Following a U.S. Department of Commerce investigation into an alleged sanctions evasion scheme, the U.S. District Court for the District of Columbia recently granted the forfeiture of roughly $17 million in funds from Al-Naser Airlines, a private Iraqi airline that allegedly acted as a front company for Mahan Air (aka Mahan Airways), a U.S- designated entity. Al-Naser is accused of spending more than $75 million, between 2014 and 2015, to help Mahan Air circumvent a temporary denial order (“TDO”) imposed by the Commerce Department’s Export Enforcement Office and U.S. sanctions imposed by the U.S. Treasury’s Office of Foreign Assets Control (“OFAC”) for Mahan Air’s alleged support of terrorist groups. The TDO prohibited Mahan Air, and parties acting on its behalf, from participating in transactions involving U.S.-origin items, including aircrafts and other aviation-related exports, while OFAC sanctions similarly prohibited Mahan Air from obtaining any U.S.-origin exports.
On March 15, 2024, the court granted federal prosecutors’ request to forfeit several payments that Al-Naser had allegedly laundered as part of its scheme to procure certain aircraft for Mahan Air – funds that the court determined were derived from proceeds that can be traced to violations of multiple U.S. statutes, including the International Emergency Economic Powers Act (“IEEPA”), the money laundering statute, and the smuggling statute. The seized payments include approximately $3,435,935 of Funds from Al-Naser Airlines and $13.6 million of Funds in the Name of German Aviation Capital for the Benefit of Al-Naser Airlines. According to the Order, approximately $6 million in funds will be returned to German Aviation Capital because the company was able to prove its interest in the funds, in response to the U.S. government’s public notice of forfeiture.