International Financial Law Prof Blog

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

Sunday, December 31, 2017

58 Criminal Leads and 18,000 Non-Criminal Leads Result from Swiss Banks Program

Since the inception of the SBP, 80 Swiss banks have entered into Non-Prosecution Agreements (NPAs) paying over 1.3 Billion in penalties, with about 58 investigative leads being sent to various CI field offices for investigation and action. Additionally, over 18,000 leads that did not meet criminal criteria have been forwarded to IRS’ LB&I Division for civil tax compliance action. (see Page 18)

As the SBP winds down and is scheduled to end in 2017, an International Tax group is being ramped up in CI’s Washington D.C field office. This group’s focus will be to dismantle the most significant International Tax schemes that have been identified as systemic threats to the integrity and fairness of the tax administration. Investigations initiated by this group will be long-term in nature and utilize all tools at the Criminal Investigation Division’s disposal.

Download 2017_criminal_investigation_annual report

December 31, 2017 in GATCA | Permalink | Comments (1)

Saturday, December 30, 2017

IRS Criminal Investigation Releases Fiscal Year 2017 Annual Report

The Internal Revenue Service today announced the release of the Criminal Investigation Division’s (CI) annual report, reflecting significant accomplishments and criminal enforcement actions taken in fiscal year 2017.   Focusing on employment tax, refund fraud, international tax enforcement, tax-related identity theft, public corruption, cybercrime, terrorist financing and money laundering, CI initiated 3,019 cases in FY 2017.  The number of cases initiated is directly tied to the number of special agents that CI has.

“We have the same number of special agents—around 2,200—as we did 50 years ago,” said Don Fort, Chief, CI.  “Financial crime has not diminished during that time– in fact, it has proliferated in the age of the Internet, international financial crimes and virtual currency. Despite these challenges, we continue to do amazing work, investigating some of the most complicated cases in the agency’s history.  Criminals would be foolish to mistake declining resources for a lack of commitment in this area.”

The annual report is released each year for the purpose of highlighting the agency’s successes while providing a historical snapshot of the make-up and priorities of the organization. The very first Chief of IRS CI, Elmer Lincoln Irey, served from 1919 to 1946 and envisioned releasing such a document each year to showcase the agency’s investigative work.

CI is the only federal law enforcement agency with jurisdiction over federal tax crimes. This year, CI again boasted a conviction rate rivaling all federal law enforcement at 91.5% while spending more than 72% of their investigative time working tax cases. That conviction rate speaks to the thoroughness of the investigations and CI is routinely called upon by prosecutors across the country to lead financial investigations on a wide variety of financial crimes including international tax evasion, identity theft, terrorist financing and transnational organized crime.

CI investigates potential criminal violations of the Internal Revenue Code and related financial crimes in a manner to foster confidence in the tax system and compliance with the law. The interactive report summarizes a wide variety of CI activity throughout the fiscal year and includes case examples from each field office on a wide range of financial crimes.

“Since taking over as the Chief of CI this summer, I could not be prouder to lead the men and women of this organization,” said Fort. As financial crimes—and the way we investigate them—continue to evolve, CI continues to set the standard for financial investigations worldwide.” 

December 30, 2017 in Tax Compliance | Permalink | Comments (0)

Friday, December 29, 2017

Former Embraer Sales Executive Pleads Guilty to Foreign Bribery and Related Charges

A former sales executive of Embraer S.A. (Embraer), a Brazilian-based manufacturer of aircraft, pleaded guilty in connection with a scheme to pay bribes to a high-level foreign government official in exchange for assistance in securing Embraer’s sale of aircraft to Saudi Arabia’s national oil company.  Download U.S. v. Colin Steven - Information

Acting Assistant Attorney General John P. Cronan 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 Special Agent in Charge Robert F. Lasky of the FBI’s Miami Field Office made the announcement.

Colin Steven, 61, a U.K. citizen residing in the United Arab Emirates, was charged by information filed today in the Southern District of New York with one count of violating the Foreign Corrupt Practices Act (FCPA), one count of conspiracy to violate the FCPA, one count of wire fraud, one count of conspiracy to commit wire fraud, one count of money laundering, one count of conspiracy to launder money and one count of making a false statement.  Steven pleaded guilty to all of those counts before U.S. District Judge Alison J. Nathan of the Southern District of New York.  A sentencing date has not been scheduled yet.  The Court set a control date of June 21, 2018.

As part of his plea, Steven, a former vice president of sales & marketing in Embraer’s Executive Jets Division, admitted that he engaged in a scheme to have Embraer pay bribes to a foreign official in exchange for assistance in getting an aircraft sales contract with favorable terms awarded to Embraer; retained a kickback as part of the scheme; and lied to law enforcement officials about his kickback.

Steven consented to the filing of the information, which alleged that Embraer was in negotiations with Saudi Arabia’s national oil company over a potential aircraft sale when Steven and the foreign official devised an arrangement whereby the foreign official would guarantee that Embraer would win a contract and that the contract would involve new rather than used aircraft in exchange for approximately $1.5 million in bribe payments.  In early 2010, Saudi Arabia’s national oil company awarded Embraer a contract for three new aircraft, valued at approximately $93 million.  The information further alleged that he arranged to disguise the bribes as commissions to a South African company that was owned in part by Steven’s personal friends.  The South African company transferred the bulk of the bribe proceeds to the foreign official’s intermediary but, at Steven’s direction, paid a portion of the bribe proceeds to Steven.

In pleading guilty, Steven admitted that he executed, and conspired with others to execute, the bribery and kickback schemes; laundered and conspired to launder the proceeds of those schemes through the South African company and lied to U.S. law enforcement about the kickback.

The guilty plea entered today follows the execution in October 2016 of a deferred prosecution agreement between the Department and Embraer, under which Embraer agreed to pay a $107 million penalty to the Department as part of a $205 million global resolution to investigations by the Department, the Securities and Exchange Commission and Brazilian authorities related to corrupt conduct in several countries, including Saudi Arabia.  The agreement acknowledged Embraer’s cooperation with the investigations.  With the cooperation of U.S. authorities, Brazilian authorities have charged 11 individuals for their alleged involvement in Embraer’s misconduct in the Dominican Republic.  Saudi Arabian authorities have charged two individuals for their alleged involvement in Embraer’s misconduct in Saudi Arabia.

The FBI’s International Corruption Squads, based in Miami, Florida, and Los Angeles, California, investigated the case.  Trial Attorneys John-Alex Romano and Nikhila Raj and Assistant Chief David Johnson of the Criminal Division’s Fraud Section, and Assistant U.S. Attorney Richard Cooper of the Southern District of New York, are prosecuting the case. The Fraud Section appreciates the cooperation and assistance provided by the SEC in this matter.

The Criminal Division’s Office of International Affairs provided significant assistance in this matter.  The Department also appreciates the cooperation and assistance provided by authorities in Brazil, the Dominican Republic, South Africa and Switzerland in this matter.

In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.

