International Financial Law Prof Blog

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

Tuesday, October 17, 2017

FINRA bars former Goldman Sachs banker linked to $3 billion 1MBD Theft

FCPA Blog reports here on the continuing saga of the 1MDB missing $3 billion dollars.

MAS said Leissner managed the client relationship with 1MDB for its three bond issues from 2012 to 2013. The bond issues were fully underwritten by London-based Goldman Sachs International.  A Goldman team from Hong Kong, Singapore, Malaysia, and the United Arab Emirates handled the work.

In the reference letter Leissner wrote on Goldman Sachs' letterhead in June 2015, he said: "Goldman Sachs had conducted due diligence on Mr Low Taek Jho and his family, and had not detected any money laundering concerns with respect to Mr Low or his family."  Low, a Malaysian citizen, has been tied by U.S., Swiss, and Singapore prosecutors to the diversion of $3 billion or more from 1MDB.  Read the full FCPA blog story about 1MDB and the stolen $3 billion, most of which remains missing...

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

Sunday, October 15, 2017

Retired U.S. Army Colonel Indicted for Conspiring to Bribe Senior Government Officials of the Republic of Haiti

A retired U.S. Army colonel was charged in an indictment filed today for his alleged role in a foreign bribery and money laundering scheme in connection with a planned $84 million port development project in Haiti.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney William D. Weinreb of the District of Massachusetts, Assistant Director Stephen Richardson of the FBI’s Criminal Investigative Division and Special Agent in Charge Harold M. Shaw of the FBI’s Boston Field Office made the announcement.

Joseph Baptiste, 64, of Fulton, Maryland, was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act, one count of violating the Travel Act and one count of conspiracy to commit money laundering in an indictment filed in the District of Massachusetts.

The indictment alleges that Baptiste solicited bribes from undercover FBI agents in Boston who posed as potential investors in connection with a proposed project to develop a port in the Moles Saint Nicolas area of Haiti.  According to the indictment, the proposed project was expected to cost approximately $84 million, and was to involve the construction of a cement factory in its first phase.  The indictment alleges that during a recorded meeting at a Boston-area hotel, Baptiste told the agents that he would funnel the payments to Haitian officials through a non-profit entity that he controlled — which was based in Maryland and purported to help impoverished residents of Haiti — in order to secure government approval of the project. 

The indictment further alleges that in telephone calls Baptiste discussed bribing an aide to a senior Haitian official by giving him a job on the port development project after he left his position.  It further alleges that although Baptiste ultimately used for personal purposes approximately $50,000 that he received from the undercover agents for the payment of bribes to Haitian officials — money that was wired at Baptiste’s direction to a non-profit organization he controls — he intended to seek additional money from the undercover agents to use for future bribe payments in connection with the port project.

An indictment is merely an allegation and all defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. Attachment(s): 

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

Thursday, October 5, 2017

Two Men Charged in Bribery Scheme Related to Korean Base Relocation

A former contracting officer for the U.S. Army Corps of Engineers (USACE), Far East District (FED) and a former officer in the Korean Ministry of Defense (MOD) were indicted for CID_sealtheir roles in a scheme to direct over $400 million in Department of Defense (DOD) construction contracts to a large multinational corporation based in the Republic of Korea in exchange for over $3 million in bribes.   

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Director Frank Robey, Major Procurement Fraud Unit, U.S. Army Criminal Investigation Command (CID); and Assistant Director Stephen E. Richardson of the FBI's Criminal Investigative Division made the announcement.

Former FED contracting officer Duane Nishiie, 58, of Honolulu, and former Korean MOD officer Seung-Ju Lee, 50, of Seoul, Korea, were charged in a nine-count indictment with mail and wire conspiracy, bribery, wire fraud, and conspiracy to commit money laundering.  Nishiie was also charged with three counts of making a false statement.

According to the indictment, from 2008 through 2012, Nishiie and Lee solicited bribes from a large Korean engineering and construction company in exchange for Nishiie’s official actions to direct to the company certain contracts relating to the relocation and expansion of Camp Humphreys, a large military installation in Korea.  The indictment further alleges that during this time, Nishiie, Lee and others used foreign bank accounts to hide the bribes accepted by Nishiie.

The indictment alleges that in late 2008, Nishiie took official action to steer a contract, valued at over $400 million, involving land development, utilities and infrastructure for the expansion of Camp Humphreys to the Korean company.  Nishiie is also alleged to have used his official position in 2009 and 2010 to influence the award of a contract for construction of a project management office at Camp Humphreys, valued at over $6 million to the same Korean company. 

In exchange for these actions, the indictment alleges, Nishiie and Lee received over $3 million in cash and other payments.  Nishiie concealed these payments by using bank accounts held in the names of Lee and other Korean nationals.

U.S. Army CID, FBI and the Defense Criminal Investigative Service conducted the investigation.  Trial Attorneys Richard B. Evans and Peter M. Nothstein of the Criminal Division’s Public Integrity Section are prosecuting the case.

October 5, 2017 in AML | Permalink | Comments (0)

Wednesday, October 4, 2017

Federal Agent, Colombian Narcotics Kingpin and Colombian National Indicted for Conspiracy, Corruption and Obstruction

A Homeland Security Investigations (HSI) Special Agent and two Colombian nationals were charged today by a federal grand jury in the Southern District of Florida with conspiracy, FBI DOJ logocorruption and obstruction of justice charges stemming from their participation in a bribery scheme that resulted in the dismissal of an indictment filed against one of the Colombian nationals in exchange for cash and other things of value, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Special Agent in Charge Michael T. Moreland of the Office of Professional Responsibility (OPR), Immigration and Customs Enforcement’s (ICE) Southeast Region; and Special Agent in Charge Jay Donly of the Office of Inspector General (OIG), HSI.

According to the indictment, Special Agent Christopher V. Ciccione, II, 52, Phoenixville, Pennsylvania, was the case agent for Operation Cornerstone, a large-scale Organized Crime and Drug Enforcement Task Force case that resulted in indictments of Colombia-based cocaine traffickers from the Cali Cartel, including Jose Piedrahita Ceballos, a Colombian national.  The indictment alleges that Piedrahita gave benefits to Ciccione in exchange for official acts that resulted in the dismissal of the indictment against Piedrahita.  Juan Carlos Velasco, also a Colombian national, served as the intermediary between Ciccione and Piedrahita.  Ciccione ultimately succeeded in getting the Cornerstone indictment dismissed against Piedrahita in exchange for approximately $20,000 in cash, dinner, drinks and prostitution.  

The indictment further alleges that while maintaining contact with Piedrahita, Ciccione misled the U.S. Attorney’s Office and HSI management and altered DHS records to represent to decision makers that Piedrahita was “unidentified” and that his case should be dismissed because “all investigative efforts” were “exhausted.”  In addition, Ciccone falsified the concurrence of several other federal agents and even attempted to parole Piedrahita into the U.S.         

The U.S. Department of the Treasury's Office of Foreign Assets Control designated Piedrahita as a Specially Designated Narcotics Trafficker pursuant to the Foreign Narcotics Kingpin Designation Act on May 3, 2016. 

October 4, 2017 in AML | Permalink | Comments (0)

Sunday, October 1, 2017

Medical Manufacturer Alere Settles Accounting Fraud and Bribery Charges for $13 Million

A Massachusetts-based medical manufacturer has agreed to pay more than $13 million to settle charges that it committed accounting fraud through its subsidiaries to meet revenue targets and made improper payments to foreign officials to increase sales in certain countries.

The Securities and Exchange Commission issued an order finding that the South Korean subsidiary of Alere Inc., which produces and sells diagnostic testing equipment, improperly SECinflated revenues by prematurely recording sales for products that were still being stored at warehouses or otherwise not yet delivered to the customers.  According to the SEC’s order, Alere also engaged in improper revenue recognition practices at several other subsidiaries.

“Our securities laws give investors the right to a fair picture of public companies’ finances.  For Alere, that picture was distorted by multiple accounting failures and by outright fraud,” said Paul Levenson, Director of the SEC’s Boston Regional Office.

The SEC’s order also finds that Alere subsidiaries in India and Colombia obtained or retained business by using distributors or consultants to make improper payments to officials of government agencies or entities under government control.  Alere failed to maintain adequate internal controls to prevent the payments, and the company inaccurately recorded the payments in its books and records.

In consenting to the SEC’s order without admitting or denying the findings, Alere agreed to pay disgorgement of ill-gotten gains totaling $3,328,689 plus interest of $495,196 and a penalty of $9.2 million. 

Download Alere Bribery Accounting Fraud SEC

October 1, 2017 in AML | Permalink | Comments (0)

Friday, September 29, 2017

Arrest Of 10 Individuals, Including Four Division I Coaches, For College Basketball Fraud And Corruption Schemes. High School players paid $150,000 to be recruited?

Coaches Alleged To Have Accepted Cash Bribes In Return For Steering College Players Under Their Control To Corrupt Financial Advisors

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Office of the Federal Bureau of Investigation (“FBI”), announced the arrest today of 10 individuals, including four Division I NCAA men’s basketball coaches and a senior executive at a major athletic apparel company (“Company-1”), in connection with two related fraud and corruption schemes.  In the first scheme, as alleged in the three Complaints unsealed today, college basketball coaches took cash bribes from athlete advisors, including business managers and financial advisors, in exchange for using their influence over college players under their control to pressure and direct those players and their families to retain the services of the advisors paying the bribes.  In the second scheme, a senior executive at Company-1, working in connection with corrupt advisors, funneled bribe payments to high school-aged players and their families to secure those players’ commitments to attend universities sponsored by Company-1, rather than universities sponsored by rival athletic apparel companies. 

The three Complaints unsealed today charge four coaches, CHUCK CONNORS PERSON, LAMONT EVANS, EMANUEL RICHARDSON, a/k/a “Book,” and ANTHONY BLAND, a/k/a “Tony”; three athlete advisors, CHRISTIAN DAWKINS, MUNISH SOOD, and RASHAN MICHEL; a senior executive at Company-1, JAMES GATTO, a/k/a “Jim,” along with two individuals affiliated with Company-1, MERL CODE and JONATHAN BRAD AUGUSTINE, with wire fraud, bribery, travel act, and conspiracy offenses.  The defendants were all arrested this morning in various parts of the country.  DAWKINS, SOOD, and AUGUSTINE are scheduled to appear before U.S. Magistrate James L. Cott in federal court later today.

Acting Manhattan U.S. Attorney Joon H. Kim said:  “The picture of college basketball painted by the charges is not a pretty one – coaches at some of the nation’s top programs taking cash bribes, managers and advisors circling blue-chip prospects like coyotes, and employees of a global sportswear company funneling cash to families of high school recruits.  For the ten charged men, the madness of college basketball went well beyond the Big Dance in March.  Month after month, the defendants allegedly exploited the hoop dreams of student-athletes around the country, treating them as little more than opportunities to enrich themselves through bribery and fraud schemes.  The defendants’ alleged criminal conduct not only sullied the spirit of amateur athletics, but showed contempt for the thousands of players and coaches who follow the rules, and play the game the right way.”

FBI Assistant Director William F. Sweeney Jr. said:  “Today’s charges detail a corrupt practice in which highly rated high school and college basketball players were steered toward lucrative business deals with agents, advisors, and an international athletics apparel company.  As alleged, NCAA Division I and AAU coaches created a pay-to-play culture, agreeing to provide access to their most valuable players while also effectively exerting their influence over them.  Today’s arrests should also serve as a warning to those who conduct business this way in the world of college athletics.”
According to allegations contained in the three Complaints[1] unsealed today in Manhattan federal court, and other publicly available documents:

Overview of the Investigation

The charges in the Complaints result from a scheme involving bribery, corruption, and fraud in intercollegiate athletics.  Since 2015, the U.S. Attorney’s Office for the Southern District of New York and the FBI have been investigating the criminal influence of money on coaches and student-athletes who participate in intercollegiate basketball governed by the NCAA.  The investigation has revealed two related schemes.  In the first scheme (the “Coach Bribery Scheme”), athlete advisors – including financial advisors and business managers, among others – allegedly paid bribes to assistant and associate head basketball coaches at NCAA Division I universities, and sometimes directly to student-athletes at those universities, facilitated by the coaches.  In exchange for the bribes, the coaches agreed to pressure and exert influence over student-athletes under their control to retain the services of the bribe-payors once the athletes entered the National Basketball Association (“NBA”).  

In the second scheme (the “Company-1 Scheme”), athlete advisors working with high-level Company-1 employees, allegedly paid bribes to student-athletes playing at, or bound for, NCAA Division I universities, and to the families of such athletes.  These bribes were paid in exchange for a commitment by the athletes to matriculate at a specific university sponsored by Company-1, and a promise to ultimately sign agreements to be represented by the bribe-payors once the athletes entered the NBA.

Participants in both schemes allegedly took steps to conceal the illegal payments, including (i) funneling them to athletes and/or their families indirectly through surrogates and entities controlled by the scheme participants; and (ii) making or intending to make misrepresentations to the relevant universities regarding the involvement of student-athletes and coaches in the schemes, in violation of NCAA rules.

As described in the complaints, these schemes operated as a fraud on the universities involved, all of which provide scholarships to players and salaries to coaches with the understanding and expectation that the players and coaches are in full compliance with all relevant NCAA rules and regulations.  Moreover, these schemes subject the universities to substantial potential penalties by the NCAA, including, but not limited to, financial fines and penalties as well as the potential loss of eligibility to compete in various NCAA events. 

The Coach Bribery Schemes

The first scheme alleged in the Complaints entailed bribes by DAWKINS and SOOD, among others, to four men’s basketball coaches, PERSON, EVANS, RICHARDSON and BLAND, in exchange for the coaches’ agreement to direct players under their control, and the players’ families, to retain DAWKINS and SOOD once the players entered the NBA.  These corrupt arrangements, which turn on the coaches’ abuse of their positions of trust at the universities, are valuable both to the coaches, who receive cash bribes, and to the bribe-payors, for whom securing a future NBA player as a client can prove extremely profitable. 

Allegations Involving Chuck Person

Beginning in or around 2016, and continuing into 2017, PERSON, a former NBA player and the associate head coach at University-1, abused his coaching position at University-1 to solicit and obtain approximately $91,500 in bribe payments from a financial advisor and business manager for professional athletes, who, unbeknownst to PERSON, was providing information to law enforcement (“CW-1”).  In exchange for the bribes, PERSON agreed to direct certain University-1 basketball players to retain the services of CW-1 when those student-athletes entered the NBA.  The bribe payments initially were arranged by MICHEL, who had a preexisting relationship with PERSON and operated a clothing store that specialized in making bespoke suits for professional athletes.  Over the course of the scheme, PERSON did, in fact, arrange multiple meetings between CW-1 and players and/or their family members, in which he falsely touted CW-1’s qualifications without disclosing that he was being bribed to recommend CW-1.  For example, at one meeting, PERSON told the mother of a player at University-1 that CW-1 was PERSON’s own financial advisor and had also advised NBA Hall of Fame inductee (and University-1 alumnus) Charles Barkley, neither of which was true.  PERSON similarly told another player that CW-1 would purchase him a separate cell phone over which they could communicate so as to conceal the nature of the scheme.  

In addition to the bribe payments that PERSON solicited and received, PERSON also arranged for CW-1 to make payments directly to the families of the players PERSON was steering to CW-1.  PERSON further claimed to have given approximately $18,500 of the bribe money he received to the families of two student-athletes whom PERSON sought to steer to retain CW-1.

Allegations Involving Lamont Evans

Beginning in 2016, and continuing into 2017, EVANS solicited at least $22,000 from CW-1 and SOOD in exchange for EVANS’s agreement to exert his official influence over certain student-athletes that EVANS coached at two NCAA Division I universities, University-3 and University-4, to retain SOOD and CW-1’s business management and financial advisory services once those players entered the NBA.  In return, EVANS (who had received bribe payments from DAWKINS previously), promised SOOD and CW-1 that he would steer multiple specific players to retain their services.  Indeed, as a part of the scheme, EVANS arranged for CW-1 to meet with a student-athlete EVANS coached at University-4 (“Player-4”), and arranged for SOOD to meet with the mother of another student-athlete EVANS had previously coached at University-3, for the purpose of pressuring them to retain SOOD and CW-1.  Moreover, and in return for the bribe payments, EVANS falsely touted the services of SOOD and CW-1 to players and their families, telling Player-4, for example, that CW-1 was “my guy,” adding, falsely, that CW-1 “has helped me personally.  And I trust that,” and assuring Player-4 that “[i]t’s going to benefit you.  I promise you that.”  In explaining the benefit of bribing an assistant coach such as EVANS, DAWKINS explained to SOOD and CW-1 that because coaches like EVANS could not get “caught” receiving bribes because “his job is on the line,” EVANS and other corrupt coaches would have an incentive to “block” other athlete advisors from accessing the players under the coaches’ supervision and directing those players to the bribe-payors.

Allegations Involving Emanuel Richardson, a/k/a “Book”

Beginning in or around February 2017, and continuing through September 2017, DAWKINS and SOOD, along with two undercover law enforcement agents posing as financial backers of CW-1 (“UC-1” and “UC-2,” respectively), paid or facilitated the payment of $20,000 in bribes to RICHARDSON in return for RICHARDSON’s commitment to steer players under his control at University-4 to retain DAWKINS and SOOD’s services upon entering the NBA.  During that period, RICHARDSON repeatedly assured DAWKINS and SOOD that RICHARDSON would use his influence over players at Univeristy-4 to direct them to DAWKINS and SOOD, explaining, with respect to one particular player DAWKINS and SOOD sought to sign (“Player-6”), that Player-6 would be “insulated in who he talks to.”  RICHARDSON added, with respect to himself, that “you’re looking at the guy” whom Player-6 trusted.  RICHARDSON subsequently facilitated at least one meeting between DAWKINS, SOOD, and a representative of Player-6 for the purpose of having that representative commit the player to retain DAWKINS and SOOD’s business management and financial advisory services.  In addition, RICHARDSON appears to have provided a portion of the bribe money he received from DAWKINS, SOOD, UC-1, and UC-2 to at least one prospective high school basketball player (“Player-5”) in order to recruit that player to play for University-4. 

Allegations Involving Anthony Bland, a/k/a “Tony,”

Beginning in or around July 2017, and continuing into September 2017, DAWKINS and SOOD, working with UC-1, paid and/or facilitated the payment of at least $13,000 in bribes to BLAND in exchange for BLAND’s agreement to exert his official influence over certain student-athletes BLAND coached at University-5, to retain DAWKINS and SOOD’s business management and/or financial advisory services once those players entered the NBA.  In particular, as BLAND told DAWKINS and SOOD, in return for their bribe payments, “I definitely can get the players. . . .  And I can definitely mold the players and put them in the lap of you guys.”  In addition, and as part of the scheme, at BLAND’s direction DAWKINS and SOOD paid or facilitated the payment of an additional $9,000 directly to the families of two student-athletes at University-5.  In return, BLAND facilitated a meeting between DAWKINS and SOOD and a relative of a player currently attending University-5 (“Player-9”) for the purpose of pressuring Player-9 to retain DAWKINS and SOOD.

The Company-1 Scheme

In addition to the Coach Bribery Scheme described above, the investigation further revealed a second, related scheme.  In the second scheme, JAMES GATTO, a/k/a “Jim,” a high-level executive at Company-1, and MERL CODE, an individual affiliated with Company-1 and its high school and college basketball programs, conspired to pay high school basketball players or their families for commitments by those players to attend and play for aCompany-1-sponsored university, and to sign with Company-1 upon turning professional.  In addition, DAWKINS, SOOD, and JONATHAN BRAD AUGUSTINE brokered and facilitated the corrupt payments in exchange for a promise that the players also would retain the services of DAWKINS and SOOD upon turning professional. 

Specifically, in or around 2017, GATTO, CODE, DAWKINS, AUGUSTINE, and SOOD agreed to pay bribes to at least three high school basketball players or their families in the following manner:

Allegations Involving Player-10 and University-6

First, GATTO, CODE, DAWKINS, and SOOD worked together to funnel $100,000 from Company-1 to the family of a high school basketball player (“Player-10”) in exchange for Player-10’s commitment to play at an NCAA Division I university whose athletic programs are sponsored by Company-1 (“University-6”), and in further exchange for a commitment from Player-10 to retain DAWKINS and SOOD, and to sign with Company-1, once Player-10 joined the NBA.  DAWKINS told CW-1 and others on a recorded conversation that he did so at the request of a coach at University-6 (“Coach-2”), and call records show that GATTO spoke directly with Coach-2 multiple times in the days before Player-10 publicly committed to attending University-6. 

Moreover, because the payments to the family of Player-10 were both in violation of NCAA rules and illegal, they were disguised by GATTO, CODE, DAWKINS, and SOOD using fake purchase orders, invoices and related documents to make them appear to be payments from Company-1 to CODE’s company.  As CODE explained to DAWKINS, while such payments are sometimes made “off the books,” for this particular payment, GATTO and CODE had identified it to Company-1 as “as a payment to my team, to my organization, so it’s on the books, [but] it’s not on the books for what it’s actually for.”  Indeed, the money, once allocated by Company-1, was funneled back to DAWKINS to use to pay the father of Player-10 in cash.

Allegations Involving Player-11 and University-6

Second, DAWKINS and AUGUSTINE agreed to facilitate payments to the family of another high school basketball player (“Player-11”) in exchange for Player-11’s commitment to play at University-6 and ultimately to retain DAWKINS’s services.  While these payments were not directly funded by Company-1, they were made to benefit Company-1, which, as noted, sponsors University-6, and with the expectation that Company-1 would provide additional funding to AUGUSTINE in return.  AUGUSTINE noted, “all [Coach-2] has to do is pick up the phone and call somebody [and say] these are my guys, they’re taking care of us.” 

Because these payments from DAWKINS to Player-11’s family were both in violation of NCAA rules and illegal, AUGUSTINE suggested that the “easiest way” for DAWKINS to provide money for Player-11 and his family would be to send the money to AUGUSTINE’s “non-profit for the grassroots team,” although AUGUSTINE confirmed that he also would accept cash.

As DAWKINS subsequently explained to UC-2 in the context of providing such money to AUGUSTINE and others, “obviously some of it can’t be completely accounted for on paper because some of it is, whatever you want to call it, illegal.”

Allegations Involving Player-12 and University-7

Third, GATTO, CODE, DAWKINS, and AUGUSTINE agreed to make payments of as much as $150,000 from Company-1 to another high school basketball player (“Player-12”) in order to secure Player-12’s commitment to play at an NCAA Division I university whose athletic programs are also sponsored by Company-1 (“University-7”).  Because Player-12 played for an amateur team run by AUGUSTINE and sponsored by Company-1, AUGUSTINE, with the assistance of CODE and DAWKINS, attempted to broker the deal to secure Player-12’s commitment to attend University-7 rather than a school sponsored by a rival athletic apparel company.  In exchange for the payment, Player-12 similarly was expected to commit to retaining DAWKINS’s services and signing with Company-1 once Player-12 joined the NBA.

Much as with the payments to Player-10 described above, according to intercepted calls, GATTO stated that the payments from Company-1 to Player-12 were allegedly requested specifically by a coach at University-7 (“Coach-3”), who allegedly called GATTO directly and who, according to DAWKINS, CODE, and AUGUSTINE, “knows everything” and, in particular, “knows something’s gotta happen for” Player-12 to commit to attending University-7. 

*                *                *




Charges (Potential Maximum Term of Imprisonment)

Chuck Connors Person


Auburn, AL

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud, Wire fraud conspiracy; Travel Act conspiracy (80 years)

Rashan Michel


Smyrna, GA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Wire fraud conspiracy; Travel Act conspiracy (80 years)

Lamont Evans


Stillwater, OK

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Emanuel Richardson, a/k/a “Book”


Tucson, AZ

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Anthony Bland, a/k/a “Tony”


Los Angeles, CA

Bribery conspiracy, Solicitation of bribes, Honest services fraud conspiracy, Honest services fraud,

Conspiracy to commit wire fraud; Travel Act conspiracy (80 years)

Christian Dawkins


Atlanta, GA

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

Munish Sood


Trenton, NJ

Bribery conspiracy, Payments of bribes, Honest services fraud conspiracy, Honest services fraud (3 counts), Wire fraud conspiracy (2 counts), Wire fraud (2 counts), Travel Act conspiracy, Money laundering conspiracy (200 years)

James Gatto, a/k/a “Jim”


Wilsonville, OR

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Merl Code


Greer, SC

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

Jonathan Brad Augustine


Winter Garden, FL

Wire fraud conspiracy, Wire fraud (2 counts), Money laundering conspiracy (80 years)

The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as the sentencing of the defendants will be determined by a judge.

Mr. Kim praised the work of the FBI and the Criminal Investigators of the United States Attorney’s Office for the Southern District of New York.

Anyone with information relevant to the investigation is asked to contact the FBI at the special phone number established to receive such information, (212) 384-2135.

The case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Robert Boone, Russell Capone, Edward B. Diskant, and Noah Solowiejczyk are in charge of the prosecution.

[1] As the introductory phrase signifies, the entirety of the texts of the Complaints and the descriptions of the Complaints set forth below constitute only allegations and every fact described should be treated as an allegation.


Download U.S. v. Chuck Person and Rashan Michel Complaint

Download U.S. v. James Gatto et al Complaint

Download U.S. v. Lamont Evans et al Complaint

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

Tuesday, September 26, 2017

Telia Company AB and Its Uzbek Subsidiary Enter Into a Global Foreign Bribery Resolution of More Than $965 Million for Corrupt Payments in Uzbekistan

Companies Agree to Coordinated Resolution between the Department of Justice, U.S. Securities and Exchange Commission (SEC) and the Kingdom of the Netherlands Representing the Second Major Resolution Involving Corruption by Telecom Companies in Uzbekistan

Stockholm-based Telia Company AB, an international telecommunications company that was formerly an issuer of publicly traded securities in the U.S., and its Uzbek subsidiary, Coscom LLC, entered into a global foreign bribery resolution and agreed to pay a combined total penalty of more than $965 million to resolve charges arising out of a scheme to pay bribes in Uzbekistan.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Chief Don Fort of Internal Revenue Service-Criminal Investigation (IRS-CI) and Special Agent in Charge Patrick J. Lechleitner of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Washington, D.C., Field Office made the announcement.

“This resolution underscores the Department’s continued and unwavering commitment to robust FCPA and white-collar criminal enforcement.  It also demonstrates the Department’s cooperative posture with its foreign counterparts to stamp out international corruption and to reach fair, appropriate and coordinated resolutions,” said Acting Assistant Attorney General Blanco.  “Foreign and domestic companies that pay bribes put honest companies at a disadvantage and distort the free and fair market and the rule of law.  Today’s resolution reflects the significant efforts of law enforcement, the Criminal Division and the U.S. Attorney’s Office for the Southern District of New York to bring such companies to justice, and to maintain a competitive and level playing field for companies to do business, create jobs and thrive.”

“Today, we announce one of the largest criminal corporate bribery and corruption resolutions ever, with penalties totaling just under a billion dollars,” said Acting U.S. Attorney Kim.   “Swedish telecom company Telia and its Uzbek subsidiary Coscom have admitted to paying, over many years, more than $331 million in bribes to an Uzbek government official.  Telia, whose securities traded publicly in New York, corruptly built a lucrative telecommunications business in Uzbekistan, using bribe payments wired around the world through accounts here in New York City.  If your securities trade on our exchanges and you use our banks to move ill-gotten money, then you have to abide by our country’s laws.  Telia and Coscom refused to do so, and they have been held accountable in Manhattan federal court today.”

“Today marks the second resolution of proceedings against corporate entities who have engaged in a global bribery scheme of government officials,” said Chief Fort.  “It also further demonstrates the dedication we have to identifying illegal financial transactions being used for bribery in the international community.  It is important that the global economy remain on a fair playing field and IRS-CI will remain committed in our efforts to dismantle these kinds of corrupt financial schemes.”

“Today’s resolution marks a win against a foreign corruption scheme where millions of dollars in bribery funds were paid to Uzbekistan officials and laundered through the U.S. financial system.” said Special Agent in Charge Lechleitner.  “HSI, working hand in hand with our partners at IRS Criminal Investigation, leveled the playing field for publicly traded companies by exposing these corrupt practices and helped the U.S. government collect nearly $275 million in criminal penalties”

Telia entered into a deferred prosecution agreement in connection with a criminal information filed today in the Southern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA).   The case is assigned to U.S. District Judge George B. Daniels.  In addition, Coscom pleaded guilty and was sentenced by Judge Daniels on a one-count criminal information charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  Pursuant to its agreement with the Department, Telia agreed to pay a total criminal penalty of $274,603,972 to the U.S., including a $500,000 criminal fine and $40 million in criminal forfeiture that Telia agreed to pay on behalf of Coscom.  Telia also agreed to implement rigorous internal controls and cooperate fully with the Department’s ongoing investigation, including its investigation of individuals.

The U.S. Securities and Exchange Commission (SEC) and the Public Prosecution Service of the Netherlands (Openbaar Ministrie, or OM) announced separate settlements with Telia in connection with related proceedings.  Under the terms of its resolution with the SEC, Telia agreed to a total of $457,169,977 in disgorgement of profits and prejudgment interest, and the SEC agreed to credit any disgorged profits that Telia pays to the Swedish Prosecution Authority (SPA) or OM, up to half of the total.  Telia agreed to pay the OM a criminal penalty of $274,000,000 for a total criminal penalty of $548,603,972, and a total resolution amount of more than $1 billion.  The Department of Justice agreed to credit the criminal penalty paid to the OM as part of its agreement with the company.  The SEC agreed to credit the $40 million in forfeiture paid to the Department as part of its agreement with the company.  Thus, the combined total amount of criminal and regulatory penalties paid by Telia and Coscom to the U.S., Dutch, and Swedish authorities will be $965,773,949. 

According to the companies’ admissions, Telia and Coscom, through various managers and employees within Telia, Coscom and affiliated entities, paid approximately $331 million in bribes to an Uzbek government official, who was a close relative of a high-ranking government official and had influence over the Uzbek governmental body that regulated the telecom industry.  The companies structured and concealed the bribes through various payments including to a shell company that certain Telia and Coscom management knew was beneficially owned by the foreign official.  The bribes were paid on multiple occasions between approximately 2007 and 2010, so that Telia could enter the Uzbek market and Coscom could gain valuable telecom assets and continue operating in Uzbekistan.  Certain Telia and Coscom management also contemplated structuring an additional bribe payment in late 2012, after Swedish media began reporting about Telia’s corrupt payments in Uzbekistan, Swedish authorities began a criminal investigation and Telia opened an internal investigation.

A number of significant factors contributed to the Department’s criminal resolution with the companies.  Among these, the companies received significant credit for their extensive remedial measures and cooperation with the Department’s investigation.  Specifically, the criminal penalty reflects a 25 percent reduction off the bottom of the U.S. Sentencing Guidelines fine range.  However, the companies did not receive more significant mitigation credit, either in the penalty or the form of resolution, because the companies did not voluntarily self-disclose their misconduct to the Department.

The resolution, reached in coordination with the SEC and authorities in the Netherlands, marks the second such resolution by a major international telecommunciations provider for bribery in Uzbekistan.  On Feb. 18, 2016, Amsterdam-based VimpelCom Limited and its Uzbek subsidiary, Unitel LLC, also entered into resolutions with the Department of Justice and admitted to a conspiracy to make more than $114 million in bribery payments to the same Uzbek government official between 2006 and 2012.  The investigation has thus far yielded a combined total of over $1.76 billion in global fines and disgorgement, including over $500 million in criminal penalties to the Department of Justice.  In related actions, the Department has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg and Ireland, which constitute bribe payments made by VimpelCom, Telia and a third telecommunications company, or funds involved in the laundering of those corrupt payments, to the Uzbek official. 

