Treasury Announces Intent to Sell Warrant Positions in Public Dutch Auctions

The US Department of the Treasury today announced its intention to dispose of several warrant positions received in consideration for investments made under the Capital Purchase Program (CPP).  Over the next month, Treasury intends to conduct auctions to sell its warrant positions in JP Morgan Chase & Co., Capital One Financial Corporation, and TCF Financial Corporation. 

Each of these banks has fully repurchased Treasury's preferred stock investment.  The warrant sales anticipated over the next month, if consummated in full, would represent Treasury's disposition of its remaining holdings in these companies.  The proceeds of these sales will provide an additional return to the American taxpayer from Treasury's investments in these banks beyond the dividend payments it received on the related preferred stock. 

Treasury intends to sell the warrants through registered public offerings.  These offerings will be executed using a modified Dutch auction methodology that establishes a market price by allowing investors to submit bids at specified increments above a minimum price specified for each auction.    More detailed guidance for the auctions will be available in prospectuses that will be filed by the warrant issuers prior to the opening of each auction.  Treasury expects to conduct similar auctions in the future for other warrant positions it holds in banks that have repaid CPP investments.

Deutsche Bank Securities Inc. (Deutsche Bank) has been retained as the auction agent and sole bookrunning manager for these offerings.  In this role, Deutsche Bank will accept bids and identify a clearing price for each auction.  If investors do not have an account with Deutsche Bank, they may be able to participate in the auction through their own brokers, as a network of several dozen brokerage firms will be invited to aggregate suitable client orders and submit them to Deutsche Bank. The warrants are complex securities that are not suitable for all investors.

Prospective investors will be able to obtain copies of the prospectuses relating to these securities, when available, from Deutsche Bank Securities Inc., Prospectus Department, Harborside Financial Center, 100 Plaza One, Jersey City, New Jersey 07311-3988, telephone: 1-800-503-4611.

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November 18, 2009
TG-411

Treasury, SBA Host Small Business Financing Forum

To view Secretary Geithner's remarks, as prepared for delivery, click here.
To view biographies of the small business owners in attendance, click here. 

Today's Small Business Financing Forum marks another step in the Obama Administration's commitment to ensuring small businesses can play a crucial role in leading job growth and recovery. As they search for the best ideas and strategies to bring to the President, Treasury Secretary Tim Geithner and Small Business Administrator Karen Mills will build on the measures the Obama Administration has already taken to help small businesses expand through increased access to credit and new tax cuts as part of the American Recovery and Reinvestment Act. 
 

I.       Administration Efforts to Improve Access to Credit

• Since the Transition, Treasury and SBA Have Worked Together to Increase Access to Credit for Small Businesses:
  • Recovery Act Provisions Raised Loan Guarantees and Reduced Fees for SBA Programs: As part of the Recovery Act, the Administration increased the maximum guarantee on 7(a) loans to 90 percent and temporarily eliminated borrower fees for the 7(a) program and both borrower and lender fees for 504 loans.
  • Treasury Worked With SBA to Introduce Programs to Unlock Secondary Markets: On March 16, Treasury and SBA announced a new initiative to make direct purchases of securities backed by 7(a) loans on the secondary market. In response to concerns that TALF as originally designed would not have any impact on SBA secondary markets, Treasury and SBA also worked with the Federal Reserve to improve the terms under the program for securities backed by SBA-guaranteed loans.

o   Additional SBA Efforts to Improve Access to Credit: SBA has taken other efforts to increase access to credit, including:

• Expanding 7(a) Loan Eligibility to More Than 70,000 Businesses Through Alternate Size Standards
• Supporting $30 Million in Inventory Financing for Auto, RV and Boat Dealerships Under a New Dealer Floor Plan Financing Pilot Program
• Approving More Than 4,000 ARC Loans Totaling $130 Million to Viable Businesses
• SBA Weekly Loan Volume Is Up More Than 75 Percent Since the Beginning of the Year: Compared to the beginning of the year – before the Recovery Act provisions were implemented and the secondary market initiative was announced – average weekly SBA loan volume for the 7(a) and 504 programs is up 79 percent. Since February, more than 900 lenders have made SBA loans that had not done so since 2007.
• Secondary Markets Have Recovered: In January 2009, the total volume of loans settled from lenders to broker-dealers on the secondary market for SBA loans had fallen to just $85.9 million. From May to October, however, the average monthly volume settled to broker-dealers was $344 million – above pre-crisis levels. Market participants have publicly cited the TALF program – which has financed more than $1 billion in purchases of SBA securities – and the announcement of a secondary market purchase program under the Financial Stability Plan as helping to unfreeze the markets, providing lenders with the promise of increased liquidity if they make new loans.
• New Reporting Requirements for Small Business Lending: Since June, Treasury's monthly lending survey, which tracks the 22 largest institutions receiving TARP funds, has included data on small business lending, allowing the Administration to better monitor the impact of the Financial Stability Plan on small businesses. In addition, Treasury is working with the bank supervisors to require all banks to report their small business lending in their quarterly call reports, rather than simply once a year, beginning in the first quarter of 2010.
• Treasury and SBA Have Announced Steps to Go Further:

o   New Programs Under the Financial Stability Plan to Increase Small Business Lending: Last month, the President announced two new programs under the Financial Stability Plan designed to increase access to credit for small businesses. These programs –for  which Treasury is preparing final terms – will support institutions that do a disproportionate share of their lending to small businesses through:

• An initiative that provides lower-cost capital to community banks that submit a plan to increase small business lending
• A program to support Community Development Financial Institutions lending to small businesses in the hardest-hit rural and urban communities

o   Increasing the Cap on SBA Loans: The Administration has called for increasing the maximum size of 7(a) loans to $5 million and increasing the maximum 504 loan guarantee from $2 million to $5 million for standard borrowers and $4 million to $5.5 million for manufacturers. Increasing the maximum SBA loan size will allow more small businesses to get the credit they need to grow their businesses and hire additional workers.

