How to build a big, beautiful (financial) wall around North Korea & make Kim Jong-un pay for it.

HERE IN WASHINGTON, THE BLOB IS ALL ATWITTER over a possible summit between Donald Trump and Kim Jong-un. Those who see no solution to this crisis but the next piece of paper took the news with the same mixture of euphoria and dread as a man who waits four hours in the emergency room in throbbing agony, only to hear, “Doctor Oz will see you now.” But in reality, a Trump-Kim summit is no more than 40 percent likely to happen at all, no more than 10 percent likely to result in any agreement, and no more than 5 percent likely to result in an agreement that will still be viable when Congress goes into its August recess.

These odds did not improve with the selections of Mike Pompeo and John Bolton, which is for the best. At least now, the President has what he lacked when he agreed to the summit in the first place: two tough-minded, bureaucratically savvy, and intelligent advisors in whom he has confidence. They will counsel him to refuse what Kim Jong-un is almost certain to demand (South Korea) and to demand what Kim Jong-un is almost certain to refuse, at least for now: complete, verifiable, and irreversible denuclearization. They will also want Pyongyang to dismantle its other WMD threats to our allies, to ourselves, and to innocent children from Aleppo to Kuala Lumpur.

Thus, no deal His Porcine Majesty is likely to offer us this year is a deal we’re likely to take or should, nor is it a deal Congress would support or fund. And because Trump has–to his credit–made it clear that he won’t relax the pressure until Kim disarms, making “maximum” pressure really maximum will be imperative to any plan to resolve this crisis peacefully.

Received message last night from XI JINPING of China that his meeting with KIM JONG UN went very well and that KIM looks forward to his meeting with me. In the meantime, and unfortunately, maximum sanctions and pressure must be maintained at all cost!

– Donald J. Trump (@realDonaldTrump) March 28, 2018

This doesn’t mean that a summit can’t have any useful purpose. It will be an opportunity to speak directly to a self-isolated adversary and his generals and tell them, face-to-face, what we must have, what they must not do, and what real maximum pressure will soon look like. A summit with limited explanatory and exploratory objectives could be an early step toward exerting steady, strengthening pressure and gaining more leverage with which to bargain in two or three years. It has already wrong-footed the talk-to-North-Korea crowd, which really just wants us to capitulate to North Korea’s every insatiable demand and incorrigible criminality. Trump–also to his credit–shows no sign of taking this misguided counsel.

There is the risk that a meeting would legitimize Kim despite his responsibility for crimes against humanity, thus easing our political and diplomatic pressure on him. It doesn’t necessarily have to.

Of course, this would require us to manage the staging, our words, and our gestures carefully. Stop laughing, dammit.

Another problem is that Trump’s pressure on Kim has been more medium than maximum. It has been much stronger than the pinprick, do-nothing sanctions of the Obama administration, but weaker than the sanctions Obama exerted against Iran, and well short of its full potential. The administration isn’t taking full advantage of the legal authorities Congress has given it to sanction ports and flags of convenience that continue to help Pyongyang evade sanctions. It has destroyed two small banks (one in China and one in Latvia) for laundering Kim’s money, but it hasn’t imposed any civil penalties against big banks through which Pyongyang’s main illicit financial arteries flow, which was key to the success of Iran sanctions.

And of course, sanctions are hardly the only form of pressure we can exert. Trump has only indirectly attacked Kim Jong-un’s single greatest self-perceived vulnerability, judging by Pyongyang’s overheated reactions to defections, criticisms, and parodies–the support of its own population. Nor is it clear to me that it’s targeting sanctions toward the security forces that keep its people in, and keep subversive information out. Once one sees the policy in terms of engaging the North Korean people, sanctions and information operations complement each other and merge into one coherent strategy to sow the liberating disorder that terrifies Kim Jong-un and Xi Jinping far more–and our true allies far less–than the threat of war.

