The following occurred over a four month period during 2002, and has been supplied by an investigator I have worked with. Some of it has been changed / sanitized for privacy reasons:
The Tax Fraud
As part of his tax fraud, “Mr. Wallace” contacted a Cayman Island bank by mail in order to open a personal account with it. He mailed account opening documents to it which included a copy of his U.S. passport and also supplied the names of references. According to these documents, Mr. Wallace lived in Miami and was a real estate developer. Based upon all of the foregoing, the Cayman Island bank opened Mr. Wallace’s personal account with a “O” balance. Just six days later however, bank “X” in Panama wired $6.3 million to Mr. Wallace’s Cayman account without any mention of the remitter.
Mr. Wallace then went on a business trip to Central America for several months; so he rented his Miami home to “Chuck”. Although Mr. Wallace hadn’t known at the time, Chuck was a small-time crook. In fact, soon after Chuck took possession of Mr. Wallace’s home, Chuck started stealing Mr. Wallace’s mail. One of the letters Chuck had stolen was written by “Bob”, a personal banker from the Cayman Island Bank where Mr. Wallace maintained his account. Bob had written to Mr. Wallace about a lucrative investment opportunity.
The Identity Theft
Surmising from Bob’s letter that Mr. Wallace had a sizable bank account, Chuck wrote to Bob pretending to be Mr. Wallace. As the sanitized copy of Chuck’s First Letter can only partly demonstrate, Chuck had assumed Mr. Wallace’s identity in that particular letter by forging Mr. Wallace’s signature. To comfort Bob, Chuck’s First Letter had also asked Bob for the minimum balance required to keep Mr. Wallace’s account open. Chuck’s “softening up” letter further suggested to Bob that Mr. Wallace’s funds might soon be needed “at very short notice” for an alleged real estate deal in Mexico. In the sanitized copy of Chuck’s Second Letter, Chuck again pretended to be Mr. Wallace as he wrote to Bob at the Cayman Island Bank. In his Second Letter, Chuck directed the wire transfer of Mr. Wallace’s funds from the Cayman Island Bank to Chuck’s own bank account in Mexico.
When Mr. Wallace next unexpectedly arrived at the Cayman Island Bank to make a cash withdrawal, he was shocked to learn that his account had been drained. The Bank then showed Mr. Wallace “his” letters and explained that it had remitted his funds to Mexico just two days earlier because of “his” instructions. Concluding that his identity had been taken over by Chuck, Mr. Wallace apologized for his error and immediately booked a flight bound for Miami. Shortly thereafter, Mr. Wallace was arrested while fleeing from his Miami home after having killed Chuck there.
Investigators from the U.S. next paid a visit to the Cayman Island Bank. Although they had first thought that Chuck had been the true beneficial owner of the Cayman Island account, they discovered that Mr. Wallace was. Investigators also learned that Mr. Wallace was not just simply a real estate developer involved in a tax fraud / abusive offshore tax avoidance scheme. Instead, Mr. Wallace was actually a major illegal narcotics trafficker hiding the proceeds of his drug crimes through money laundering. Investigators finally concluded that much of the foregoing had happened because the Cayman Island Bank had among many other things:
- Inadequate bank customer identification procedures / know your customer rules;
- Permitted Mr. Wallace’s account to be opened by mail & also with a “0″ balance;
- Neglected to contact a single reference mentioned in Mr. Wallace’s account opening documents;
- Failed to recognize suspicious activities like the wire transfer of the $6.3 million from Panama or Chuck’s “softening up” letter.
Copyright 2008-2011 Fred L. Abrams