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The Letters - Update December 21, 2008

Two reports I've recently received are that the Prepenalty Notices which have been issued in response to either a non-answer or claim of no information contain specific information regarding the exact items purchased. This leads me to believe that OFAC had this information all along and their strategy was to see what action a target would take. Would the target of investigation come clean and fess up, in other words.

I have contacted one of the vendors targeted in this wave but have yet to receive a response back. At this point in time, there are two credible, plausible routes for specific customer/transaction amount/itemized products list. Once I firm up this information a little more, I will take the additional step of presenting what these hypotheses are.

Bottom line is that the actions have not let up. OFAC is not inclined to let things slide. The time window of purchases subject to scrutiny has in fact moved into 2006.

Wilkey
 
Thanks Wilkey. In the meantime, I will continue to enjoy my Padrons, Fuentes, ERDM, Padillas, Connies, etc. :)
 
Things have taken a turn for the worse.

1. Settlement amounts are going up.
2. Timeframe of alleged purchases now stretches from October 2002 through August 2006.
3. Prepenalty Notices are itemizing the exact identity of the merchandise purchased.

From the April 2007 OFAC report on enforcement actions:
One individual has agreed to a settlement totaling $820 for dealing in property in which Cuba or a Cuban national had an interest: Between January 2005 and December 2005, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

One individual has agreed to a settlement totaling $1,071.90 for dealing in property in which Cuba or a Cuban national had an interest: Between September 2004 and February 2005, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.
Click to expand...

From the May 2007 OFAC report on enforcement actions:
One individual has agreed to a settlement totaling $6,088.85 for allegedly dealing in property in which Cuba or a Cuban national had an interest: OFAC alleged that between September 2003 and August 2006, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC. The individual provided information to OFAC concerning additional purchases of Cuban-origin cigars.

One individual has agreed to a settlement totaling $1,261.00 for allegedly dealing in property in which Cuba or a Cuban national had an interest: In January 2006, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.
Click to expand...

From the June 2007 OFAC report on enforcement actions:
One individual has agreed to a settlement totaling $2,304.00 for allegedly dealing in property in which Cuba or a Cuban national had an interest: In January, March, April, June, November, December 2005 and March 2006, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

One individual has agreed to a settlement totaling $1,311.00 for allegedly dealing in property in which Cuba or a Cuban national had an interest: In December 2004, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.

One individual was assessed a penalty totaling $856.00 for allegedly dealing in property in which Cuba or a Cuban national had an interest. On or about October 4, 2002, July 10, and November 3, 2003, the individual purchased Cuban-origin cigars offered for sale on the Internet. The individual did not voluntarily disclose this matter to OFAC.
Click to expand...

Wilkey
 
This may have been answered before in the thread, but I was wondering if it is of any signifigance that they differentiate between "One individual has agreed to a settlement totaling..." and "One individual was assessed a penalty totaling"
 
drew_goring said:
This may have been answered before in the thread, but I was wondering if it is of any signifigance that they differentiate between "One individual has agreed to a settlement totaling..." and "One individual was assessed a penalty totaling"
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From my reading of the OFAC documents, it seems as if "penalty" means the person simply paid the fine listed in the Prepenalty notice. A "settlement" suggests that the individual communicated with OFAC to get the fine down from the initial amount. If this is an accurate reading, it's even more troubling since it would mean the $6,088 settlement was initially larger.

grateful1 said:
Wilkey,
That info is right on the OFAC website....right?
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Yes. This is all public information provided through the equivalent of press releases. I suppose they are having the intended effect.

Wilkey
 
My read of this is, that the 2006 dates appear to be self-disclosed, after receiving the letter. The May 07 listing indeed points out the cooperation.

These numbers sure make it look like cooperation can cost you.
 
FINAL UPDATE Late June 13, 2007
Guys,

Here is an article that appeared today on the CigarCyclopedia website. I am looking for the original article in a Los Angeles paper and will post that reference when I find it.

It is out in the open now and although there really wasn't anything reported that was not known before, I believe this public reporting puts an end to the usefulness of this thread. In a sense, we are now well and truly on our own. The only defense against receiving a letter was not to have purchased Cuban cigars in the time frame from the present extending back to at least 2002. None of us can change the past, but we can make decisions moving ahead.

Thank you to all who shared their ideas and experiences. I created this thread out of a sense of responsibility to my fellow cigar smokers and you have all reinforced for me again and again that that dedication is well deserved.

Carry on, play it safe, and never stop lighting up...your favorite Nicaraguan, Dominican, Honduran, etc...

Very best,
Wilkey

Los Angeles, June 13 – The government office responsible for monitoring violations of the U.S. trade embargo against Cuba has U.S. cigar smokers in its sights.

The Office of Foreign Assets Control (OFAC), a department of the U.S. Treasury, has handed out seven penalties so far this year with fines totaling $13,712.75 to Americans who “purchased Cuban-origin cigars offered for sale on the Internet.”

That’s a high level of enforcement compared to past years. For example, in all of 2006, OFAC handed out only two such penalties, and late in the year, with fines totaling $2,189. Most of the penalties issued by OFAC to individuals prior to the fourth quarter of last year were for unauthorized travel to Cuba or the sale of goods or services by companies without an OFAC license to do so.

In the cigar cases handed down so far this year, penalties ranged from a low of $820 to a high of $6,088.85 for violations ranging from a single case to multiple instances:

• April: a fine of $820.00 for an individual who bought Cuban cigars on the Internet in 2005.

• April: a fine of $1,071.90 for an individual who bought cigars in 2004 and 2005.

• May: a fine of $6,088.85 for an individual who bought cigars from 2003-06.

• May: a fine of $1,261.00 for an individual who bought cigars in 2006.

• June: a fine of $856.00 for an individual who bought cigars in 2002-03.

• June: a fine of $1,311.00 for an individual who bought cigars in 2004.

• June: a fine of $2,304.00 for an individual who bought cigars in 2005-06.

It’s worth noticing that as OFAC acquires records of transactions going back as far as five years, it is imposing fines, no doubt based on the number and size of the violations. In addition, OFAC has sent letters to smokers with U.S. addresses who are suspected of being customers of Internet sites which ship Havana cigars into the United States. So while the practice continues, the U.S. Government has increased its vigilance of the Cuban cigar trade into the U.S.

In case you had any doubts, the language of the current Cuban cigar regulations, issued in September 2004, read:

“There is now an across the board ban on the importation into the United States of Cuban-origin cigars and other Cuban-origin tobacco products, as well as most other products of Cuban origin. This prohibition extends to such products acquired in Cuba, irrespective of whether a traveler is licensed by OFAC to engage in Cuba travel-related transactions, and to such products acquired in third countries by any U.S. traveler, including purchases at duty free shops. Importation of these Cuban goods is prohibited whether the goods are purchased directly by the importer or given to the importer as a gift. Similarly, the import ban extends to Cuban-origin tobacco products offered for sale over the Internet or through the catalog mail purchases.”

Is OFAC seriously impeding the flow of Cuban cigars into the U.S. with these penalties? Probably not. But forewarned is forearmed: OFAC is watching you.
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Once again, THANK YOU Wilkey, for providing us with information and analysis regarindg this issue. It is truly appreciated.
 
It seems that the article could have been written by someone who read this thread.

It still does not say HOW they are obtaining the information.

Thanks for your work, Wilkey!
 
grateful1 said:
It seems that the article could have been written by someone who read this thread.

It still does not say HOW they are obtaining the information.

Thanks for your work, Wilkey!
Click to expand...


I agree with what Grateful1 has said. The article seems to be a broad generalization of the facts and a general "heads up" tone associated with the reporting.

Furthermore, there were a couple of loose ends not tied up (I believe Wilkey was in the process of finding out some answers):

1) what order are the OFAC folks using to send letters. For example, there are various offenders who have been caught between the years of 2002 and 2006, however the list shows inconsistencies in when those penalized purchased their cigars.

2) as stated above, HOW did OFAC come upon these transaction lists? This seems to be the most mysterious aspect of all the occurrences to date. Was it from third party payment institutions?

I suppose more information could be gleaned from hard work, but in the end I'd like to personally thank Wilkey for all that he's personally done on this most informative thread.

Darren
 
Wilkey,

Thanks for your diligence in this matter. With a family, two kids, your continuing education and job, I wonder if you actually sleep. :)

One question, do these fines continue to relate to vendors in the Hong Kong market or has OFAC started to move to other sections of the globe?
 
PTownshend said:
grateful1 said:
It seems that the article could have been written by someone who read this thread.

It still does not say HOW they are obtaining the information.

Thanks for your work, Wilkey!
Click to expand...


I agree with what Grateful1 has said. The article seems to be a broad generalization of the facts and a general "heads up" tone associated with the reporting.

Furthermore, there were a couple of loose ends not tied up (I believe Wilkey was in the process of finding out some answers):

1) what order are the OFAC folks using to send letters. For example, there are various offenders who have been caught between the years of 2002 and 2006, however the list shows inconsistencies in when those penalized purchased their cigars.

2) as stated above, HOW did OFAC come upon these transaction lists? This seems to be the most mysterious aspect of all the occurrences to date. Was it from third party payment institutions?

I suppose more information could be gleaned from hard work, but in the end I'd like to personally thank Wilkey for all that he's personally done on this most informative thread.

Darren
Click to expand...
Gary,
I agree.

Darren,
There are a few fundamental questions that remain unanswered. You've identified some of the hottest. Rest assured, I won't stop digging. I'm simply saying that unless and until I learn anything significant, this thread will remain as it is. We're reverting to a condition of greater discretion.

Wilkey
 
BobbyRitz said:
Wilkey,

Thanks for your diligence in this matter. With a family, two kids, your continuing education and job, I wonder if you actually sleep. :)

One question, do these fines continue to relate to vendors in the Hong Kong market or has OFAC started to move to other sections of the globe?
Click to expand...
4-5 hours a night, thus my recent zombification.

To answer your question, there is no indication that the world region initially focused on has changed.

Wilkey
 
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