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

Thursday, December 28, 2017

Keppel Offshore & Marine Ltd. and U.S. Based Subsidiary Agree to Pay $422 Million in Global Penalties to Resolve Foreign Bribery Case

Guilty Plea by Former Senior Member of Legal Department Unsealed

Keppel Offshore & Marine Ltd. (KOM), a Singapore-based company that operates shipyards and repairs and upgrades shipping vessels, and its wholly owned U.S. subsidiary, Keppel Offshore & Marine USA Inc. (KOM USA), have agreed to pay a combined total penalty of more than $422 million to resolve charges with authorities in the United States, Brazil and Singapore arising out of a decade-long scheme to pay millions of dollars in bribes to officials in Brazil.  KOM USA pleaded guilty today in connection with the resolution.  In addition, a guilty plea by a former senior member of KOM’s legal department was unsealed.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Acting U.S. Attorney Bridget M. Rohde of the Eastern District of New York, and Assistant Director Stephen E. Richardson of the FBI’s Criminal Investigative Division made the announcement.

“Today’s resolution once again underscores the importance of the Department of Justice’s collaboration with foreign authorities to hold corrupt companies and individuals accountable for their crimes, while ensuring the fair and appropriate allocation of fines and penalties,” said Acting Assistant Attorney General Cronan.  “This case also represents the first coordinated FCPA resolution with Singapore and the most recent of several coordinated resolutions with Brazil.  The Criminal Division is committed to working with our international partners to ensure that honest, law abiding companies are able to compete on a level playing field across the globe.”

“The resolutions with KOM and its U.S. subsidiary are the result of a multinational effort to investigate and prosecute a corruption scheme that resulted in the payment by the defendant companies of over $50 million in bribes to Brazilian officials and in profits for the defendant companies of over $350 million from business corruptly obtained in Brazil,” said Acting U.S. Attorney Rohde.  “In an attempt to conceal their crimes, the defendants used the global financial system – including the United States banking system – to disguise the source and disbursement of the bribe payments by passing funds through a series of shell companies.  The United States, working with its law enforcement partners abroad, will continue to hold responsible those corporations and individuals who seek to enrich themselves through the corruption of government officials and legitimate governmental functions.”

“The resolution to this investigation shows to those around the world that the FBI and our law enforcement partners are dedicated to work together to bring justice to companies who play outside the rule of law,” said FBI Assistant Director Richardson.  “The FBI won’t stand by while individuals operate their business illegally using bribes.”

KOM entered into a deferred prosecution agreement with the Department in connection with a criminal information filed today in the Eastern District of New York charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to U.S. District Judge Kiyo A. Matsumoto.  In addition, KOM USA pleaded guilty and was sentenced by Judge Matsumoto 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, KOM will pay a total criminal fine of $422,216,980, with a criminal penalty due to the United States of $105,554,245, including a $4,725,000 criminal fine paid by KOM USA.  As part of the deferred prosecution agreement, KOM also committed to implement rigorous internal controls and to cooperate fully with the Department’s ongoing investigation.

In related proceedings, the company settled with the Ministério Público Federal (MPF) in Brazil and the Attorney General’s Chambers (AGC) in Singapore.  The United States will credit the amount the company pays to Brazil and Singapore under their respective agreements, with Brazil receiving $211,108,490, equal to 50 percent of the total criminal penalty, and Singapore receiving up to $105,554,245, equal to 25 percent of the total criminal penalty. 

The Department also unsealed charges today against a former senior member of KOM’s legal department, who pleaded guilty to one count of conspiracy to violate the FCPA on Aug. 29, 2017 in the Eastern District of New York.  He is awaiting sentencing. 

According to admissions and court documents, beginning by at least 2001 and continuing until at least 2014, KOM conspired to violate the FCPA by paying approximately $55 million in bribes to officials at the Brazilian state-owned oil company Petrobras and to the then-governing political party in Brazil, in order to win 13 contracts with Petrobras and another Brazilian entity.  KOM effectuated and concealed the bribe payments by paying outsized commissions to an intermediary, under the guise of legitimate consulting agreements, who then made payments for the benefit of the Brazilian officials and the Brazilian political party.

In reaching the resolutions with the Department, KOM and KOM USA received credit for their substantial cooperation with the Department’s investigation and for taking extensive remedial measures.  For example, KOM has terminated and otherwise disciplined employees involved in the criminal conduct, and it has implemented an enhanced system of compliance and internal controls to address and mitigate corruption risks.  Accordingly, the criminal penalty reflects a 25 percent reduction off the bottom of the applicable U.S. Sentencing Guidelines fine range.

The case is being investigated by the FBI’s International Corruption Squad in Houston.  Trial Attorneys Derek J. Ettinger and David M. Fuhr and Assistant Chief Christopher J. Cestaro of the Criminal Division’s Fraud Section, as well as Assistant U.S. Attorneys Alixandra Smith  and Patrick Hein of the Eastern District of New York, are prosecuting the case.

The MPF in Brazil and the AGC in Singapore provided significant assistance in this matter, as did the Criminal Division’s Office of International Affairs. 

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

Friday, December 22, 2017

OECD releases first peer reviews of the BEPS Action 5 minimum standard on spontaneous exchange on tax rulings

As part of continuing efforts to improve tax transparency and the international tax framework, the OECD has released the first analysis of individual countries' progress OECD APA Sharing Reportsin spontaneously exchanging information on tax rulings in accordance with Action 5 of the BEPS package of measures released in October 2015.

The first annual report on the exchange of information on rulings evaluates how 44 countries, including all OECD members and all G20 countries, are implementing one of the four new minimum standards agreed in the OECD/G20 BEPS Project.

A key aim of the project was to increase transparency, which resulted in a new minimum standard to ensure that information on certain tax rulings is exchanged between relevant tax administrations in a timely manner (Action 5). This minimum standard requires tax administrations to spontaneously exchange information on rulings that have been granted to a foreign related party of their resident taxpayer or a permanent establishment which, in the absence of exchange, could give rise to BEPS concerns. As a minimum standard, all members of the Inclusive Framework on BEPS have committed to implement this standard, and to have their compliance with the standard reviewed and monitored by their peers.

The standard covers rulings such as advance pricing agreements (APAs), permanent establishment rulings, related party conduit rulings, and rulings on preferential regimes. More than 10 000 relevant rulings were identified up to the end of 2016.

The annual report includes almost 50 country-specific recommendations on issues such as improving the timeliness of the exchange of information, ensuring that all relevant information on the taxpayer’s related parties is captured for exchange purposes, and ensuring that exchanges of information are made with respect to preferential tax regimes that apply to income from intellectual property.

The next annual peer review will cover all members of the Inclusive Framework, except for the developing countries that requested a deferral of their review to 2019.

December 22, 2017 in BEPS | Permalink | Comments (0)

Wednesday, December 20, 2017

The Bahamas and Zambia join the Inclusive Framework on BEPS, 110 Countries Will Impose Anti-Avoidance Regime

The Inclusive Framework on Base Erosion and Profit Shifting (BEPS) welcomed The Bahamas and Zambia as its newest members, bringing to 110 the total number of countries and jurisdictions participating on an equal footing in the project. Members of the Inclusive Framework have the opportunity to work together with other OECD and G20 countries on implementing the BEPS package consistently and on developing further standards to address remaining BEPS issues.

