Waked Fares v. Smith, 249 F. Supp. 3d 115

Background

Plaintiffs (Abdul M. Waked Fares, Mohamed A. Waked Darwich, Lucia Touzard Romo, and Grupo Wisa, S.A.) were designated as Specially Designated Narcotics Traffickers (SDNTs) under the Kingpin Act on May 5, 2016; OFAC blocked their U.S. property interests.
Plaintiffs sought administrative reconsideration and the administrative record; OFAC initially denied reconsideration as premature but later produced a largely redacted administrative record (July) and two unredacted summaries of privileged/classified material (August and October).
The October Summary provided a three-page, substantive account alleging Plaintiffs were principal members or associates of a major Panama-based money‑laundering organization and described methods, implicated entities, and role relationships.
Plaintiffs sued under the Fifth Amendment Due Process Clause and the Administrative Procedure Act, seeking declaratory relief and an order compelling an unredacted administrative record.
The government argued the disclosures satisfied due process and APA requirements and that law‑enforcement sensitivity justified redactions and summary disclosure of privileged/classified material.
The District Court denied Plaintiffs’ summary judgment, denied the government’s motion to dismiss for lack of jurisdiction, and granted the government’s motion for summary judgment, holding OFAC’s post‑designation notice and remedial process were sufficient.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of post‑designation notice under Due Process	OFAC’s redacted record and summaries lacked particularized, verifiable allegations and transaction‑level detail, so Plaintiffs cannot meaningfully rebut designations	OFAC provided the redacted record plus substantive unredacted summaries; classified/privileged material may be summarized to protect investigations; Plaintiffs retain repeated opportunities for administrative reconsideration	Held: Notice was sufficient; October Summary plus record permitted meaningful opportunity to be heard and to submit rebuttal evidence
APA claim that OFAC violated its procedures	OFAC’s near‑complete redactions and lack of privilege log violated OFAC regulations and the APA	OFAC followed its regulations; no rule required more disclosure or a privilege log for materials withheld from the administrative record	Held: APA claim rejected; OFAC did not act arbitrarily or contrary to its procedures on the record presented
Mootness / jurisdiction	Plaintiffs contended relief still needed (unredacted record) so case not moot	Defendants argued subsequent disclosures mooted claims	Held: Case not moot because Plaintiffs had not obtained all requested relief; court reached merits and granted government summary judgment
Applicability of constitutional protection to foreign plaintiffs	Plaintiffs assumed Fifth Amendment protections; government questioned standing of foreign nationals to assert due process	Court noted it need not decide entitlement but proceeded assuming protection; analyzed whether process provided was adequate	Held: Court assumed arguendo applicability but found adequate process, so did not resolve standing question

Key Cases Cited

Zevallos v. Obama, 793 F.3d 106 (D.C. Cir. 2015) (post‑designation disclosure of unclassified evidence and opportunity to contest satisfies due process)
Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003) (due process requires disclosure of unclassified portions of administrative record; classified material may be submitted in camera)
Nat’l Council of Resistance of Iran v. Dep’t of State, 251 F.3d 192 (D.C. Cir. 2001) (Mathews balancing and flexible procedures; classified evidence need not be disclosed to designee)
Al Haramain Islamic Found., Inc. v. U.S. Dep’t of Treasury, 686 F.3d 965 (9th Cir. 2012) (government may rely on classified material without disclosure but unclassified summaries may sometimes be required; timeliness and completeness of notice matter)
KindHearts for Charitable Humanitarian Dev., Inc. v. Geithner, 647 F. Supp. 2d 857 (N.D. Ohio 2009) (insufficient and untimely unclassified summary and record can violate due process)
People’s Mojahedin Org. of Iran v. U.S. Dep’t of State, 613 F.3d 220 (D.C. Cir. 2010) (limits on reliance upon undisclosed classified material where such material is essential to uphold designation)