Arrest of man wanted in US over €50 million fraud declared invalid by court

A 68-year-old man wanted in America on various financial crime charges, including fraud of $50 million is arrested in Malta

File Photo
File Photo

Lawyers for a man contesting his extradition to the US have successfully contested the validity of the arrest warrant issued in Malta, arguing that he is not indicted for an arrestable offence or unlawfully at large.

Lawyers Giannella De Marco, Stefano Filletti and Mark Refalo appeared for Frank Salvatore Rafaraci, a 68 year-old Italian-American man who is wanted by the American authorities to answer charges of having defrauded the United States Government out of some €50 million, amongst others.

The man had been suspected as a key player in a scheme that used falsified invoices and receipts for equipment and supplies provided to the US Navy.   

The man is also alleged to have paid a US government official tens of thousands of euros in cash bribes in exchange for insider information on upcoming navy contracts.  

US authorities believe the man and his known associates then laundered illicit funds using shell companies, evading millions of dollars in US taxes.  

He was flagged to the Maltese authorities by their US counterparts earlier this year when they found out that he was planning to fly to Malta for a short time period

Magistrate Yana Micallef Stafrace presided over Rafaraci's arraignment. Police Inspectors Omar Zammit and Robinson Mifsud explained that the man was wanted in the United States to answer charges of bribery, as well as conspiracy in fraud and money laundering.

He was arrested on Monday morning, the day after his arrival in Malta, after the US made an extradition request.

The magistrate asked if the man confirmed his identity as the subject of the extradition request. After comparing the man's passports with the extradition request, the defence said that he was confirming his identity. The passports - Italian and American - were exhibited in court.

De Marco informed the court that the arrest warrant is being contested by the defence. "We are contesting the local arrest warrant issued by Magistrate Frendo Dimech on the strength of the Extradition Act...We have no way of knowing what was done in America. That will be contested elsewhere." 

The prosecution was asked to justify the arrest. Inspector Omar Zammit took the witness stand. He said he received information from the Attorney General on Friday that they had received a request for a provisional arrest warrant for Rafaraci. A request was sent to the duty magistrate on Saturday and an arrest warrant was issued. "The information we received was...that Mr Rafaraci was coming to Malta on Sunday and was probably leaving today or tomorrow. Through the AG a provisional arrest warrant was issued by the duty magistrate. 
"Yesterday it was confirmed that he was staying in St. Julians and he was arrested on Monday morning," said the inspector. Two mobile phones and a laptop had been seized from the man. They were exhibited in court today.

De Marco asked the officer whether the arrest warrant was issued in terms of the extradition act. It was, said the inspector. "Have you got any sentence of conviction for Mr. Rafaraci?" "No, he is wanted by the US authorities." The inspector confirmed that the warrant was issued by the District of Columbia on the complaint of an American police officer, which was made to the US District court.

Attorney General lawyer Meredith Ebejer  was asked why the man was arrested. "On the basis of article 14 of the extradition Act, we received docs from the US DOJ, these contained the complaint which are the charges in the US together with an affidavit by the officer. We also received a formal request explaining the criminal charges against Mr Rafaraci," explained the lawyer.

De Marco argued that the law stated clearly the circumstances in which the magistrate may issue an arrest warrant. "These are if he is accused of an extraditable offence or if he is convicted of such an offence. Now Inspector Zammit has told us that there is no charge and no conviction. What there is is a complaint by special agent De La Pena, who states that in 2011...there could be a violation of the law. 

A complaint is not the same as a charge or indictment, said the lawyer. The current arrest warrant is based on a complaint, not an indictment. De la Pena's affidavit says there is probable cause to believe that Rafaraci is in violation of a number of sections of US law. This was not within the parameters of article 14 of the Extradition Act, argued the lawyer. "Our law only admits of such an arrest warrant in lieu of extradition if there is an indictment or a judgment." He should be released immediately, he said.

