International Financial Law Prof Blog

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

Tuesday, April 23, 2019

UniCredit Group Settles with U.S. Treasury for $1.3 Billion for OFAC Violations

Treasury Settlement Part of Combined $1.3 Billion Settlement for Banks’ Apparent Violations of Multiple Sanctions Programs

WASHINGTON – As part of a combined $1.3 billion settlement with federal and state government partners, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced three separate agreements totaling $611 million with the following UniCredit Group banks: UniCredit Bank AG in Germany, UniCredit Bank Austria AG in Austria, and UniCredit S.p.A. in Italy.  The settlements resolve OFAC’s investigations into apparent violations of a number of U.S. sanctions programs, including those related to weapons of mass destruction proliferation.

Specifically, between January 2007 and December 2011, UniCredit Bank AG processed over 2,000 payments totaling over $500 million through financial institutions in the United States in apparent violation of multiple U.S. sanctions programs.  During this time period, UniCredit operated U.S. dollar accounts on behalf of the Islamic Republic of Iran Shipping Lines (IRISL) and several companies owned by or otherwise affiliated with IRISL, and managed the accounts of those companies in a manner that obscured the interest or involvement of IRISL in transactions sent to or through U.S. intermediaries.  For a number of years up to and including 2011 (UniCredit Bank AG) and 2012 (UniCredit Bank Austria AG and UniCredit Bank S.p.A.), all three banks processed payments to or through the United States in a manner that did not disclose underlying sanctioned persons or countries to U.S. financial institutions which were acting as financial intermediaries.

These transactions constitute apparent violations of contemporaneous sanctions programs targeting proliferators of weapons of mass destruction, global terrorism, and the following countries:  Burma, Cuba, Iran, Libya, Sudan, and Syria.

“UniCredit Group banks routed transactions through the United States in a non-transparent manner, when those payments would have been blocked or rejected if their true nature had been clear, in violation of multiple sanctions programs,” said Sigal P. Mandelker, Under Secretary for Terrorism and Financial Intelligence.  “These banks have agreed to implement and maintain commitments to enhance their sanctions compliance.  As the United States continues to enhance our sanctions programs, incorporating compliance commitments in OFAC settlement agreements is a key part of our broader strategy to ensure that the private sector implements strong and effective compliance programs that protect the U.S. financial system from abuse.”

Pursuant to the settlement agreements, each bank is required to implement and maintain compliance commitments designed to minimize the risk of the recurrence of the conduct giving rise to the apparent violations.  The full set of commitments are identified in each of the banks’ public settlement agreements (UniCredit Bank AG [LINK], UniCredit Bank Austria AG [LINK], UniCredit S.p.A. [LINK]) and focus on areas that led to the apparent violations, including (1) a commitment from senior management to promote a “culture of compliance” throughout each organization, (2) a commitment that each bank implements internal controls that adequately address the results of its OFAC risk assessment and profile, and (3) a commitment to providing adequate training to support each bank’s OFAC compliance efforts.

OFAC worked closely and collaboratively with its counterparts at other government agencies in the course of these investigations.  Today’s settlements are being announced in conjunction with actions involving the U.S. Department of Justice, the New York County District Attorney’s Office, the Federal Reserve Board of Governors, and the Department of Financial Services of the State of New York.

“Today’s settlements are the result of a years-long interagency effort and reinforce OFAC’s commitment to working with partner agencies at the federal and state levels to ensure the U.S. financial infrastructure is protected from the risks inherent in this type of illicit activity,” said OFAC Director Andrea M. Gacki.  “We will continue to investigate institutions that utilize the U.S. financial system in a manner that undermines U.S. sanctions programs and aggressively enforce U.S. sanctions rules and regulations.”

The banks’ obligations to pay OFAC such settlement amounts were deemed satisfied up to an equal amount by payments in satisfaction of penalties assessed by U.S. federal officials arising out of the same patterns of conduct during the same time periods.  UniCredit Bank AG will remit $105,876,230 to OFAC to settle civil liability relating to the apparent violations.

View settlement agreements: UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit S.p.A..

April 23, 2019 in AML | Permalink | Comments (0)

Fifth Defendant Pleads Guilty to Laundering Millions of Dollars of Hard Narcotics Proceeds for Sinaloa Cartel

A Culiacan, Mexico man pleaded guilty to international money laundering in connection with his operation of a currency exchange house that received the proceeds of multi-kilogram quantities of cocaine, methamphetamine and heroin smuggled into the United States by the Sinaloa Cartel, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Robert S. Brewer Jr. of the Southern District of California. 

Gibran Rodriguez-Mejia, 31, was extradited from Mexico to San Diego in September 2018, and is the fifth Mexican-based defendant in this case to enter a guilty plea, doing so before U.S. Magistrate Judge Mitchell D. Dembin.  Rodriguez-Mejia will be sentenced on July 8, 2019 before U.S. District Judge Roger T. Benitez. 

Through his plea agreement, Rodriguez-Mejia admitted to laundering $3.5 million in drug proceeds.  He coordinated with couriers, primarily located in Southern California, who smuggled the bulk of U.S. currency from the United States to Mexico.  Rodriguez-Mejia also admitted that he arranged for currency to be smuggled to an exchange house in Tijuana, Mexico owned and operated by co-defendant Cesar Hernandez-Martinez, who pleaded guilty on April 4, 2019 and will be sentenced on July 8, 2019.  After the money was converted to Mexican pesos, Rodriguez-Mejia provided financial accounts in Mexico into which the money was deposited for the benefit of the Mexican-based cartel drug traffickers.

In addition to the five defendants in this case, approximately 20 other individuals have entered guilty pleas and have been previously sentenced in related cases.  Those cases have involved individuals based in the United States or individuals who have frequently crossed into the United States and served as money couriers, drug couriers and drug stash-house operators and who were part of, or related to, the same money laundering and drug trafficking organization.

Omar Ayon-Diaz, Osvaldo Contreras-Arriaga and Joel Acedo-Ojeda have also pleaded guilty in this case and have been sentenced to 120 months, 132 months and 135 months in prison, respectively.

April 23, 2019 in AML | Permalink | Comments (0)

Saturday, April 20, 2019

Former Manager for International Airline Pleads Guilty to Acting as an Agent of the Chinese Government

Defendant Placed Packages on Flights from JFK Airport to Beijing at the Direction of Military Officers Assigned to the Chinese Mission to the United Nations

Ying Lin pleaded guilty to acting as an agent of the People’s Republic of China (PRC), without notification to the Attorney General, by working at the direction and control of military officers assigned to the Permanent Mission of the People’s Republic of China to the United Nations.  Lin, a former manager with an international air carrier headquartered in the PRC (the Air Carrier), abused her privileges to transport packages from John F. Kennedy International Airport (JFK Airport) to the PRC aboard Air Carrier flights at the behest of the PRC military officers and in violation of Transportation Security Administration (TSA) regulations.  The proceeding was held before United States District Judge Ann M. Donnelly.

Assistant Attorney General for National Security John C. Demers, U.S. Attorney Richard P. Donoghue for the Eastern District of New York, Assistant Director in Charge William F. Sweeney, Jr of the FBI’s New York Field Office, and Special Agent in Charge Angel M. Melendez, Department of Homeland Security, Homeland Security Investigations (HSI) announced the guilty plea.

“This case is a stark example of the Chinese government using the employees of Chinese companies doing business here to engage in illegal activity,” said Assistant Attorney General Demers.  “Covertly doing the Chinese military’s bidding on U.S. soil is a crime, and Lin and the Chinese military took advantage of a commercial enterprise to evade legitimate U.S. government oversight.”

“The defendant’s actions as an agent of the Chinese government helped Chinese military officers to evade U.S. law enforcement scrutiny of packages that they sent from New York to Beijing,” stated United States Attorney Donoghue.  “This case demonstrates how seriously we address counterintelligence threats posed by individuals in the United States who work for foreign governments, such as China.” 

“The FBI and our law enforcement partners do all we can every day to protect this country from the threats we can see, and we work even harder to find the threats we can’t see,” said FBI Assistant Director-in-Charge Sweeney.  “Ms. Lin was secreting packages through some of the country's busiest airports, using her work with the Chinese government to thwart our security measures.  We believe this case isn’t unique and hope it serves as an example that the Chinese and other foreign governments can't break our laws with impunity.”

“Lin’s criminal actions exploited the international boundary of the United States as she used her position to smuggle packages onto planes headed to China,” said HSI Special Agent-in-Charge Melendez. “We are committed to ensuring the integrity of our international airports so they are not used as a front for illicit activities.”

Lin worked for the Air Carrier from 2002 through the fall of 2015 as a counter agent at JFK Airport and from the fall of 2015 through April 2016 as the station manager at Newark Liberty International Airport.  During her employment with the Air Carrier, Lin accepted packages from the PRC military officers, and placed those packages aboard Air Carrier flights to the PRC as unaccompanied luggage or checked in the packages under the names of other passengers flying on those flights.  As the PRC military officers did not travel on those flights, Lin’s actions were contrary to a security program that required that checked baggage be accepted only from ticketed passengers, thereby violating TSA regulations.  In addition, Lin encouraged other Air Carrier employees to assist the PRC military officers, instructing those employees that because the Air Carrier was a PRC company, their primary loyalty should be to the PRC.