December 20, 2017 in BEPS | Permalink | Comments (0)

Tuesday, December 19, 2017

The Bahamas is #116 to Sign Up to OECD's Bank Account Information Sharing via CRS

The Hon. Kevin Peter Turnquest, Deputy Prime Minister and Minister of Finance of the Bahamas signed the  Multilateral Convention on Mutual Administrative Assistance in Tax Matters (“the Convention”) in the presence of OECD Secretary General Angel Gurria. With this signing, The Bahamas becomes the 116th jurisdiction to join the world’s leading instrument for boosting transparency and combating cross-border tax evasion.

The Convention is the most powerful instrument for international tax cooperation providing for all forms of administrative assistance in tax matters: exchange of information on request, spontaneous exchange, automatic exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection. It guarantees extensive safeguards for the protection of taxpayers' rights.

The Convention will enable The Bahamas to fulfil their commitment to implement the Standard for Automatic Exchange of Financial Account Information in Tax Mattersand begin the first of such exchanges by 2018. The Bahamas also during the week signed the Multilateral Competent Authority Agreement (MCAA), in the margins of the 14th meeting of the Automatic Exchange of Information Group of the Global Forum on Transparency and Exchange of Information in Tax Matters which took place on 13-15 December 2017 in San Marino. The MCAA, which is a framework agreement specifies the details of what information will be exchanged and when and has been signed by 97 jurisdictions.

In another major step to boost international tax cooperation, The Bahamas has also joined the inclusive framework on BEPS today which makes it the 110th jurisdiction participating on an equal footing in the BEPS Project as Associates. The Convention can also be used to swiftly implement the transparency measures of the OECD/G20 Base Erosion and Profit Shifting (BEPS) Project such as the automatic exchange of Country-by-Country reports under Action 13 as well as the sharing of rulings under Action 5 of the BEPS Project.

“Signing “the Convention” is an assertion of the commitment by The Bahamas to protect the integrity of its financial services industry and to effectively implement the OECD's international standards on tax transparency for the automatic exchange of financial account information,” said The Hon. Kevin Peter Turnquest, Deputy Prime Minister and Minister of Finance of the Bahamas.  “The Bahamas is a well known leading international financial centre, as such, we will continue to maintain a well regulated and transparent environment for the provision of international financial services.  This week, we have taken major steps to ensure this by also signing the Multilateral Competent Authority Agreement  (MCAA), and by joining the inclusive framework on Base Erosion Profit Shifting (BEPS)".

December 19, 2017 in GATCA | Permalink | Comments (0)

Monday, December 18, 2017

OECD releases second round of peer reviews on implementation of BEPS minimum standards on improving tax dispute resolution mechanisms

As part of continuing efforts to improve the international tax framework and tax certainty, the OECD has released the second round of analyses of individual country efforts to improve dispute resolution mechanisms. These seven peer review reports represent the second round of stage 1 evaluations of how countries are implementing new minimum standards agreed in the OECD/G20 BEPS Project.

The reports relate to implementation by AustriaFrance (also available in French)GermanyItalyLiechtensteinLuxembourg (also available in French) and Sweden. A document addressing the implementation of best practices is also available on each jurisdiction that opted to have such best practices assessed. These seven reports include over 170 recommendations relating to the minimum standard. In stage 2 of the peer review process, each jurisdiction’s efforts to address any shortcomings identified in its stage 1 peer review report will be monitored.

These stage 1 peer review reports continue to represent an important step forward to turn the political commitments made by members of the Inclusive Framework on BEPS into measureable, tangible progress. The seven jurisdictions concerned are already working to address most deficiencies identified in their respective reports. The OECD will continue to publish stage 1 peer review reports in accordance with the Action 14 peer review assessment schedule.

December 18, 2017 in BEPS | Permalink | Comments (0)

Sunday, December 17, 2017

IRS Publishes New FATCA FAQs

The IRS published new QI/WP/WT FAQs. The FAQs can be found in the New Applications/Renewals (Q17, Q18 and Q19) and Certifications and Periodic Reviews (Q1 and Q2) subsections on the FATCA – FAQs General page.

Now in its 7th edition, this industry-leading 2,300-page analysis of the FATCA and CRS compliance challenges,  92 chapters by FATCA and CRS FATCAcontributing experts analyzing 35 FATCA and CRS topics and 57 countries’ regulations.  Besides in-depth, practical analysis, the 2018 edition includes examples, charts, timelines, links to source documents, and compliance analysis pursuant to the IGA and local regulations for many U.S. trading partners and financial centers.   Byrnes’ Guide to FATCA & CRS Compliance, designed from interviews with over 100 financial institutions and professional firms, is a primary reference source for financial institutions and service providers, advisors and government departments.  This treatise also includes in-depth analysis of designing a FATCA and CRS internal policy, designing an equivalent form to the W-8, reporting accounts, reporting payments, operational specificity of the mechanisms of information capture, validation for fit for purpose, data management, and exchange by firms and between countries, insights as to the application of FATCA, CRS, and the IGAs within BRIC, SEA and European country chapters.  This seventh edition provides the financial enterprise’s FATCA and CRS compliance officer the tools for developing and maintaining a best practices compliance strategy.  This book does not contain fluff such as page filling forms and regs (that are linked to instead)– it’s all analysis and compliance support materials! 

December 17, 2017 in GATCA | Permalink | Comments (0)

Saturday, December 16, 2017

Austria’s progress in strengthening measures to tackle money laundering and terrorist financing

As a result of Austria’s progress in strengthening its framework to tackle money laundering and terrorist financing since last year’s mutual evaluation, the FATF has re-rated the country on 10 of the 40 Recommendations.

Austria has been in an enhanced follow-up process, following the adoption of their mutual evaluation, which assessed the effectiveness of Austria’s anti-money laundering and counter-terrorist financing (AML/CFT) measures and their compliance with the FATF Recommendations. In line with the FATF Procedures for mutual evaluations, the country has reported back to the FATF on the progress it has made to strengthen its AML/CFT framework, in particular by improving national AML/CFT policy coordination and assessment of risk.

This report analyses Austria’s progress in addressing the technical compliance deficiencies identified in the mutual evaluation report. The report also looks at whether Austria has implemented new measures to meet the requirements of FATF Recommendations that have changed since their 2016 mutual evaluation.

To reflect this progress, the FATF has re-rated Austria on Recommendations: 1, 2, 9, 10, 12, 15, 16, 18, 22, and 29.

The FATF welcomes the steps that Austria has taken to improve its technical compliance with Recommendations 23 and 28; however, insufficient progress has been made to justify a re-rating of these Recommendations.

www.fatf-gafi.org/publications/mutualevaluations/documents/fur-austria-2017.html

Download the report at www.fatf-gafi.org/media/fatf/documents/reports/mer4/FUR-Austria-Dec-2017.pdf

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

Friday, December 15, 2017

Justice Department Announces Charges and Guilty Pleas in Three Computer Crime Cases Involving Significant DDoS Attacks

Defendants Responsible for Creating “Mirai” and Clickfraud Botnets, Infecting Hundreds of Thousands of IoT Devices with Malicious Software

The Justice Department announced today the guilty pleas in three cybercrime cases.  In the District of Alaska, defendants pleaded guilty to creating and operating two botnets, which targeted “Internet of Things” (IoT) devices, and in the District of New Jersey, one of the defendants also pleaded guilty to launching a cyber attack on the Rutgers University computer network.

