US prosecutors have announced that they have closed their investigation into cyclist Lance Armstrong without charging him, nearly two years after they began looking into allegations that he and his cycling teammates committed a variety of possible crimes by doping.  The possible crimes being investigated included the defrauding of the government, drug trafficking and money laundering.  In particular, the authorities were exploring whether money from the US Postal Service, the primary team sponsor for the first four of Armstrong’s Tour de France wins, was used to buy performance-enhancing drugs.  Armstrong, who won the Tour de France a record seven times, has always emphatically denied all accusations that he used illegal performance-enhancing drugs.  But his first Tour de France win in 1999 followed the event’s largest doping scandal, and ever since he has fought suspicions that his Tour titles were tainted by drug use, although he has never tested positive. 

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Jimmie Goodgame, from Ohio, has been given a prison sentence of 70 months for laundering more than US$1.5 million [about £950,000] for a group of drug dealers by using the money to buy a fleet of luxury vehicles.  Goodgame is one of eight people indicted in 2011 in a huge heroin trafficking ring based in Cleveland; all but one have now been sentenced.  Goodgame and his wife Stacy created three companies and set up numerous bank accounts, and then used money from those bank accounts to purchase more than fifty luxury vehicles in the names of their companies.  In reality, the vehicles – including Range Rovers, Porsches, Audis, Cadillacs, Mercedes Benzes, BMWs and a Maserati – were all driven and controlled by drug dealers.  Stacy allowed her husband to use her legitimate company, Goodgame Heavenly Cleaning, and her personal name and bank accounts for the money laundering efforts; she was sent to prison for eighteen months in October 2011.  The drug ring supplying the money to be laundered was run by Addonnise Wells and Mario Freeman, who have both already been sent to prison.

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Four men convicted last week of commercial corruption in the UK energy sector have been given lengthy prison sentences.  Andrew Rybak was sentenced to five years in prison, Ronald Saunders to three years and six months, Philip Hammond to three years, and Barry Smith to twelve months suspended for 18 months and 300 hours of unpaid work.  Rybak and Hammond were disqualified from acting as company directors for a period of ten years, and confiscation actions are to be undertaken against Rybak, Hammond and Saunders.  Passing sentence, HHJ Deborah Taylor said: “All this was done without the slightest regard for the interests of others.  Your activities in connection with these conspiracies had little, if anything, to do with the interests of those engaged with the project, but were parasitic, leeching money for your benefit.”  SFO Director Richard Alderman said: “Demanding backhanders in exchange for confidential and advantageous information saps business and is completely unacceptable to society.  Hopefully these sentences will ring out the message loud and clear that the criminal justice system will do all it can to combat wrong-doing like this.”

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FIFA, the international governing body of football, has announced that its whistleblowers’ hotline to help fight match-fixing will not be launched today as planned.  FIFA has cited “administrative issues” for the delay and has not set a new launch date, although it insists that it “remains committed to implementing this measure as soon as possible”.  The hotline was to be run independently by an outside organisation and operate throughout 2012.  FIFA is offering a plea-bargaining amnesty for three months to players, coaches, referees and officials who report their own involvement in or connection to match-fixing. 

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In a follow-up to a story dated 7 March 2011 (see Old news page), the owners of a Los Angeles toy company that made teddy bears have been sent to prison for laundering drug money for Colombian and Mexican traffickers.  Meichun Cheng Huang and Ling Yu, owners of Angel Toy Company, were sentenced to three years in prison and ordered to pay a US$20,000 [about £12,500] fine.  Huang and Yu pleaded guilty in March 2011 to allowing Colombian and Mexican clients to drop off cash at their company’s headquarters or deposit it directly into the company’s bank accounts.  The dirty cash then entered the legitimate financial system, and the money was returned to the traffickers when teddy bears were exported to Colombia and Mexico and sold to generate local “clean" money.  During one four-year period, more than $8 million in cash was deposited into the toy company’s accounts – every single transaction under the $10,000 reporting threshold operational in the US.

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A registered nurse and her pharmacist husband from Boston in the US have been found convicted of illegally distributing prescription drugs and international money laundering.  From October 2007 to October 2008, Gladys and Baldwin Ihenacho conspired to distribute prescription anti-anxiety and weight-loss drugs from Meetinghouse Community Pharmacy, which they co-owned.  Meetinghouse was the distributor for an Internet pharmacy in the Dominican Republic: customers without prescriptions ordered drugs online and then had their orders filled at Meetinghouse, which then mailed the drugs to the customers.  At its busiest, Meetinghouse shipped about a thousand packages a week containing an estimated total 3.5 million pills drugs to customers all over the US who did not have valid prescriptions.  The Ihenachos were paid US$1.2 million [about £761,000] by the Internet pharmacy operators.  Gladys was found guilty after a two-week trial and will be sentenced on 9 May 2012; Baldwin pleaded guilty in August 2011 and will be sentenced on 17 February 2012.

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Three men have been jailed for a €22 million forgery fraud on Swiss bank EFG Private Bank.  Kevin Steele was a partner at London law firm Mishcon de Reya, while Michael Shephard was one of his clients and Mark Pattinson was an associate of Shephard’s.  Together they conspired to produce letters purporting to be from Bank Julius Baer & Co in Guernsey claiming that over £76 million was held in two Guernsey accounts and available for use as security on a €22 million loan to Shephard.  The stated purpose of the loan application was to fund the development of a luxury Turkish resort where footballers Wayne Rooney and Ronaldinho had bought villas.  Steele was sentenced to five years and six months in prison, while Shephard was sentenced to six years and three months and disqualified from acting as a company director for fifteen years.  Pattinson was sentenced earlier this month to eighteen months; he had entered into an agreement to give evidence at the trial of Steele.

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Bulgaria’s Supreme Court has confirmed that Petar Petrov, known as Amigosa and one of Bulgaria’s most senior organised crime figures, will serve a three-year jail sentence for money laundering.  Amigosa was originally sentenced in 2009 to five years in jail and a fine of BGN 25,000 [about £10,700] for laundering BGN 99 million, [about £42 million] and heading an organised group smuggling cigarettes via Macedonia.  His jail sentence was reduced on appeal.  Amigosa came to fame as the assistant to Ivan Todorov, aka the Doctor - one of Bulgaria’s most legendary mafia bosses, who was shot dead in Sofia in 2006.

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Allen Stanford, the Texas financier accused of defrauding investors of US$7 billion [about £4.5 billion] through a Ponzi scheme involving his bank in Antigua, has gone on trial in Houston, Texas.  He has pleaded not guilty to 14 counts of fraud and money laundering and – if convicted – faces up to twenty years in prison.  The prosecution alleges that Stanford International Bank used the money raised from selling fraudulent certificates of deposit to pay off maturing contracts and to support their owner’s other business ventures, including other banks, a brokerage that sold the certificates of deposit, an airline, cricket grounds and restaurants.  Stanford and three of his former executives (themselves awaiting trial in Antigua) are accused of fabricating company documents and bribing officials in Antigua to cover up their illegal activities.  His defence lawyers – the fifth legal team to represent him since he was indicted – say that Stanford’s businesses were legal and that investors would have been paid if his companies had not been seized by the US government, thus destroying their value.  Prosecutors say that Stanford used the proceeds of the fraud to fuel an extravagant lifestyle that included owning houses and yachts, and sponsoring cricket matches.  He has been held in custody for two and a half years because of fears he would attempt to flee, and his trial is expected to last for six weeks.

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Assets worth nearly a million pounds are to be seized from two Glasgow businessmen who are believed to have been involved in the illegal drugs trade, extortion of money from a taxi firm, and money laundering.  Russell Stirton and Alexander Anderson were targeted by police in 2004; although neither was prosecuted, the Crown pursued them through proceeds of crime legislation and, after a lengthy legal battle, both men have been ordered to hand over three properties.  Judge Lady Stacey ruled that three houses held by Stirton and Anderson, and other assets, valued at £922,000, were obtained through crime: “I have found that Mr Stirton was present when controlled drugs and a hand gun were imported into Dover from Calais in 1997.  Mr Stirton and Mr Anderson were found to have a large amount of cash in a car on the M74 in 2000, in circumstances from which I infer that they were involved in some capacity in the supplying of controlled drugs or other contraband or the laundering of cash.”  Lady Stacey also found that both men had extorted cash from directors of Spring Radio Cars in Glasgow and laundered money by purchasing Skoda cars, and that the three houses concerned were obtained by mortgage fraud.  Chief Superintendent Wayne Mawson of Strathclyde Police said: “The Proceeds of Crime Act offers a valuable tool to law enforcement agencies to see that ill-gotten gains do not remain ill-gotten.  This case also offers a timely reminder that the police and other justice agencies will pursue the holders of such property for however long it takes.”

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David Ojo, a newsagent from Southampton, has been jailed for three-and-a-half years for using his business to launder £581,000 for Internet fraudsters.  Between February and July 2009, Ojo used his Western Union agency in his shop, Andor News, to send the money to accomplices: he received 695 transfers and sent out 784.  Customer complaints led to an investigation, and in the cellar of the shop police found files containing false names and addresses used to disguise the transfers.  The entries were in Ojo’s handwriting and the files had his fingerprints on them.  Ojo faces a confiscation hearing on 22 June 2012.

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In a follow-up to a story dated 10 January 2012, five people in Thailand have been charged with defrauding a woman by posing as anti-money laundering officials.  The five were arrested in Chiang Mai, in possession of 32 bank passbooks, 126 ATM cards, seven mobile phones and a laptop computer.  During December 2011, an elderly woman was contacted on many occasions by the fraudsters, one of whom claimed to be Seehanat Prayoonrat, secretary-general of Thailand’s FIU, the Anti-Money Laundering Office (AMLO).  She was told that she was being investigated for laundering money for drug traffickers, and she would be prosecuted and could have her money seized if she refused to transfer it to AMLO “for examination”.  On their instructions, the victim made 269 transfers totalling almost 30 million baht [about £615,000].  Police are in the process of issuing arrest warrants for owners of the private bank accounts and the ATM cards used in the scam. 

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Vikram Datta, an Indian-American entrepreneur, has been sentenced to twenty years in prison for using his perfume distribution business to launder millions of dollars for Mexican drug cartels.  According to Manhattan-based US Attorney Preet Bharara: “Datta used his perfume business to remove the stench from Mexican drug cartel money, and now he will pay a steep price for his crimes.  This sentence should make anyone think twice about getting into business with narcotics traffickers.”  Datta owned several retail perfume stores on the US-Mexico border and sold significant amounts of perfume to Mexican buyers.  As payment, he accepted millions of dollars in cash that had been generated from drug sales in the US.  According to trial evidence about the laundering method known as the black market peso exchange, Mexican money exchange businesses purchased these “narco dollars” in exchange for Mexican pesos.  The narco dollars were transported back into the US and used to purchase perfume at businesses, including Datta’s, located in Laredo, Texas.  Datta pleaded guilty to money laundering in September 2011.

