“Terrorist Financing, Money Laundering & Financial Intelligence Units” and “Transnationally Tracking The Assets Of Terrorists” discusses the Egmont Group.  The Financial Intelligence Units of the Egmont Group search for assets secreted by terrorist financiers and money launderers.

Financial Intelligence Units search for these illicit assets by looking for special indicators.  The Egmont Group’s report “FIUs And Terrorist Financing Analysis” lists the indicators or “red flags” associated with terrorist financing.  Spotting terrorist financing red flags could conceivably lead to the detection of assets hidden during a variety of schemes.

Some of the red flags detailed by the Egmont Group’s report are:

• The use of funds by the non-profit organization is not consistent with the purpose for which it was established.

• The transaction is not economically justified considering the account holder’s business or profession.

• A series of complicated transfers of funds from one person to another as a means to hide the source and intended use of the funds.

• Transactions which are inconsistent with the account’s normal activity.

• Deposits were structured below the reporting requirements to avoid detection.

• Multiple cash deposits and withdrawals with suspicious references.

• Frequent domestic and international ATM activity.

• No business rationale or economic justification for the transaction.

• Unusual cash activity in foreign bank accounts.

• Multiple  cash  deposits  in  small  amounts  in  an  account  followed  by  a large  wire transfer to another country.

• Use of multiple, foreign bank accounts.  (FIU’s And Terrorist Financing Analysis¹).

¹FIUs And Terrorist Financing Analysis, courtesy of the Egmont Group.

Copyright 2012-2018 Fred L. Abrams

A letter rogatory from Kenya and the February 24th return of Mayan artifacts to Guatemala.

  1. Following a money trail through multiple jurisdictions may necessitate letters rogatory.  Such a letter rogatory was filed October 12, 2011 in In Re: Request from Kenya, U.S. District Court for the District of Delaware, Index No. 11-mc-00213.  The Delaware Federal Court ultimately issued this Kenyan letter rogatory on behalf of the Kenya Anti-Corruption Commission, which has since been replaced by the Ethics and Anti-Corruption Commission.  As the Kenyan letter rogatory reveals, a public corruption investigation was underway in connection with the Postapay electronic funds transfer service offerred by Kenya’s postal system.
  2. The January 4, 2011 and / or  July 13, 2011 Asset Search News Roundups explain that common vehicles for concealing assets include: portable valuable commodities, checks and wire transfers, trade-based money laundering and bulk-cash smuggling.  Smuggled cultural artifacts can too be a tool for secretly transferring assets, although less frequently and in smaller amounts.  Eight Mayan artifacts seemingly smuggled into the United States, were returned to Guatemala at a February 24th repatriation ceremony.  The ceremony is described by a press release and here is one of the now-returned artifacts–

 

Photo: U.S. Immigration and Customs Enforcement

Copyright 2012 Fred L. Abrams

The New York Post and Bloomberg wrote last month about the appeal pending in Cohen v. S.A.C. Trading Corp., et. al., (11-1390-cv). The Cohen appeal is over the trial court’s March 30, 2011 dismissal of Patricia Cohen’s Second Amended Complaint.  The Second Amended Complaint accused Ms. Cohen’s ex-husband, (billionaire hedge fund manager Steven Cohen), of tax fraud, money laundering, securities fraud and other alleged crimes.

This complaint also pleaded civil RICO, common law fraud, breach of fiduciary duty and unjust enrichment claims because Mr. Cohen had purportedly hidden marital assets from Ms. Cohen during their 1990 divorce.  The gravamen of the complaint was that Mr. Cohen supposedly defrauded Ms. Cohen out of marital assets which she was arguably entitled to recover.

According to the complaint, Mr. Cohen had invested $8,745,169 dollars in co-op apartment conversions, with former attorney Brett K. Lurie.  By January 1987, Mr. Lurie had allegedly repaid Mr. Cohen $5.5 million of the $8,745,169 dollars.  The complaint claims the $5.5 million was a marital asset hidden by Mr. Cohen and omitted from his 1988 Statement of Financial Condition.  This financial statement identified the $8,745,169 dollar investment with Mr. Lurie as a “non-liquid asset”:

(To Read The Entire Financial Statement, Click On The Highlighted Excerpt)

Continue Reading The Asset Recovery Case Of Cohen v. S.A.C. Trading Corp.

Todays “Asset Search News Roundup” mentions whistleblower programs:

  1. An Asset Search Via Whistleblowers & Other Tipsters comments on IRS and SEC efforts to sniff out fraudulently concealed assets with the help of reward programs.  Forbes’ March 2nd article IRS Whistleblowers See Little Reward, also describes these programs.  The article compares one to the other and too discusses whistleblowing via “qui tam” lawsuits under the False Claims Act.
  2. The IRS has just revised its whistleblower program rule at 26 CFR Part 301 §7623–1, Rewards and awards for information relating to violations of internal revenue laws.  This revision clarified the definition of “proceeds of amounts collected” and “collected proceeds”, as mentioned by §7623-1 (a).  The revised rule was published in the February 22, 2012 Federal Register, available by clicking here.

