Disbanding the team will cause long-term damage to the government’s capacity to prosecute grand corruption and money laundering crimes.
Buried near the bottom of the fourth page of a Department of Justice memorandum directed at “Total Elimination of Cartels and Transnational Criminal Organizations”—one of 14 memoranda issued by Attorney General Pam Bondi in the opening hours of her tenure—was this sentence: “Task Force KleptoCapture, the Department’s Kleptocracy Team, and the Kleptocracy Asset Recovery Initiative, shall be disbanded.” The memo continues, “Attorneys assigned to those initiatives shall return to their prior posts, and resources currently devoted to those efforts shall be committed to the total elimination of Cartels and TCOs [transnational criminal organizations].” Understanding what the Kleptocracy Team was, how it functioned, and its key achievements are crucial to assessing the wisdom of Attorney General Bondi’s day-one decision to disband it.
Changes announced elsewhere in the memorandum, such as the refocusing of Foreign Corrupt Practices Act (FCPA) enforcement on “bribery that facilitates the criminal operations of Cartels and TCOs,” followed by the subsequent “pause” on FCPA enforcement, have received significant and deserved attention. But the disbanding of the Kleptocracy Team and Kleptocracy Asset Recovery Initiative should not escape public notice. With that single sentence, Bondi dismantled an expert prosecutorial team that, for well over a decade, has played a unique role in the Justice Department, focused on ensuring that the U.S. financial system was not used to launder the proceeds of corruption.
The Kleptocracy Team has targeted grand corruption of a breathtaking scope, with several cases involving hundreds of millions, even billions, of dollars, stolen from countries where many citizens live in poverty—schemes not involving “Cartels and TCOs,” and which would likely go unprosecuted under President Trump’s Justice Department. Disbanding the team and scattering its members risks losing the institutional knowledge and international relationships that are the team’s unique strength. That capacity cannot be easily reconstituted, meaning that disbanding the team seems likely to cause long-term damage to the government’s capacity to prosecute such crimes.
Shuttering a unit that has unique expertise and that prosecutes conduct universally condemned as odious (kleptocracy, derived from the Greek word for “rule of thieves”) is not worth the marginal benefit of redeploying a small number of prosecutors to focus on “Cartels and TCOs,” particularly a team that has little experience building cases against such targets. Nor does ending the Kleptocracy Initiative advance an “America First” ideology: The laundering of corruption proceeds through the U.S. economy creates security risks and market-distorting forces.
Corruption abroad undermines national security at home. Citizens who suffer at the hands of a corrupt government may be drawn to support extremist movements that oppose the United States and threaten its security. Corruption depresses economies and increases desperation and the lack of faith in institutions—factors that can drive people to turn to extremist groups for support, once it becomes clear that their own government does not serve them. With the United States turning its back on the Kleptocracy Initiative’s effort to stop grand corruption and return stolen funds to the people to whom they rightfully belong, those affected by corruption will have little reason to see the United States as a trusted ally—and will respond to incentives to align themselves with forces opposed to the United States who do promise to contribute to their economic well-being.
Moreover, the Kleptocracy Team does not target purely foreign conduct. It seeks to stop the use of the U.S. financial system to facilitate money laundering. When kleptocrats exploit the U.S. market, they drive up housing prices; a New York Times study, for example, explored how shell companies were transforming New York’s real estate market for the worse. The Kleptocracy Team also prosecutes U.S. enablers—the gatekeepers who help kleptocrats shield their assets by setting up shell companies and buying assets in others’ names, among other criminal conduct.
The Programs Affected
Attorney General Bondi’s Feb. 5 memo names three entities to be disbanded: “Task Force KleptoCapture, the Department’s Kleptocracy Team, and the Kleptocracy Asset Recovery Initiative[.]” Task Force KleptoCapture targeted corrupt Russian oligarchs as part of the U.S. government’s response to Russia’s invasion of Ukraine, on the theory that the oligarchs’ sanctions-evasion fueled Russia’s war effort. Launched in 2022, it brought together prosecutors from various components of the Justice Department, including the National Security Division and the Criminal Division, to address “efforts to evade or undermine the economic actions taken by the U.S. government in response to Russian military aggression.” That included prosecuting violations of sanctions laws, seizing assets belonging to sanctioned individuals, and other types of actions. As of February 2024, Task Force KleptoCapture had brought actions to forfeit more than $700 million in assets and against more than 70 individuals for violating international sanctions and export controls. The assets included luxury properties in Beverly Hills, New York, Washington, D.C., and Florida linked to Russian oligarchs and enablers, as well as superyachts and aircraft.