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The US Treasury Department has said that a popular private lottery in Guatemala is a front for laundering drug money.  The department’s Office of Foreign Assets Control confirms that it has designated Bingoton Millionario part of a drug-trafficking ring run by Marllory Dadiana Chacon Rossell, whom it calls one of the most prolific drug traffickers in Central America.  It says that her organisation moves tons of cocaine each month between Guatemala, Panama, Honduras and Mexico and then on to the US.  She is believed to launder tens of millions of dollars a month.  The lottery’s Facebook page says that it sells tickets in thousands of stores across Guatemala and has awarded a total of $2 million [about £1.3 million] to 595,000 winners over the last three years.  Guatemala’s government says it will start an investigation.

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In a follow-up to a story dated 8 November 2011, the husband of former Citibank employee Malinda Dee has been sent to prison for four years and fined IDR 350 million [about £25,500] for forgery and money laundering.  Malinda Dee was accused in November 2011 of embezzling about US$5 million from Citibank in Indonesia and of laundering the money – she has yet to face trial.  Her husband Andhika Gumilang was found guilty of accepting a total of IDR 147 million in the form of 24 bank transfers from Malinda, made through bank accounts belonging to Malinda’s brother-in-law, Ismail bin Janim, and sister, Visca Lovitasari.  Andhika also received a Hummer SUV car worth around IDR 1.1 billion from Malinda.  Presiding judge Yonisman said: “The defendant surely knew that the money he had received was gained from crime.”  He added that Andhika also had seven identity cards in the names of Andhika Gumilang and Juan Farrero, each stating a different date of birth.  The identity cards were later used to open different bank accounts to receive the transfers from his wife. 

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Thomas Smyth, a businessman from County Antrim, has been ordered to hand over nineteen houses to the Serious Organised Crime Agency.  A Recovery Order was granted in Belfast High Court after Mr Justice Treacy deemed Smyth’s property portfolio to be the proceeds of crime.  The properties in question are Smyth’s family home in a village near Belfast, and eighteen buy-to-let houses in County Antrim and Liverpool.  SOCA’s investigations showed that between 2000 and 2007 Smyth made numerous fraudulent self-certification mortgage applications to a variety of financial institutions in order to obtain almost £2 million in loans to buy property, and therefore that Smyth had obtained his property portfolio through mortgage fraud, tax evasion and money laundering.  Andy Lewis of SOCA said: “Thomas Smyth deliberately abused the system for his personal gain.  This is a tough lesson but if you prop up your lifestyle through illicit profits SOCA will ensure you hand them back.” 

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Marwan Adli, the former warden of the Narcotics Penitentiary on Nusakambangan Island – Indonesia’s Alcatraz – has been sentenced to thirteen years in prison for assisting a drug ring operating inside the penitentiary, and money laundering.  He was also ordered to pay a fine of 10 billion rupiah [about £710,000].  Adli says that he will appeal: “I feel that this sentence is too much for me.  I think that there were documents that were not considered by the panel of judges.”  Prison sentences were also handed down to Adli’s accomplices, Nusakambangan’s former prison security chief Iwan Syaefudin and former education chief Fob Budiyono.  His son Andhika Permana Dirgantara and his grandchildren Dhiko Aldila and Rinal Kormial also received prison sentences for their roles in the drug ring. 

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A money laundering trial has collapsed after Metropolitan Police officers revealed that they had “inadvertently” destroyed paperwork connected with the case, which concerned four members of the Maughan family arrested in the wake of a police raid on a travellers’ site in Camden Town, north London.  Defence solicitors said the lost documents – receipts that proved ownership of goods confiscated by police – would have proven their clients’ innocence in court.  Samira Noor-Khan, from law firm Hodge, Jones and Allen, said: “I’m angry about this because it’s been going on since 2010 and no evidence has been supplied.  People have been held in custody during some of this time and had their freedom limited.”  Superintendent Roger Smalley said Camden police followed a general Met policy of clearing property held in investigations as quickly as possible, but in this case the problem was an error: “Unfortunately, it would appear that due to administrative errors, a set of documents had been destroyed.  This was extremely disappointing, resulting in a case not being able to be put forward for the court’s consideration.  I am ensuring that we review our processes and systems to prevent a recurrence in the future.”

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Barrister David Friesner has admitted stealing £81,500 from his own chambers.  Friesner was deputy head of the 9 St John Street Chambers in Manchester when he left in 2009 following the allegations.  He had been at the chambers for nearly fifteen years and was well-known for his work in serious criminal cases.  One of his areas of expertise was fraud and money laundering and he prosecuted a number of high profile fraud cases.  The judge, Mr Justice Singh, told Friesner: “You will have no doubt about the likely sentence in this case.  In the circumstances of this case, and having regard to relevant guidelines, a sentence of immediate imprisonment is the likely sentence in your case.  It’s likely to be a substantial period of time.”  Friesner was given unconditional bail and will be sentenced on 10 February 2012. 

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Nicholas Heywood, a solicitor from Bolton in Lancashire, has been jailed for twelve months for money laundering.  One of Heywood’s clients, Keith Gough, won £9.5 million on the National Lottery in 2005.  Gough’s alcohol-related health problems made him vulnerable, and Heywood abused his position of trust when he transferred a loan of £13,750, which was intended for Gough, to himself.  Gough died in 2010.  Heywood also admitted perverting and prejudicing the course of justice in relation to Duncan Adamson, a friend and client who was convicted of money laundering in 2007: Heywood failed to produce two key files during a trial and although he later produced one of them, it was significantly altered.  Detective Inspector Tim Dean of Cheshire Constabulary, said: “Heywood abused his trusted position as a solicitor with the deliberate intent of frustrating a police investigation and justice itself.  I cannot think of a more damning condemnation of a solicitor other than to pervert the course of justice and launder money.  His actions have undermined the public trust in all solicitors.”

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Mark Lloyd and John Johnson, from Greater Manchester, have been jailed for mortgage fraud and money laundering.  Lloyd claimed on several mortgage application forms that he was the manager of a company selling hygiene products earning a six figure salary.  However, his records with HMRC showed that his income never exceeded £14,000, and the director of the company confirmed that Lloyd was a delivery driver and that the wage slips Lloyd had submitted in the mortgage applications were false.  Through the false applications, Lloyd obtained loans totalling £528,248.  Johnson used a similar deception, claiming to work for the same hygiene company, which had never heard of him.  An investigation was launched after Greater Manchester Police found the two men in possession of £500,000 in cash.  Detective Sergeant Neal Colburn said: “After recovering half-a-million pounds in cash, our investigations discovered that over a three year period, this pair were able to fraudulently obtain more than £700,000 from mortgage companies.”  Lloyd was sentenced to three-and-a-half years in prison and Johnson to two-and-a-half years.

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An elderly woman in Bangkok has asked the Anti-Money Laundering Office (AMLO – the Thai FIU) to return about 30 million baht [about £612,000] which she claimed to have transferred to a bank account belonging to the agency’s chief.  The woman claims that she transferred 2 million baht a day to bank accounts which she believed were held by AMLO secretary general Seehanat Prayoonrat.  She said she had been contacted in December 2011 by a man claiming to be Police Colonel Prayoonrat who asked her to make the transfers, and warned her not to mention it to other government agencies as it was a top-secret request.  The caller told her that she was being investigated for laundering money for drug traffickers, and that she needed to transfer the money “for examination”, and that if she did not make the transfers she would be prosecuted for money laundering.

The unnamed victim made 269 transfers to 75 different bank accounts but decided to stop after the caller asked her to mortgage her house and borrow from friends.  She went to the AMLO office with her transaction receipts and asked for a refund, but preliminary enquiries have shown that the telephone number used to contact her does not belong to AMLO.  The 75 bank accounts have been frozen, although nearly all the money has already been withdrawn by the fraudsters, and Police Colonel Prayoonrat has said that he will be asking the woman’s bank why it did not pick up on the unusual transactions.  He said that AMLO is aware of about five phone scam gangs were operating from overseas and targeting elderly people, especially retired state officials who had pensions but stayed home alone.  The investigation continues.

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In the latest instalment of the Solomon Dwek saga (see Old news page, 29 June 2011), New Jersey rabbi Eliahu Ben Haim has been sentenced to five years in prison for money laundering.  Ben Haim admitted that from October 2006 he met with Solomon Dwek (who later turned state’s evidence), and for a fee of approximately 10% agreed to launder and conceal Dwek’s funds through an already-existing underground money transfer network.  Ben Haim further admitted that prior to laundering the money, he was repeatedly told that the funds were the proceeds of Dwek’s illegal businesses and schemes, including fraud and trafficking in counterfeit goods.  Ben Haim directed Dwek to make cheques payable to several organisations that Ben Haim operated, including Congregation Ohel Eliahu, Friends of Yechave Daat, and Congregation Yehuda Yaaleh.  Ben Haim deposited the cheques into the relevant accounts and then wired the money to co-conspirators in Israel, Turkey, China, Switzerland and Argentina.

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Derek Swann, a property developer in Oklahoma, has been sentenced to 40 months in prison for money laundering.  Swann and his business partner Giovanni Stinson used false information to solicit investors for “The Falls”, their proposed commercial and residential development.  According to the prosecution: “From 2006 to 2008, individuals invested more than US$5 million [about £3.2 million] into The Falls based on promises made by Swann.  Swann then used investors’ monies for reasons different from what he told them: rather than paying for engineering, architectural or infrastructure costs... Swann used the investments for personal expenses and repayment of earlier investors.”  Among the personal expenses cited, Swann and Stinson paid for golf and meals at the Oklahoma City Golf Club and leased BMW cars.  The Falls was never completed.  In February 2011, Swann admitted misusing some of the $255,000 put into the project by a Texan investor, and has been ordered to pay more than $4.3 million in restitution to more than two dozen investors.  Stinson is awaiting sentencing after pleading guilty earlier this year to conspiracy to commit securities fraud.

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Bruce Hall, an Australian former aluminium executive, will be extradited to the UK to face charges of corruption and money laundering charges related to Alcoa’s sale of Australian alumina to Bahrain.  Hall was arrested at his home in New South Wales on 20 October 2011 as part of an investigation by the Serious Fraud Office into millions of dollars allegedly paid by Alcoa to gain aluminium contracts.  He has now “consented to his surrender to the UK” according to court documents.  Victor Dahdaleh, a Canadian businessman with links to Perth, was arrested in the UK in November 2011 for allegedly paying bribes to Aluminium Bahrain (Alba) on behalf of Alcoa in exchange for contracts.  Both Alcoa and Dahdaleh have denied the allegations.  Hall was chief executive of Alba from 2001 to 2005, when the alleged bribery took place.  Alba runs one of the world’s biggest aluminium smelters, which uses Alcoa’s West Australian alumina as a raw material.

