International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Monday, May 29, 2017

Student loan scams

The Federal Trade Commission charged the operators of a phony student loan debt relief and credit repair scheme with bilking millions of dollars from consumers by falsely promising 1024px-US-FederalTradeCommission-Seal.svg to reduce or eliminate their student loan debt and offering them non-existent credit repair services.

At the FTC’s request, a federal court has temporarily halted the operation. The agency seeks to permanently stop the alleged illegal practices and obtain refunds for affected consumers.

“Consumers who paid Strategic Student Solutions for help with their student loans watched their situations go from bad to worse,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection. “The bottom line: never pay an up-front fee to a company promising to deliver debt relief.”

According to the FTC’s complaint, the operators of Strategic Student Solutions (SSS) and related companies lured student loan borrowers with promises such as “Payments as low as $0 Monthly” or “Save 60 percent or MORE on your monthly payment.”

According to the FTC’s complaint, SSS operators told the student loan borrowers they would be enrolled in a loan forgiveness or payment reduction program, and that their monthly payments would be applied to their loans. However, in many cases, consumers discovered that the defendants failed to enroll them in any loan forgiveness or payment reduction programs, and found out that none of their monthly payments were applied to their student loan debt.

In its complaint, the FTC also alleges that SSS operators falsely represented that they would provide credit repair services and improve consumers’ credit scores. In exchange for the promised debt relief and credit repair services, defendants charged illegal upfront fees of up to $1200 and monthly payments typically of $49.99.

The individual defendant, Dave Green, owner of SSS and the related entities, used corporate funds to pay for personal expenses such as jewelry, casino tabs, mortgage payments, luxury vehicles, clothing, and construction of a pool.

The defendants named in the complaint, Green and his companies—Strategic Student Solutions LLC, Strategic Credit Solutions LLC, Strategic Debt Solutions LLC, Strategic Doc Prep Solutions LLC, Student Relief Center LLC, and Credit Relief Center LLC—are charged with violating the Federal Trade Commission Act, the Telemarketing Sales Rule, and the Credit Repair Organizations Act.

The FTC appreciates the assistance provided by the Ohio Office of the Attorney General, the Florida Office of the Attorney General, the Florida Department of Agriculture and Consumer Services, and the Washington Office of the Attorney General in bringing this case. The Commission vote authorizing the staff to file the complaint was 2-0. The complaint was filed in the U.S. District Court for the Southern District of Florida.

To help make consumers aware of fraudulent debt relief services, the FTC offers advice about student loan debt relief, in English and Spanish. The FTC also offers a list of every company and person courts have banned from selling debt relief services as a result of FTC actions.

Consumers seeking to reduce their student loans should always contact the Department of Education for official guidance.

The costs of student loans and fees can be overwhelming. You might see online ads that promise to help lower your payments or get your loans forgiven. But be wary of companies that make those promises, and never pay an upfront fee. Today, the FTC announced it had filed charges against Strategic Student Solutions, Student Relief Center, and related companies for lying to consumers about providing student loan debt relief and charging illegal upfront fees.

According to the FTC’s complaint, Strategic Student Solutions promised consumers loan forgiveness or payment reduction and credit repair services, but they didn’t deliver. They told consumers that their monthly fees would be put toward their student loans. They also charged consumers illegal upfront fees of up to $1,200.

Consumers found out later that they had not been enrolled in forgiveness or repayment programs, that none of their payments had been put towards their student loans, and their credit had not been repaired. In fact, consumers often ended up farther behind on their payments than when they first signed up for the companies’ services.

If you have paid money to Strategic Student Solutions or Student Relief Center, contact your loan servicer immediately. Depending on the type of loans you have, you may want to discuss a repayment plan or other options for your situation.

Remember, you do not have to pay for help with your student loans. Never pay an upfront fee for the promise of debt relief. Learn how to spot a debt relief scheme.

To report a student loan debt relief scam, file a complaint with:

·       the FTC at ftc.gov/complaint

·       the CFPB at consumerfinance.gov/complaint

May 29, 2017 in AML | Permalink | Comments (0)

Visiting Law Professor Fall 2017 for John Marshall in Chicago

The John Marshall Law School seeks a one-semester, full-time podium visitor to teach Contracts I and another to-be determined course during Fall 2017. John Marshall is located in Chicago's Loop and is known for its lawyering skills, intellectual property, trial advocacy, and clinical programs. For additional information about the law school, visit www.jmls.edu.  We seek someone who has prior full-time teaching experience at an ABA-accredited law school. 

Interested candidates should forward a current CV, cover letter, three professional references, and, if available, a summary of past teaching evaluations to Dean Darby Dickerson, ddickerson@jmls.edu. Applications will be reviewed on a rolling basis. 

 

May 29, 2017 in Education | Permalink | Comments (0)

Sunday, May 28, 2017

Three Nigerians Sentenced in International Cyber Financial Fraud Scheme

Three Nigerian nationals, who were extradited from South Africa to the Southern District of Mississippi in July 2015, were sentenced to prison this week for their roles in a large-scale Justice logointernational fraud network.

Assistant Attorney General Kenneth A. Blanco, Acting U.S. Attorney Harold Brittain of the Southern District of Mississippi and Special Agent in Charge Raymond R. Parmer Jr. of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in New Orleans made the announcement.

Oladimeji Seun Ayelotan, 30, was sentenced to 95 years in prison. Rasaq Aderoju Raheem, 31, was sentenced to 115 years in prison. Femi Alexander Mewase, 45, was sentenced to 25 years in prison. After a three-week trial in early 2017, a federal jury found each defendant guilty of offenses involving mail fraud, wire fraud, identity theft, credit card fraud and theft of government property. Ayelotan and Raheem were also found guilty of conspiracies to commit bank fraud and money laundering.

A total of 21 defendants were charged in this case, 12 of whom have pleaded guilty to charges related to the conspiracy, and 11 of whom have been sentenced to date. One of the leaders of the conspiracy, Teslim Olarewaju Kiriji, 30, of Nigeria was previously sentenced to 20 years in prison. Six other defendants were previously sentenced to 10 years in prison each for their roles in this conspiracy: Adekunle Adefila, 41, of Nigeria; Anuoluwapo Segun Adegbemigun, 40, of Nigeria; Gabriel Oludare Adeniran, 30, of Nigeria; Olufemi Obaro Omoraka, 27, of Nigeria; Taofeeq Olamilekan Oyelade, 32, of Nigeria; and Olusegun Seyi Shonekan, 34, of Nigeria. Genoveva Farfan, 45, of California, was sentenced to 9 years in prison, and Rhulane Fionah Hlungwane, 26, of South Africa, to five years in prison for their roles in the conspiracy. Olutoyin Ogunlade, 41, of New York, was sentenced to four years in prison. Dennis Brian Ladden, 75, of Wisconsin was sentenced to time served and six months’ home confinement. Susan Anne Villeneuve, 61, of California, pleaded guilty earlier this month and is awaiting sentencing.

According to the plea agreements and evidence at trial, the defendants and their co-conspirators carried out numerous internet-based fraud schemes dating back at least to 2001. These schemes involved using unsuspecting victims to cash counterfeit checks and money orders, using stolen credit card numbers to purchase electronics and other merchandise and using stolen personal identification information to take over victims’ bank accounts. As a whole, the conspiracy involved tens of millions of dollars in intended losses.

To accomplish their fraud schemes, the conspirators recruited the assistance of U.S. citizens via “romance scams,” in which the perpetrator would typically use a false identity on a dating website to establish a romantic relationship with an unsuspecting victim. According to trial evidence and plea documents, once the perpetrator gained the victim’s trust and affection, the perpetrator would convince the victim to either send money or to help carry out fraud schemes. For example, the defendants admitted that they used romance victims to launder money via Western Union and MoneyGram, to re-package and re-ship fraudulently obtained merchandise and to cash counterfeit checks.

U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the U.S. Postal Inspection Service investigated the case. Significant assistance was also provided by the Criminal Division’s Office of International Affairs, the HSI Cyber Crimes Center, HSI Attachés in Pretoria, South Africa and Dakar, Senegal, the U.S. Marshals Service’s International Investigations Branch and the Southern District of Mississippi District Office, the South African Police Service (SAPS) Directorate of Priority Crimes Investigation (DPCI) Electronic Crimes Unit, the SAPS Interpol Extradition Unit, the South African National Prosecution Authority and the South African Department of Justice and Constitutional Development. Trial Attorney Conor Mulroe of the Criminal Division’s Organized Crime and Gang Section, Senior Counsel Peter Roman of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorney Annette Williams of the Southern District of Mississippi tried the case.

