Casino executives alleged to have been collecting debts when arrested in China

By Christine Duhaime | March 10th, 2017

According to this article, the 18 executives of Crown casinos that were arrested in China in October 2016, were in China to collect the debts of what are called “VIP customers” who go on gambling trips through junket schemes. One of the people arrested was Jason O’Connor, who was the VIP executive for Crown Casinos, allegedly responsible for luring rich people from China to gamble in Australia.

It is illegal to solicit gambling services to people in China. O’Connor is believed to have been arrested in October 2016 and has been incarcerated ever since with 17 other Crown employees. When he was arrested, the Crown casino’s VIP operations plummeted 45%. Most large casinos in close proximity to China make money mostly relying upon VIP gambling operations. In Macau, it is Mainland Chinese sub-contractors who arrange the junkets. In the case of Crown, according to this article, it set up offices in China to directly solicit VIP gamblers, rather than using established junket operators.

The arrest was in the midst of something called “Operation Chain Break”, a Chinese operation to stop money laundering through Macau by junket operators but the operation appears to have widened.

The arrest in China is going to require a review by the gambling regulator of the registration of the Australian gambling operations. That is because the arrest and incarceration of Crown employees in China affects the integrity of gambling in Australia.

You can learn more about junkets from our two-part series: “Macau casino junket operators use trade show to polish image” here and “Macau casinos face regulatory balancing act amid international money laundering concerns” here.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

Politically exposed Chinese foreign national pleads guilty to immigration fraud

By Christine Duhaime | March 9th, 2017

Shilan Zhao (趙世蘭), the ex-wife of a Chinese official and a politically exposed person, has pleaded guilty to immigration fraud related to the EB5 investor visa program in the US and will serve a term of incarceration of five years.

Zhao conspired with her husband, Jianjun Qiao (喬建軍), aka Feng Li, to immigrate to the US fraudulently and settle in Washington State. He is wanted in China for embezzling over $50 million in state funds acquired while serving as the director of a state-owned grain company, Sinograin,  in the Henan province. He is on China’s Most Wanted list.

By 2012, Zhao had moved about US$2.2 million in what the US government called “laundered funds” from China to banks in Vancouver and parked the funds there in anticipation of immigration to the US. Those banks were RBC and HSBC. Zhao also bought homes in the Vancouver area.

According to the investigation by the IRS and DHS, Qiao and Zhao transferred about US$700,000 to HSBC in Vancouver in 6 transactions in 2011; then transferred another $1.6 million to another HSBC account in Vancouver; and in 2012, they cashed out over $2 million from a Royal Bank account; and transferred a further $700,000 from RBC to buy property in the US.

Zhao applied to the US under the EB5 program using falsified documents, including fake documents ostensibly proving the source of her investment to qualify under the EB5 program to obtain a US visa. In reliance upon those fake documents, Zhao was approved to immigrate to the US.

In this article, the Chinese Foreign Minister confirms that the people of China “care greatly about bringing back fugitives and recovering their assets.” So far, 2,500 fugitives from more than 90 countries were returned to China on charges of corruption and economic crimes.  38 are on the list of 100 most wanted fugitives.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

Mafia dad and his 3 children sentenced to long jail terms for illegal gambling

By Christine Duhaime | February 26th, 2017

According to several news reports in Italy (here, here and here), a whole family of the ‘Ndrangheta, an international criminal organization that originated in Italy, was convicted Wednesday of illegally operating online gambling websites after a three year trial called “Black Monkey”.

Nicola Femia, his daughter and two sons were sentenced to 56 years incarceration collectively in Bologna, Italy. They ran several online gambling websites hosted in Romania and the UK that provided services to Italians online at 888Suite.com, Vivacasinoelite.com, Vanillascasino.com and Davidcasino.com and also operated a series of slot machines and VLTs across Italy, collecting debts in violent ways from gamblers.

Femia is alleged to have paid €100,000 to a member of the local police to try to influence the outcome of his trial by attempting to bribe the judge. The policeman and the financial intermediary were arrested in October 2013.

In 2008, the U.S. Department of the Treasury added the ‘Ndrangheta to the Office of Foreign Assets Control Specially Designated Nationals list. The ‘Ndrangheta are present in Toronto and in the northern parts of Toronto and once a person is affiliated with them, there is no such thing as ending the relationship.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

Co-founder of infrastructure fund allegedly under investigation for money laundering

By Christine Duhaime | February 25th, 2017

Kola Aluko, a Nigerian energy mogul, is allegedly under investigation for money laundering in Nigeria. Among other things, Aluko is one of the founders of Made in Africa (MiAF), a foundation for infrastructure projects across Africa which, in 2013, joined the African Development to launch the Africa50 Fund on NASDAQ, Africa’s largest infrastructure investment vehicle. It seems to have no projects to date.

Mr. Aluko was the subject of a mareava injunction freezing his assets worldwide. Those assets are listed as including 3 mansions in Los Angeles, 2 high-end apartments in New York City, properties in Santa Barbara, California; numerous properties in Lagos, including 43 apartments in Banana Island, 58 vehicles, the Galactica Star yacht, and three airplanes.

The New York Times reported last year how Aluko made extensive use of shell companies and beneficial ownership structures to move money around the world through tax havens.

