Saturday, March 7, 2020
Federal Jury Convicts Founder and Chairman of a Multinational Investment Company and a Company Consultant of Public Corruption and Bribery Charges
A federal jury sitting in Charlotte, North Carolina, has convicted the founder and chairman of a multinational investment company and a company consultant of public corruption and bribery charges, for orchestrating a bribery scheme involving independent expenditure accounts and improper campaign contributions.
Greg E. Lindberg, 49, of Durham, North Carolina, the founder and chairman of Eli Global LLC (Eli Global) and the owner of Global Bankers Insurance Group (GBIG), and Lindberg’s consultant, John D. Gray, 69, of Chapel Hill, North Carolina, were convicted of conspiracy to commit honest services wire fraud and bribery concerning programs receiving federal funds after an approximately three-week trial. A third co-defendant, Eli Global executive John V. Palermo, 64, of Pittsboro, North Carolina, was acquitted by the jury. A fourth co-defendant, Robert Cannon Hayes, 74, of Concord, North Carolina, previously pleaded guilty to making false statements to the FBI.
“Greg Lindberg and John Gray undermined public confidence in our government by promising millions of dollars in campaign contributions in exchange for government decisions to benefit Lindberg’s business interests,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The department is grateful for the assistance of the law-abiding public officials who reported the attempted bribes in this case, which allowed us to use all the tools at our disposal to investigate and root out this pernicious and greedy effort to corrupt North Carolina state government.”
“The defendants devised an elaborate plan to make a hefty campaign contribution to an elected official to secure favorable action. This was not a lapse in judgment. It was a deliberate bribery attempt and a clear violation of federal law,” said U.S. Attorney Andrew Murray for the Western District of North Carolina. “Public corruption is a threat to our way of life and if left unchecked it can tear apart the very fabric of our country. My office will continue to diligently ferret out public corruption schemes to protect the public and hold bad actors like these unscrupulous defendants accountable.”
“Greg Lindberg and John Gray plowed across the line from legal political donations to felonious bribery,” said Special Agent in Charge John Strong of the FBI’s Charlotte Field Office. “These men thought they could buy changes to North Carolina Department of Insurance personnel, policies, and procedures to benefit Lindberg's businesses. The FBI will work tirelessly to root out any and all forms of public corruption.”
According to filed court documents, witness testimony and evidence presented at trial, in January 2018, the elected Commissioner of Insurance (Commissioner) of the North Carolina Department of Insurance (NCDOI) reported concerns to the FBI about political contributions and other requests made by Lindberg and Gray, and agreed to cooperate with the federal investigation that was initiated.
The evidence established that from April 2017 to August 2018, Lindberg, Gray and Hayes engaged in a bribery scheme involving independent expenditure accounts and improper campaign contributions for the purpose of causing the Commissioner to take official action favorable to Lindberg’s company, GBIG. Trial evidence further established that Lindberg and Gray gave, offered, and promised the Commissioner millions of dollars in campaign contributions and other things of value, in exchange for the removal of NCDOI’s Senior Deputy Commissioner, who was responsible for overseeing regulation and the periodic examination of GBIG.
According to trial evidence, Lindberg, Gray and the Commissioner held numerous in-person meetings at different locations, including in Statesville, North Carolina, and had telephonic and other communications with each other, and with Hayes, to discuss Lindberg’s request for the personnel change in exchange for millions of dollars, and to devise a plan on how to funnel campaign contributions to the Commissioner anonymously. In order to conceal the bribery scheme, at the direction of Lindberg, two corporate entities were set-up to form an independent expenditure committee with the purpose of supporting the Commissioner’s re-election campaign, and Lindberg funded the entities with $1.5 million as promised to the Commissioner. In addition, at Lindberg and Gray’s direction, Hayes caused the transfer of $250,000 from monies Lindberg had previously contributed to a North Carolina state party of which Hayes was chairman, to the Commissioner’s re-election campaign.