On Dec. 8, Paras Jha, 21, of Fanwood, New Jersey; Josiah White, 20, of Washington, Pennsylvania; and Dalton Norman, 21, of Metairie, Louisiana, pleaded guilty to criminal Informations in the District of Alaska charging them each with conspiracy to violate the Computer Fraud & Abuse Act in operating the Mirai Botnet.  In the summer and fall of 2016, White, Jha, and Norman created a powerful botnet – a collection of computers infected with malicious software and controlled as a group without the knowledge or permission of the computers’ owners.  The Mirai Botnet targeted IoT devices – non-traditional computing devices that were connected to the Internet, including wireless cameras, routers, and digital video recorders.  The defendants attempted to discover both known and previously undisclosed vulnerabilities that allowed them to surreptitiously attain control over the victim devices for the purpose of forcing the devices to participate in the Mirai Botnet.  At its peak, Mirai consisted of hundreds of thousands of compromised devices.  The defendants used the botnet to conduct a number of powerful distributed denial-of-service, or “DDOS” attacks, which occur when multiple computers, acting in unison, flood the Internet connection of a targeted computer or computers.  The defendants’ involvement with the original Mirai variant ended in the fall of 2016, when Jha posted the source code for Mirai on a criminal forum. Since then, other criminal actors have used Mirai variants in a variety of other attacks.

On Dec. 8, Paras Jha and Dalton Norman also pleaded guilty to criminal Informations in the District of Alaska charging each with conspiracy to violate the Computer Fraud & Abuse Act.  From December 2016 to February 2017, the defendants successfully infected over 100,000 primarily U.S.-based computing devices, such as home Internet routers, with malicious software.  That malware caused the hijacked home Internet routers and other devices to form a powerful botnet.  The victim devices were used primarily in advertising fraud, including “clickfraud,” a type of Internet-based scheme that makes it appear that a real user has “clicked” on an advertisement for the purpose of artificially generating revenue.

On Dec. 13, Paras Jha pleaded guilty in the District of New Jersey to violating the Computer Fraud & Abuse Act.  Between November 2014 to September 2016, Jha executed a series of attacks on the networks of Rutgers University.  Jha’s attacks effectively shut down Rutgers University’s central authentication server, which maintained, among other things, the gateway portal through which staff, faculty, and students delivered assignments and assessments.  At times, Jha succeeded in taking the portal offline for multi-day periods, harming Rutgers University, its faculty, and its students.

“The Mirai and Clickfraud botnet schemes are powerful reminders that as we continue on a path of a more interconnected world, we must guard  against the threats posed by cybercriminals that can quickly weaponize technological developments to cause vast and varied types of harm,” said Acting Assistant Attorney General Cronan.  “The Criminal Division will remain constantly vigilant in combating these sophisticated schemes, prosecuting cybercriminals, and protecting the American people.”

“Our world has become increasingly digital, and increasingly complex,” said U.S. Attorney Schroder.  “Cybercriminals are not concerned with borders between states or nations, but should be on notice that they will be held accountable in Alaska when they victimize Alaskans in order to perpetrate criminal schemes.  The U.S. Attorney’s Office, along with our partners at the FBI and Department of Justice‘s Computer Crime and Intellectual Property Section (CCIPS), are committed to finding these criminals, interrupting their networks, and holding them accountable.”

“Paras Jha has admitted his responsibility for multiple hacks of the Rutgers University computer system,” said Acting U.S. Attorney Fitzpatrick. “These computer attacks shut down the server used for all communications among faculty, staff and students, including assignment of course work to students, and students’ submission of their work to professors to be graded.  The defendant’s actions effectively paralyzed the system for days at a time and maliciously disrupted the educational process for tens of thousands of Rutgers’ students. Today, the defendant has admitted his role in this criminal offense and will face the legal consequences for it.”

“These cases illustrate how the FBI works tirelessly against the actions of criminals who use malicious code to cause widespread damage and disruptions to the general population,” said FBI Assistant Director Smith. “The FBI is dedicated to working with its domestic and international partners to aggressively pursue these individuals and bring justice to the victims.”   

For additional information on cybersecurity best practices for IoT devices, please visit:  https://www.justice.gov/criminal-ccips/page/file/984001/download.

All three cases were investigated by the FBI’s Anchorage, Alaska and Newark, New Jersey Field Offices.  The Mirai Botnet and Clickfraud Botnet cases are being prosecuted by Assistant U.S. Attorney Adam Alexander of the District of Alaska and Trial Attorney C. Alden Pelker of the Computer Crime and Intellectual Property Section of the Criminal Division.  The Rutgers University case is being prosecuted by Assistant U.S. Attorney Shana Chen of the District of New Jersey.  Additional assistance was provided by the FBI’s New Orleans and Pittsburgh Field Offices, the U.S. Attorney’s Office for the Eastern District of Louisiana, the United Kingdom’s National Crime Agency, the French General Directorate for Internal Security, the National Cyber-Forensics & Training Alliance, Palo Alto Networks Unit 42, Google, Cloudflare, Coinbase, Flashpoint, Yahoo and Akamai.  Former Department of Justice prosecutors Ethan Arenson, Harold Chun, and Yvonne Lamoureux provided invaluable support during their previous tenure at DOJ.

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

Thursday, December 14, 2017

Department of Justice Recovers Millions in Criminal Proceeds Via a First Time Forfeited Asset Sharing by Guernsey Officials

United States prosecutors and investigators are recovering more than $14 million linked to two U.S. criminal cases, in which the money was laundered via Guernsey, thanks to a first-time ever sharing of forfeited assets by Guernsey officials.  Guernsey is a significant offshore financial center located in the English Channel near the coast of France.

“The United States and Guernsey have a valued and close law enforcement relationship, and this first-ever asset sharing from Guernsey to the United States is the latest outward sign AML book of our strong ties,” said John P. Cronan, Acting Assistant Attorney General for the Department of Justice’s Criminal Division.  “Today’s announcement sends a strong message that the Department of Justice and our counterparts in Guernsey will not rest until defendants are brought to justice and denied the illicit proceeds of their crimes.” 

Guernsey Attorney General Megan M.E. Pullum, Q.C., and Guernsey Solicitor General Robert M. Titterington, Q.C., announced their commitment to transfer the funds to the United States under a bilateral asset sharing agreement that entered into force between Guernsey and the United States in February 2015.  Their announcement came during a meeting with U.S. officials at the Department of Justice’s headquarters today.

The $14.3 million to be shared from Guernsey represents one half of the net proceeds recovered in that jurisdiction that stem from the two U.S. criminal cases, which are discussed below.  Guernsey will retain an equal amount.  

Most of the funds being transferred from Guernsey – more than $12.77 million – stem from Guernsey’s cooperation in connection with the prosecution of defendant Raymond Bitar and his associates by the United States Attorney for the Southern District of New York.  In April 2013, Bitar pleaded guilty to unlawful internet gambling and conspiracy to commit bank fraud and wire fraud.  He admitted to defrauding customers of his Full Tilt Poker operation by lying to them about the security of their funds held by Full Tilt Poker, and by falsely promising players that their funds would be protected in segregated accounts.  Instead, Bitar and his accomplices used players’ funds for whatever purposes that Bitar directed, including to pay him and others millions of dollars and to cover the operating expenses of Full Tilt Poker.  Ultimately, Full Tilt collapsed and was unable to pay players approximately $350 million that it owed to them. In connection with his plea and sentencing, Bitar agreed to forfeit $40 million dollars in money and other property derived from his offenses, including the funds he maintained in Guernsey.  

The United States Marshals Service expended significant work on the post-conviction tracing, recovery, and liquidation of the criminal assets of Bitar and his associates, both domestically and internationally.  Between November 2012 and June 2015, the Justice Department’s Office of International Affairs sent a series of three Mutual Legal Assistance requests to the Guernsey authorities seeking their assistance with the tracing, restraint, forfeiture and recovery of the proceeds that had been laundered to Guernsey. In response to those requests, the Guernsey authorities used domestic proceedings to block the Bitar accounts, provided bank records that facilitated the U.S. investigation and forfeiture, and ultimately gave effect to the final U.S. judgment of forfeiture and liquidated the accounts.  

The remaining funds to be shared by Guernsey – more than $1.56 million – stemmed from the prosecution of defendant Paul Hindelang and his associates by the United States Attorney for the Southern District of Florida.  Hindelang was large-scale importer of Colombian marijuana into the United States during the 1970s and 1980s.  Similar to the Bitar case, Guernsey’s assistance in connection with the Hindelang case ultimately included the registration and enforcement of a U.S. judgment of forfeiture against assets that were laundered to Guernsey and the liquidation of those assets. 

This is the second time assets have been shared pursuant to a 2015 asset sharing agreement between the United States and Guernsey.  In 2016, the Department of the Treasury shared more than $2 million with Guernsey in 2016.  Guernsey has long been a reliable partner with the United States in the areas of anti-money laundering and forfeiture cooperation.

Representatives from the United States Marshals Service, Homeland Security Investigations, and the Office of International Affairs, who provided substantial assistance in this matter, also were on hand for the asset sharing announcement.

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

Wednesday, December 13, 2017

SBM Offshore N.V. And United States-Based Subsidiary Resolve Foreign Corrupt Practices Act Case Involving Bribes in Five Countries

SBM Offshore N.V. (SBM), a Netherlands-based company specializing in the manufacture and design of offshore oil drilling equipment, and its wholly owned U.S. subsidiary, SBM Offshore USA Inc. (SBM USA), have agreed to resolve criminal charges and pay a criminal penalty of $238 million in connection with schemes involving the bribery of foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq in violation of the Foreign Corrupt Practices Act (FCPA).  SBM USA pleaded guilty in connection with the resolution.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Acting U.S. Attorney Abe Martinez of the Southern District of Texas and Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) Houston Field Office made the announcement. 

“This corrupt scheme involved some of the highest-level executives within the company, spanned five countries, and lasted for more than a decade,” said Acting Assistant Attorney General Cronan.  “The resolution announced today demonstrates the Criminal Division’s continuing commitment to work closely with our foreign partners to hold both companies and individuals accountable for their actions as we continue to level the playing field for ethical and honest businesses to compete in the marketplace.”

“Deterring corporate crime requires enforcing the law on multiple fronts,” said Acting U.S. Attorney Martinez.  “These cases involve both individual and corporate misconduct, which the guilty pleas reflect. We will continue to aggressively investigate and prosecute individuals and corporations who violate the FCPA and those who misuse our financial system to do so.”

“This case exemplifies how HSI works diligently with our foreign law enforcement partners to promote and protect international trade practices, ensuring a fair and equal playing field for U.S. companies and consumers,” said HSI Special Agent in Charge Dawson. 

SBM entered into a deferred prosecution agreement in connection with a criminal information filed today in the Southern District of Texas charging the company with conspiracy to violate the anti-bribery provisions of the FCPA.  The case is assigned to U.S. District Judge David Hittner.  In addition, SBM USA pleaded guilty and was sentenced by Judge Hittner 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, SBM agreed to pay a total criminal penalty of $238 million to the United States, including a $500,000 criminal fine and $13.2 million in criminal forfeiture that SBM agreed to pay on behalf of SBM USA.

According to the companies’ admissions and court documents, beginning by at least 1996 and continuing until at least 2012, SBM conspired to violate the FCPA by paying more than $180 million in commissions to intermediaries, knowing that a portion of those commissions would be used to bribe foreign officials in Brazil, Angola, Equatorial Guinea, Kazakhstan and Iraq.  SBM made these payments in order to influence those officials, for the purpose of securing improper advantages and obtaining or retaining business with state-owned oil companies in the five named countries.  SBM acknowledged that it gained at least $2.8 billion from projects it obtained from these state-owned oil companies.

The Justice Department resolution follows guilty pleas by two former SBM executives.  On Nov. 9, Anthony Mace, the former CEO of SBM and a former member of the board of directors of SBM USA, pleaded guilty to one count of conspiracy to violate the FCPA.  On Nov. 6, Robert Zubiate, a former SBM USA executive, pleaded guilty to one count of conspiracy to violate the FCPA.  Mace and Zubiate are awaiting sentencing.

In 2014, SBM settled with the Dutch Public Prosecutor’s Office (Openbaar Ministerie) over related conduct and paid the Netherlands a total $200 million in disgorged profits and a $40 million fine.  SBM has paid a combined worldwide total in criminal penalties in excess of $475 million.          

The Department reached this resolution based on a number of factors, including the fact that while SBM brought the conduct to the attention of the Criminal Division’s Fraud Section and Dutch authorities, it did not provide a complete disclosure for approximately one year; that SBM did cooperate with the Department’s investigation, including an accelerated investigation into bribery conduct related to Kazakhstan and Iraq; and that SBM has undertaken significant remedial measures, including terminating and demoting employees who were involved in the criminal conduct, terminating longstanding agency agreements and implementing a new and enhanced system of internal controls to address and mitigate corruption and compliance risks.  Therefore, SBM was entitled to a 25 percent reduction off of the bottom of the U.S. Sentencing Guidelines range.  In addition, the Department considered SBM’s inability to pay a fine. 

In calculating its fine, the Department credited SBM’s payment of penalties to the Openbaar Ministerie and the payment of penalties likely to be paid to the Brazilian Ministério Público Federal (MPF).

The Department of Justice is grateful to Brazil’s MPF, the Netherlands’ Dutch Public Prosecutor’s Office (Openbaar Ministerie) and Switzerland’s Office of the Attorney General and Federal Office of Justice for providing substantial assistance in gathering evidence during this investigation.

ICE-HSI investigated the case.  Trial Attorney Dennis R. Kihm and Assistant Chief Tarek Helou of the Fraud Section and Assistant U.S. Attorney Suzanne Elmilady of the Southern District of Texas are prosecuting the case.  The Criminal Division’s Office of International Affairs also provided substantial assistance in this matter.  The FBI’s International Corruption Squad and the Internal Revenue Service’s Criminal Investigation Division assisted with portions of the investigation of this case.