II.    Cutting Taxes for Small Businesses

In its efforts to support an economic recovery, the Administration has enacted tax cuts for small businesses, providing them with a boost to their cash flow that can help them support an economic recovery:

• Extension of Enhanced Small Business Expensing:  The Recovery Act allows small businesses to immediately write off up to $250,000 of qualified investment in 2009, providing an immediate tax incentive to invest and create jobs.  This provision is estimated to cut small business taxes by more than $1 billion in 2009 and 2010.
• Five-Year Carryback of Net Operating Losses: The Recovery Act allows small businesses to carry back 2008 net operating losses (NOLs) for up to five years, as opposed to two years under prior law. This longer carry back period gives small businesses that experienced losses in 2008 the ability to get immediate refunds of income taxes they paid in earlier years and is estimated to give back $4.7 billion to small businesses in 2009.  The unemployment insurance bill signed by the President on November 6 extended this provision by a year as part of a broader expansion of the provision to more businesses.
• Exclusion of Small Business Capital Gains: The Recovery Act encourages investment in small businesses by excluding from taxation 75 percent of the capital gains for investors in small businesses that hold their investments for five years.  The President's Budget proposes to completely eliminate the capital gains tax on this small business stock.
• Estimated Tax Payment Relief: The Recovery Act provides immediate tax relief for small businesses by reducing their liability for estimated tax payment by about $275 million in 2009.

III. Supporting Small Businesses Through Contracting Programs

• Recovery Act Contracts Are Getting Into The Hands Of Small Businesses: SBA is responsible for ensuring that 23 percent of all federal government contracts go to small businesses.  As of November 9, 2009, 26.7 percent of federal agency Recovery Act contracting dollars have gone into the hands of small businesses.
• The SBA Is Taking Steps To Support Disadvantaged Small Businesses In Government Contracting: Vice President Biden, SBA and the Department of Commerce are co-leading a Stakeholder Outreach Initiative to promote Recovery Act contracting outreach for small and disadvantaged businesses.

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President Obama establishes Interagency Financial
Fraud Enforcement Task Force

To view Secretary Geithner's remarks, as prepared for delivery, click here.

         WASHINGTON – Attorney General Eric Holder, Treasury Secretary Tim Geithner, Housing and Urban Development (HUD) Secretary Shaun Donovan, and Securities and Exchange Commission (SEC) Chairwoman Mary Schapiro today announced that President Barack Obama has established by Executive Order an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime.  The Department of Justice will lead the task force and the Department of Treasury, HUD and the SEC will serve on the steering committee.  The task force's leadership, along with representatives from a broad range of federal agencies, regulatory authorities and inspectors general, will work with state and local partners to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, address discrimination in the lending and financial markets and recover proceeds for victims.

The task force, which replaces the Corporate Fraud Task Force established in 2002, will build upon efforts already underway to combat mortgage, securities and corporate fraud by increasing coordination and fully utilizing the resources and expertise of the government's law enforcement and regulatory apparatus.  The attorney general will convene the first meeting of the Task Force in the next 30 days.

"This task force's mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening," Attorney General Eric Holder said.  "We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives."

"Through the Financial Fraud Task Force, we are making clear that the Obama Administration is going to act aggressively and proactively in a coordinated effort to combat financial fraud," said Treasury Secretary Geithner.  "It's not enough to prosecute fraud only after it's become widespread.  We can't wait for problems to peak before we respond. We're seeking comprehensive financial reform to create a more stable, safer financial system and stepping up our enforcement strategy.  Doing so will help to stop emerging trends in financial fraud before they're able to cause extensive, system-wide damage to our economy."

"To give American families the protection and peace-of-mind they need, it's clear the federal response must be as interconnected and multi-dimensional as the challenges we face," said HUD Secretary Shaun Donovan.  "No one agency is going to be able to stop financial fraud. This Task force will build upon many of the inter-agency collaborations already underway to protect consumers and restore confidence."

"Many financial frauds are complicated puzzles that require painstaking efforts to piece together.  By formally coordinating our efforts, we will be better able to identify the pieces, assemble the puzzle and put an end to the fraud," said SEC Chairman Mary Schapiro.

The task force is composed of senior-level officials from the following departments, agencies and offices:

a.     the Department of Justice;
b.     the Department of the Treasury;
c.     the Department of Commerce;
d.     the Department of Labor;
e.     the Department of Housing and Urban Development;
f.      the Department of Education;
g.     the Department of Homeland Security;
h.     the Securities and Exchange Commission;
i.      the Commodity Futures Trading Commission;
j.      the Federal Trade Commission;
k.     the Federal Deposit Insurance Corporation;
l.      the Board of Governors of the Federal Reserve System;
m.    the Federal Housing Finance Agency;
n.     the Office of Thrift Supervision;
o.     the Office of the Comptroller of the Currency;
p.     the Small Business Administration;
q.     the Federal Bureau of Investigation;
r.      the Social Security Administration;
s.     the Internal Revenue Service, Criminal Investigations;
t.      the Financial Crimes Enforcement Network;
u.     the United States Postal Inspection Service;
v.     the United States Secret Service;
w.    the United States Immigration and Customs Enforcement;
x.     relevant Offices of Inspectors General and related Federal entities, including without limitation the Office of the Inspector General for the Department of Housing and Urban Development, the Recovery Accountability and Transparency Board and the Office of the Special Inspector General for the Troubled Asset Relief Program; and
y.     such other executive branch departments, agencies, or offices as the President may, from time to time, designate or that the Attorney General may invite.

In addition, the attorney general will invite representatives of the National Association of Attorneys General, the National District Attorneys Association and other state, local, tribal and territorial representatives to participate in the task force through its Enforcement Committee.

# # #

November 17, 2009
tg407

Treasury International Capital Data For September

WASHINGTON – The U.S. Department of the Treasury today released Treasury International Capital (TIC) data for September 2009. The next release, which will report on data for October 2009, is scheduled for December 15, 2009.

Net foreign purchases of long-term securities were $40.7 billion.

• Net foreign purchases of long-term U.S. securities were $55.7 billion. Of this, net purchases by private foreign investors were $44.8 billion, and net purchases by foreign official institutions were $10.9 billion.
• U.S. residents purchased a net $15.0 billion of long-term foreign securities.

Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $31.7 billion.

Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities decreased $11.8 billion. Foreign holdings of Treasury bills decreased $0.3 billion.

Banks' own net dollar-denominated liabilities to foreign residents increased $113.7 billion.

Monthly net TIC flows were $133.5 billion. Of this, net foreign private flows were $148.1 billion, and net foreign official flows were negative $14.6 billion.

Complete data are available on the Treasury website at www.treas.gov/tic.

Note: Beginning with the press release of September 16, 2009, the data for lines 22-32, and especially line 29, include data from a number of institutions previously reporting only quarterly as nonbanks, but which are now reporting monthly as banking entities. This change in reporter classification affects data going back to October 2008.