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A major money laundering ring has been cracked in the United Arab Emirates.  A gang was planning to smuggle 94,410kg of gold and millions in cash into the country, pay it into the banking system and then transfer it to a number of Arab and foreign countries.  However, the smuggling was intercepted and several members of the network have been arrested.  The gang planned to smuggle the gold and money in oil tankers from an African country to a neighbouring country where two members of the gang would receive them and deliver them to accomplices inside the UAE.  Police arrested a member of the ring who was trying to enter the country through the Ghuwaifat border checkpoint; the suspect was carrying 10 million Saudi riyals [about £1.7 million] hidden in his truck. 

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Vittorio Pisani, formerly head of the Naples police flying squad and currently serving with the Servizio Centrale Operativo (the Italian national crime squad), will go on trial in late January 2012.  He has been charged with aiding and abetting a criminal: prosecutors say that Pisani warned restaurant owner Marco Iorio (allegedly a member of the Camorra criminal organisation) about a money laundering investigation into the catering industry and helped him transfer funds to Switzerland.  The decision by Public Prosecutor Francesca Ferro that there is enough evidence to proceed with a trial means that Pisani, considered a brilliant police investigator, cannot live in Naples, and involves seventeen people accused of money laundering.  Under Pisani’s direction, the flying squad arrested high profile crime bosses Cesare Amato, Raffaele Pagano, Vincenzo Licciardi, Eduardo Contini and Casalesi Antonio Iovine in 2010, and in recent weeks Michele Zagaria, the “Scarlet Pimpernel” of the Caserta area.

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Richard and Lisa Smith, who lived a “Premiership footballer type lifestyle” while claiming benefits in Salford, have been jailed for money laundering.  The couple owned luxury cars, went on numerous holidays and spa breaks and had a £20,000 wedding in 2009.  Richard was arrested in May 2010 on suspicion of involvement in a fire at a vehicle recovery yard but escaped from a security van outside court.  He was later arrested in Spain and extradited to the UK.  During the subsequent investigation, officers found the couple lived an “extravagant” lifestyle although Richard earned only £15,000 a year and his wife was claiming benefits.  When police viewed a DVD of the couple’s lavish wedding, they recognised a large number of local criminals among the guests.  Detective Sergeant Simon Akker said: “The Smiths were living a lifestyle that many honest hard-working people only ever dream of.  This money undoubtedly came from criminality as neither had any discernible legitimate income that could fund such extravagant spending.  The couple are a negative role model to the Salford community.”  Richard pleaded guilty to money laundering, arson and escaping from lawful custody, and was sentenced to eleven years in prison.  Lisa pleaded guilty to money laundering and was sentenced to eighteen months. 

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A US federal judge has ruled that Texan financier Allen Stanford is mentally fit to stand trial for allegedly operating a Ponzi scheme – involving the sale of fraudulent certificates of deposit issued by his offshore bank in Antigua – that netted US$7 billion [about £4.5 billion].  He has pleaded not guilty to charges of fraud, conspiracy and money laundering, and his lawyers suggested that he could not stand trial because he has suffered from an impaired memory since he was attacked in prison in September 2009.  However, Dr Robert Cochrane, a psychological evaluator at the prison, told the court: “I see no brain injury that stands in the way of his standing trial”.  US District Judge David Hittner agreed after a three-day hearing in Houston, Texas, that Stanford is able to help his lawyers prepare for the trial.  He has spent more than eight months at a North Carolina prison hospital undergoing psychological tests and being weaned off anti-anxiety medication.

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In a follow-up to a story dated 30 September 2011 (see Old news page), Leo Gao – the so-called “accidental millionaire” – has appeared in court in New Zealand to be charged with 27 counts of theft and money laundering charges.  Gao and his girlfriend Kara Hurring ran a petrol station in Rotorua, and fled New Zealand in 2009 when his bank, Westpac, mistakenly gave Gao a NZ$10 million [about £4.9 million] overdraft instead of the $100,000 he had asked for.  Hurring returned voluntarily to New Zealand in February 2011, and Gao was arrested in Hong Kong in September 2011.  $3.9 million of the bank’s money remains unrecovered.  Hurring is due to stand trial in February 2012, and Gao was remanded in custody until his next hearing on 5 January 2012.

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An entire municipal police force in Mexico has been disbanded as part of a campaign to root out corruption.  More than 900 officers in Veracruz-Boca del Rio, on the eastern coast of Mexico, are losing their jobs and the Mexican navy is taking over responsibility for law enforcement, backed by federal police officers.  Veracruz state governor Javier Duarte said the decision to disband the force was part of a national programme to reform the police: “All those who belong to the now defunct Veracruz-Boca del Rio force can join the police again once they have passed the tests of trustworthiness demanded by the national system of public security”.  One of the prompts for this extreme measure was the dumping of 35 bodies on a main road in Veracruz in September, followed two weeks later by the discovery of another 32 bodies in three buildings.  The killings are thought to be the result of a battle for control of drug-trafficking routes between two of Mexico’s most powerful drug gangs, the Zetas and the Gulf Cartel.  More than 40,000 people have been killed in drug-related violence in Mexico since December 2006; and the armed forces and federal police have taken over security in several municipalities because local police have been unable to cope with the power of the drug gangs.

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In a follow-up to a story dated 15 April 2011 (see Old news page), Brent Beckley, the co-founder of online site Absolute Poker, has pleaded guilty to bank fraud, money laundering, illegal gambling offences and violating the Unlawful Internet Gambling Enforcement Act.  Beckley had been living in Costa Rica, but returned to the US to enter his pleas in response to charges laid by the Department of Justice in April.  Sentencing is scheduled for 19 April 2012; prosecutors are recommending a prison sentence of between 12 and 18 months.  Beckley has also agreed to forfeit US$300,000 [about £190,000].  PokerStars founder Isai Scheinberg and Full Tilt Poker founder Ray Bitar were also indicted in April 2011, and all three companies stopped accepting US play.  Full Tilt Poker’s licence was revoked by its regulator because the company did not have enough money to pay its players.  Full Tilt is in the process of being acquired by Groupe Bernard Tapie (GBT); if the sale is completed, GBT will be responsible for returning money to players outside of the US and the US Department of Justice will be responsible for returning money to American players.  PokerStars has already returned the money it owed American players when it pulled out of the US market, while the status of money owed to Absolute Poker players is unclear.

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Harish Patel and Ravindra Patel (no relation) have been sentenced to seven and five years in prison respectively for laundering the proceeds of crime.  Police began their investigations after suspicions were raised by business associates of the pair who had noticed that they were handling very large amounts of cash.  Harish used his family-run electrical business, Alpha Electrics Limited, in Leicester as a physical location for the collection of the cash – a fact of which his brothers were completely unaware.  He and Ravindra would then visit banks (most frequently the Bank of Baroda in Leicester) and money service businesses with rucksacks and wheeled suitcases stuffed with cash – often more than £100,000 at a time – and deposit it with the explanation that it was the proceeds of a legitimate diamond business.  Harish set up a front company, Alpha Diam Limited, which issued bogus invoices for non-existent diamond trading to account for the cash.  Once deposited, the money was transferred to India and Dubai.  The two men were arrested in March 2011 and had over £190,000 in cash on them.  A further £115,000 was restrained in a bank account held in the name of the bogus business and it is believed that between them they laundered more than £4.6 million.  The crime which generated the cash is not known. 

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Nasir Khan, the fifteenth member of a gang involved in a £250 million VAT fraud using the supposed import and export of mobile phones, has been jailed for nine years with a restraint order placed on his assets of £15 million.  Following a ten-year investigation by HM Revenue & Customs (HMRC), codenamed Operation Euripus, Khan’s fourteen criminal colleagues were jailed for a total of almost 90 years for their part in the conspiracy in five previous trials.  Reporting restrictions on all six trials have now been lifted following the conviction of Khan who, using the alias Nasa Khan, made donations of £34,000 to Crimestoppers in 2008.  Nasir Khan was charged with money laundering, while the other defendants were charged with conspiracy to cheat the public revenue.

In July 2003, HMRC officers carried out a series of coordinated arrests across the UK, seizing of over half a million documents and 130 computer hard drives.  Analysis of the data seized showed transaction chains, contacts between the defendants and how the organisation was carrying out fraudulent deals from June 2001 to July 2003.  Offshore bank accounts were identified showing monies being transferred from the UK and EU into accounts in Hong Kong, Pakistan and Dubai. Talking about the very complex investigation, Chris Martin, Assistant Director of Criminal Investigation for HMRC, said: “The scale of this operation was unprecedented when we carried out the initial raids in 2003.  We had 350 officers visiting around a hundred premises across the UK and Spain which led to the arrest of 42 people.  VAT fraud is a serious crime which diverts vital income from the UK’s public services into the pockets of career criminals to fund their lavish and luxurious lifestyles.  This sends a clear signal to anyone involved or considering becoming involved in VAT fraud that the crime is serious and so are the penalties.”

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Isaac William, his wife Venus and their daughters Sylvia William, Sophie William and Maria Gunasekara have been sentenced for tax fraud and money laundering.  Isaac William ran a business supplying security guards to the construction industry but between 1999 and 2008 he failed to declare £5 million of business profits or pay the correct amount of tax due.  His wife and daughters laundered £1.3 million from the business through their own bank accounts.  They used the money to buy properties in Pakistan and the UK, and to pay for trips to Dubai and Pakistan.  They also withdrew large amounts of cash and transferred some of it into bank accounts they held in Dubai and Pakistan.  Isaac was sentenced to four years in prison, Venus to sixteen months, Maria to twelve months suspended for twelve months (plus 100 hours of community service), Sylvia to ten months suspended for twelve months (plus 100 hours of community service) and Sophie to eight months suspended for twelve months (plus 150 hours of community service).

Simon De Kayne, Assistant Director of Criminal Investigation for HM Revenue & Customs (HMRC), said: “Isaac William failed to declare his company’s income or pay taxes of £1.1 million from his business activities.  The amount he owes now stands at £2.6 million including interest. His wife and daughters then continued the web of deceit by laundering over £1.3 million through their personal bank accounts.  Their criminal activities ensured they were able to fund luxury lifestyles and further increase their wealth at the expense of the taxpayer.”  Confiscation proceedings are underway. 

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In a civil suit filed in Manhattan, US authorities have accused three Lebanese financial institutions linked to Hezbollah of laundering more than US$300 million [about £193 million] through the US second-hand car market between January 2007 and early 2011.  The allegation is that the Lebanese Canadian Bank and two bureaux de change – Hassan Ayash Exchange Company and Ellissa Holding – used the proceeds from drug trafficking and other crimes to buy and ship cars to West Africa.  Couriers, smugglers and currency brokers brought the cash to the bureaux de change in Beirut which then deposited it at the Lebanese Canadian Bank.  The cash proceeds from the car sales was allegedly then smuggled to Lebanon, along with funds from Colombian and Mexican cartels.  Prosecutors say that the bank also allowed other Hezbollah-related entities to conduct massive transactions, sometimes worth as much as $260,000 per day, without disclosing the source or purpose of the money.  The Lebanese Canadian Bank merged with a subsidiary of Société Générale in February 2011 after the US treasury designated it as a “primary money laundering concern”, thus forbidding US institutions to deal with it.  Prosecutors say that $480 million in total was laundered through an “intricate scheme” involving “a vast and far-flung network that spanned three continents”, and are seeking that amount in penalties from the three institutions, as well as asking to freeze and seize their assets along with those of about thirty US car dealers and a US shipping company which are accused of facilitating the crime. 

