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ownership of assets and accounts. These techniques include the
utilization of trusts, shell corporations, and persons acting in
a nominee capacity.
2. The information contained in this affidavit is based
upon my review of documents related to this investigation,
including documents obtained via subpoena, records seized
pursuant to the execution of a federal search warrants in
Herndon, Virginia in March 2002 and at the offices of Ptech, Inc.
("Ptechff
), in Quincy, Massachusetts in December, 2002, interviews
conducted with various sources of information, and information
furnished to me by other law enforcement agents, including
Special Agents employed by the Federal Bureau of Investigation
("FBI ff
), Internal Revenue Service, Criminal Investigations ("IRSCI
ff
) , and the U.S. Secret Service ("USSS ff
).
3. I am submitting this affidavit in support of a criminal
complaint charging OUSSAMA ABDUL ZIADE, former President and
Chief Executive Officer of Ptech, with:
(a) attempting to engage in transactions involving the
assets of Yassin Kadi, a Specially Designated Global
Terrorist, which assets had been invested in Ptech, in
violation of the provisions of the International
Emergency Economic Powers Act ("IEEPAff
), 50 U.S.C. §§
1701 and 1705 and Executive Order 13224;
(b) making false statements to the United States Small
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Business Administration when Ptech applied in January
2002 for a loan through a program offered to assist
small businesses economically harmed by the attacks of
September 11, 2001 (hereinafter, "the 9/11 Loan") by
falsely representing the identities of P~ech's major
shareholders (those who owned twenty percent or more)
to knowingly and willfully conceal the interest in
Ptech held by Sarmany Limited, one of Kadi's nominee
companies, in violation of 18 U.S.C. § 1014;
(c) making false statements of material fact to special
agents of the FBI's Joint Terrorism Task Force, the Internal
Revenue Service, Criminal Investigations, and Immigration
and Customs Enforcement in December 2002 when he falsely
denied that he knew what ownership interests Kadi held in
Ptech.
This affidavit is submitted for the limited purpose of
establishing probable cause in support of the application for the
requested criminal complaint and associated arrest warrant.
Therefore, it does not set forth each and every fact that I have
learned during the course of this investigation.
I. General Overview
4. Between on or about 1994 and 2001, Yassin Kadi alkla
"Shaykh Yassin Abdullah Kadi," "Yassin A. A. Kadi," "Yassin AlKadi,"
"Yasin Kahdi," "Yasin AI-Qadi," and "Yassin Qadi" ("Kadi")
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invested approximately $10,319,815 into Ptech,. a computer
software company located in Quincy, Massachusetts through
companies he owned, controlled, or to which he was affiliated.
As a result of these investments, ptech issued common stock to
Kadi's companies, Sarmany Limited ("Sarmany"), Caravan Company
Limited a/k/a Caravan Development Group Limited ("Caravan"),
Perdana Investments Limited ("Perdana"), Abrar Group
International ("Abrar"), Sara Company Limited ("Sara"), and
Grayson Group Limited ("Grayson"). As of October 12, 2001, the
effective date of Kadi's designation as a Specially Designated
Global Terrorist, Kadi indirectly owned and controlled a large
percentage of ptech common shares, representing a total
investment of $10,319,815 in Ptech, and held that interest in the
names of his nominee companies, including Sarmany and Caravan.
ZIADE knew that Kadi owned Ptech stock through these nominee
companies.
5. On October 12, 2001', the United States government
designated Kadi as a Specially Designated Global Terrorist
("SDGT") pursuant to Executive Order 13224 of September 23, 2001
("Blocking Property and Prohibiting Transactlons with Persons Who
Commit, Threaten to Commit, or Support Terrorism") promulgated
pursuant to, among other authorities, IEEPA.
'This designation was not published in the Federal Register
until October 26, 2001.
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6. As described below, under Executive Order 13224, all of
Kadi's property or interest in property was blocked or frozen,
and any transaction or dealing in Kadi's property or interest in
property was prohibited. Accordingly, when Kadi was designated
as a SDGT in October 2001, ZIADE as President and Chief Executive
Officer of ptech was required to freeze all assets, shares or
property interests of Kadi, whether held himself or by any
company with which he was affiliated, and was prohibited from
conducting, attempting to conduct, or conspiring to engage in any
transactions involving Kadi's or his company's Ptech stock.
7. ZIADE and other ptech agents, knowingly and willfully
failed to block Kadi's assets, and attempted to, and did engage
in transactions involving those assets, in violation of the
provisions of IEEPA, 50 U.S.C. §1705 and Executive Order 13224.
Further, ZIADE and others made false statements to the U.S. Small
Business Administration when ptech applied in January 2002 for a
9/11 Loan by knowingly and willfully concealing the interest in
ptech held by Sarmany, one of Kadi's nominee companies, in
violation of 18 U.S.C. § 1014. In addition, ZIADE made false
material statements to Special Agents of the FBI's Joint
Terrorism Task Force, the Internal Revenue Service, Criminal
Investigations, and Immigration and Customs Enforcement in
December 2002 when he falsely denied that he knew what ownership
interests Kadi held in Ptech.
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II. Summary of the Law
8. Under IEEPA, 50 U.S.C. S170l-l705, the President has the
authority Uto deal with any unusual and extraordinary threat
. to the national security, foreign policy or economy of the
United States. H 50 U.S.C. § 1701. The President deals with
unusual or extraordinary threats through Executive Orders, which
have the force and effect of law. A violation of an Executive
Order is an illegal act punishable under IEEPA, 50 U.S.C. §
l705(b).
9. On September 23, 2001, pursuant to IEEPA, President
Bush issued Executive Order 13224, entitled uBlocking Property
and Prohibiting Transactions with Persons Whc Commit, Threaten to
Commit, or Support Terrorism. H It declared a national emergency
to address the September 11 terrorist attacks, among other
terrorist threats. Executive Order 13224 directs that uall
property and interests in property of [persons determined to be
subject to the order] that are in the United States or that
hereafter come within the United States, or that hereafter come
within the possession or control of the United States persons are
blocked. H
10. Executive Order 13224 further spec~fically states that:
(a) any transaction or dealing by United States persons
or within the United States in property or interests in
property blocked pursuant to this order is prohibited,
including but not limited to the making or receiving of
any contribution of funds, goods, or services to or for
the benefit of those persons listed in the Annex to
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this order or determined to be subject to this order2
;
(b) any transaction by any United States person or
within the United States that evades or avoids, or has
the purpose of evading or avoiding, or attempts to
violate,' any of the prohibitions set forth in this
order is prohibited; and
(c) any conspiracy formed to violate any of the
'Federal regulations enacted pursuant to IEEPA further
describe the prohibited transactions as follows: "no property or
interests in property of a specially designated [global]
terrorist, that are in the united States, that hereafter come
within the United States, or that are or hereafter come within
the possession or control of U.S. persons, including their
overseas branches, may be transferred, paid, exported, or
otherwise dealt in." 31 C.F.R. § 595.201. Office of Foreign
Asset Control ("OFAC") has broadly defined property interests as
"an interest of any nature whatsoever, direct or indirect" of any
property including "money, checks, drafts, bullion, bank
deposits, saving accounts, debts, indebtedness, obligations,
notes, guarantees, debentures, stocks, bonds, coupons, any other
financial instruments, bankers acceptances, mortgages, pledges,
liens or other rights in the nature of security, warehouse
receipts, bills of lading, trust receipts, bills of sale, any
other evidences of title, ownership or indebtedness,
contracts of any nature whatsoever, and any other property real,
personal, or mixed, tangible or intangible, or interest or
interests therein, present, future, or contingent." See 31
C.F.R. §595.307; 31 C.F.R. § 595.310. These regulations were
promulgated by OFAC in August 1997 under Executive Order 12947,
also enacted pursuant to IEEPA. The 1997 regulations (31 C.F.R.
Part 595) outlined what OFAC considered a prohibited transaction.
The sections of the 1997 regulations that contain the definitions
of prohibited transactions and the terms property and interests
in property are identical, with the exception of the use of the
term specially designated terrorist versus specially designated
global terrorist (emphasis added), to those enacted pursuant to
E.O. 13224 in June 2003.
3 In the First Circuit, an attempt occurs when a defendant
intends to commit the substantive crime and 1:akes a purposeful
act that, under the circumstances as he believed them to be,
amounted to a substantial step toward the commission of that
crime and which strongly corroborates his criminal intent.
United States v. Dworken, 855 F.2d 12, 16-19 (1"' Cir. 1988).
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prohibitions set forth in this order is prohibited.
11. On October 26, 2001, the Office of toreign Asset
Control ("OFAC"), a component of the u.s. Department of Treasury,
published the designation of 45 individuals and 21 entities
pursuant to the authority of Executive Order 13224. See 66
Federal Register 54404. Kadi was one of them, designated as
follows:
AL-QADI, Yasin (a.k.a. KADI, Shaykh Yassin Abdullah;
a.k.a. KAHDI, Yasin) Jeddah, Saudi Arabia (individual)
[SDGT] .
KADI, Shaykh Yassin Abdullah (see AL-QADI, Yasin)
(individual) [SDGT].
KAHDI, Yasin (see AL-QADI, Yasin) (individual) [SDGT].
66 Federal Register at 54406, 55408.
12. Kadi's designation was effective at 8:00 a.m. on
October 12, 2001. As discussed above, his designation made it
illegal for any United States person or entity to conduct any
transaction or dealing in property, or an interest in property,
of Kadi in the United States.
13. Under Section 1014 of Title 18, it is illegal to make
any false statement or report to the Small Business
Administration in connection with a loan application for the
purpose of influencing its action in any way. The maximum
penalty for a violation of Section 1014 is 30 years imprisonment
and a fine of $1,000,000. Similarly, Section 1001 of Title 18
prohibits the making of any materially false, fictitious, or
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fraudulent statement or representation in any matter within the
jurisdiction of the executive, legislative, or judicial branch of
the u.s. Government. The maximum penalty for violation of
Section 1001 is five years imprisonment and a fine of $250,000.
III. Facts
a. Ptech Established with Financial Assistance of Kadi
14. Ptech is a private, for-profit computer software
company, that was incorporated in Massachusetts on February 2,
1994. Ptech's principal place of business has been located at
500 Victory Road in Quincy, Massachusetts. ZIADE is the
President, Chief Executive Officer, and Chairman of the Board of
Directors of Ptech.
15. Ptech has developed and sold systems management
software to private businesses, individuals, and government
agencies. Until approximately 1997, Ptech's main focus was
research and development. Ptech spent approximately $20 million
developing its products. These funds came primarily from Saudi
Arabian investors, including Kadi.
16. ZIADE co-founded Ptech in 1994 with the capital
financing provided by Kadi through one of his nominee companies,
Sarmany Limited. Initially, in 1994, Kadi invested approximately
$5 million in ptech through Sarmany, an Isle of Man company he
owned and controlled. In exchange, and pursuant to an
authorization granted by Kadi and Sarmany's other director, Ptech
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and Sarmany entered into a Stock Purchase Agreement on March 24,
1994, under which ptech issued stock certificate number 3 to
Sarmany representing 47,700 shares of Ptech common stock (53% of
all of the issued and outstanding ptech stockl.
b. Kadi's Investments in ptech after its Establishment
17. In or about November 1995, Caravan Company Limited
a/k/a Caravan Development Group Limited, two related companies,
one in the Isle of Man and the other in Malaysia, owned and
controlled by Kadi, both referred to as ftCaravan H
, invested $1.8
million in Ptech, bringing Kadi's total investment in Ptech to
$6.8 million. In exchange for the investment, ptech and Caravan
entered into a Stock Purchase Agreement, which was signed by Kadi
as Chairman and Director of Caravan, under which Ptech issued to
Caravan on November 1, 1995 stock certificate number 4
representing 10,588 shares of Ptech common stock.
18. Between 1996 and 1998, Kadi also invested approximately
$3 million more in ptech through Perdana Investment Limited,
Abrar Group International, and Sara Company Limited, companies he
also owned and controlled, bringing his total investment in the
company to more than $9.8 million. Later, Kadi transferred the
Perdana and Abrar holdings to Caravan, another of Kadi's
companies.
19. Between approximately January 15, 1996 and April 29,
1998, Kadi invested $2,211,935 in ptech through Perdana. As a
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result, ptech issued Perdana 13,969 shares of ptech common stock
represented by four stock certificates.
20. On or about July 15, 1996, Kadi invested $648,000 in
ptech through Abrar. In exchange, ptech issued stock certificate
number 14 to Abrar representing 3,812 shares of ptech common
stock.
21. On or about April 29, 1998, Kadi invested $199,920 in
Ptech through Sara, a Malaysian company he owned and controlled.
On or about April 30, 1998, Kadi invested another $99,960 in
Ptech through Sara. In exchange for these investments, ptech
issued Sara two stock certificates: number 23 in the amount of
1,176 common shares and number 38 in the amount of 588 common
shares.
22. On or about September 23, 1998, at the request of Kadi,
Abrar's Ptech stock certificate, certificate number 14, was
transferred from Abrar to Caravan.
23. On February, 15, 1999, Kadi wrote a letter to ZIADE
instructing ZIADE to transfer his holdings of Ptech stock in name
of Perdana to Caravan. In this letter, signed by Kadi as the
Chairman of Perdana, he states:
Perdana Investment (L) Limited is owned by Sheikh
Yassin A. A. Kadi. The said company has decided to
transfer the following ptech Inc., shares to its
associate Caravan Company (L) Limited, also owned by
Sheikh Yassin A. A. Kadi.
Immediately below these words was the following chart identifying
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which ptech shares and certificate numbers Kadi wished to
transfer from Perdana to Caravan:
Date Issued Cert1f1cate Number Number of Common
Stock (Shares)
15-Jan-1996 13 5,882
l5-Aug-1996 15 5,294
l5-Aug-1996 20 294
29-Apr-1998 22 2,499
TOTAL 13,969
24. As a result, Ptech transferred 13,969 of Perdana's
ptech shares, representing Kadi's investment in Ptech through
Perdana of $2,211,935, to Caravan using stock certificate number
40. By February 1999, Kadi owned $4.65 million dollars worth of
Ptech common stock through Caravan.
25. In or about March to April 2000, Kadi made a
convertible loan in the amount of $360,000 to Ftech through
Grayson Group Limited, a company affiliated to Caravan that Kadi
owned and/or controlled. Grayson transferred this money to ptech
via bank wires from Faisal Finance Switzerland. This loan was
convertible to shares of ptech common stock. On or about June
29, 2001, Grayson's loan of $360,000 was converted to 2,118
shares of Ftech stock.
26. In summary, by June 2001, Kadi had invested $10,319,815
in Ftech.
27. By the time of his designation in October 2001, Kadi
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owned or had a direct or beneficial interest' in 55,8005 shares
of Ptech common stock through Sarmany, which represented
approximately 34% of Ptech's outstanding issued shares; 28,369
shares of Ptech common stock through Caravan; 1,765 shares of
ptech common stock through Sara; and 2,118 shares of ptech common
stock through Grayson. In total, by October 12, 2001, the date
of Kadi's designation as a SDGT, Kadi indirectly owned through
his nominee companies 88,051' shares of ptech common stock, which
represented more than 50% of Ptech's outstanding issued shares.
c. Kadi's Significant Role in the Operation of ptech
28. As a result of his substantial investments in Ptech,
Kadi involved himself in the operation and management of Ptech.
Kadi served as a director of Ptech from approximately March 1995
, Although Kadi transferred his ownership interests in some
of these companies to his wife and son in 1999, he continued to
exert control over his Ptech investments and by October 2001 had
at least a beneficial interest in them, which is all that IEEPA
requires. For instance, although he formally transferred his
ownership interest in Sarmany and Caravan (Isle of Man) to his
wife and son, Kadi remained a director of Caravan (Isle of Man)
until October 15, 2001 and a director of Sarmany until April
2002. Kadi also continues to this day to serve as a director and
shareholder of Sara.