REPORTS

• Treasury International Capital Data For September

November 10, 2009
TG-401

Treasury Designates Financial Network
Tied to the Rodriguez Orejuela Family as
Specially Designated Narcotics Traffickers

WASHINGTON – The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated a network of 14 individuals and 25 companies in Colombia, Spain and the Netherlands as Specially Designated Narcotics Traffickers (SDNTs) for supporting the network of Gilberto Rodriguez Orejuela, leader of the Cali Cartel.  Hernando Mejia Uribe, a Colombian national, is the lynchpin of this network of Colombians and Spaniards who collaborated to hide assets belonging to the previously designated family members of Cali Cartel leaders Miguel and Gilberto Rodriguez Orejuela. Today's action is being taken pursuant to Executive Order 12978, which freezes any assets the designated entities may have that are subject to U.S. jurisdiction and prohibits all financial and commercial transactions by any U.S. person with those entities.

Hernando Mejia Uribe is a long-time associate of Miguel and Gilberto Rodriguez Orejuela and controlled a number of Colombian properties belonging to previously designated Rodriguez Orejuela family members.  In February 2009, Mejia Uribe was arrested by Colombian authorities, along with Gilberto Rodriguez Orejuela's children, Humberto, Jaime, and Maria Alexandra Rodriguez Mondragon, on charges of money laundering and acting as a front person for the Rodriguez Orejuela family.

"Today's designation of a previously hidden, multi-national network demonstrates the great lengths that the Rodriquez Orejuela family has gone to hide their assets from authorities – and OFAC's commitment for almost fifteen years to expose and block assets from their drug trafficking and money laundering activities in support the Government of Columbia's counter-narcotics efforts," said OFAC Director Adam J. Szubin.

Hernando Mejia Uribe owns or controls a number of Colombian companies, principally located in Cartagena, Colombia, including:  Inversiones El Progreso S.A., Euromar Caribe S.A., and Inversiones Lamarc S.A.  Mejia Uribe's network also includes his wife, Maria Emma Botero Aristizabal; lawyers Luis Carlos Gamboa Morales and Luis Gonzalo Baena Cardenas; and accountants Inmaculada Diaz Chacon and Sixto Parra Millares.  Through the companies Inversiones El Progreso S.A. and Under Par Real Estate S.L., the Mejia Uribe network is involved in real estate projects in Cartagena, Colombia with the two Spanish developers Laureano Ramos Rodriguez and Marco Jose Fernandez Montero   Additionally, the Spanish developers control a number of companies including: Under Par Real Estate S.L., Auriga Interlexus S.L., and Servicios De Control Integral De Obras S.L. in Spain and Colombia Real Estate Development B.V. and Arawak Holding B.V. in the Netherlands.  The individuals and entities are all targeted in today's action.

In 2006, Miguel and Gilberto Rodriguez Orejuela pleaded guilty to drug trafficking charges in the U.S. District Court for the Southern District of Florida and money laundering charges in the U.S. District Court for the Southern District of New York.  In connection with Miguel and Gilberto Rodriguez Orejuelas' guilty pleas, 28 of their family members who were previously designated as SDNTs entered into an agreement with the U.S. Department of Justice and the U.S. Department of the Treasury in September 2006. 

As part of this agreement, the 28 family members were obligated to identify all "forfeitable property" financed in whole or in part with narcotics proceeds and to identify all other assets of any nature whatsoever that are owned or controlled by any family member who is a party to the agreement.  The Hernando Mejia Uribe financial network identified today worked to conceal assets that were not previously identified by several Rodriguez Orejuela family members who are designated as SDNTs by OFAC.

Today's designation is part of the ongoing interagency effort by the Departments of the Treasury, Justice, State and Homeland Security to implement Executive Order 12978 which applies financial sanctions to Colombia's drug cartels.

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REPORTS

• Rodriguez Orejuela Financial Network

November 10, 2009
TG-400

Obama Administration Releases New Date
On Making Home Affordable Program,
Includes State-Specific Modifications to Date

WASHINGTON – Today, the Obama Administration released the next monthly report for the Making Home Affordable (MHA) loan modification program. As part of an ongoing commitment to transparency, the report includes for the first time state-specific trial modification numbers. With more than 650,000 modifications under way across the country, the program is on track to meet its goals over the next several years.

"As this report demonstrates, struggling homeowners in every state now benefit from reduced monthly mortgage payments and have an opportunity to stay in their homes," said Treasury Assistant Secretary Michael S. Barr.  "The program is having a pronounced impact in areas particularly hard hit by the housing crisis. We're reaching borrowers at a larger scale than any other modification program to date, but there is still much more work to be done."

###

REPORTS

• Monthly MHA Report

Treasury Announcement Regarding the Capital Assistance Program

Only one institution, GMAC, has indicated a need for capital from Treasury and their capital need is expected to be lower than anticipated at the time the SCAP results were announced.  This institution is expected to access the Troubled Asset Relief Program (TARP) Automotive Industry Financing Program to meet its capital need, and is in discussions with the Treasury on the structure of its investment.

"In January of this year, there was very little confidence in the financial system. Financial institutions could not borrow without guarantees provided by the government, and we faced the real prospect of having to use taxpayer resources to recapitalize the banks," said Treasury Secretary Tim Geithner.  "Today, banks are repaying the taxpayers with interest and credit is coming back, but we need to reinforce that improvement and ensure that small and medium sized businesses can borrow to create jobs on Main Street."

The results of the stress tests -- the most comprehensive, forward looking review of our nation's largest banks ever undertaken -- were released publicly by the Federal banking supervisors on May 7, 2009. These tests were intended to ensure that banks maintained a sufficient capital cushion to continue lending even in a more adverse economic scenario than was expected at the time. 

In January, there was risk that the taxpayer would be called upon to provide up to the $75 billion of capital augmentation required by the SCAP. The President's Budget for 2010 included a placeholder for an additional $750 billion of funding to supplement the existing authority under the TARP. In the subsequent six months, banks successfully raised $80 billion in common equity, the highest quality capital, from private sources and $73 billion of TARP investments have been repaid. The President has also subsequently removed the placeholder for additional support for the financial system from the budget for 2010. On top of the repayments, Treasury has received $6.8 billion in dividend income and $2.9 billion in warrant related income. It anticipates another $50 billion in repayments over the next 12-18 months.  On the whole, Treasury is borrowing less and taxpayer support for the financial sector has declined materially, because banks are meeting their needs in the private markets and repaying the government.