The other two entities—and the focus of this piece—were the “Kleptocracy Team” and the Kleptocracy Asset Recovery Initiative. The attorney general’s memorandum treats these as two separate programs, but they are not. The Kleptocracy Asset Recovery Initiative began in 2010 with the formation of the Kleptocracy Unit (what the attorney general’s memo refers to as the Kleptocracy Team). The Kleptocracy Unit was part of the Criminal Division’s Asset Forfeiture and Money Laundering Section (now called the Money Laundering and Asset Recovery Section). Previously, attorneys within the Asset Forfeiture and Money Laundering Section had worked on kleptocracy investigations, but 2010 marked the launch of a team dedicated to the effort.
In a November 2009 forum in Doha, then-Attorney General Eric Holder explained the purpose of the Kleptocracy Initiative:
[W]e must work together to ensure that corrupt officials do not retain the illicit proceeds of their corruption. There is no gentle way to say it: When kleptocrats loot their nations’ treasuries, steal natural resources, and embezzle development aid, they condemn their nations’ children to starvation and disease. In the face of this manifest injustice, asset recovery is a global imperative.
The Kleptocracy Unit undertook two main types of efforts throughout its tenure. It conducted its own investigations into foreign officials who laundered corruption proceeds in or through the United States. And it assisted other countries when their corruption investigations pointed to the United States, often because a kleptocrat had used the U.S. financial system to launder ill-gotten gains. In those cases, the foreign government—if it was party to a mutual legal assistance treaty with the United States—could send a request to ask the United States to gather U.S. evidence or seize assets identified as corruption proceeds.
The money laundering took many forms. Some officials used bribery or embezzled money to buy U.S. assets, such as a mansion in Malibu or equipment from a seafood restaurant in Jacksonville, Florida. Others created U.S. bank accounts to hold their money or used dollar-denominated wire transfers that passed through American banks as they moved funds through networks of shell companies around the world.
Anti-Kleptocracy Tools
The Kleptocracy Asset Recovery Initiative’s main statutory tools were the money laundering statutes and forfeiture provisions that allowed the government to seize the proceeds of, or property involved in, money laundering. While money laundering can take various forms, two of the more relevant to kleptocracy cases involve engaging in a financial transaction with the proceeds of “specified unlawful activity” to conceal the source, ownership, location, or control of those proceeds (18 U.S.C. § 1956(a)(1)(B)(i)) or engaging in a “monetary transaction” with a value of over $10,000 using the proceeds of “specified unlawful activity” (18 U.S.C. § 1957(a)). A “monetary transaction” includes, among other things, transferring funds through a financial institution or transferring title to any real property, vehicle, vessel, or aircraft.
The definition of “specified unlawful activity” provides the hook that allows the government to pursue proceeds from bribery or embezzlement, even if it takes place abroad. “Specified unlawful activity” includes “an offense against a foreign nation involving … the bribery of a public official, or the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.” This provision is found in 18 U.S.C. § 1956(c)(7)(b)(iv), and as that long citation suggests, it is nested deep within the lengthy money-laundering statute.
Putting these statutory provisions together, if a public official abroad receives bribes or steals public funds in violation of his or her country’s laws, and then uses those ill-gotten gains to buy property valued at over $10,000 or to transfer money to or through the U.S. financial system to try to hide it, he or she could be prosecuted for money laundering. The money laundering statutes provide for up to 10 or 20 years’ imprisonment, depending on the specific statute violated.
There’s a problem, though, when using these statutes to prosecute foreign officials. A head of state may have immunity under international law. Even if the official does not have immunity, if he or she still holds a position of power in a foreign country, that country is unlikely to extradite him or her to face charges in the United States—assuming there is an extradition treaty that exists in the first place.
