A New York federal court last week entered a judgment of forfeiture regarding the M/T Courageous, a 2,734-ton oil-products tanker used to make illicit deliveries of petroleum products through ship-to-ship transfers with vessels flagged in the Democratic People’s Republic of Korea (DPRK or North Korea) and direct shipments to the North Korean port of Nampo.
According to court documents, payments to purchase the Courageous, to obtain oil for supplying to North Korea using the Courageous, and to procure necessary services for the Courageous were made using U.S. dollars through unwitting U.S. banks, in violation of U.S. law and United Nations Security Council resolutions. On April 23, 2021, a civil forfeiture action was filed against M/T Courageous. Criminal charges of conspiracy to evade economic sanctions on the DPRK and money laundering conspiracy are pending against the alleged owner and operator of the Courageous, Kwek Kee Seng, a Singaporean national who remains at large.
Pursuant to the International Emergency Economic Powers Act (IEEPA) and the North Korea Sanctions and Policy Enhancement Act of 2016 (NKSPEA), the DPRK and individuals or entities that the Department of the Treasury, Office of Foreign Assets Control (OFAC), has determined are involved in the facilitation of proliferation of weapons of mass destruction are prohibited from engaging in transactions with U.S. persons or using the U.S. financial system. The United Nations Security Council has similarly imposed economic sanctions on North Korea, prohibiting among other things the conduct of ship-to-ship transfers with DPRK-flagged vessels and the provision of petroleum products to the DPRK.
According to documents filed in the civil forfeiture action and allegations contained in the criminal complaint, Kwek and his co-conspirators engaged in an extensive scheme to evade these U.S. and U.N. sanctions by using vessels under their control to covertly transport fuel to North Korea, thereby providing a critical resource for the North Korean government and for DPRK-based companies. One of those vessels was M/T Courageous — formerly known as the Sea Prima — which was purchased by Kwek through front companies to further the scheme to evade sanctions and launder money. Among other things, for a four-month period between August and December 2019, M/T Courageous illicitly stopped transmitting information regarding its location, during which time satellite imagery shows that M/T Courageous both engaged in a ship-to-ship transfer of more than $1.5 million worth of oil to a North Korean ship, the Saebyol, which had been designated by OFAC, and traveled to the North Korean port of Nampo. Kwek and his co-conspirators allegedly took additional steps to hide the scheme by (1) operating a series of shell companies, (2) lying to international shipping authorities about M/T Courageous’s dealings with North Korea, and (3) falsely identifying M/T Courageous as another ship in order to evade detection.
In furtherance of the scheme, Kwek and his co-conspirators arranged for a variety of payments denominated in U.S. dollars that were processed through U.S.-based correspondent accounts to purchase oil – including more than $1.5 million to purchase the oil that was transferred to the Saebyol, over $500,000 to buy M/T Courageous, and thousands more dollars to procure necessary services for M/T Courageous and another vessel, including registration fees, ship materials, and salary payments for crewmembers. Kwek and his co-conspirators overseas sought to conceal these sanctions-evading transactions by, among other things, using front companies to disguise the nature of the transactions; disguising location information for vessels carrying illicit shipments; and conducting ship-to-ship fuel transfers on the open sea in an attempt to hide their counterparties, such as the Saebyol.
Cambodian authorities seized M/T Courageous in March 2020 and held the vessel pursuant to a U.S. seizure warrant, which was issued under seal on April 2, 2020. On April 23, 2021, the U.S. Attorney’s Office for the Southern District of New York filed a civil forfeiture complaint against M/T Courageous and the case was subsequently assigned to District Judge Hon. Valerie Caproni, who issued today’s judgment of forfeiture.
Acting Assistant Attorney General Mark J. Lesko of the Justice Department’s National Security Division, U.S. Attorney Audrey Strauss for the Southern District of New York and Assistant Director-in-Charge Michael J. Driscoll for the FBI’s New York Field Office made the announcement.
The FBI’s New York Field Office, Counterintelligence Division, is investigating the case, with valuable assistance provided by the FBI Legal Attaché Office in Phnom Penh, Cambodia; the Justice Department’s National Security Division, Counterintelligence and Export Control Section, Money Laundering and Asset Recovery Section’s Program Operations Unit, and Office of International Affairs; the U.S. Coast Guard; the Cambodian Ministry of Justice; and the Cambodian National Police.
Assistant U.S. Attorneys David W. Denton Jr. and Kimberly J. Ravener for the Southern District of New York and Trial Attorney Matthew McKenzie of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.
An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