According to admissions Hayes made in connection with his guilty plea, on or about Aug. 28, 2018, Hayes falsely stated to FBI agents that he had never spoken with the NCDOI Commissioner about personnel or personnel problems at NCDOI, or about Lindberg or Gray. Hayes further admitted that, at the time he made the materially false statements, Hayes knew that it was unlawful to lie to the FBI, and knew that his statements were false because Hayes had in fact spoken with the NCDOI Commissioner about Lindberg and Gray, and about Lindberg’s request that the Commissioner move certain personnel within NCDOI.
Friday, March 6, 2020
Two Chinese Nationals Charged with Laundering Over $100 Million in Cryptocurrency From Exchange Hack
Two Chinese nationals were charged with laundering over $100 million worth of cryptocurrency from a hack of a cryptocurrency exchange. The funds were stolen by North Korean actors in 2018.
In the two-count indictment unsealed today in the District of Columbia, 田寅寅 aka Tian Yinyin, and 李家东aka Li Jiadong, were charged with money laundering conspiracy and operating an unlicensed money transmitting business.
“These defendants allegedly laundered over a hundred million dollars worth of stolen cryptocurrency to obscure transactions for the benefit of actors based in North Korea,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “Today's actions underscore that the Department will pierce the veil of anonymity provided by cryptocurrencies to hold criminals accountable, no matter where they are located.”
“Today, we are publicly exposing a criminal network’s valuable support to North Korea’s cyber heist program and seizing the fruits of its crimes,” said Assistant Attorney General John C. Demers of the Justice Department’s National Security Division. “This case exemplifies the commitment of the United States government to work with foreign partners and the worldwide financial services industry to disrupt this blended threat.”
“The hacking of virtual currency exchanges and related money laundering for the benefit of North Korean actors poses a grave threat to the security and integrity of the global financial system,” said U.S. Attorney Timothy J. Shea of the District of Columbia. “These charges should serve as a reminder that law enforcement, through its partnerships and collaboration, will uncover illegal activity here and abroad, and charge those responsible for unlawful acts and seize illicit funds even when in the form of virtual currency.”
“North Korea continues to attack the growing worldwide ecosystem of virtual currency as a means to bypass the sanctions imposed on it by the United States and the United Nations Security Council. IRS-CI is committed to combatting the means and methods used by foreign and domestic adversaries to finance operations and activities that pose a threat to U.S. national security,” said Internal Revenue Service-Criminal Investigation (IRS-CI) Chief Don Fort. “We will continue to push our agency to the forefront of complex cyber investigations and work collaboratively with our law enforcement partners to ensure these nefarious criminals are stopped and that the integrity of the United States financial system is preserved.”
“The FBI will continue to actively work with our domestic and international law enforcement partners to identify and mitigate illicit movement of currency,” said Assistant Director Calvin Shivers of the FBI’s Criminal Investigative Division. “Today’s indictment and sanctions send a strong message that the United States will not relent in holding accountable bad actors attempting to evade sanctions and undermine our financial system.”
“This case shows how important robust partnerships across the U.S. Government are in disrupting criminal actors,” said Acting Assistant Director Robert Wells of the FBI’s Counterintelligence Division.
“This indictment shows what can be accomplished when international law enforcement agencies work together to uncover complex cross-border crimes,” said Acting Executive Associate Director Alysa Erichs of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI). “HSI is committed to upholding the rule of law and investigating those that would steal cryptocurrency for their illicit purposes.”
According to the pleadings, in 2018, North Korean co-conspirators hacked into a virtual currency exchange and stole nearly $250 million worth of virtual currency. The funds were then laundered through hundreds of automated cryptocurrency transactions aimed at preventing law enforcement from tracing the funds. The North Korean co-conspirators circumvented multiple virtual currency exchanges’ know-your-customer controls by submitting doctored photographs and falsified identification documentation. A portion of the laundered funds was used to pay for infrastructure used in North Korean hacking campaigns against the financial industry.