In exchange for her work at the direction and under the control of PRC military officers and other PRC government officials, Lin received benefits from the PRC Mission and PRC Consulate in New York.  These benefits included tax-exempt purchases of liquor, cigarettes and electronic devices worth tens of thousands of dollars.  These benefits also included free contracting work at the defendant’s two residences in Queens, New York, by PRC construction workers who were permitted under the terms of their visas to work only on PRC government facilities.

When sentenced, Lin faces up to 10 years’ imprisonment.  As part of the guilty plea, Lin agreed to forfeit approximately $25,000 as well as an additional $145,000 in connection with her resolution of the government’s forfeiture verdict in United States v. Zhong, No. 16-CR-614 (AMD).

Mr. Demers and Mr. Donoghue expressed their appreciation to the Transportation Security Administration for their assistance on the case.  The government’s case is being handled by the National Security and Cybercrime Section.  Assistant United States Attorneys Douglas M. Pravda, Alexander A. Solomon, Ian C. Richardson and Sarah M. Evans are in charge of the prosecution, with assistance from Trial Attorney Matthew R. Walczewski of the Department of Justice’s Counterintelligence and Export Control Section.  The forfeiture aspect of the case is being handled by EDNY Assistant United States Attorney Brian Morris of the Office’s Civil Division.

April 20, 2019 in AML | Permalink | Comments (0)

Friday, April 19, 2019

Japanese Investment Company Executives Extradited on Charges Relating to $1.5 Billion Ponzi Scheme

Japanese authorities have extradited to the United States two former executives of a Las Vegas, Nevada, investment company in connection with their alleged roles in a $1.5 billion Ponzi scheme.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicholas A. Trutanich of the District of Nevada and Special Agent in Charge Aaron C. Rouse of the FBI’s Las Vegas Division made the announcement.

Junzo Suzuki, 70, and Paul Suzuki, 40, who are father and son and are both Japanese nationals, were each charged in a July 2015 indictment filed in the District of Nevada with eight counts of mail fraud and nine counts of wire fraud.  Japanese authorities arrested the Suzukis in January 2019 at the request of the United States, and extradited them to the United States on April 17.  The Suzukis will make their initial appearance this afternoon before U.S. Magistrate Judge Cam Ferenbach of the District of Nevada.

According to the indictment, Junzo Suzuki previously was executive vice president for Asia Pacific of MRI International (MRI), an investment company which was headquartered in Las Vegas and had an office in Japan.  Paul Suzuki previously was the company’s general manager for Japan operations, based in Tokyo.  MRI purportedly specialized in “factoring,” whereby the company purchased accounts receivable from medical providers at a discount, and then attempted to recover the entire amount, or at least more than the discounted amount, from the debtor.

According to allegations in the indictment, from at least 2009 to 2013, the Suzukis and their co-defendant Edwin Fujinaga, 72, of Las Vegas, fraudulently solicited investments from thousands of Japanese residents.  When MRI collapsed, it allegedly owed investors over $1.5 billion.  Specifically, the indictment alleges that Fujinaga and the Suzukis promised investors a series of interest payments that would accrue over the life of the investment and that would be paid out along with the face value of the investment at the conclusion of the investments’ duration.  The defendants allegedly solicited investments by, among other things, promising investors that their investments would be used only for the purchase of medical accounts receivable (MARS) and by representing that investors funds would be managed and safeguarded by an independent third-party escrow company.

The indictment further alleges that MRI operated as a Ponzi scheme, in which the defendants used new investors’ money to pay prior investors’ maturing investments.  According to the indictment, the defendants also allegedly used investors’ funds for purposes other than the purchase of MARS, including paying themselves sales commissions, subsidizing gambling habits, funding personal travel by private jet and other personal expenses.

In November 2018, after a five-week trial, Fujinaga was found guilty of eight counts of mail fraud, nine counts of wire fraud and three counts of money laundering in connection with this Ponzi scheme.  His sentencing hearing is scheduled for May 23, 2019.  Download Suzuki MRI Indictment

April 19, 2019 in AML | Permalink | Comments (0)

Tuesday, April 16, 2019

Two Romanian Cybercriminals Convicted of All 21 Counts Relating to Infecting Over 400,000 Victim Computers with Malware and Stealing Millions of Dollars

A federal jury convicted two Bucharest, Romania, residents of 21 counts related to their scheme to infect victim computers with malware in order to steal credit card and other information to sell on dark market websites, mine cryptocurrency and engage in online auction fraud, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Justin E. Herdman of the Northern District of Ohio.

Bogdan Nicolescu, 36, and Radu Miclaus, 37, were convicted after a 12-day trial of conspiracy to commit wire fraud, conspiracy to traffic in counterfeit service marks, aggravated identity theft, conspiracy to commit money laundering and 12 counts each of wire fraud.  Sentencing has been set for Aug. 14, 2019 before Chief Judge Patricia A. Gaughan of the Northern District of Ohio.

According to testimony at trial and court documents, Nicolescu, Miclaus, and a co-conspirator who pleaded guilty, collectively operated a criminal conspiracy from Bucharest, Romania.  It began in 2007 with the development of proprietary malware, which they disseminated through malicious emails purporting to be legitimate from such entities as Western Union, Norton AntiVirus and the IRS. When recipients clicked on an attached file, the malware was surreptitiously installed onto their computer.

This malware harvested email addresses from the infected computer, such as from contact lists or email accounts, and then sent malicious emails to these harvested email addresses.  The defendants infected and controlled more than 400,000 individual computers, primarily in the United States.

Controlling these computers allowed the defendants to harvest personal information, such as credit card information, user names and passwords.  They disabled victims’ malware protection and blocked the victims’ access to websites associated with law enforcement.

Controlling the computers also allowed the defendants to use the processing power of the computer to solve complex algorithms for the financial benefit of the group, a process known as cryptocurrency mining.

The defendants used stolen email credentials to copy a victim’s email contacts.  They also activated files that forced infected computers to register email accounts with AOL.  The defendants registered more than 100,000 email accounts using this method.  They then sent malicious emails from these addresses to the compromised contact lists.  Through this method, they sent tens of millions of malicious emails.

When victims with infected computers visited websites such as Facebook, PayPal, eBay or others, the defendants would intercept the request and redirect the computer to a nearly identical website they had created.  The defendants would then steal account credentials.  They used the stolen credit card information to fund their criminal infrastructure, including renting server space, registering domain names using fictitious identities and paying for Virtual Private Networks (VPNs) which further concealed their identities.

The defendants were also able to inject fake pages into legitimate websites, such as eBay, to make victims believe they were receiving and following instructions from legitimate websites, when they were actually following the instructions of the defendants.

They placed more than 1,000 fraudulent listings for automobiles, motorcycles and other high-priced goods on eBay and similar auction sites.  Photos of the items were infected with malware, which redirected computers that clicked on the image to fictitious webpages designed by the defendants to resemble legitimate eBay pages.

These fictitious webpages prompted users to pay for their goods through a nonexistent “eBay Escrow Agent” who was simply a person hired by the defendants.  Users paid for the goods to the fraudulent escrow agents, who in turn wired the money to others in Eastern Europe, who in turn gave it to the defendants.  The payers/victims never received the items and never got their money back.

This resulted in a loss of millions of dollars.

The Bayrob group laundered this money by hiring “money transfer agents” and created fictitious companies with fraudulent websites designed to give the impression they were actual businesses engaged in legitimate financial transactions.  Money stolen from victims was wired to these fraudulent companies and then in turn wired to Western Union or Money Gram offices in Romania.  European “money mules” used fake identity documents to collect the money and deliver it to the defendants. 

The FBI investigated the case, with assistance from the Romanian National Police.  Senior Counsel Brian Levine of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorneys Duncan T. Brown and Brian McDonough of the Northern District of Ohio prosecuted the case.  The Office of International Affairs also provided assistance in this case.

