Wednesday, June 8, 2005
Victor Conte, founder of the Bay Area Laboratory Co-op (BALCO) who has admitted providing steroids to a number of athletes, will likely face additional money laundering charges, according to an AP story (here). At a closed hearing in San Francisco on June 7, the government disclosed that it plans to issue a superseding indictment with charges that only name Conte and not the other defendants. The trial is scheduled to begin September 6, although additional charges that only name Conte increases the chance that the judge will sever at least some of the defendants to avoid any prejudice to them from unrelated evidence. Conte's admissions in a national television interview (see earlier post here) that BALCO created and distributed steroids certainly makes his defense quite difficult, and the other defendants have a stong incentive not to join him at the defense table once trial starts. (ph)
Friday, April 22, 2005
The Financial Crimes Enforcement Network (FinCEN) filed a notice of proposed rulemaking to prohibit two Latvian banks headquartered in Riga, VEF Banka and Multibanka, from conducting financial transactions with banks in the United States because of possible money laundering activities at the banks. Under the USA PATRIOT Act, U.S. financial institutions can be required to take "special measures" against foreign banks or other institutions when there is a "primary money laundering concern" regarding use of accounts for money laundering. FinCEN seeks to adopt the "fifth special measure" which "prohibits or conditions the opening or maintaining of correspondent or payable through accounts for the designated institution by U.S. financial institutions."
According to the FinCEN release on VEF Banka (here), "The bank’s dealings with foreign shell companies, provision of confidential banking services, and lack of controls and procedures adequate to the risks involved, make VEF vulnerable to money laundering and other financial crimes. As a result of the significant number of credit and debit transactions involving entities that appear to be shell corporations banking at VEF, some U.S. financial institutions have already closed correspondent relationships with VEF." Regarding Multibanka, the FinCEN release (here) states, "Multibanka offers confidential banking services and numbered accounts for non-Latvian customers. Reports substantiate that a significant portion of its business involves wiring money out of the country on behalf of its accountholders. The bank has been suspected of being used by Russian and other shell companies to facilitate financial crime. A common way for criminals to disguise illegal proceeds is to establish shell companies in countries known for lax enforcement of anti-money laundering laws. The criminals use the shell companies to conceal the true ownership of the accounts and assets, which is ideal for the laundering of funds." (ph)
Friday, March 11, 2005
As discussed in a previous post (here) about a number of arrests of public officials in Monmouth County, New Jersey, charges against three additional defendants for money laundering were filed on March 10 as part of a widening crackdown on public corruption resulting from an extensive undercover FBI operation. A press release issued by the U.S. Attorney's Office details charges against the defendants:
Criminal complaints were unsealed today charging a Monmouth County truck and equipment contractor, a transportation service owner and a Far Hills councilman with laundering large sums of cash in exchange for kickbacks from undercover agents in an FBI corruption investigation, U.S. Attorney Christopher J. Christie announced.
One of the complaints charges Stephen Appolonia, 52, of Colts Neck, the co-owner of International Trucks of Central Jersey, based in Howell and Hillside. The company sells International-brand trucks and other equipment to Monmouth County and various municipalities in Monmouth and elsewhere.
The same complaint charges Far Hills Councilman and police commissioner Thomas A. Greenwald, 52, a friend of Appolonia whom Appolonia introduced to undercover agents when Greenwald also wanted to participate in the money-laundering scheme, according to the criminal complaint. Greenwald and Appolonia ultimately laundered more than $350,000, according to the criminal complaint.
The indictment quotes the third defendant as describing his limousine business as "the greatest washing machine in the world" -- that may be tough to explain to a jury. The criminal complaints filed in the case are here and here. (ph)
Saturday, February 26, 2005
Miami attorney Sam Burstyn appeared in federal court in the Southern District of Florida this past week to face an indictment charging money laundering and obstruction of justice. Burstyn has represented celebrity clients, including Robin Givens and the wife of tennis player Boris Becker, and is known for his penthouse office on Brickell Ave. in addition to his criminal defense work. The government alleges that he was the "house counsel" for a marijuana importation enterprise led by Jeffrey Tobin. The charges against Burstyn include a $500,000 money laundering charge related to a loan that was made with alleged drug profits, and that Burstyn obstructed justice by advising Tobin to flee the United States and organized meetings with grand jury witnesses to provide false testimony. According to a press release issued by the U.S. Attorney's Office:
On or about October 22, 1998, Burstyn lent approximately $498,250, in the form of a counter check, to an owner of the business, Auto Fund of Atlanta, Georgia, at a substantial interest rate. This check was drawn on the lawyer’s trust account of Samuel I. Burstyn, P.A. Burstyn obtained the proceeds to make this loan from the financial accounts of his relatives. Burstyn used a fictitious company named “J.B. Partners” as an entity to make the loan. As a condition for making the loan, defendant Burstyn obtained collateral of $500,000 in drug proceeds from Jeffrey Tobin.