The pleadings further allege that between December 2017 and April 2019, Yinyin and Jiadong laundered over $100 million worth of virtual currency, which primarily came from virtual currency exchange hacks. The defendants operated through independent as well as linked accounts and provided virtual currency transmission services for a fee for customers. The defendants conducted business in the United States but at no time registered with the Financial Crimes Enforcement Network (FinCEN).
The pleadings further allege that the North Korean co-conspirators are tied to the theft of approximately $48.5 million worth of virtual currency from a South Korea-based virtual currency exchange in November 2019. As with the prior campaign, the North Korean co-conspirators are alleged to have laundered the stolen funds through hundreds of automated transactions and submitted doctored photographs and falsified identification documentation. The pleadings identify how the North Korean co-conspirators used infrastructure in North Korea as part of this campaign.
The civil forfeiture complaint specifically names 113 virtual currency accounts and addresses that were used by the defendants and unnamed co-conspirators to launder funds. The forfeiture complaint seeks to recover the funds, a portion of which has already been seized.
The charges in the pleadings are merely allegations, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Today, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) also imposed sanctions on Yinyin, Liadong, and numerous cryptocurrency addresses related to their involvement in activities facilitating North Korean sanctions evasion based on their services and support for malicious cyber enabled activities linked to North Korean actors.
The investigation was led by the IRS-CI, the FBI, and HSI. The Korean National Police of the Republic of Korea provided assistance and coordinated with their parallel investigation.
Thursday, March 5, 2020
Former DEA Agent and His Wife Indicted for Alleged Roles in Scheme to Divert Drug Proceeds from Undercover Money Laundering Investigations
A 19-count indictment in Tampa, Florida, was unsealed against a former Drug Enforcement Administration (DEA) special agent and his wife for their alleged roles to divert drug proceeds from undercover money-laundering investigations into bank accounts they, along with family members and criminal associates, controlled.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Byung J. Pak of the Northern District of Georgia, Special Agent in Charge James F. Boyersmith of the Justice Department’s Office of the Inspector General Miami Field Office, Special Agent in Charge Michael F. McPherson of the FBI’s Tampa Field Office and Special Agent in Charge Mary E. Hammond of IRS-Criminal Investigation (CI) and Acting Special Agent in Charge Kevin Sibley of U.S. Immigration and Customs Enforcement's Homeland Security Investigations (HSI) Tampa made the announcement.
The FBI arrested Jose I. Irizarry, 46, and Nathalia Gomez-Irizarry (Gomez), 36, this morning at their residence near San Juan, Puerto Rico. Irizarry and Gomez made their first appearance in U.S. District Court in San Juan today and were released on bond. Their next court appearance is scheduled for Feb. 26.
The indictment alleges that while working as an agent for the DEA in Miami and Cartagena, Colombia, Irizarry engaged in an illegal scheme to divert drug proceeds from undercover money laundering investigations into bank accounts controlled by himself and Gomez, their family members, and their criminal associates. To carry out the plot, Irizarry and his criminal associates are alleged to have opened a bank account with a stolen identity and then utilized the account to secretly send and receive drug proceeds from active DEA investigations.
The indictment further alleges that Irizarry and Gomez used drug proceeds to purchase jewelry, a home and multiple luxury vehicles for themselves and their family. As alleged, Irizarry was in personal bankruptcy proceedings for nearly the duration of this criminal conduct and failed to disclose any of his illicit income to the U.S. Bankruptcy Court.
Irizarry is charged with conspiracy to launder monetary instruments, honest services wire fraud, bank fraud, conspiracy to commit bank fraud, conspiracy to commit identity theft and aggravated identity theft. Gomez is charged with conspiracy to launder monetary instruments.
Wednesday, March 4, 2020
Texas Businessman Sentenced to 70 Months in Prison for Role in Venezuela Bribery Scheme and Obstruction of Justice
A former procurement officer of Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A. (PDVSA), was sentenced to 70 months in prison followed by three years of supervised release for laundering the proceeds of a corrupt scheme to secure contracts from PDVSA through bribery, underreporting income on his tax return and obstructing the government’s investigation into bribes paid by the owner of U.S.-based companies to Venezuelan government officials in exchange for securing additional business with Citgo Petroleum Corporation, a Houston-based PDVSA subsidiary.
Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Ryan K. Patrick of the Southern District of Texas and Special Agent in Charge Mark Dawson of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Houston made the announcement.
Alfonzo Eliezer Gravina Munoz (Gravina), 57, of Katy, Texas, was sentenced by U.S. District Judge Gray H. Miller of the Southern District of Texas. Judge Miller also ordered Gravina to pay restitution to the IRS in the amount of $214,849.21. Judge Miller previously entered a final order of forfeiture on May 17, 2017, after Gravina forfeited $590,446 in connection with this case. Gravina pleaded guilty on Dec. 10, 2015, to one count of conspiracy to commit money laundering and one count of making false statements in connection with a tax return. Based on his actions after entry of his guilty plea in 2015, Gravina was indicted on Nov. 15, 2018, on one count of conspiracy to obstruct an official proceeding, to which he pleaded guilty on Dec. 10, 2018.
According to admissions made in connection with Gravina’s December 2015 plea, Gravina accepted bribes from U.S.-based businessmen Abraham Jose Shiera Bastidas (Shiera) and Roberto Enrique Rincon Fernandez (Rincon) while employed as a purchasing manager at PDVSA. This ensured that Shiera’s and Rincon’s companies were placed on PDVSA bidding panels, which enabled the companies to win lucrative energy contracts with PDVSA. Gravina admitted that he accepted over $590,000 in bribes from 2007 to 2014. In order to conceal the corrupt payments, Rincon and Shiera transferred funds to Gravina from accounts they controlled outside of the United States to accounts in the names of Gravina’s associates and relatives. Gravina admitted that he did not report the bribe payments he received from Rincon, Shiera and others as income on his 2010 tax return, thus underreporting his income. Rincon and Shiera have also pleaded guilty and await sentencing.
After his plea in December 2015, Gravina met periodically with HSI agents to provide information regarding corruption at PDVSA. Gravina admitted that, during interviews with the government, he concealed facts about bribe payments to officials at Citgo Petroleum Corporation and, at the same time, he provided details about the government’s investigation to a subject of the investigation, including about the topics discussed during Gravina’s meetings with the government. This passing of information led to the destruction of evidence and to the subject’s attempt to flee the United States in July 2018.
Gravina is the seventh defendant to be sentenced by Judge Miller as part of a larger, ongoing investigation by the U.S. government into bribery at PDVSA. Including Gravina, Rincon and Shiera, to date, the Justice Department has announced charges against 26 individuals, 20 of whom have pleaded guilty in connection with the investigation.
Tuesday, March 3, 2020
Two former executives of the Indonesian subsidiary of the French power and transportation company Alstom S.A. and a former executive of the Japanese trading company Marubeni Corporation have been charged in a superseding indictment unsealed today for their alleged participation in a scheme to pay bribes to foreign government officials in Indonesia.
Reza Moenaf, 63, the former president of Alstom’s subsidiary in Indonesia; Eko Sulianto, 63, the former director of sales of Alstom’s subsidiary in Indonesia; and Junji Kusunoki, 57, the former deputy general manager of Marubeni’s Overseas Power Project Department, were each charged with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and conspiracy to commit money laundering. Kusunoki was charged with six counts of violating the FCPA and four counts of money laundering, and Sulianto and Moenaf were each charged with two counts of violating the FCPA and one count of money laundering.
According to the indictment, the defendants, together with others, paid bribes to officials in Indonesia – including, among others, a high-ranking member of the Indonesian Parliament and the president of Perusahaan Listrik Negara (PLN), the state-owned and state-controlled electricity company in Indonesia – in exchange for assistance in securing a $118 million contract, known as the Tarahan project, for Alstom’s subsidiaries in Connecticut and Indonesia and for Marubeni to provide power-related services for the citizens of Indonesia. To conceal the bribes, the defendants allegedly retained two so-called “consultants” purportedly to provide legitimate consulting services on behalf of the power company and its subsidiaries in connection with the Tarahan project. The indictment, however, alleges that the primary purpose for hiring the consultants was to use the consultants to pay bribes to Indonesian officials.