April 16, 2019 in AML | Permalink | Comments (0)

Monday, April 15, 2019

UniCredit Bank AG Agrees to Plead Guilty and Pay Over $1.3 Billion for Violation of Iranian Sanctions

UniCredit Bank AG (UCB AG), a financial institution headquartered in Munich, operating under the name HypoVereinsbank, and part of the UniCredit Group has agreed to enter a guilty plea to conspiring to violate the International Emergency Economic Powers Act (IEEPA) and to defraud the United States by processing hundreds of millions of dollars of transactions through the U.S. financial system on behalf of an entity designated as a weapons of mass destruction proliferator and other Iranian entities subject to U.S. economic sanctions.  UniCredit Bank Austria (BA), another financial institution in the UniCredit Group, headquartered in Vienna, Austria, agreed to forfeit $20 million and entered into a non-prosecution agreement to resolve an investigation into its violations of IEEPA.  UniCredit SpA, the parent of both UCB AG and BA, has agreed to ensure that UCB AG and BA’s obligations are fulfilled. Download UniCredit Bank AG Information and Download UniCredit Bank Austria Non-Prosecution Agreement

According to court documents, over the course of almost 10 years, UCB AG knowingly and willfully moved at least $393 million through the U.S. financial system on behalf of sanctioned entities, most of which was for an entity the U.S. Government specifically prohibited from accessing the U.S. financial system.  UCB AG engaged in this criminal conduct through a scheme, formalized in its own bank polices and designed to conceal from U.S. regulators and banks the involvement of sanctioned entities in certain transactions.  UCB AG routed illegal payments through U.S. financial institutions for the benefit of the sanctioned entities in ways that concealed the involvement of the sanctioned entities, including through the use of companies that UCB AG knew would appear unconnected to the sanctioned entity despite being controlled by the sanctioned entity.

“When the United States sanctioned Iranian entities for proliferating weapons of mass destruction, UCB AG went to great lengths to help one such entity – Islamic Republic of Iran Shipping Lines – evade sanctions to gain access to the U.S. financial system,” said Assistant Attorney General Benczkowski.  “The integrity of our financial system requires financial institutions to comply with our laws, and UCB AG willfully failed to do so.  Today’s guilty plea and $1.3 billion penalty are just punishments for undermining U.S. sanctions and putting our financial system at risk.”

“UCB AG’s actions in deliberately providing a designated weapons-of-mass-destruction proliferator with access to the U.S. financial system for almost two years after such access was prohibited by U.S. law were particularly egregious,” said U.S. Attorney Liu.  “The bank’s impending guilty plea and the accompanying monetary penalty announced today send a clear message that financial institutions that subvert U.S. sanctions, and therefore our national security, should expect severe consequences.”

"This case is a prime example of how some institutions erroneously believe they can game the U.S. financial system and conceal their nefarious activity,” said Assistant Director in Charge Sweeney.  "The FBI will root out and aggressively investigate institutions, like UCB AG, that conspire to violate U.S. sanctions on behalf of prohibited entities."

“The financial penalty announced today should dissuade other financial institutions around the world from scheming and circumventing U.S. sanctions by moving money around using various institutions and companies,” said Special Agent in Charge Jackson.  “Following the money is what we do—so too is holding those accountable who try to avoid following the law.”

UCB AG will waive indictment and be charged in a one-count felony criminal information, according to documents to be filed in federal court in the District of Columbia, charging UCB AG with knowingly and willfully conspiring to commit violations of IEEPA and to defraud the United States, from 2002 through 2011.  UCB AG has agreed to plead guilty to the information, has entered into a written plea agreement and has accepted responsibility for its criminal conduct.  UCB AG will enter its guilty plea before a judge in the District of Columbia.  UniCredit Group banks will pay total financial penalties of approximately $1.3 billion.  The plea agreement, subject to approval by the court, provides that UCB AG will forfeit $316,545,816 and pay a fine of $468,350,000.  

According to admissions in the non-prosecution agreement and accompanying statement of facts, between 2002 and 2012, BA used non-transparent methods to send payments related to sanctioned jurisdictions such as Iran through the United States.  BA conspired to violate IEEPA and defraud the United States by processing transactions worth at least $20 million through the United States on behalf of customers located or doing business in Iran and other countries subject to U.S. economic sanctions or customers otherwise subject to U.S. economic sanctions.  As a result of its crimes, BA will forfeit $20 million and has agreed to additional compliance and sanctions enhancements. 

In addition, UCB AG has entered into a plea agreement with the New York County District Attorney’s Office (DANY) for violating New York State law pursuant to which it will pay $316,545,816.  BA has also entered into a non-prosecution agreement with DANY for violating New York State law.  DANY conducted its own investigation alongside the Justice Department.

UniCredit SpA, UCB AG and BA have also entered into various settlement agreements with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve) and the New York State Department of Financial Services (DFS) under which they will pay additional penalties of approximately $660 million as follows:  $611,023,421 to OFAC, which will be satisfied in part by payments to the Justice Department and the Federal Reserve, $157,770,000 to the Federal Reserve and $405 million to DFS.

The case was prosecuted by Senior Trial Attorney Margaret A. Moeser of the Bank Integrity Unit in the Criminal Division’s Money Laundering and Asset Recovery Section, and Assistant U.S. Attorney Michelle Zamarin of the District of Columbia.  The case was investigated by the FBI and the IRS-CI.

The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions.  The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

April 15, 2019 in AML | Permalink | Comments (0)

Charity Executives, Former Arkansas State Senator Indicted for Embezzlement and Public Corruption Scheme

Two former executives of a Springfield, Missouri-based charity and a former Arkansas state senator have been indicted by a federal grand jury for their roles in a multi-million-dollar public corruption scheme that involved embezzlement, bribes and illegal campaign contributions for elected public officials in Missouri and Arkansas, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney Tim Garrison of the Western District of Missouri. Download Goss Indictment

Bontiea Bernedette Goss, 63, her husband, Tommy Ray Goss, aka “Tom,” 63, both residents of Springfield, Missouri, and Boulder, Colorado, and Jeremy Young Hutchinson, 45, of Little Rock, Arkansas, were charged on March 29, 2019, in a 32-count indictment by a federal grand jury in Springfield, which was unsealed today.

The indictment alleges that the Gosses, who were high-level executives at Preferred Family Healthcare Inc. (formerly known as Alternative Opportunities Inc.), and Hutchinson, who is an attorney and served as a state senator in the Arkansas Senate from 2011 to 2018, along with others, participated in a conspiracy from 2005 to November 2017 to embezzle and misapply the funds of a charitable organization that received federal funds, to pay bribes and kickbacks to elected officials (including Hutchinson), and to deprive the citizens of Arkansas of their right to the honest services of those elected officials.  According to the indictment, in exchange for the bribes and kickbacks offered by the Gosses and other co-conspirators, Hutchinson and other elected officials allegedly provided favorable legislative and official action for the charity, including directing funds from the state’s General Improvement Fund (GIF).

The indictment also alleges that the Gosses and others defrauded the charity, and the governmental entities that funded the charity, by embezzling and misapplying charity funds for their personal benefit, including, but not limited to:

  • causing the charity to pay for chartered air flights for the Gosses to commute between their home in Colorado and their work at the charity’s office in Springfield;
  • providing millions of dollars in interest-free loans to their for-profit companies;
  • charging the charity inflated prices to lease vehicles from their for-profit companies;
  • renting charity-owned commercial real estate to one of their for-profit companies at below-market rates or, in some instances, for free; and
  • using charity funds to pay for personal services for themselves, including child and pet care, housekeeping and cleaning their personal residences, picking up and delivering groceries, and shoveling snow, among other personal services paid for by the charity.

The indictment also contains a forfeiture allegation, which would require the Gosses and Hutchinson to forfeit to the government any property obtained from the proceeds of the alleged offenses.

The charity was known as Alternative Opportunities Inc. from its founding in 1991 until its 2015 merger with Preferred Family Healthcare.  The charity, which is cooperating with federal investigators, provided a variety of services to individuals in Arkansas, Illinois, Kansas, Missouri and Oklahoma, including mental and behavioral health treatment and counseling, substance abuse treatment and counseling, employment assistance, aid to individuals with developmental disabilities and medical services.

An indictment contains only allegations.  A defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

April 15, 2019 in AML | Permalink | Comments (0)

Sunday, April 14, 2019

Univar USA Inc. to Pay U.S. $62.5 Million to Resolve Allegations that it Evaded $36 Million in Antidumping Duties on Imported Chinese Saccharin

Univar USA Inc. (Univar), a subsidiary of Univar Inc., of Downers Grove, Illinois, has agreed to pay the United States $62.5 million to settle allegations under the customs penalty statute that it was grossly negligent or negligent when it imported 36 shipments of transshipped saccharin between 2007 and 2012. The saccharin was manufactured in China and transshipped through Taiwan to evade a 329 percent antidumping duty that applied to saccharin from China.  The antidumping duty was a remedial measure in response to injury sustained by the domestic saccharin industry by reason of dumping of Chinese saccharin. The transshipment resulted in the evasion of approximately $36 million in antidumping duties. 

“Transshipment of merchandise through third countries to evade antidumping duties undermines the integrity of our trade laws and puts domestic manufacturers at risk from unfairly traded merchandise,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “We enforce our laws against importers who fail to take all reasonable steps to vet their suppliers and determine the true country of origin of their merchandise.” 

The settlement resolves a lawsuit brought in the United States Court of International Trade seeking recovery of unpaid antidumping duties and penalties under 19 U.S.C. § 1592 totaling $84 million plus interest. In that action, the government alleged that Univar was grossly negligent or negligent in failing to determine that its supplier in Taiwan was not a manufacturer but, instead, imported saccharin into Taiwan from China for transshipment to the United States. This is the largest recovery under section 1592 ever reached in the Court of International Trade.      