An AP story here discusses Burstyn's law practice and his attorney's statement that "If you were to see him now, you would be struck by how confident he is that he will be acquitted." (ph)
Wednesday, February 9, 2005
As discussed in an earlier post (here), former Georgia School Superintendent and 2002 gubernatorial candidate Linda Schrenko was charged in a federal indictment with corruption charges involving the misappropriation of over $600,000 in federal education funds that were used for her campaign and also for cosmetic surgery. Her top deputy entered a plea agreement on Jan. 10 (see post here), and his cooperation may have led to new charges. The U.S. Attorney's Office for the Northern District of Georgia (Atlanta) upped the ante on Feb. 8 when the grand jury issued a superseding indictment alleging an additional 20 counts of money laundering, which could substantially affect the sentence if she is convicted of those charges. Among the methods alleged by the government to disguise the source and use of the funds were the issuance of 104 blank checks for $590 each that were to be used for "focus groups" related to the campaign. An article in the Atlanta Journal-Constitution describes the new allegations against Schrenko and her codefendants. (ph)
Monday, February 7, 2005
As discussed in earlier posts (here and here), the acquisition of Riggs National Bank by PNC Financial was delayed by the federal investigation of possible money laundering violations by Riggs, including the bank's failure to monitor transactions by former Chilean dictator Augusto Pinochet. Riggs ultimately settled the criminal case by agreeing to plead guilty to a violation of the Bank Secrecy Act and pay a $16 million fine. The fallout from that case, and "continued deterioration" in Riggs' operations, led PNC to seek to modify the terms of the transaction, and Riggs has struck back by withdrawing from the deal and suing PNC in DC Superior Court. An article in the Wall Street Journal (Feb. 7) discusses the collapse of the deal, which will likely result in Riggs drifting even further unless another can be located that might be interested in acquiring the bank. Unfortunately for Riggs (and its shareholders), the prospect of a fire sale looms. (ph)
Wednesday, January 26, 2005
Riggs National Corporation, the parent of Washington D.C.'s Riggs National Bank, is on the verge of accepting a plea agreement with the Department of Justice for violating the Bank Secrecy Act for failing to report suspicious activity in accounts involving possible money laundering, according to an article in the Wall Street Journal (Jan. 26). The article states: "The Riggs board has been presented with a plea agreement by prosecutors in which the bank would admit to one count of violating the Bank Secrecy Act by failing to file reports to regulators on suspicious transfers and withdrawals by clients, people close to the case said. Directors are expected to accept the plea and the bank would pay a fine of between $16 million and $18 million. The deal could be announced as soon as tomorrow, these people said." As discussed in earlier posts here and here, Riggs came under federal scrutiny for possible money laundering by foreign government executives, including former Chilean dictator Augusto Pinochet, through accounts maintained that involved large-scale transfers of funds. The article notes that the plea agreement, if it goes through, may affect the deal Riggs has to be acquired by PNC Financial, including the possibility that the transaction will be canceled. (ph)
Monday, January 24, 2005
Bloomberg.com reports (here) that the New York and Miami branches of the Banco de Chile are being investigated for possible money laundering violations. Earlier posts (here and here) discussed the federal investigation of Riggs National Bank in Washington DC for money laundering problems involving foreign leaders, including former Chilean dictator Augusto Pinochet. The report states:
Banco de Chile's New York branch, which caters to foreign customers, is under investigation for compliance with anti-money laundering laws, according to a filing with the U.S. Securities and Exchange Commission. The Office of the Comptroller of the Currency is looking into the New York branch of Chile's second-largest bank, while the Federal Reserve Bank of Atlanta is examining certain accounts at the Miami operation, according to today's filing.
Monday, January 17, 2005
Riggs National Bank became embroiled in a money laundering scandal related to its relationships with foreign governments and leaders, including former Chilean dictator Gen. Augusto Pinochet, and as a result the bank was bought out by PNC Financial (see earlier posts here and here). A story in the Washington Post (Jan. 17) details the failure of the Riggs board of directors to pursue any additional information, much less remedial measures, when informed of the problem. According to the article:
In October 2002, the directors of Riggs Bank received an internal memorandum listing $1.9 million in suspicious cash withdrawals by former Chilean dictator Augusto Pinochet from 2000 to 2002 -- the board's first official notification of a relationship that bank regulators were investigating. The directors did not question the nature of the bank's relationship with Pinochet, who only a year before had eluded a Spanish criminal indictment on genocide and torture charges, according to sources who have seen minutes and transcripts of the meeting. No internal procedures were changed. The board took no action.
Even worse, the banks controlling shareholder, Joe Allbritton and his wife Barbara--both board members--took the lead in ignoring the problem, according to the article. "At Riggs, the directors at the bank and its holding company did not confront the huge risks connected with Riggs international banking relationships. The boards followed the lead of Allbritton and his wife, Barbara -- both directors who were often openly derisive of efforts by regulators to improve oversight of its international banking operations." In an industry as heavily regulated--and prone to abuse--as banking, it is surprising to hear that directors would tolerate such an attitude. Maybe I'm just naive. (ph)