The first consultant retained by the defendants allegedly received hundreds of thousands of dollars in his Maryland bank account to be used to bribe the member of Parliament. The consultant then allegedly transferred the bribe money to a bank account in Indonesia for the benefit of the official. According to court documents, emails between the defendants and their co-conspirators discussed in detail the use of the first consultant to funnel bribes to the member of Parliament and the influence that the member of Parliament could exert over the Tarahan project.
The superseding indictment alleges that in the fall of 2003, the defendants and their co-conspirators determined that the first consultant was not effectively bribing key officials at PLN. One email between Moenaf, Sulianto and their co-conspirators described PLN officials’ “concern that if we have won the job, whether their rewards will still be satisfactory or this agent only give them pocket money and disappear.” In another email, Moenaf asserted that the consultant “has no grip on the PLN Tender team at all” and “is more or less similar to [a] cashier which I feel we pay too much.” As a result, the co-conspirators allegedly retained a second consultant to more effectively bribe PLN officials. The defendants and their co-conspirators were successful in securing the Tarahan project and subsequently made payments to the consultants for the alleged purpose of bribing the Indonesian officials, the indictment alleges.
An indictment is merely an accusation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The charges against Moenaf, Sulianto, and Kusunoki are part of a wide-ranging investigation into alleged corrupt practices by employees of Alstom and Marubeni. Five other individuals, as well as Alstom and Marubeni, have pleaded guilty in the case so far, and Lawrence Hoskins, a former senior vice president at Alstom, was found guilty on Nov. 6, 2019, following a jury trial, of 11 counts of conspiracy, violating the FCPA, and money laundering.
The FBI’s Los Angeles Field Office is investigating the case with assistance from the FBI’s Meriden, Connecticut, Resident Agency. The Criminal Division’s Office of International Affairs assisted in the investigation. Senior Deputy Chief Daniel S. Kahn and Assistant Chief Lorinda Laryea of the Criminal Division’s Fraud Section and Assistant U.S. Attorney David E. Novick of the District of Connecticut are prosecuting the case.
The department appreciates the significant cooperation provided by its law enforcement colleagues in Indonesia, Switzerland's Office of the Attorney General, as well as authorities in the United Kingdom, France, Germany, Italy, Singapore and Taiwan.
Monday, March 2, 2020
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2019 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP also increased 2.1 percent.
The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was also 2.1 percent. In the second estimate, an upward revision to private inventory investment was offset by a downward revision to nonresidential fixed investment (see "Updates to GDP" on page 2).
The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), federal government spending, exports, residential fixed investment, and state and local government spending that were partly offset by negative contributions from private inventory investment and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased (table 2).
Real GDP growth in the fourth quarter was the same as that in the third. In the fourth quarter, a downturn in imports and an acceleration in government spending were offset by a larger decrease in private inventory investment and a slowdown in PCE.
Current dollar GDP increased 3.5 percent, or $184.2 billion, in the fourth quarter to a level of $21.73 trillion. In the third quarter, GDP increased 3.8 percent, or $202.3 billion (tables 1 and 3).
The price index for gross domestic purchases increased 1.4 percent in the fourth quarter, the same increase as in the third quarter (table 4). The PCE price index increased 1.3 percent, compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index increased 1.2 percent, compared with an increase of 2.1 percent.
More information on the source data that underlie the estimates is available in the "Key Source Data and Assumptions" file on BEA’s website.