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A French court has given former President Jacques Chirac a two-year suspended prison sentence for diverting public funds and abusing public trust.  Chirac was not in court to hear the verdict because of ill-health but has denied wrongdoing.  President from 1995 to 2007, he was put on trial on charges that dated back to his time as mayor of Paris (1997-1995) and was accused of paying members of his Rally for the Republic party for municipal jobs that did not exist.  In 2004 several figures including France’s current Foreign Minister Alain Juppe were convicted in connection with the case; Mr Juppe was given a fourteen-month suspended sentence.  Jacques Chirac is the first former French head of state to be convicted since Marshal Philippe Petain, the leader of the wartime Vichy regime, was found guilty in 1945 of collaborating with the Nazis.  The former president, who had legal immunity during his time as head of state, faced a potential ten years in prison and a fine of 150,000 euros for the employment of more than twenty bogus officials.  Chirac’s doctors say he has irreversible neurological problems which cause memory lapses, and his legal team will now consider whether to appeal against the conviction. 

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In a follow-up to a story dated 2 December 2009 (see Old news 2009), Charles Bowie, a retired major in the US Army, has been sentenced to 24 months in prison for laundering US$400,000 [about £] which he received from a contractor following his deployment to Kuwait.  He was also sentenced to three years of supervised release and was ordered to pay $400,000 in restitution.  Bowie served in Kuwait from April 2004 to April 2005, and conspired with John Cockerham, also a US Army major at the time, who directed a government contractor to pay Bowie money in exchange for the award of a bottled water contract.  In December 2009, Cockerham was sentenced to 210 months in prison and ordered to pay $9.6 million in restitution. 

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Ayman Joumaa, a Lebanese national suspected of being the ringleader of a vast international drug smuggling ring with links to the militant group Hezbollah, has been indicted in the US on drug and money laundering charges, the latter concerning more than US$850 million [about £550 million] in illicit profits.  Joumaa, who is currently at large, is charged, among other things, with selling nearly 100 tons of Colombian cocaine to the Zetas drug cartel in Mexico between 2005 and 2007 that was ultimately smuggled into the US.  Earlier this year, the US Treasury Department designated Joumaa as a drug trafficker and said Hezbollah had profited from his network.  Specifically, they accused the Lebanese Canadian Bank of being complicit in Joumaa’s money laundering and turning a blind eye to massive cash transactions.  The Lebanese Canadian Bank was sold to an affiliate of Société Générale in March 2011 after the accusations triggered concerns in Lebanon that the US would begin targeting Lebanon’s banking sector as a way to exert pressure against Hezbollah.  Joumaa is believed to be in Lebanon, and it is unclear whether the US would be able to obtain his extradition.

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Four men who conspired to launder US$15.5 million [about £10 million] stolen eleven years ago from a German bank have been sentenced to a total of 18 years in prison following an extensive financial investigation by SOCA.  Herbert Austin, Leigh Greest, Anthony Heald and Raymond Jewitt tried to avoid detection by spreading a tangled web of financial transactions across the globe, gambling that no one authority would have overall responsibility for investigating the crime, nor the resources to unpick the worldwide mechanics of the group – but SOCA has proved them wrong.

The original electronic bank theft in August 2000 was carried out by Matthew Holmes and Donald Somers, both working for Commerzbank in Germany, and they were convicted in Germany.  In 2006, SOCA investigators identified that funds being transferred to the UK were the same criminal funds stolen by Holmes and Somers and began investigating.  Officers discovered that through another employee of the bank, Leigh Greest, the men had enlisted a specialist criminal money laundering group headed by Herbert Austin to try to obscure the money trail.  Austin and Raymond Jewitt created an international system to receive and wash the stolen money which exploited offshore companies controlled via trusted associates and faceless administrative nominees.  They then used an additional layer of offshore banks in jurisdictions including Guernsey, Jersey and Cyprus before transferring the funds to the accounts of Equity Holdings and Investments Limited and Westfield Corporation Limited in the UK.  To date the equivalent of approximately $4.5 million of assets have been restrained in the UK, with additional sums being restrained in Spain, Portugal and Australia.  Herbert Austin was sentenced to eight years in prison, Raymond Jewitt to five, Anthony Heald to three and Leigh Greest to two.

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In a follow-up to a story dated 23 November 2011, Panama’s ex-leader Manuel Noriega has been extradited back to his home country from France and taken straight to El Renacer prison.  Last month, a French court approved a request from Panama to send him back home to be jailed over his convictions in absentia for murder, corruption and embezzlement during the 1980s.  He had the right to appeal the extradition, but his lawyers said he wanted to return to Panama.  He travelled to Panama City via Madrid in the company of a team of Panamanian officials, including the attorney-general and a doctor.  The 77-year-old has already spent more than twenty years in prisons in France and the US for drug trafficking and money laundering.  In Panama he faces three 20-year jail terms, although it is unclear whether he will remain in prison: Panama allows people aged 70 years and above to serve their sentences at home.

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Six years being found guilty of money laundering, a lawyer from Chicago has finally been ordered to report to prison by Judge William Lee.  Jerry Jarrett will serve 37 months in prison and also pay a fine of US$92,000 [about £59,000].  In 1999, one of Jarrett’s clients gave him $67,000 which Jarrett knew was proceeds from drug dealing.  He then deposited the money into the bank, making it appear that the client had invested money with him and that this money was interest earned on the investment.  He did the same thing for another client, and received a total fee of about $19,000 for laundering the money.  He was charged in 2003 and convicted in 2004, but his sentencing has been delayed numerous times by appeals and other motions.  Jarrett claimed that federal prosecutors had shown no interest in pursuing him, even though they had evidence on him in 1999, until he represented Dr Jong Hi Bek, who was charged by the state with murder in connection with two of his patients.  The charges were dropped because of shaky evidence, and Jarrett argued that federal prosecutors went after him as payback.  The Court of Appeals reversed the judge’s decision, and more appeals followed.  Judge William Lee, sentencing, did not grant the government’s request for a sentence of 63 to 78 months, as he said that Jarrett has already suffered some punishment through being disbarred from practising law and therefore unemployed since 2004.  Sentencing guidelines have also become more harsh, and Judge Lee said that it is not Jarrett’s fault that his indictment came after these changes. 

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Edward Jarvis, currently serving a 28-year prison sentence for trafficking more than a tonne of Class A and Class B drugs, has been given a Confiscation Order for £800,567 in illicit profits.  Specific assets itemised include a mansion in Liverpool, a villa near Marbella, high-value jewellery and money held in the bank accounts of family members and business associates.  This Confiscation Order is in addition to one of £158,000 granted against Jarvis after previous convictions for money laundering and tax evasion.  He was jailed in 2005 for masterminding a plan to traffick 593kgs of cocaine, which was foiled after the drugs were seized from a yacht on the island of Margarita, off the coast of Venezuela.  Investigators found that he had travelled to a number of countries to oversee arrangements for the shipment of the drugs to Europe, and had wired money to the yacht’s crew members under an alias.  Jarvis will have another two years added to his prison sentence if he fails to meet the terms of the Order, and would still be liable for the money.  He has also been made subject to a Financial Reporting Order, which compels him to provide information on any significant income, assets or expenditure for a period of fifteen years.  His wife Alison pleaded guilty in January 2011 to possessing criminal property, and last week was made subject to a Confiscation Order of £5,024.  Specialist Prosecutor Jane Hart of the Proceeds of Crime Unit at the Crown Prosecution Service said: “In the event that the CPS identifies further assets being held by Mr or Mrs Jarvis, the matter can be referred back to the court with a view to increasing the amounts payable.” 

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Several members of a family from Cincinnati in Ohio have been sent to prison for a US$3 million [about £1.9 million] mortgage fraud.  Debbie Sferrazzas started several mortgage brokerage companies between 2004 and 2009 and used forged documents to obtain mortgages or refinances for properties in the area.  Instead of using the money to pay for the homes, she and her family would pocket the cash.  Debbie Sferrazza was sentenced to 46 months in prison and ordered to pay $384,537 in restitution to various lenders and $151,000 to the Internal Revenue Service.  Her husband Salvatore was sentenced to three years’ probation and ordered to pay $71,700 to lenders.  Earlier this year, their son James Ashurst was sentenced to one day in jail, three years of supervised release and ordered to pay $99,400 in restitution, while his wife Heather Ashurst received two years’ probation and had to pay $99,400 in restitution.  Debbie’s daughter Whitney Bonapfel was sentenced to two years of probation, and Debbie’s brother Keiron Ashurst to 12 months and one day in prison and ordered to pay $138,500 in restitution.  The only non-family member involved, an employee called Tabatha Sturgill, was sentenced to 12 months and one day in prison and ordered to pay $384,500 in restitution. 

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Kuwaiti media have been reporting that millions of dollars have been deposited into the bank accounts of fifteen Kuwaiti members of parliament suspected of money laundering.  “Al-Jarida” newspaper reported that the central bank has told prosecutors that bank accounts held by the fifteen “have received suspicious deposits and the anti-money laundering law applies to them” and that the prosecutor planned to ask parliament to lift the immunity of the MPs to question them to determine the source of the money.  The opposition has alleged that the funds, estimated at nearly 100 million dinars [about £232 million], were paid by the government to secure votes on crucial issues.  In September 2011, the public prosecutor launched an enquiry into the bank accounts of the fifteen MPs after three banks reported large deposits from unknown sources.  It is believed that this is one of several issues that forced prime minister Sheikh Nasser Mohammad Al Ahmad Al Sabah to resign at the end of November.  The Kuwaiti government has denied the allegations. 

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Transparency International (TI) has released the 2011 version of its Corruption Perceptions Index.  The index this year features 183 countries – the five new entrants are North Korea (which storms in at last position), the Bahamas, Suriname, St Lucia, and St Vincent and the Grenadines.  Top spot is nabbed by New Zealand, followed by Denmark and Finland, then Sweden and Singapore.  Somalia joins North Korea at the bottom of the index, with Myanmar, Afghanistan and Uzbekistan only marginally better.  As the index was released, Huguette Labelle, Chair of TI, warned that protests around the world, often fuelled by corruption and economic instability, clearly show that citizens feel their leaders and public institutions are neither transparent nor accountable enough: “This year we have seen corruption on protestors’ banners be they rich or poor.  Whether in a Europe hit by debt crisis or an Arab world starting a new political era, leaders must heed the demands for better government.”

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Accountant Malcolm Carle from Cheshire has been jailed for six years for laundering more than £1.2 million for a drug dealer.  Carle helped Walter Callinan to launder money from importing cannabis from Spain and selling it in the UK, even buying a hotel near Worcester with criminal cash.  When police raided Carle’s home, they found accounts and diaries, as well as more than £10,000 in cash.  The accounts showed that Carle had set up a complex network of trusts and companies abroad, including in Azerbaijan, the Seychelles and the British Virgin Islands.  Police also found messages from Carle to Callinan about the hotel, stating that it had been purchased with “dirty money” and was meant to be a “hidden and long-term investment”, with the money transferred abroad “to hide the way the funds were raised”.  Records showed that on ten occasions between December 2007 and November 2011 Carle drove to collect from Callinan cash totalling £593,000 – charging Callinan 20p per mile expenses.  Although he told Callinan his drawings from the business were limited to £20 a week, Carle drove a Jaguar, flew around Europe watching Chelsea FC play matches, and enjoyed many foreign holidays.  The two men fell out when Carle took out a loan against the hotel without telling Callinan, and could not repay it.  Callinan has already been sentenced for drug trafficking and money laundering – along with five others – and is serving eleven years. 

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In a follow-up to a story dated 20 October 2011, when Gregory Podlucky, formerly the CEO of bankrupt American soft drink maker Le-Nature’s Inc. was sentenced to twenty years in prison for defrauding investors, vendors and lenders out of US$684 million [about £430 million], his wife and son have now been found guilty of money laundering.  Karla and Jesse Podlucky originally claimed that they were respectively a stay-at-home mother and a low-level employee who knew nothing about the fraud, but the prosecution showed that they spent huge amounts of money, including $33 million on diamonds and sapphires.  It was also accepted that the suspicious ways the defendants handled various transactions – such as moving money through multiple accounts, buying a car out of state, and using different post offices and addresses – provided enough circumstantial evidence for the jury to conclude that the family members knew the money came from fraud.  Karla and Jesse have been released on bail with electronic tagging, and will be sentenced on 26 April 2012.

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Roosevelt Hairston, former general counsel to and executive vice president of the Children’s Hospital of Philadelphia (CHOP), has been sentenced to four years in prison for mail fraud, money laundering and filing a false tax return.  Hairston’s offending began in 1999, when he was responsible for coordinating CHOP’s defence against medical malpractice claims.  He created 126 fraudulent invoices for non-existent expert medical witnesses and other supposed work done for the hospital, such as consulting services and economic impact studies.  Payments for these invoices were then sent by CHOP in the form of cheques, to fake entities that Hairston had set up (such as The Children’s Research Alliance).  In total he defrauded CHOP of  US$1.7 million [about £1.1 million], in addition to the $700,000 annual salary he earned as general counsel.  He lived well, maintaining a yacht with a captain.  Hairston pleaded guilty in July 2011, and has also been order to pay $1.7 million in restitution to CHOP and $1 million in undeclared back-taxes.

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Hayley Hughes, who was jailed in 2010 in Birmingham for laundering the proceeds of the sale of stolen cars, has been ordered to sell her home to pay back £126,000 or face more time in prison.  Hughes was jailed for two years in June 2010 but released on appeal after three months on the grounds that the original sentence had been too harsh; it was replaced it with a 12-month sentence, suspended for 18 months, with a supervision order.  Hughes was a drug addict who became involved with criminal Lee Morris, who was jailed for ten years in 2009 for 36 burglaries.  At a Proceeds of Crime hearing, Hughes was given six months to pay back the £126,000 in “criminally held assets”, and told to sell her house to fund the payment.  If she does not meet the deadline, she will face a prison sentence of two years and three months.  Detective Sergeant Dave Treacy, from West Midlands Police’s payback team, welcomed the ruling: “This is an excellent example of our confiscation powers, removing the assets from criminals who seek to profit from their criminality.  Any criminals who believe they can serve time and then be released from prison to a cosy nest-egg of ill-gotten gains can think again.”

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Guernsey’s former Lieutenant-Governor Sir Fabian Malbom has been targeted by an e-mail scam.  A message claiming to be from Sir Fabian was sent to a number of people, stating that the former governor had been robbed in Barcelona and needed money to be sent to him.  Guernsey’s Education Minister Carol Steere was one of the recipients: “I’ve heard of these scams before, where people send you an email saying they’re in difficulties.  Cheekily they’ve also put a telephone number, and the hotel’s telephone number.  I haven’t tried it yet because I’m sure that that’s going to be a high rate telephone number.”  Government House has confirmed that this is a scam, and that Sir Fabian is safe and well.

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Terry Adams, a London criminal who was jailed for seven years in March 2007 for money laundering and made subject to a ten-year Financial Reporting Order (FRO), has been sent to prison for eight weeks for failing to report his financial affairs to the Serious Organised Crime Agency (SOCA) under the terms of that FRO.  Adams pleaded guilty of four breaches of his FRO, as he had failed to report details of a financial account, payments to the account, and details of assets held.  FROs require a convicted criminal to report their financial details at regular intervals, and can be made by a court, on the application of a prosecutor, for up to twenty years for those sentenced to life or a maximum of fifteen years for other sentences.  Adams’s FRO expires on May 2017.  A SOCA spokesman said: “Financial Reporting Orders are designed to make it more difficult for high level criminals to re-offend.  SOCA will not tolerate breaches.  Our policy of lifetime management means what it says.”

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Vladimir Antonov, the owner of Portsmouth Football Club, and his business partner Raimondas Baranauskas are due to appear in Westminster Magistrates’ Court to answer a Europe-wide arrest warrant.  Lithuanian prosecutors want to question the two men as part of an investigation into asset-stripping claims involving Bankas Snoras, of which they are both shareholders and former managers.  Snoras Bank went into temporary administration last week.  A court in Lithuania granted the request by the prosecutor general’s office on 22 November, and a pre-trial investigation into alleged fraud and money laundering has started.  According to prosecutors: “Both former managers of the bank Snoras have been recognised as suspects with regard to misappropriation of property on a large scale and forgery of documents.”  Antonov owns 68% of Bankas Snoras and an administrator has been appointed to assess its financial position.  Baranauskas was chairman of the board and president.

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In the latest step in a long-running saga, a French appeals court has ruled that  former Panamanian dictator Manuel Noriega can be extradited to his homeland to serve time for crimes committed during his rule in the 1980s.  Noriega spent more than twenty years in prison in the US before being extradited in 2010 to France where he was convicted of money laundering for the Medellin drug cartel and sentenced to six years in prison.  The ruling comes after the US agreed to a second Panamanian extradition request; US approval is required because he was sent to France before the completion of his US sentence.  Panama wants Noriega to serve three twenty-year sentences for the murders of three political opponents: Hugo Spadafora, a doctor and former deputy health minister who was murdered in 1985, Captain Moises Giroldi who was murdered in 1989, and union activist Heliodoro Portugal who was murdered in 1970.  However, one of Noriega’s lawyers said last week that his client should be home for Christmas and might not even go to prison because of his alleged ill health. 

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Three people in Ohio have been given prison sentences for mortgage fraud and money laundering.  During December 2006 and January 2007, Louis Amir fraudulently applied for and obtained six mortgage loans from four lenders totalling US$6.7 million [about £4.3 million] to finance the purchase of a home in Gates Mills, Ohio.  The actual purchase price was $2 million.  Once he had the fraudulent proceeds, Amir issued a cheque for $100,000 to Deirdre Ferguson and three cheques totalling $65,000 to Daphne Stokes, as well as paying off Stokes’ mortgage of $87,000.  He also bought a Bentley for $103,000 and leased a Rolls Royce for $164,000, and bought plasma TVs and speakers for $96,000.  Amir was sentenced to 151 months (just over 12½ years) in prison and ordered to pay restitution of $6,592,637 to the four mortgage lenders.  Ferguson was sentenced to three years’ probation, while Stokes was sentenced to 30 months in prison followed by three years’ supervised release.

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HM Treasury has imposed new financial restrictions against Iran.  From 15:00 on Monday 21 November 2011, all UK credit and financial institutions are required to cease business relationships and transactions with all Iranian banks, including their branches and subsidiaries, and with the Central Bank of Iran.  This means that UK credit and financial institutions are prohibited from entering into transactions or business relationships with these entities and from continuing existing transactions and business relationships with them, unless licensed to do so by HM Treasury.  According to the Treasury announcement: “This action has been taken because of the Government’s serious and ongoing concern in relation to Iran’s nuclear activities.  Iranian banks play a crucial role in providing financial services to individuals and entities within Iran’s nuclear and ballistic missile programmes, as companies carrying out proliferation activities require banking services.  London is an important global financial centre and the UK’s financial restrictions will make it more difficult for Iranian banks to utilise the international financial system in support of Iran’s nuclear and ballistic missile programmes.  This measure will protect the UK financial sector from being unknowingly used by Iranian banks for proliferation related transactions.”

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Joseph Johnson, a car salesman from Idaho, has been given a 40-month prison sentence and fined US$6,000 [about £3,800] after pleading guilty to money laundering.  In 2008 and 2009, he tried to sell two cars for $55,000 to undercover agents posing as drug dealers in an Internal Revenue Service sting operation.  Johnson, the former finance manager of West Coast Car Company in Boise, agreed not to use the buyers’ real names and told them that he would not file the required Internal Revenue Service forms.  Two other employees at the dealership – Michael McCormick and Kurt Bates – were also caught in the sting; they pleaded not guilty and will go on trial in April 2012. 

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In a follow-up to a story dated 14 October 2011, Munir Patel – the first person  charged under the UK’s Bribery Act 2010 – has been sentenced to six years in prison.  He pleaded guilty in October to one charge under the Bribery Act (for which he was given a three-year sentence) and one charge of misconduct in public office (for which he was given a six-year sentence, to run concurrently).  Patel admitted taking a £500 bribe to avoid putting details of a traffic summons into a court database.  Judge Alistair McCreath said that Patel’s misconduct had lasted for more than a year and involved at least 53 cases of people trying to avoid fines or points on their licence: “That is why I described these offences as very serious.  They caused great harm and involved high culpability on your part.”

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Ryan Charles, striker for Cambridge United Football Club, and basketball player Dwayne Gilpin have pleaded guilty to money laundering.  The two men conspired to buy hotel vouchers with stolen credit card details, and then auction them on eBay, making £12,000 out of the fraud.  The fraud was uncovered when a woman paid £543 through PayPal for a voucher for a three-night stay in Claridges Hotel in London; the hotel realised that the voucher had been bought with stolen US credit card details, and PayPal traced the voucher to Charles.  Charles’s defence lawyer said: “He was asked by a friend if he could use his eBay account because Gilpin’s was frozen.  He did not stop it.  He turned a blind eye. He bitterly regrets his involvement and is ashamed of his conduct.  He feels he has let himself and his mother down very badly.”  Charles was given a six-month sentence suspended for 18 months, with 12 months of supervision, ordered to complete 100 hours of unpaid work, and ordered to pay £2,044 in compensation and £350 costs.  Gilpin was sentenced to 12 months in jail suspended for 18 months, ordered to carry out 120 hours of unpaid work, and told to pay compensation of £1,457.