Despite this important progress, Treasury remains focused on fostering a sustainable recovery and ensuring that remaining resources in the TARP program are devoted making credit available to businesses and households. Progress in these areas has been slower than the in the financial markets more broadly, and there is more work to be done.

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Treasury Department Announces Additional initial closing of
Legacy Securities Public Private Investment Fund

WASHINGTON -- The U.S. Department of the Treasury today announced that RLJ Western Asset Management, LP, has completed an initial closing of a Public-Private Investment Fund (PPIF) established under the Legacy Securities Public-Private Investment Program (PPIP).  RLJ Western Asset Management, LP, is a minority-owned partnership between The RLJ Companies, LLC and Western Asset Management.

To date, seven PPIFs have completed initial closings on approximately $4.09 billion of private sector equity capital which has been matched 100 percent by Treasury, representing $8.18 billion of total equity capital.  Treasury has also provided $8.18 billion of debt capital, representing $16.36 billion of total purchasing power for all PPIFs.

Treasury expects initial closings for the remaining two PPIFs to be announced soon.  Following an initial closing, each PPIF has the opportunity to conduct additional closings over the following six months to receive matching Treasury equity and debt financing, with a total Treasury equity and debt investment in all PPIFs equal to $30 billion ($40 billion including private investor capital).  Treasury will continue to provide updates as subsequent PPIF closings occur.

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Treasury Designates Bank Mellat Subsidiary and
Chairman Under Proliferation Authority

WASHINGTON – The U.S. Department of the Treasury today designated First East Export Bank (FEEB), a Bank Mellat subsidiary located in Malaysia, under Executive Order (E.O.) 13382 for being owned or controlled by Bank Mellat. Treasury also designated the Chairman of Bank Mellat, Ali Divandari, for acting on behalf of Bank Mellat. E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them.

Iran's state-owned Bank Mellat has facilitated the movement of millions of dollars for Iran's nuclear program and was designated under E.O. 13382 in October 2007 for its role in providing financial services to the Atomic Energy Organization of Iran (AEOI) and Novin Energy Company (Novin).  Specifically, Bank Mellat has serviced and maintained AEOI bank accounts, mainly through Novin, which acted as AEOI's financial conduit.  On October 12, 2009, the United Kingdom also took financial action against Bank Mellat for its role in Iran's nuclear program. As Chairman of Bank Mellat, Ali Divandari plays a significant role in Bank Mellat's activities and decision-making processes.

"Today's action will help to protect the integrity of the U.S. financial system and ensure that banks and regulators around the world are aware that First East Export Bank is in fact an arm of Bank Mellat, an institution that has supported Iran's nuclear program in violation of UN Security Council resolutions," said Under Secretary for Terrorism and Financial Intelligence Stuart Levey.

AEOI and Novin were previously sanctioned by the U.S. government under E.O. 13382 and by the UN Security Council under Resolutions 1737 and 1747, respectively.  AEOI, which reports directly to the Iranian president, is the main Iranian government organization for research and development activities in the field of nuclear technology. Novin, an AEOI front company, has transferred millions of dollars on behalf of AEOI to entities associated with Iran's nuclear program.

Bank Mellat received a license from Malaysian financial authorities to establish FEEB in Labuan, Malaysia in late 2008, and the Malaysian government publicly listed FEEB as an official offshore bank in April 2009.  FEEB is the first overseas subsidiary of an Iranian bank to open for business since the Financial Action Task Force (FATF), the world's premier standard-setting body for combating money laundering and terrorist financing, called in February 2009 for all jurisdictions to impose countermeasures to protect against the risks posed by Iran to the international financial system.  FATF also advised jurisdictions at that time to take these risks into account when considering requests by Iranian financial institutions to open branches and subsidiaries.

Today's actions are consistent with United Nations Security Council Resolutions on Iran, including UNSCR 1803, which calls on Member States to exercise vigilance over activities between their financial institutions and all banks domiciled in Iran, and their branches and subsidiaries abroad, in order to avoid such activities contributing to the proliferation of sensitive nuclear activities, or to the development of nuclear weapon delivery systems.

Identifying Information

Entity:             First East Export Bank, P.L.C. Unit Level 10 (B1), Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 WP Labuan, Malaysia; Business Registration Number LL06889 [NPWMD]

Individual:      Ali Divandari, c/o Bank Mellat, Tehran, Iran; DOB: 1 July 1967; POB Ghoochan, Khorasan, Iran; Nationality: Iranian [NPWMD]

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Treasury Removes Three Former Terrorist
Supporters from Specially Designated Nationals List

WASHINGTON – The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today removed Patricia Rosa Vinck, Barakaat International, and Barakaat International Foundation from its Specially Designated Nationals List, having found that Vinck and the two entities no longer present a significant threat of supporting terrorism.  Today's action was taken in conjunction with a removal of the three names from the United Nations' 1267 Sanctions Committee (U.N. 1267 Committee) Consolidated List of individuals and entities subject to U.N. sanctions measures. 

"The U.S. Government is actively supporting the comprehensive review underway at the U.N. 1267 Committee to ensure the efficacy, accuracy, and fairness of this vital sanctions regime," said OFAC Director Adam J. Szubin. "We are reviewing the evidentiary records for hundreds of listings – advocating for continued preventative sanctions against those who pose a significant threat of supporting terrorism and removal of those who do not." 

Vinck, Barakaat International, and Barakaat International Foundation were all designated by the Treasury Department under Executive Order 13224 and by the U.N. 1267 Committee.   The Treasury Department and the United Nations designated Vinck in January 2003 and the two Barakaat entities in November 2001.

Vinck is the wife of Nabil Abdul Salam Sayadi, who headed the Belgium office of the Global Relief Foundation (GRF), an organization designated in October 2002 by the United States and the United Nations for its support to al Qaida.  Vinck served as the secretary of GRF's Belgium office and facilitated GRF's activities.  Following U.S. and U.N. sanctions against her, Vinck ceased her activities on behalf of GRF.

The Barakaat organizations were part of a financial conglomerate operating in 40 countries around the world that facilitated the financing and operations of al Qaida and other terrorist organizations.  The U.S. and U.N. sanctions against these entities assisted the global effort to prevent them from routing funds to al Qaida and other terrorist groups, and the two organizations are no longer operating.  Other designated entities and individuals related to the Barakaat conglomerate remain on the U.S. and U.N. sanctions lists.