SOn March 4, 1999, Ptech transferred 8,100 common shares
from Omega Integrated Information Systems to Sarmany pursuant to
Kadi's instructions.
'By that time, Ptech had issued a total of 165,036 shares of
common stock.
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until at least 1998' and attended several Board of Director
meetings in his capacity as a director and/or investor. For
instance, Kadi attended Ptech's Board of Director meeting held in
Jeddah, Saudi Arabia (where Kadi's residence and some of his
businesses are located) on March 22, 1998. The minutes of this
meeting are signed by ZIADE, Kadi, and another Ptech director.
They reflect that the Board decided, among other things, that
Perdana, one of Kadi's companies, would pay "$261,445.00 for all
lease obligations of Ptech, Inc. outstanding with BMI Leasing
Inc. of Secaucus, New Jersey." At another ptech Board of
Director meeting held on November 3, 1998, Kadi and another Saudi
Arabian investor agreed to help raise two million dollars for
Ptech by January 1999.
29. ZIADE considered Kadi a partner in his Ptech "venture"
as well as a "key member of the [B]oard" of Directors. In a
letter to Kadi dated July 27, 1997 requesting advice about
business development, ZIADE stated:
You are the major shareholder as well as a key member
of the board. We have to do this together and I need
to have access to you, at least to brainstorm in a
difficult situation. Between you and myself we own
more than 80% of the company. Therefore you and then
myself have the most to gain or lose in this company.
'In his April 1999 curriculum vitae maintained by the
Vakfuska Bank in Sarajevo, Kadi indicated that he held "large
interests in capital investment in risky projects - Ptech Inc. Boston,
Massachusetts, USA" and was at that time serving as a
director of Ptech.
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Over the years 1996-1998, ZIADE wrote similar letters, emails,
and facsimiles to Kadi. In these communications, ZIADE
repeatedly thanked Kadi for his support, recognized his
assistance, and requested more money to pay ptech's debts and
expenses. For example, on April 21, 1996, ZIADE wrote to Kadi:
As you told me last time we spoke, 'this is the last
time I will help you in getting cash, after that you
have to look for other alternative in USA.' We will
take that effort now, but we will appreciate any help.
. Remember the first day that we met in
Westborough, I told [you] about my dreams, and I asked
you are you going to be able to support me to go
through this. . And you have been supportive. Do
not let anything get between you and your goodwill. I
have been working for the past years to put this
company together. You and I did not want me to be
alone in this venture. You wanted me to build a team,
and I did. . I will never forget your support and
encouragement, and with God will, I will not fail you.
In addition to these written communications, ZIADE and Kadi also
had frequent telephone conversations while Kadi served on Ptech's
Board of Directors.
30. Prior to his designation in October 2001, ZIADE and
ptech's directors communicated with Kadi via telephone concerning
operational and financial matters relating to Ptech. ZIADE and
other Ptech officers and directors also sent and copied Kadi
and/or his chief financial accountant or financial advisor,
emails regarding the management of ptech using the email address
yassin@caravangroup.com. From on or about 1996 until 2001, ZIADE
(and occasionally other Ptech employees at ZIADE's direction)
routinely sent Kadi by facsimile or email ptech's monthly and
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quarterly financial statements. For instance, on December 13,
2000, ZIADE sent Kadi via email a copy of Ptech's financial
statement for the period of January to November 2000 and on
January 2, 2001, in an email he entitled ~Dec another Good
Result", ZIADE advised Kadi of the monthly revenue numbers for
December 2000 and the annual revenue numbers for 2000.
31. Even after he resigned from the Board of Directors,
Kadi remained actively involved in the operation and management
of Ptech. Kadi hosted and participated in several ptech business
meetings in Saudi Arabia from 1999 through 2001. For instance,
in February 1999, several meetings were held in Saudi Arabia with
Kadi, including one at Kadi's home, at which discussions about
the financing of Ptech, the marketing of Ptech products, and
other business matters took place. In January 2001, ZIADE and
others met with Kadi in Kadi's office in Saudi Arabia to discuss
a possible ptech restructuring, a review of Ptech's financial
situation and business operation in 2000, Ptech's 2001 strategy,
and an update on the hiring of a Chief Financial Officer. Kadi
also assisted ptech in his efforts to raise financing for Ptech
in the Middle East.
32. ZIADE and Ptech's directors also frequently sought
Kadi's advice and approval on important financial and operational
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matters after Kadi resigned from Ptech's Board of Directors'.
These included the following:
a. In March and April, 2000, in response to financial
difficulties ptech was experiencing, Kadi loaned Ptech
$360,000 through Grayson, a company Kadi controlled.