If you believe that you may have been a victim of criminal fraud committed by any of the defendants, please go to http://www.justice.gov/usao-sdms/scams and complete the questionnaire. Defendants allegedly used the following email addresses and names to perpetuate the scheme:

ADDIEP01@YAHOO.COM                        

ANITA.LAUREN01@GMAIL.COM

ANITA.LAUREN1@GMAIL.COM            

EMPLOYMENTOFFERS007@YAHOO.COM

FAYEKIMBERLY@YMAIL.COM            

FAYEKIMBERLY19@YAHOO.COM       

FEMI_OMORAKA@YAHOO.COM          

FMPLUST12@GMAIL.COM          

FNCYJEN@YAHOO.COM                         

FOLLYEDWARDS@YAHOO.COM

GENTILEMARK186@GMAIL.COM         

GERVINOJ@YAHOO.COM                   

GERVINOJ11@GMAIL.COM                    

GLENNSATTELBERG1961@GMAIL.COM

HORLAMI84@YAHOO.COM                    

JOHNVINO56@GMAIL.COM       

JONES_DICKSON@YAHOO.COM

JUSTIN.WORSHAM@YAHOO.COM

KAREN_ROB01@YAHOO.COM              

KEVINSMITH3949@YAHOO.COM         

LMG.ORCHID1827@GMAIL.COM          

LLOYDFARELL0012008@YAHOO.COM

MARCHAS1963@GMAIL.COM                

MARK2GENTLE@YAHOO.COM

MATT.MILLER4070@GMAIL.COM

MAXWELLSAMUEL59@YAHOO.COM

MIMICOLE001@YAHOO.COM                

MOBICOALZ@GMAIL.COM        

OLADIMEJISEUN2008@YAHOO.COM   

OLUWA_NISHOLA@YAHOO.COM

PETERLAWSON5050@YAHOO.COM     

RASAQ_ADEROJU@YAHOO.COM

RDARWIN322@GMAIL.COM                  

RDARWIN324@GMAIL.COM

REDARMY_TX_HOST@YAHOO.COM   

RHULANEF@YAHOO.COM

RWASSER@ROCKETMAIL.COM            

SEGSEA121@YAHOO.COM

SMITHKEVIN902@GMAIL.COM             

SPOWELL26AL@GMAIL.COM            

SPOWELL26AL3@YAHOO.COM            

STACYADAMS20009@YAHOO.COM

STARENTERPRISE74@YAHOO.COM     

SUSANV1418@YAHOO.COM      

TESCOSG@YAHOO.COM

Stacy Adams                                                  

Marlon Chase             

Regina Darwin                                               

Folly Edwards                                               

Kimberly Faye                                               

Lorene M. Garrett                                          

Mark Gentile                                                  

John Gervino                                      

Dickson Jones                                                

Anita Lauren

Samuel Maxwell                                            

Mark Miller                                       

Adeline Piper                                                 

Sarah Powell                                      

Karen Robinson                                             

Glenn Sattelberg                                            

Kevin Smith                                                   

Mark Smith                                        

Richard Wasser                                              

Justin Worsham

Any information that you provide through the questionnaire may be helpful in the criminal investigation and prosecution of this case. A federal investigator may contact you with additional questions or to request documents you may have. Please note that submitting the questionnaire is not a substitute for consulting with your own attorney to determine what actions and remedies may be available to you through civil litigation. If you have any questions related to this matter that are not addressed at the above websites, you may contact federal law enforcement authorities at USAMSS.Scams@usdoj.gov.

May 28, 2017 in AML | Permalink | Comments (0)

Saturday, May 27, 2017

Chinese National Pleads Guilty to Economic Espionage and Theft of a Trade Secret From U.S. Company

Today, Xu Jiaqiang, 31, formerly of Beijing, China, pleaded guilty to economic espionage and theft of a trade secret, in connection with Xu’s theft of proprietary source code from Xu’s FBISeal former employer, with the intent to benefit the National Health and Family Planning Commission of the People’s Republic of China. Xu pleaded guilty to all six counts with which he was charged.

The announcement was made by Acting Assistant Attorney General for the National Security Dana Boente and Acting U.S. Attorney Joon H. Kim for the Southern District of New York. The pleas were entered before U.S. District Judge Kenneth M. Karas in White Plains, New York federal court. 

“Today, Xu pleaded guilty to stealing trade secrets from his former employer for his own profit and intending to benefit the People’s Republic of China,” said Acting Assistant Attorney General Boente. “The Economic Espionage Act is a key tool in protecting our economic and security interests. The National Security Division will pursue and prosecute any individual who steals intellectual property from American businesses to benefit a foreign government.”

“Xu Jiaqiang admitted and pled guilty today to stealing high tech trade secrets from a U.S. employer, intending to benefit the Chinese government. What Xu did was not only a federal crime, but a threat to our national security and the American spirit of innovation. Our Office is committed to finding, arresting and holding accountable those who take advantage of American businesses by engaging in economic espionage.”

According to the allegations contained in the Complaint and the Superseding Indictment filed against Xu, as well as statements made in related court filings and proceedings:

From November 2010 to May 2014, Xu worked as a developer for a U.S. company (the “Victim Company”). As a developer, Xu enjoyed access to certain proprietary software (the “Proprietary Software”), as well as that software’s underlying source code (the “Proprietary Source Code”). The Proprietary Software is a clustered file system developed and marketed by the Victim Company in the U.S. and other countries. A clustered file system facilitates faster computer performance by coordinating work among multiple servers. The Victim Company took significant precautions to protect the Proprietary Source Code as a trade secret. Among other things, the Proprietary Source Code is stored behind a company firewall and can be accessed only by a small subset of the Victim Company’s employees. Before receiving Proprietary Source Code access, Victim Company employees must first request and receive approval from a Victim Company official. Victim Company employees must also agree in writing at both the outset and the conclusion of their employment that they will maintain the confidentiality of any proprietary information. The Victim Company took these and other precautions in part because the Proprietary Software and the Proprietary Source Code are economically valuable, which value depends in part on the Proprietary Source Code’s secrecy. 

In May 2014, Xu voluntarily resigned from the Victim Company. Xu subsequently communicated with one undercover law enforcement officer (“UC-1”), who posed as a financial investor aiming to start a large-data storage technology company, and another undercover law enforcement officer (“UC-2”), who posed as a project manager, working for UC-1. In these communications, Xu discussed his past experience with the Victim Company and indicated that he had experience with the Proprietary Software and the Proprietary Source Code. On March 6, 2015, Xu sent UC-1 and UC-2 code, which Xu stated was a sample of Xu’s prior work with the Victim Company. A Victim Company employee (“Employee-1”) later confirmed that the code sent by Xu included proprietary Victim Company material that related to the Proprietary Source Code.

Xu subsequently informed UC-2 that Xu was willing to consider providing UC-2’s company with the Proprietary Source Code as a platform for UC-2’s company to facilitate the development of its own data storage system. Xu informed UC-2 that if UC-2 set up several computers as a small network, then Xu would remotely install the Proprietary Software so that UC-1 and UC-2 could test it and confirm its functionality.

In or around early August 2015, the FBI arranged for a computer network to be set up, consistent with Xu’s specifications. Files were then remotely uploaded to the FBI-arranged computer network (the “Xu Upload”). Thereafter, on or about Aug. 26, 2015, Xu and UC-2 confirmed that UC-2 had received the Xu Upload. In September 2015, the FBI made the Xu Upload available to a Victim Company employee who has expertise regarding the Proprietary Software and the Proprietary Source Code (“Employee-2”). Based on Employee-2’s analysis of technical features of the Xu Upload, it appeared to Employee-2 that the Xu Upload contained a functioning copy of the Proprietary Software. It further appeared to Employee-2 that the Xu Upload had been built by someone with access to the Proprietary Source Code who was not working within the Victim Company or otherwise at the Victim Company’s direction.

On Dec. 7, 2015, Xu met with UC-2 at a hotel in White Plains, New York (the “Hotel”).  Xu stated, in sum and substance, that Xu had used the Proprietary Source Code to make software to sell to customers, that Xu knew the Proprietary Source Code to be the product of decades of work on the part of the Victim Company, and that Xu had used the Proprietary Source Code to build a copy of the Proprietary Software, which Xu had uploaded and installed on the UC Network (i.e., the Xu Upload). Xu also indicated that Xu knew the copy of the Proprietary Software that Xu had installed on the UC Network contained information identifying the Proprietary Software as the Victim Company’s property, which could reveal the fact that the Proprietary Software had been built with the Proprietary Source Code without the Victim Company’s authorization. Xu told UC-2 that Xu could take steps to prevent detection of the Proprietary Software’s origins – i.e., that it had been built with stolen Proprietary Source Code – including writing computer scripts that would modify the Proprietary Source Code to conceal its origins.

Later on Dec. 7, 2015, Xu met with UC-1 and UC-2 at the Hotel. During that meeting, Xu showed UC-2 a copy of what Xu represented to be the Proprietary Source Code on Xu’s laptop. Xu noted to UC-2 a portion of the code that indicated it originated with the Victim Company as well as the date on which it had been copyrighted. Xu also stated that Xu had previously modified the Proprietary Source Code’s command interface to conceal the fact that the Proprietary Source Code originated with the Victim Company and identified multiple specific customers to whom Xu had previously provided the Proprietary Software using Xu’s stolen copy of the Proprietary Source Code. 

In connection with the economic espionage counts charged in the Superseding Indictment, Xu stole, duplicated, and possessed the Proprietary Source Code with the intent to benefit the National Health and Planning Commission of the People’s Republic of China.

Xu pleaded guilty to three counts of economic espionage, each of which carries a maximum sentence of 15 years in prison, and three counts of theft of a trade secret, each of which carries a maximum sentence of 10 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

Xu’s sentencing is scheduled for October 13.

Mr. Kim praised the FBI’s outstanding investigative efforts. He also thanked the U.S. Department of Justice’s National Security Division. 

The case is being handled by the Office’s Terrorism and International Narcotics Unit and its White Plains Division. The prosecution is being handled by Assistant U.S. Attorneys Benjamin Allee, Ilan Graff and Shane T. Stansbury for the Southern District of New York, with assistance from Trial Attorney David Aaron of the National Security Division’s Counterintelligence and Export Control Section.

May 27, 2017 in AML | Permalink | Comments (0)

Friday, May 26, 2017

7th Brazil Summit on Anti-Corruption

Remarks of Acting Principal Deputy Assistant Attorney General Trevor N. McFadden

Thank you for that introduction.  Good morning to all of you.   I am grateful to be with you today, and it is a pleasure to be here in São Paulo, a truly beautiful city. Many thanks for the Justice logoinvitation to address you and to kick off today’s events. We are here to discuss anti-corruption: a topic of key importance in the United States, Brazil and countries throughout the world.