*          *          *

Law enforcement colleagues within the OM and the SPA provided significant cooperation and assistance in this matter.  Law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, Latvia, Luxembourg, Norway, Switzerland, the Isle of Man and the United Kingdom have also provided valuable assistance.  The Criminal Division’s Office of International Affairs provided significant assistance, as well.  The SEC referred the matter to the Department and also provided extensive cooperation and assistance.

The IRS-CI and ICE-HSI are investigating the cases as part of the IRS Global Illicit Financial Team in Washington, D.C.  Senior Litigation Counsel Nicola J. Mrazek and Trial Attorney Ephraim Wernick of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Edward Imperatore of the Southern District of New York are prosecuting the criminal case, with substantial assistance from the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS).  MLARS Trial Attorney Michael Khoo is prosecuting the forfeiture case with substantial assistance from the Fraud Section and former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington. 

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

Sunday, September 24, 2017

Former Canadian Mountie Sentenced to Money Laundering Charges Stemming from a Conspiracy to Smuggle Ivory Tusks

A retired officer of the Royal Canadian Mounted Police was sentenced by U.S. District Court Judge John A. Woodcock for the District of Maine to 62 months in prison for 10 money Justice logolaundering offenses, announced the Justice Department. Gregory R. Logan, 59, of St. John, New Brunswick, was extradited to the United States from Canada on March 11, 2016.  He was indicted in the District of Maine in November 2012 and charged with conspiracy, smuggling and money laundering, and pled guilty to 10 money laundering offenses on September 28, 2016.

“This defendant illegally imported hundreds of narwhal tusks into the United States, with a value in the millions of dollars.  Unlawful wildlife trade like this undermines efforts by federal, state, and foreign governments to protect and restore populations of species like the narwhal, a majestic creature of the sea with long and spiraled protruding ivory tusks,” said Acting Assistant Attorney General Jeffrey H. Wood of the Environment and Natural Resources Division. “Our Division successfully worked with the U.S. Fish and Wildlife Service, NOAA Fisheries, and the Canadian Government to successfully conclude this case.”

 “This investigation highlights the best of law enforcement working together.  Our special agents, with counterparts from the National Oceanic and Atmospheric Administration and Environment and Climate Change Canada, investigated a complex scheme where illegal narwhal tusks were trafficked across the U.S.-Canada border,” said acting Chief of Law Enforcement Ed Grace for the U.S. Fish and Wildlife Service. “Wildlife smuggling is a transnational crime that knows no borders and requires an international response. We will continue to work closely with our international, federal, and state partners to investigate and arrest individuals who smuggle and sell protected wildlife for their own financial gain.”

"Today's sentencing brings to a close a long investigation and prosecutorial process that underscores our global commitment to end wildlife trafficking," said Chris Oliver, Assistant Administrator for NOAA Fisheries. "We are grateful for the international cooperation that has lead to this conclusion."

“This case is the result of a successful joint investigation involving partners across Canada and the United States working to stop the illegal commercialization and exploitation of Canadian wildlife, in this case the smuggling of narwhal tusks,” said Glen Ehler, Regional Director, Wildlife Enforcement Directorate, Enforcement Branch, Environment and Climate Change Canada. “Today’s sentence and the previous conviction in Canada send a strong message that this type of offence will not be tolerated.”

 Logan was involved in a scheme to smuggle narwhal tusks from Canada to the United States for sale to American customers and transfer the proceeds of those sales back to Canada.  Logan was arrested in Canada, based on a request from the United States, in December 2013.  Logan pleaded guilty to a related wildlife smuggling crime in Canada and the terms of his extradition limited the case against him in the United States to the money laundering offenses.  Also charged in the original indictment was Andrew J. Zarauskas of Union, New Jersey.  Zarauskas was convicted after a jury trial in Bangor and sentenced to 33 months in prison.

 Narwhals are medium-sized toothed whales that are native to the Arctic.  They are known for their distinctive ivory tusk, which can grow to more than eight feet in length.  Given the threats to their population, narwhals are protected domestically by the Marine Mammal Protection Act and internationally by the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) – an international treaty to which more than 170 countries, including the United States and Canada, are parties.  It is illegal to import narwhals, or their parts, into the United States for commercial purposes.  Further, any importation must be accompanied by a permit and must be declared to U.S. Customs and Border Protection and the U.S. Fish and Wildlife Service.

 According to the indictment, Logan smuggled more than 250 narwhal tusks into the United States between 2000 and 2010.  As part of the plea agreement, Logan agreed that the market value of the narwhal tusks in this case was between $1.5 million and $3 million. Knowing that the tusks were illegal to bring into the United States and sell, Logan transported them across the border in false compartments in his vehicle and trailer.  Logan utilized a shipping store in Ellsworth, Maine, to send the tusks to customers throughout the United States, including Zarauskas and others.  Logan knew that his customers would re-sell the tusks for a profit and in an attempt to increase that re-sale price, Logan would occasionally provide fraudulent documentation claiming that the tusks had originally belonged to a private collector in Maine who had acquired them legally.

 In addition to shipping the tusks from Maine, Logan maintained a post office box the Ellsworth shipping store as well as an account at a bank in Bangor.  Logan instructed his customers to send payment in the form of checks to the post office box, or wire money directly to his Maine bank account.  Logan then transported the money to Canada by having the shipping store forward his mail to him in Canada, and by using an ATM card to withdraw money from his Maine bank account at Canadian ATM machines.  At times, Logan also directed his customers to send funds directly to him in Canada.

 The case was investigated by special agents of the National Oceanic and Atmospheric Administration, Office of Law Enforcement; U.S. Fish & Wildlife Service, Office of Law Enforcement; and Wildlife Officers from Environment and Climate Change Canada.  The case was prosecuted by Trial Attorneys James B. Nelson and Lauren D. Steele.  

September 24, 2017 in AML | Permalink | Comments (0)

Friday, September 22, 2017

FinCEN Warns Financial Institutions to Guard Against Corrupt Venezuelan Money Flowing to U.S.

The Financial Crimes Enforcement Network (FinCEN) issued an advisory to alert financial institutions of widespread public corruption in Venezuela and the methods Venezuelan FINCEN 2senior political figures and their associates may use to move and hide proceeds of their corruption. The advisory also describes a number of financial red flags to assist in identifying and reporting suspicious activity that may be indicative of corruption.

“In recent years, financial institutions have reported to FinCEN their suspicions regarding many transactions suspected of being linked to Venezuelan public corruption, including government contracts,” said Acting FinCEN Director Jamal El-Hindi. “Not all transactions involving Venezuela involve corruption, but, particularly now, during a period of turmoil in that country, financial institutions need to continue their vigilance to help identify and stop the flow of corrupt proceeds and guard against money laundering and other illicit financial activity.”

Venezuela faces severe economic and political circumstances due to the rupture of democratic and constitutional order. Endemic corruption can further damage the country’s economic growth and stability. The red flags identified in this FinCEN advisory are intended to help financial institutions differentiate between illicit and legitimate transactions. Ongoing vigilance by the financial community, including continued reporting of suspicious transactions as informed by this advisory, can also support law enforcement in identifying and investigating potentially illicit funds from Venezuela entering the U.S. financial system.

Financial institutions should take risk-based steps to identify and limit any exposure they may have to funds and other assets associated with Venezuelan public corruption. Consistent with a risk-based approach, however, financial institutions should be aware that normal business and other transactions involving Venezuelan nationals and businesses do not necessarily represent the same risk as transactions and relationships identified as being connected to the Venezuelan government.

Reports from financial institutions are critical to stopping, deterring, and preventing the proceeds tied to suspected Venezuelan public corruption from moving through the U.S. financial system.

The Financial Crimes Enforcement Network (FinCEN) is issuing this advisory to alert financial institutions of widespread public corruption in Venezuela and the methods Venezuelan senior political figures (and their associates and front persons) may use to move and hide corruption proceeds.[1]  This advisory also provides financial red flags to assist in identifying and reporting to FinCEN suspicious activity that may be indicative of Venezuelan corruption, including the abuse of Venezuelan government contracts, wire transfers from shell corporations, and real estate purchases in the South Florida and Houston, Texas regions. 

This advisory should be shared with:

• Private Banking Units

• Chief Risk Officers

• Chief Compliance Officers

• AML/BSA Analysts

• Sanctions Analysts

• Legal Departments

Awareness of money laundering schemes used by corrupt Venezuelan officials may help financial institutions (1) differentiate between illicit and legitimate transactions, and (2) identify and report transactions involving suspected corruption proceeds being held or moved by their customers, including through their private and correspondent banking relationships. 

Consistent with a risk-based approach, however, financial institutions should be aware that normal business and other transactions involving Venezuelan nationals and businesses do not necessarily represent the same risk as transactions and relationships identified as being connected to the Venezuelan government, Venezuelan officials, and Venezuelan state-owned enterprises (SOEs) involved in public corruption that exhibit the red flags below or other similar indicia.

Public Corruption in Venezuela

Venezuela faces severe economic and political circumstances due to the rupture of democratic and constitutional order by the government and its policy choices.  Endemic corruption, such as that seen in Venezuela, can further damage its economic growth and stability.  Such corruption, particularly related to government contracts and resources, can also deprive populations of their wealth; interfere with efforts to promote economic development; discourage private investment; and foster a climate where financial crime and other forms of lawlessness can thrive. 

In recent years, financial institutions have reported to FinCEN their suspicions regarding many transactions suspected of being linked to Venezuelan public corruption, including government contracts.  Based on this reporting and other information, all Venezuelan government agencies and bodies, including SOEs, appear vulnerable to public corruption and money laundering.  The Venezuelan government appears to use its control over large parts of the economy to generate significant wealth for government officials and SOE executives, their families, and associates.  In this regard, there is a high risk of corruption involving Venezuelan government officials and employees at all levels, including those managing or working at Venezuelan SOEs. 

Recent Sanctions Actions

On February 13, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated Venezuelan Vice President Tareck El Aissami (El Aissami) for playing a significant role in international narcotics trafficking pursuant to the Foreign Narcotics Kingpin Designation Act.  On the same day, OFAC also designated his front man, Samark Lopez Bello, for materially assisting El Aissami and acting on his behalf.[2]  Their designations disrupted their ability to launder illicit proceeds, and hundreds of millions in assets associated with Lopez Bello have since been blocked.  On March 8, 2015, the President of the United States issued Executive Order (E.O.) 13692 which blocks property and suspends entry of certain persons contributing to the situation in Venezuela. E.O. 13692 authorizes the Secretary of the Treasury to designate persons, inter alia, involved in public corruption by senior officials within the Government of Venezuela or persons who have materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of, such designated persons. On August 25, 2017, the President of the United States issued E.O. 13808 imposing additional sanctions prohibiting certain debt, equity, and profit and dividend disbursement activities with the Government of Venezuela and Venezuelan state-owned oil company, Petroleos de Venezuela, S.A. (PDVSA).[3]

The OFAC designations increase the likelihood that other non-designated Venezuelan senior political figures may seek to protect their assets, including those that are likely to be associated with political corruption, to avoid potential future blocking actions. 