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Guatemalan President Alvaro Colom has said that he will grant a US extradition request for former president Alfonso Portillo, who faces money laundering charges in the US related to the alleged embezzlement of US$1.5 million [about £950,000] in foreign donations.  In May 2011, a Guatemalan court found Portillo not guilty of charges that he stole $15 million from the department of defence during his presidency from 2000 to 2004.  However, he has been charged in New York with embezzling $1.5 million donated by Taiwan to buy schoolbooks for Guatemalan children, and laundering the proceeds by depositing the money in Miami and then transferring it to a bank account in Paris in the name of his ex-wife and daughter.  After leaving office in 2004, Portillo fled to Mexico where he worked a financial adviser for a building materials company.  He was extradited from Mexico to Guatemala in 2008 to face the embezzlement charges at home, and was detained on 26 January 2010 following the US extradition request, as he waited on a beach for a boat to flee Guatemala.  President Colom has not yet given a date for the extradition, and the remaining administrative processes could take several months.

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David Don, former executive officer of Catholic school St Patrick’s College in Wellington, New Zealand, has pleaded guilty to embezzling money from the school and laundering it.  Don stole NZ$126,728 [about £61,500] and – when confronted by school authorities – told them that he had spent it on “prostitutes and daily living”, including mortgage payments, hotel bills and a waterbed.  He spent $19,820 [about £9,600] on escort services at a local hotel, which sent invoices to the school addressed to “Corporate Wellington”.  Don has been remanded in custody until sentencing in 2012, although the judge indicated that he is likely to get a prison sentence of about two years.  Don has said that he plans to repay all the money. 

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Mohammed Aleem and Iftikhar Ahmad have been jailed for money laundering after police seized £152,000 in drug money when they stopped a private hire car in West Yorkshire.  The cash, which was heavily contaminated with heroin, was being transported from Sheffield to Mohammed Aleem’s money services bureau in Manchester.  Iftikhar Ahmad, the driver, had made the journey several times before, allegedly booked to an address of a solicitor’s firm in Manchester Road but in reality going to the money services bureau on the same road.  Aleem was jailed for thirty months and Ahmad for fifteen months.  Niaz Ahmed, a passenger in the hire car who admitted his guilt at the outset, was given a nine-month prison sentence suspended for twelve months.  Judge James Spencer QC told the trio: “Without any facility for laundering money those at the heart of this wicked trade would have enormous difficulty realising any gain for themselves.” 

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Aaron Castro, the ringleader of a “massive and sophisticated” gang dealing in methamphetamine in Denver, Colorado has been sentenced to 45 years in prison.  Aaron, his brother Alfonzo and thirty-nine other people used a complex system to run the equivalent of 100,000 doses of meth through the city every month.  Investigators believe the meth was being made in what they call a “super lab” in Mexico and smuggled to Colorado via Phoenix in Arizona.  Women were used as mules to smuggle the drugs into the US by hiding it in their body cavities.  As for the money, the brothers spent much of it on a collection of comic books worth about US$500,000 [about £315,000].  Among the hundred boxes of comics seized by investigators were collectors’ items, including first-edition Batman and Superman comics stored in protective plastic wrapping; some of the individual comics were worth thousands of dollars.

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Two investors who lost their money to Bernard Madoff are suing JPMorgan Chase for US$19 billion [about £12 billion] in New York, accusing the firm of aiding and abetting the Ponzi schemer.  Stephen and Leyla say that JPMorgan, which was Madoff’s banker for more than twenty years, knew about the Ponzi scheme.  Their lawyer Steve Berman said in a statement: “JPMorgan was, in effect, the banking back-office for the Madoff Ponzi scheme, shuffling piles of money from one account to another at Madoff’s request [and] profited handsomely.  Had JPMorgan done even a perfunctory job of due diligence and fulfilled its duty to report Madoff’s illegalities, it would have saved investors millions of dollars.”  The Hills suit has been filed just days after a similar suit from the court-appointed trustee Irving Picard seeking $19 billion from JPMorgan was dismissed by the New York courts; the judge also threw out a similar suit against UBS for $2 billion, ruling that Picard did not have the authority to pursue the cases as he presented them.  He has so far filed about a thousand lawsuits worth some $100 billion against individuals and companies accused of profiting from Madoff’s scheme – or five times the $20 billion that Madoff is believed to have cheated from his clients while masquerading as an investment firm.  About half of the stolen money has been recovered by the trustee’s firm and the US Marshals.  Claims have been filed by more than 16,000 investors, though the trustee has only recognized 2,425 as legitimate victims; nearly 11,000 rejected claimants are third-party investors, meaning that they invested indirectly through feeder funds and do not have legal protection. 

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Inong Malinda Dee, a former senior executive of Citibank Indonesia, has gone on trial for embezzling US$5 million [about £3.1 million] from the bank.  She is accused of taking the money from the savings accounts of wealthy customers on at least 117 occasions between 2007 and February 2011, while employed as a premium client manager at the bank.  She is also accused of laundering the money through other bank accounts and via the purchase of luxury items, including a Ferrari and a Hummer.  In May 2011, Indonesia’s central bank temporarily barred Citibank from opening new branches or issuing new credit cards due to the alleged misconduct.  Dee was dismissed by Citibank in June 2011 and, if convicted, faces up to fifteen years in prison.

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Richard Arledge has been jailed for nearly sixteen years for money laundering through his car dealership in McKinney, Texas.  Arledge was the owner of Richard Arledge Suzuki and also the director and president of Expressway Financial, Inc.  He intentionally sold high-end luxury cars – including Bentleys, Aston Martins, and Maseratis – to individuals who derived their income from the illegal distribution of controlled substances, the promotion of prostitution, and mail and wire fraud.  These criminal customers usually paid for their luxury cars in cash, and provided tens of thousands of dollars in cash to the dealership in pillowcases, in shrink-wrapped plastic packages, in backpacks, and even in fast food paper bags.  During these financial transactions, Arledge and other dealership employees promised the criminal customers that the dealership would not report the financial transactions to federal authorities, despite federal reporting regulations requiring that all cash received in excess of $10,000 be reported to the Internal Revenue Service.  Arledge and others also concealed the fact that the criminal customers were purchasing the cars by titling the transactions in the names of third parties, and also labelled the car purchases as “leases” in order to permit the dealership to re-acquire the luxury cars if ever seized by law enforcement during the course of a federal investigation.  Fourteen other individuals were either convicted or pleaded guilty in connection with the money laundering scheme.

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Two former employees of the Singapore Land Authority (the national land registry) have been sent to prison for cheating and money laundering: James Koh Seah Wee was sentenced to 22 years while Christopher Lim Chai Meng, was sentenced to 15 years.  The pair embezzled S$12.5 million [about £6 million] from government coffers between January 2008 and March 2010 by submitting bogus invoices through various IT firms for fake maintenance services and goods that were never needed or delivered.  The two bought themselves superfast cars including a Lamborghini and a Ferrari.  Justice Tay Yong Kwang told the court that offences involving public funds committed against public institutions have to be dealt with sternly as they undermine good administration.  Both men co-operated with police investigations, and nearly S$9 million in money and assets has been recovered so far.

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Kurt Barton, formerly CEO of Texas-based investment firm Triton Financial, has been jailed for 17 years for investment fraud and money laundering.  He used his connections with professional footballers from the National Football League (NFL) to promote his Ponzi scheme.  Former NFL quarterback Ty Detmer lost most of his life savings – about US$2 million – while other athletes who promoted or invested with Triton were Heisman Trophy winner Earl Campbell, former NFL quarterback Jeff Blake and NFL kicker David Akers (who lost more than $3 million).  None of the athletes was accused of wrongdoing.  Other investors including Barton’s family and church members, who thought that their money was for real estate deals and business loans.  However, Barton spent much of the money on luxuries such as a premier box at University of Texas football games and a $150,000 car.  He defrauded more than 300 investors over four years to December 2009: he raised about $75 million [about £46 million] from investors, only about $20 million of which went to legitimate business purposes – many investors lost their retirement savings in the scheme.  Prosecutor Mark Lane told the court: “This case was… about Mr Barton being a big shot.  This case was about his ego and feeding it.  And his ego is expensive.”

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Robert Bonnar, who laundered almost £500,000 of drugs cash at a travel agent in Glasgow, has been jailed for three years.  Bonnar admitted laundering the money at a Lunn Poly store in the city centre between 2002 and 2003.  He exchanged sums of up to £70,000 on fourteen occasions, telling Lunn Poly staff that he was investing in property abroad, and was caught inside the travel agency in May 2003 following an undercover sting by customs investigators.  He went on the run to Bali in Indonesia before his trial in 2006, returning three months later, and was arrested when police stopped him for a road traffic offence.  Jailing him, temporary judge Norman Ritchie QC told Bonnar: “Money laundering is a essential component of successful drug trafficking.  You were a facilitator.” 

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Russian Viktor Bout has been convicted in the US of conspiring to sell weapons to government informants.  Bout was arrested in 2008 in Thailand after an undercover US Drug Enforcement Administration operation lured him there for a meeting with people he thought were members of the Revolutionary Armed Forces of Colombia (FARC).  The meeting was to discuss sales of weapons that could shoot down US helicopters fighting the illicit drug trade in co-operation with the Colombian government.  It took more than two years for the US to extradite Bout from Thailand, and Russian officials strongly opposed the action.  The trial lasted three weeks.  After less than two days, the jury found him guilty of conspiracy to kill US citizens, conspiracy to kill US employees, conspiracy to acquire and use anti-aircraft missiles and conspiracy to provide material support to a terrorist group.  His sentencing is scheduled for 8 February 2012 and he faces life in prison.  His lawyers plan to appeal both the conviction and the sentence. 

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Transparency International (TI) has released the 2011 version of its Bribe Payers’ Index (BPI), last updated in 2008.  This ranks 28 countries according to how likely their companies are to pay bribes when doing business abroad, according to a poll of 3,000 business executives.  As in 2008, companies from Russia and China are most likely to pay bribes, while those from the Netherlands and Switzerland are least likely.  Companies from the UK ranked eighth (i.e. eighth least likely to bribe), just ahead of those from the US and France.  Other major developing economies come higher up the rankings: India is 19^th while Brazil is 14^th.  According to the BPI: “It is of particular concern that China and Russia are at the bottom of the index.  Given the increasing global presence of businesses from the countries, bribery and corruption are likely to have a substantial impact on societies in which they operate and on the ability of companies to compete fairly in these markets.”  Russia is a particularly challenging case, as noted by TI Russian director Elena Panfilova: “Unfortunately... there are no islands of integrity in Russian public and business life.”