The U.N. 1267 Committee is currently implementing a number of procedural and other measures called for by U.N. Security Council Resolution 1822, adopted in June 2008, to improve the effectiveness and fairness of U.N. sanctions.  These measures include a comprehensive review of the approximately 500 names on the U.N. 1267 Committee's Consolidated List to be completed by June 2010.  The resolution also mandates the establishment and posting on the U.N. 1267 Committee's website of narrative summaries of reasons for the listing of all individuals and entities on the Consolidated List, and updates to the U.N. 1267 Committee's listing and delisting procedures.  The United States strongly supports and is participating vigorously in these efforts.

More information about the activities of the U.N. 1267 Committee, including the Consolidated List and corresponding narrative summaries, can be found on the U.N. 1267 Committee's website at www.un.org/sc/committees/1267.

Detailed information about Treasury's anti-terrorism sanctions program and the Specially Designated Nationals List are provided on OFAC's website at www.treas.gov/ofac.

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November 2, 2009
TG-341

Treasury Announces Marketable Borrowing Estimates

Washington, D.C. -- The U.S. Department of the Treasury today announced its current estimates of marketable borrowing for the October – December 2009 and the January – March 2010 quarters:

• During the October – December quarter, Treasury expects to issue $276 billion in net marketable debt, assuming an end-of-December cash balance of $85 billion, which includes $15 billion for the Supplementary Financing Program (SFP).  The borrowing estimate is $209 billion lower than announced in July 2009.  The decrease in borrowing is primarily related to cash balance adjustments related to the SFP, and lower outlays offset partially by lower receipts.
• During the January - March quarter, Treasury expects to issue $478 billion in net marketable debt, assuming an end-of-March cash balance of $45 billion, which includes $15 billion for the SFP.
• These estimates do not include any incremental borrowing needs that would result from a potential increase in issuance under the SFP.

During the July – September 2009 quarter, Treasury issued $393 billion in net marketable debt, finishing the quarter with a cash balance of $275 billion, of which $165 billion was attributable to the SFP.  In July, Treasury had estimated $406 billion in marketable borrowing for the quarter, assuming an end-of-September cash balance of $270 billion.  The decrease in borrowing was primarily a result of lower outlays.

Additional financing details relating to Treasury's Quarterly Refunding will be released at 9:00 a.m. on Wednesday, November 4.

###

REPORTS

• Sources and Uses

Report on U.S. Portfolio Holdings of Foreign Securities at End-Year 2008

WASHINGTON – The findings from an annual survey of U.S. portfolio holdings of foreign securities at year-end 2008 were released today and posted on the Treasury web site at (http://www.treas.gov/tic/fpis.html).

The survey was undertaken jointly by the U.S. Department of the Treasury, the Federal Reserve Bank of New York and the Board of Governors of the Federal Reserve System. 

A complementary survey measuring foreign portfolio holdings of U.S. securities also is conducted annually.  Data from the most recent such survey, which reports on securities held on June 30, 2009, are currently being processed. Preliminary results are expected to be reported on February 26, 2010.

Overall Results

The survey measured the value of U.S. portfolio holdings at year-end 2008 of approximately $4.3 trillion, with $2.7 trillion held in foreign equities, $1.3 trillion in foreign long-term debt securities (original term-to-maturity in excess of one year), and $0.3 trillion held in foreign short-term debt securities.  The previous such survey, conducted as of year-end 2007, measured U.S. portfolio holdings of $7.2 trillion, with $5.2 trillion held in foreign equities, $1.6 trillion in foreign long-term debt securities and $0.4 trillion held in foreign short-term debt securities. The decrease in the value of U.S. portfolio holdings between the two surveys primarily reflects valuation changes in foreign equities during 2008.

U.S. portfolio holdings of foreign securities by country at the end of 2008 were the largest for the United Kingdom ($647 billion), followed by Japan ($403 billion) and Canada ($378 billion) (see Table 2). These three countries attracted one-third of the total U.S. portfolio investment. 

The surveys are part of an internationally-coordinated effort under the auspices of the International Monetary Fund (IMF) to improve the measurement of portfolio asset holdings.

Table 1.  U.S. holdings of foreign securities, by type of security, as of survey dates[1]

(Billions of dollars)

U.S. Portfolio Investment by Country

Table 2.  U.S. holdings of foreign securities, by country of issuer and type of security, for the countries attracting the most U.S. portfolio investment, as of December 31, 2008

(Billions of dollars, except as noted)

* Greater than zero, but less than $500 million

Treasury Awards $5 Billion to Encourage Private
Sector Investments in Local Communities

New Markets Tax Credit Program Includes $1.5 Billion
Awarded Under the Recovery Act

CHICAGO-- As part of the Obama Administration's efforts to revive local economies, Treasury Secretary Tim Geithner today visited a job training center in Chicago benefiting from private sector investments made through the New Markets Tax Credit (NMTC) program. As part of his visit, Geithner announced $5 billion in NMTC awards, including $1.5 billion made possible through the American Recovery and Reinvestment Act (Recovery Act), for more than 90 organizations in communities around the country.

"We must rebuild our economy on a firmer foundation, one that equips our workers with the skills and education they need to compete," said Secretary Geithner.  "We must make sure that the advantages of this new, stronger economy are broadly shared. Too often, communities are left behind by economic growth.  The Recovery Act and the New Markets Tax Credit program help break this vicious cycle to ensure the benefits of growth reaches all corners of the country."

In May 2009, Secretary Geithner announced an initial $1.5 billion for NMTC awards under the Recovery Act, making today's announcement the second round of Recovery Act funding for the program.  The NMTC program, established by Congress in December 2000, permits individual and corporate taxpayers to receive a credit against federal income taxes for making equity investments in investment vehicles known as Community Development Entities (CDEs). The investor receives a credit totaling 39 percent of the cost of the investment. CDEs must apply to the Treasury's Community Development Financial Institutions (CDFI) Fund, which administers the NMTC program, to compete for this allocation authority.  The organizations receiving awards have identified principal service areas that will cover nearly every state in the country, as well the District of Columbia and Puerto Rico and plan to invest in renewable energy projects, charter schools, health care facilities, manufacturing companies, and retail centers.