Copyright 2012 Fred L. Abrams

At “Hockey bid a factor in Beckman’s Ponzi trial”, the StarTribune analyzes the Second Superseding Indictment filed in the criminal prosecution against Jason Bo Beckman, Gerald Durand and Patrick Kiley.  This StarTribune article explains the three are accused of money laundering and other alleged crimes arising out of Trevor Cook’s securities fraud which was one of the biggest Ponzi schemes in Minnesota history.  The article too reveals that the Second Superseding Indictment differs from two earlier ones.

This was true because the Second Superseding Indictment appears to accuse Mr. Beckman of using Ponzi scheme proceeds as part of an alleged attempt to buy an ownership interest in the National Hockey League’s Minnesota Wild team.  There is however, another difference between the Second Superseding Indictment and the previous indictments in this matter.  Unlike the earlier indictments, Counts 24-25 at pp. 34-36 of the Second Superseding Indictment, basically accuse Mr. Durand of using a nominee’s bank account at Wells Fargo to secretly convert nearly $22,000 in Swiss francs to U.S. dollars.

This supposed currency conversion had conceivably caused Wells Fargo to unknowingly file Currency Transaction Reports with material omissions in them, about who participated in said conversion.  Although suspected crimes related to Currency Transaction Reports are typically charged under 31 U.S.C. §§ 5322 &/or 5324, Counts 24-25 of the Second Superseding Indictment allege that Mr. Durand concealed material facts and / or made false statements to the Federal Government in violation of 28 U.S.C. §1001.

Continue Reading Prosecutors Add To Indictment Connected To Ponzi Scheme Case

The Financial Action Task Force updates its standards and two politically exposed persons are criminally charged in the Turks and Caicos Islands¹:

  1. The Financial Action Task Force has revised its 40 Recommendations for fighting money laundering and terrorist financing.  A February 16th press release states these revisions include “[m]ore effective international cooperation including exchange of information between relevant authorities, conduct of joint investigations, and tracing, freezing and confiscation of illegal assets.”  Some of the changes address tax crimes, public corruption and laundering by politically exposed persons.  Such laundering easily happens in cases where a corrupt politically exposed person exercises direct power over a bank, as I suggest at the Moneylaundering.com article International Groups Say Corrupt PEPs Can Often Loot With Impunity.²
  2. The Special Investigation and Prosecution Team researching alleged public corruption by ex-Turks & Caicos Premier Michael Misick, recently filed criminal charges against two politically exposed persons.  The two are former Turks & Caicos Minister
 of
 Natural
 Resources

 McAllister 
Hanchell and Turks and Caicos Progressive National Party leader Clayton Greene, who is an attorney.  The Turks & Caicos Sun reported that Mr. Hanchell is accused of conspiring to collect bribes.  Mr. Hanchell was mentioned at pp. 253-255 of a Commission of Inquiry Report,³ which earlier said Mr. Hanchell should be criminally investigated for possible corruption.  Mr. Greene is accused of washing corruption proceeds through his attorney trust account.  Attorney trust accounts are sometimes used in money laundering circuits, as highlighted at the February 6th Asset Search News Roundup.

 

¹The Turks and Caicos Islands, SN/1A/5038 contains parliamentary information licensed under the Open Parliament Licence v1.0.

²International Groups Say Corrupt PEPs Can Often Loot With Impunity, Copyright 2011 Alert Global Media, reprinted with permission.

³Commission of Inquiry Report, is reproduced under the terms of Crown Copyright Policy Guidance issued by HMSO.

Copyright 2012 Fred L. Abrams

A February 3rd civil complaint filed against Forex dealer Peregrine Financial Group, (“PFG”), alleges “PFG ignored or failed to discern a myriad of objective red flags of fraud…” Complaint at pp. 5-6 ¶12.  The complaint asserted a $48 million dollar claim under Minnesota’s fraudulent conveyance law and it was filed by Receiver R.J. Zayed, who is trying to collect assets dissipated by Ponzi schemer Trevor Cook.

Describing the complaint, a StarTribune.com article explained that Trevor Cook admitted to defrauding more than 700 investors out of $194 million.  According to p. 35 ¶102 of the complaint, PFG participated in fraud with Ponzi schemer Trevor Cook.  Page 13 ¶33 of the complaint alleged that Cook opened, (or caused to be opened), at least 26 trading accounts at PFG.  The complaint also stated at page 31 ¶90, “PFG permitted itself to be used to funnel funds” and that Cook had supposedly used PFG to wash funds through a commission account.

In certain respects Receiver Zayed’s complaint against PFG, resembles Madoff Trustee Irving Picard’s December 5, 2010 amended complaint suing HSBC.  Similar to Receiver Zayed’s complaint, Trustee Picard’s amended complaint asserted at p.155 ¶550 & p.157 ¶ 557, that some defendants ignored “myriad red flags“.  The first paragraph of the amended complaint claimed that Madoff monies “were funneled by and through the HSBC defendants” and also alleged that these defendants “aided, enabled and sustained the massive Ponzi scheme masterminded by Madoff…”

As mentioned by “Using Red Flags To Recover Ponzi Proceeds“, Trustee Picard’s amended complaint was filed pursuant to New York’s fraudulent conveyance law, bankruptcy law, securities law and the common law.  The Court’s July 28, 2011 decision ultimately determined that Trustee Picard lacked standing to bring common law claims and dismissed the same.  An article discussing this dismissal is Madoff Trustee’s Job Just Became Much Tougher.