Venezuelan Government Corruption – Red Flags

Venezuelan Government Agencies and State-Owned Enterprises

Transactions involving Venezuelan government agencies and SOEs, particularly those involving government contracts, can potentially be used as vehicles to move, launder, and conceal embezzled corruption proceeds.  SOEs (as well as their officials) may try to use the U.S. financial system to move or hide proceeds of public corruption.  Among the SOEs referenced in OFAC’s recent designations related to Venezuela are the National Center for Foreign Commerce (CENCOEX), Suministros Venezolanos Industriales, CA (SUVINCA), the Foreign Trade Bank (BANCOEX), the National Telephone Company (CANTV), the National Electric Corporation (CORPELEC), Venezuelan Economic and Social Bank (BANDES), and similar state-controlled entities.  As law enforcement and financial institutions increase scrutiny of transactions involving Venezuelan SOEs, corrupt officials may try to channel illicit proceeds through lesser-known or newly-created SOEs or affiliated enterprises.           

The Role of Currency Controls

Currency controls in Venezuela limit the supply of U.S. dollars for most economic activities, which encourages the demand for foreign currency and smuggled goods in the parallel market. Although illegal, Venezuela’s parallel market is a highly profitable business for those with regime connections that enable them to access inexpensive dollars and goods.[4]  This parallel market relies upon unregulated brokers, whose clients often include criminals who integrate illicit proceeds into the legal economy. Venezuelan officials who receive preferential access to U.S. dollars at the more favorable, official exchange rate, also exploit the multi-tier exchange rate system for profit. 

The red flags noted below, which are derived from information available to FinCEN (including suspicious activity reporting), published information associated with OFAC designations, and other public reporting, may help financial institutions identify suspected schemes by corrupt officials, their family members, and associates to channel corruption proceeds, often involving government contracts or resources, through transactions involving Venezuelan SOEs and subsidiaries:

Government Contracts: Corrupt officials may use contracts with the Venezuelan government as vehicles to embezzle funds and receive bribes.  In this regard, some financial red flags can include:

Image removed.Transactions involving Venezuelan government contracts that are directed to personal accounts.

Image removed.Transactions involving Venezuelan government contracts that are directed to companies that operate in an unrelated line of business (e.g., payments for construction projects directed to textile merchants).

Image removed.Transactions involving Venezuelan government contracts that originate with, or are directed to, entities that are shell corporations, general “trading companies,” or companies that lack a general business purpose.

Members of the regime and their allies direct government contracts to their associated companies to import goods and obtain approval from the Venezuelan Corporation of Foreign Trade (CORPOVEX) for foreign-domiciled companies—often shell companies—to participate in the import activity.[5]  Both the importers and the receiving government officials often divert a portion of the merchandise to the black market, where profits are higher. 

Image removed.Documentation corroborating transactions involving Venezuelan government contracts (e.g., invoices) that include charges at substantially higher prices than market rates or that include overly simple documentation or lack traditional details (e.g., valuations for goods and services).  Venezuelan officials who receive preferential access to U.S. dollars at the more favorable, official exchange rate may exploit this multi-tier exchange rate system for profit. 

Image removed.Payments involving Venezuelan government contracts that originate from non-official Venezuelan accounts, particularly accounts located in jurisdictions outside of Venezuela (e.g., Panama or the Caribbean).

Export businesses in South Florida that specialize in sending goods to Venezuela are particularly vulnerable to trade-based money laundering (TBML) schemes.  These include businesses that send heavy equipment, auto parts, and electronics (cell phones and other appliances) from Florida to Venezuela. 

Image removed.Payments involving Venezuelan government contracts that originate from third parties that are not official Venezuelan government entities (e.g., shell companies).

Public reports indicate that the use of third parties, or brokers, to deal with government entities is common in Venezuela and is a significant source of risk.  Brokers, particularly when colluding with corrupt government officials, can facilitate overseas transactions in a way that circumvents currency controls and masks payments from SOEs. 

Image removed.Cash deposits instead of wire transfers in the accounts of companies with Venezuelan government contracts.

In addition, other financial red flags observed in transactions suspected of involving Venezuelan government corruption include:

Image removed.Transactions for the purchase of real estate—primarily in the South Florida and Houston, Texas regions—involving current or former Venezuelan government officials, family members or associates that is not commensurate with their official salaries.

Image removed.Corrupt Venezuelan government officials seeking to abuse a U.S. or foreign bank’s wealth management units by using complex financial transactions to move and hide corruption proceeds.

Reminder of Regulatory Obligations for U.S. Financial Institutions

FinCEN is providing the information in this advisory to assist U.S. financial institutions in meeting their due diligence obligations that may apply to activity involving certain Venezuelan persons.  To best meet these obligations, financial institutions should generally be aware of public reports of high-level corruption associated with senior Venezuelan foreign political figures, their family members, associates, or associated legal entities or arrangements.  Financial institutions should assess the risk for laundering of the proceeds of public corruption associated with specific particular customers and transactions.  Financial institutions also should be aware that OFAC has designated (and provided related guidance on) several Venezuelan persons and entities located in or related to Venezuela.[6] 

Consistent with existing regulatory obligations, financial institutions should take reasonable, risk-based steps to identify and limit any exposure they may have to funds and other assets associated with Venezuelan public corruption.  Such reasonable steps should not, however, put into question a financial institution’s ability to maintain or continue otherwise appropriate relationships with customers or other financial institutions, and should not be used as the basis to engage in wholesale or indiscriminate de-risking of any class of customers or financial institutions.  FinCEN also reminds financial institutions of previous interagency guidance on providing services to foreign embassies, consulates, and missions.[7] 

Enhanced Due Diligence Obligations for Private Bank Accounts

Under Section 312 of the USA PATRIOT Act (31 U.S.C. § 5318(i)), U.S. financial institutions have regulatory obligations to apply enhanced scrutiny to private banking accounts held by, or on behalf of, senior foreign political figures and to monitor transactions that could potentially represent misappropriated or diverted state assets, the proceeds of bribery or other illegal payments, or other public corruption proceeds.[8]

FinCEN’s regulations implementing Section 312 require a written due diligence program for private banking accounts held for non-U.S. persons that is designed to detect and report any known or suspected money laundering or other suspicious activity.[9]  Accordingly, covered financial institutions maintaining private banking accounts for senior foreign political figures are required to apply enhanced scrutiny of such accounts to detect and report transactions that may involve the proceeds of foreign corruption.[10]

General Obligations for Correspondent Account Due Diligence and Anti-Money Laundering (AML) Programs

U.S. financial institutions must comply with their general due diligence obligations under 31 CFR § 1010.610(a) and their AML program requirements under 31 U.S.C. § 5318(h) and 31 CFR § 1010.210.  In addition, as required under 31 CFR § 1010.610(a), covered financial institutions should ensure that their due diligence programs, which address correspondent accounts maintained for foreign financial institutions, include appropriate, specific, risk-based, and, where necessary, enhanced policies, procedures, and controls that are reasonably designed to detect and report known or suspected money laundering activity conducted through or involving any correspondent account established, maintained, administered, or managed in the United States.

Suspicious Activity Reporting

A financial institution is required to file a suspicious activity report (SAR) if it knows, suspects, or has reason to suspect a transaction conducted or attempted by, at, or through the financial institution involves funds derived from illegal activity, or attempts to disguise funds derived from illegal activity; is designed to evade regulations promulgated under the Bank Secrecy Act (BSA); lacks a business or apparent lawful purpose; or involves the use of the financial institution to facilitate criminal activity, including foreign corruption.[11] 

Additional SAR Reporting Guidance on Senior Foreign Political Figures

In April 2008, FinCEN issued Guidance to assist financial institutions with reporting suspicious activity regarding proceeds of foreign corruption.[12]  A related FinCEN SAR Activity Review, which focused on foreign political corruption, also discusses indicators of transactions that may be related to proceeds of foreign corruption.[13]  Financial institutions may find this Guidance and the SAR Activity Review useful in assisting with suspicious activity monitoring and due diligence requirements related to senior foreign political figures.

SAR Filing Instructions

When filing a SAR, financial institutions should provide all pertinent available information in the SAR form and narrative.  FinCEN further requests that financial institutions select SAR field 35(l) (Suspected Public/Private Corruption (Foreign)) and reference this advisory by including the key term:

“Venezuelan Corruption”

in the SAR narrative and in SAR field 35(z) (Other Suspicious Activity-Other) to indicate a connection between the suspicious activity being reported and the persons and activities highlighted in this advisory. 

SAR reporting, in conjunction with effective implementation of due diligence requirements and OFAC obligations by financial institutions, has been crucial to identifying money laundering and other financial crimes associated with foreign and domestic political corruption.  SAR reporting is consistently beneficial and critical to FinCEN and U.S. law enforcement analytical and investigative efforts, OFAC designation efforts, and the overall security and stability of the U.S. financial system.[14] 


September 22, 2017 in AML | Permalink | Comments (0)

Thursday, September 21, 2017

CEO of International Metallurgical Company Sentenced to 57 Months in Prison for Conspiring to Export Specialty Metals to Iran

Erdal Kuyumcu, the chief executive officer of Global Metallurgy, LLC, based in Woodside, New York, was sentenced to 57 months in prison following his June 14, 2016 guilty plea to conspiracy to violate the International Emergency Economic Powers Act by exporting specialty metals from the United States to Iran.  The sentencing proceeding was held before Chief United States District Judge Dora L. Irizarry.

The sentence was announced by Bridget M. Rohde, Acting United States Attorney for the Eastern District of New York, Dana J. Boente, Acting Assistant Attorney General for National Security, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation (FBI), and Jonathan Carson, Special Agent-in-Charge of the U.S. Department of Commerce’s Bureau of Industry and Security, Office of Export Enforcement’s New York Field Office.

 “This Office, together with our law enforcement partners, will continue to use every tool available, including U.S. export laws, to prevent goods with potentially dangerous uses from falling into the wrong hands and jeopardizing our national security,” stated Acting United States Attorney Rohde. “Here, the defendant exported a metallic powder that has potential military and nuclear applications to Iran, a state sponsor of terrorism.”