“We are committed to ensuring the laws that protect legitimate trade and US domestic industry, including anti-dumping and countervailing duties laws, are vigorously enforced,” said CBP’s Office of Trade Executive Assistant Commissioner Brenda Smith. “And to that end, we applaud the agencies that came together to settle this case.”

“I applaud the outcome of this investigation and commend the efforts of the special agents and CBP personnel who worked so diligently on this,” said Homeland Security Investigations (HSI) Executive Associate Director Derek Benner. “This is a tremendous example of the agencies’ collaborative commitment to enforce the trade laws of the United States.”

The settlement announced today was the result of an investigation by the U.S. Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), and the Commercial Litigation Branch of the Justice Department’s Civil Division.  The investigating ICE agent was Special Agent Patrick C. Deas. The case was handled by Commercial Litigation Branch Attorneys Patricia M. McCarthy, Stephen C. Tosini and Reta E. Bezak, and CBP Assistant Chief Counsel Currita C. Waddy.

April 14, 2019 in AML | Permalink | Comments (0)

Saturday, April 13, 2019

BiPartisan STATES Act To Effectively Legalize Marijuana at Federal Level (other than for the Tax Code)

Today, 46 states have laws permitting or decriminalizing marijuana or marijuana-based products. Washington D.C., Puerto Rico, Guam, and a number of tribes have similar laws. (Previous version of the bipartisan bill is here)

 As states began developing their own approaches to marijuana enforcement the Department of Justice issued guidance to support these state actions and focus law enforcement resources.

 However, this guidance was withdrawn in 2018, causing legal uncertainty that severely limits these state laboratories of democracy, creates public health and safety issues, and undermines the state regulatory regimes.

 As more states, territories, and tribes thoughtfully consider updates to marijuana regulations, often through voter-initiated referendums, it is critical that Congress take immediate steps to safeguard their right to do so.

The Strengthening the Tenth Amendment Through Entrusting States (STATES) Act ensures that each State has the right to determine for itself the best approach to marijuana within its borders.

 Amends the Controlled Substances Act (21 U.S.C. § 801 et seq.) (CSA) so that -- as long as states and tribes comply with a few basic protections -- its provisions no longer apply to any person acting in compliance with State or tribal laws relating to the manufacture, production, possession, distribution, dispensation, administration, or delivery of marijuana.

 Amends the definition of “marihuana” under the CSA (21 U.S.C. § 802(16)) to exclude industrial hemp, as defined in section 7606(b) of the Agricultural Act of 2014 (7 U.S.C. §
5940(b)).

 The bill does not alter CSA Section 417 (prohibition on endangering human life while manufacturing a controlled substance) and maintains the prohibition on employing persons under age 18 in marijuana operations, two federal requirements with which states, territories, and tribes must continue to comply.

 The bill prohibits the distribution of marijuana at transportation safety facilities such as rest areas and truck stops (Section 409).

 The bill does not allow for the distribution or sale of marijuana to persons under the age of 21 (Section 418) other than for medical purposes.

 To address financial issues caused by federal prohibition, the bill clearly states that compliant transactions are not trafficking and do not result in proceeds of an unlawful transaction.

April 13, 2019 in AML | Permalink | Comments (0)

Friday, April 12, 2019

Federal Indictments in Health Care Fraud Scheme Involving 24 Telemedicine and Durable Medical Equipment (DME) Marketing Executives Responsible for Over $1.2 Billion Billings

Hundreds of Thousands of Elderly and/or Disabled Patients Nationwide and Abroad Lured into Criminal Scheme; Center for Program Integrity, Center for Medicare Services, Takes Administrative Action Against 130 DME Companies That Submitted Over $1.7 Billion

One of the largest health care fraud schemes investigated by the FBI and the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and prosecuted by the Department of Justice resulted in charges against 24 defendants, including the CEOs, COOs and others associated with five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $1.2 billion in loss, as well as the execution of over 80 search warrants in 17 federal districts.  In addition, the Center for Medicare Services, Center for Program Integrity (CMS/CPI) announced today that it took adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Sherri A. Lydon of the District of South Carolina, U.S. Attorney Craig Carpenito of the District of New Jersey, U.S. Attorney Maria Chapa Lopez of the Middle District of Florida, Assistant Director Robert Johnson of the FBI’s Criminal Investigative Division, Deputy Inspector General for Investigations Gary Cantrell of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), Chief Don Fort of the IRS Criminal Investigation (CI) and Deputy Administrator and Director of CPI Alec Alexander of the CMS/CPI made the announcement.

The charges announced today target an alleged scheme involving the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that are medically unnecessary.  Some of the defendants allegedly controlled an international telemarketing network that lured over hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.  The defendants allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.  The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.

“These defendants — who range from corporate executives to medical professionals — allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care,” said Assistant Attorney General Benczkowski.  “This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs.  I commend the Criminal Division prosecutors and our partners from U.S. Attorney’s Offices and law enforcement agencies across the country for their unrelenting efforts to stop this alleged fraud before more money was stolen from American taxpayers.”

“Simply put, the law applies equally to all in South Carolina,” said U.S. Attorney Sherri Lydon.  “The same spoon that serves indictments on drug dealers, felons in possession of firearms, and corrupt officials will also feed those companies and individuals who engage in Medicare fraud.  White collar crime is not victimless.  All taxpayers will endure the rising cost of health care premiums and out-of-pocket costs as a result of fraud on our Medicare system.  I am honored to stand with our partners at the FBI, HHS-OIG, and IRS-CI, who led this outstanding and nationally significant investigation from right here in South Carolina.”

“The indictments we are unsealing today charge the defendants with running a complex, multilayered scheme to defraud our Medicare system and avoid detection by government regulators,” said U.S. Attorney Craig Carpenito.  “The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns.  Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds. We are proud to join our law enforcement partners in New Jersey and around the country to put a stop to this unscrupulous criminal activity.”

“Protecting the integrity of America’s health care programs is necessary to ensure that our citizens receive the care they have paid for and deserve,” said U.S. Attorney Chapa Lopez.  “The mammoth coordination and cooperation demonstrated among the various offices, districts, and agencies involved in this case leaves no doubt. We will leverage the full weight of our resources to combat fraud and abuse, wherever it is found.”

“Today, one of the largest health care fraud schemes in U.S. history came to an end thanks to close collaboration and coordination between the FBI and partners including HHS-OIG and IRS-CI,” said FBI Assistant Director Robert Johnson.  “Health care fraud causes billions of dollars in losses, it deprives real patients of the critical health care services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity.  Through today’s coordinated national effort, we put an end to this egregious and costly health care fraud scheme, and the public can rest assured the FBI will continue to make health care fraud investigations a top priority.”

“Our law enforcement officers are focused on preventing and uprooting health care fraud schemes like those alleged today,” said Deputy Inspector General for Investigations Gary Cantrell.  “These schemes divert money from taxpayer-funded federal health care programs into the hands of criminals.  Working closely with our law enforcement partners, our agency will continue to investigate and disrupt attempts to undermine Medicare and target beneficiaries.”

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” said IRS-CI Chief Don Fort.  “The conspiracy described in this indictment was not perpetrated by one individual.  Rather, it details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants.  We all suffer when schemes like this go undiscovered and I’m proud of the work our agents did in working with our partners to uncover this complex scheme.”

“The Centers for Medicare & Medicaid Services (CMS) Center for Program Integrity (CPI) is proud to work very closely everyday with our law enforcement partners to stop exploitation of vulnerable patients and misuse of taxpayer dollars,” said Deputy Administrator and CPI Director Alec Alexander.  “In this case CMS has taken swift administrative action and has suspended payments to 130 distinct providers thereby likely preventing billions of additional dollars in losses.  CMS remains committed to protecting the millions of beneficiaries we are honored to serve and to preventing fraud of all sorts in the Medicare and Medicaid programs.”

According to allegations in court documents, some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity.  The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries.  The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders.  Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare.  Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

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Amongst those charged by Strike Force attorneys include:

In the District of New Jersey, charges were brought against Creaghan Harry, 51, of Highland Beach, Florida; Lester Stockett, 51, of Deefield Beach, Florida; and Elliot Loewenstern, 56, of Boca Raton, Florida; the owner, CEO and VP of marketing, respectively, of purported call centers and telemedicine companies, for their alleged participation in a $454 million illegal health care kickback and international money laundering scheme related to the solicitation of illegal kickbacks and bribes in exchange for the referral of DME orders to DME providers.  In addition, Joseph DeCoroso, M.D., 62, of Toms River, New Jersey, was charged in a $13 million conspiracy to commit health care fraud and separate charges of health care fraud for writing medically unnecessary orders for DME, in many instances without ever speaking to the patients, while working for two telemedicine companies.  The cases are being prosecuted by Fraud Section Acting Assistant Chief Jacob Foster and Trial Attorney Darren Halverson.

