By Bob Van Voris and Jonathan Levin
November 20, 2019

Bruce Bagley, an international studies professor, knew all about how corrupt Venezuelan officials were moving vast sums into South Florida. He cultivated contacts with Latin American policymakers, top criminal lawyers and U.S. anti-money-laundering officials. And, prosecutors say, he knew how to get a taste for himself.

Bagley, a 73-year-old white-bearded University of Miami academic who wrote about drug trafficking and international organized crime, was charged this week with helping move about $3 million into the U.S. from Venezuela and taking a 10% cut.

Colleagues and neighbors expressed shock that a man known for his scholarship and care of his disabled wife could be arrested on such charges. But it was easy to see how Bagley — who in recent years had narrowly escaped a foreclosure sale — could have put his expertise to practical use, said John Polga-Hecimovich, a U.S. Naval Academy professor who knew him through academic networks.

“In the course of where he lives and in the research he does, I’m sure he came into contact with figures like the ones he’s accused of coming into contact with,” Polga-Hecimovich said Tuesday. “It’s plausible.”

Bagley’s lawyer, Daniel Forman, said his client would be vindicated. Bagley, who was placed on leave by the University of Miami, is free on a $300,000 bond.

His indictment Monday hinted at how Venezuelan’s vast corruption has seeped into South Florida, where officials associated with Nicolas Maduro’s and Hugo Chavez’s regimes have parked cash and bought real estate.

This year, the U.S. government auctioned off one such cache from Alejandro Andrade, a former Venezuelan treasurer who pleaded guilty to taking more than $1 billion in bribes. The sale included prize-winning show horses and mansions.

Criminals for years have concealed money stolen from state oil company Petroleos de Venezuela SA, the nation’s main source of income and foreign currency, American prosecutors have said. In September, a former company president was charged in Houston with money laundering in a probe of a $1 billion bribery scheme. A former Venezuelan government official and a former officer at Corpoelec SA, the state power company, were charged in June with taking bribes to award $60 million in business to Florida-based companies.

Intimate Acquaintance

It’s a milieu Bagley knows well. Testifying as an expert defense witness in a Miami cocaine-trafficking trial last month, he told jurors about his constant efforts to keep abreast: teaching six times a year in Colombia, talking with colleagues at professional conferences, scouring newspapers and government reports.

“I sometimes interview people in jail here in Miami and in other parts of the United States,” Bagley testified. “I try to use all the sources that are available to me, but it’s often, because it’s a clandestine and often-violent industry, sometimes difficult to get all the information that you need.”

Bagley is a native Californian who first saw the drug trade up close as a Peace Corps volunteer in Colombia, he told jurors. He got his undergraduate degree at the University of California, Berkeley, then a master’s and a Ph.D. from the University of California, Los Angeles.

He taught in Colombia and at the Johns Hopkins University School of Advanced International Studies before moving to Miami, where he recently finished his 30th year. He’s taught a generation of academics, government and law enforcement officials, published books and articles and testified as an expert about 100 times.

“He’s an icon,” said Jonathan Rosen, a political scientist who said he’s published books with Bagley and counts him as a mentor. Rosen described Bagley as somebody with a “big personality” and a boisterous laugh.

“He could retire any time,” Rosen said. “He does this because he really loves it.”

Laugh Line

Every year, Bagley teaches a course on drug trafficking, he told the trial jurors.

“He always said, ‘This is not a how-to course,’” said Miami lawyer Erick Cruz, a former student who was also the defense attorney in the cocaine trial, in which his client was convicted.

It wasn’t immediately clear why an academic with a reputation cultivated over decades would launder money.

Bagley supports his wife, who was disabled after a stroke. He lost a foreclosure judgment of $660,000 in 2014 after he and his wife defaulted on a mortgage, court records show. The bank allowed them to sell the property for less than they owed.

Bagley doesn’t own his current home in Coral Gables, part of a gated area tucked beside mangroves and Biscayne Bay, according to property records. On Tuesday, two SUVs were parked in the driveway. Bagley left the house at 9:23 a.m. in a blue button-down shirt, carrying a thick manila envelope and a book, and drove off in his black Nissan Rogue, declining to answer questions.