The solution? Asset forfeiture. Forfeiture laws allow the government to seize the proceeds of certain types of criminal activity or property involved in money laundering. The government can file a civil forfeiture action, directed at the property itself, or forfeit money in connection with a criminal prosecution. Forfeiture laws also include provisions allowing the government to seize or restrain assets pending completion of the lawsuit so that the assets’ value is preserved.
It’s worth noting that civil forfeiture has been a controversial practice in the United States, triggering complaints that law enforcement has seized assets from individuals who are not culpable and have little power to reclaim those assets—such as a mother whose car was seized because her son sold drugs out of it. The dynamics are different in a kleptocracy case. These are not seizures from low-income individuals who are powerless to contest the cases; it’s quite the opposite. Moreover, because the corrupt officials in question may be effectively immune from prosecution or arrest, taking their criminal proceeds may be the only way to deter their criminal behavior and provide some recompense to victims. For example, the now-defunct Kleptocracy Asset Recovery Initiative’s mission was to return seized funds to the victims of corruption—people of the country from which the money was stolen in the first place.
To succeed, kleptocracy investigations must prove a violation of another country’s law (involving theft of public funds or bribery), identify the money stolen or bribes paid, trace them to or through the United States financial system, and find an asset that still had value and could be seized. Kleptocracy cases often pose myriad challenges, including proving an act of bribery or embezzlement in another country (which could have taken place decades earlier), understanding foreign law, gathering evidence admissible in a U.S. court, tracing money around the world despite often-sophisticated efforts to conceal it, finding witnesses willing to testify, working through multiple foreign legal systems to obtain cooperation, and navigating diplomatic sensitivities. Kleptocracy attorneys must be creative, diplomatic, and tireless, and they must be able to conduct both criminal prosecutions and civil litigation.
To address these challenges, the Kleptocracy Team developed expertise in conducting international foreign corruption investigations, unpacking networks of shell companies and tracing illicit financial flows across the globe. They used many of the traditional tools of federal prosecution, such as grand jury subpoenas or search warrants to obtain e-mail or other electronic communications, but also turned to specialized instruments focused on providing financial data and gathering information from other countries. For example, in addition to mutual legal assistance treaty requests for assistance from foreign countries, prosecutors could also use Egmont requests, which allow financial intelligence sharing among certain countries. To gather information from U.S. financial institutions, prosecutors can obtain Bank Secrecy Act filings, such as suspicious activity reports or currency transaction reports, which report currency transactions of more than $10,000. They could also issue Section 314 requests to the Financial Crimes Enforcement Network (FinCEN), which would provide information on the financial institutions where an individual had accounts. They collaborated with agents with forensic accounting skills to trace money through shell companies and across jurisdictions. They also relied on formal and informal networks where prosecutors and law enforcement may—subject to their countries’ respective laws—partner on investigations and share information. Using these tools effectively requires specialized training and resources; some may require multiple rounds of requests, analysis of substantial amounts of financial data, and the ability to work through back channels to bear fruit. This is the type of labor-intensive investigation that cannot easily be farmed out to any U.S. Attorney’s Office–which typically does not have the same resources and must spread those resources across many more cases. And, once lost, the technical skills and relationships needed to effectively conduct investigations using these tools cannot easily be rebuilt.
The Work of the Kleptocracy Initiative
The Kleptocracy Team brought several high-profile cases involving staggering amounts of corruption—cases that do not appear to include a nexus to “Cartels and TCOs” and thus would not be pursued under the attorney general’s memorandum. One early example is the litigation involving Teodorin Nguema Obiang, the vice president of Equatorial Guinea, whose father has ruled the country since 1979. Nguema Obiang has also served as the minister of forestry. From 2000 to 2011, despite earning a modest government salary, he spent more than $300 million acquiring assets and property on four continents—North America, South America, Europe, and Africa.
According to court documents, by 2004, Equatorial Guinea was the third largest oil and gas producer in sub-Saharan Africa and also earned money from exporting timber. As Human Rights Watch reported,
The discovery of oil in Equatorial Guinea in the 1990s generated enormous wealth that could have transformed the lives of those living in the small central African country had it been used to meet the government’s social and economic rights’ obligations. Sadly, systemic corruption and self-dealing has largely squandered that potential.