I want to start with stating what is probably abundantly clear to all of you: over the last few years, Brazil has become one of the U.S. Justice Department’s closest allies in the fight against corruption. Thus far, the Department of Justice and Brazilian authorities have entered into four global resolutions and assisted one another in dozens of other cases.  This requires high levels of coordination, trust and resolve between our prosecutors and law enforcement agents. On a nearly daily basis, our prosecutors and agents are in touch, exchanging information and assisting one another as appropriate.

Earlier this week, I had the great honor of meeting with Prosecutor General Janot, Minister of Justice Serraglio, Federal Police Director General Coimbra and DRCI Director Luís Roberto Ungaretti.  The close relationships between our agencies on both leadership and staff levels is testament to the productive partnerships our agencies have developed.

Anti-corruption prosecutors everywhere are driven by several similar principles.  Bribery of public officials is wrong and intentional violations of anti-corruption laws must be treated as serious attacks on our system of government and on the welfare of our people.  Corruption has particularly harmful effects on the most vulnerable citizens of countries in which the corruption occurs.  Indeed, if corrupt officials can extort multinational businesses with impunity, think of the expectations that sets for their interactions with the poor and unprotected in their countries. Corruption impedes fair and free competition and creates a high risk that prices will be distorted and products and services will be substandard. Importantly, corruption disadvantages honest businesses that do not pay bribes.  And bribes impede economic growth, undermine democratic values and public accountability and weaken the rule of law.

As Attorney General Jeff Sessions stated in his confirmation process and again earlier this month at a meeting with compliance professionals in Washington, D.C., the U.S. Department of Justice remains committed to enforcing the Foreign Corrupt Practices Act (FCPA) and to prosecuting fraud and corruption more generally.  The department does not make the law, but it is responsible for enforcing the law, and we will continue to do so.  Also, the department continues to prioritize prosecutions of individuals who have willfully and corruptly violated the FCPA.  Attorney General Sessions has noted the importance of individual accountability for corporate misconduct. Finally, the department regularly takes into consideration voluntary self-disclosures, cooperation and remedial efforts when making charging decisions involving business organizations.

In my remarks today, I want to focus on a few important matters.  First, I want to share with you some recent developments regarding the Department of Justice’s international cooperation efforts.  Second, I want to highlight a couple aspects of the FCPA that are highly relevant to our efforts in the anti-corruption arena, namely: some of the diverse tools in our prosecutorial toolbox that allow us to prosecute corruption, and the importance of transparency in our work.

By way of background, allow me to back up slightly to provide a high level summary of the Department of Justice’s Criminal Division, which has an ambitious mission: to combat the most serious and complex criminal threats facing the United States today.  The Criminal Division, which I am honored to help lead, employs about 600 attorneys and is comprised of 17 components. The Criminal Division’s investigations and prosecutions run the gamut of white collar crime cases – fraud, bribery, public corruption, organized crime, trade secret theft, money laundering, securities fraud, kleptocracy, healthcare fraud and computer and internet fraud – to name a few.  Other cornerstones of our work include facilitating and executing incoming and outgoing requests for extraditions and mutual legal assistance, and providing justice sector capacity building in countries throughout the world.  The Criminal Division has also answered our Attorney General’s call to redouble efforts to combat violent crime and drug trafficking organizations: we have teams of prosecutors that specialize in bringing criminal gang members, international drug traffickers and sophisticated human smuggling organizations to justice.

In all of our work at the Criminal Division, our prosecutors and staff are committed to a fair process in which the defendant’s rights are protected throughout criminal proceedings.  We believe everyone is entitled to be considered innocent until proven guilty. We are cognizant of our high burden of proof in the criminal context.  We seek to gain a meticulous understanding of the facts of each case, which drives so much of our decision-making.

As you know, many of our cases – whether white collar or otherwise – have international implications.  Whether uncovering a multinational bribery scheme or seeking to recover illegally derived assets associated with investment funds owned by a foreign government, our investigations almost always have an international nexus, often involving several different countries.  This reality necessitates the department’s ever-increasing utilization of the various mechanisms of international cooperation with our foreign partners that permit for evidence exchange and fugitive apprehension.

The landscape of international cooperation continues to evolve. In so many of the cases we handle, and in nearly all of the white collar cases, cooperation with our foreign partners has become a hallmark of our work.  And of course, international cooperation is a two-way street, meaning that just as we receive significant assistance from our foreign partners in our investigations and prosecutions, so too do we provide significant assistance to them. This balanced model of reciprocity in information sharing is a vital tool in the modern prosecutor’s toolbox – whether the prosecutor is sitting in the United States, South America, Europe or elsewhere.

This reality – reciprocal information sharing – is giving rise to a developing trend, especially as it relates to international enforcement of criminal laws in the white collar arena.  And the emerging trend is this: due in part to the significant assistance we provide to our foreign partners, there has been an increase in multi-jurisdictional prosecutions of criminal conduct, particularly when that conduct is transnational in nature and when several countries have prosecutorial authority over it.  We are seeing this trend more and more each year, and it is a trend that will hopefully deter companies and individuals from engaging in conduct that is detrimental to victims around the world.

Indeed, and especially in the area of bribery of government officials, countries around the world are strengthening their laws, investigating and bringing impactful cases.  In this context, we have found that not only is there a need to cooperate with our partners, such as Brazil, on the investigative side, but also on global resolutions.

Indeed, as part of our cooperation with our international partners, where appropriate, we seek to reach global resolutions that apportion penalties between the relevant jurisdictions.  In this way, companies seeking to accept responsibility for their prior misconduct are not unfairly penalized for the same conduct by multiple countries and agencies.  Global investigations and multi-national corporate resolutions are on the rise.

For example, in our prosecution of Rolls Royce, the UK-based company paid the U.S. about $170 million as part of an $800 million global resolution to investigations in three countries – the United States, the UK and Brazil.  The multi-national form of resolution reflected the misconduct, which involved payments of $35 million in bribes to officials in half-a-dozen countries.

As another example of the U.S. Department of Justice’s increasing cooperation with its international partners, in the coming months we expect to be detailing one of our anti-corruption prosecutors to the UK’s Financial Conduct Authority. This is part of our ongoing efforts to collaborate with our international partners in the fight against corruption and financial fraud.  While the U.S. Department of Justice has a number of attorneys and agents stationed in various cities abroad, including here in Brazil, this will be the first time the Criminal Division our Fraud Section will detail a prosecutor to work in a foreign regulatory agency on white collar crime issues.

While on assignment in the UK, our prosecutor will collaborate on financial fraud and foreign bribery cases with the relevant UK authorities.  The cross-border nature of many financial frauds has increased the need for international cooperation and coordination among regulators and prosecutors.  We expect that this exchange will be a learning experience that will show our dedication to international cooperation with countries fighting corruption in the UK and around the world.

As I mentioned earlier, I spent the first part of this week meeting with several of my Brazilian counterparts in Brasilia.  Meetings like these with foreign counterparts are not rare.  Increasingly, prosecutors around the world understand that investigating and prosecuting transnational crime necessitates transnational cooperation. Indeed, just as criminals seek to exploit geographical boundaries to protect themselves and their illegally derived assets, so must the mechanisms of international cooperation serve to disrupt their ability to do so.

Over the past several years, there has been a significant increase in the number of incoming requests for legal assistance from our foreign partners.  In fact, in the last five years, there has been an overall increase of 28 percent in the number of annual incoming requests for legal assistance from our foreign partners and, since 2012, we’ve seen an increase of 147 percent in the number of annual requests from foreign counterparts seeking U.S.-based evidence to support foreign bribery and corruption investigations.  Similarly, since 2012, there has been a 75 percent increase in the number of annual requests from the United States to our partners abroad for evidence to support U.S. prosecutors conducting FCPA and corruption investigations.

In response, we have grown the Criminal Division’s Office of International Affairs, or OIA, which serves as the Central Authority for the United States on Mutual Legal Assistance (MLA) matters and is our principal coordinating authority for international extradition.

OIA is now better positioned to respond effectively and without undue delay to our foreign counterparts when they request our assistance.  To that end, OIA established two units dedicated to executing the abundant incoming requests from our foreign counterparts – the Cyber Unit and the MLA Unit.  The Cyber Unit responds to and executes requests for electronic evidence from foreign authorities – requests that have increased exponentially over the last decade.  While the MLA Unit is responsible for assisting foreign authorities with gathering non-cyber evidence, Federal prosecutors and law enforcement agents from across the country frequently assist OIA with the execution of these requests.  In addition, a relatively new group within the FBI is dedicated to executing requests from foreign authorities made to OIA.  These new resources reflect our recognition that it is important to our own prosecutions – and those of our international colleagues – that requests for assistance are handled carefully and expeditiously.

Of course, formal assistance pursuant to bilateral or multilateral treaties are not our only tools.  The United States and countries around the world also share evidence and information with one another pursuant to the principle of reciprocity, or through various informal mechanisms.  For instance, earlier this month, Roman Seleznev was sentenced by a U.S. district judge to 27 years’ incarceration for his hacking scheme that stole more than two million credit card numbers and defrauded banks of more than $169 million.  Seleznev’s reign of terror criminal enterprise was brought to an abrupt end several years ago during his vacation in the Maldives, when local authorities agreed to hand him over to U.S. law enforcement agents even though no formal extradition treaty existed between the U.S. and the Maldives.

The Department of Justice and its investigative agencies post attachés in embassies all over the world, including here in Brazil.  One of the primary goals of the attachés is to provide and receive information related to ongoing investigations and prosecutions. Such information may provide significant leads to us or our counterparts.

Now that I have spoken a bit about international cooperation, I want to switch gears and discuss a couple nuances of the FCPA under U.S. law.  There are two issues I want to focus on. First, I would like to explain an important but sometimes overlooked aspect of our practice in the United States.  Namely, while we often charge foreign bribery under the FCPA, when we cannot, there are several other legal theories we can use to prosecute both the briber and the bribe recipient. Second, I want to explain the importance of transparency in our anti-corruption prosecutions.

The FCPA makes it unlawful for certain categories of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business.  The FCPA has been described as a “supply-side” statute in that it governs only the conduct of the bribe payer, not the government official who receives the bribe.  Nevertheless, the department has regularly charged certain “foreign official” bribe recipients with other related crimes, such as money laundering.

For example, late last year, the department indicted Mahmoud Thiam, the former Minister of Mines and Geology of the Republic of Guinea.  In that case, we alleged that Thiam took part in a scheme to launder approximately $8.5 million in bribes he received from senior representatives of a Chinese conglomerate.  In exchange for the bribes, Thiam used his official position in the Guinean government to enable affiliates of the Chinese conglomerate to obtain exclusive and highly-valuable investment rights in a wide range of sectors of the Guinean economy, including near total control of Guinea’s valuable mining sector.

In order to conceal the bribes, Thiam opened a bank account in Hong Kong and misreported his occupation to conceal his status as a government official.  Thiam later transferred millions of dollars in bribe proceeds into the United States, where he lied to two U.S. banks to conceal both his position as a foreign government official and the source of the funds.  Thiam spent the bribe proceeds on, among other things, construction work on his estate in upstate New York. Earlier this month, a federal jury convicted Thiam for this conduct and he now awaits sentencing.  This is an example of how, when the FCPA does not prohibit certain misconduct, other statutes also permit us to fight corruption.

The Criminal Division has formed a Kleptocracy Asset Recovery Initiative, which is specifically designed to target and recover the proceeds of foreign official corruption that have been laundered into or through the United States.

When we cannot charge a crime under the FCPA, in addition to crimes such as money laundering, false statements, and obstruction of justice, there are multiple legal theories we may use in order to prosecute corruption.  Here are a few others that we can charge:

Travel Act: If a company pays kickbacks to an employee of a private company who is not a foreign official, such private-to-private bribery could possibly be charged under the Travel Act.  The Department has previously charged both individual and corporate defendants in FCPA cases with violations of the Travel Act.

Mail and Wire Fraud: The mail and wire fraud statutes may also apply if a defendant’s fraudulent scheme intentionally deprives another of property or honest services, using mail or wire communication.

Tax Violations: Individuals and companies that violate the FCPA may also violate U.S. tax law, which explicitly prohibits tax deductions for bribes, such as false sales “commissions” deductions intended to conceal corrupt payments.

Indeed, businesses and individuals should be aware that conduct that violates the FCPA’s anti-bribery or accounting provisions may also violate other statutes or regulations.  Moreover, payments to government officials and intermediaries may violate these laws even if all of the elements of an FCPA violation are not present.

Of course, even if charges are not appropriate or available under U.S. statutes, other countries may be able to hold the wrongdoers responsible where we cannot.  We are under no illusions that we are or should be a global police force, seeking to hold international wrongdoers responsible for conduct that has no connection to the United States.

One of the main benefits of our closer cooperation with other regulators enforcement partners, like Brazil’s Prosecutor General’s office, is to ensure that wrongdoers who are not appropriately prosecuted for prosecution in the United States will be held accountable for their criminal conduct elsewhere.  Prosecutors from the U.S. Department of Justice regularly work with your Prosecutor General’s office and other authorities to determine which jurisdiction is the most appropriate authority to bring a case.  The arrests that have occurred here recently relating to joint corporate investigations are good examples of this cooperation.

Let me change gears and discuss the importance of transparency in our work. U ltimately, our hope is that companies and individuals voluntarily comply with anti-corruption laws, and I believe transparency and clarity from regulators encourages this compliance. Let me explain some of our efforts in this regard.

Back in 2012, as part of the effort to increase transparency, the department and the U.S. Securities & Exchange Commission published a “Resource Guide to the U.S. Foreign Corrupt Practices Act,” in an effort to educate companies and individuals about the FCPA’s requirements.  This guide provides a great deal of information regarding the Department’s role, policy objectives and the legal framework of our FCPA prosecutions.

Also, the Fraud Section’s “Pilot Program” is an example of an effort to provide more transparency and consistency for our corporate resolutions.  Last year, we began the program, which delineates specified mitigation credit a company can receive if it acts in accordance with standards of self-disclosure, cooperation, and remediation.  Each of these concepts – self-disclosure, cooperation, and remediation – were carefully defined as part of the roll out of the program.  The Fraud Section publishes information on our website on cases we have declined to prosecute, where we would have otherwise brought criminal cases.  There have already been five such cases. Of course, this number does not include the many cases we routinely decline for various reasons, including insufficient evidence of corporate criminal misconduct.

Indeed, we have found that offering leniency to companies that self-report has led to more companies coming forward with information. In the Pilot Program’s first year, 22 companies have voluntarily disclosed violations, which is an increase from 13 during the previous year.  At this point, the program continues as we evaluate it and reach a final decision regarding its permanence.

We are certainly far from seeing an end to the global problem of corruption, but I think it is safe to say that we are headed in the right direction.  Increasingly, multinational companies are voluntarily complying with anti-corruption laws not simply to avoid prosecution. Corruption introduces significant uncertainty into business transactions, and it actually increases the cost of doing business.  Bribery has destructive effects within a business as well, undermining employee confidence in a company’s management and fostering a permissive atmosphere for other kinds of corporate misconduct, such as employee self-dealing, embezzlement, financial fraud and anti-competitive behavior.  Companies that pay bribes to win business ultimately undermine their own long-term interests and the best interests of their investors.

That is not to say that companies that reach a resolution with the Department are “bad companies,” or that they don’t care about corporate compliance.  Indeed, many of our resolutions are with companies that voluntarily self-disclose past mistakes, and I know from having been on both sides of this process that companies that reach a resolution with us typically work hard to improve their compliance systems to ensure their compliance failures are not repeated.

Fighting corruption leads to a robust and transparent marketplace.  I also hope that the work to root out corruption in Brazil, as well as the Justice Department’s efforts, ultimately serve to create an even playing field for honest businesses.  Indeed, the Department of Justice takes a robust attitude towards the jurisdictional reach of the FCPA primarily to help ensure there is an even playing field for honest businesses everywhere.

In closing, the Criminal Division will continue to do its part to punish and deter crime – including corruption – with international implications. Increasing our commitment to international collaboration, we hope, will ultimately have the effect of safeguarding our countries, our markets and our citizens.

May 26, 2017 in AML | Permalink | Comments (0)

Thursday, May 25, 2017

Airbus hires outside monitors amid fraud investigations

Reuters reports that Airbus has appointed an independent panel including two former ministers to examine its anti-corruption practices after Britain and France launched fraud and bribery investigations into the sale of jetliners.  Read the full story here.

May 25, 2017 in AML | Permalink | Comments (0)

Wednesday, May 24, 2017

FTC Submits Annual Budget Request, Performance Plan and Performance Report to Congress

The Federal Trade Commission submitted to Congress its Fiscal Year 2018 budget request to Congress, in support of the President’s FY 2018 budget for the federal government. The 1024px-US-FederalTradeCommission-Seal.svgbudget request also includes the FY 2018 Budget Overview Statement, Performance Plan for FY 2017 and FY 2018, and Performance Report for FY 2016, as required under the Government Performance and Results and Modernization Act of 2010.

The Commission vote to submit the budget request, performance plan and performance report to Congress was 2-0. (FTC File No P859900; the staff contact James Hale, Financial Management Office, 202-326-2385.)

Download FTC Budget 2018

 

May 24, 2017 in Financial Regulation | Permalink | Comments (0)

Tuesday, May 23, 2017

Banamex USA Agrees to Forfeit $97 Million in Connection with Bank Secrecy Act Violations

Today Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division announced that Banamex USA (BUSA), a financial institution based in Los Justice logoAngeles, California, and a subsidiary of Citigroup Inc., agreed to forfeit $97.44 million and entered into a non-prosecution agreement (NPA) to resolve an investigation into BUSA’s Bank Secrecy Act (BSA) violations. In its agreement with the Justice Department, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money laundering (AML) compliance program with appropriate policies, procedures, and controls to guard against money laundering and willfully failing to file Suspicious Activity Reports (SARs).

According to admissions contained in the NPA and the accompanying statement of facts, from at least 2007 until at least 2012, BUSA processed more than 30 million remittance transactions to Mexico with a total value of more than $8.8 billion. During the same period, BUSA’s monitoring system issued more than 18,000 alerts involving more than $142 million in potentially suspicious remittance transactions. BUSA, however, conducted fewer than 10 investigations and filed only nine SARs in connection with these 18,000-plus alerts, filing no SARs on remittance transactions between 2010 and 2012.

BUSA also admitted that, for several years, BUSA recognized that it should have improved its monitoring of MSB remittances but failed to do so. BUSA employed a limited and manual transaction monitoring system, running only two scenarios to identify suspicious activity on the millions of remittance transactions it processed. These two scenarios produced paper reports that were intended to be reviewed by hand by the two employees assigned to perform the BSA functions of the bank, in addition to time-consuming non-BSA responsibilities. As BUSA began to expand its remittance processing business in 2006, BUSA understood the need to enhance its anti-money laundering efforts, yet failed to make necessary improvements to its transaction monitoring controls or to add staffing resources.

In July 2015, in a related matter, the Federal Deposit Insurance Corporation (FDIC) and California Department of Business Oversight ordered BUSA to pay a $140 million civil money penalty to resolve separate BSA regulatory investigations. Thus, the combined penalties paid by BUSA associated with the criminal and regulatory investigations of its BSA compliance violations amount to approximately $237.44 million. In March 2017, the FDIC also announced related enforcement actions against four former senior BUSA executives relating to BUSA’s violations of the BSA. As part of those actions, two executives were fined and prohibited from working at financial institutions in the future, one was fined, and one was prohibited from working at financial institutions in the future.