Stefano Filletti said that the prosecution had made a mistake when they said that a complaint is the same as a criminal charge. "God forbid that every complaint filed with the court becomes a charge. Here we go through a magisterial inquiry , then there is a judicial process to issue charges." There is no charge!" exclaimed the lawyer.

"There is probably cause to believe that Rafaraci is engaged in the following criminal activity." read the lawyer. This was the opinion of a police officer, not a charge. "It is not the lawyers who set the rules of the game, it is Maltese law: there are following requirements- these are a sine qua non: a charge, an accused is a person charged, not a suspect. Do we have a charge sheet? They have presented a form with a complaint and an affidavit, signed by De La Pena. The judge had said he was issuing the warrant on the complaint of De La Pena.

Ebejer submitted that none of them are competent to interpret US law in that an indictment is the same as a charge.

Filletti submitted that the criminal complaint in question was signed by De La Pena, not on behalf of the State. 
It emerged at this stage that De La Pena was present in the courtroom. It was suggested by the prosecution that he testify at this stage, but this was shouted down by the defence and the court, who said that the man had clearly been listening to all the English -language proceedings so far.

De Marco argued that "the basic thing they had to have was an authenticated bill of indictment by the court." Filletti added that the judgement against Alberto Chang Raji which clearly stated how the document is to be authenticated could be used as a guide.

"Where is the seal on the document?" asked De Marco, her voice rising. "We do not have original documents as it was dealt with in a matter of days through urgency as he was entering and leaving Malta within 24 hours," the AG lawyer said at a later stage.

Filletti : I don't dictate the law, the law dictates that it be done. I cannot agree with a submission that we didn't have enough time. If you don't have enough time, don't arrest people.  Each document must carry a separate seal.  These had to be produced at the day of the arrest.

"With all due respect, it could have been printed off a printer somewhere," observed the magistrate.

"That you arrest a person without a charge and without original documents is unpardonable!" Filletti submitted. 
"At no stage was Inspector Zammit able to present a copy of the indictment against Mr. Rafaraci," added De Marco. "Therefore in light of the above, when one considers that arrest for the purposes of committal may only be executed if a person is accused of an extraditable offence, or alleged to be unlawfully at large after conviction of such an offence, since no evidence acceptable at law has been submitted of such, the court has no option but to release immediately Mr. Frank Rafaraci," said the lawyer.

Ebejer, submitted that in terms of the Extradition Act, information was sent to the AG by the US Department of Justice requesting the arrest of Mr. Rafaraci.

Filletti replied that "whilst the US DOJ forwarded their request and correctly indicated the basis of the request as being a criminal complaint and also having legitimately requested an arrest, that very same request had to be executed in the territory of the Republic of Malta. Extradition in Malta is governed by local legislation and quite independently of any request which may have been received by the local competent authority...that authority could only execute that request in terms of local legislation. It would be incorrect to argue that this request for arrest and committal is merely based on a request by foreign authorities, which are merely a request.

"The defence has been amply clear that independently of the request made by the foreign authorities, local law ...on this issue of arrest have not been complied with. It is ironic that it is the defence counsel that has to point out this fact when, rather, it should have been the competent authority which today ought to have justified this arrest before this court in terms of law."

None of the two alternative conditions required by law had been fulfilled, he said. "Defence counsel has not seen a formal charge sheet, in the sense that it has rendered Rafaraci as a person accused in the requesting state."

De Marco added that she wished it to be minuted that De la Pena was present during proceedings and was writing throughout. 

The court, having heard the submissions and heard the evidence, noted that it was only presented with photocopies of the purported documents, essential to the charges brought before it. 

It also noted that no explanation regarding the nature of the basis of the document requesting the extradition were given.In the circumstances the court declared that the arrest was invalid. 

The case continues in October.

The 68-year-old man is wanted in the US over bribery, fraud and money laundering. He arrived in Malta on Sunday evening and was arrested on Monday morning after a joint operation by the Maltese and American authorities.