While the country experienced rapid economic growth, 70 percent of the population still lives in poverty. Nguema Obiang’s father granted him timber concessions and then put him in charge of the forestry industry. With an official salary of less than $100,000 per year, he nonetheless bought two Bentleys and a $6.5 million house in Bel Air within months of each other in 2001. By 2011, he had purchased two dozen sports cars, two racing boats, a $30 million Malibu mansion, and a $38 million private jet in the United States—in addition to profligate spending abroad. He also spent more than $3 million on Michael Jackson memorabilia, including $275,000 for a crystal-studded glove that Jackson wore on the “Bad” tour. Nguema Obiang financed these purchases through a pattern of extortion and embezzlement, such as demanding that any timber company pay him a personal fee, requiring companies to donate to so-called public service campaigns and then embezzling the donated funds, and inflating bids for government contracts and diverting the excess for his personal use.
The Justice Department filed two colorfully titled civil complaints in federal court: one in Los Angeles (United States v. One White Crystal-Covered “Bad Tour” Glove and Other Michael Jackson Memorabilia; Real Property Located on Sweetwater Mesa Road in Malibu, California; One 2011 Ferrari GTO) and one in Washington, D.C. (United States of America v. One Gulfstream G-V Jet Aircraft Displaying Tail Number VPECS, Its Tools and Appurtenances). The complaints are a testament to the demands that kleptocracy investigations require. They analyze Equatoguinean law; set out facts concerning a multipronged bribery/embezzlement/extortion scheme; and detail international funds transfers, asset purchases, and shell companies. Developing the details of a corruption scheme lasting for years, with some predicate acts taking place over a decade before the filing of the complaint, occurring in a country unwilling to cooperate with the United States (because the corrupt actors are still in power), and involving individuals who may fear retribution—based on a record of admissible evidence—takes creativity, dedication, experience, and resources.
The Justice Department settled the case in 2014, after Nguema Obiang agreed to forfeit nearly $30 million in assets, including his Malibu mansion. The U.S. government later transferred $19.3 million of the settlement to the United Nations to pay for 1.2 million doses of coronavirus vaccines for the people of Equatorial Guinea.
Other cases involved similarly large sums, like $630 million stolen by Nigerian dictator Sani Abacha, or $850 million held in European bank accounts tied to Gulnara Karimova (the daughter of former Uzbek president Islam Karimov)—in connection with a telecom bribery scheme. The largest case of all involved 1 Malaysia Development Berhad (1MDB): 43 separate civil forfeiture actions to recover $1.7 billion in funds stolen from Malaysia’s sovereign wealth fund, which also spawned related prosecutions involving Goldman Sachs’s role in a conspiracy to pay bribes and divert 1MDB funds in connection with bond offerings. 1MDB’s assets were supposed to be invested for the benefit of the Malaysian people, but instead, high-level officials and a businessman used the money to buy luxury properties in Beverly Hills, California, New York, and London; a 300-foot superyacht; and paintings by Claude Monet and Vincent Van Gogh. Some of the money from 1MDB funded a movie production company that made “The Wolf of Wall Street.” In total, more than $4.5 billion was stolen between 2009 and 2015. As recently as Jan. 17, less than three weeks before the attorney general shut down the Kleptocracy Asset Recovery Initiative, the Justice Department announced that it had recovered $20 million more in misappropriated 1MDB funds.
Implications of the Attorney General’s Memorandum
From 2013 to 2015, I was a trial attorney who worked as part of the Kleptocracy Asset Recovery Initiative. I saw my colleagues bring powerful cases targeting acts of corruption that allowed rulers to live lavish lives while ordinary citizens remained impoverished. I cannot recall a single case concerning drug cartels. Limiting the work of these attorneys to “Cartels and TCOs” will likely exclude any action where an official steals public funds or demands bribes from companies seeking to do business—the only actionable unlawful activity will be, potentially, a situation in which a cartel has paid a foreign official a bribe. No one will be left to prosecute the Abachas, the Nguema Obiangs, the theft of over $1 billion from Malaysia, and more—the stunning acts of simple plunder that, because they did not involve “Cartels and TCOs,” fall outside the attorney general’s mandate.
