Bloomberg and other major media outlets, including Forbes, Financial Times and Reuters, have recently reported on the Anti-Terrorism Act lawsuit Zapata v. HSBC filed by Elias LLC on behalf of American victims of drug cartel terrorism:
Bloomberg News video: HSBC Sued for Drug Cartel Murders
Bloomberg article: HSBC Sued Over Drug Cartel Murders After Laundering Probe
Families of U.S. citizens murdered by drug gangs in Mexico sued HSBC Holdings Plc, claiming the bank can be held responsible for the deaths because it let cartels launder billions of dollars to operate their businesses.
The lawsuit brings fresh scrutiny to the Mexican activities of HSBC, which in 2012 paid $1.9 billion to resolve a criminal investigation into whether it violated U.S. sanctions laws and laundered at least $881 million on behalf of drug cartels.
HSBC said it would fight the claims in the lawsuit, filed Tuesday in federal court in Brownsville, Texas.
The new case recounts a series of murders in 2010 and 2011 in horrific detail, arguing that the bank should be held to account for them under the U.S. Anti-Terrorism Act.
Four Months Pregnant
Lesley Redelfs was four months pregnant when she and her husband, Arthur, were shot by the Juarez cartel after leaving a children’s birthday party hosted by the U.S. Consulate in Ciudad Juarez, where she worked. Jaime Zapata and Victor Avila Jr. were special agents for Immigration and Customs Enforcement, driving to Mexico City when they were run off the road by two vehicles filled with hit men from the Los Zetas cartel, who then opened fire. Avila survived. Rafael Morales Jr. was abducted on his wedding day, as were his brother and uncle, and the three died of asphyxiation after members of the Sinaloa cartel wrapped duct tape around their heads.
“The Mexican drug cartels are terrorists who routinely commit horrific acts of violence to intimidate, coerce, and control the civilian population and the government,” Richard Elias, a lawyer for the victims and their families, said in an e-mail. “HSBC was complicit in laundering billions of dollars for drug cartels and should be held accountable under the Anti-Terrorism Act for supporting their terrorism.”
The 1996 Anti-Terrorism Act, amended in the wake of Sept. 11, allows victims to seek compensation from organizations that provide material support to groups that commit terrorist acts. Although other violent drug-trafficking organizations, such as the Revolutionary Armed Forces of Colombia (FARC), have been designated by the U.S. Government as terrorists, the Mexican drug cartels have so far avoided that official label. The Texas lawsuit seems to be the first that’s based on the legal theory that the Mexican cartels are terrorist organizations.
The lawsuit draws on documents made public in 2012 as part of a U.S. Senate investigation. HSBC’s internal controls were ignored and the bank was dubbed by one drug lord as “the place to launder money,” according to the complaint — a claim disputed by the bank.
In an unprecedented legal move, families of Americans murdered by Mexican drug cartels filed a lawsuit this week against the London-based HSBC bank for allegedly providing “continuous and systematic material support” to Mexico’s Sinaloa, Juárez, and Los Zetas cartels by laundering billions of dollars.
The lawsuit was filed Tuesday against HSBC Holdings, HSBC Bank USA, and HSBC México S.A. in the U.S. District Court of the Southern District of Texas. The plaintiffs are the Zapata, Avila, Redelfs and Morales families. Three of the victims were U.S. government employees.
Financial Times article: HSBC Sued Over Mexico Drug Cartel Murders
The families of several US citizens killed at the hands of some of Mexico’s most notorious drug cartels are suing HSBC, claiming the bank can be held liable as it allowed the syndicates to launder billions of dollars.
“As a proximate result of HSBC’s material support to the Mexican drug cartels, numerous lives, including those of the plaintiffs, have been destroyed,” read the complaint filed in a federal court in Texas. …
“Without the ability to place, layer and integrate their illicit proceeds into the global financial network, the cartels’ ability to corrupt law enforcement and public officials, and acquire personnel, weapons and ammunition, vehicles, planes, communication devices, raw materials for drug production and all other instrumentalities essential to their operations would be substantially impeded,” the complaint read.