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

U.S. INTERNATIONAL TRADE IN GOODS AND SERVICES October 2017

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced that the goods and services deficit was $48.7 billion in October, up $3.8 billion from $44.9 billion in September, revised. October exports were $195.9 billion, down less than $0.1 billion from September exports. October imports were $244.6 billion, $3.8 billion more than September imports.

The October increase in the goods and services deficit reflected an increase in the goods deficit of $3.8 billion to $69.1 billion and a decrease in the services surplus of less than $0.1 billion to $20.3 billion.

Year-to-date, the goods and services deficit increased $49.1 billion, or 11.9 percent, from the same period in 2016. Exports increased $97.5 billion or 5.3 percent. Imports increased $146.6 billion or 6.5 percent.

Goods and Services Three-Month Moving Averages (Exhibit 2)

The average goods and services deficit increased $1.2 billion to $46.0 billion for the three months ending in October.
* Average exports of goods and services increased $0.8 billion to $195.2 billion in October.
* Average imports of goods and services increased $2.0 billion to $241.2 billion in October.

Year-over-year, the average goods and services deficit increased $5.1 billion from the three months ending in October 2016.
* Average exports of goods and services increased $8.2 billion from October 2016.
* Average imports of goods and services increased $13.2 billion from October 2016.

Exports (Exhibits 3, 6, and 7)

Exports of goods decreased $0.3 billion to $130.3 billion in October.
Exports of goods on a Census basis decreased $0.5 billion.
* Foods, feeds, and beverages decreased $1.3 billion.
o Soybeans decreased $1.4 billion.
* Capital goods decreased $1.2 billion.
o Civilian aircraft decreased $1.1 billion.
* Industrial supplies and materials increased $2.6 billion.
Net balance of payments adjustments increased $0.2 billion.

Exports of services increased $0.3 billion to $65.6 billion in October.
* Financial services increased $0.1 billion.
* Other business services, which includes research and development services; professional and management services; and technical, trade-related, and other services, increased $0.1 billion.

Imports (Exhibits 4, 6, and 8)

Imports of goods increased $3.5 billion to $199.4 billion in October.
Imports of goods on a Census basis increased $3.5 billion.
* Industrial supplies and materials increased $1.8 billion.
o Crude oil increased $1.5 billion.
* Other goods increased $1.1 billion.
* Consumer goods increased $0.8 billion.
o Cell phones and other household goods increased $0.3 billion.
Net balance of payments adjustments decreased less than $0.1 billion.

Imports of services increased $0.3 billion to $45.2 billion in October.
* Transport increased $0.3 billion.

Real Goods in 2009 Dollars – Census Basis (Exhibit 11)

The real goods deficit increased $3.1 billion to $65.3 billion in October.
* Real exports of goods decreased $0.3 billion to $125.7 billion.
* Real imports of goods increased $2.9 billion to $191.0 billion.

Revisions

Exports and imports of goods and services were revised for April through September 2017 to incorporate more comprehensive and updated quarterly and monthly data.

Revisions to September exports
* Exports of goods were revised up $0.1 billion.
* Exports of services were revised down $0.9 billion.
Revisions to September imports
* Imports of goods were revised down $0.1 billion.
* Imports of services were revised up $0.6 billion.

Goods by Selected Countries and Areas: Monthly – Census Basis (Exhibit 19)

The October figures show surpluses, in billions of dollars, with South and Central America ($3.9), Hong Kong ($2.3), Brazil ($1.1), Singapore ($0.7), Saudi Arabia ($0.3), and United Kingdom ($0.2). Deficits were recorded, in billions of dollars, with China ($31.9), European Union ($12.0), Mexico ($6.0), Japan ($5.9), Germany ($5.3), Italy ($2.7), South Korea ($2.7), India ($2.1), Canada ($1.9), OPEC ($1.6), France ($1.6), and Taiwan ($1.6).

  • The balance with members of OPEC shifted from a surplus of $0.6 billion to a deficit of $1.6 billion in October. Exports decreased $0.9 billion to $4.3 billion and imports increased $1.3 billion to $5.9 billion.
  • * The deficit with China increased $2.1 billion to $31.9 billion in October. Exports decreased $0.8 billion to $10.6 billion and imports increased $1.2 billion to $42.5 billion.
    * The deficit with the European Union decreased $2.5 billion to $12.0 billion in October.
    Exports increased $1.4 billion to $25.0 billion and imports decreased $1.1 billion to $37.0
    billion.

Goods and Services by Selected Countries and Areas: Quarterly – Balance of Payments Basis (Exhibit 20)

The third quarter figures show surpluses, in billions of dollars, with South and Central America ($18.3), Hong Kong ($8.4), Brazil ($7.1), Singapore ($5.0), OPEC ($4.9), Canada ($4.3), United Kingdom ($3.7), and Saudi Arabia ($3.5). Deficits were recorded, in billions of dollars, with China ($81.9), European Union ($25.5), Germany ($17.2), Mexico ($15.9), Japan ($14.6), Italy ($8.7), India ($7.4), Taiwan ($4.2), South Korea ($3.5), and France ($3.2).

  • The balance with Canada shifted from a deficit of $0.7 billion to a surplus of $4.3 billion in the third quarter. Exports increased $1.0 billion to $85.5 billion and imports decreased $4.0 billion to $81.2 billion.
  • The deficit with Mexico decreased $2.6 billion to $15.9 billion in the third quarter. Exports increased $1.3 billion to $69.2 billion and imports decreased $1.3 billion to $85.2 billion.
  • The deficit with South Korea increased $2.2 billion to $3.5 billion in the third quarter. Exports decreased $1.5 billion to $17.3 billion and imports increased $0.7 billion to $20.8
    billion.

December 13, 2017 in Economics | Permalink | Comments (0)

Tuesday, December 12, 2017

Former Procurement Officer at Federally Funded Nuclear Research and Development Facility Pleads Guilty to Wire Fraud and Money Laundering

A former procurement officer employed at Sandia Corporation, the prime operator of a federally funded nuclear research and development facility, pleaded guilty to charges of wire fraud and money laundering for orchestrating a scheme to obtain approximately $2.3 million in federal funds through fraudulent means and for laundering fraudulently obtained proceeds through her father’s companies.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division made the announcement.

Carla Sena, 55, of Santa Rosa, New Mexico, pleaded guilty to one count of wire fraud and one count of money laundering before U.S. District Chief Judge M. Christina Armijo in the District of New Mexico.  Sentencing will be scheduled at a later date before Judge Armijo.

According to the plea documents, Sena’s employer, Sandia Corporation, managed and operated Sandia National Laboratories (SNL), a nuclear research and development facility owned by the federal government under sponsorship of the U.S. Department of Energy (DOE).  In late 2010, Sena managed the bidding process for the award of a multi-million-dollar contract for moving services at SNL.  Sena admitted that, in anticipation of the bidding process for this contract, she created the company, New Mexico Express Movers LLC (Movers LLC), to which she awarded the multi-million-dollar contract.  Sena prepared a bid on Movers LLC’s behalf containing fraudulent misrepresentations, and submitted the bid under the name of an individual who had no knowledge of Movers LLC to conceal her involvement.    Sena also admitted that she used her position of trust to access inside information and competing bidders’ documents that she leveraged to ensure award of the contract to Movers LLC. 