2001, ZIADE had several conversations wi~h Kadi via
In May
telephone concerning the conversion of his $360,000 loan to
ptech shares.
b. In December 2000, ZIADE had at least two conversations
with Kadi about Ptech during which the following topics were
discussed: the appointment of one of Kadi's associates, a
Pakistani born United States citizen, to Ptech's Board of
Directors to represent the interests of ~he Saudi Arabian
investors; restructuring Ptech; finalizing the decision on
the hiring of a new Chief Financial Officer and related
negotiations with the candidate; and Ptech's cash flow
projections.
c. As a result of Kadi's request for representation on
Ptech's Board of Directors, on or about ?ebruary 11, 2001,
Kadi's associate was appointed as a director of Ptech.
d. Because Ptech was experiencing financial difficulties at
8Kadi also solicited advice from ZIADE. In an email dated
November 21, 2000, ZIADE provided Kadi with f:Lnancial advice
concerning a potential investment in another company, Inzigo,
Inc.
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that time, on or about December 13, 2000 .. ZIADE requested
and Kadi agreed to make arrangements for Ptech to receive a
$300,000 loan.
e. Between in or about May and July 2001, Kadi was included
in oral and written (via email) discussions concerning a new
potential licensing agreement between ptech and Horizons
Software Development, an Egyptian company.
f. Between in or about April and June 2001, ptech
considered acquiring a Canadian company, Process Renewal
Group ("PRG H
). Kadi was included in these negotiations. In
|
fact, ZIADE advised the President of PRG that he would have
to meet the "real ownersH of ptech in Saudi Arabia before
the deal could be approved. Thereafter, in June, 2001, the
President of PRG traveled to Saudi Arabia and met with Kadi
and another Saudi Arabian ptech investor to negotiate the
sale (despite these negotiations, the sale did not
materialize) .
g. As late as August 9, 2001, Ptech's Chief Operating
Officer ("COO H
) sent Kadi an email, on behalf of ZIADE,
containing information regarding a confidential executive
summary of the Ptech business plan, a potential consulting
contract, and information on Ptech's efforts to raise $15
million in financing. This email was sent to Kadi and
another Saudi Arabian investor.
18
In this message, on which
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ZIADE was copied, the COO stated: "Oussama is in Lebanon and
is having some difficulty with Internet access. For this
reason he asked me to forward on to you an update on our
progress at Ptech. He also asked me to ensure that Yassin
also receives this information. " The COO further
described the progress on the potential PRG acquisition and
concluded the email: "We all appreciate your continuing
interest and support for Ptech."
h. Ptech's employees at Ziade's direction routinely
provided financial statements and other business reports to
Kadi's financial advisors.
d. ZIADE's Knowledge of Kadi's Ownership of ptech Shares
and Involvement in its Operations
33. Prior to Kadi's designation as a SDGT, ZIADE, Ptech's
co-founder and its only President and CEO, had knowledge of all
of Ptech's investors and specifically knew Kadi had invested
approximately $10 million dollars in Ptech through foreign
companies he owned and/or controlled.' ZIADE personally
maintained copies of the original stock purchase agreements and
transfer requests signed by Kadi. ZIADE also maintained and
edited stock ownership records in the form of capitalization
tables on his computer, which demonstrated that Kadi's companies
owned a majority of Ptech's outstanding issued shares.
'From its inception in 1994 to October 2001, Ptech had only
issued 53 stock certificates over a period of eight years.
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34. Two financial documents created by ZIADE and maintained
on his computer prior to the government's search of ptech in
December 2002, identify Kadi as a Ptech investor whose total
investment in the company was approximately $10 million dollars.
In one document created on or about December 17, 1999, ZIADE
indicated that Kadi invested $9.65 million in Ptech, Kadi's
family invested $0.2 million, and Kadi's friends invested $1.7
million. In another document, created on or about November 29,
2001, entitled ~New CAPITAL2 Analysis", ZIADE identified Kadi as
having invested, and owning Ptech shares worth, $9,959,810
through Sarmany, Caravan, and Sara. Similarly, in a document
entitled ~Stock Dustribution" created by ZIADE on or about
September 26, 2000, ZIADE listed Kadi as an owner of 98,100 Ptech
shares while he identified himself and Ptech :nanagement as owning
153,036 shares.
35. ZIADE communicated with Kadi or his financial advisors
about a number of financial matters concerning Ptech, including
the amount of Ptech shares Kadi owned and names under which Kadi
held his Ptech shares. For instance, on March 11, 2001, Kadi's
chief financial accountant informed ZIADE by email that Kadi was
considering the further consolidation of his ~oldings of ptech
shares. Kadi's accountant advised ZIADE:
Sheikh Yassin A. Kadi is considering the consolidation
of his holdings into one offshore company account.
Currently, the majority of shares of ptech are held in
the name of Sarmany Limited. Sheikh Yassin A. Kadi now
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wants to transfer all the shares owned by Sarmany
Limited to either Caravan Development Group Limited or
Loxhall Limited, without passing of any actual
consideration. Sarmany, Caravan, and Loxhall are Isle
of Man, nonresident offshore companies.
36. As discussed above, Kadi made a $360,000 loan to ptech
through Grayson in March and April 2000. In May 2001, ZIADE had
several conversations with Kadi via telephone concerning the
conversion of this $360,000 loan to Ptech shares. ZIADE
documented one of his telephone conversations with Kadi in an
email to Kadi's associate on the Board of Directors dated May 15,
2001. In this email, ZIADE admitted that "[aJs per our records
the whole of US $360,000 was injected as convertible loan @ $170
per share by Sheikh Yassin A. Kadi." ZIADE further indicated
that ptech shares would be issued to Kadi in the name of Grayson
after two issues had been worked out with the Ptech Board. ZIADE
also referenced Kadi's assistance in helping ~o raise over $2
million dollars from investors after February 1999. In closing,
ZIADE stated: "I think these two issues need ~o be resolved by
the Board as soon as we can so we can make Yassin happy."