Almost 1,400 miles southeast, Venezuela is mired in a yearslong political and economic crisis caused by Maduro’s misrule and a decline in oil prices. The nation is a gallery of socialist showpieces in various stages of completion. Railway projects lead nowhere and an expansion of the hydroelectric dam system has been halted even as residents go without power.

The money that Bagley laundered, U.S. prosecutors said, was skimmed from such public works projects and the professor took a cut as it passed through his accounts.

He opened a bank account using a company he owned, taking in 14 payments from November 2017 to October 2018, according to the indictment. The payments came from Swiss and United Arab Emirates accounts held by a “purported food company” and a wealth management firm, prosecutors said. They accused Bagley of withdrawing 90% as cashier’s checks payable to an account held by an unnamed person and transferring the rest to his own account.

Even after the bank account was shut down for suspicious activity in October 2018, Bagley opened a second one in December, where he received money twice, prosecutors said.

The professor, as prosecutors told it, took chances of which he should have been aware: He was a consultant for FinCEN, a bureau of the Treasury Department that fights laundering. The sums were sometimes moved in chunks of more than $200,000, large enough to draw investigators’ attention.

That would leave “a pretty clear documentary trail leading to where the dead bodies are buried,” said Andrew Ittleman, a Miami defense lawyer.

Former student Nilda Garcia said Bagley inspired her to get her doctorate and she now teaches about trafficking herself at Texas A&M University.

“He’s been like a big inspiration in my life,” she said.

Garcia laughed when she remembered his office, full of books and papers from floor to ceiling. “It was insane,” she said.

“When someone is really that brilliant, sometimes the simple things are hard to do.”

The case is U.S. v. Bagley, 19-cr-00765, U.S. District Court, Southern District of New York (Manhattan).

— With assistance by Fabiola Zerpa

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By Ashley Yeager
September 9, 2019

On Friday (Sept. 6), Google announced it would “prohibit advertising for unproven or experimental medical techniques such as most stem cell therapy, cellular (non-stem) therapy, and gene therapy.” The treatments, the company says in the statement, can have “dangerous health outcomes” and therefore have “no place” on the its platforms.

“Google’s new policy banning advertising for speculative medicines is a much-needed and welcome step to curb the marketing of unscrupulous medical products such as unproven stem cell therapies,” Deepak Srivastava, president of the International Society for Stem Cell Research, says in the statement. “The premature marketing and commercialization of unproven stem cell products threatens public health, their confidence in biomedical research, and undermines the development of legitimate new therapies.”

Some of these treatments have caused severe physical impairment, with several women going blind after receiving stem cell injections into their eyes. Scientists say many of the treatments’ claims are false, so the new policy could intensify scrutiny of the companies, according to The Washington Post. The US Food and Drug Administration has begun cracking down on the practices and marketing of stem cell clinics, which have otherwise largely skirted regulation.

“A number of us have pushed for this kind of policy over the years so this news is a welcome surprise,” University of California, Davis, stem cell biologist Paul Knoepfler tells The Post. He’s been criticizing the Google ads for stem cell treatments for years and says the move is a big deal because the ads recruited many of the same patients negatively affected by the treatments.

Andrew Ittleman, a Miami lawyer who represents several stem cell clinics, tells The Post the policy will damage companies with legitimate treatment claims. “It puts Google in the position of being a quasi regulator, taking on quite a significant amount of jurisdiction,” Ittleman says. “They’re painting the industry with a broad brush and companies with legitimate arguments are going to be collateral damage.”

The ban would go into effect in October, according to Fortune, and the company would not reveal how it would vet medical ads.

“The American Medical Association believes it is critical to distinguish between treatments that have been validated by appropriate scientific study, those that are promising, and those that are without foundation,” Patrice Harris, the association’s president, tells Fortune in an emailed statement. “We urge [Google] to make public the process they use to vet advertisements and what evidentiary standard they use for determining which treatments are appropriate to advertise.”