How can an administration that may be giving serious consideration to war still be half-hearted about financial sanctions and political subversion? Some of this may have been due to a lack of political will, perhaps on the part of Rex Tillerson. It often seems that no one is leading the effort to implement a coherent strategy. No single person in the administration is closely managing a whole-of-government policy implementation effort, of which sanctions are but one critical piece. This means that each agency lives in its own silo, free to imagine or pursue its own policy.

Who would lead this whole-of-government effort? Ideally, the National Security Council, except that it’s presently too busy and thinly staffed to give the implementation of North Korea policy the close, tough, day-to-day management it requires. Yet no other agency is currently equipped to do it. The State Department is too depleted by Tillerson’s malign neglect and too discredited by its unbroken faith in years of failed agreed frameworks. The Treasury Department is too cautious, and the intelligence community is legally constrained from making and leading policy. One hopes that Bolton and Pompeo will fill this leadership vacuum soon. These men are too well-qualified to be the next Spinal Tap drummers in a turbulent administration.

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But I suspect that the main limiting reagent in our sanctions effort is the simplest one: lack of funding. Name any agency in the government with a significant role in enforcing sanctions against North Korea, and in every one of those agencies, save one, are people who’ve told me that their work is crippled by underfunding. This isn’t the standard whining about underfunding I’ve heard from bureaucrats throughout my civil service career. Some, in their inflated belief in my power to write (and enact!) laws on my Saturdays, beg me for appropriations that I have no power to influence, so that they can hire staff or bring in detailees. Some lack for pocket change to pay for official travel, or for subscriptions to news services and databases that could help them build criminal cases on violators. Others email me with work-related legal questions at 10 p.m. on Sunday nights. Most of those expressing these concerns are at the working levels; one is a presidential appointee. All will remain unnamed.

Don’t expect any of them to back me on the record. Civil servants don’t talk to the press about their jobs, and senior officials are under strict orders from their cabinet secretaries and the Office of Management and Budget to tell Congress that they’re funded adequately. (This isn’t unique to the Trump administration; it’s long-standing OMB policy that transcends administrations.) But in reality, the funding for our greatest national security priority–one that is urgent to the prevention of nuclear war–is anything but adequately resourced. That won’t change until the administration is willing to ask Congress for more appropriations and those appropriations arrive, or until the administration finds some other way to resource the effort.

As you’ve probably guessed by now, I can think of some.

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The untapped potential of any law enforcement priority is that legally, it can bring vastly more cash into the Treasury than it costs. Certainly, any law that empowers bureaucrats to eat what they kill requires limits to protect against abuses–careful oversight, rules, and due process. But having said this, Congress has repeatedly authorized the feds to use the proceeds of fines, penalties, and forfeitures to combat the same evils as the laws the feds are charged with enforcing. Some of these funds could be turned on through administrative decisions or regulations, after consultation with the right congressional committee staffers, but legislation would make it all much clearer.

Fines. For example, if the feds prosecute a defendant and a court convicts him, it may impose a fine as part of the sentence. The Justice Department doesn’t deposit these fines directly into the General Fund of the Treasury. By law, they go into the Justice Department’s Crime Victims Fund. Last year, the balance in that fund was just shy of $9 billion, although distributions are capped at $730 million a year to ensure the fund’s long-term stability. The Fund supports such diverse priorities as victim-witness advocates and counselors, grants to study human trafficking, and funding for state and local governments to investigate and prosecute child abuse.

These are perfectly noble priorities, just not in the context of North Korea. There’s something profoundly inequitable about taking money stolen from some of the world’s poorest, most isolated people and diverting it to crime victims in a first-world society. There would be no North Korea crisis if its people enjoyed the natural rights we’ve enshrined in our First Amendment–and if sanctions alone aren’t sufficient, the Second. For example, what if a manufacturer or exporter is convicted and fined for selling, say, cell phone trackers to the North Korea government, which uses them to catch and punish a poor woman for calling her daughter in Seoul to plead for money? Equity suggests that those fines ought to be used to help North Korea’s most vulnerable–to help refugees escape, or to develop and deploy more secure technology to help them bypass the regime’s censorship or its economic monopolization.