37. Significantly, in January 2001, during a disagreement
with Ptech's Saudi Arabian shareholders concerning Ptech's
serious financial instability and the proposed replacement of
ZIADE as Ptech's President and Chairman, ZIADE wrote emails in
which he noted that Kadi was a majority shareholder of Ptech and
was extensively involved with the management of the company. On
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January 22, 2001, in an email to one of Kadi's financial
advisors, ZIADE stated:
Yassin made a mistake in buying a majority of ptech to
start with, but did not have the mean[s] to defend the
company[.] [E]ven he knew that this - as it was put for
him then - [was] an effort that will require $25M and 5
years. This put all the load on him. . Yassin is
emotional - much more than me - but [he] ha[s] good
instinct[s], we need always to influence him
positively. Leave out of the negative influence. Not
because you get upset [with] me, and you and Saied
decided that [the] CEO has to be changed, you go and
convince him [of] that. We are not going to go
anywhere with this.
38. Over the years 1995 through 2002, Kadi and his chief
financial accountant also sent ZIADE correspondence on letterhead
bearing the name °Yassin A. Kadi Est." or which used Kadi's
address of P.O. Box 214, Jeddah 21411, Saudi Arabia.
e. ZIADE and ptech Learns of Kadi's Designation as a SDGT
39. On October 18, 2001, ZIADE downloaded from the internet
a copy of an article from the Chicago Tribune regarding Kadi's
designation as a SDGT. The article specifically stated that
Kadi's name was included on a list of °individuals and groups
accused of supporting Al Qaeda."
40. On November 8, 2001, ZIADE visited OFAC's website and
downloaded a copy of Executive Order 13224 with the list of
people and entities designated as Specially Designated Global
Terrorists as of that date. This list included Kadi's name and
indicated he had been designated as a SDGT on October 12, 2001.
The designation list, maintained on OFAC's website, advised the
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public to contact OFAC for more information about sanctions
involving transactions with designated terrorists and provided a
telephone number.
41. ptech did not contact OFAC through any of its officers,
directors, employees, or agents to request a license to transact
business or engage in any transactions involving the assets of
Kadi, a SDGT.
f. Steps taken to conceal Kadi's Property and/or Interests
in ptech
42. From October 2001 through March 2002, several
discussions occurred and meetings were held among ZIADE and other
members of ptech management concerning Kadi's designation.
43. During one meeting with a ptech forlner employee,
ZIADE described various steps that had been taken to conceal
Kadi's ownership interest in ptech and that Kadi's equity
interest in ptech had been transferred to his son. Further,
ZIADE stated that there was no trail linking Kadi to ptech
because Kadi never owned any Ptech shares in his own name.
44. Additionally, a witness has reported that during one
management meeting in or about November 2001, ZIADE and other
members of Ptech management, based upon the advice of its
corporate counsel, decided to conceal from the government and the
public Kadi's indirect ownership of Ptech stock through his
nominee companies.
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g. Ziade Engages in Prohibited Transactions Involving
Kadi's Property and/or Interests in ptech
45. On January 15, 2002, three months after Kadi's
designation as a SDGT, Ziade established a new corporation,
Ptech, Inc., in Delaware. In February 2002, Ziade Ptech, Inc.
(MA) , was merged with Ptech, Inc. (DE), with ~tech, Inc. (DE)
being designated as the surviving corporation. 'o According to
the Plan of Merger, and Articles of Incorpora~ion and Bylaws for
Ptech, Inc. (DE), Ptech's agents advised the shareholders of the
Massachusetts entity that their shares of co~non stock would be
converted into preferred A shares of the Delaware entity.
Accordingly, the Massachusetts shareholders were instructed to
return their Ptech stock certificates and advised that new stock
certificates in the name of the Delaware entity would be issued.
46. Based upon a desire of Ptech's Board of Directors
(ftBOD") to ftfix the foreign ownership issue" (identified as an
agenda item at the BOD meeting of December 18, 2001), ZIADE
drafted clustering proposals whereby Sarmany (a Kadi controlled
company) would transfer its ptech shares to other entities.
final proposal, entitled ·Shareholding Clustering Proposal",
In a
dated April 18, 2002, ZIADE proposed that Sarmany transfer all of
its ptech shares to three entities in the following amounts:
lOZIADE acknowledged to one former Ptech employee that the
Delaware merger was a way ftto go around the problem" (the Kadi
designation problem) .
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Bective Limited - 24,000 shares; Arkday Limited - 17,700 shares;
Grayson Group Limited 14,100 shares. l1
47. On April 24, 2002, Sarmany12, with the assistance of
Kadi's chief financial accountant, at the advice of ZIADE,
transferred Sarmany Limited's entire property interest in Ptech
(55,800 shares of ptech common stock) to three entities: Bective
Limited; Arkday Limited; and Grayson Group Limited.
Specifically, as ZIADE had proposed, Sarmany transferred 24,000
Ptech shares to Bective Limited; 17,700 Ptech shares to Arkday
Limited; and 14,100 Ptech shares to Grayson Group. ZIADE
assisted Sarmany with this stock transfer by nullifying the old
shareholder (Sarmany) agreements and stock certificates on its
books and transferring Sarmany's stock interests on Ptech's
capitalization tables to the new shareholders (Bective, Arkday,
and Grayson) .'3 ZIADE also advised Kadi's chief financial
l1This clustering proposal also proposed that Sara transfer
all of its 1,764 Ptech shares to Arkday Limited.