“Thus, by facilitating the laundering of billions of dollars of drug cartel proceeds through its banks, HSBC materially supported the terrorist acts of cartels.”
The plaintiffs claim the bank is liable under the US Anti-Terrorism Act, which says the survivors of those killed in terrorist incidents may sue for damages.
Reuters article: HSBC Sued by Families of Victims in Drug Money Laundering Case
The Guardian article: Families of Americans Killed by Mexican Cartels Sue HSBC for Laundering Billions
The Telegraph article: Murder Victims’ Families Sue HSBC Over Drug Gang Money Laundering
Mother Jones article: Victims of the Mexican Drug War Are Suing the Banks that Handled the Cartel’s Money
The families are suing under the US Anti-Terrorism Act, which allows US citizens to sue parties that they allege provided terrorist organizations with material support or resources. Jimmy Gurulé, a professor of law at the University of Notre Dame Law School, and former Undersecretary for Enforcement with the US Department of the Treasury from 2001-2003, says that the plaintiffs in this case have to prove that the bank provided support to the cartels knowing, or intending, that money would be used to commit a violent crime.
“Here, I assume the plaintiffs are going to be arguing, ‘Well, the bank employees knew that these monies were going to be used for these criminal, violent purposes because they knew that the participants in the transactions were members of a drug cartel, and they knew that these drug cartels engage in violent activity, and therefore they had to know that some of this money might be used for a violent, criminal purpose,'” he told Mother Jones. “The more I think about it, it has some resonance.”
Since this is a civil case, he adds, the burden of proof is only a preponderance of the evidence whereas criminal cases require a standard beyond reasonable doubt. Besides, he says, large international banks aren’t exactly held in high esteem.
“If the case goes before a jury, I think HSBC, the global bank, is not a particularly sympathetic defendant,” he says. “At the same time, the victims, the surviving family members of the persons who were killed by members of the drug cartel, they are sympathetic … If I was HSBC, I would be taking this complaint seriously.”
Association of Certified Financial Crime Specialists article: Lawsuit Against HSBC By Victims of Cartel Killings Could Fit Provisions Under Powerful US Anti-Terror Law
A lawsuit by families of U.S. citizens murdered by Mexican drug cartels brought against global bank HSBC under provisions of a powerful anti-terror law could have legs, even though the gangs themselves are not currently designated as terrorist groups, say legal experts….
The case is a novel interpretation of the ATA, a 1990s era law strengthened after 9/11, which covers the actions of both designated and non-designated terror groups and could be the first such instance of a group of plaintiffs attempting to sue a bank alleging that its lax compliance systems were, in actuality, willful and material support for drug gangs sowing terror through fear, intimidation and murder….
Interestingly, the novel legal theory that a particular dug trafficking organization is engaged in terrorist acts is not that far a stretch, said Gary Osen, a New Jersey-based attorney who has sued a dozen large banks under the civil provisions of the ATA over the last decade in cases alleging that financial institutions provided material support to designated terrorist organizations and state sponsors of terrorism….
“Assuming you could prove the plaintiffs were murdered by the Sinaloa cartel, their activities, such as kidnappings, murders and assassinations of police fit pretty easily into the definition of terrorist acts under the material support statutes,” he said, adding that he is talking about general legal concepts and is not commenting on the proof or evidence in the latest case….
Although certain drug-trafficking organizations, such as the Revolutionary Armed Forces of Colombia (FARC), have been designated by the U.S. Government as terrorists, the Mexican drug cartels have thus far evaded that official moniker….
The attorneys in the HBSC lawsuit, though, were judicious in choosing the parts of the ATA that are applicable, according to Osen, adding that they correctly sued under parts 2339 (a) and 2339 (c), which deal with the actions of non-designated groups that fit the definition of terrorist acts, while section 2339 (b) deals with material support for designated groups.