As explained in the Non-Prosecution Agreement, the Justice Department reached this resolution based on a number of factors. In particular, BUSA engaged in extensive remedial actions, including devoting significant resources to remediation of the BSA and AML deficiencies, exiting BUSA’s MSB business entirely, and ultimately ceasing all banking operations at BUSA. BUSA received partial credit for its cooperation with the Justice Department’s criminal investigation, including making factual presentations, voluntarily making foreign-based employees available for interviews in the United States, producing documents from foreign countries in ways that did not implicate foreign data privacy laws, and collecting, analyzing and organizing voluminous evidence and information for the Justice Department, including identifying and providing documents relating to certain individuals and topics. In addition, pursuant to the NPA, BUSA and Citigroup agreed to cooperate fully in this and any other Justice Department investigation relating to violations of the BSA and federal money laundering statutes and, for a period of one year, to report to the Justice Department any evidence or allegation of violations of the BSA or money laundering laws. Citigroup further agreed to report to the Justice Department regarding implementation of compliance measures to improve oversight of its subsidiaries’ BSA compliance.

This case was investigated by the Drug Enforcement Administration’s New England Field Division, the Internal Revenue Service’s Criminal Investigation Boston Field Office and the FDIC’s Office of Inspector General. Senior Trial Attorney Jennifer E. Ambuehl and Trial Attorney J. Randall Warden of the Criminal Division’s Money Laundering and Asset Recovery Section, Bank Integrity Unit, prosecuted the case. Assistant U.S. Attorneys David J. D’Addio and James E. Arnold of the U.S. Attorney’s Office for the District of Massachusetts provided significant assistance in this investigation.

The Justice Department wishes to thank the FDIC – both the San Francisco Office and FDIC Headquarters for its cooperation in this investigation.

Banamex USA NPA

May 23, 2017 in AML | Permalink | Comments (0)

Monday, May 22, 2017

Last Chance for Free Registration For Tuesday's Lunch "The Business of Risk Management"

Tuesday, May 23, 2017: The Business of Risk Management (Prof. William Byrnes presenting)

There is still time to join Texas A&M University School of Law for an exciting and informative program at noon on Tuesday, May 23, 2017, highlighting the fall 2017 opening of the law TAMU San Antonioschool’s San Antonio Center, a facility that will house an innovative new degree program designed from the ground up for business professionals.  The May 23 event will be held at San Antonio’s Acenar restaurant (146 Houston Street), and event registration is open online at http://law.tamu.edu/SA-programs. Space is limited, and lunch will be provided for those who register by 5:00 p.m. on Monday, May 22.

The May 23 event will also kick off the Texas A&M School of Law Business Lecture Series, a series of lunchtime gatherings where Aggie Law faculty bring their practical expertise to the San Antonio business community. Our first featured speaker will be Professor William H. Byrnes, discussing “The Business of Risk Management” and how professionals can manage risks and leverage opportunities in the current legal and political environment.

We hope to see you for lunch Tuesday!

May 22, 2017 in Education | Permalink | Comments (0)

several law school positions ASAP

Creighton University School of Law seeks applications from qualified persons for a visiting professor position in the areas of Trusts & Estates and, ideally, Tax for the 2017-2018 academic year. A J.D. degree is required and teaching experience is strongly preferred. Applications should be directed to Associate Dean David P. Weber via email at davidweber@creighton.edu. We will begin reviewing applications immediately. Please share this information with any qualified individuals whom you think may be interested. 

We are accepting applications for the position of Director of Legal Writing (link here:  http://www.mc.edu/offices/human-resources/employment/?ref_cID=67&bID=57&dd_asId=894 )  Given the timing, we'd like to fill the position as soon as possible, so please feel free to pass this along to anyone who might be interested (and encourage them to apply quickly :)
 
The University of Houston Law Center is hiring three Lawyering Skills and Strategies (LSS) Lecturers for the 2017-18 academic year.  In the fall, the Law Center will also conduct a national search for three permanent LSS Clinical Professors.  Those who are selected for the one-year lecturer positions will be welcomed to apply. Here’s a link to the posting.  https://jobs.uh.edu/postings/35267  Please direct all questions about the positions to me.  Marcilynn A. Burke Associate Dean, Associate Professor of Law, 4604 Calhoun ·    Houston, TX  77204-6060, (713) 743-2227 (voice) maburke@uh.edu (e-mail)

Colleagues, We are in the process of moving our former position of Director of Clinical Programs to Associate Dean of Experiential Learning and in the process we will be expanding the scope of the position to oversight of other aspects of experiential learning, including legal analysis and writing.  If anyone has and is willing to share a position description for this type of position, it would be greatly appreciated.  Feel free to reply off-list to: bcosens@uidaho.edu

 

 

 

May 22, 2017 in Education | Permalink | Comments (0)

Friday, May 19, 2017

Texas Tax Professors Research Workshop at Houston Law Today

Presentation #1: 9:00 – 9:20 Presenter: Bryan Camp, “Application of Equitable Principles to Jurisdictional Time Periods”

9:00 – 9:40 Commenter: Terri Helge Treasury-Dept.-Seal-of-the-IRS
9:40 – 10:00 OPEN COMMENT

Presentation #2: 10:10 – 10:30 Presenter: Cal Johnson, Beckemeyer and the Tax Benefit Rule
10:30 – 10:50 Commenter: Johnny Buckles
10:50 – 11:10 OPEN COMMENT

Open Forum: Round Table Discussion on Business Tax Reform

Presentation #3: 12:30 – 12:50 Presenter: Susan Morse, “The Dark Side of Safe Harbors?”
12:50 – 1:10 Commenter: Bruce McGovern
1:10 – 1:30 OPEN COMMENT

Presentation #4: 1:30 – 1:50 Presenter: Bill Byrnes, “How Much Does It Cost to Roast a Cup of Starbucks?” Download 5-19-2017
1:50 – 2:10 Commenter: Bill Streng
2:10 – 2:30 OPEN COMMENT

*Open Forum 2:20 – 3:20 Roundtable Introduction of Research Topics for Non-Presenters (if time permits)

May 19, 2017 in Academia, Tax Compliance | Permalink | Comments (0)

Thursday, May 18, 2017

FinCEN and Manhattan U.S. Attorney Announce Settlement with Former MoneyGram Executive Thomas E. Haider

The Financial Crimes Enforcement Network (FinCEN) and the U.S. Attorney’s Office for the Southern District of New York announced today the settlement of claims under the Bank FINCENSecrecy Act (BSA) against Thomas E. Haider, the former Chief Compliance Officer of MoneyGram International, Inc. Mr. Haider has agreed to a three-year injunction barring him from performing a compliance function for any money transmitter and has agreed to pay a $250,000 penalty. He also has admitted, acknowledged, and accepted responsibility for the following, among other things:  (1) failing to terminate specific MoneyGram outlets after being presented with information that strongly indicated that the outlets were complicit in consumer fraud schemes; (2) failing to implement a policy for terminating outlets that posed a high risk of fraud; and (3) structuring MoneyGram’s anti-money laundering (AML) program such that information that MoneyGram’s Fraud Department had aggregated about outlets, including the number of reports of consumer fraud that particular outlets had accumulated over specific time periods, was not generally provided to the MoneyGram analysts who were responsible for filing suspicious activity reports with FinCEN. 

Acting FinCEN Director Jamal El-Hindi recognized the efforts of FinCEN’s Enforcement Division’s Office of Special Investigations, and its Office of Compliance and Enforcement in this matter. He also expressed his appreciation to Joon H. Kim, the Acting U.S. Attorney for the Southern District of New York, and his Office, for their extensive contributions to the case and outstanding partnership with FinCEN.

“FinCEN relies on compliance professionals from every corner of the financial industry,” said Acting FinCEN Director Jamal El-Hindi. “FinCEN and our law enforcement partners need their judgment and their skills to effectively fight money laundering, fraud, and terrorist financing. Compliance professionals occupy unique positions of trust in our financial system. When that trust is broken, it is important that we take action so that the reputations of thousands of talented compliance officers are not diminished by any one individual’s outlying egregious actions. We have repeatedly said that when we take an action against an individual, the record will clearly reflect the basis for that action. Here, despite being presented with various ways to address clearly illicit use of the financial institution, the individual failed to take required actions designed to guard the very system he was charged with protecting, undermining the purposes of the BSA. Holding him personally accountable strengthens the compliance profession by demonstrating that behavior like this is not tolerated within the ranks of compliance professionals.”

Acting U.S. Attorney Joon H. Kim said:  “Compliance officers perform an essential function, serving as the first line of defense in the fight against fraud and money laundering.  Unfortunately, as today’s settlement shows, Thomas Haider violated his obligations as MoneyGram's chief compliance officer. By failing to terminate MoneyGram outlets that presented a high risk for fraud and to take other actions clearly required of him, Haider allowed criminals to use MoneyGram to defraud innocent consumers. We are committed to working with FinCEN to enforce the requirements of the Bank Secrecy Act and to hold individuals like Haider accountable.”

In December 2014, FinCEN issued a $1 million civil money penalty against Mr. Haider for failing to ensure that his company abided by the AML provisions of the BSA. The U.S. Attorney’s Office for the Southern District of New York then filed a complaint in U.S. District Court that sought to enforce the penalty and to enjoin Mr. Haider from employment in the financial industry. This settlement concludes those actions and was approved by U.S. District Judge David S. Doty of the U.S. District Court for the District of Minnesota.

From 2003 to 2008, Mr. Haider was the Chief Compliance Officer for MoneyGram International Inc. Mr. Haider oversaw MoneyGram’s Fraud Department, which collected thousands of complaints from consumers who were victims of fraudulent schemes. Mr. Haider also headed MoneyGram’s AML Compliance Department, which was charged with ensuring compliance with requirements under the BSA designed to protect the financial system against money laundering and terrorist finance.

