Pamrapo Savings Bank, a subsidiary of Pamrapo Bancorp Inc., pleaded guilty in U.S. District Court in Trenton, New Jersey, to conspiracy to violate the Bank Secrecy Act for failing to file currency transaction reports and suspicious activity reports, and willfully failing to maintain adequate anti-money laundering programs. The failures to file reports were in connection with approximately US$35 million in illegal and suspicious financial transactions handled by the Pamrapo Bank.
Duhaime's Financial Crime & Anti-Money Laundering Law in Canada
Four men in Alberta charged in $60 million Ponzi scheme
The RCMP have charged four people from Alberta with fraud and money laundering in connection with a $60 million Ponzi scheme in which about 1,000 investors from Canada and the U.S. were allegedly defrauded.
Garth Bailey, Murray Stark and Robert Fly were charged with conspiracy to commit fraud and money laundering. A fourth person, Katherine Bailey, was charged with money laundering. According to the RCMP, investors were told that their investments were risk-free and were secured by bonds that could be liquidated if the investments failed. The investments were allegedly managed by HMS Financial Inc. from 2001 to 2004.
Garth Bailey is a lawyer who is currently suspended from practicing law in Alberta. RCMP investigated HMS Financial for 6 years before laying these charges – the delay was partly attributed to the fact that some investors were reluctant to come forward.
3 arrested in US$9 million real estate fraud in San Francisco
Three men were arrested and charged in connection with real estate fraud and money laundering in San Francisco for allegedly forging real estate deeds to three luxury condominium at One Rincon Hill worth about US$7.5 million to gain legal control of the condominiums to borrow US$2.2 million against the properties.
Melvin Emerich, Kaushal Niroula and Jay Shah allegedly pretended to be investors and convinced real estate agents to lend them keys to the building. Emerich is a lawyer licensed to practice in California. The proceeds from the real estate fraud were allegedly wired to a Nevada shell company and a Swiss bank account. Police raids were carried out at several locations in four countries simultaneously by more than 50 law enforcement agents. Niroula is alleged to have conspired to kill a 74-year-old victim to obtain title to the victim’s home. All three are charged with money laundering and grand theft. Niroula is also charged with murder.
FINTRAC fines unregistered money services business
FINTRAC has fined Bharat Money Exchange Ltd., located in Surrey, British Columbia, $36,100 for numerous violations of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act for operating a money services business without registering with FINTRAC or filing appropriate reports. Bharat was also fined for numerous failures flowing from its unregistered status, including failure to have a written anti-money laundering compliance policy in place; failure to have conducted a risk assessment, failure to develop a training program; failure to retain records; and failure to ascertain identity of customers in the operation of its money services business.
Dozens arrested for money laundering in Europe
Dozens of people were arrested across Europe in a major crackdown on Eastern European mafia led by Spanish authorities and dubbed “Operation Java”.
At least 24 were detained in Spain and another 50 arrested in Germany, Austria, Switzerland, France and Italy for suspected ties to Georgian and Russian crime gangs. Various of the suspects are accused of arms and drug trafficking, money laundering, extortion and conspiracy to murder in Britain, Turkey, Ireland and Sweden.
The suspects are apparently tied to Zakhar Kalashov, an alleged Russian mafia boss who is on trial in Spain for money laundering, kidnapping, and arms and drugs smuggling. Kalashov was arrested in 2005 in the UAE.
Money laundering trial opens in Spain
Spain’s largest money laundering trial, dubbed the “ballena blanca” (white whale) case, started in Malaga, Spain today. Fernando del Valle, a Chilean-born lawyer, and 18 others are on trial charged with money laundering, forgery, false testimony and crimes against the Spanish Treasury for laundering over 12 million euros from drug trafficking, prostitution, and tax fraud. Del Valle is alleged to have set up various corporate entities to facilitate the laundering of the funds. In a profile of Del Valle just after his arrest in March 2005, he was described as “the toast of Marbella society” whose life was one of “luxury befitting his position – designed suits, a beautiful villa, the best schools for his children.” Del Valle built a law practice that became one of the best-known firms dedicated to the area’s booming real estate market in the space of ten years.
Wachovia Corp. agrees to pay US$160 million in penalties
Wachovia Corp. has agreed to pay a US$160 million settlement with the Department of Justice in the U.S. over allegations that it failed to implement anti-money laundering controls that enabled drug traffickers to launder money by transferring funds from Mexican currency exchange houses, known as casas de cambio, to Wachovia.
Prosecutors said the bank processed US$420 billion in transactions without anti-money laundering procedures. Wachovia took in at least US$373 billion in wire transfers that were made from casas de cambio in Mexico between May 2004 and May 2007.
In addition, more than US$4 billion in bulk cash was shipped from Mexican casas de cambio to Wachovia accounts, prosecutors allege. Wachovia also operated a “remote deposit capture” service that took in another US$47 billion, according to prosecutors.
Macau junket operator involved in money laundering probe
According to a report in the South China Morning Post, police arrested Lin Chiu, an investor in the Neptune Group Limited for allegedly money laundering.
The Neptune Group, a publicly traded company, is said to own 70% of the Hong Kong-based gambling cruise ship called “Neptune” and operates VIP junkets to casinos in Macau, including the StarWorld and Venetian Macau.
Casino junkets have been criticized by the Financial Action Task Force because they facilitate the movement of large amounts of money across borders and through multiple casinos by third parties and create layers of obscurity around sources of money and the identity of gamblers. Junkets are casino-based gaming tours that bring in large groups of high-paying customers to gamble.
Few jurisdictions regulate junkets and they have been known to act as a front for unlicensed casinos.
German national arrested in Florida for money laundering
A German national, Michael Olaf Schuett, residing in Florida, was arrested today in connection with operating an unlicensed money transmitting business that received and disbursed funds to Canadians and Americans on behalf of Internet gambling sites operating offshore. According to a criminal complaint filed on February 17, 2010 in the United States District Court, Fort Myers Division, Schuett:
- set up at least nine corporate entities to conduct wire transfers including MI Global Inc., MCM Capital Management Inc., US AG 24 Inc., Woodhouse Systems Inc., and Internet Payment Services Group Inc.;
- received and transferred out approximately US$70 million from various financial institutions; and
- facilitated the distribution of gambling proceeds to Canadians and Americans, including from an Internet gambling site called ultimatebet.com.
Schuett is alleged to have operated an unregistered and unlicensed money transmitting business, failed to register with FinCEN and establish anti-money laundering programs. He is also alleged to have laundering the proceeds from his activities. His companies had accounts with several financial institutions including the Royal Bank of Canada, Bank of America, Wachovia Bank and Shamrock Bank, all in Florida.
Employees at Shamrock Bank, Wachovia Bank and Federal Express became suspicious of Schuett’s activities in the Fall of 2009. FedEx employees reported that Schuett couriered about 150 packages a week to various addresses in the US. Employees opened several of the packages and learned that Schuett was sending cheques for gambling wins.
Senate report says dirty money still entering U.S. – and there’s a Canadian connection
Dirty money entering the U.S. from foreign nationals
The Senate Committee on Homeland Security & Governmental Affairs released a special money laundering report today that describes four case studies of foreign politically exposed persons (“PEP“) who laundered money in the U.S. without detection. Two of the case histories have a Canadian connection. The 330-page report, entitled ‘Keeping Foreign Corruption out of the United States: Four Case Histories”, available here, describes how dirty money from powerful PEPs entered the U.S. financial system and how the PEPs used lawyers, real estate agents, escrow agents, bankers, lobbyists, and university officials to circumvent money laundering laws in the US.
Here are highlights from the four case histories in the report: