Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and John C. Demers, Assistant Attorney General for National Security, announced today the entry of a judgment of forfeiture regarding the M/V Wise Honest (the “Wise Honest”), a 17,061-ton, single-hull bulk carrier ship flagged in the Democratic People’s Republic of Korea (“DPRK” or “North Korea”). The Wise Honest, one of the largest North Korean-flagged vessels, was used to conduct large illicit shipments of coal from North Korea and to import heavy machinery back to the DPRK. Payments for maintenance, equipment, and improvements of the Wise Honest were made in U.S. dollars through unwitting U.S. banks, in violation of U.S. law and United Nations Security Council resolutions.
U.S. Attorney Geoffrey S. Berman said: “Today’s judgment of forfeiture finalizes the U.S. government’s seizure of the Wise Honest and officially takes this North Korean vessel out of commission. It will no longer be used to further a criminal scheme. Using the full set of tools at our disposal, we will continue to investigate and prosecute attempts to evade U.S. sanctions, including by the North Korean regime.”
Assistant Attorney General for National Security John C. Demers said: “This order of forfeiture sinks the Wise Honest’s career as one of North Korea’s largest sanctions-busting vessels. The Department of Justice will continue to pursue other property used to violate U.S. and international sanctions, around the globe, with the cooperation of our international partners.”
According to documents filed in Manhattan federal court:
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 (“WMDs”) are prohibited from engaging in transactions with U.S. persons, involving U.S.-origin goods, or using the U.S. financial system. The United Nations Security Council has similarly prohibited the provision of goods, technology, and services to North Korea, including the sale, supply, or transfer of coal.
From November 2016 through April 2018, the Wise Honest was used by Korea Songi Shipping Company, an affiliate of Korea Songi General Trading Corporation – which, in 2017, OFAC determined was “subordinate to the [Korean People’s Army] and involved in exporting North Korean coal” – and one of Korea Songi Shipping Company’s representatives, Kwon Chol Nam, to export coal from North Korea to foreign purchasers and import machinery to North Korea (the “Korea Songi Scheme”).
On March 14, 2018, the Wise Honest was loaded with coal in Nampo, North Korea. On April 2, 2018, Indonesian maritime authorities intercepted and detained the Wise Honest. Although maritime regulations require vessels like the Wise Honest engaged in international voyages to operate an automatic identification system (“AIS”) capable of providing information about the vessel to other ships and to coastal authorities, and despite its March 2018 voyage from North Korea, the Wise Honest had not broadcast an AIS signal since August 4, 2017.
Participants in the Korea Songi Scheme additionally attempted to conceal the Wise Honest’s DPRK affiliation by falsely listing the Wise Honest’s nationality or the origin of the illicit coal on board the vessel in shipping documentation, for example, as from Tanzania or Russia.
In connection with Korea Songi Scheme, Kwon paid for numerous improvements, equipment purchases, and service expenditures for the Wise Honest in U.S. dollars through U.S. financial institutions. Such transfers constitute a provision of services by U.S. banks to both the sender and recipient of the funds, and U.S. law prohibits banks from providing such services to North Korean parties. In connection with the March 2018 shipment of coal on board the Wise Honest alone, payments totaling more than $750,000 were transmitted through accounts at a U.S. financial institution.
On May 9, 2019, the U.S. Attorney’s Office filed a civil forfeiture complaint against the Wise Honest, which had previously been seized pursuant to a warrant issued in the Southern District of New York. Today’s judgment of forfeiture was ordered by U.S. District Judge P. Kevin Castel.
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Mr. Berman praised the outstanding investigative work of the Federal Bureau of Investigation and its New York Field Office, Counterintelligence Division, and thanked the Department of Justice’s Money Laundering and Asset Recovery Section’s Program Operations Unit and Office of International Affairs, the U.S. Coast Guard, and the Department of State for their assistance.
Mr. Berman also thanked Fred and Cindy Warmbier, the parents of the late Otto Warmbier, for their willingness to voluntarily withdraw their claim in the action in order to facilitate the forfeiture of the Wise Honest.
The case is being handled by the Office’s Terrorism and International Narcotics Unit and Money Laundering and Transnational Criminal Enterprises Unit. Assistant U.S. Attorneys David W. Denton Jr. and Benet J. Kearney are in charge of the case, with assistance from Trial Attorney Christian Ford of the Counterintelligence and Export Control Section.