The guilty plea of Minneapolis money manager Trevor Cook and the Court’s dismissal of a Wisconsin lawsuit against Associated Bank, are mentioned by today’s "Asset Search News Roundup":
* At a plea hearing that took 33 minutes yesterday, Trevor Cook pleaded guilty to counts one and two of his of his criminal information. At
Wachovia, one of the world’s largest international banks, is still defending itself against the Florida civil complaint described at my post "Lawsuit Claims Wachovia Bank Facilitated Alleged Ponzi Scheme". The complaint essentially claims that Wachovia’s anti-money laundering program under the Bank Secrecy Act had failed to detect money laundering. It was brought by the apparent victims of a Ponzi-like securities fraud.
Although the complaint could conceivably be the subject of a trial, the Court might soon dismiss at least part of it. This might happen since there is no private right of action under the Bank Secrecy Act for alleged anti-money laundering program violations. Only governmental authorities can seek monetary damages for Bank Secrecy Act violations, as suggested by pages 77-78 of the August 26, 2009 opinion in Armstrong v. American Pallet Leasing, Inc.:
(CLICK ON THE IMAGE ABOVE TO READ THE OPINION) Continue Reading Wachovia Bank & Its Bank Secrecy Act Issues
Bank customers sometimes hide their assets offshore in nominee bank accounts located in high-risk geographical locations like Switzerland. One such bank customer was ex-watch manufacturer Jack Barouh of Golden Beach, Florida. As a February 4, 2010 press release basically explained, Mr. Barouh was accused of hiding undeclared revenue from the IRS during an abusive offshore tax avoidance scheme at UBS AG and other foreign banks.
Mr. Barouh’s scheme could have stared in 1976 when he first transferred skimmed monies from his U.S. watch businesses to foreign accounts at UBS of Switzerland. He reportedly carried out his scheme with the help of two Swiss money managers and a Swiss attorney. One of these Swiss money managers had even supposedly misappropriated some of Mr. Barouh’s undeclared revenue, although Mr. Barouh may have eventually recovered this revenue via a settlement.
The Swiss attorney and money managers are believed to have opened Mr. Barouh’s nominee bank accounts and / or had been directors of Mr. Barouh’s foreign companies. These foreign companies were formed in Panama, the British Virgin Islands and Hong Kong and had reportedly been used to open Mr. Barouh’s nominee bank accounts in Switzerland or Hong Kong. Despite all of the foregoing, the IRS was able to detect Mr. Barouh’s undeclared revenue in his nominee bank accounts.Continue Reading An Ex-Watch Manufacturer & His Nominee Bank Accounts
“Smuggling Cash Across Iraq’s Borders” mentioned Donnie the former DEA agent who had trained Iraqi border personnel to interdict bulk-cash smugglers. To help detect these smugglers, governmental authorities also use declaration forms to track the cross-border movement of cash and monetary instruments.
As mentioned by my April 13, 2009 “Asset Search News Roundup“, one such declaration form is the “FinCen 105”. It generally requires disclosure to the Bureau of Customs and Border Protection, when individuals physically transport, mail or ship more than $10,000 in cash or monetary instruments into the U.S.:
(To View The Complete Form, Click On The Image)
To avoid triggering the mandatory filing of a FinCen 105, Virginia medical doctor Andrew Silva had illegally structured cash by smuggling it in packages containing less than $10,000. During an abusive offshore tax avoidance scheme, Dr. Silva mailed these packages of cash from Switzerland into the U.S., as outlined by his “statement of facts” filed in U.S.A. v. Andrew B. Silva.Continue Reading A Doctor, A Lawyer & Bricks Of Cash In Switzerland
This "Asset Search News Roundup" contains a copy of the indictment filed against Minneapolis auto magnate Dennis Hecker. It also discusses the securities fraud complaints pending in New York against Bank of America.
The Wall Street Journal’s February 4, 2010 article "Switzerland Freezes Freed Duvalier Assets", is about alleged illicit assets blocked in Switzerland. The blocked assets have been maintained in Swiss bank accounts and are believed to originate from Haiti’s public coffers. These public coffers were reportedly looted by former politically exposed person Jean-Claude "Baby
By using customer identification or “know your customer” rules, banks try to prevent money laundering and other financial frauds. This use of customer identification rules by banks is contemplated at the Fifth Recommendation of the Financial Action Task Force. The Fifth Recommendation urges banks to diligently verify a customer’s identity and to record the true beneficial ownership of bank accounts.
As reported at “Fighting Financial Fraud At UK Banks“, the UK changed its banks’ “know your customer” rules on December 15, 2007, by codifying them at Money Laundering Regulations 2007*. U.S. banks too verify customer identities, but do so pursuant to 31 C.F.R Part 103.121. Lawsuits alleging that two U.S. banks had failed to sufficiently identify their bank customers, are respectively described at: “Associated Bank Sued For Supposedly Ignoring Red Flags” and “Lawsuit Claims Wachovia Bank Facilitated Alleged Ponzi Scheme“.
UBS AG and other Swiss banks also require customer identification at the time a bank account is opened. The customers of Swiss banks execute a declaration of beneficial ownership, commonly referred to as a “Form A”. A July 13, 2001 “Form A” was used in the U.S. tax fraud case brought against Florida yacht broker Robert Moran. According to the Plea Agreement in Mr. Moran’s case, the July 13th “Form A” helped demonstrate that Mr. Moran had violated 26 U.S.C. § 7206 (1), (perjury on a return / false statements).Continue Reading Customer Identification At UBS AG And Some Other Banks
The securities fraud complaint in Nesbeth v. USMIO, Docket No: 09−cv−62042−WJZ, alleges that Wachovia Bank caused damage to the supposed victims of a Ponzi scheme. This complaint, (referred to hereinafter as “the Florida Complaint“), also asserts claims against: MasterCard Worldwide, Mr. David Smith of Jamaica, Overseas Locket Corporation formed in Jamaica, Former Premier Michael Misick of the Turks and Caicos Islands, etc.
The Florida Complaint alleges that Mr. David Smith had operated a Ponzi scheme which reportedly involved six thousand victims from the Jamaican community and might have caused $220 million in losses. Florida Complaint at ¶¶31, 37 & 38. The suspected illicit proceeds of the scheme may have been used to invest in businesses and possibly pay for: real property, a lavish cruise, valuable watches (i.e. portable valuable commodities), ornamental furniture and exotic automobiles. Florida Complaint at ¶52.
According to the Florida Complaint at ¶49, proceeds from the scheme had additionally been laundered through bank accounts, including one maintained at Wachovia. Like the Wisconsin Complaint earlier provided at “Associated Bank Sued For Supposedly Ignoring Red Flags“, the Florida Complaint essentially claims that a bank’s anti-money laundering program / Customer Identification Program pursuant to 31 CFR 103.121 ¶ (b) (2) (i), failed.Continue Reading Lawsuit Claims Wachovia Bank Facilitated Alleged Ponzi Scheme
Governmental authorities sometimes use data mining and money laundering typologies to detect financial fraud trends. An earlier financial fraud trend we will undoubtedly see in 2010, is beneficial owners hiding assets through nominee bank accounts. Another likely continuing trend for 2010, is the use of Delaware-based shell companies to facilitate money laundering in some cases.
The Association of Certified Anti-Money Laundering Specialists is a private sector anti-money laundering credentialing organization and Colby Adams is a reporter affiliated with it. Mr. Adams telephoned me this week to discuss my thoughts about abusive offshore tax avoidance schemes and The "John Doe" Summons Case, which was settled with UBS AG.
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