A U.S. Army Sergeant pleads guilty to taking bribes, then trying to conceal them in a money laundering conspiracy and $32.8 million in U.S. currency is interdicted because of “Project Coronado”:

 *A U.S. Department of Justice press release describes the conviction of Army Sergeant Ana C. Chavez for a public corruption scheme which had bribery and money laundering components.  The Sergeant pleaded guilty on October 20, 2009 to taking $90,000 in bribe monies and trying to hide them in U.S. bank accounts through a money laundering conspiracy.  I already wrote about these kinds of public corruption schemes at: “Army Major Arrested For Money Laundering” and “Second Army Major Guilty Of Bribery“.

*Another press release states that Project Coronado netted $32.8 million in suspected drug-related currency along with 11.7 tons of drugs.  Project Coronado resulted in almost 1200 arrests and focused on La Familia Michoacán, which is reportedly the most violent of Mexico’s five drug cartels.  On April 15, 2009  La Familia Michoacán was placed on U.S. Treasury’s Specially Designated Nationals List pursuant to the Kingpin Act.  This designation freezes any La Familia assets subject to U.S. jurisdiction, as described by my February 11, 2009 “Asset Search News Roundup“.  Finally multiple cities were involved in Project Coronado:

Click Here To Enlarge The Map 

Map Courtesy Of: U.S. Drug Enforcement Administration

Copyright 2009 Fred L. Abrams

As a high-profile Twin Cities auto magnate, Mr. Hecker had been one of Minnesota’s largest car dealers.  During April 2008, he sought a divorce from his wife of about fifteen years in Hennepin County Family Court, Case No. 27-FA-08-2731.  Mr. and Mrs. Hecker however, stipulated to dismiss said divorce case during October 2008. 

At that time, Mr. Hecker had business difficulties which later culminated in the entry of a nearly $477 million dollar judgment against him in Chrysler Financial Services Americas LLC v. Dennis E. Hecker, Hennepin County Civil Court, Case No. 27-CV-09-2152.  Given the fact of this $477 million dollar debt, Mr. Hecker filed a Chapter 7 bankruptcy petition on June 4, 2009. 

Mrs. Hecker meantime, applied to the Family Court for a monthly award of interim spousal maintenance and child support.  Similar to what I discussed at "Recovering Marital Assets Through A Domestic Court", page 4 ¶14 of her September 28, 2009 supporting affidavit asked the Court to "impute income" to Mr. Hecker:

Click On The Affidavit To Read It

  

Continue Reading Has Auto Magnate Dennis Hecker Hidden His Assets?

Holocaust-era assets and drug-related assets are both covered by this “Asset Search News Roundup”:

*My article “Searching For Nazi-Looted Art” described the Holocaust-era assets / contested provenance case ofBakalar v. Vavra, Index No. 05-CV-3037 (S.D.N.Y.). The trial court in Bakalar rejected the claim that Egon Schiele’s “Seated Woman With Bent Left Leg (Torso)” was Nazi-looted art ransacked during the Holpocaust from Austrian-Jewish entertainer Fritz Grunbaum. Bakalar, is now on appeal in the Second Circuit of the U.S. Court of Appeals and there was an oral argument in it on October 9, 2009.

**”Interdicting The Assets Of Mexico’s Narco-Traffickers” included a U.S. Treasury Office of Foreign Assets Control link chart and press release from October 2008. This link chart and press release basically indicated that Telesforo Baltazar Tirado Escamilla was subject to sanctions under the Foreign Narcotics Kingpin Designation Act (21 U.S.C.§ 1901-1908, 8 U.S.C.§ 1182) and Executive Order 12978 of October 21, 1995.

Telesforo Baltazar Tirado Escamilla was sanctioned for supposedly using his “Productos Farmaceuticos Collins” company to supply the Mexican narco-trafficking Amezcua Contreras Organization with the precursor materials for methamphetamine production.

The Office of Foreign Assets Control recently claimed via its September 2009 link chart and press release, that Telesforo Baltazar Tirado Escamilla had attempted to evade the sanctions. He is accused of evading the sanctions by using “key front individuals”, as the September 2009 link chart reveals:

(Click On The Link Chart To Enlarge It)

Link Chart: U.S. Treasury Office Of Foreign Assets Control

Copyright 2009 Fred L. Abrams

The October 11th Asset Search News Roundup describes what could have been the use of cross-border elements to launder the proceeds of a securities fraud. The interdiction of $41 million from bulk cash smuggling in Mexico and Colombia, is also discussed.