In the Middle District of Florida, charges were brought against Willie McNeal, 42, of Spring Hill, Florida, the owner and CEO of two purported telemedicine companies, for his alleged participation in a $250 million scheme related to the solicitation of illegal kickbacks and bribes in exchange for the referral of DME orders to DME providers.  The case is being prosecuted by Fraud Section Acting Assistant Chief Jacob Foster and Trial Attorneys John Michelich, Catherine Wagner and Sara Clingan.

In the Northern District of Texas, charges were brought against Leah Hagen, 48, and Michael Hagen, 51, of Dalworthington Gardens, Texas, owners and operators of two DME companies, for their alleged participation in a $17 million illegal health care kickback scheme related to the payment of kickbacks in exchange for the referral of medically unnecessary DME orders.  The case is being prosecuted by Fraud Section Trial Attorneys Brynn Schiess and Carlos Lopez.

In the Western District of Texas, Christopher O’Hara, 54, of Kingsbury, Texas, the owner of a purported telemedicine company, was charged in an $40 million scheme related to the alleged solicitation of illegal kickbacks and bribes in exchange for the referral of DME orders to DME providers.  The case is being prosecuted by Fraud Section Trial Attorney Kevin Lowell.

In the Eastern District of Pennsylvania, Randy Swackhammer, M.D., 60, of Goldsboro, North Carolina, was charged for an alleged $5 million conspiracy to commit health care fraud that involved writing medically unnecessary orders for DME while working for a telemedicine company, in many instances with only a brief telephonic conversation with the patients.  The case is being prosecuted by Fraud Section Trial Attorney Adam Yoffie.

In the Central District of California, charges were brought against Darin Flashberg, 41, of Glendora, California, and Najib Jabbour, 47, of Glendora, California, owners of seven DME companies, for their alleged participation in a $34 million scheme related to their payment of kickbacks and bribes in exchange for medically unnecessary DME orders.  The case is being prosecuted by Fraud Section Trial Attorney Robyn Pullio.

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In addition to the Strike Force prosecutions, other enforcement actions were taken, including the execution of search warrants to support related investigative efforts in seven additional U.S. Attorney’s Offices to include in various investigations conducted by the District of New Jersey, District of South Carolina, Southern District of California, District of Nebraska, Middle District of Florida, Eastern District of Missouri and Western District of Washington. 

In the District of South Carolina, charges were brought against Andrew Chmiel, 43, of Mt. Pleasant, South Carolina, owner of over a dozen companies involved in the scheme, for his alleged participation in a $200 million scheme related to the payment of kickbacks and bribes in exchange for medically unnecessary DME orders.  The cases are being prosecuted by Assistant U.S. Attorneys Jim May and Will Lewis of the District of South Carolina.

In the District of New Jersey, charges were brought against Neal Williamsky 59, of Marlboro, New Jersey, and Nadia Levit, 39, of Englishtown, New Jersey, owners of approximately 25 DME companies, for their alleged participation in a $150 million scheme related to the payment of kickbacks and bribes in exchange for medically unnecessary DME orders.  Albert Davydov, 26, of Rego Park, New York, was also charged for his alleged participation in a $35 million scheme related to the payment of kickbacks and bribes in exchange for medically unnecessary DME orders.  The cases are being prosecuted by Assistant U.S. Attorneys Brian Urbano and Stephen Ferketic of the District of New Jersey.

In the Middle District of Florida, search and seizure warrants are being executed at 20 different business locations, including numerous DME companies and a fraudulent telemarketing company. The search and seizures are being executed by over 100 law-enforcement officers from six federal agencies, including HHS-OIG, FBI, IRS-CI, VA-OIG, SSA-OIG, and USPS-OIG.  In addition to the 20 search warrants, millions of dollars and other assets tied to the conspiracy are being seized and/or frozen, including through a civil injunction naming 13 defendants as authorized under 18 U.S.C. § 1345.

Any doctors or medical professionals who have been involved with alleged fraudulent telemedicine and DME marketing schemes – including Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD – should call to report this conduct to the FBI hotline at 1-800-CALL-FBI.

Additional documents related to this announcement will shortly be available here: https://www.justice.gov/opa/documents-and-resources-april-9-2019-press-release-health-care-fraud.

April 12, 2019 in AML | Permalink | Comments (0)

Thursday, April 11, 2019

Obama's White House Counsel Indicted For Lying As Agent of Russia's Ukrainian Government

A federal grand jury returned an indictment charging Gregory B. Craig, President Obama's White House Counsel, a Washington-based lawyer, with making false statements and concealing material information about his activities on behalf of the Russian backed government of Ukraine from the Department of Justice, National Security Division’s Foreign Agents Registration Act Unit (FARA Unit). Download Craig Indictment

Craig, 74, of Washington, D.C., was indicted by a grand jury in the U.S. District Court for the District of Columbia for willfully falsifying and concealing material facts from the FARA Unit, in violation of Title 18, United States Code, Section 1001(a)(1), and for making false and misleading statements to the FARA Unit, in violation Title 22, United States Code, Section 618(a)(2).

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and is not evidence of guilt.  Every defendant is presumed innocent until, and unless, proven guilty.

The maximum penalties for the charged offenses are, respectively, five years’ imprisonment and a $250,000 fine, and five years’ imprisonment and a $10,000 fine.  The maximum statutory sentence for federal offenses is prescribed by Congress and is provided here for informational purposes.  The sentencing will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

This case is being investigated by the FBI’s New York Field Office. It is being prosecuted by Assistant U.S. Attorneys Fernando Campoamor-Sanchez and Molly Gaston of the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Jason McCullough of the Justice Department’s National Security Division.

April 11, 2019 in AML | Permalink | Comments (0)

Tuesday, April 9, 2019

Standard Chartered Bank Admits to Illegally Processing Transactions in Violation of Iranian Sanctions and Agrees to Pay More Than $1 Billion

Iranian National Indicted and Former SCB Employee Pleaded Guilty for Criminal Conspiracy to Violate Iranian Sanctions

Standard Chartered Bank (SCB), a global financial institution headquartered in London, England, has agreed to forfeiture of $240 million, a fine of $480 million, and to the amendment and extension of its deferred prosecution agreement (DPA) with the Justice Department for an additional two years for conspiring to violate the International Emergency Economic Powers Act (IEEPA).  This criminal conspiracy, lasting from 2007 through 2011, resulted in SCB processing approximately 9,500 financial transactions worth approximately $240 million through U.S. financial institutions for the benefit of Iranian entities. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Jessie K. Liu of the District of Columbia, Assistant Director in Charge William F. Sweeney, Jr. of the FBI’s New York Field Office, Chief Don Fort of the IRS Criminal Investigation (CI), and District Attorney Cyrus R. Vance Jr. of New York County made the announcement.

The New York County District Attorney’s Office (DANY) is also announcing today that SCB has agreed to amend its DPA with DANY and extend for two additional years, and to pay an additional financial penalty of $292,210,160.  Under the amended DPA with DANY, SCB has admitted that it violated New York State law by, among other things, falsifying the records of New York financial institutions.  SCB has also entered into separate settlement agreements with the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve), the New York State Department of Financial Services (DFS), and the United Kingdom’s Financial Conduct Authority (FCA) under which SCB shall pay additional penalties totaling more than $477 million.  The Justice Department has agreed to credit a portion of these related payments and, after crediting, will collect $52,210,160 of the fine, in addition to SCB’s $240 million forfeiture.

In connection with the conspiracy, a former employee of SCB’s branch in Dubai, United Arab Emirates (UAE), referred to as Person A, pleaded guilty in the District of Columbia for conspiring to defraud the United States and to violate IEEPA.  A two-count criminal indictment was unsealed today in federal court in the District of Columbia charging Mahmoud Reza Elyassi, an Iranian national, 49, and former customer of SCB Dubai, with participating in the conspiracy.

“Today’s resolution sends a clear message to financial institutions and their employees: if you circumvent U.S. sanctions against rogue states like Iran—or assist those who do—you will pay a steep price,” said Assistant Attorney General Benczkowski.  “When a global bank processes transactions through the U.S. financial system, its compliance program must be up to the task of detecting and preventing sanctions violations—and when it is not, banks have an obligation to identify, report, and remediate any shortcomings.  The Justice Department is committed to protecting our U.S. financial system and will continue to hold financial institutions and individuals to account when they violate U.S. sanctions laws.” 

“SCB and the individuals whose charges were unsealed today undermined the integrity of our financial system and harmed our national security by deliberately providing Iranians with coveted access to the U.S. economy,” said U.S. Attorney Liu.  “The financial penalty announced today leaves no doubt that repeat corporate offenders with deficient compliance programs will pay a steep price.  When bank employees and customers conspire to violate U.S. sanctions and subvert our national security, we will bring them to justice no matter where they reside or operate.”

“U.S. sanctions laws exist to protect our national security and the integrity of our financial systems,” said FBI Assistant Director in Charge Sweeney.  “Global banks that facilitate transactions through our financial institutions have to play by these rules, plain and simple.  Allowing hostile nations access to our economy is dangerous business.  The deferred prosecution agreement and charges announced today make it abundantly clear that any alleged violation of IEEPA, whether on behalf of an individual or entity, will not be taken lightly.”