When deciding if an act of violence by a group fits the definition of a terrorist attack, a judge has to consider if several thresholds are met, including if the murders or crimes were committed in a manner that appears or is intended to appear to intimidate a civilian population, police, or influence the government by intimidation, coercion, mass destruction or kidnapping, he said.
“Without a doubt,” that covers the actions of the cartels, Osen said….
The key issue is whether, in this case, HSBC “knowingly engaged in conduct to help facilitate the money laundering by the cartels,” Osen said. “If the bank actively served as a conduit for the cartels, and knowingly provided banking services, then I think there is a strong case to be made for the foreseeable consequences [that the institution helped] the cartels to operate, prosper and fund their activities, including the murder and kidnapping of American nationals.”
Article by Nomi Prins, author of All the Presidents’ Bankers: The Big Banks Hiding Money for Elites
HSBC’s connection to drug money has recently returned to center stage. A new lawsuit alleges that certain victims paid the ultimate price for HSBC’s abetting Mexican drug cartels.
Bringing the case against HSBC is Richard Elias (pictured below). After more than a decade as Assistant United States Attorney for the Department of Justice, Rich founded his own small law firm in St. Louis. As a federal prosecutor, Rich led the investigation into JPMorgan Chase & Co.’s pre-crisis mortgage practices, reaching a record-setting $13 billion settlement. He’s the real deal.
Now, Rich is representing victims of terrorism seeking compensation from global banks that provide support to terrorists. He recently filed a suit against HSBC on behalf of the families of three victims of “horrific” drug cartel attacks in Mexico. The case alleges “HSBC knowingly serviced the cartels, including the Sinaloa, Juarez and Los Zetas cartels, aided by a pervasive culture of ‘recklessness and corruption’ stemming from deficient anti-money-laundering programs.”
Nomi Prins speaking with Richard Elias, former Assistant U.S. Attorney for the Department of Justice, at the “Banks, Markets, Corruption” event at the Financial West Group’s Annual Convention, in Las Vegas.
The complaint against HSBC contains gruesome killings and kidnappings tied to the cartels, including the February 2011 attack on Jaime Zapata and Victor Avila Jr., special agents for U.S. Immigrations and Customs Enforcement. They were attacked “in broad daylight” on a Mexican highway by a pack of Los Zetas members armed with assault weapons. Zapata was killed. Avila suffered life-threatening injuries.
I asked Richard why he left his government job and is pursuing this HSBC case. He said:
“The world needs to appreciate the direct link between the gruesome acts of mass violence committed by the drug cartels and the financial institutions that help empower them. As the cartels were executing mass atrocities throughout Mexico, including the atrocities committed against the United States victims in our case, HSBC facilitated the laundering of billions of cartels dollars, and was, by its own admission, the preferred financial institution for drug cartels. I brought this suit to hold HSBC accountable for its complicity in these terrible crimes.”
I asked whether he had proof of senior level knowledge. He nodded and said, “HSBC Mexico’s CEO was warned in early 2008 by a senior anti-money laundering official that there were allegations that 60 to 70 percent of the laundered proceeds in Mexico went through HSBC.” And yet, “2008 became a record year of bulk US dollar cash deposits at HSBC branches throughout Mexico.”
According to government documents, HSBC employees in Mexico accepted deposits of hundreds of thousands, sometimes millions, of US dollars that showed “unmistakable” signs of money laundering from 2006 to 2010. These included cash deposits from people with no identifiable income source, delivered in boxes that fit the precise dimensions of teller windows. Since HSBC’s U.S. arm rated Mexico as “low risk,” $670 billion in wire transfers passed through HSBC Mexico unmonitored.
This complaint could be the first Anti-Terrorism Act suit filed against a bank for its connection to a Mexican cartel for money laundering damages. And if Rich wins, this case could set a global precedent for governments to use the Anti-Terrorism Act as a way to gain access to the banking information that the banks resist handing over (and to keep its citizens in check).