As a direct result of Sena’s fraudulent scheme, Movers LLC received approximately $2.3 million in federal funds between May 2011 and April 2016.  Sena also admitted that, between October 2011 and April 2015, she transferred via negotiated checks at least $643,000 of the fraudulently obtained proceeds to legitimate businesses owned by her father with the intent to conceal the source and control of those funds and her subsequent personal gain from the proceeds.

December 12, 2017 in AML | Permalink | Comments (0)

Monday, December 11, 2017

More Than $16 Million Awarded to Two Whistleblowers

The Securities and Exchange Commission today announced awards of more than $8 million each to two whistleblowers whose critical information and continuing assistance helped the agency bring the successful underlying enforcement action.

With this case, SEC enforcement actions involving whistleblower awards have now resulted in more than $1 billion in financial remedies ordered against wrongdoers. SEC

The first whistleblower alerted SEC enforcement staff of the particular misconduct that would become the focus of the staff’s investigation and the cornerstone of the agency’s subsequent enforcement action.  The second whistleblower provided additional significant information and ongoing cooperation to the staff during the investigation that saved a substantial amount of time and agency resources.   

“Whistleblowers have played a crucial role in the progression of many investigations and the success of enforcement actions since the inception of the whistleblower program,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “The value of whistleblowers can be seen in the more than $1 billion in financial remedies ordered against wrongdoers based on actionable information from whistleblowers, including more than $671 million in disgorgement of ill-gotten gains, much of which has been or is scheduled to be returned to harmed investors.” 

The SEC’s whistleblower program has now awarded more than $175 million to 49 whistleblowers since issuing its first award in 2012.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. 

Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million. 

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

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

Sunday, December 10, 2017

Former Company Insider Earns More Than $4.1 Million for Whistleblower Tip

The Securities and Exchange Commission announced an award of more than $4.1 million to a former company insider who alerted the agency to a widespread, multi-year securities law SEC logoviolation and continued to provide important information and assistance throughout the SEC’s investigation.  The whistleblower is the third awarded by the SEC in the past week.  

“Company insiders often have valuable information that can help the SEC halt an ongoing securities law violation and better protect investors,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “The breadth of the SEC’s whistleblower program is demonstrated by this case, where the whistleblower, a foreign national working outside of the United States, affirmatively stepped forward to shine a light on the wrongdoing.”  

The SEC’s whistleblower program has now awarded more than $179 million to 50 whistleblowers since issuing its first award in 2012.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. 

Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.  Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million. 

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

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

Saturday, December 9, 2017

Former Bank Executive Charged for Role in $15 Million Bank Loan Scheme

A former Kansas bank executive was charged in an indictment filed today for his participation in a bank fraud scheme to obtain a $15 million construction loan from 26 Kansas banks based on allegedly false information contained in the loan documents.

Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, Special Agent in Charge David Anderson of the Federal Deposit Insurance Corporation Office of Inspector General’s (FDIC-OIG) Kansas City Regional Office, Special Agent in Charge Karl A. Stiften of the Internal Revenue Service Criminal Investigation’s (IRS-CI) St. Louis Field Office, Special Agent in Charge Darrin E. Jones of the FBI’s Kansas City Field Office and Special Agent in Charge Catherine Huber of the Federal Housing Finance Agency Office of Inspector General’s (FHFA-OIG) Central Region Office made the announcement.

Troy A. Gregory, 50, of Lawrence, Kansas, was charged in an indictment filed in the District of Kansas with one count of conspiracy to commit bank fraud, four counts of bank fraud, and two counts of false statements.  

According to the indictment, Gregory was a bank executive and loan officer who had made millions of dollars in loans to a group of borrowers who were struggling to make payments on the loans.  The indictment alleges that beginning in approximately late 2007, Gregory began the process of making a $15.2 million construction loan to build an apartment complex to that same group of borrowers.  The indictment further alleges that Gregory’s bank shared this loan with 25 other Kansas banks.  Gregory allegedly made or caused others to make false statements to the banks about the strength of the borrowers, the debt status of the apartment property and the existence of approximately $1.7 million in certificates of deposit for collateral on the loan, all to get the loan approved.  Instead of using the loan funds promised for building the apartments, Gregory allegedly immediately diverted over $1 million of the loan to pay for part of the certificates of deposit pledged as collateral, pay off debt on the apartment property and make payments on unrelated loans.  Other Kansas banks that shared in this loan allegedly would not have participated in the loan without the false representations and promises.

The indictment alleges that the banks ultimately wrote off millions of dollars on the $15.2 million construction loan.

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

The FDIC-OIG, IRS-CI, FBI and FHFA-OIG are investigating this matter.  Trial Attorney Andrew R. Tyler and Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country, focusing on cases of national significance and international scope.  Fraud Section prosecutors have vast experience in investigating and prosecuting securities and financial fraud, health care fraud and foreign corruption.  The Section is routinely the national leader in large, sophisticated white collar investigations and prosecutions, frequently in partnership with U.S. Attorneys’ Offices and in coordination with foreign law enforcement agencies.

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

Friday, December 8, 2017

Attorney General Sessions Delivers Remarks at the World Bank Global Forum on Asset Recovery

On behalf of President Trump, I want to thank Baroness Williams and the U.K. delegation.  The United States is proud to co-host the forum with you.  We are proud to call attention to the important work that’s been done – and the important work that lies ahead – in our shared fight against crime.  I also want to recognize our distinguished guests from the four focus countries and from our partners in Brazil and Switzerland.  Thank you to the World Bank, the United Nations Office on Drugs and Crime, and everyone else who helped organize this inaugural Global Forum on Asset Recovery.  It is an honor to open the forum today.  I think this is a unique opportunity to bring together investigators, prosecutors, judges, policy-makers and civil society organizations so that we can learn from one another and build relationships.  And that is critically important to us all.

Year by year and day by day, our economies have become increasingly interconnected.  And just as our economies have gone global, so too have the consequences of criminal activity. Criminals are not bound by borders.

Bribes paid to an official in West Africa can be spent on a yacht in Miami.  Dangerous drugs produced in Afghanistan or Colombia can kill a teenager in Cincinnati or Sydney.

A social media post in Syria can inspire a terrorist attack in Europe.  A criminal from Mexico can victimize innocent people in Portland or San Francisco.

In the United States, we know all too well that the consequences of crime can be international.

People across America today are talking about the tragic death of Kate Steinle, a 32-year old woman who was shot in the back walking along a pier in San Francisco.  The man holding the gun had illegally entered the United States six times.

He admitted that he was in San Francisco because the city does not cooperate with immigration enforcement.  He illegally entered 5 times and was charged 10 crimes.

He should not have been in the country in the first place.  Kate Steinle would be alive today if our government had carried out its duties to enforce the law and protect its citizens.

Each one of us—whether we are prosecutors, judges, or legislators—have a responsibility to pursue the common good for the people we serve.  And while each of us has limited jurisdiction, we must recognize that the consequences of our actions can be felt around the world.