The attorney general’s memo does not bar local U.S. Attorney’s Offices around the country from bringing non-narcotics-related kleptocracy cases, so such offices could pick up some of the Kleptocracy Team’s caseload; there are capable, motivated federal prosecutors around the country. But that is easier said than done. The Kleptocracy Team’s prosecutors were able to focus on the specific problem—laundering of the proceeds of foreign corruption—developing indispensable expertise in investigative techniques, the use of criminal and civil forfeiture tools, a dedicated squad of FBI agents, the interpretation of foreign laws and the specific money-laundering statutes, and relationships with international law enforcement partners. The team also brought resources to investigations that U.S. Attorney’s Offices sometimes could not afford, such as forensic accountants and paralegals with specialized skills who were able to dedicate their time to a small number of cases. Kleptocracy investigations are complicated and time consuming, and they cross jurisdictions; the evidence that must be marshaled in most of the prosecutions sprawls. Moreover, U.S. Attorney’s Offices may similarly be directed to focus more on cartel or immigration crimes and less on international financial crimes—it seems unlikely that a local federal prosecutor’s office, led by a U.S. attorney selected by the White House, would choose to devote the substantial resources that kleptocracy cases require to the cause.
If the prosecutors dedicated to the Kleptocracy Team are reassigned, as the attorney general’s memo demands, some may leave government, following the disbanding of the mission to which they were devoted. The team that brought kleptocracy cases built its knowledge and capability over many years—some members of the team pioneered the approach and brought the first kleptocracy cases before the initiative even formally began in 2010. Once that expertise is lost, it cannot easily be replaced or rebuilt. In this way, disbanding the team may harm enforcement with effects lasting well beyond one attorney general’s tenure. Even if a new administration takes over in four years, it will take far longer to rebuild the team, its expertise, and its decades-long relationships with enforcement partners around the globe if its current members are driven away. And, in the meantime, the whiplash caused by the sudden abandonment of America’s willingness to protect its financial system from abuse by kleptocrats diminishes trust that the country will be a reliable partner going forward—if it can so easily turn on a dime and abandon what had seemed to be its established commitments.
The Kleptocracy Asset Recovery Initiative policed some of the most obvious, gross violations of law imaginable: privileged rulers who stole millions—or billions—from their countries, often while ordinary citizens, to whom the money rightfully belonged, remained poverty-stricken. While the Kleptocracy Asset Recovery Initiative benefited the security and stability of the United States and its financial system, it was not just a naked effort to promote American economic interests. It was an attempt by the United States to live up to ideals of fairness and equality, and to help others around the globe realize basic economic opportunities by using U.S. legal tools to fight the scourge of grand corruption that is antithetical to any conception of justice or fairness. The abandonment of an initiative that has fought some of the most blatant injustices—theft by the powerful, by the very rich from the very poor—should prompt reflection about a deeper question: What does it say about what America stands for? The country has now sent the message around the world that, essentially, it no longer cares if rulers steal while ordinary people live in poverty. It no longer cares if those rulers exploit the U.S. financial system to stash and enjoy the benefit of what they have stolen, through Park Avenue condominiums or Malibu mansions. Its commitment to return the looted money to the people to whom it rightfully belongs is now recast not as embodiment of American commitment to values of equality, opportunity, and dignity; that was the policy preference of a particular administration or two, something that could be abandoned at a moment’s notice. The abrupt abandonment of this mission to police some of the most obvious examples of gross injustice damages any noble conception of what America is.
While this harm to American values—and to the sense of pride that Americans can feel knowing they are part of a country acting for good—may be abstract, it is coupled with very practical harms: the hundreds of millions or billions of dollars that the government will forgo recovering; the countries that no longer trust or are willing to help America when it needs them to investigate a crime or respond to a threat, because they now understand that America’s partnership can be fleeting; and a team that cannot be instantly reconstituted should political winds change, for it is based on decades of experience prosecuting arcane and complicated cases and building relationships with needed partners around the world. This is more than a temporary reordering of enforcement priorities for a couple of years. It is an alarming and dangerous change. The legal community, and the American public, should take notice.
– Alexis Loeb is a former Deputy Chief of the Jan. 6 Capitol Siege Section at the U.S. Department of Justice. Loeb is now a partner at Farella, Braun, and Martel.