“The financial penalty announced today should dissuade other financial institutions around the world from thinking they can circumvent U.S. sanctions by moving money around the world through various institutions and in various forms,” said IRS-CI Chief Fort.  “Following complex money trails is what we do—so too is holding those accountable who try to avoid following the law.”

“Our office’s unique jurisdiction and expert personnel have again enabled us to deliver hundreds of millions in ill-gotten gains to the People of New York while contributing to America’s longstanding effort to promote democratic values around the world,” said Manhattan District Attorney Vance.  “We are honored and privileged to collaborate in this shared endeavor with the supremely talented public servants of the U.S. Departments of Justice and Treasury, the New York Department of Financial Services, and the Federal Reserve Bank of New York.”

A two-count felony criminal information was filed today in the District of Columbia charging SCB with illegally conspiring to violate IEEPA.  The first count alleges SCB’s participation in a criminal conspiracy from 2001 through 2007; the United States first charged SCB with this illegal conduct on Dec. 10, 2012, and under the terms of a DPA entered the same day, the government agreed to defer prosecution and SCB agreed to pay a financial penalty of $227 million.  The second count alleges SCB’s participation in a criminal conspiracy to violate IEEPA from 2007 through 2011.  This latter conspiracy resulted in SCB intentionally processing U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities worth approximately $240 million.  In the amended DPA, SCB admitted and accepted responsibility for its criminal conduct, agreed to extend the term of the agreement for an additional two years and, among other things, agreed to additional cooperation, compliance and disclosure obligations. 

As part of the amended DPA announced today, SCB admitted that, from 2007 through 2011, two former employees of its branch in Dubai, willfully conspired to help Iran-connected customers conduct U.S. dollar transactions through the U.S. financial system for the benefit of Iranian individuals and entities.  One of these Iran-connected customers was Elyassi, an Iranian national who operated business accounts with SCB’s Dubai branch while residing in Iran.  SCB’s former employees helped Elyassi manage these accounts, concealed their Iranian connections, and facilitated foreign currency transactions in U.S. dollars.  SCB’s former employees knew that Elyassi’s business organizations operated from Iran and conducted U.S. dollar transactions for the benefit of Iranian interests, and helped Elyassi disguise his Iranian connections to avoid suspicion.

According to the indictment unsealed today, Elyassi and his co-conspirators registered numerous supposed general trading companies in the UAE, and used those companies as fronts for a money exchange business located in Iran.  Between November 2007 and August 2011, Elyassi used a business account at SCB’s Dubai branch to cause U.S. dollar transactions to be sent and received through the U.S. financial system for the benefit of individuals and entities ordinarily resident in Iran in violation of U.S. economic sanctions.  The charges in the indictment as to Elyassi are merely allegations, and Elyassi is presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

SCB admitted to processing approximately 9,500 U.S. dollar transactions through the United States totaling approximately $240 million on behalf of Elyassi’s companies between 2007 and 2011.  More than half of these U.S. dollar transactions were the result of deficiencies in SCB’s compliance program which allowed customers to request U.S. dollar transactions from within sanctioned countries, including Iran.

Since mid-2013, SCB has engaged in significant remediation, including the comprehensive enhancement of its U.S. economic sanctions compliance program and significant improvements to its financial crime compliance program.  Once presented with evidence of potential post-2007 sanctions violations, SCB provided substantial cooperation in the government’s investigation, including by producing significant evidence of criminal wrongdoing perpetrated by its employees and customers.

This matter was investigated by the FBI’s New York Field Office and the IRS-CI’s Washington D.C. Field Division.  The cases are being prosecuted by the Criminal Division’s Money Laundering and Asset Recovery Section’s Bank Integrity Unit and the U.S. Attorney’s Office for the District of Columbia.  Trial Attorney Jennifer Wine of the Bank Integrity Unit and Assistant U.S. Attorneys Michael Friedman and Peter Lallas of the District of Columbia are handling the matters.

The Bank Integrity Unit investigates and prosecutes complex, multi-district, and international criminal cases involving financial institutions.  The Unit’s prosecutions focus on banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

The New York County District Attorney’s Office conducted its own investigation in conjunction with the Justice Department, including Assistant District Attorneys Jose Fanjul and Kevin Wilson serving as Special Assistant U.S. Attorneys in the District of Columbia.  The Justice Department expressed its gratitude to OFAC, the Federal Reserve, DFS, and the FCA.  The Justice Department’s Office of International Affairs provided assistance.

Attachment(s): 

April 9, 2019 in AML | Permalink | Comments (0)

Congressional Staffer Sentenced to Prison for Extensive Fraud and Election Crimes Scheme

A former congressional staffer was sentenced to 18 months in prison followed by three years of supervised release and ordered to pay $564,718.65 in restitution and $156,855.29 in forfeiture, for participating in a multi-year scheme to defraud charitable donors of hundreds of thousands of dollars and secretly funnel the proceeds to pay for personal expenses and illegally finance campaigns for federal office. 

Jason T. Posey, 48, of Tupelo, Mississippi, was sentenced in the U.S. District Court for the Southern District of Texas by Chief U.S. District Judge Lee H. Rosenthal.  Posey pleaded guilty on Oct. 11, 2017, to one count of mail fraud, one count of wire fraud and one count of money laundering.  As part of his plea, Posey admitted that he participated in a scheme led by former U.S. Representative Stephen E. Stockman, 62, who was convicted by a federal jury in Houston on April 12, 2018, of 23 counts of mail fraud, wire fraud, conspiracy to make conduit contributions and false statements to the Federal Election Commission (FEC), making false statements to the FEC, making excessive coordinated campaign contributions, money laundering and filing a false tax return.  Another of Stockman’s former congressional staffers, Thomas Dodd, 40, of Houston, Texas, pleaded guilty on March 20, 2017, to one count of conspiracy to commit mail and wire fraud and one count of conspiracy to make conduit contributions and false statements.  On Dec. 12, 2018, Dodd was sentenced to serve 18 months in prison and ordered to pay $800,000 in restitution, to be followed by three years of supervised release.

According to the admissions made by Posey in connection with his guilty plea, from January 2013 to February 2014, Posey assisted Stockman in fraudulently soliciting $800,571.65 in donations from charitable organizations and the individuals who ran those organizations based on false pretenses, then using a series of sham nonprofit organizations and dozens of bank accounts to launder the money before it was spent on a variety of personal and campaign expenses. 

Specifically, Posey admitted that shortly after Stockman took office as a member of the U.S. House of Representatives in 2013, Stockman and Dodd used the name of one sham nonprofit entity, Life Without Limits, to solicit and receive a $350,000 charitable donation, to be used to create an educational center called the Freedom House.  Stockman, Dodd, and Posey instead used this donation for a variety of personal and campaign expenses, including illegal conduit campaign contributions, and payments for hundreds of thousands of robocalls and mailings promoting Stockman’s candidacy for U.S. Senate in early 2014.

In addition, Posey admitted that, in connection with Stockman’s Senate campaign, Stockman and Posey used another sham nonprofit entity called Center for the American Future to secure a $450,571.65 donation in order to fund a purportedly legitimate independent expenditure promoting Stockman’s candidacy.  Posey admitted that the purportedly independent expenditure was in fact secretly controlled by Stockman, who directed his campaign and Posey to file false affidavits with the FEC covering up Stockman’s involvement. 

In addition, Posey admitted that during the early stages of the investigation, Stockman directed Posey to flee to Cairo, Egypt, for two and a half years so that Posey could not be questioned by law enforcement.

April 9, 2019 in AML | Permalink | Comments (0)

Monday, April 8, 2019

The Founder and Chairman of a Multinational Investment Company, a Company Consultant and Two North Carolina Political Figures are Charged with Public Corruption and Bribery

A federal criminal indictment unsealed in the Western District of North Carolina charges the founder and Chairman of a multinational investment company, a company consultant and two North Carolina political figures with public corruption and bribery, for their alleged participation in a bribery scheme involving independent expenditure accounts and improper campaign contributions.

The indictment charges Greg E. Lindberg, 48, of Durham, North Carolina, and founder and Chairman of Eli Global LLC (Eli Global) and the owner of Global Bankers Insurance Group (GBIG); John D. Gray, 68, of Chapel Hill, North Carolina and a consultant for Lindberg; North Carolina state political party Chairman Robert Cannon Hayes, 73, of Concord, North Carolina; and Chairman of a Chatham County political party and an Eli Global executive John V. Palermo, 63, of Pittsboro, North Carolina, with conspiracy to commit honest services wire fraud, and bribery concerning programs receiving federal funds and aiding and abetting.  Hayes is also charged with three counts of making false statements to the FBI.

The defendants made their initial appearances today before U.S. Magistrate Judge David C. Keesler in federal court in Charlotte.