“With this sentence, the defendant is being held accountable for conspiring with others to send specialized U.S. technology – over a thousand pounds of metallic powder with nuclear and missile applications – to Iran via Turkey,” stated Acting Assistant Attorney General Boente.  “The National Security Division will aggressively prosecute those who seek to unlawfully provide dangerous material and technology to Iran, a state sponsor of terrorism.”   

“Laws exist to keep groups and governments from buying materials in support of doing harm.  Iran has demonstrated in this case it is willing to use whatever means necessary to hide the end user of the materials, to include utilizing a U.S. citizen to carry out their proliferating activities,” stated Assistant Director-in-Charge Sweeney.  “The FBI New York and its foreign and domestic partners work every day to investigate and interdict adversaries from procuring these items and materials to build nuclear and other weapons of mass destruction, which could end up in dangerous hands.”

“Today's sentencing is the result of outstanding collaborative work by the Justice Department, the Commerce Department and the FBI to break up a network whose aim was to illegally ship sophisticated U.S.-origin technology to Iran,” said Special Agent-in-Charge Carson.  “We will continue to pursue violators wherever they may be.”

According to court documents, Kuyumcu, a U.S. citizen, conspired to export from the United States to Iran a metallic powder primarily composed of cobalt and nickel, without having obtained the required license from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  As established during a two-day presentencing evidentiary hearing, the metallic powder has potential military and nuclear applications.  Such specialized metals are regulated by the U.S. Department of Commerce to combat nuclear proliferation and terrorism, and exporting them without the required license is illegal. 

In furtherance of the illegal scheme, Kuyumcu and others plotted to obtain more than 1,000 pounds of the metallic powder from a U.S.-based supplier.  To hide the true destination of the goods from the supplier, Kuyumcu arranged for the metallic powder to be shipped first to Turkey and then to Iran.  Kuyumcu used coded language when discussing shipment of the powder with a Turkey-based co-conspirator, such as referring to Iran as the “neighbor.”  Shortly after one of the shipments was sent from Turkey to Iran, a steel company in Iran sent a letter-sized package to Kuyumcu’s Turkey-based co-conspirator.  The Iranian steel company had the same address as an OFAC-designated Iranian entity under the Weapons of Mass Destruction proliferators sanctions program that was associated with Iran’s nuclear and ballistic missile programs. 

The government’s case is being handled by the Office’s National Security & Cybercrime Section.   Assistant U.S. Attorneys Tiana A. Demas and Ameet B. Kabrawala, and Trial Attorney David Recker from the National Security Division’s Counterintelligence and Export Control Section, are in charge of the prosecution. 

September 21, 2017 in AML | Permalink | Comments (0)

Wednesday, September 20, 2017

Russian Cyber-Criminal Pleads Guilty to Role in Organized Cybercrime Ring Responsible for $50 Million in Online Identity Theft

A Russian cyber-criminal Roman Valeryevich Seleznev, aka Track2, aka Bulba, aka Ncux, 33, who sold stolen credit card data and other personal information through the identity theft and credit card fraud ring known as “” pleaded guilty in two separate criminal cases to one count of participation in a racketeering enterprise and one count of conspiracy to commit bank fraud.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Steven W. Myhre of the District of Nevada, U.S. Attorney John A. Horn of the Northern District of Georgia, Assistant Special Agent in Charge Michael Harris of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE HSI) and Special Agent in Charge Brian Spellacy of the U.S. Secret Service in Las Vegas made the announcement.

Roman Valeryevich Seleznev, aka Track2, aka Bulba, aka Ncux, 33, entered guilty pleas in both criminal cases at a hearing before U.S. District Judge Steve C. Jones of the Northern District of Georgia.  Seleznev pleaded guilty to one count of participation in a racketeering enterprise pursuant to an indictment returned in the District of Nevada, and one count of conspiracy to commit bank fraud pursuant to an indictment returned in the Northern District of Georgia.  He will be sentenced on December 11. 

In connection with his guilty plea in the Nevada case, Seleznev admitted that he became associated with the organization in January 2009. According to Seleznev’s admissions in his plea agreement, was an Internet-based, international criminal enterprise whose members trafficked in compromised credit card account data and counterfeit identifications and committed identity theft, bank fraud and computer crimes. Seleznev admitted that the group tried to protect the anonymity and the security of the enterprise from both rival organizations and law enforcement. For example, members communicated through various secure and encrypted forums, such as chatrooms, private messaging systems, encrypted email, proxies and encrypted virtual private networks. Gaining membership in the group required the recommendation of two current members in good standing.

Seleznev further admitted that he sold compromised credit card account data and other personal identifying information to fellow members. The defendant sold members such a large volume of product that he created an automated website, which he advertised on the organization’s websites. His automated website allowed members to log into and purchase stolen credit card account data. The defendant’s website had a simple interface that allowed members to search for the particular type of credit card information they wanted to buy, add the number of accounts they wished to purchase to their “shopping cart” and upon check out, download the purchased credit card information. Payment of funds was automatically deducted from an established account funded through L.R., an on-line digital currency payment system. Seleznev admitted that he sold each account number for approximately $20.  The organization’s criminal activities resulted in loss to its victims of at least $50,983,166.35.

In connection with his guilty plea in the Northern District of Georgia case, Seleznev admitted that he acted as a “casher” who worked with hackers to coordinate a scheme to defraud an Atlanta-based company that processed credit and debit card transactions on behalf of financial institutions.  Seleznev admitted that pursuant to the scheme, in November 2008, hackers infiltrated the company’s computer systems and stole 45.5 million debit card numbers, certain of which they used to fraudulently withdraw over $9.4 million from 2,100 ATMs in 280 cities around the world in less than 12 hours.

Fifty-five individuals were charged in four separate indictments in Operation Open Market, which targeted the organization. To date, 33 individuals have been convicted and the rest are either fugitives or are pending trial.

The cases were investigated by HSI and the U.S. Secret Service.  The Nevada case is being prosecuted by Trial Attorney Catherine Dick of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorney Kimberly M. Frayn of the District of Nevada.  The Northern District of Georgia case is being prosecuted by Assistant U.S. Attorney Kamal Ghali of the Northern District of Georgia.

Seleznev is also a defendant in a wire fraud and computer hacking case brought by the Department of Justice in the U.S. District Court for the Western District of Washington.  On Aug. 25, 2016, a federal jury convicted Seleznev of 38 counts related to his role in a scheme to hack into point-of-sale computers to steal and sell credit card numbers to the criminal underworld.  On April 21, Seleznev was sentenced to 27 years in prison for those crimes.    

September 20, 2017 in AML | Permalink | Comments (0)

Tuesday, September 19, 2017

China proposes new commercial bribery definition

see Norton Rose Fulbright analysis here at Anti-bribery in China: Government proposes tighter rules

The Draft Amendments define “commercial bribery” to mean a business operator “giving or promising to give economic benefits to business counterparties, or to any third party who may influence the underlying transaction, to entice it to seek transaction opportunities or competitive advantages for the business operator. Providing or promising to provide economic benefits shall constitute an offer of commercial bribery whilst accepting or agreeing to accept economic benefits shall constitute an acceptance of commercial bribery.”

In addition, the Draft Amendments also set out the following circumstances which may be considered as commercial bribery and are hence prohibited:

  1. seeking benefits in the course of, or relying upon, the provision of public services;
  2. failing to accurately record in contracts and accounting records the giving of economic benefits between business operators; and
  3. giving or promising to give, any third party who is influential to the underlying transaction, economic interests which damage the legitimate interests of other business operators or customers.

see Hogan Lovells analysis: China: Draft amendments to the AUCL redefine commercial bribery

Most controversially, the amendments to the AUCL create a new corporate offense. In the draft, where an employee engages in bribery that creates opportunities or advantages for his or her employer, the bribery is considered the conduct of the company as if it sanctioned the bribe. This brings Chinese law closer in line with the UK Bribery Act. But unlike the Bribery Act, which allows a company a defense if it can prove it had “adequate procedures” in place to prevent bribery, the amendment to the AUCL offers no such option. The only defense against strict liability is where the company can show that the employee’s bribe conduct was against the company’s interest, without any explanation as to what constitutes such exonerating circumstances. So as a multinational, you may face strict liability for the conduct of any of your employees engaged in bribery unless you can demonstrate some form of cognizable harm.

see the previous release of China government proposal Proposed Amendments to the PRC Anti-Unfair Competition Law Provide Greater Clarity on Commercial Bribery and Impose Tougher Sanctions

September 19, 2017 in AML | Permalink | Comments (0)

Wednesday, September 13, 2017

Law Students Exploring Careers as Prosecutors and Intelligence Work

Each year approximately 1,800 delegates from 110 countries, representing top academic institutions, governments, global banks, and large professionals firms are invited to converge for eight days on Jesus College' campus to undergo the Cambridge University's Economic Crimes Symposium which just completed its 35th year. 

"The Cambridge Economic Crime Summit provided me with an unparalleled opportunity to network and engage in interactive discussions with over 1,700 delegates from all FullSizeRacross the world," said Madeline Pricer, Texas A&M Law 3rd year. She continued, "Furthermore, the symposium allowed me to discover advanced techniques to combat white-collar crimes, terrorism financing and more—all of which I hope to implement into my legal career in government prosecution. I highly recommend any law students that are interested in economic crime at the state, federal or international level to contact Professor Byrnes about this sector of law."

Shelby Sterling, Aggie third year law student, remarked, "The Cambridge Economic Crime Symposium has opened my eyes to new opportunities that I otherwise would not have been exposed to, including learning about issues in new areas of law from different global perspectives, network with leading professionals, and leverage my law degree to prevent terrorism financing and asset forfeiture."

"Our Aggie law students are able to undertake my risk program setting them as the top candidates for careers in the prosecution of globally organized crimes, human trafficking, and terrorism networks", said Professor William Byrnes.  "Through leveraging my network, I am able to provide a unique opportunity for the students to engage with the professional leaders and hiring agents of governments, large financial institutions and professional firms seeking to prevent money laundering."

"Over the week long symposium, I meaningfully interacted with over 1,700 professionals and forged lasting relationships with individuals from around the world," replied Shelby Sterling.  "I am ecstatically looking forward to returning to the symposium next year and potentially working overseas post-graduation. I strongly urge Aggie law students to reach out to Professor Byrnes to explore this legal arena." 

"Katherine Anne-Grawl Kim, Aggie ('14) and 3rd-year law, is the student leader of my Money Laundering, Asset Forfeiture & Recovery, and Compliance – A Global Guide, published by Lexis it is the primary legal analysis reference of professionals",  added William Byrnes.  "Students like Kate are afforded an opportunity to highlight their analysis and writing ability through a practical training of editing and potentially authorship of new topic areas under my guidance." 

Aggie Law students attending the Cambridge symposium include:

Shelby Sterling

Madeline Pricer

Tyla Evans

Elizabeth Ramey

Graduate and international students are welcome to undertake the risk-specific program curriculum as an LL.M. or a M.Jur. for nonlawyers.

Cambridge Leaders photo

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

Sunday, September 10, 2017

U.S. Nuclear Engineer Sentenced to 24 Months in Prison for Violating the Atomic Energy Act

Szuhsiung Ho, aka Allen Ho, 66, a naturalized U.S. citizen born in Taiwan, was sentenced to 24 months in prison and one year of supervised release.  Ho was also ordered to pay a $20,000 fine.  The defendant pleaded guilty in January 2017 to conspiracy to unlawfully engage or participate in the production or development of special nuclear material outside the U.S., without the required authorization from the U.S. Department of Energy (DOE), in violation of the Atomic Energy Act.

Acting Assistant Attorney General for National Security Dana J. Boente, U.S. Attorney Nancy Stallard Harr of the Eastern District of Tennessee and Special Agent in Charge Renae McDermott of the FBI’s Knoxville Field Division made the announcement.

“Today, Allen Ho is being held accountable for enlisting U.S.-based nuclear experts to provide assistance in developing and producing special nuclear material in China for a Chinese state-owned nuclear power company. He did so without the required authorization from the U.S. Department of Energy,” said Acting Assistant Attorney General Boente. “Prosecuting those who unlawfully facilitate the acquisition of sensitive nuclear technology by foreign nations continues to be a top priority of the National Security Division.”

“The U.S. Attorney’s office is committed to working to ensure that sensitive and controlled technology is not illegally obtained and exported from the United States,” said U.S. Attorney Harr.  “Violations of our export control laws will be aggressively prosecuted in the Eastern District of Tennessee.”

“Theft of our nuclear technology by foreign adversaries is of paramount concern to the FBI. Along with our local, state and federal partners, we will aggressively investigate those who seek to steal our technology for the benefit of foreign governments,” said Special Agent in Charge McDermott.

An April 2016 indictment charged Ho; China General Nuclear Power Company (CGNPC), the largest nuclear power company in China and Energy Technology International (ETI), a Delaware corporation with these offenses.  At the time of his indictment, Ho was a nuclear engineer, employed as a consultant by CGNPC and was also the owner of ETI.  CGNPC specialized in the development and manufacture of nuclear reactors and was controlled by China’s State-Owned Assets Supervision and Administration Commission.

According to documents filed in the case, beginning in 1997 and continuing through April 2016, Ho conspired with others to engage or participate in the development or production of special nuclear material in China, without specific authorization to do so from the U.S. Secretary of Energy, as required by law.  He assisted CGNPC in procuring U.S.-based nuclear engineers to assist CGNPC and its subsidiaries with designing and manufacturing certain components for nuclear reactors more quickly by reducing the time and financial costs of research and development of nuclear technology. In particular, Ho sought technical assistance related to CGNPC’s Small Modular Reactor Program; CGNPC’s Advanced Fuel Assembly Program; CGNPC’s Fixed In-Core Detector System; and verification and validation of nuclear reactor-related computer codes.

Under the direction of CGNPC, Ho also identified, recruited and executed contracts with U.S.-based experts from the civil nuclear industry who provided technical assistance related to the development and production of special nuclear material for CGNPC in China.  Ho and CGNPC also facilitated the travel to China and payments to the U.S.-based experts in exchange for their services.

This case was investigated by the FBI, Tennessee Valley Authority-Office of the Inspector General, DOE-National Nuclear Security Administration and U.S. Immigration and Customs Enforcement Homeland Security Investigations, with assistance from other agencies.  Assistant U.S. Attorneys Charles E. Atchley Jr. and Bart Slabbekorn of the Eastern District of Tennessee, and Trial Attorney Casey T. Arrowood of the Counterintelligence and Export Control Section and Attorney Jeffrey M. Smith of the Appellate Unit in the National Security Division prosecuted this case.

September 10, 2017 in AML | Permalink | Comments (0)

Saturday, September 9, 2017

HABIB Bank New York Branch Fined $629,625,000 for weak AML compliance procedures

The New York Department of Financial Services has been conducting an investigation concerning serious deficiencies identified in the New York Branch's program devoted to complying with New York and Federal laws and regulations concerning anti-money laundering ("AML") compliance, including the Bank Secrecy Act ("BSA").The evidence presently before the Department demonstrates that compliance failures found at the New York Branch are serious, persistent and apparently affect the entire Habib banking enterprise. They indicate a fundamental lack of understanding of the need for a vigorous compliance infrastructure, and the dangerous absence of attention by Habib Bank's senior management for the state of compliance at the New York Branch

the Superintendent of Financial Services hereby seeks to impose a civil monetary penalty upon Respondents in an amount up to and including Six Hundred Twenty-Nine Million Six Hundred Twenty-Five Thousand Dollars ($629,625,000).

Download Habib Bank

September 9, 2017 in AML | Permalink | Comments (0)

Thursday, September 7, 2017

Defendant Charged With Conspiring and Attempting to Provide Material Support to ISIS and Al-Nusrah Front

An indictment was unsealed charging Dilshod Khusanov, 31, a citizen of Uzbekistan, with conspiring and attempting to provide material support to the Islamic State of Iraq and al-Sham (ISIS) and al-Nusrah Front, both designated foreign terrorist organizations. The defendant, arrested earlier this morning in Villa Park, Ill., is scheduled to be arraigned this afternoon before U.S. Magistrate Judge M. David Weisman in Chicago.

Acting Assistant Attorney General for National Security Dana J. Boente, Acting U.S. Attorney Bridget M. Rohde for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, Special Agent in Charge Michael J. Anderson of the FBI’s Chicago Field Office and Commissioner James P. O’Neill of the NYPD made the announcement.

As alleged in the indictment and other court filings, Khusanov belonged to a group of likeminded individuals who provided financial support for persons in the U.S. travel to Syria to join ISIS or al-Nusrah Front. Four other members of this support group and two persons who attempted to travel to Syria to join ISIS have been indicted in a separate related case. The investigation began when Abdurasul Juraboev, one of Khusanov’s co-conspirators, came to the attention of law enforcement. Juraboev posted on an Uzbek-language website that propagates ISIS’s ideology his offer to engage in an act of martyrdom on U.S. soil on behalf of ISIS, such as killing the then President of the U.S. Barack Obama. The investigation subsequently revealed that Juraboev and another co-conspirator, Akhror Saidakhmetov, planned to travel to Turkey and then to Syria for the purpose of waging violent jihad on behalf of ISIS.

Saidakhmetov was arrested on Feb. 25, 2015, at John F. Kennedy International Airport where he was attempting to board a flight to Istanbul, Turkey. Juraboev previously purchased a plane ticket to travel from New York to Istanbul and was scheduled to leave the U.S. in March 2015. Abror Habibov, Dilkhayot Kasimov, Azizjon Rakhmatov and Akmal Zakirov – were charged in the related case with funding Saidakhmetov’s efforts to join ISIS. Juraboev pleaded guilty on Aug. 14, 2015, while Saidakhmetov pleaded guilty on January 19 and Abror Habibov on August 29 – all to charges of conspiring to provide material support to ISIS.

As alleged in the indictment and other court filings, Khusanov, a legal permanent resident of the U.S., helped to fund the efforts of Saidakhmetov and others to join ISIS or al-Nusrah Front. In particular, Khusanov and Zakirov discussed providing their own money to cover Saidakhmetov’s travel expenses. Khusanov also agreed to raise money from others to fund Saidakhmetov’s travel. In the week leading up to Saidakhmetov’s scheduled departure, Khusanov transferred money into Zakirov’s personal bank account, which funds were intended to facilitate Saidakhmetov’s travel to join ISIS. Khusanov and others also provided financial assistance for other persons from the U.S. to join either ISIS or al-Nusrah Front.

If convicted, Khusanov faces a maximum sentence of 30 years in prison. The charges in the superseding indictment are allegations, and the defendant is presumed innocent unless and until proven guilty.  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 after considering the advisory Sentencing Guidelines and other statutory factors.

Assistant U.S. Attorneys Alexander A. Solomon, Douglas M. Pravda, Peter W. Baldwin and David K. Kessler of the Eastern District of New York and Trial Attorney Steven Ward of the Counterterrorism Section of the National Security Division are prosecuting the case, with assistance from Assistant U.S. Attorney Barry Jonas of the Northern District of Illinois.

September 7, 2017 in AML | Permalink | Comments (0)

Wednesday, September 6, 2017

Former Guinean Minister of Mines Sentenced to Seven Years in Prison for Receiving and Laundering $8.5 Million in Bribes From China International Fund and China Sonangol

A former Minister of Mines and Geology of the Republic of Guinea was sentenced to seven years in prison, and three years of supervised release, for laundering bribes paid to him by executives of China Sonangol International Ltd. (China Sonangol) and China International Fund, SA (CIF).

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Joon H. Kim of the Southern District of New York, Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division and Assistant Director in Charge William F. Sweeney Jr. of the FBI’s New York Field Office made the announcement.

Mahmoud Thiam, 50, of New York, New York, was sentenced by U.S. District Judge Denise L. Cote of the Southern District of New York.  Thiam was convicted on May 3, after a seven-day trial of one count of transacting in criminally derived property and one count of money laundering.

“Mahmoud Thiam engaged in a corrupt scheme to benefit himself at the expense of the people of Guinea,” said Acting Assistant Attorney General Blanco. “Corruption is a cancer on society that destabilizes institutions, inhibits fair and free competition, and imposes significant burdens on ordinary law-abiding people just trying to live their everyday lives.  Today’s sentence sends a strong message to corrupt individuals like Thiam that if they attempt to use the U.S. financial system to hide their bribe money they will be investigated, held accountable, and punished.”

“As a unanimous jury found at trial, Thiam abused his position as Guinea’s Minister of Mines to take millions in bribes from a Chinese conglomerate, and then launder that money through the American financial system,” said Acting U.S. Attorney Kim. “Enriching himself at the expense of one Africa’s poorest countries, Thiam used some of the Chinese bribe money to pay his children’s Manhattan private school tuition and to buy a $3.75 million estate in Dutchess County. Today’s sentence shows that if you send your crime proceeds to New York, whether from drug dealing, tax evasion or international bribery, you may very well find yourself at the front end of long federal prison term.”

"Thiam abused his official position, but the outcome shows that no one is above the law," said Assistant Director Stephen E. Richardson. "The FBI will not stand by while individuals attempt to live by their own rules and use the United States as a safe haven for their ill-gotten gains. I would like to applaud the dedicated investigators and prosecutors who have worked to hold those who have committed these crimes accountable for their illegal actions.”

“Today’s sentencing should remind the public that no matter who you are, or how much money you have, you’re not immune from prosecution.  The FBI will continue to use all resources at our disposal to uncover crimes of this nature and expose them for what they really are,” said Assistant Director in Charge Sweeney

According to evidence presented at trial, China Sonangol, CIF and their subsidiaries signed a series of agreements with Guinea that gave them lucrative mining rights in Guinea.  In exchange for bribes paid by executives of China Sonangol and CIF, Thiam used his position as Minister of Mines to influence the Guinean government’s decision to enter into those agreements while serving as Guinea’s Minister of Mines and Geology from 2009 to 2010.  The evidence further showed that Thiam participated in a scheme to launder the bribe payments from 2009 to 2011, during which time China Sonangol and CIF paid him $8.5 million through a bank account in Hong Kong.  Thiam then transferred approximately $3.9 million to bank accounts in the U.S. and used the money to pay for luxury goods and other expenses.  To conceal the bribe payments, Thiam falsely claimed to banks in Hong Kong and the U.S. that he was employed as a consultant and that the money was income from the sale of land that he earned before he was a minister. 

The trial evidence showed that the purpose of the bribes was to obtain substantial rights and interests in natural resources in Guinea, including the right to be the first and strategic shareholder with Guinea of a national mining company into which Guinea had to, among other things, transfer all of its stakes in various mining projects and future mining permits or concessions that the government decided to develop on its own.  China Sonangol and CIF, through their subsidiaries, also obtained exclusive and valuable rights to conduct business operations in a broad range of sectors of the Guinean economy, including mining. 

The FBI’s International Corruption Squads in New York City and Los Angeles investigated the case.  Trial Attorney Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Elisha Kobre and Christopher DiMase of the Southern District of New York prosecuted the case.  Fraud Section Assistant Chief Tarek Helou and Trial Attorney Sarah Edwards, and Money Laundering and Asset Recovery Section Senior Trial Attorney Stephen Parker previously investigated the case.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter. 

The Fraud Section is responsible for investigating and prosecuting all matters relating to the Foreign Corrupt Practices Act (“FCPA”).  Additional information about the Justice Department’s FCPA enforcement efforts can be found at

September 6, 2017 in AML | Permalink | Comments (0)

Tuesday, September 5, 2017

Former Social Security Administrative Law Judge Sentenced to Four Years in Prison for Role in $550 Million Social Security Fraud Scheme

A former social security administrative law judge (ALJ) was sentenced to four years in prison for his role in a scheme to fraudulently obtain more than $550 million in federal disability payments from the Social Security Administration (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 Field Division, Special Agent in Charge Tracey D. Montaño of the IRS Criminal Investigation (IRS-CI) Nashville 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 (HHS-OIG) Atlanta Regional Office made the announcement.

David Black Daugherty, 81, of Myrtle Beach, S.C., was sentenced by U.S. District Judge Danny C. Reeves of the Eastern District of Kentucky, who also ordered Daugherty to pay restitution of over $93 million to the SSA and HHS. Daugherty pleaded guilty in May 2017 to two counts of receiving illegal gratuities.

According to admissions made as part of his guilty plea, beginning in 2004, Daugherty, as an ALJ assigned to the SSA’s Huntington, W. Va., hearing office, sought out pending disability cases in which Kentucky attorney Eric Christopher Conn represented claimants and reassigned those cases to himself. Daugherty then contacted Conn and identified the cases he intended to decide the following month and further solicited Conn to provide medical documentation supporting either physical or mental disability determinations. Without exception, Daugherty awarded disability benefits to individuals represented by Conn – in some instances, without first holding a hearing. As a result of Daugherty’s awarding disability benefits to claimants represented by Conn, Conn paid Daugherty an average of approximately $8,000 per month in cash, until approximately April 2011. All told, Daugherty received more than $609,000 in cash from Conn for deciding approximately 3,149 cases.

As a result of the scheme, Conn, Daugherty, and their co-conspirators obligated the SSA to pay more than $550 million in lifetime benefits to claimants based upon cases Daugherty approved for which he received payment from Conn.

Daugherty was indicted last year, along with Conn and Alfred Bradley Adkins, a clinical psychologist. The defendants were charged with conspiracy, fraud, false statements, money laundering and other related offenses in connection with the scheme.

Conn pleaded guilty on March 24, to a two-count information charging him with theft of government money and paying illegal gratuities, and was sentenced in absentia on July 14 to 12 years in prison. Conn absconded from court ordered-electronic monitoring on June 2, and is considered a fugitive. He remains under indictment. On June 12, Adkins was convicted after a jury trial of one count of conspiracy to commit mail fraud and wire fraud, one count of mail fraud, one count of wire fraud and one count of making false statements. Adkins is scheduled to be sentenced on September 22.

The SSA-OIG, FBI, IRS-CI and HHS-OIG investigated the case. Trial Attorney Dustin M. Davis of the Criminal Division’s Fraud Section and Trial Attorney Elizabeth G. Wright of the Criminal Division’s Money Laundering and Asset Recovery Section are prosecuting the case, with previous co-counsel including Assistant U.S. Attorney Trey Alford of the Western District of Missouri and Investigative Counsel Kristen M. Warden of the Justice Department’s Office of the Inspector General.

September 5, 2017 in AML | Permalink | Comments (0)

Monday, August 21, 2017

The Beneficial Ownership of Legal Persons (Guernsey) Law, 2017 In Effect and Registry Now Recording UBOs

The Beneficial Ownership of Legal Persons (Guernsey) Law 2017 came into force on 15 August, and the associated limited-access electronic registry service is now live. It imposes a statutory duty on resident agents to keep an up-to-date record of the beneficial owners of legal entities for which they are responsible, essentially setting a 25 % threshold for beneficial ownership.  EXPLANATORY MEMORANDUM

The Law establishes the Office of the Registrar of Beneficial Ownership of Legal Persons, sets out the powers and functions of the Registrar, and imposes new duties on beneficial owners of legal persons and resident agents relating to the provision of information. The Law also makes appropriate amendments to the "relevant legal person Laws" - ie the Companies (Guernsey) Law, 2008, the Limited Liability Partnerships (Guernsey) Law, 2013 and the Foundations (Guernsey) Law, 2012 - and makes amendments to other legislation to ensure that the Guernsey Financial Services Commission has appropriate supervisory powers in respect of persons it regulates.

Part 1 of the Law establishes the Office of the Registrar and sets out the Registrar's functions. Part 2 sets out the duties of resident agents and beneficial owners to collect and disclose information. These duties expand on existing duties in the relevant legal persons Laws (eg Part XXIX of the Companies Law). The duties are enforced by a civil penalties regime and, in respect of resident agents, criminal offences. Part 3 amends the existing resident agent and beneficial ownership provisions in the relevant legal person Laws, making them consistent with the duties under Part 2 and the functions of the Registrar. Part 4 is concerned with the enforcement of the provisions, including a range of flexible civil sanctions consistent with those in the Companies Law, such as the power to issue private reprimands. The general provisions at Part 5 include providing for the meaning of 'beneficial owner' and related expressions to be defined by regulations.

Schedule 1 makes standard provision in respect of the Office of the Registrar. Schedule 2 sets out in more detail the general powers of the Registrar to disclose, and obtain, information, as well as the duty on him to keep information secure and confidential; the powers to disclose are consistent with powers in existing legislation such as the Disclosure Law. Also in Schedule 2 is an express power for the GFSC and the Economic Crime Division of the Customs and Immigration Service to inspect the Register for the purposes of carrying out their functions. Schedule 3 sets out amendments to the Foundations Law and Schedule 4 sets out amendments to other enactments, made for the broad purpose of ensuring that the GFSC has suitable supervisory powers in respect of persons it regulates.

August 21, 2017 in AML, GATCA | Permalink | Comments (0)

Friday, August 18, 2017

FTC Says Operators of Bogus Discount Clubs Took Tens of Millions of Dollars From Consumers’ Bank Accounts without Their Consent

The Federal Trade Commission has charged a group of marketers with debiting more than $40 million from consumers’ bank accounts for membership in three online discount clubs they enrolled consumers in without their authorization.

According to the FTC, the defendants targeted consumers with websites and telemarketing calls that purported to offer payday or cash advance loans. Thinking they were applying for loans, consumers provided their bank account information, which the defendants used to enroll consumers in an online coupon service that cost monthly fees.

The FTC alleges that the defendants used electronic remotely created checks (RCCs) to withdraw from consumers’ accounts an initial fee ranging from $49.89 to $99.49, and 1024px-US-FederalTradeCommission-Seal.svgrecurring monthly fees of $14 to $19.95. Hundreds of thousands of consumers called the defendants to cancel their memberships and request refunds, and thousands of people informed their banks about the unauthorized debits. Throughout the operation of the discount clubs, banks rejected more than 75 percent of the attempts to debit consumers’ accounts. More than 99.5 percent of those who supposedly enrolled in the scheme never accessed any of the discount clubs’ coupons.

The alleged scheme began in 2010, when EDebitPay LLC (EDP), Dale Paul Cleveland and William R. Wilson launched the Saving Pays Club. At the time, they were facing contempt charges for violating a 2008 settlement order with the FTC in another deceptive debiting scam. In 2012, EDP launched a new version of the discount club, Money Plus Saver. In 2013, EDP sold its assets, including the discount clubs, to Hornbeam. Hornbeam then launched a third version of the same discount club, calling it Saving Makes Money, and continued to charge consumers enrolled in the Saving Pays Club and Money Plus Saver.

iStream Financial Services, Inc. processed all of the payments for the discount clubs from November 2010 through April 2016. The FTC alleges that iStream consistently disregarded the high return rates generated by the discount club transactions, as well as other fraud indicators highlighted by its chief risk officer, outside compliance auditors, and the president of its own sister bank. In late 2014, iStream allegedly enabled Hornbeam to artificially reduce its high discount club return rate by allowing it to send thousands of small RCCs to itself.

The defendants in this case are EDP; Dale Paul Cleveland; William Wilson; Keith Merrill; clickXchange Media LLC; Platinum Online Group LLC, doing business as Premier Membership Clubs; Hornbeam; Cardinal Points Holding LLC; Cardinal Points Management LLC, doing business as Clear Compass Digital Group; Gyroscope Management Holdings LLC; Jerry L. Robinson; Earl G. Robinson; James McCarter; Mark Ward; iStream Financial Services Inc.; Kris Axberg; Richard Joachim; and Chet Andrews.

The FTC charged all of the defendants with violating the FTC Act. The Commission also charged the EDP and Hornbeam defendants with violating the Restore Online Shoppers’ Confidence Act. In addition, the FTC charged defendants, except for Mark Ward, with violating the Telemarketing Sales Rule.

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