FinCEN seeks to protect the U.S. financial system from being exploited by illicit actors. Its efforts are focused on compromised financial institutions and their employees; significant fraud; third-party money launderers; transnational organized crime and security threats; and cyber threats. FinCEN has a broad array of enforcement authorities to target both domestic and foreign actors affecting the U.S. financial system.

May 18, 2017 in AML | Permalink | Comments (0)

Wednesday, May 17, 2017

Administrative Law Judge Pleads Guilty for Role in $550 Million Social Security Disability Fraud Scheme

A former administrative law judge for the Social Security Administration (SSA) pleaded guilty in federal court today for his SSArole in a scheme to fraudulently obtain more than $550 million in federal disability payments from the SSA for thousands of claimants.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Special Agent in Charge Michael McGill of the Social Security Administration-Office of Inspector General’s (SSA-OIG) Philadelphia Field Division; Special Agent in Charge Amy S. Hess of the FBI’s Louisville, Kentucky, Field Division; Special Agent in Charge Tracey D. Montaño of the Internal Revenue Service-Criminal Investigation (IRS-CI) Nashville, Tennessee, Field Office; and Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services-Office of the Inspector General’s (HHS-OIG) Atlanta Regional Office made the announcement.

David Black Daugherty, 81, of Myrtle Beach, South Carolina, pleaded guilty before U.S. District Judge Danny C. Reeves of the Eastern District of Kentucky to an information charging him with two counts of receiving illegal gratuities. Sentencing is set for Aug. 25, 2017.

Daugherty was an administrative law judge at the Social Security hearing office in Huntington, West Virginia (Huntington Hearing Office) for more than 20 years, where his primary responsibility was to adjudicate disability claims on behalf of the SSA. According to admissions made as part of his guilty plea, from November 2004 to April 2011, Daugherty accepted more than $609,000 in cash payments, total, in more than approximately 3,100 cases from Social Security disability lawyer, Eric Christopher Conn, of Pikeville, Kentucky, for awarding disability benefits to claimants represented by Conn. Furthermore, in an effort to conceal the source of these cash payments, Daugherty divided cash deposits into various bank branches and accounts, he admitted.

Daugherty admitted that he sought out Conn’s cases pending with the Huntington Hearing Office, contacted Conn and told him what type of medical evidence to submit in support of disability findings and then awarded benefits to claimants represented by Conn without holding hearings. As a result, Conn ultimately received at least $7.1 million in representative fees from the SSA, and Daugherty further obligated the SSA to pay more than $550 million in lifetime benefits to claimants, according to the plea.

Daugherty was indicted on April 1, 2016, along with Conn and Alfred Bradley Adkins, a clinical psychologist of Pikeville. They were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme. Conn pleaded guilty to the fraud scheme earlier this year. As to Adkins, who is awaiting trial, the indictment is merely an allegation as all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

May 17, 2017 in AML | Permalink | Comments (0)

Update Regarding Imposition of Fifth Special Measure against FBME Bank, Ltd.

In its April 14, 2017 order granting FinCEN's motion for summary judgment, the U.S. District Court for the District of Columbia lifted the stay blocking the implementation of the March FinCEN-logo-shield31, 2016 Final Rule imposing a prohibition on opening or maintaining correspondent accounts for, or on behalf of, FBME Bank, Ltd. pursuant to Section 311 of the USA PATRIOT Act.  On April 28, 2017, the U.S. Court of Appeals for the District of Columbia Circuit denied FBME's motion for stay pending appeal.  Accordingly, the Final Rule is in effect.  FBME is appealing the district court's decision. 

I have been following this case for quite some time and intend to write a law review article about it as time allows.  See my previous post: 

Is FinCEN Becoming a Star Chamber? The Curious FBME case (2015)

FBME Bank Obtains Preliminary Injunction Against FinCEN (2015) 

FinCEN Cuts FBME Bank from Access to U.S. Financial System (2015)

FinCEN Re-Issues Order Against FBME Bank Ltd. Setting the Stage for the Court to Sort it Out (2016)

May 17, 2017 in AML | Permalink | Comments (0)

Tuesday, May 16, 2017

FinCEN Awards Recognize Law Enforcement Success Stories Supported by Bank Secrecy Act Reporting

The Financial Crimes Enforcement Network (FinCEN) held its third annual Law Enforcement Awards ceremony today at the U.S. Department of the Treasury.  FinCEN presented FINCENawards to law enforcement agencies that use Bank Secrecy Act reporting provided by financial institutions in their criminal investigations.  The goals of the program are to recognize law enforcement agencies that made effective use of financial institution reporting to obtain a successful prosecution, and to demonstrate to the financial industry the value of its reporting to law enforcement.  The program emphasizes that prompt and accurate reporting by the financial industry is vital to the successful partnership with law enforcement to fight financial crime.

“The scope and quality of the data that we are collecting through Bank Secrecy Act reporting is constantly improving, and FinCEN has made great advancements to provide law enforcement and stakeholders faster and easier access to financial intelligence that will assist with investigations and prosecutions,” said Treasury Secretary Steven T. Mnuchin, who congratulated award recipients at the opening of the awards ceremony.  “These success stories highlight the value of our ongoing efforts to strengthen partnerships to combat money laundering, fraud, corruption, criminal trafficking, and other illicit activities.”

The program includes six award categories recognizing achievements in combatting significant threats to the integrity of the financial system and the safety of our communities.  The program is open to all Federal, state, local, and tribal law enforcement agencies.  The 2017 award recipients are listed below. 

SAR Review Task Force: New York State Police

The New York State Police Special Investigations Unit at the Financial Crimes Unit (FCU) identified suspicious transactions occurring in the Hudson Valley Region indicative of money laundering as part of Suspicious Activity Report (SAR) review initiatives.  The impetus of the investigation was a single financial institution reporting an unusual pattern of cash deposits.  The reporting bank indicated that it believed much of the cash was derived from the illegal sale of marijuana.  The funds were rapidly withdrawn from ATM locations across the United States.  Investigators identified many additional reports containing sensitive financial information, dating back another year, indicating similar activity in this account.

Further investigation demonstrated that these individuals were connected to a larger criminal organization than originally believed, allowing the organization to be considered an “enterprise” and eligible to be charged under the Racketeer Influenced and Corrupt Organizations Act.

Investigators discovered extensive criminal histories for many of the individuals associated with this organization, including narcotics and firearms possession charges on several individuals.  The Special Investigations Unit initiated a criminal investigation, and the two parallel investigations led to the identification of expansive criminal organizations responsible for bringing large quantities of narcotics into the region, operating business fronts used to launder funds, weapons trafficking, bulk cash smuggling, and extensive gang activity, including murder.  Over 100 individuals belonging to several different street and prison gangs were identified, ranging from leadership to low-level associates, along with residences and vehicles belonging to these individuals.

As a result of this multi-agency investigation, law enforcement successfully seized 16 firearms, 14 kilos of cocaine, 12 pounds of marijuana, 90 grams of crack cocaine, 153 grams of heroin, 75 oxycodone pills, $200,000 in cash, and several vehicles.  Coordinated efforts resulted in the arrest and indictment of 55 individuals in the Northern and Southern Districts of New York.

Transnational Organized Crime: Federal Bureau of Investigation (FBI)

The FBI initiated an investigation after receiving a referral from local law enforcement regarding an individual suspected of carrying out various fraud and money laundering schemes.  A review of sensitive financial information identified a high volume of data enabling investigators to identify 80 accounts controlled by the primary target and identify funds that appeared to be derived from criminal activity.  The individual was arrested and charged with money laundering, which subsequently led to his cooperation with law enforcement.

Based on information this individual provided after agreeing to cooperate with the FBI, investigators uncovered a network of criminal actors located in the United States and Canada.  Investigators then used this information to identify additional accounts and transactions involving these newly identified targets at financial institutions located throughout the United States.  These financial institutions described suspected money laundering activity though a series of businesses and trust accounts located in several countries.  Investigators also identified additional ongoing criminal investigations by other agencies targeting this same network of individuals.

Investigators began working closely with the other agencies to identify the full scope of this criminal organization.  The information obtained during this coordination led the FBI to consider this criminal organization one of its highest priority transnational organized crime targets.  Working closely with foreign and domestic law enforcement partners, investigators identified members of this criminal organization operating from all over the world.  Analysis of financial activity indicated that this organization was bringing in $100-$300 million in annual criminal proceeds in North America alone.

Authorities arrested and indicted the targets on various money laundering, fraud, and conspiracy charges.  Several suspects pled guilty before their cases went to trial.  Several targets went to trial, where all defendants were convicted on all counts.

Transnational Security Threats: Federal Bureau of Investigation (FBI)
 

The FBI used a high volume of sensitive financial information over several years during the course of its investigation into a criminal organization moving hundreds of millions of U.S. dollars to support foreign nuclear and ballistic missile programs.

This investigation identified two families engaged in criminal activities.  These families each operated a network of exchange houses, precious metals companies, trading companies, and front companies throughout the Middle East to carry out financial activity for the benefit of multiple OFAC-sanctioned entities, as well as several entities with close ties to foreign military organizations. 

This investigation utilized information gleaned from financial data to confirm information necessary to issue search warrants and subpoenas to multiple U.S. financial institutions.  Piecing together many pieces of financial data, they determined that the targets were operating one particular exchange house for foreign remittances.  This information enabled a grand jury to issue more than 100 subpoenas to U.S. financial institutions relating to more than 300 targets.  These subpoenas identified millions of transactions totaling over $200 billion.