Secretary Geithner's announcement was made today at the Greater West Town Community Development Project (GWTP) which provides job training and placement services to local residents, and educational and career development services targeted to former Chicago public high school drop-outs.  Through financing provided by the Chicago Development Fund, a New Markets Tax Credit award recipient in Chicago, the GWTP will convert a vacant industrial building into a new job training and education facility. The GWTP projects the development will create 30 construction jobs and 35 permanent jobs for employees. Secretary Geithner was joined at the site by Donna J. Gambrell, Director of Treasury's CDFI Fund; Mayor Richard Daley; Congressman Danny Davis (IL-7); and Bill Leavy, Director of the GWTP.

Said Gambrell: "The New Markets Tax Credit Program is promoting private-sector investment in our nation's communities and is helping to stimulate economic growth, create jobs and bringing new opportunities to Americans most in need.  This innovative federal program is helping to finance numerous businesses and real estate projects across the country--projects that may not have been financed if not for New Markets Tax Credits."

Said Leavy: "The major reason we are able to build this new job training facility is because we received a New Markets Tax Credit award.  This innovative federal program is supporting the expansion of employment and educational opportunities so desperately needed in communities like ours."

To date, over $14 billion of private-sector capital has been invested through the NMTC Program into urban and rural communities throughout the country. Data reported through 2008 shows that $12.7 billion dollars of NMTC capital has been invested into approximately 2,000 businesses and real estate developments. A complete list of the organizations selected and additional information on the NMTC Program can be found on the CDFI Fund's web site at: www.cdfifund.gov.

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Administration Calls on Congress to Approve Key Housing Measures

Treasury Allocates $2.2 Billion in Bonds for Renewable Energy Development

Clean Renewable Energy Bonds Awarded to More Than 800 Recipients Nationally

WASHINGTON--As part of the Obama Administration's efforts to spur renewable energy production, the U.S. Department of Treasury today announced the allocation of $2.2 billion in Clean Renewable Energy Bonds (CREBs) for 805 recipients across the country.  Funded by the Energy Improvement and Extension Act of 2008 and the American Recovery and Reinvestment Act of 2009 (Recovery Act), these energy bonds help government agencies, public power providers, and cooperative electric companies obtain lower cost financing for clean energy development projects.

"The Recovery Act's innovative bond programs provide communities around the country with financing to jump start important development projects," said Treasury Deputy Secretary Neal Wolin. "Because of the Clean Renewable Energy Bonds awards announced today, energy developers will be able to access lower cost credit to help make the shift to clean renewable energy production, benefitting both our economy and our environment."

The Treasury Department allocates bond authority to governmental agencies, public power providers, and cooperative electric companies involved in clean renewable energy development and production. The application deadline for the new CREBs allocations was August 4, 2009, with recipients being announced today.  These bonds function as tax credit bonds which allow investors to receive federal tax credits in lieu of the payment of a portion of the interest on the bond.  For CREBs, the federal tax credits will cover 70 percent of the interest on the bonds.

A complete list of recipients receiving awards of bond authority to issue CREBs can be found here.

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Statement from Treasury Secretary Geithner on
House and Senate Introduction of
Foreign Account Tax Compliance Act of 2009

WASHINGTON – The U.S. Department of the Treasury today released the following statement from Secretary Tim Geithner on the introduction of the Foreign Account Tax Compliance Act of 2009:

"The legislation introduced today by Chairman Rangel and Chairman Baucus follows through on the Administration's commitment to combating offshore tax evasion and ensuring a level playing field.  For too long, individuals have taken advantage of the system by hiding money in accounts overseas, while millions of families and small businesses here at home pay the price.  This legislation will reduce the amount of taxes lost through the illegal use of hidden accounts and is the next step in making sure that everyone pays their fair share. 

"This legislation fits well into the Administration's dual-track strategy of improving our domestic tax laws while increasing global cooperation on tax information exchange to help narrow the tax gap and create the fairer tax system we need.  We have had great success recently in working with countries around the world to increase tax information exchange as part of the global effort to end offshore tax evasion.

"In addition to the leadership of Chairman Rangel and Chairman Baucus, I want to acknowledge the work of Senators Kerry and Levin and Representatives Neal and Doggett in support of a strong international tax enforcement agenda."

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October 23, 2009
TG-331

Treasury Surpasses $3 Billion in Recovery Act Funds for States to Provide Affordable Housing

California to Receive $284 Million in Payments in Lieu of Tax Credits;
To Date, 45 State Housing Agencies Receive Funds

WASHINGTON – As part of the Obama Administration's efforts to strengthen communities and ease pressures on the housing market, the U.S. Department of the Treasury today announced $284 million in American Recovery and Reinvestment Act (Recovery Act) funding to spur the development of affordable housing in California. To date, 45 state housing authorities have been awarded a total of $3.1 billion in payments in lieu of tax credits for affordable housing projects.

"This innovative Recovery Act program allows the federal government to partner with states to support local developers and helps ensure that housing developers can access the financing necessary to build affordable housing," said Treasury Deputy Secretary Neal Wolin. "We have worked quickly to make available more than $3 billion to state housing agencies, and we expect to see continued efforts at the state level, so that these funds can be delivered to the communities that need it most."

In May 2009, the Treasury Department launched an innovative program to provide payments in lieu of tax credits to state housing agencies to jump start the development or renovation of qualified affordable housing for families across the country.  Upon receiving notice of these allocations, state housing agencies manage a competitive process to disburse funds to qualified developers. This is an ongoing program open to additional state applications through 2010.

The following is a complete list of funds awarded to states under the program to date. For more information on the award to California, please contact Alice Scott, Public Affairs Director of the California Tax Credit Allocation Committee, ascott@treasurer.ca.gov, (916) 651-9411.

REPORTS

• Designated State Housing Credit Agency

Treasury Designates North Korean Bank and Banking Official
As Proliferators of Weapons of Mass destruction

WASHINGTON – The U.S. Department of the Treasury today designated Amroggang Development Bank (Amroggang) as a proliferator of weapons of mass destruction under Executive Order (E.O.) 13382 for being owned or controlled by North Korea's Tanchon Commercial Bank (Tanchon). Treasury also today designated Tanchon's President, Kim Tong Myong.  Tanchon, which is sanctioned by the United States under E.O. 13382 and the UN Security Council under Resolution (UNSCR) 1718 for its involvement in North Korea's proliferation activities, is a commercial bank based in Pyongyang, North Korea.  E.O. 13382 freezes the assets of designated proliferators of weapons of mass destruction and their supporters and prohibits U.S. persons from engaging in any transactions with them.