Despite the lack of details, proponents of the policy say it’s a big step forward and a long time coming. “These ads have been present on the Internet for at least 15 years—at least,” Sean Morris, chairman of the Society of Stem Cell Research, tells Fortune. “But better late than never.”

Click here to read the full article.

By Antonio Regalado
September 6, 2019

New policy: Google, which pulls in more than $110 billion a year in online ad revenue, said in a statement posted on its advertising pages that under the new policy it will now “prohibit ads selling treatments that have no established biomedical or scientific basis.”

The policy will cover a host of bogus cures for cancer and ALS, as well as treatments that are under study but don’t have enough “formal clinical testing to justify widespread clinical use.” Ads for government-sanctioned clinical trials will be allowed, according to the Washington Post.

Big problem: Ads from stem-cell clinics have been a fixture of Google’s search results for years, funneling desperate patients to a growing industry of doctors who collect blood or other cells from patients, then re-inject them. Testimonials from celebrity NFL players and others have helped spread the quackery to sports medicine and orthopedics centers.

The treatments have little evidence to support their use and can be hazardous. Several people have ended up blinded or developed bizarre tumors. In China, the search giant Baidu was rocked after a 21-year-old college student died from a treatment he learned about in a promoted search result.

Growing embarrassment: Google’s advertising of sham medicine became a bigger liability in 2015 after the company launched Calico, a company seeking remedies for aging, and a health research subsidiary called Verily.

“We know that important medical discoveries often start as unproven ideas,” Google said in its statement today. “At the same time, we have seen a rise in bad actors attempting to take advantage of individuals by offering untested, deceptive treatments.”

Hype problem: Stem cells have been touted as the cure for just about anything, and some medical clinics claim the procedures are also exempt from regulation if they involve a person’s own cells, such as fat, blood concentrates, or bone marrow.

The US Food and Drug Administration has sometimes pursued the clinics, though, winning a case this summer against a Florida stem-cell company, US Stem Cell, and issuing a broad warning to consumers earlier this week.

Experts intervened: According to the International Society for Stem Cell Research, a body representing academic scientists, it helped draw Google’s attention to the role of ads in harming patients. In early 2019, executives from the internet giant were invited to presentations about the problems caused by the clinics as part of the National Academy of Sciences’ Forum on Regenerative Medicine.

“Google’s new policy banning advertising for speculative medicines is a much-needed and welcome step to curb the marketing of unscrupulous medical products,” the president of the society, Deepak Srivastava, said in a statement. “While stem cells have great potential to help us understand and treat a wide range of diseases, most stem cell interventions remain experimental and should only be offered to patients through well-regulated clinical trials.”

Ads still visible: The Washington Post, which first reported the new ad policy, says it will go into effect in October. A Google search today from Cambridge, Massachusetts, still returned numerous advertisements, such as one for the Boston Stem Cell Center, which sells a variety of treatments involving a person’s own cells.

Google as regulator?  Andrew Ittleman, a Miami lawyer who works for stem-cell clinics, told the Post that the ad ban could penalize “good” companies trying to follow regulations, as well as bad actors. Ittleman said some clinics had already been banned by Google starting two years ago.

“It puts Google in the position of being a quasi regulator, taking on quite a significant amount of jurisdiction,” he told the Post. “They’re painting the industry with a broad brush.”

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Facebook’s Libra plan for an alternative currency sounds audacious, but the company already has some of the infrastructure in place to muscle through regulatory hurdles.

By Annie Gaus
June 24, 2019

There’s no denying that Facebook’s crypto plans are ambitious. They might even seem a bit outlandish.

The gist of Facebook’s (FB – Get Report) Libra initiative, in the words of CEO Mark Zuckerberg, is to create a “simple global financial infrastructure.” But making that a reality is far from a slam dunk. Within hours of Facebook’s Libra reveal, skeptics called out seeming contradictions in the documents that Facebook published giving more details on the currency Libra, governing body the Libra Association, and the Calibra subsidiary that will manage digital wallets and other services.

The Libra announcement also sparked a swift backlash from lawmakers in the U.S. and elsewhere, with House Financial Services chair Rep. Maxine Waters (D-Calif.) and others calling for a moratorium on Facebook’s development of the project. It was met with doubts from much of the public, who have seen an unending parade of Facebook privacy scandals in recent years. And the organizational challenges for the social networking giant are also hard to quantify at this point.