Forfeitures. Since September 2016, the Justice Department has been filing more civil forfeiture actions against defendants who’ve aided North Korea’s money laundering, sanctions violations, and proliferation. The three main types of forfeiture are administrative, criminal, and civil. Administrative forfeitures are limited in both scope and amount, and include the Customs forfeiture authority in Title 19. Criminal forfeitures have the disadvantage of requiring the feds to arrest, prosecute, and convict a live body, something that isn’t always easy when you’re targeting North Korea and its shadowy international networks. That means that civil forfeiture has become DOJ’s weapon of choice against the funds of entities like Dandong Hongxiang, Minzheng International, and Velmur. If the Justice Department wins all of those cases, it stands to rake in over $13 million, although this isn’t a complete list. It doesn’t include the Dandong Hongxiang case, which doesn’t specify a sum certain as the defendant. Let’s assume conservatively that the Justice Department’s forfeiture cases filed since late 2016 take in $20 million this year. That would be enough to pay and equip a team of investigators and lawyers that would go far toward making “maximum pressure” more than a hashtag.

In that last paragraph, I meant to say that the “sum” is the defendant. Civil forfeiture is an in rem action against the property itself–including proceeds of a specified unlawful activity, or property “involved in” the specified unlawful activity and having a substantial connection to it. That’s why forfeiture cases can have names as odd as “United States v. 11 1/4 Dozen Packages of Articles Labeled in Part Mrs. Moffat’s Shoo-Fly Powders for Drunkenness,” or my personal favorite, “United States v. One Package of Japanese Pessaries” because … Japan.

The feds don’t have to arrest and convict anyone to prevail in a civil forfeiture case; they just have to seize the property and prove to a court by a preponderance of the evidence that it’s either the proceeds of a specified unlawful activity or was “involved in” one. Violations of section 104(a) of the NKSPEA are defined as specified unlawful activities, and the courts have upheld the new law’s use to seize funds that are now pending forfeiture. (Legally, under 18 U.S.C. 981(k), the feds can also forfeit money right out of a correspondent account and let the bank make itself whole from the depositor, but for reasons that aren’t clear to me, the Justice Department has shied away from using this potentially invaluable tool against North Korea.) Claimants may then file claims against the defendant property and argue that the feds haven’t proven that the property is proceeds or “involved in” the offense, and thus subject to forfeiture. They can also claim to be innocent owners of property that some third person misused, or that the forfeiture of the entire property would be disproportionate or excessive on Eighth Amendment grounds.

But the main point of this post is to explain where the money goes and how the feds ought to be using it to Build The Wall. The short answer is that forfeited funds can be used for law enforcement operations after being deposited into one of two funds–the Treasury Department’s forfeiture fund, or the Justice Department’s forfeiture fund. Both statutes allow forfeited funds to be used for similar purposes, including law enforcement salaries, overtime, fuel, training, equipment, vehicles, rewards for informants, and the services of experts and consultants, as long as those expenses can be linked to forfeiture cases.

Because Justice and Treasury often work their cases together, they often negotiate among themselves how much of each forfeiture is deposited into each fund. Other law enforcement agencies can then draw on these deposits. For example, U.S. Immigration and Customs Enforcement partially pays for its undercover operations from the Treasury forfeiture fund, and partially pays for them from the proceeds of the front businesses it sets up to convince bad guys that its cops aren’t really cops. The feds can also share forfeitures with cooperating state governments, or even foreign governments under 18 U.S.C. 981(i). This might be a way to incentivize foreign officials to cooperate with the enforcement of U.N. sanctions, or to leverage the considerable skill and chutzpah of New York state financial regulators.

