Friday, May 14, 2021

"Unbanked"

The New York Appellate Division for the First Judicial Department has imposed a one-year suspension nunc pro tunc to a previously-ordered interim suspension

On June 28, 2018, respondent pleaded guilty in the United States District Court for the Southern District of New York to operation of an unlicensed money transmitting business in violation of 18 USC ยง 1960, a felony. On December 6, 2018, he was sentenced to time served, two years of supervised release, 500 hours of community service, and fined $7,500. In addition, he consented to entry of a $9.4 million forfeiture judgment against him (which the Government contended was the money traceable to, or the proceeds of, his criminal conduct); however, the Government agreed to accept $262,267.62 in full satisfaction thereof to be paid pursuant to a schedule determined by the U.S. Attorney's Office.

In 2013, respondent was introduced to a banker by an individual who had consulted for one of respondent's prior clients and they generally discussed potential business ventures, one of which involved offering "unbanked" Mexicans in the United States a cost-effective system by which they could send money to "unbanked" Mexicans in Mexico. Respondent, who had extensive experience in cross-border, international financing restructuring and project refinance, agreed to assist this individual in developing a corporate structure for this venture.

Respondent worked with this individual to create and operate money transmitting businesses (MTBs). Respondent's initial role was to create entities for the MTB and open bank accounts, for which he used his passport as identification, through which remitted funds would flow. In opening documents for these bank accounts, respondent described the company as providing various services, including investment, consulting, and wholesale trade when, in fact, the company was ultimately not used to provide these services. Some deposits were made by respondent after obtaining cash from others who wanted to send funds to Mexico. On other occasions, individuals with no prior relationship to respondent, and located in regions outside of New York, made cash deposits into the company's accounts in order to have those funds moved to Mexico. Following the cash deposits into the company's bank accounts, respondent caused wire transfers to be made therefrom to Mexico.

At no time were respondent or his companies licensed under federal and state regulations to operate an MTB. Further, neither respondent nor his companies engaged in the required monitoring of their transmission activity, nor did they file suspicious activity reports or cash transaction reports (CTRs). Respondent was aware of the existence of the applicable federal reporting requirements, specifically, pursuant to the Bank Secrecy Act, transactions over $10,000 would have to be reported to the U.S. Treasury Department's Financial Crimes Enforcement Network through CTRs, and he had an independent obligation with regards to the receipt of the funds in question to file the appropriate documentation.

In sum, between 2013 and 2014, respondent used a company he owned to open bank accounts in the United States and facilitated the transmission of approximately $9 million to Mexican financial institutions of which respondent personally transmitted approximately $700,000. Respondent received a fee for his participation in this operation. According to the Government's analysis, at least $262,000 remained in respondent's corporate accounts from these activities, which were used in large part to pay personal expenses including rent, car payments, bills, and tuition.

Sanction

The parties have stipulated to the following factors in aggravation: the many wire and money transfers in question were conducted by dozens of entities and individuals over the course of approximately one year and conducted as an enterprise. In mitigation, the parties have stipulated to the following factors: respondent has no prior discipline; he cooperated with both the U.S. Attorney's Office and the Committee during their respective investigations; he has accepted full responsibility for his misconduct and not attempted to blame anyone or anything for it; and he has expressed sincere remorse and contrition for his misconduct. In addition, respondent is well regarded in the legal community and has an excellent reputation for the character traits of honesty and integrity; he has provided the Committee with letters attesting to his reputation for good character; and given the severity of the penalties he has already received, including both financial and the interim suspension from the practice of law, there is little likelihood that his misconduct will recur. The parties agree that respondent has presented compelling factors in mitigation which support the requested sanction.

(Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2021/05/the-new-york-appellate-division-for-the-first-judicial-department-has-imposed-a-one-year-suspension-nunc-pro-tunc-to-a-previo.html

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