In that case, (known as Philips v. Cook, 09-cv-01732), proceeds from an alleged securities fraud might have been laundered across international borders and transferred into Switzerland, Panama, Costa Rica and the United Kingdom. "Investors fear money went south — to Panama", mentioned these particular cross-border elements in connection with the Phillips case.

  • Bulk cash and other smuggling continues even though cargo containers can be screened by X-ray and gamma ray machines and radiation detection devices at ports like the one in Cartagena, depicted below. This past September, $41 million in U.S. currency was interdicted from bulk cash smugglers who had used cargo containers.

A press release states that the $41 million was hidden in the cargo containers at Colombian and Mexican ports. Other articles herein about smuggling cash include: "Concealing Assets By Smuggling Cash", "Smuggling Cash Across Iraq’s Border" and "A Yola, A Police Sergeant & A Restauranteur".

The Port of Cartagena, Colombia

Picture: U.S. Customs and Border Protection

Copyright 2009 Fred L. Abrams

In this "Asset Search News Roundup", I mention that 90 tax information exchange agreements have been executed since April and talk about the $198 million dollar lawsuit filed last Friday:

  • The $198 million dollar lawsuit referred to at my last "Asset Search News Roundup", (against Bernard Madoff’s brother, two sons and a niece), is reproduced below. This lawsuit was commenced by Madoff trustee Irving Picard to recover assets which may have been dissipated during Bernard Madoff’s Ponzi scheme. It was filed last Friday pursuant to the Securities Investors Protection Act and other statutes, including those listed in my September 4, 2009 article about "clawback" claims in bankruptcy court.

(Click On The $198 Million Dollar Lawsuit, To View It)

Copyright 2009 Fred L. Abrams

As a countermeasure against those bank customers who would use their bank accounts to fraudulently conceal assets, government regulators commonly require that banks apply customer identification or “know your customer” rules.  These rules are often geared toward identifying the true beneficial owner of a bank account and are analyzed at my articles “Beneficial Owners Concealing Their Foreign Bank Accounts” and “Fighting Financial Fraud At UK Banks“.

Despite the use of customer identification / “know your customer” rules at banks, some bank customers still try to conceal their beneficial ownership of assets parked in bank accounts.  As outlined by “Nominees & Hidden Assets“, beneficial owners sometimes misuse existing business entities like shell companies, to open financial accounts and circumvent a bank’s customer identification procedures.

The Egmont Group of financial intelligence units, describes this very situation at one of its money laundering typologies, labeled as reference no. 08014.  It explains how “Mr. B” essentially used existing businesses in the form of shell companies, to “wash” assets through North American and European bank accounts used in a money laundering circuit.  My September 20, 2009 article “Money Laundering By Minneapolis Money Managers?” also discussed what might have been the use of a fictitious business entity to circumvent the U.S. customer identification rules codified at 31 CFR 103.121 ¶ (b) (2) (i).

As more fully set forth in that article, a civil complaint in Minneapolis alleges among other things, that a bank account maintained by the “non-existent, non-registered [business] entity” called Crown Forex LLC, could have transferred the proceeds of a securities fraud.  Some of the allegations in that complaint are also believed to be the subject of a federal grand jury proceeding, according to the Minneapolis Star Tribune at: “Twin Cities investment advisers focus of probe“.

Copyright 2009 Fred L. Abrams

A September 27th article explained that Madoff trustee Irving Picard will sue Bernard Madoff’s brother, sons and a niece this week for $198 million dollars.  Trustee Picard could assert causes of action in the suit for: negligence, breach of fiduciary duty and possibly unjust enrichment.  He will be filing suit because he seeks to interdict assets and then equally distribute them to defrauded Madoff investors, as contemplated by the Securities Investor Protection Act.

The $198 million dollar suit is however, just one of the steps trustee Picard is taking to recover assets on behalf of defrauded Madoff investors.  Trustee Picard for instance, retained the corporate financial consulting company FTI on December 30, 2008.  A May 5, 2009 affidavit indicates that FTI is basically conducting a financial fraud investigation on behalf of the trustee, regarding the assets of Bernard L. Madoff Investment Securities, LLC.

As described at the August 5, 2009 "Asset Search News Roundup", trustee Picard is also trying to recover assets by suing Ruth Madoff for $45 million dollars.  He brought the suit under the United States Bankruptcy Code (title 11, United States Code) and New York State’s version of the Fraudulent Conveyance Act, codified at N.Y. Debt. & Cred. Law §§270-281.  Trustee Picard has similarly used some of these laws as a basis for the "clawback" lawsuits against the Madoff investors described by my "Asset Search News Roundup" from September 4, 2009.

