Anti Money Laundering Blog

The group of 9 persons have been charged with handling a million-dollar drug and money laundering operation in southeastern Virginia.

According to the Newport News Daily Press, 8 members of this group lived in the Newport News area. It is alleged that the head of the drug operation was William Foreman who was assisted by Quentin Haley and Bryan Robbs. Robbs was from Costa Mesa, California, the other two were from Newport News.

A federal grand jury charged the 3 with laundering the proceeds of drugs. Shavonda York of Hampton, Perry Lee Bowen Jr. of Chesapeake and Richard Wiggins Jr. of Newport News were charged with money laundering. A 72-year-old defendant, Margarette Bullock Powell, was charged with wire fraud.

A 30-year-old man who spent more than GBP 1 million on luxury cars and holidays has been put to prison for money laundering. Kerry Reed was sentenced to 3 years in prison at Kingston Crown Court.

According to the court, Reed bought cars including 7 Range Rovers, 4 Porsches, 2 Ferraris and 2 Lamborghinis between 2004 and 2007. Part of the GBP 1 008 147 that was spent by him between April 2004 and May 2007 went on jewellery, designer clothes and socialising. Police said that each of his cars was bought with large cash deposits and kept for no more than 6 months.

Since 2003, Reed had no legitimate income registered with HM Revenues and Customs. When questioned by police, he himself gave his status as unemployed and could offer no reasonable explanation for his wealth.

A confiscation hearing is scheduled to take place on December 19.

On August 26, 2008, Chinese investment company director Yang Shiming was sentenced to 9 years in jail and a fine of USD 728 571 for money laundering.

It should be noted that this case is the first of that kind in the province’s capital city of Chengdu that leads the country in terms of illicit money deals.

Besides Yang Shiming, the Sichuan Province court dealt with 15 defendants that were sentenced to a range of penalties from death with 2-year probation to 4-year imprisonment for their involvement in 8 fraud cases worth 240 million yuan.

Adalberto Gallegos, Jr., the lead singer of a popular Tejano band, has pleaded guilty to a money laundering charge. A 52-year old Gallegos, Jr. Is a member of the musical group Latin Breed.

Gallegos, Jr. was charged with conspiring to conduct financial transactions that involved the proceeds of distributing marijuana.

In 2004, he established a bank account in Florida. This account was used for receiving more than USD 270 000 in drug proceeds. According to federal investigators, the money deposited in Florida was later withdrawn by and Gallegos, Jr. in Tucson.

The son of the singer, Adalberto Gallegos III, is charged with receiving nearly USD 62 000 in drug proceeds in a different bank account. The son, who has an outstanding arrest warrant from a previous unrelated case, is also being sought in relation with the money laundering charge.

On August 6, 2008 Gallegos, Jr. will be sued by U.S. District Court Judge Cindy Jorgenson. A conviction for money laundering he faces is a maximum penalty of 20 years in prison and/or a USD 500 000 fine, or both.

The process of money laundering has been discussed and it has been also indicated that the process of money laundering can be divided into basic 3 steps – placement, layering and integration. These steps can happen either one by one or simultaneously, or separately.

Below is one of the notorious cases of money laundering that clearly illustrates the three steps.

In the 1980s, Eddie Antar skimmed millions of dollars from the company to hide it from the IRS. He was the owner of Crazy Eddie’s Electronics who had a very original plan, anyway. But, eventually, he and his co-conspirators decided to make better use of the money if to send it back to the company disguised as revenue. This move would inflate the reported assets of the company in preparation for its IPO.

Having travelled to Israel a number of times, he carried millions of US dollars strapped to his body and in his suitcase.

The money laundering scheme worked out by Antar worked the following way:

PLACEMENT - Antar made a series of separate deposits to an Israeli bank. Once, “Crazy Eddie” made 12 deposits in a single day.
LAYERING - Before US or Israeli authorities noticed the unexpectedly huge balance in the account, he had transfered all the money from the Israeli bank to Panama, where bank secrecy laws are in force. From the account in Panama, Eddie Antar made anonymous transfers to numerous offshore accounts.
INTEGRATION - Antar slowly wired the money from the offshore accounts to the legitimate Crazy Eddie’s Electronics bank account, and in the account of the company the money mixed in with legitimate US dollars and documented as revenue.

All in all, “Crazy Eddie” laundered more than USD 8 million. Antar’s scheme boosted the initial offering stock price so that his company ended up worth USD 40 million more than it if the revenue would have not been added. When Eddie Antar sold his stock, he had USD 30 million in profit. In 1992, he was found by the authorities in Israel and extradited to the US to stand trial, where he received an 8-year prison sentence.

On April 28, 2008, Police arrested a man on charges of running a money laundering scheme. The cheme assisted some customers in avoiding taxes by transferring $93 million through offshore bank accounts.

According to police, an arrested Australian, 58-year-old Robert Agius was charged with 3 fraud and money laundering offenses that allegedly operated in Australia, New Zealand and Vanuatu. The suspect has been living in Vanuatu.