With a planned launch date of 2020, the clock is ticking for Facebook to sort it all out. So with that in mind, I asked a dozen or so smart experts to weigh in on a simple question: What’s the likelihood that Facebook actually launches Libra, as it was initially described on Tuesday, by next year?

Perhaps unsurprisingly, opinions varied widely — from 100% likelihood all the way down to 0%. Also, it depends how you define “launch.”

“A better question would be the likelihood of whether Libra will launch at all,” said Ryan Taylor, CEO of the digital currency Dash, who placed the likelihood at 5%. “It will almost certainly launch somewhere so that the involved parties can save face, but I expect a crippled launch in limited numbers and geographies.”

If there’s one common theme among skeptics and optimists around Libra’s prospects, it’s that the first markets where Libra will launch will most assuredly not be in the U.S. or Europe.

In both geographies, Libra’s prospective launch takes place against a backdrop of growing distrust of Facebook and other tech giants. The DOJ and FTC are planning sweeping antitrust investigations targeting Facebook, Amazon (AMZN – Get Report) , Alphabet (GOOGL – Get Report) and Apple (AAPL – Get Report). Facebook is also a unique case: Apart from its sheer size and reach across the social media landscape — it has close to 2.5 billion users across Facebook, WhatsApp and Instagram — Facebook has also been accused of wrongdoing innumerable times over the past few years. Moreover, its entire business model is predicated on capturing and monetizing as much data as possible — leading to flat-out cynicism among some that Facebook’s “private” future, as defined by Zuckerberg this year, is much more than lip service.

In the whitepapers describing Libra, the Libra Association and Calibra, Facebook wrote that user accounts would be disassociated from anyone’s real-world identity. Elsewhere, however, the documentation suggested that “Calibra will use Facebook data to comply with the law, secure customers’ accounts, mitigate risk and prevent criminal activity.”

So, which is it — and how much does the answer even matter?

“From what I’ve read so far, more of the heartburn from the general public and media so far, is that being a payment system will require Facebook to gather additional information on behalf of Libra users — because to have an effective money laundering program, you need to know who your users are,” said attorney Andrew Ittleman of Fuerst Ittleman David & Joseph, who advises fintech and crypto companies on legal issues.

As ambitious as Libra may be, it’s not exactly forging a new path. Facebook’s crypto initiative would make Calibra a money transmitter, a category that includes PayPal, Western Union and Barclays. And what a money transmitter must do to stay on the right side of the law — specifically, Know Your Customer, anti-money laundering requirements, and registration with FinCen — is well-established at the federal level.

The business of sending money is also not new for Facebook. It has an existing payments feature within Messenger, which likely means that Facebook  already has some of the expertise and personnel needed to muscle through regulatory hurdles. When Facebook started tinkering with a payment product back in 2010, it also formed a subsidiary, called Facebook Payments Inc.

“The infrastructure they would need is likely already there,” he added. “Whether they’re going to create a new entity for this purpose, or perhaps have a service agreement [with Facebook Payments], I don’t know.”

But Facebook isn’t just any money transmitter: It’s a social media company, and a not particularly well-trusted one at that. Witnesses including David Marcus, Libra’s project lead and former president at PayPal (PYPL – Get Report) , have been asked to testify before the Senate Banking Committee on July 16.

In that hearing, questions around how data will be shared between Calibra, Facebook and the Libra Association — a group of 28 initial participants that include Uber (UBER) , Lyft (LYFT) , Mastercard (MA – Get Report) , Visa (V – Get Report) eBay (EBAY – Get Report) and others — are likely to arise.

“Yes, there are regulatory hurdles that Facebook needs to overcome,” added David Kemmerer of Cryptotrader.tax, a company that sells compliance software for crypto traders, who placed the likelihood of Libra launching at 75%. “It also has the same right as any other cryptocurrency company or financial service company to launch a payment system. As long as it stays in line with the law, which they have made it clear they intend to do, the regulatory hurdles can be managed.”

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