In these clawback suits, investors’ profits from Madoff’s Ponzi scheme are deemed presumptively fraudulent and can be subject to a turnover order.  Meanwhile, an alleged 82-year-old former Madoff investor filed a letter about clawback with the Bankruptcy Court.  The letter, (redacted below for privacy reasons), claims that this investor would be forced into bankruptcy, if clawback is ultimately applied to him: 

(Click Here To Enlarge The Above Letter)

  Copyright 2009 Fred L. Abrams

An "Asset Search In A Chapter 7 Bankruptcy Case" talks about researching a debtor’s bankruptcy petition and other court filings to help determine whether there is any fraudulently concealed bankruptcy estate property.  This type of research recently resulted in the filing of a bankruptcy fraud complaint against Kelvin Daniels, who is a New York City cop. 

Mr. Daniels is accused in U.S.A. v. Daniels 7:09−mj−02103, of fraudulently concealing bankruptcy estate property during his New York bankruptcy in the summer of 2005.  A Department of Justice press release claims that Mr. Daniels failed to schedule and otherwise disclose his deeded property on Third Street in Newburgh, New York. 

A bankruptcy debtor who conceals an asset, fails to list an asset on schedules, undervalues an asset or provides a misleading description of an asset, may violate 18 U.S.C. §152 (1) Fraudulent Concealment (punishable fine up to $500,000 for corporations and $250,000 for individuals and /or imprisonment up to five years).

Other bankruptcy fraud statutes which commonly relate to asset concealment include:

  1. 18 U.S.C. §152 (2) (False oath or account);
  2. 18 U.S.C. §152 (3) (False declarations);
  3. 18 U.S.C. §152 (7) (Fraudulent pre-petition transfers or concealment);
  4. 18 U.S.C. §157 (Bankruptcy fraud).

Copyright 2009 Fred L. Abrams

The September 23rd "Asset Search News Roundup" first discusses the importance of international cooperation, especially when assets are concealed by money laundering in multiple jurisdictions.  It then mentions how U.S. and Chinese authorities cooperated to recover cultural relics including dinosaur fossils from as early as 100 million years ago.

+An offshore asset search can sometimes require the use of letters rogatory or the other formal methods of international cooperation listed in "Eliciting Evidence From Foreign Bank Witnesses".  This kind of international cooperation is an essential element in the fight against money laundering in multiple jurisdictions.

 

This is of course recognized by Mr. Paul Vlaanderen, who is the president of the leading transnational anti-money laundering organization, the Financial Action Task Force.  As Mr. Vlaanderen stated during his August 21, 2009 speech in Lesotho: "Some jurisdictions expose us all to unacceptable risk by failing to implement effective AML/CFT [anti-money laundering / counter-terrorist financing] systems".

 

++Ten days ago, U.S. officials turned over to China cultural relics including the partial dinosaur skull pictured below.  Some of these relics were from as early as 100 million years ago.  As reported by "US turns over seized prehistoric relics to China", the relics were contraband and had been recovered because of U.S.- Chinese cooperation.  The Ministry of Land and Resources in China had apparently sought the relics which had been interdicted in Richmond, Virginia and at the Chicago O’Hare International Mail Facility. 

 

 (To Enlarge, Click On The Photo)

 Photo: U.S. Immigration and Customs Enforcement

 Copyright 2009 Fred L. Abrams

Minnesota money managers Trevor Cook, Patrick Kiley, Christopher Pettengill, Jason Bo-Alan Beckman and Gerald Durand, have been sued by 57 investors for alleged securities fraud.  The Minneapolis Star Tribune wrote about the lawsuit in “Investment fraud suit grows more complex” and earlier on July 12, 2009.

The investors’ second amended complaint at part 1 and part 2 herein, pleaded causes of action for: fraud, conversion, civil theft, negligent misrepresentation, civil conspiracy, deceptive trade practices, breach of contract, and breach of fiduciary duty.  It asserted that the money managers had converted about $16 million belonging to the investors by inducing the investors to place monies in a foreign currency arbitrage program.

This second amended complaint specifically claimed that some of the money managers had aired radio broadcasts to solicit investments for the foreign currency arbitrage program.  Money manager Christopher Pettengill reportedly described this arbitrage program to two investors, by drawing what might be nothing more than a meaningless link chart:

(Click On The Link Chart To Enlarge It)

 

Continue Reading Money Laundering By Minneapolis Money Managers?