Robert Agius is charged with collecting $1.3 million in commissions.

According to police commander Gray, although the charges regatded only about 20 alleged customers and unpaid Australian taxes exceeding $12 million, more than 400 people might have paid money into the money laundering scheme. Australian Federal Police contacted also other customers to warn them that they may collectively owe millions more in unpaid taxes. Gray, a senior crime officer with the Australian Federal Police,  said the police expects to make some more arrests. The scheme was related to transferring money out of Australia as consulting fees, and afterwards claiming a business expense before returning the funds to Australia already as an interest-free loan.

According to the conclusion made by a team of researchers from the University of Dar es Salaam (UDSM), money laundering is kicking within the Great Lakes region. The researchers stated that the Great Lakes region money laundering cartel is part of the USD 500 billion illegal cash laundered globally. The origin of this money is to be searched in corruption, drug trafficking and gun smuggling.

The above-mentioned announcement is based on investigations carried under the auspices of the Great Lakes Peace and Security Network (PeSeNet), and ForDIA that covers Democratic Republic of Congo, Tanzania, Kenya, Uganda, Burundi and Southern Sudan.

It should be mentioned that the Great Lakes region has been a territory of prolonged armed conflicts, so this area is insecure and free jungle for laundered money, drugs, guns and massive plunder of natural resources.

In most cases, researchers have established criminal organisations carrying out dealing related to currency counterfeit, illegal foreign exchange, and illegal drugs.

The essence of the scandal was the following – Liechtenstein’s LGT Group acknowledged that the German secret services obtained LGT Group’s client information. The secret data was revealed by a former employee of the bank, who had stolen it. According to Liechtenstein’s LGT Group, the client information that was illegally disclosed to the German authorities is limited to the client data stolen from LGT Treuhand in 2002.

LGT alleged that a former employee who was the informant was Liechtenstein citizen Heinrich Kieber. He worked for the bank since 1999. Kieber was the subject of an international arrest warrant issued by Spanish authorities over a real estate fraud case in 1997. The bank alleged that Kieber, who was sentenced in Liechtenstein to a fine of CHF 600 000 in October 2001 and left Liechtenstein in November 2002, prior leaving the country stole client data from LGT Group and copied it onto 4 DVDs.

According to Germany, to get the data on holders of accounts with LGT in Liechtenstein, the investigators had paid an informant up to EUR 5 million.

However, a recent tax scandal involving Liechtenstein and Germany has been important across Europe as investigators from the United Kingdom to Scandinavia reportedly tried to get to know the details pointing to widespread tax evasion.

According to Financial Times, the UK authorities have now paid GBP 100 000 pounds for a list of about 100 wealthy Britons who allegedly evaded tax through Liechtenstein. The obtained information could help the Authorities recover GBP 100 million.

Accordin go Germany’s Handelsblatt daily, Finland, Sweden and Norway also got interested in the list of clients of LGT Bank.

The bank said in a statement that apparently, the stolen information has been illegally disclosed, directly or indirectly, to other authorities, and considered such methods to be extremely offensive. According to the bank,
the data regards approximately 1 400 client relationships, and the largest number is resident in Germany –  approximately 600.

As to the informant, he is considered to have been given a new identity to protect him from from those whom he had exposed as hiding money in Liechtenstein’s tax haven. Some claim he has left Europe to start his life anew in Australia.

This week it emerged that the price being paid by Israel Discount Bank subsidiary Israel Discount Bank of New York in order to settle the money laundering case goes on to climb.

According to the Bank’s financial report for the 3rd quarter of 2007, the cost will reach USD 46-47 million, spread over 2005-2007.

In accordance with the settlement between Discount New York with the Banking Department of the State of New York and the Federal Deposit Insurance Corporation (FDIC), Israel Discount Bank of New York paid a fine of USD 16.5 million to the New York State Banking Department, FDIC and Finance Crimes Enforcement Network, for which the bank made a provision in 2006. Also, the bank suggests that the cost to implement the improvements and examinations will be USD 16.1 million in 2006 and USD 11.4 million in January-September 2007, as well as additionally USD 2-3 million through the end of the year.

A leading Venezuelan independent shipowner Wilmer Jose Ruperti Perdomo has been sued in the US Court and charged with committing huge fraud against companies that are owned by Russia. The total amount claimed from Ruperti accounts for USD 17.1 million.

It should be mentioned that Ruperti is a well-known member of a group of Venezuelan businessmen who do business with their government – the so-called Bolivarian Elite, and who are extraordinarily close to President Chavez. Also, Ruperti is considered to be a close associate of numerous Venezuelan Politically Exposed Persons.

The magnate controlling his Panamanian-domiciled companies, Sea Pioneer Shipping Corporation and PMI Trading Inc., is charged with a breach of his fiduciary duties, in earning secret profits and undisclosed covert payments, connected with charters of Plaintiffs’ oil tankers by Venezuela’s government-controlled petrochemical agency named PdVSA. Ruperti is charged with committing charter party fraud.