"As long as North Korea continues to try to evade sanctions and obscure its illicit proliferation transactions, we will take steps to combat that activity and protect the integrity of the international financial system," said Under Secretary for Terrorism and Financial Intelligence Stuart Levey.

Amroggang, which was established in 2006, is a Tanchon-related company managed by Tanchon officials.  Tanchon, the financial arm of the U.S. and UN-designated North Korean company Korea Mining Development Corporation (KOMID), plays a role in financing KOMID's sales of ballistic missiles and has also been involved in ballistic missile transactions from KOMID to Iran's Shahid Hemmat Industrial Group (SHIG), the U.S. and UN-designated Iranian organization responsible for developing liquid-fueled ballistic missiles. KOMID is North Korea's premiere arms dealer and main exporter of goods and equipment related to ballistic missiles and conventional weapons.

A North Korean individual Kim Tong Myong was also designated today for acting on behalf of Tanchon.  Kim Tong Myong has held various positions within Tanchon since at least 2002 and is currently Tanchon's President.  He has also played a role in managing Amroggang's affairs using the alias Kim Chin-so'k.

Identifying Information

Entity:             Amroggang Development Bank (a.k.a. Amnokkang Development Bank) Tongan-dong, Pyongyang, Democratic People's Republic of Korea [NPWMD]

Individual:      Kim Tong-myo'ng (a.k.a. Kim Tong Myong; a.k.a. Kim Chin-so'k; a.k.a. Kim Jin Sok) c/o Tanchon Commercial Bank, Saemul 1-Dong Pyongchon, District, Pyongyang, Democratic People's Republic of Korea; DOB 1964; Nationality: North Korean [NPWMD]

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The Special Master for TARP Executive Compensation Issues First Rulings

Today, the Special Master for TARP Executive Compensation Kenneth R. Feinberg released determinations on the compensation packages for the top executives at firms that received exceptional TARP assistance. Under the Emergency Economic Stabilization Act (EESA) as amended in 2009, the Special Master has a mandate to review all forms of compensation for five most senior executive officers and the next 20 most highly compensated employees at the seven firms that received exceptional TARP assistance (AIG, Citigroup, Bank of America, Chrysler, GM, GMAC and Chrysler Financial).

1.      Reforms Pay Practices for Top Executives to Align Compensation Practices With Long-Term Value Creation and Financial Stability:  The Special Master's rulings represent a fundamental transformation from the pay practices of the past.  These decisions will significantly alter the way that executives covered by the Special Master's decisions--including the senior executive officers and next 20 most highly compensated employees of each of the seven recipients of "exceptional" assistance under the TARP (AIG, Citigroup, Bank of America, Chrysler, GM, GMAC and Chrysler Financial)--are paid.

·         Rejects Cash Payments Based on Short-Term Performance, as required by statute: Traditionally, compensation for these employees has included large cash amounts, including significant cash bonuses.  These payments gave executives incentives to take short-term risks and little reason to protect the long-term the health of the company or financial stability.  After today's rulings, as required by statute and Treasury regulations, these executives will receive the overwhelming majority of their pay in company stock that may only be sold over the long term, aligning their interests with those of taxpayers and shareholders.

·         Restructures Existing "Guaranteed" Cash Payments into Stock Held For the Long Term: Under the pay practices of the past, several executives in this group were awarded cash "guarantees" in 2009.   Guaranteed minimum amounts give employees little downside risk in the event of poor performance--but upside when times are good.  The Special Master required these agreements to be restructured.  Under today's rulings, these amounts will be paid in company stock that must be held over the long term. 

·   Citigroup and Phibro: At Phibro, Citigroup's commodities trading unit, the Chief Executive Officer was to receive a significant cash bonus based on the short-term results of significant risk-taking.  The Special Master rejected this approach, and Citigroup agreed to sell Phibro to a company that has not received taxpayer funds.  Under today's ruling, nothing may be paid to the Phibro CEO until the sale is complete.

2.      Significantly Reduces Compensation Across the Board:  To break from the pay practices of the past, the Special Master has reduced compensation across the board--both in terms of cash and the total compensation executives will receive.

·        On Average, Cash Compensation Decreased by More Than 90 percent: The Special Master rejected cash payments based on short-term results that may prove illusory, and cash guarantees that separate pay from performance.   Overall, the Special Master reduced cash pay by more than 90 percent from 2008 levels--and, as required by Treasury regulations, cash bonuses may no longer be paid to any of these employees.

·        Approved cash salary generally limited to $500,000:  Consistent with the Administration's February 4 guidance on executive compensation at TARP recipients, the Special Master approved base salaries of $500,000 or less for more than 90 percent of the employees in this group.  Base salaries greater than $1 million were approved in just three cases: for the new CEO of AIG, as previously announced, and for two employees of Chrysler Financial, which will wind down its operations in the near term and cannot grant employees long-term incentives.

·        On Average, Total Compensation Decreased by More Than 50 percent:  Even including the value of stock that must be held for the long term, the Special Master reduced the total compensation packages for executives in this group to less than half of 2008 levels.

·        Exceptions Where Necessary to Retain Talent and Protect Taxpayer Interests: Although the Special Master's rulings generally emphasize decreases in both cash and total compensation across the seven companies, increases in compensation were permitted where shown to be necessary to retaining key talent critical to a company's long-term success--and, ultimately, ability to repay the taxpayer.

3.      Requires Salaries to be Paid in Company Stock Held Over the Long Term:  The Special Master's rulings fundamentally change the structure of compensation at these firms.  Rather than cash, today's rulings require that the majority of salaries be paid in stock that must be held for the long term--giving executives incentives to pursue long-term value creation and financial stability.

·        Stock is Immediately Vested, Requiring Executives to Put Their Own Funds at Stake: Rather than just cash, executives will earn base salaries in the form of vested stock in their companies.  In effect, the Special Master is requiring each executive to invest their base salary in the long-term future of the firm, alongside taxpayers.  These structures ensure that executives do not have incentives to take the excessive risks that contributed to the financial crisis.

·         Stock May Only Be Sold in One-Third Installments, Beginning in Two Years: Unlike the pay practices of the past, which allowed executives to sell stock in their companies immediately, the Special Master's rulings require stock to be held for the long term.  Stock received as salary may only be sold in one-third installments that will not begin until 2011, unless the taxpayer is repaid earlier.