“The indictment unsealed today outlines a brazen bribery scheme in which Greg Lindberg and his coconspirators allegedly offered hundreds of thousands of dollars in campaign contributions in exchange for official action that would benefit Lindberg’s business interests,” said Assistant Attorney General Benczkowski.  “Bribery of public officials at any level of government undermines confidence in our political system.  The Criminal Division will use all the tools at our disposal—including the assistance of law-abiding public officials—to relentlessly investigate and prosecute corruption wherever we find it.”

“Thanks to the voluntary reporting of the North Carolina Commissioner of Insurance, we have uncovered an alleged scheme to violate our federal public corruption laws,” said U.S. Attorney Murray.  “Improper campaign contributions erode the public’s trust in our political institutions.  We will work with our law enforcement partners to investigate allegations of public corruption, safeguard the integrity of the democratic process, and prosecute those who compromise it.”

“These men crossed the line from fundraising to felonies when they devised a plan to use their connections to a political party to attempt to influence the operations and policies of the North Carolina Department of Insurance,” said Special Agent in Charge Strong.  “The FBI will root out any and all forms of public corruption.  We remain committed to ensuring those who violate the public’s sacred trust are held accountable.”

The criminal indictment alleges that in January 2018, the elected Commissioner of Insurance (Commissioner) of the North Carolina Department of Insurance (NCDOI) reported concerns to federal law enforcement about political contributions and other requests made by Lindberg and Gray, and agreed to cooperate with the federal investigation that was initiated. 

According to allegations in the indictment, from April 2017 to August 2018, Lindberg, Gray, Palermo and Hayes devised a scheme to defraud and deprive the citizens of North Carolina of the honest services of the Commissioner, an elected State official, through bribery.  As alleged in the indictment, the defendants 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.  As the indictment alleges, the defendants 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. 

During the time frame relevant to the indictment, Lindberg, Gray, Palermo 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, Palermo allegedly set up, at the direction of Lindberg, two corporate entities to form an independent expenditure committee with the purpose of supporting the Commissioner’s re-election campaign, and funded the entities with $1.5 million as promised to the Commissioner.  Also, at Lindberg and Gray’s direction, Hayes allegedly 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.

On or about Aug. 28, 2018, FBI agents interviewed Hayes about his involvement with and knowledge of the alleged improper campaign contributions.  During the interview, Hayes allegedly lied to FBI agents about directing funds, at Lindberg’s request, from Lindberg’s campaign contribution to the North Carolina state political party to the Commissioner’s re-election campaign; about having any discussions with the Commissioner about Lindberg or Gray; and about discussing with the Commissioner personnel issues related to the Commissioner’s office.  

April 8, 2019 in AML | Permalink | Comments (0)

Sunday, April 7, 2019

Texas Men Arrested for Bribery, Attorney Laundered Via IOLTA Account

Three Texas men, including a former Weslaco City Commissioner and a former Hidalgo County Commissioner, were arrested on charges of conspiracy to commit honest services wire fraud and conspiracy to commit money laundering. Download Cuellar Criminal Complaint

Criminal complaints were filed in the Southern District of Texas against former Weslaco City Commissioner John Cuellar, 56, of Weslaco, Texas, and former Hidalgo County Commissioner Arturo Cuellar Jr., 65, of Hidalgo County, Texas.  They are charged with conspiring to bribe a Weslaco City Commissioner in exchange for official actions favorable to three engineering companies and conspiracy to commit money laundering.  Daniel Garcia, 40, an attorney based in Rio Grande City, Texas, was also charged with conspiracy to commit money laundering.

According to the complaint, starting in approximately March 2008, Cuellar agreed to accept bribes from three engineering companies that were funneled through Cuellar Jr. and others. Cuellar and another Weslaco City Commissioner would then allegedly take actions favorable to the three companies in relation to contracts to rehabilitate and rebuild Weslaco’s water treatment facilities. 

According to the complaint, from approximately April 2008 through December 2015, Lopez received approximately $3.7 million from two engineering companies, and shared approximately $1.398 million with Cuellar Jr.  The complaint further alleges that Cuellar Jr. used a company he controlled to pay Cuellar approximately $405,000, disguised as legitimate legal expenses.  In exchange for these payments, Cuellar allegedly took several official actions to benefit the three construction companies, including the award of a $38.5 million contract to rehabilitate Weslaco’s water treatment plant.

The complaint further alleges that Lopez and Cuellar, Jr. enlisted Garcia, an attorney, to launder approximately $90,000 in bribe payments to Cuellar through Garcia’s interest on lawyers trust (IOLTA) account.

April 7, 2019 in AML | Permalink | Comments (0)

Saturday, April 6, 2019

South Florida Health Care Facility Owner Convicted for Role in Largest Health Care Fraud Scheme Ever Charged by The Department of Justice, Involving $1.3 Billion in Fraudulent Claims

A federal jury found a South Florida health care facility owner guilty for his role in the largest health care fraud scheme ever charged by the Justice Department, involving over $1.3 billion in fraudulent claims to Medicare and Medicaid for services that were not provided, were not medically necessary or were procured through the payment of kickbacks. 

After an eight-week trial, Philip Esformes, 50, of Miami Beach, Florida, was convicted of one count of conspiracy to defraud the United States, two counts of receipt of kickbacks in connection with a federal health care program, four counts of payment of kickbacks in connection with a federal health care program, one count of conspiracy to commit money laundering, nine counts of money laundering, two counts of conspiracy to commit federal program bribery, and one count of obstruction of justice before U.S. District Judge Robert N. Scola Jr. of the Southern District of Florida.  Sentencing has not yet been scheduled.

“Philip Esformes orchestrated one of the largest health care fraud schemes in U.S. history, defrauding Medicare and Medicaid to the tune of over a billion dollars,” said Assistant Attorney General Benczkowski.  “I commend our dedicated prosecutors and law enforcement partners for their professionalism and unyielding pursuit of justice on behalf of American taxpayers and vulnerable beneficiaries who, as a result of Esformes’s crimes, were denied the level of care that they needed and deserved.”

“Philip Esformes’ criminal scheme defrauded America’s health care system out of millions of dollars, that would have otherwise provided quality care to patients in need,” said U.S. Attorney Fajardo Orshan.  “I commend the Assistant U.S. Attorneys from the Southern District of Florida, who worked tirelessly alongside their partners at the Department’s Criminal Division, the FBI and HHS-OIG to bring this case to justice.  This massive fraud scheme, perpetuated in nursing and assisted living facilities in our South Florida communities, compromised the integrity of our local health care system.  We remain united in our commitment to root out health care fraud and support quality patient care.”

“Philip Esformes is a man driven by almost unbounded greed,” said Assistant Special Agent in Charge Denise M. Stemen of FBI Miami.  “The illicit road Esformes took to satisfy his greediness led to over $800 million in fraudulent health care claims, the largest amount ever charged by the Department of Justice.  Along that road, Esformes cycled patients through his facilities in poor condition where they received inadequate or unnecessary treatment, then improperly billed Medicare and Medicaid.  Taking his despicable conduct further, he bribed doctors and regulators to advance his criminal conduct and even bribed a college official in exchange for gaining admission for his son to that university.  The FBI and its partners are constantly investigating health care fraudsters, big and small, who steal money from taxpayers at the expense of patients in need of quality medical care.”

“This largest ever healthcare fraud conviction highlights the awful toll criminal schemes take on federal health programs,” said HHS-OIG Special Agent in Charge Richmond.  “Even beyond the vital dollars lost though, Esformes exploited and victimized patients by providing inadequate medical care and poor conditions in his nursing homes.  Along with our law enforcement partners, we will continue the fight against such parasites.”

According to evidence presented at trial, from approximately January 1998 through July 2016, Esformes led an extensive health care fraud conspiracy involving a network of assisted living facilities and skilled nursing facilities that he owned.  Esformes bribed physicians to admit patients into his facilities, and then cycled the patients through his facilities, where they often failed to receive appropriate medical services, or received medically unnecessary services, which were then billed to Medicare and Medicaid, the evidence showed.  Several witnesses testified to the poor conditions in the facilities and the inadequate care patients received, which Esformes was able to conceal from authorities by bribing an employee of a Florida state regulator for advance notice of surprise inspections scheduled to take place at his facilities.  The evidence further showed that Esformes used his criminal proceeds to make a series of extravagant purchases, including luxury automobiles and a $360,000 watch.  Esformes also used criminal proceeds to bribe the basketball coach at the University of Pennsylvania in exchange for his assistance in gaining admission for his son into the university.  Altogether, the evidence established that Esformes personally benefited from the fraud and received in excess of $37 million. 

Esformes’s coconspirator, physician’s assistant Arnaldo Carmouze, previously pleaded guilty to conspiracy to commit health care fraud and is scheduled to be sentenced on April 10.  Esformes’s coconspirator Odette Barcha also pleaded guilty to one count of conspiring to violate the anti-kickback statute.  Barcha was sentenced on April 3 to serve 15 months in prison followed by three years of supervised release.  She was also ordered to pay $704,516.00 in restitution.