The sector most affected by bribery was public procurement, where companies compete to win contracts from governments for everything from waste collection to road building.  TI noted that the nature of public sector contracts – which are usually large, complex and involve many sub-contractors – makes it much easier to inflate costs and hide inappropriate payments.  However, paying bribes to win major infrastructure and housing projects “effectively cheats taxpayers out of their money” and can undermine safety standards.  The mining and the oil and gas sectors – in which Russia and China are most active – also scored low in the poll.  Agriculture was considered the least bribe-prone, while banking ranked the fourth least-corrupt out of nineteen industries.

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Jeffrey Melchior, of Vancouver Island in Canada, has been charged with money laundering after police seized more than US$2.6 million [about £1.6 million] from his boat in the middle of the night.  Melchior was arrested just before midnight on 24 March 2011 after Mounties noticed a rigid-hull inflatable boat speeding towards the US border on a common smuggling route.  As their vessel approached the suspicious boat, officers saw a suitcase being tossed overboard.  When the case was recovered, investigators found wads of cash packed in plastic-wrapped bundles.  The investigation is ongoing, and Melchior will appear in court in Victoria on 21 November 2011.

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The new Bank of England £50 banknote featuring Matthew Boulton and James Watt has gone into circulation.  The pair feature on the new note partly because they were instrumental in manufacturing coins that were difficult to counterfeit.  The banknote, which includes a number of new security features, will eventually take over from the note carrying the portrait of the first governor of the Bank of England, Sir John Houblon’s portrait – although that note remains legal tender until a withdrawal date yet to be set by the Bank.  There are about 210 million £50 notes in circulation, worth £10.5 billion in total.  The new version of the £50 banknote has a thread woven into the paper, rather than printed on it.  There are images on the thread of a £ symbol and the number 50 which move up and down when the banknote is tilted from side to side.  When the note is tilted up and down, the images move from side to side and the symbols switch. 

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The father of the former mayor of Nogales in Arizona in the US has been sentenced to two years in prison and seven years’ probation for fraud, with his son implicated in money laundering.  The Arizona Attorney General’s Office sought indictments for Octavio Garcia Suarez and his son, the former mayor Octavio Garcia Von Borstel after Western Union won a civil lawsuit against them and investigators uncovered independent evidence they were involved in money laundering.  Von Borstel set up a company called Legalizaciones and used the company to cash cheques and obtain Western Union money orders through his father’s cheque-cashing company, Western Cash Express, without actually paying for them.  As a result, Western Union was defrauded of nearly US$618,000 [about £387,000].  Von Borstel was sentenced in August to 3½ years in prison and seven years’ probation.  In addition to the Western Union case, Von Borstel was accused of helping a number of companies get contracts with the city in exchange for kickbacks.

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Border Agency officers at Dover are celebrating a record month for cash seizures at the port, after finding £700,000 bound for Poland and Ukraine.  On 4 October 2011, they arrested two Poles heading out of Dover on foot and seized £50,000 – half of it stuffed down one of the suspect’s underpants.  On 6 October, officers stopped a lorry packed with mince meat en route to Holland from Ireland – and found £500,000.  A further £150,000 was seized from another lorry and two Polish drivers were arrested.  It is thought that the money – almost certainly the proceeds of crime – was going to be laundered through new businesses set up to cater to football fans during the 2012 European Football Championship, to be held in the two countries.

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Haidar Hayasi and Hersh Zangana have been jailed for money laundering, and also face deportation.  The men were arrested as part of Operation Zephyr – a partnership of police forces in the south-west of England.  Zangana, originally from Iraq but living in London, was stopped and searched at Bristol bus station in November 2010, and police found a large amount of cash on him.  Their investigations then led them to Iranian Hayasi’s Bristol flat, where more cash was found.  Both men were unemployed but had deposited large amounts of cash into a number of bank accounts.  Non-European Economic Area (EEA) citizens sentenced to a year or more can be automatically deported when their sentences end unless they can show this would breach their human rights.  On jailing Hayasi and Zangana for a year each, Judge Julian Lambert said that even if the prison term had not triggered deportation, he would have recommended that the Home Office review their immigration status anyway: “Conversion of criminal property is a serious offence.  The criminals rely on people like you to take the risks for them.  It is known that you are rewarded accordingly.  Those who take on criminal property on behalf of criminals work at great risk, but when they are caught they must pay the price.” 

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Three former executives of Innospec Limited, a chemicals company, have been charged with corruption offences by the UK’s Serious Fraud Office.  The SFO alleges that Dennis Kerrison, former chief executive of Associated Octel Corporation (which was later renamed Innospec), and Paul Jennings, who succeeded him as chief executive and stepped down in 2009, gave or agreed to give corrupt payments to public officials and other agents of the Indonesian government in return for contracts to supply Innospec’s products, including the fuel additive tetraethyl lead.  In an interview with the Guardian newspaper last year, Kerrison said: “Obviously there has been a serious fall-down in how Innospec has done business, including illegal transactions, and as an ex-CEO I feel a degree of responsibility as some of it was on my watch.  [However] I have not authorised any bribes, backhanders, or other illegal or dubious payments.”  Jennings is also accused of scheming to defraud rival Ethyl Corporation by making payments between 2002 and 2008 to public officials and other agents of the Iraqi government to ensure that competitors’ product failed field tests.  Earlier this year Jennings agreed to pay the US the Securities and Exchange Commission US$229,000 [about £142,000] without admitting or denying allegations that he paid bribes to win orders for sales of tetraethyl lead.  David Turner, former Innospec business unit director, was also charged with corruption offences.

In the UK, Innospec as a company pleaded guilty to bribing employees of a state-owned refinery in Indonesia and other Indonesian officials in order to land sales of tetraethyl lead.  The company pleaded guilty in 2010 in the US to wire fraud in connection with payments to the Iraqi government under the UN Oil for Food Program, as well as violations of the Foreign Corrupt Practices Act.  The company paid a total of about $40 million in settlements with authorities in both countries.

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Twenty-four members of an organised crime network have been jailed for a total of more than 250 years for their roles in plots to smuggle up to forty tonnes of drugs into the UK.  The network, which was dismantled following a three-year investigation led by the Serious Organised Crime Agency (SOCA), consisted of organised criminals from London and Liverpool working with overseas traffickers to import cocaine from South and Central America, along with heroin, cannabis and amphetamine from Europe.  All twenty-four gang members were prosecuted for either drugs, money laundering, forgery or identity theft offences.  London-based Mehmet Baybasin and his Liverpool counterpart Paul Taylor received 30 years and 22 years respectively for conspiracy to import up to three tonnes of cocaine.  According to SOCA listening devices, Baybasin planned to use his established contacts in the global drugs trade to supply the cocaine to Taylor and his associates.  If the three tonne test shipment was a success, Taylor said there was a stockpile of forty tonnes ready to smuggle inside shipments of tinned fish or wood pellets.  During sentencing, Judge David Aubrey QC said: “The quantities or potential quantities of drugs that were to come into this country and subsequently flood our street, pubs, homes and clubs and the potential profit that you were seeking or did make is staggering… The wholesale value of 500kg alone is £17.5 million and the retail value would be that much greater.”

Steve Baldwin, Head of Investigations in the North West for SOCA, said: “This was a highly sophisticated network with a very clear focus.  Baybasin, Taylor and their cronies lived and breathed drug trafficking.  It’s all they ever talked about, and while they talked, SOCA listened and watched.  Bringing down the entire network was only possible because of a tremendous international partnership: Merseyside Police, the PSNI, partners in South and Central America, and the Crown Prosecution Service all played a crucial part in achieving this excellent result.”  During the investigation officers seized 10kg of heroin, 50kg of cannabis resin, 3kg of cocaine, 200kg of amphetamine and over £420,000 in cash.  A financial investigation into the network is still ongoing and there will be a confiscation hearing at a later date.

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Joel Esquenazi, the former president of Terra Telecommunications Corporation, has been sentenced to fifteen years in prison – the longest term ever handed down in a US foreign bribery case.  His former vice-president, Carlos Rodriguez, received seven years in prison.  Both were convicted in August 2011 for their roles in a scheme to bribe officials at the state-owned telecoms company Haiti Teleco: they were found guilty of violating the Foreign Corrupt Practices Act, money laundering and wire fraud.  Between November 2001 and March 2005, the two men paid more than US$890,000 [about £556,000] to shell companies to be used as bribes to Haiti Teleco, the sole provider of land line telephone service in the country.  Terra had a series of contracts with Haiti Teleco to allow its customers to place calls to Haiti, and the purpose of the bribes was to obtain various advantages such as preferred rates, reductions in the number of minutes for which payment was owed and the continuance of Terra’s connection with Haiti.  Several other defendants in the case – including Terra’s controller and the director of international affairs for Haiti Teleco – have pleaded guilty to various crimes, and they are all serving or have served sentences of various lengths.  A statement issued by the attorney general’s office in the Southern District of Florida said: “This sentence – the longest sentence ever imposed in an FCPA case – is a stark reminder to executives that bribing government officials to secure business advantages is a serious crime with serious consequences… Today’s long prison sentences confirm the serious consequences of ignoring corporate ethics when doing business abroad.”

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A study of studies published by the United Nations Office on Drugs and Crime (UNODC) has estimated that about US$1.6 trillion was laundered in 2009 – equivalent to about 2.7% of global gross domestic product.  However, less than 1% of global illicit financial flows are being seized and frozen.  Yury Fedotov, executive director of the UNODC, said: “Tracking the flows of illicit funds generated by drug trafficking and organised crime and analysing how they are laundered through the world’s financial systems remain daunting tasks.”  According to the report – entitled “Illicit Financial Flows 2011” – the most profitable form of transnational organised crime is the drug trade, which accounts for about a fifth of all crime proceeds.  For instance, gross profits for the cocaine trade were around $84 billion in 2009.  Taken together, all proceeds of crime save for tax evasion reached $2.1 trillion in 2009.

In another report, this one issued jointly with the World Bank, the UNODC examined the legal ways in which criminal funds can be hidden in the global financial system.  “Puppet Masters” showed how bribes, embezzled state assets and other corrupt funds are hidden in shell companies, trusts and other legal structures.  It recommended that more detailed information on beneficial ownership be held in corporate registries, and that those who provide any sort of service to legal entities do better due diligence on controlling interests.  According to World Bank specialist Emile van der Does de Willebois: “We need to put corporate transparency back on the national and international agenda.  It is important for governments to increase the transparency of their legal entities and arrangements and at the same time improve the capacity of law enforcement.”