4.       Require Incentive Compensation to be Paid in the Form of Long Term Restricted Stock – and to be Contingent on Performance and on TARP Repayment:  As the Secretary noted in his June 10 statement, incentive pay can be undermined by compensation practices that set the performance bar too low or simply reward rising tides.  The Special Master's rulings require that incentives be paid only if executives reach objective goals agreed upon in consultation with the Special Master--and only if TARP is repaid.

·        Requires Achievement of Goals Set in Consultation with the Special Master:  The Special Master's rulings permit these executives to receive incentive pay only if the executives attain objective, predetermined performance goals set in consultation with the Special Master.  Achievement of these goals must be certified by each company's compensation committee--which, under Treasury regulations, must be composed solely of directors fully independent from management.

·        Requires Three Years of Service, and TARP Repaid, Before Payment: To ensure that taxpayers continue to receive the benefits of the executives' talents, the Special Master's ruling requires that any incentive awards be paid only if the employee provides at least three years of service to the company after the award is made.  And, under Treasury regulations, the awards must be paid in the form of restricted stock that may not be paid unless the company repays its TARP obligations.

5.      Requires Immediate Reform of Practices Not Aligned With Shareholder Interests:  As the Secretary noted in his June 10 statement, in some cases golden parachutes and supplemental executive retirement plans have expanded beyond their original purpose, and may not enhance the long-term value of the firm or allow shareholders to easily ascertain the full value of the "walkaway" pay an executive will receive when departing the firm.  The Special Master's rulings place tough new restrictions on these payments--as well as perquisites and other personal benefits--for executives at companies that have received exceptional taxpayer assistance. 

·        Caps perquisites and "other" compensation: Several experts, including the Conference Board Task Force on Executive Compensation, have concluded that executives--and not companies--should generally cover the costs of personal expenses.  The Special Master's rulings generally cap these types of payments at $25,000, with limited exceptions for unusual circumstances that can be justified to the Special Master.

·        Additional limitations on "golden parachute" payments: Large "golden parachute" or severance payments often serve to enrich executives rather than provide reasonable compensation during unemployment, and often do not enhance the long-term value of a company.  Tough new Treasury regulations prohibit these payments to the senior executive officers and five most highly compensated employees at all companies that have received taxpayer assistance.  The Special Master's rulings go further, however, and prohibit companies from increasing the amount of any "golden parachute" payable to any of the top 20 most highly compensated executives during 2009.

·        Freezing supplemental executive retirement plans: Supplemental executive retirement benefits can provide substantial cash guarantees to departing executives, regardless of performance.  And, as the Secretary noted on June 10, these complex benefits can make it difficult for shareholders--and, in the case of exceptional assistance companies, taxpayers--to ascertain the full amount of pay an executive will receive upon retirement.  The Special Master's rulings conclude that that executives should provide for their retirements with wealth based on performance while they are employed, rather than being guaranteed substantial retirement benefits beyond those provided to everyday workers.  As a result, the Special Master's decisions prohibit additional accruals under supplemental executive pension programs and company credits to other non-qualified deferred compensation plans following the release of today's rulings.

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LINKS

• Executive Compensation Determinations for Top TARP Recipients

October 22, 2009
TG-326

Treasury Designates Mexican Nationals,
Company as Specially Designated Narcotics Traffickers

WASHINGTON – The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated Mexican national Edgardo Leyva Escandon, five members of his financial network, and one Mexico-based company as Specially Designated Narcotics Traffickers for their ties to the Arellano Felix Organization (Tijuana Cartel), Francisco Javier Arellano Felix, or Tijuana Cartel member, Edgardo Leyva Escandon.   Pursuant to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), today's designation freezes any assets the designees may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions with the designees.  

"We are taking this action to disrupt Edgardo Leyva Escandon's ability to access weapons and financial conduits on behalf of the Arellano Felix Organization," said OFAC Director Adam J. Szubin. "We will do everything in our power to support the determined counter-narcotics efforts of the Government of Mexico."

The Arellano Felix Organization was named a Tier I Kingpin by the President in June 2004. The principal of this Arellano Felix Organization cell is Edgardo Leyva Escandon, the organization's primary ammunition and firearms supplier, an assassin and a personal assistant to Francisco Javier Arellano Felix, also designated a Tier I Kingpin in June 2004.  According to a Southern District of California complaint, Leyva Escandon purchased cases of ammunition from multiple San Diego-based firearms merchants, acquiring thousands of rounds at a time.  During a July 22, 2006 search of Leyva Escandon's residence, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) seized more than 450 rounds of assorted ammunition and conversion kits for the production of fully automatic Uzi machine guns.

In addition to ammunition trafficking, Leyva Escandon helped procure the Dock Holiday yacht, which was utilized by Francisco Javier Arellano Felix.  On August 14, 2006, the Drug Enforcement Administration (DEA), with assistance from the U.S. Coast Guard, arrested Francisco Javier Arellano Felix while he was on-board the Dock Holiday in international waters.

In addition to the ATF, Edgardo Leyva Escandon is wanted by the DEA and is the subject of a $2 million reward under the auspices of the State Department's Narcotics Rewards Program.

Also designated today are the following Edgardo Leyva Escandon financial operators: Aristoteles Alejandro Abaroa Preciado, Victor Manuel Abaroa Diaz, Victor Hussein Abaroa Preciado, Elia Yolanda Preciado Gamez and Rosa Yolanda Nabila Abaroa Preciado.  The designation also includes a maritime equipment supplier Tienda Marina Abaroa, based in Baja California Sur, Mexico. 

This action is part of ongoing efforts under the Kingpin Act to apply financial measures against significant foreign narcotics traffickers worldwide.  Internationally, more than 500 businesses and individuals associated with 82 drug kingpins have been designated pursuant to the Kingpin Act since June 2000.  Penalties for violations of the Kingpin Act range from civil penalties of up to $1.075 million per violation to more severe criminal penalties.  Criminal penalties for corporate officers may include up to 30 years in prison and fines up to $5 million.  Criminal fines for corporations may reach $10 million.  Other individuals face up to 10 years in prison and fines pursuant to Title 18 of the United States Code for criminal violations of the Kingpin Act.

Today's designation would not have been possible without key support from DEA's San Diego Field Division, Tijuana Resident Office and Mazatlan Resident Office; the ATF's San Diego Field Office; and the U.S. Attorney's Office for the Southern District of California.

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REPORTS

• Tjuana Cartel