 

Copyright 2012 Fred L. Abrams

The February 6th “Asset Search News Roundup” concentrates on the possible abuse of attorney trust accounts:

  • “Three UBS Clients Accused of Hiding Offshore Money From IRS” outlines the suspected tax fraud case against ex-San Diego tax attorney Christopher M. Rusch and Phoenix-area businessmen Stephen M. Kerr and Michael Quiel.  The three are accused of secreting assets via business entities and foreign bank accounts in multiple jurisdictions, including: Switzerland, Panama, St. Kitts and Nevis.  Their December 8, 2011 indictment asserts at paragraph “26”, that Mr. Rusch caused falsified Form A’s to be submitted to Swiss banks.  As “Customer Identification At UBS AG And Some Other Banks” indicates, Swiss banks detect the true beneficial owners of bank accounts by requiring bank customers to execute Form A’s.  Paragraphs 30, 31, 68, 72 & 74  of the indictment meanwhile, indicate that Mr. Rusch could have used his attorney trust account to transfer funds to and from secret Swiss bank accounts.
  • The following typology from the Egmont Group of Financial Intelligence Units also mentions an attorney trust account.  It fundamentally demonstrates the utilization of an attorney trust account as a laundering link, to wash monies placed in a money laundering circuit:

 Typology / Case# 06078, Courtesy of The Egmont Group

Copyright 2012 Fred L. Abrams

A principal of PokerStars pleads guilty and Nigerian advance fee frauds:

♦ The May 9, 2011 Asset Search News Roundup and Secreting Money Via Internet Gambling On The Isle Of Man, discussed criminal prosecutions against the principals of three internet gambling businesses.  One of the principals, Ira Rubin of PokerStars, just entered a guilty plea to counts 1, 8 & 9 of his superseding indictment.

These counts accused Mr. Rubin of violating: 31 U.S.C. § 5363 & 18 U.S.C. § 371 (illegal gambling conspiracy);  18 U.S.C. §§ 1343, 1344 & 1349 (conspiracy to commit bank and wire fraud); and 18 U.S.C. § 1956 (h) (money laundering conspiracy).  Page 20 of Mr. Rubin’s indictment specifically claimed he was employed to process “…internet gambling transactions disguised as legitimate online merchant transactions, in order to trick U.S. banks into processing the transaction.”  Mr. Rubin’s docket report reveals he will next be sentenced on May 17, 2012.

♦ Authorities like Belgium’s CTIF-CFI, have long warned of Nigerian advance fee frauds, (i.e. “419 Scams”).  In the U.S., FinCEN considered these frauds at its October 2001 SAR Activity Review.  A 1997 publication from the U.S. Bureau of International Narcotics and Law Enforcement Affairs, also analyzed advance fee frauds.  Determined criminals now facilitating them, typically send their intended victims “softening up” e-mails.

The e-mails promise to pay out inheritances, lottery winnings or other funds.  In their attempt to collect this phony inheritance, winnings, etc., the victims always end up advancing / losing some of their own money to the criminals.  One variation of the fraud starts out with an e-mail promising to pay for help transferring monies from a supposed Holocaust claim fund.  A January 18th e-mail thought to be part of this kind of fraud, is available here.

Copyright 2012 Fred L. Abrams

The Financial Action Task Force’s frequently asked questions webpage, states “Large-scale money laundering schemes invariably contain cross-border elements.”  Large-scale money launderers are not the only ones who hide assets by utilizing cross-border or offshore elements.  Divorcing spouses, judgment debtors and anyone else, may conceal valuable assets by combining offshore elements with additional ones.

These elements are sometimes financial accounts opened anonymously, in the name of shell companies.  As suggested by “If A Judge Can See Your Assets, He Can Seize Them”, financial accounts and shell companies can be put to work to disguise the beneficial ownership of assets.  Over the summer, Senator Carl Levin (MI) sponsored two bills which try to address this abuse.   These two bills are the subject of today’s “Asset Search News Roundup”:

  1. The Stop Tax Haven Abuse Act (S. 1346), was introduced in the U.S. Senate on July 12, 2011 and it is discussed here.  This bill could help the IRS identify the beneficial owners of offshore financial accounts.  The bill would also compel persons in the business of forming shell companies, to follow anti-money laundering rules.  Under these rules, the owners of shell companies would presumably be identified.
  2. The Incorporation Transparency and Law Enforcement Assistance Act (S.1483), similarly requires beneficial owners of shell companies and other business entities, to be identified.  Senator Levin introduced S.1483 in the Senate on August 2, 2011.  Its predecessor, (S.569), was introduced on March 11, 2009, as shown by the “June 10, 2010 Asset Search News Roundup.”

Copyright 2012 Fred L. Abrams