The Who, The What, and The How
An Interview with David Zapp
Good morning, Mr. Zapp.
David Zapp: Good morning, Ben.
I have asked to speak with you today to talk about OFAC, about what it is, and about what it does.
David Zapp. I’ll be glad to answer your questions if I can.
First of all, what does “OFAC” stand for and what does it do?
David Zapp: It stands for Office of Foreign Assets Control. It is a regulatory body that sanctions people and entities that OFAC believes are engaged in specified criminal activity.
It forbids anyone or any entity in the U.S. from doing business with anyone or any entity on the “sanction” list or, as it is often called in Latin America, the “Clinton List.”
Is it an American law?
David Zapp: It is.
Then why do so many countries follow it?
David Zapp: They don’t follow it. Businesses in their countries follow it.
Why?
David Zapp: Because they’re afraid of being blocked from doing business in the United States if they don’t follow the U.S.’s wishes
Who is targeted?
David Zapp: People or entities that commit certain crimes like drug dealing, terrorism, or money laundering.
Can one get off the list?
David Zapp: Sure.
How does one go about it?
David Zapp: The listee, that is, the person or entity that is on the list, will make a request to be “delisted” and will give his reasons. This request is usually made with the assistance of an American lawyer since OFAC is an American agency.
After the request, what happens?
David Zapp: OFAC will respond by sending the listee’s lawyer a questionnaire with questions about people and relationships the listee may have had with these people or entities. If there is no response to the questionnaire within 90 days, OFAC says it will consider the request to be withdrawn. There is no legal support for this ultimatum but that is what they say.
Can you do anything about that?
David Zapp: Well along with the filled-out questionnaire, I send OFAC a cover letter saying that if I don’t hear from them within 15 days, I will assume OFAC does not wish to grant our request and take him off the list. I personally take great care in answering the questionnaire as narrowly as I can.
Why?
David Zapp: Because I find that OFAC uses the answers against the listee and usually premises its very denial on the answers.
Then what happens?
David Zapp: After the listee answers the questionnaire and sends it to OFAC, OFAC will take it’s time to respond despite my ultimatum.
Why will it “take its time?”
David Zapp: Because OFAC is a bureaucracy and bureaucrats take their time. They also know that they can get away with the delay, and they also know, most importantly, that the longer they take to respond, the longer the listee remains on the list.
So what can you do?
David Zapp: Well if they ignore my ultimatum date, I wait a reasonable time thereafter, and I sue them in federal court. I wait a reasonable tme to make sure the court knows I have given them more than enough time to reply.
What’s the advantage of that?
David Zapp: It removes control of the litigation away from OFAC and confers it upon the judge. Now, if I ask OFAC for something, and they ignore me or don’t give me what I ask for, I ask the judge to intervene, and if my request has merit, she will order OFAC to give me what I want. And with the passage of time, the burden of proof changes.
What do you mean, the “burden of proof changes?” What “burden?”
David Zapp: In an OFAC case the listee initially has the burden of proof to show why she or it, in the case of a business, should not be on the list, a pretty difficult burden to meet since it calls for the listee to prove a negative, i.e., something that doesn’t exist, namely, the alleged illicit conduct. OFAC’s burden, initially, is only to say in purely conclusory terms, that there is “probable cause to believe that the listee is involved in a specific illicit activity” without making any effort to support its thesis. And forget getting evidence from them. They will claim the evidence is confidential and they can’t give it to you. That’s also why you want to go into court. If the court thinks your demand has merit, the court will order OFAC to give you the evidence.
When time passes, however, several months to a year later, the burden shifts to OFAC. Now they must show why the listee should still be on the list, and that’s when OFAC starts seriously considering the “reasonableness” of a settlement.
And if they don’t settle?
David Zapp: Then the litigation will go on until finally motions on both sides will be made asking the court to either dismiss the lawsuit (OFAC’s request) or order OFAC to remove the listee from the list (the listee’s request). Then the judge will decide. And if the listee wins, great, but even if the listee loses, he or she will have the advantage of gaining the insight needed to be able to win when he or she makes the challenge again and, if need be, again and again as every listee has a right to. There is no limit on the amount of times that you can challenge a listing. Keep making your claim, and sooner or later you’ll win. The government hates pressure. It is the only thing that motivates them to do anything that you want them to do.
You once said, “settlements are as good as wins?”
David Zapp: Yes, because in the end you’re getting your client off the list.
But can’t OFAC impose onerous conditions in the settlement?
David Zapp: They can, theoretically but if they do, you don’t settle. But most settlements are fairly reasonable because both parties want them. The settlement generally states that no one is admitting guilt, the the parties won’t sue each other for actions taken before, during, or after the litigation, and the listee will agree that he will not engage in illicit activity, an fairly easy representation to make, since the listee never admitted guilt in the first place as the government acknowledges in the settlement.
So this process does not seem so complicated.
David Zapp: It isn’t once you get the experience and have the time and money to press the claim. You are, after all, suing the United States of America.
Is there anything else you would like to add?
David Zapp: Yes. On the one hand I don’t consider OFAC my enemy. Once you get a chance to talk to them, they will be immensely cordial. You just have to be prepared for a certain amount of frustration and arbitrariness.
On the other hand, OFAC is an arm of law enforcement. They’re not there to help you just as a cop is not there to cancel a speeding ticket that he gave you. They are not going to conduct some judicious balancing test. They will simply consult with the agent who initially asked OFAC to put you on the list, and what he or she says goes. That consultation could take 90 seconds. And if you’re not going to “cooperate,” with Team America or give up some valuable property or money—ransom, if you ask me—chances are that you will not get off the list without suing OFAC.
Why do you call giving up money or property “ransom?”
David Zapp: Because it has nothing to do with getting on or off the list. It is whether a party is engaged in illicit activity. OFAC has nothing to do with forfeiture or fines. Not offering up property for forfeiture is not a reason for OFAC to hold up a delisting. That is beyond its mandate.
Well, that’s an eye opener. Thank you very much for your time.
David Zapp: My pleasure.