Presumably, most of the forfeited funds would be ill-gotten wealth that Kim Jong-un has stolen from the people of North Korea, or ill-gotten wealth he’s taking in from arms sales, slavery, or theft. As an American, I can make a legal argument that we have jurisdiction over this money, and I can make a legal argument that Kim Jong-un doesn’t rightfully own it. I can even argue that we’re within our rights to deduct a reasonable amount to cover the cost of enforcement–after all, the UN Convention Against Corruption allows as much. But equitably, most of that money belongs to the people of North Korea. And in the event that Kim–or whatever cabal overthrows him–agrees to the transparency that is a prerequisite to a sustainable disarmament agreement and begins to disarm verifiably, that money could also be used to distribute humanitarian aid to them, provided someone can verify that it’s dispensed freely and fairly. Stop laughing, dammit.

Civil penalties. I’ve said that I’ll believe we’re serious about sanctions when we start to hit Chinese banks with nine-digit penalties for laundering North Korea’s money. Unlike fines and forfeitures, there’s no law directing civil penalties to any special fund, so we default to the Miscellaneous Receipts Statute at 31 U.S.C. 3302. Under that law, those nine-digit penalties must be deposited into the General Fund of the U.S. Treasury–except when they aren’t, such as in one recent set of cases where Congress has redirected certain civil penalties to address other evils.

The Justice for United States Victims of State Sponsored Terrorism Act. You remember the massive ten-digit penalty against BNP Paribas? Of course you do. It was so massive that in 2015, Congress passed legislation creating a special fund to compensate the victims of state-sponsored terrorism. That fund draws not only from the BNP Paribas civil penalty, but also from some large forfeiture actions against Iranian property in New York that the feds linked to sanctions violations and money laundering. And now that North Korea has been named a state sponsor of terrorism, a share of the fines, penalties, and forfeitures that would otherwise go into the Justice Forfeiture Fund under the NKSPEA, the KIMS Act, and various executive orders sanctioning North Korea will now be deposited into this fund. But with a few exceptions, most of those eligible for compensation from this fund aren’t victims of North Korea, so pouring the take from enforcing North Korea sanctions into this fund doesn’t address the evils at which North Korea sanctions are aimed. Still, as a model for how special legislation to create a North Korea Enforcement and Humanitarian Fund, this isn’t a bad template. Of course, I’ve written a better one. If you’re a person with the capacity to help enact and use that language, by all means contact me.

Clearly, then, there is a precedent for channeling the proceeds of North Korea sanctions enforcement into a special fund to fund more investigation and enforcement, and also to support change inside North Korea itself. There’s more than enough money in the fines, penalties, and forfeitures that a determined enforcement campaign would yield to hire enough cops, lawyers, and spies–and to “incentivize” enough informants and foreign officials–to put Pyongyang into Treasury Department receivership, and to empower its population to demand political change. I submit that much of that money rightfully belongs to the people of North Korea, and that a fair share of it should be used to break the isolation that keeps them hungry and afraid. As always, the interests of the American and North Korean peoples converge once we realize that Kim Jong-un represents a mortal threat to us all. One can hope that it’s possible to negotiate a peaceful change. But our prospects of doing so diminish to a vanishing point if we seem less than willing to coerce it.

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Postscript: By now, a few of you may be wondering if fines, penalties, and forfeitures could also pay for that other wall. The short answer is “probably not,” because I doubt Congress would pass a law to authorize it. The longer answer is that it depends on which reality you’re living in. The Homeland Security Department says a border wall would cost $21.6 billion; the Democrats say the true figure is closer to $70 billion. Let’s assume that the feds can make a case against a bank that has spent a decade stripping wires and laundering money for Mexican drug cartels and coyotes on a scale comparable to what BNP Paribas was doing for Iran, Sudan, and Cuba. If so, $9 billion would be enough for a substantial down payment. Stop laughing, dammit.