the future. (However, as OFAC acknowledged repeatedly, anyone is free to \u201crespond\u201d by saying that they refuse to answer any of the questions in the RFI per the Fifth Amendment privilege, in which case there is no fine. Also, OFAC settled over 200 travel cases for a standard $1000 settlement from 2001-2004.) Although the original ALJ heard evidence of Sanders\u2019 financial condition in deciding on the $1000 fine, there\u2019s no indication the appeals officer took any of that into account.<\/p><\/blockquote>\n

Mr. Sanders’ case finally ended in 2012 <\/a>when he agreed to settle the proceedings.<\/p>\n

My client’s case could have resulted in a lengthy lawsuit as well, but I chose to first try and\u00a0negotiate an acceptable settlement which would\u00a0resolve\u00a0the matter.\u00a0\u00a0After\u00a0contacting a\u00a0Treasury Department lawyer, and a few rounds of negotiation, I obtained\u00a0what I considered to be a favorable settlement offer.\u00a0 The offer was attractive, especially when taking into consideration\u00a0that even with free legal representation my\u00a0client still would\u00a0have travel and other expenses, as well as\u00a0lost time,\u00a0if the case went to litigation.\u00a0 My client agreed to the settlement amount, the size of which you can\u00a0probably guess after reading the\u00a0block quote above.\u00a0 While the\u00a0ACLU did not get its\u00a0test case from me, I believe that my\u00a0client\u2019s best interests were well served.<\/p>\n

What is the takeaway from this story?\u00a0 In 1998, my client went on\u00a0a Church-sponsored bike trip to\u00a0Cuba, and in\u00a0response\u00a0the U.S. Treasury Department went\u00a0after\u00a0my client for $10,000.<\/p>\n

Meanwhile, yesterday we learned (courtesy of Newsweek<\/em><\/a>) that\u00a0also in 1998\u00a0a company controlled by Donald Trump\u00a0hired business consultants and sent them\u00a0to Cuba.\u00a0 They were hired\u00a0in order to\u00a0scope out possible business opportunities if the Cuba Trade Embargo were to end.\u00a0 While there, these consultants incurred $68,000 in expenses for which they billed the Trump company and for which they were reimbursed.\u00a0 The size of this spending far exceeds\u00a0the minor amounts that my client was alleged to\u00a0have spent while on his bicycle trip that same year.\u00a0 They also were engaged in business activities, and not on a trip sponsored by a charitable or humanitarian organization (although documents obtained by Newsweek suggest that a cover story involving a charitable sponsor\u00a0was concocted after the trip took place).<\/p>\n

Moreover, unlike my client, Donald\u00a0Trump was an experienced businessman in the hospitality industry who knew in detail about what was and wasn’t permitted under the Cuba Trade Embargo (indeed, the entire purpose of hiring the consultants and sending them to Cuba was to prepare for the end of the Embargo, which presupposes knowledge of what was prohibited under the law).\u00a0 Therefore, this appears to be\u00a0a knowing violation of U.S.\u00a0law, which could have been referred to the Department of Justice for criminal prosecution\u00a0had this conduct come to the attention of the U.S. government\u00a0at the time.<\/p>\n

Since the story broke, the Trump Campaign has not denied any of the facts contained in the Newsweek story.\u00a0\u00a0Indeed, in an interview, his Campaign Manager Kellyanne Conway seemingly admitted that persons working on behalf of Mr. Trump spent money while in Cuba<\/a>.\u00a0 She stressed that Mr. Trump did not “invest” in any Cuban business opportunities, which does not address the fact that merely spending money in Cuba (directly or indirectly) was a punishable offense.\u00a0 Her only defense was that this all occurred\u00a0a long time ago.<\/p>\n

It is true that\u00a0there is little likelihood of a present criminal prosecution premised\u00a0upon conduct which occurred in 1998, because the\u00a0statute of limitations for the violation of the Embargo has\u00a0run.<\/p>\n

It may also\u00a0be true that very few voters really care about whether or not Donald Trump violated the\u00a0U.S. Trade Embargo with Cuba.<\/p>\n

The problem for Mr. Trump is that there are some voters who very much do care\u00a0about punishing persons who violated the Cuba\u00a0Trade Embargo.\u00a0 Those voters are Cuban Americans in the State of Florida, a state that Mr. Trump almost certainly needs to win if he is to defeat Hillary Clinton in November.<\/p>\n","protected":false},"excerpt":{"rendered":"

I received a phone call\u00a0from Larry Dupuis of the Milwaukee Office of the American Civil Liberties Union\u00a0in November of 2003.\u00a0 He described a Wisconsin resident\u00a0who had contacted the ACLU after receiving a PrePenalty Notice from the Department of Treasury.\u00a0 In severe language, this form\u00a0accused\u00a0this individual\u00a0of violating the Cuban Assets Control Regulations which were promulgated pursuant 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