This case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida with assistance from Florida Attorney General’s Office Medicaid Fraud Control Unit  The case was prosecuted by Fraud Section Assistant Chiefs Allan Medina and Drew Bradylyons and Trial Attorneys James Hayes, Elizabeth Young and Jeremy Sanders, as well as Assistant U.S. Attorneys John Shipley and Dan Bernstein of the Southern District of Florida.  Assistant U.S. Attorneys Alison Lehr, Nalina Sombuntham and Daren Grove of the Southern District of Florida are handling the forfeiture aspects of the case.

The Fraud Section leads the Medicare Fraud Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

April 6, 2019 in AML | Permalink | Comments (0)

Saturday, March 30, 2019

Former Lobbyist Guilty - 5 Year Multi-Million High-Yield Investment Fraud Scheme

A former lobbyist pleaded guilty today to making a false statement to U.S. Postal Inspectors in connection with an ongoing federal investigation and proceedings concerning a five-year multi-million dollar high-yield investment fraud scheme, announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division.  

Christopher Petrella, 51, of Greer, South Carolina, pleaded guilty before U.S. Magistrate Judge David S. Cayer of the Western District of North Carolina to one count of making a false statement.  Sentencing, which has not yet been scheduled, will be before U.S. District Judge Robert J. Conrad of the Western District of North Carolina.

Petrella was indicted in October 2018 for one count of obstruction of justice. Under the plea agreement, the government will move to dismiss the indictment at sentencing.   

As part of his guilty plea, Petrella admitted that, in an attempt to mislead federal law enforcement about his involvement in a high-yield investment scheme involving Niyato Industries Inc (Niyato), he knowingly and willfully made the false claim that he had filed a “quarterly report” with U.S. Congress pursuant to certain requirements applicable to federal lobbyists, such as himself.  The “quarterly report” purportedly disclosed to authorities that certain individuals had made false and misleading statements about Niyato’s business and operations on Niyato’s Twitter and Facebook pages. 

Ten individuals had been previously indicted by a Charlotte grand jury for their alleged roles in a high-yield investment scheme involving Niyato.  The charges in that case allege that the defendants raised money from investors by representing that Niyato manufactured electric and compressed natural gas automobiles when, in truth, the company had no facilities, no operations and no capability to manufacture anything.  Two defendants were recently found guiltyof conspiracy to commit mail and wire fraud, mail fraud, wire fraud, and money laundering, following a three-week trial and are awaiting sentencing.  Four other defendants have pleaded guilty and are awaiting sentencing.  One additional defendant has pleaded guilty and received a sentence of 102 months in prison in connection with his role in the Niyato case and in an unrelated Costa Rican sweepstakes fraud.  Daniel Thomas Broyles, Sr., 61, of Beverly Hills, California, was also charged and remains a fugitive.  An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

March 30, 2019 in AML | Permalink | Comments (0)

Friday, March 29, 2019

Resolving Foreign Bribery Cases with Non-Trial Resolutions

Settlements and Non-Trial Agreements by Parties to the Anti-Bribery Convention

Ever since the entry into force of the OECD Anti-Bribery Convention, bribery offences, including the bribery of foreign public officials, have increasingly been resolved through non-trial resolutions. Of the 890 cases concluded under the Anti-Bribery Convention to date, close to 80% have been through non-trial resolutions. Download Resolving-foreign-bribery-cases-with-non-trial-resolutions

Non-trial resolutions, commonly known as “settlements”, are generally viewed as a pragmatic and efficient way to resolve cases that would otherwise require tremendous time and resources to investigate and prosecute before reaching a court. Advocates for settlements argue that their compromising rather than adversarial nature constitute an incentive for wrongdoers to self-report to prosecutors and increase the prospects of corporate governance reforms. However, they also present legal, institutional and procedural challenges and some experts question their ability to fairly and effectively deliver justice. Questions of transparency, the level of deterrence and victims’ compensation are generally at the heart of these concerns.

This Study is the first cross-country examination of the different types of resolutions that can be used to resolve foreign bribery cases. Covering 27 of the 44 Parties to the Anti-Bribery Convention, the Study documents the non-trial resolution mechanisms available to resolve foreign bribery cases with individuals and/or legal persons with the imposition of sanctions and/or confiscation. The Study was undertaken by the OECD Working Group on Bribery in International Business Transactions. It relies on governmental data gathered through both the rigourous country monitoring process, and a comprehensive survey circulated to all Parties to the Convention. It also relies on the OECD database of concluded foreign bribery cases and specific case studies of the most prominent multi-jurisdictional cases.

March 29, 2019 in AML | Permalink | Comments (0)

Tuesday, March 26, 2019

Former Candidate for U.S. House Guilty for Fraud PAC "Keeping America in Republican Control" (KAIRC), Spending $1 Million on Personal Expenses

A former candidate for the U.S. House of Representatives pleaded guilty today to wire fraud and willfully violating the Federal Election Campaign Act (FECA) by operating fraudulent and unregistered political action committees.

Harold Russell Taub, 30, of Cranston, Rhode Island, pleaded guilty to one count of wire fraud and one count of willfully violating FECA before U.S. District Judge William E. Smith for the District of Rhode Island.  Sentencing is set for July 12, 2019.

According to the Information, in late 2016, Taub began soliciting donations to an organization he called Keeping America in Republican Control (KAIRC), which he represented to be a legitimate political committee, organized in accordance with federal law to support Republican candidates at the state and federal level.  In March 2018, Taub began soliciting donations to another purported political action committee, Keeping Ohio in Republican Control (KOIRC), with the stated purpose of supporting Republican candidates in Ohio.  Taub collected a total of approximately $1,630,439 in contributions to KAIRC and KOIRC, but never registered either entity with the FEC or made required reports to the FEC, as required by FECA.

Taub admitted as part of the plea that he held KAIRC and KOIRC out as legitimate, federally-registered political actions committees on his website, in social media posts, and in email solicitations that reached hundreds of donors.  Taub represented that all of KAIRC and KOIRC’s staff were volunteers and that “100 percent” of donations were used to support candidates.  However, of the more than $1.6 million in contributions to KAIRC and KOIRC, Taub used more than $1 million for purely personal expenses.  In furtherance of his fraudulent scheme, Taub also repeatedly used the name of a former Ambassador and high-level military officer without the knowledge or permission of the person, even after being instructed not to do so. 

The FBI investigated the case.  Trial Attorney Peter M. Nothstein of the Criminal Division’s Public Integrity Section is prosecuting the case.

March 26, 2019 in AML | Permalink | Comments (0)

Saturday, March 23, 2019

New Beneficial Ownership Toolkit will help tax administrations tackle tax evasion more effectively

The first ever beneficial ownership toolkit was released today in the context of the OECD’s Global Integrity and Anti-Corruption Forum. The toolkit, prepared by the Secretariat of the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes in partnership with the Inter-American Development Bank, is intended to help governments implement the Global Forum’s standards on ensuring that law enforcement officials have access to reliable information on who the ultimate beneficial owners are behind a company or other legal entity so that criminals can no longer hide their illicit activities behind opaque legal structures. 

Download Beneficial-ownership-toolkit

The toolkit was developed to support Global Forum members and in particular developing countries because the current beneficial ownership standard does not provide a specific method for implementing it.  To assist policy makers in assessing different implementation options,  the toolkit contains policy considerations that Global Forum members can use in implementing the legal and supervisory frameworks to identify, collect and maintain the necessary beneficial ownership information.

“Transparency of beneficial ownership information is essential to deterring, detecting and disrupting tax evasion and other financial crimes.  The Global Forum’s standard on beneficial ownership offers jurisdictions flexibility in how they implement the standard to take account of different legal systems and cultures.  However, that flexibility can pose challenges particularly to developing countries.” said Pascal Saint-Amans, Head of the OECD’s Centre for Tax Policy and Administration. “This new toolkit is an invaluable new resource to help them find the best approach.”

The toolkit covers a variety of important issues regarding beneficial ownership, including:

  • the concepts of beneficial owners and ownership, the criteria used to identify them, the importance of the matter for transparency in the financial and non-financial sectors;
  • technical aspects of beneficial ownership requirements, distinguishing between legal persons and legal arrangements (such as trusts), and measures being taken internationally to ensure the availability of information on beneficial ownership a series of checklists that may be useful in pursuing a specific beneficial ownership framework;
  • ways in which the principles on beneficial ownership can play out in practice in Global Forum EOIR peer reviews;
  • why beneficial ownership information is also a crucial component of the automatic exchange of information  regimes being adopted by jurisdictions around the world.

With 154 members, a majority of whom are developing countries, the Global Forum has been heavily engaged in providing technical assistance on the new beneficial ownership requirements, often with the support of partner organisations including the IDB. The Toolkit offers another means to further equip members to  comply with the international tax transparency standards.

The Toolkit is the first practical guide freely available for countries implementing the international tax transparency standards. It will be frequently updated to incorporate new lessons learned from the second-round EOIR peer reviews conducted by the Global Forum, as well as best practices seen and developed by supporting organisations.

March 23, 2019 in AML | Permalink | Comments (0)