During the FBI investigation, foreign authorities took legal action against several of the targets, who were arrested on a range of charges, including billions of dollars in bribery, corruption, and embezzlement.  While most of these charges were ultimately dropped, the FBI was able to compare data about the foreign law enforcement investigation with evidence it had obtained through its own investigation and determined that many significant elements of the foreign investigation supported conclusions the FBI had drawn based on email, bank, and other data.  As a result of the publicity generated by the foreign investigation, law enforcement gathered additional and previously unknown details on the identified individual targets and their hundreds of associated shell companies.  This allowed the FBI to expand its search and more completely map out the criminal network and its funding mechanisms.

The investigation ultimately led to criminal charges of conspiracy to commit money laundering, bank fraud, and sanctions violations through two separate indictments against nine individuals, including an officer of a foreign bank.  Prosecution of these individuals is still pending. Criminal forfeiture totals are expected to reach hundreds of millions of dollars.
 

Cyber Threats: Internal Revenue Service-Criminal Investigation (IRS-CI)

A multi-year, multi-agency investigation, led by IRS-CI focused on several targets selling narcotics on the dark web and distributing them throughout the United States through the U.S. Postal Service.  The primary targets of this investigation conducted their online activity through The Onion Router (TOR), which provided them with encryption and decryption of peer-to-peer connections.  This method provided the targets with access to several dark web sites, on which they sold methamphetamine and marijuana.

The targets disguised their shipments of narcotics through the Postal Service inside packages filled with markers and drawing paper.  Despite the targets’ use of multiple return addresses and sender names, Postal inspectors were able to determine that the suspected narcotics mailings were originating from the same individuals based on several telling packaging characteristics.

Investigators intercepted multiple packages as a result of search warrants.  Investigators were then able to determine through internet service provider records that the username associated with several undercover purchases on the dark web belonged to the same individual sending the narcotics through the Postal Service.  Investigators determined that over a 6-month period, this individual sent 435 suspicious packages on at least 50 different occasions.

Sensitive financial information identified during the course of this investigation detailed specific information that corroborated the financial and personal information of the subjects of the investigation.  The data also indicated that the subjects were using Bitcoins in an effort to conceal their illicit proceeds.  The information identified in the financial data and from subpoenas issued to numerous financial institutions and Bitcoin exchangers helped clarify the convoluted series of transactions conducted to launder the funds.

The targets only accepted payment for the narcotics in the form of Bitcoin.  The Bitcoins were then sent through a Bitcoin “blender” to conceal their source.  The Bitcoins would then be redistributed back to the targets through several Bitcoin exchangers before being converted into U.S. dollars and deposited into several bank accounts.

The targets of this investigation were arrested on various drug charges, at which point several search warrants were issued on several locations where methamphetamine, marijuana, and numerous firearms were discovered.  The targets were subsequently indicted and pled guilty to various drug and money laundering charges.  This is notable since this is the first case in this particular Midwest district where money laundering charges were approved based on Bitcoin transactions.

Significant Fraud: Defense Criminal Investigative Service (DCIS)
 

DCIS initiated a long-term investigation based on structuring and excessive credit card charges identified by multiple financial institutions on a single individual.  Two different working groups identified the transaction data and referred it for further investigation.  Investigators determined that one of the subjects was transferring funds to a company providing subcontractor support for a military contract in Afghanistan.  Further investigation determined that the company receiving the funds was a shell company owned by a U.S. military official to conceal bribery payments he was receiving in exchange for helping the primary target win contracts.

Further financial analysis identified $24 million in transactions in the personal accounts of the primary target.  The majority of the transactions were multi-million dollar deposits from his employer, which was a DOD prime contractor providing logistical support and training to foreign military units.  These deposits were followed immediately by transfers to several bank accounts and structured cash withdrawals.

A detailed analysis of sensitive financial information and contract documents revealed that the U.S. military official received bribes from the primary target in exchange for sensitive bidding data, including bid amounts of competitors and actual government estimates.  The official was also responsible for establishing those estimates and assembling the team responsible for reviewing bids.  In return for his assistance in winning $54 million in bids, the primary target paid the official over $9 million through an extensive network of shell companies and bank accounts. 

The targets of this investigation eventually pled guilty to various conspiracy, money laundering, obstruction, and fraud charges.  Investigators seized $12.3 million in assets from the primary target and his employer and the military official, including real property, vehicles, boats, aircrafts, firearms, gold coins, and bank accounts.

Third-Party Money Launderers:  Immigration and Customs Enforcement Homeland Security Investigations (HSI)

Over the course of 18 months, HSI investigators utilized an extensive volume of sensitive financial information to assist in their investigation into a large-scale illegal third-party money laundering organization.  The investigation began based largely on information gleaned from a FinCEN-issued Geographic Targeting Order (GTO).  This GTO required armored car services importing or exporting funds through two specific geographies in the southwest border region to acquire additional identifying information on certain transactions.

The information that investigators discovered as a result of the GTO led them to focus on one particular armored car company that appeared to be facilitating a money laundering scheme outside southern California.  Investigators discovered that the company was importing U.S. dollars and Mexican pesos from casas de cambio in Mexico and depositing them into shell company bank accounts that were opened and operated by the two individuals who owned and operated the company.

Law enforcement was able to identify and connect an address for the armored car company that was shared by several other companies owned by the same individuals.  Two of these newly identified companies were registered as money services businesses (MSB).  Further investigation and a detailed analysis of financial data indicated that these additional companies were simply shell companies that the two individuals used to funnel millions of U.S. dollars back into Mexico.

Subpoenas were issued to the banks used by each of these companies, as well as to all of the people known to be involved with the companies.  Transaction records identified cash deposits of $45 million over a 15-month period, which were then transferred in and out of the accounts of the various companies owned by the individuals before ultimately being wired to Mexico.

As a result of the investigation and discovery of the money laundering scheme, both individuals pled guilty to violations regarding failures to maintain an effective anti-money laundering program.  They also lost all licenses necessary to operate as an MSB and forfeited hundreds of thousands of U.S. dollars and Mexican pesos.

May 16, 2017 in AML | Permalink | Comments (0)

Monday, May 15, 2017

Third Indian National Pleads Guilty for Role in Multimillion Dollar India-Based Call Center Scam Targeting U.S. Victims

An Indian national pleaded guilty today to one count of conspiracy to commit money laundering for his role in liquidating and laundering victim payments generated through various telephone fraud and money laundering schemes via India-based call centers.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Abe Martinez of the Southern District of Texas, Executive DHS InvestigationsAssociate Director Peter T. Edge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA) and Inspector General John Roth of the U.S. Department of Homeland Security Office of Inspector General (DHS OIG) made the announcement.

Harsh Patel, 28, an Indian national who most recently resided in Piscataway, New Jersey, pleaded guilty before U.S. District Court Judge David Hittner of the Southern District of Texas. Sentencing is set for Aug. 7, 2017.

According to admissions made in connection with the plea, Patel and his co-conspirators perpetrated a complex scheme in which individuals from call centers located in Ahmedabad, India, impersonated officials from the IRS or U.S. Citizenship and Immigration Services (USCIS) in a ruse designed to defraud victims located throughout the United States. Using information obtained from data brokers and other sources, call center operators targeted U.S. victims who were threatened with arrest, imprisonment, fines or deportation if they did not pay alleged monies owed to the government. Victims who agreed to pay the scammers were instructed how to provide payment, including by purchasing stored value cards or wiring money. Upon payment, the call centers would immediately turn to a network of “runners” based in the U.S. to liquidate and launder the fraudulently-obtained funds.

According to his plea, since around January 2015, Patel worked as a runner operating primarily in New Jersey, California and Illinois. At the direction of India-based co-conspirators, often via electronic WhatsApp text communications, Patel admitted to purchasing reloadable cards registered with misappropriated personal identifying information of U.S. citizens. Once victim scam proceeds were loaded onto those cards, Patel admitted that he liquidated the proceeds on the cards and transferred the funds into money orders for deposit into various bank accounts while keeping a percentage of the victim funds for himself. Patel also admitted to receiving fake identification documents from an India-based co-conspirator and other sources and using those documents to receive victim scam payments via wire transfers.

To date, Patel, 55 other individuals, and five India-based call centers have been charged for their roles in the fraud and money laundering scheme in an indictment returned by a federal grand jury in the Southern District of Texas on Oct. 19, 2016. Patel is the third defendant thus far to plead guilty in this case. Co-defendants Bharatkumar Patel, aka Bharat Patel, 43, and Ashvinbhai Chaudhari, 28, pleaded guilty on April 13, 2017, and April 26, 2017, respectively.

The remaining defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

HSI, DHS OIG and TIGTA led the investigation of this case. Also providing significant support was the Criminal Division’s Office of International Affairs; Ft. Bend County, Texas, Sheriff’s Office; police departments in Hoffman Estates and Naperville, Illinois, and Leonia, New Jersey; San Diego County District Attorney’s Office Family Protection/Elder Abuse Unit; U.S. Secret Service; U.S. Small Business Administration - Office of Inspector General; IOC-2; INTERPOL Washington; U.S. Citizenship and Immigration Services USCIS; U.S. State Department’s Diplomatic Security Service; and U.S. Attorney’s Offices in Northern District of Alabama, District of Arizona, Central District of California, Northern District of California, District of Colorado, Northern District of Florida, Middle District of Florida, Northern District of Illinois, Northern District of Indiana, District of Nevada and District of New Jersey. The Federal Communications Commission’s Enforcement Bureau also provided assistance in TIGTA’s investigation.

Senior Trial Attorney Michael Sheckels and Trial Attorney Mona Sahaf of the Criminal Division’s Human Rights and Special Prosecutions Section, Trial Attorney Robert Stapleton of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys S. Mark McIntyre and Craig M. Feazel of the Southern District of Texas are prosecuting the case.