Updates to GDP
In the second estimate, the fourth-quarter growth rate in real GDP was unrevised from the advance estimate. Private inventory investment, exports, federal government spending, and residential fixed investment were revised up. These upward revisions were offset by downward revisions to nonresidential fixed investment, PCE, state and local government spending, and an upward revision to imports. For more information, see the Technical Note and the "Additional Information" section below.
|Advance Estimate||Second Estimate|
|(Percent change from preceding quarter)|
|Gross domestic purchases price index||1.5||1.4|
|PCE price index||1.6||1.3|
|PCE price index excluding food and energy||1.3||1.2|
For the third quarter of 2019, the percent change in real GDI was revised from 2.1 percent to 1.2 percent based on new third-quarter data from the BLS Quarterly Census of Employment and Wages.
Real GDP increased 2.3 percent in 2019 (from the 2018 annual level to the 2019 annual level), compared with an increase of 2.9 percent in 2018 (table 1).
The increase in real GDP in 2019 reflected positive contributions from PCE, nonresidential fixed investment, federal government spending, state and local government spending, and private inventory investment that were partly offset by a negative contribution from residential fixed investment. Imports increased (table 2).
The deceleration in real GDP in 2019, compared to 2018, primarily reflected decelerations in nonresidential fixed investment and PCE, which were partly offset by accelerations in both state and local and federal government spending. Imports increased less in 2019 than in 2018.
Current-dollar GDP increased 4.1 percent, or $846.9 billion, in 2019 to a level of $21.43 trillion, compared with an increase of 5.4 percent, or $1,060.8 billion, in 2018 (tables 1 and 3).
The price index for gross domestic purchases increased 1.5 percent in 2019, compared with an increase of 2.4 percent in 2018 (table 4). The PCE price index increased 1.4 percent, compared with an increase of 2.1 percent. Excluding food and energy prices, the PCE price index increased 1.6 percent, compared with an increase of 1.9 percent (table 4).
Measured from the fourth quarter of 2018 to the fourth quarter of 2019, real GDP increased 2.3 percent during the period. That compared with an increase of 2.5 percent during 2018. The price index for gross domestic purchases, as measured from the fourth quarter of 2018 to the fourth quarter of 2019, increased 1.4 percent during 2019. That compared with an increase of 2.2 percent during 2018. The PCE price index increased 1.4 percent, compared with an increase of 1.9 percent. Excluding food and energy, the PCE price index increased 1.6 percent, compared with an increase of 1.9 percent (table 6).
The Cayman Islands has achieved another milestone in improving its understanding of how the jurisdiction can be misused for possible illicit purposes.
In response to recommendations made by the Caribbean Financial Action Task Force (CFATF) in the Mutual Evaluation Report of the Cayman Islands, published in March 2019, the Cayman Islands undertook and completed a National Assessment on Terrorism Financing Risk.
When geography and demographics are taken into consideration, the risk of funds for terrorist financing purposes being collected or used in the jurisdiction was judged to be low. At the same time, given the size and prominence of the Cayman Islands’ financial sector, the likelihood of funds connected to terrorist purposes moving through the jurisdiction was found to be a mere medium risk.
Indeed, prosecution and intelligence reports from foreign agencies relating to potential movement of funds through the Cayman Islands are limited. Yet, because of the challenges involved in detecting terrorist financing it must be assumed that the jurisdiction, like many others, is potentially vulnerable to misuse for terrorist financing.
The Cayman Islands had previously assessed the risks of terrorist financing in the jurisdiction as low in 2015. Using the new FATF Terrorist Financing Risk Assessment Guidance, the terrorist financing threats and vulnerabilities to the Cayman Islands as an International Financial Centre were again assessed. The slightly revised rating in the 2019 National Risk Assessment of Terrorism Financing, therefore, comes as a result of the new methodology and more precise data on the flows of funds.
This Risk Assessment was prepared by the Anti-Money Laundering Steering Group with input from several government agencies that have roles in combatting terrorist financing. These assessments enable the government agencies to better understand their risks and they can prioritise resources according to the level of risk. It will help the public and private sector understand the methods that can be used in the Cayman Islands, the threats and vulnerabilities and the risks that these activities can pose to the security of the Cayman Islands’ financial system. It will also help the private sector to better mitigate their terrorism financing risks.