Aluko is a politically exposed person and was subject to enhanced due diligence by banks, law firms, wealth management firms as to the source and legitimacy of any funds he transacted in respect of. Persons connected to him at the Africa50 Fund are also each politically exposed persons.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

RCMP charge man in Alberta for money laundering for acting as a finder

By Christine Duhaime | February 25th, 2017

The RCMP has arrested Neil Andrew McDonald in Alberta for money laundering and fraud in connection with finding $240,000 from 7 investors in 2015 in Alberta, in violation of securities law.

It is unusual for Canadian prosecutors outside of Quebec to attach a money laundering offence to a serious predicate offence, especially for securities fraud and this signals a change among Canadian prosecutors.

In this case, it appears that Mr. McDonald may have been acting as a “finder” – a term that describes an unlicensed person who “finds” investors to invest in deals. In some cases, a finder is able to act in finding investors provided they comply with securities legislation by, among other things, filing disclosure statements that they acted as a finder. The arrest of Mr. McDonald is the first one resulting from a joint investigation in Alberta of the Alberta Securities Commission, the RCMP and prosecution office.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

US extends GTOs for tracking money laundering in real estate

By Christine Duhaime | February 23rd, 2017

The US Treasury has announced that it is extending its Geographical Targeting Orders to identify purchasers of luxury real estate properties in six areas in the US. The GTOs require title insurance companies to identify the natural persons behind shell companies used to pay all cash for high-end residential real estate.

A Special Agent with the US Department of Homeland Security said: “We don’t come across [money laundering in real estate] once every 10 or 12 cases – we come across real estate being purchased with illicit funds once every other case.”

FinCEN reported that 30% of the transactions covered by the GTOs involve a person (natural or legal) that is the subject of a previous suspicious activity report for money laundering, and is consistent with the concerns of FinCEN that shell companies and beneficial structures are used to buy luxury real estate. The GTOs are important to understand financial crime being used for real estate. As a Miami area lawyer noted: “It’s not good for real estate or for business if illicit dollars are artificially inflating the market. And law enforcement doesn’t want real estate to be a safe haven for money laundering.”
Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

The waitress, the casino, the money laundering scam

By Christine Duhaime | February 16th, 2017

The CEO of Mohegan Tribal Gaming Authority has resigned following a review by the Pennsylvania Gaming Control Board that indicates the possibility of financial irregularities at the Mohegan Sun Pocono Casino. The irregularities stem from charges laid against three people, Robert Pellegrini, Mark Hetitzel and Rochelle Poszeluznyj, who conspired to scam the Casino out of $400,000 and launder the proceeds of crime.

Poszeluznyj, a champagne cocktail waitress, pleaded guilty to defrauding the Casino of $419,000 for over a year and could serve up to 20 years in jail. The plan was concocted from a love triangle involving Poszeluznyj with two different men. When her relationship with one of the men soured, he informed the police about her scam.

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

Q & A on Extreme Vetting

By Christine Duhaime | February 12th, 2017

The Executive Orders issued by the US Government for immigration and subsequent statements by the administration indicate that the Department of Homeland Security is starting a process of “extreme vetting” of prospective immigrants, refugee claimants and non-immigrant visa applicants. From a terrorism perspective, here is a Q&A about “extreme vetting.”

What is “extreme vetting”?

Extreme vetting is not in place yet. In the weeks to come, what extreme vetting will involve is that when a person from those 7 countries, and any other situation that may be determined to be high risk, attends a US Embassy for an interview to visit or immigrate to the US, according to what we know so far, they will be required to provide:

  • A list of the websites they have visited;
  • A list of social media they are members of with their passwords for access;
  • A review of those people who the applicant follows, and who follows the applicant on all social media platforms, together with checking of those followers and followed persons against global security databases for risks and such;
  • The contact list on their cellular phone which will be vetted as against those lists maintained in the global security database;
  • The telephone numbers the applicant has called or received calls from, again which will be vetted as against global security databases; and
  • The same type of vetting for emails, as for telephone numbers.

Continue reading

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

US President signs Financial Crime Executive Order to, among other things, bring foreigners to “Face Justice in the US”

By Christine Duhaime | February 11th, 2017

Come Face US Justice

On Thursday, the US President signed an executive order to protect the US from transnational criminal organizations and, inter alia, to tackle financial crimes.

The executive order is entitled “Enforcing Federal Law with Respect to Transnational Criminal Organizations and Preventing International Trafficking.” Its purpose is to dismantle international organized crime.

Thwarting Organized Crime for Certain Offences

Pursuant to the order, the new US government policy is to strengthen enforcement of the law to stop international criminal organizations and groups that undertake the following types of illegal activities:

  • financial crimes – the Order does not identify them but typically these include tax evasion, insider trading, terrorist financing, financial fraud, sanctions avoidance and illegal gambling;
  • concealing or transferring proceeds of crime (the money laundering offence);
  • IP theft;
  • corruption;
  • cybercrime; or
  • illegal smuggling of foreign nationals, wildlife, weapons or drugs.

Continue reading

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email

World Check being sued over database of personal information

By Christine Duhaime | February 4th, 2017

A number of persons and organizations are allegedly preparing to sue Thomson Reuters, the organization that runs World Check for wrongly listing them in a database as a financial crime risk. World Check created (apparently without informed consent at least under Canadian law), an online global database that purports to provide anti-money laundering, sanctions and counter-terrorist financing mitigation advice by selling, for a fee, the personal and other information of people.

According to news reports, World Check listed a nine-month-old baby as a politically exposed person even though the baby did not have a bank account, was not opening one anytime soon and lacked the legal capacity to access financial services in any event.

Continue reading

Share this Post:
  • Facebook
  • Twitter
  • LinkedIn
  • Print
  • email