120n April 15, 2002, Kadi notified Sarmany's Board of
Directors, which only consisted of one person besides himself, of
his immediate resignation from the Board. Kadi's chief financial
accountant, employed at Kadi's companies including Yassin A. Kadi
Establishment, continued to exercise control over Sarmany. In
April 1999, Kadi had transferred his 50% ownership interest in
Sarmany to Ilana Limited, a company owned by his wife and son.
"Like Sarmany, on or about April 24, 2002, Sara, as ptech
had proposed, transferred its 1,764 Ptech shares to Arkday
Limited. This transfer was reflected in Ptech's capitalization
records. On April 24, 2002, Kadi was a director and shareholder
of Sara. Based upon Sara's corporate records, Kadi's status as
director and shareholder has not changed since April 2002.
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accountant he would issue new stock certificates to the new
shareholders based upon the final clustering proposal.
48. As a result, Sarmany was never identified as an owner
of stock of the Delaware entity. Sarmany's shares were
transferred to the three new entities, who replaced Sarmany, at
the conversion ratel4 given to the original Massachusetts
shareholders. Accordingly, Bective became an owner of 3,600,000
Preferred A shares of ptech (DE), Arkday became an owner of
3,671,400'5 Preferred A shares of ptech (DE), and Grayson became
an owner of 2,160,000 Preferred A shares of ptech (DE).
h. ZIADE Made False Statements to U.S. Small Business
Administration
49. ZIADE made false statements, in violation of 18 U.S.C.
S1014, on an application for a loan from the U.S. Small Business
Administration ("SBA") under a program designed to assist
business adversely affected by the September 11, 2001 terrorist
attacks.
50. In January 2002, Ptech submitted a loan application to
the SBA for $650,000 under the Expanded Economic Injury Disaster
HAs a result of the merger, each share of Ptech (MA) common
stock was converted into 150 shares of Prefer~ed A shares of
Ptech (DE).
"This amount also includes ptech (MA) common shares
transferred on or about April 24, 2002 from Sara Company Limited,
Kadi's wife, Kadi's family members, and Caravan Development
Limited to Arkday and converted to Preferred 1\ shares of ptech
(DE) .
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Loan Program, a program created to help small businesses
economically harmed by "the destruction of the World Trade Center
or damage to the Pentagon on September 11, 2001".
51. The SBA instructed Ptech, orally and in writing, that
it was required, in its application, to provide the names of any
individual or entity that owned 20% or more of Ptech.
Notwithstanding this instruction, ZIADE and P:ech's COO concealed
the fact that Sarmany owned 20% or more of ptech stock at the
time of its application for the 9/11 loan in ,January 2002. This
omission is directly contradicted by each tax return filed by
Ptech for years 1994-2000, which identify Sarmany as a foreign
entity owning 25% or more of ptech stock. In January 2002,
Sarmany owned approximately 34% of Ptech's corrnnon shares.
52. ZIADE created a new capitalization ("cap") or stock
ownership table on his laptop for the sole purpose of being used
as an exhibit to the SBA loan application. This table omitted
Sarmany from the list of owners of ptech shares, even though
other existing cap tables maintained by ZIADE dated prior to and
after January 2002 (the date of the SBA loan application), and
also maintained on his laptop, listed Sarmany as the largest
single shareholder owning 55,800 Ptech shares, which represented
between 33.82 and 35.3% of Ptech's total outstanding common
shares.
53. Both ZIADE and Ptech's COO signed the application. By
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signing the application, both ZIADE and ptech's COO certified
that
All information in this application is true and
complete to the best of my knowledge. All financial
statements submitted with this application fully and
accurately present the financial position of the
business. I have not omitted any disclosures in these
financial statements. This certification also applies
to any financial statements submitted after this date.
I understand that false statements may result in the
forfeiture of benefits and possible prosecution by the
u.s. Attorney General (reference 18 U.S.C. § 1001
and/or 15 U.S.C. § 645).
54. Ptech's SBA loan application was not approved for
various reasons including, but not limited to, Ptech's inability
to establish future profitability and the existence of a federal
criminal investigation of the company and its agents. This does
not affect ZIADE's criminal liability; he viclated 18 U.S.C. §
1014 when he falsely stated the identities of Ptech stockholders
and omitted the name Sarmany.
i. ZIADE Makes False Statements to Prosecutors and Law
Enforcement
55. On December 5, 2002, ZIADE, represented by counsel, met
with prosecutors and law enforcement agents involved in the
investigation of ptech in Boston. Pursuant to a proffer
agreement, ZIADE made the following statements, which he knew to
be false: (1) he had no knowledge of Kadi's position in Grayson
Group; (2) he was never conclusively able to determine whether
Kadi had invested any of his own money into ptech; (3) he did not
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have any paperwork disclosing that Kadi had invested any of his
own money into ptech; and (4) approximately five months
previously (July 2002), ZIADE first learned tiat Kadi had more of
a connection with Caravan than he originally believed.
56. ZIADE knew in December 2002 that Kadi was involved in
the management and operations of ptech from the time that Kadi
initially invested $5 million dollars into the company in 1994.