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John F. Haggerty Jr., a Republican political consultant who was accused of stealing US$1.1 million [about £690,000] from Mayor Mike Bloomberg during his 2009 re-election campaign, has been found guilty of second-degree [i.e. not pre-meditated] grand larceny and second-degree money laundering.  Prosecutors said Haggerty promised to provide ballot security during the election (placing campaign operatives at polling sites to discourage voter fraud) but instead used most of the $1.1 million donated for that purpose by Bloomberg to that to buy a house for his father.  Bloomberg himself testified at the trial, where defence lawyers claimed that the mayor was so desperate to win a third term that he would have gone ahead with the donation no matter what Haggerty spent it on.  Haggerty faces up to fifteen years in prison. 

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Swiss prosecutors have announced that they have charged an Italian man with money laundering and forgery of documents in connection with the 2003 collapse of Italian food giant Parmalat.  Parmalat collapsed in 2003 with debts of 14 billion euros – wiping out the savings of about 135,000 people in Italy.  The Swiss attorney-general’s office said that the man had allegedly embezzled funds with his accomplices from Parmalat and the tourism group Tanzi.  He then transferred the funds into several accounts in the Swiss-Italian canton of Ticino, which were opened under the names of third parties, including some offshore companies and a family foundation domiciled in Liechtenstein.  Switzerland has already frozen about CHF10 million [about £7 million] in relation to the Parmalat case.  The dairy group itself accused several international banks of contributing to its downfall, and demanded 7.1 billion euros [about £6 billion] in damages and interest from Credit Suisse and two billion dollars from UBS.  In June 2008, the two Swiss banks said they would pay 357.5 million euros in settlements to Parmalat.

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Gregory Podlucky, formerly the CEO of bankrupt American soft drink maker Le-Nature’s Inc., has been sentenced to twenty years in prison for defrauding investors, vendors and lenders out of US$684 million [about £430 million].  Podlucky bullied staff into falsifying financial statements and creating fraudulent cheques in order to make Le-Nature’s, based near Pittsburgh, seem like a bigger player in the soft-drink industry than it really was.  Five top executives have pleaded guilty to helping Podlucky vastly overstate the company’s revenues so that it could get loans and equipment leases that it would not otherwise have been able to obtain.  Podlucky also embezzled from the company: he claimed in his 2005 tax return that he had earned $495,000 and owed $147,000 in taxes, when he really diverted more than $7.1 million to himself and should have paid more than $1 million in taxes.

The fraud collapsed when Le-Nature’s was forced into bankruptcy in October 2006.  Federal agents searching the company’s headquarters found a secret room containing millions of dollars’ worth of jewellery and diamond watches, and an 8,000-piece model train collection.  Podlucky himself spent more than $10 million on a mansion that was never finished and couldn’t even be seized and sold by the government to repay the victims because it was in such disrepair.  He was caught in 2010 trying to launder money by selling rare jewels bought with embezzled funds at a Sotheby’s auction.  As the case is so complicated, the judge will rule later on restitution.  Podlucky cried as he was sentenced, telling the judge, “I am nothing but a filthy rag – the things I did are abominable.  I am appalled at my actions, Lord, I mean, your honour, and I have asked for forgiveness of these sins because that’s what they are.”  His wife Karla and son Jesse are to stand trial later this month for helping Podlucky to launder money.

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Police in Georgia have seized US$2 million and a million euros in cash from billionaire Bidzina Ivanishvili’s Cartu Bank and detained at least six people on suspicion of money laundering.  An Interior Ministry spokesman confirmed that the money belonged to Tbilisi-based Cartu and had been seized from an armoured delivery van.  Cartu president Nodar Javakhishvili told reporters: “This has nothing to do with money laundering.  We needed cash to comply with banking regulations, and this was a case of going to another bank to get cash.”

Some believe that this is an attempt to damage the reputation of Ivanishvili, who was stripped of his Georgian citizenship on 11 October 2011 – four days after he announced plans to create an opposition party to challenge President Mikheil Saakashvili. In May 2011, Ivanishvili accused the president of orchestrating a smear campaign against him by spreading rumours that he was bankrolling the government.  In March 2011, “Forbes” magazine Ivanishvili’s wealth at $5.5 billion – equal to almost half of Georgia’s $11.7 billion economy.  A spokesman for the billionaire confirmed the figure, and said that Ivanishvili holds about a third of his assets in Russia and the remainder in market investments abroad, while living in his native village of Chorvila. 

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Curtis Warren, who was jailed for thirteen years in 2009 by the authorities in Jersey for trying to import cannabis into the island, is trying once again to have his conviction quashed.  An earlier appeal failed, after Warren suggested that the police had used illegal means to obtain evidence against him.  Now his lawyers are claiming that a juror in his trial may have been illegally approached.  Advocate Justin Michel – who is himself serving a fifteen-month prison term for perverting the course of justice – has submitted a statement saying that the juror told him he had been approached at a Jersey Rugby match by a police officer who said “They’re guilty”.  Michel claims that the juror – who was the friend of a friend – told him this and said that he was subsequently removed from the jury.  This latest appeal has already been turned down by Jersey Solicitor General Howard Sharp, but now Warren’s lawyer Stephen Baker has approached the Lieutenant Governor and asked him to instruct Hampshire Police, as an independent and disinterested police force, to investigate the matter.

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Braz Alvez-Junior of Kilburn has been given a twelve-month prison sentence suspended for two years after pleading guilty to running three brothels for over a year, and laundering the proceeds.  The brothels in Edgware and Stanmore were searched, and phones were found linking them to Alvez-Junior.  Further investigations uncovered a large number of cash transactions going through his bank accounts.  Giving what might be seen as a light sentence, Judge John Anderson told the defendant: “I take fully into account your early guilty pleas and… that there is no evidence of threats, coercion, fear, intimidation or exploitation of those working at the houses that you kept.  In fact, I would go as so far as to say there is positive evidence that those working there were doing so willingly and were content.”  Alvez-Junior is also under a curfew order for four months where he will be electronically tagged from 7pm to 7am. 

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A Cairo court has sentenced in absentia Egyptian businessman Hussein Salem, his son Khaled and daughter Magda to seven years in jail and a combined fine of more than US$4 billion [about £2.5 billion] for profiteering and money laundering.  Hussein Salem, one of the closest aides of ousted president Hosni Mubarak, was arrested in Spain in June 2011, along with his son – both men have Spanish citizenship.  He fled Egypt on 3 February 2011, eight days before Mubarak was forced to step down.  The Spanish authorities have frozen millions of euros and dollars in bank accounts as well as property and luxury vehicles linked to Salem.  He is currently under house arrest in Spain, pending trial for money laundering there – quite separate from the charges in Egypt – but apparently the Spanish authorities plan to extradite him to Egypt.  Hussein Salem was a major shareholder in East Mediterranean Gas(EMG), and Egyptian opposition groups have long complained that EMG had been selling gas at preferential prices to Israel and other countries, which cost Egypt billions of dollars.  The Egyptian judge said that the money laundered by the Salems from gas exports to Israel was more than $2 billion. 

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Proton Bank – one of Greece’s smallest – has become the country’s first lender to be saved by a rescue fund activated by its central bank.  The bank – with 31 branches and total assets of 3.8 billion euros [about £3.3 billion] – is being split in two after allegations that some of its former managers violated anti-money laundering laws.  A “good bank” called New Proton Bank will take on the firm’s deposit accounts and safe assets, while the rest of the business will be put into liquidation and the proceeds used to pay off third party claims.  The rescue is being paid for by the Hellenic Financial Stability Fund (HFSF), a 10 billion euro scheme set up by the eurozone and the International Monetary Fund as part of their bail-out of Greece.  The HFSF will become the sole shareholder of New Proton Bank.  The Greek central bank replaced Proton’s board of directors in August 2011 after discovering 51 million euros of loans had been issued without the proper procedures. 

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Police in New York have broken up an international identity theft ring that used fake credit cards to buy high-value computer products.  More than 86 people have been arrested and 25 more are sought for their part in the scam which involved five crime organisations in New York.  Bank cashiers, restaurant workers and other service employees working for the gangs stole card details from customers using a machine to skim personal data from credit cards.  The data were then passed to criminal technicians who would make forged credit cards to be used to buy high-end computer products across the US to resell to crime syndicates in China, Europe and the Middle East.  Prosecutors said US$13 million [about £8.3m] had been lost over a 16-month period.  The two-year investigation, dubbed Operation Swiper, resulted in the seizure of tens of thousands of dollars in cash, $650,000-worth of stolen computer equipment, a number of handguns and a truck full of electronics, computers, designer shoes, watches and ID theft equipment.  Police Commissioner Raymond Kelly said the thieves had “an amazing knowledge of how to use technology – the schemes and the imagination that is developing these days are really mind-boggling”.

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Sandra Arreola, the bookkeeper for Visalia First Assembly of God Church in California, has pleaded guilty to embezzlement and money laundering.  Between 2003 and 2009, she stole more than US$2 million [about £1.3 million] from collection plates and spent it on property, holidays and clothes.  Arreola had been employed at the church as head of their accounting department since 1996, and the theft was uncovered by an audit in 2008.  She resigned in December 2009 when confronted by church officials, and was charged in December 2010.  She now faces up to eleven years in prison and is required to pay back the $2.1 million she stole.  She will be sentenced on 27 October 2011. 

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Anthony Kearney and Donna McCafferty, who fled Scotland for Spain to escape fraud charges, are to have almost a million pounds seized under proceeds of crime legislation.  The couple was tracked down in the Costa Blanca town of Benissa in November 2008 after being featured in a Crimestoppers appeal to catch on-the-run British suspects, and extradited to Scotland.  They admitted claiming housing benefit when they had more than £330,000 in offshore accounts, while Kearney also claimed almost £23,000 in income support and made more than £10,000 from credit card frauds.  Kearney was jailed for two years and McCafferty was given 250 hours’ community service.  At Glasgow Sheriff Court, a confiscation order for £930,362 was made against Kearney, and a confiscation order for £13,003 was made against McCafferty.  Minister for Welfare Reform Lord Freud said benefit thieves were costing the taxpayer almost a billion pounds a year: “This money should be going to the people who need it most and not lining the pockets of criminals sunning themselves overseas.” 

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Karina Kostromina, a Latvian citizen, has been sentenced to two years in prison for money laundering, as part of an intricate international case against an Eastern European gang that used the Zeus banking Trojan to steal nearly £3 million from UK bank customers.  The gang was caught as part of an international police investigation called Operation Lath, involving the FBI in the US and GCHQ and the Serious Organised Crime Agency in the UK.  The ringleaders was Kostromina’s Ukrainian husband Yevhen Kulibaba.  Based in the Ukraine, Kulibaba identified the accounts to be attacked, while Kostromina used her UK bank account to the proceeds.  The gang infected people’s computers with the Zeus Trojan, and then stole money from their bank accounts with HSBC, the Royal Bank of Scotland, Barclays Bank and Lloyds TSB.  In addition to Kostromina and Kulibaba, eleven others were charged.  However, the UK members made up just one part of a massive global fraud ring: worldwide, over 150 people have been arrested for stealing an estimated £44 million.

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