A Department of Justice website(link is external) has been established to provide information about the case to already identified and potential victims and the public. Anyone who believes they may be a victim of fraud or identity theft in relation to this investigation or other telefraud scam phone calls may contact the Federal Trade Commission (FTC) via this website.

May 15, 2017 in AML | Permalink | Comments (0)

Sunday, May 14, 2017

Former U.S. Congresswoman Corrine Brown Guilty of Fraud Scheme Involving Bogus Non-Profit Scholarship Entity

Former U.S. Congresswoman Corrine Brown was convicted by a federal jury in Jacksonville, Florida, today for her role in a conspiracy and fraud scheme involving a fraudulent scholarship charity.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney W. Stephen Muldrow of the Middle District of Florida, FBISealSpecial Agent in Charge Charles P. Spencer of the FBI’s Jacksonville, Florida, Division and Chief Richard Weber of the of Internal Revenue Service-Criminal Investigation (IRS-CI) made the announcement.

“Former Congresswoman Corrine Brown violated the public trust, the honor of her position, and the integrity of the American system of government when she abused one of the most powerful positions in the nation for her own personal gain. She shamefully deprived needy children of hundreds of thousands of dollars that could have helped with their education and improved their opportunities for advancement, and she lied to the IRS and the American public about secret cash deposits into her personal bank accounts,” said Acting Assistant Attorney General Blanco. “The Department of Justice is committed to fighting corruption and fraud wherever we find it, at all levels of government, regardless of their power and influence.”

“Former Congresswoman Brown chose greed and personal gain over the sacred trust given to her by the community that she served for many years,” said Acting U.S. Attorney Muldrow. “These guilty verdicts underscore our Office's resolve in holding public officials at all levels of government accountable for their actions. In this case, former Congresswoman Brown stole money that was donated on the false promise of helping further the educational goals of underprivileged children.”

“Former Congresswoman Brown took an oath year after year to serve others, but instead she exploited the needs of children and deceived her constituents to advance her own personal and political agendas,” said Special Agent in Charge Spencer. “Corrupt public officials undermine the integrity of our government and violate the public’s trust, and that is why investigating public corruption remains the FBI’s top criminal priority. I am proud of our special agents, analysts and support personnel who spent countless hours following the money trail in this case, and thank our law enforcement partners at the IRS-CI and U.S. Attorney’s Office for their efforts to hold Brown and her associates accountable for their inexcusable actions.”

“Former Congresswoman Corrine Brown failed to deliver and uphold her duty to file true and correct tax returns by lying about her income and charitable contributions to feed her greed. No one is above the law, including those in a position of public trust, and there isn’t a separate standard when it comes to paying taxes, said Chief Weber. “IRS CI, along with our law enforcement partners, will hold accountable those who violate the tax laws and cheat the taxpayers.”

Brown, 70, of Jacksonville, was convicted on 18 counts of an indictment charging her with participating in a conspiracy involving a fraudulent education charity, concealing material facts on required financial disclosure forms, obstructing the due administration of the internal revenue laws and filing false tax returns. The jury also found Brown guilty of violating the Ethics in Government Act by concealing certain income on the required annual financial disclosure forms she submitted to the U.S. House of Representatives.

Judge Timothy J. Corrigan of the Middle District of Florida noted that he would schedule Brown’s sentencing for a later date.

Brown’s co-conspirators, Elias “Ronnie” Simmons, Brown’s long-time Chief of Staff, and Carla Wiley, the president of the fraudulent charity, previously pleaded guilty to their roles in the education charity scheme on Feb. 8, 2017, and March 3, 2016, respectively.

Evidence at trial showed that between late 2012 and early 2016, Brown participated in a conspiracy and fraud scheme involving One Door for Education – Amy Anderson Scholarship Fund (One Door) in which the Brown, Simmons, Wiley and others acting on their behalf solicited more than $800,000 in charitable donations based on false representations that the donations would be used for college scholarships and school computer drives, among other charitable causes. Testimony by One Door donors showed that Brown and her coconspirators solicited donations from individuals and corporate entities that Brown knew by virtue of her position in the U.S. House of Representatives. Many of the donors were led to believe that One Door was a properly registered 501(c)(3) non-profit organization, when, in fact, it was not.

Contrary to Brown’s representations, Brown, Simmons, Wiley and others used the vast majority of One Door donations for their personal and professional benefit, including tens of thousands of dollars in cash deposits that Simmons made to Brown’s personal bank accounts, according to trial evidence. In one instance, Simmons deposited $2,100 of One Door funds into Brown’s personal bank account the same day that Brown paid $2,057 to the IRS for taxes she owed. Likewise, trial evidence showed Brown and Simmons used the outside consulting company of one of Brown’s employees to funnel One Door funds to Brown and others for their personal use.

Trial evidence also showed that more than $300,000 in One Door funds were used to pay for events hosted by Brown or held in her honor, including a golf tournament in Ponte Vedra Beach, Florida; lavish receptions during an annual conference in Washington, D.C.; the use of a luxury box during a concert in Washington, D.C.; and the use of a luxury box during an NFL game in the Washington, D.C., area. According to trial evidence, despite raising over $800,000 in donations, One Door granted only two scholarships totaling $1,200 that were awarded to students to cover expenses related to attending a college or university.

Additionally, trial evidence demonstrated that Brown failed to disclose, among other things, the reportable income she received from One Door and claimed deductions on her tax returns based on false statements that she made certain donations to One Door, as well as to local churches and non-profit organizations in the Jacksonville area.

The FBI and IRS-CI investigated the case. Deputy Chief Eric G. Olshan of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys A. Tysen Duva and Michael J. Coolican of the Middle District of Florida prosecuted the case.

May 14, 2017 in AML | Permalink | Comments (0)

Saturday, May 13, 2017

Panama National Assembly set to approve new AML Law (LAW 412, 23 of 2015)

Law 412 proposes the establishment of a legal platform for the consolidation of Panama as an international fiduciary center and place it at the forefront of international transparency FATF logo standards. Read here official publication in Spanish.

Draft Law 412, which amends Law 1 of 1984 on the business of trust and updates Law 23 of 2015 on prevention of money laundering, financing of terrorism and financing of proliferation of mass destruction weapons was approved in the third debate in the National Assembly.

The project establishes new parameters for compliance companies, strengthening the Administration Office for Supervision and Regulation of Non-Financial Subjects, granting the Superintendence of Banks of Panama supervisory responsibilities of other financial subjects, among other aspects contemplated in the initiative.

In addition, Draft Law 412 proposes the establishment of a legal platform to promote the local market as a necessary step for the consolidation of Panama as an international trust center and place it at the forefront of international transparency standards.

The fiduciary business in Panama is one of the most important of the financial sector, the rule that governs it dates back to 1984, so it was necessary to update it, in order to improve the supervision and regulation of this market whose trust fund reaches 22 thousand million dollars.

The approval of Draft Law 412 is part of Panama's actions to strengthen its legal framework and promote transparency, and will be evaluated in May by the Latin American Financial Action Task Force (GAFILAT).

See US 2016 INCSR Report

See arrest by Panama police of Mossack and Fonseca founding partners because of their alleged involvement with money laundering for Brazil's Petrobras corruption scandal.

May 13, 2017 in AML | Permalink | Comments (0)

Friday, May 12, 2017

Controlled Foreign Corporations, Tax Year 2012

Two new tables presenting data from Form 5471, Controlled Foreign Corporations, and Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities, Irs_logoare now available on SOI’s Tax Stats Webpage. The tables present data from the estimated population of returns filed for Tax Year 2012. One table presents number, assets, and earnings for controlled foreign corporations and their foreign disregarded entities classified by selected country of incorporation. The other table displays number, assets, and earnings for controlled foreign corporations and their foreign disregarded entities classified by selected NAICS industrial sector.

SOI Tax Stats - Controlled Foreign Corporations

May 12, 2017 in Tax Compliance | Permalink | Comments (0)

Thursday, May 11, 2017

New FTC Website Helps Small Businesses Avoid Scams and Cyber Attacks

Attacks can be especially devastating to small businesses; Agency provides information on how they can protect themselves

At the direction of Acting Chairman Maureen Ohlhausen, the Federal Trade Commission has launched a new website – ftc.gov/SmallBusiness – with articles, videos, and other 1024px-US-FederalTradeCommission-Seal.svginformation aimed at helping small business owners avoid scams and protect their computers and networks from cyberattacks and other threats.

“Small businesses are critical to our economic strength, building America's future, and helping the United States compete in today's global marketplace,” Acting Chairman Ohlhausen said. “This innovative new website is a one-stop shop where small businesses can find information to protect themselves from scammers and hackers, as well as resources they can use if they are hit with a cyberattack.”

According to the U.S.Small Business Administration (SBA), there are more than 28 million small businesses nationwide, employing nearly 57 million people. Scammers frequently target small businesses with deceptive tactics designed to get them to pay for supplies they didn’t order, donate to fake charities or trick them into giving access to their network or downloading malware that can corrupt their business’s computers.

Cyberattacks can be particularly devastating to small businesses, and many of them lack the resources that larger companies have to devote to cybersecurity. Symantec Corp.’s 2016 Internet Security Threat Report indicates the percentage of spear-phishing attacks targeting small business rose dramatically from 18 percent to 43 percent between 2011 and 2015.

The FTC’s new web page offers specific information to help small businesses protect their networks and their customer data. This includes a new Small Business Computer Security Basics guide, which shares computer security basics to help companies protect their files and devices, train employees to think twice before sharing the business’s account information, and keep their wireless network protected, as well as how to respond to a data breach. It also has information on other cyber threats such as ransomware and phishing schemes targeting small businesses. The FTC is continuing to work with the SBA on additional ways to help small businesses.

May 11, 2017 in AML | Permalink | Comments (0)