ZIADE knew Kadi remained involved in the management of ptech
until he was designated as a SDGT in October 2001. Over the
years, ZIADE had met with Kadi in Saudi Arabia about Ptech, and
communicated with Kadi via telephone and email. ZIADE had also
communicated with Kadi's financial advisors regarding Kadi's
holdings in Ptech shares and under what companies names he held
them.
57. Additionally, when he was interviewed by law
enforcement in December 2002, ZIADE knew that he had electronic
and paper documents in his possession at his office and on his
computer that demonstrated that Kadi had directly invested
millions of dollars in Ptech, many of which he himself had
created.
58. ZIADE also knew Kadi owned or controlled Grayson Group.
In 1999, ZIADE and Kadi had discussed Kadi making a loan to Ptech
in 2000 through Grayson that would be convertible to Ptech shares
at a later date. Kadi in fact made this loan to ptech in 2000.
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Subsequently, as a result of discussions with Kadi in 2001, ZIADE
converted the loan to 2,118 ptech shares. In an email to one of
Ptech's directors, ZIADE admits "[a]5 per our records the whole
of US $360,000 was injected as convertible loan @ $170 per share
by Sheikh Yassin A. Kadi." Thus, ZIADE knew in December 2002
that Kadi controlled and/or owned Grayson Group, the entity
through which Kadi made a loan to ptech in 2000.
CONCLUSION
47. Based upon the above, and on my training and
experience, I have probable cause to believe, and do in fact
believe, that OUSSAMA ABDUL ZIADE:
(a) attempted to engage in transactions involving the
assets of Yassin Kadi, a Specially Designated Global
Terrorist, which assets had been invested in Ptech, in
violation of the provisions of the International
Emergency Economic Powers Act, 50 U.S.C. §§ 1701 and
1705 and Executive Order 13224;
(b) made false statements to the United States Small
Business Administration when ptech applied in January 2002
for a loan through a program offered to assist small
businesses economically harmed by the attacks of September
11, 2001 (hereinafter, "the 9/11 Loan") by falsely
representing the identities of Ptech's major shareholders
(those who owned twenty percent or more) to knowingly and
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willfully conceal the interest in ptech held by Sarmany, one
of Kadi's nominee companies, in violation of 18 U.S.C. §
1014;
(c) made false statements of material fact to special agents
of the FBI's Joint Terrorism Task Force, the Internal
Revenue Service, Criminal Investigations, and Immigration
and Customs Enforcement in December 2002 when he falsely
denied that he knew what interests Kadi held in Ptech prior
to his designation as a SDGT.
L . .I\ \- J:
>
Sworn to me and
July 2005.
LINDA HUNT
Special Agent
Immigration and
sUbscribed!; my
,
B. SWARTWOOD
States Magist
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""'JS 45 (5/97) - (Revised USAO MA 6/29/04)
Criminal Case Cover Sheet U.S. District Court - District of Massachusetts
Place of Offense: Massachusetts Category No......II"- _ Investigating Agency ICEIFBWRS
City Quincy and Boston Related Case Information:
County Norfolk and Suffolk Superseding Ind./ Inf.
Same Defendant
Magistrate Judge Case Number
Search Warrant Case Number
R 201R 40 from District of
Case No.
New Defendant _
2002M-0461-RBC
Defendant Information:
Defendant Name QUSSAMA ABDUL ZIADE Juvenile DYes 119 No
Alias Name
Address
Birth date (Year only): 1964 SSN (last 4 #): 3765 Sex M Race: ______ Nationality: ""L"'c:::.:b"'a"'n"'e:::.:se::- _
Defense Counsel if known: Martin Richey Address: Federal Defender Office
408 Atlagtic Aye.. Boston. MA
Bar Number:
U.S. Attorney Information:
AUSA B. Stephanie Siegmann Bar Number if applicable _
Matter to be SEALED:
[XJ Warrant Requested
Interpreter: DYes 119 No
119 Yes
List language and/or dialect:
o Regular Process o In Custody
Location Status:
Arrest Date:
on
o Already in Federal Custody as oAlready in State Custody
D On Pretrial Release: Ordered by
in
DServing Sentence DAwaiting Trial
[R] Complaint D Indictment
[!I Felony ....:3'-- _
o Information
o _____ 0 Misdemeanor Total # of Counts: Petty
Charging Document:
Date: July 27, 2005 Signature of AUSA:
Continue on Page 2 for Entry of U.S.c. Citations
[R] I hereby certify that the case numbers of any prior proceedings before a Magistrate Judge are
accurately set forth above.
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Index Key/Code
Set 1 50 U.S.c. §§ 1701 & 1705
~JS 45 (5/97) - 'Revised USAO MA 3/25/02) Page 2 of 2 or Reverse
District Court Case Number (To be filled in by deputy clerk):
Name of Defendant OUSSAMA ABDUL ZIADE
U.S.c. Citations
Description of Offeuse Charged
International Emergency Economic Powers Act 1
Count Numbers
Set 2 18 U.S.c. § 1014
Set 3 18IJ,S,C. § 100J(a)f2)
Set 4
Set 5
Set 6
Set 7
Set 8
Set 9
Set 10 _
Set 11 _
Set 12 _
Set 13 _
Set 14 _
Set 15 _
ADDITIONAL INFORMATION: |
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