You can be sure of this: the United States will do our part.  And we urge every government to do their part, as well.

Over the next few minutes, I’d like to discuss a few of the ways the United States is cooperating with our law enforcement partners across the globe and achieving successes that benefit all of us.

First of all, we have seized or restrained $3.5 billion worth of corruption proceeds involved in money laundering offenses.

Since 2004, the United States has returned millions in corruption proceeds to compensate victims.

That includes approximately $119 million to the people of Italy, $115 million to the people of Kazakhstan, more than $20 million to the people of Peru, and millions more to the people of Nicaragua, South Korea, and Taiwan.

That recovery has only been possible because of cooperation with our foreign law enforcement partners.

You may be familiar with some of these cases.  For example, nearly half of the $3.5 billion in corruption proceeds we have restrained is related to just one enforcement action.

That action was related to a Malaysian sovereign wealth fund known as 1MDB.  1MDB was created by the Malaysian government to promote long-term economic development for the benefit of the Malaysian people.

But allegedly corrupt officials and their associates reportedly used the funds for a lavish spending spree: $200 million for real estate in Southern California and New York.  $130 million in artwork.  $100 million in an American music label.  Not to mention a $265 million yacht.

In total, 1MDB officials allegedly laundered more than $4.5 billion in funds through a complex web of opaque transactions and fraudulent shell companies with bank accounts in countries ranging from Switzerland and Singapore to Luxembourg and the United States.  This is kleptocracy at its worst.

Today, the U.S. Department of Justice is working to provide justice to the victims of this alleged scheme.

As a prosecutor for 14 years, I know firsthand that the best evidence is often simple things like bank records, airplane records, and telephone records.

If they’re not properly shared between nations, then, in many cases, justice cannot be done.  It is essential that we continue to improve that kind of sharing.

That’s why we must all do more to expedite mutual legal assistance requests.  These requests ensure that prosecutors have the evidence that they need to bring criminals to justice.

In response to the increasing volume and complexity of legal assistance requests, the Department of Justice has taken two actions that are critically important.

First, we have increased staffing levels at the Department’s Office of International Affairs, or OIA.  Second, OIA has created two new units dedicated to reviewing and executing foreign requests.  As a result, OIA has significantly reduced its backlog by thousands of cases, despite receiving 16 percent more requests in fiscal 2016 than in fiscal 2015.

These are important steps.  But we can and must do more to help one another.

I challenge all of you to devote more resources to quickly and effectively reducing your backlog too.  You know how serious these cases can be.  There is no time to waste.  We will do our part for you, but we need to work together.

The Department is also working towards the implementation of a framework with some of our closest allies that would supplement the MLAT process and reduce potential conflicts of law regarding the disclosure of electronic evidence.  That kind of framework would enhance public safety efforts in the U.S. and around the world.

In order for this type of framework to function, however, we need to ensure that our warrants continue to be effective even when an American company chooses to store customer data outside of the United States.

When we have access to the right evidence, we get results.

Earlier this year, we worked with foreign authorities to arrest the alleged creator of the Kelihos botnet. Over several years, this network was used to steal login credentials, distribute hundreds of millions of spam e-mails, and install ransomware and other malicious software across the globe.

That pernicious network of tens of thousands of infected computers has now been dismantled.

This summer, with the help of eight of our allies, we dismantled the largest darknet market, AlphaBay.  It operated for more than two years and was used to sell a host of illicit items, including deadly illegal drugs and firearms.

At one time, more than 40,000 vendors offered contraband for sale, and drugs sold on the site have been linked to overdose deaths around the country.  Now this site has been taken down.

The Justice Department has also indicted foreign cyber criminals who have broken into systems in the United States looking to steal ideas that make our nation strong and competitive in the global marketplace.  One of the cases we are prosecuting involved the theft of technology that allegedly caused $800 million in losses.  That is more than ten times the largest bank robbery.

Intellectual property theft is so important today that G-20 leaders have agreed that no country should steal trade secrets or other confidential business information in order to advantage its companies or commercial sectors.  The Department of Justice is committed to bringing those responsible for intellectual property-related crimes to justice.

The United States has too often been a victim, and we intend to fight these crimes vigorously.

All of us need to do a better job of properly evaluating extradition requests, and it is unacceptable for nations to flatly refuse to extradite individuals who have committed crimes in another country.  The United States seeks to participate in economic activity worldwide.

We believe we have a strong record of fairly and professionally prosecuting global criminal activity and we will work hard to assist our global partners in their efforts to crack down on fraud and abuse.  But we will insist on cooperation from our global partners.

Many of the countries in this room have honored our extradition requests, allowing fugitives to undergo the judicial process in the United States.  I want to thank you for that. We are also working with you and plan to do so faster and more effectively in the future.

Cooperation works—and at the Department of Justice, we know that firsthand.

Thank you all for your ongoing efforts against crime. We fully respect the importance of borders. Indeed, borders are an essential component of sovereignty, but if we work together- respectful of each other’s rights- we can far more effectively stop transnational criminals.

And we must do so.  I look forward to our work together—and to many more successes in the future.

December 8, 2017 in AML | Permalink | Comments (0)

Thursday, December 7, 2017

Immigration Attorney Pleads Guilty to Fraud Scheme and Identity Theft in Relation to Visa Applications

An Indianapolis, Indiana immigration attorney pleaded guilty today for defrauding the U.S. Citizenship and Immigration Services (USCIS) and more than 250 of his clients by filing false visa applications and reaping approximately $750,000 in fraudulent fees.

Attorney General Jeff Sessions, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division and Special Agent in Charge James M. Gibbons of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) in Chicago made the announcement.

Indianapolis immigration attorney Joel Paul, 45, of Fishers, Indiana pleaded guilty before U.S. District Judge Jane E. Magnus-Stinson of the Southern District of Indiana to an information charging him with one count each of mail fraud, immigration document fraud, and aggravated identity theft in connection with a scheme to submit fraudulent U-visa applications.  Sentencing will be scheduled before Judge Magnus-Stinson in early 2018.

 "Individuals who commit immigration fraud undermine and abuse our generous immigration system—a system that lawfully admits more immigrants than any other country in the world—and put our public safety and national security at risk,” said Attorney General Sessions.  “President Trump promised voters he would return this country to a lawful system of immigration, and this Justice Department is committed to fulfilling that promise by rooting out fraud and abuse. We will not tolerate fraud at any level, and will bring those who engage in fraud to justice.”

According to the plea agreement, Paul admitted that from 2013 to 2017, he submitted more than 250 false Applications for Advance Permission to Enter as a Nonimmigrant on behalf of his clients and without their knowledge.  Those applications falsely asserted that Paul’s clients had been victims of a crime and had provided substantial assistance to law enforcement in investigating the crime.  With approximately 200 of the false applications, Paul submitted unauthorized copies of a certification he had obtained from the U.S. Attorney’s Office (USAO) for the Southern District of Indiana in 2013, using the certification without the USAO’s knowledge to falsely claim that the applicant had provided substantial assistance in a criminal prosecution.  In total, Paul charged his clients approximately $3,000 per application.

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