In a follow-up to a story dated 26 January 2010, Indian businessman Raj Arjandas Bhojwani has been found guilty of “greed and corruption on a massive scale” in Jersey’s Royal Court.  For five weeks, in one of Jersey’s largest ever money laundering cases, the Royal Court heard how Bhojwani laundered US$43.9 million [about £29.1 million] – the proceeds of corrupt Nigerian vehicle deals – through Jersey bank accounts.  Since Bhojwani’s arrest in 2007, a surety of around $50 million has been lodged with Jersey’s Viscount and the prosecution will now move to permanently confiscate those funds.

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A gang of twelve men has been found guilty of smuggling skunk cannabis worth £62 million into the UK hidden in boxes of flowers from the Netherlands.  The drugs were smuggled through the ports of Harwich and Hull, and were then unpacked and stored in lock-up garages in south-west London and Surrey.  The gang was the subject of a 14-month undercover police operation.  In two years, they smuggled in 88 shipments; at the peak of their operation, they were bringing in 250kg of the highly potent cannabis strain every week, enough for 225,000 street deals.  They ended up with so much cash they forgot £60,000, which went mouldy in an underground safe in a garage in Kingston.  They also used a bureau de change in east London to launder money, and police believe much of the laundered money was wired to accounts in Pakistan and Dubai.  The gang leader, Terrence Bowler, and five other men pleaded guilty to conspiracy to import controlled drugs and laundering the proceeds of crime.  Four other men admitted drug-related offences, while two more pleaded guilty to money laundering.  All twelve will be sentenced later this month. 

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In a follow-up to a story dated 25 February 2010, Frank McGrath, the former deputy leader of Preston Council in Lancashire, has been jailed for four-and-a-half years for laundering money for a drug trafficker.  McGrath laundered more than £300,000 for Silvano Turchet, who is currently serving 15 years for the importation of Class A drugs.  Sentencing Judge Robert Atherton told McGrath: "You deceived those who you did business with and you deceived people who trusted you."  Turchet was sentenced to another six years in prison, to run concurrently.

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John Maurice, a semi-retired property salesman who tried to smuggle cash out of the UK in his underpants, has been jailed for four years for laundering almost £4 million.  A sniffer dog showed an interest in Maurice as he waited to board a ferry from Dover to France in June 2008, and when challenged he (Maurice, not the dog) removed 63,000 euros and £2,600 from his underwear.  The authorities had been monitoring Maurice as he regularly took large amounts of sterling cash – between £25,000 and £50,000 – to a bureau de change in Worthing in West Sussex and changed them into euros.  He used the bureau de change 180 times between April 2005 and June 2008.  Maurice claimed that he was dealing with the money on behalf of clients who wanted to buy furniture for Spanish properties – although investigations revealed that once the exchange had taken place, he would return the cash to his clients.  He has never revealed the true nature of the criminal activity he was involved in, but by his plea to money laundering Maurice admitted that the money had come from a illicit source.  Sentencing Maurice at Canterbury Crown Court, Judge Adele Williams told him: “You have been living a double life of Jekyll and Hyde, respectable on the surface and dishonest conduct underneath.  You must have engaged in serious criminality.  Were it not for your age [68], previous good character and health, your sentence would have been much longer.”  Confiscation of Maurice’s assets is now being sought. 

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Khawar Khan and brothers Imran and Nadeem Mirza have been jailed for carrying out an £8 million mortgage fraud in Essex.  The three set up 33 fraudulent mortgages with the Abbey National and Birmingham Midshires building societies for properties across the south east of England, and 32 of the applications were signed by Mahmood Ali, of Montague Mason Solicitors, who allegedly falsified the paperwork.  The money from the mortgages was sent to the law firm’s account from where it was dispersed to various bank accounts.  Ali is still being sought by the police.

Between June and December 2008, Khan laundered £1.3 million using more than 150 bank accounts, while the Mirza brothers laundered £1.6 million between them.  The fraudsters were traced by the IP addresses of their computers as they used internet banking systems.  Police officers seized gold ingots worth £65,000, and £13,000 in cash from a property linked to Khan in Nottingham.  They also seized credit card readers, computers, false passports and credit cards, jewellery and mobile phones from his home in Barking, while about £100,000 in cash was seized from the Mirza brothers’ home in Ilford.  Khan was jailed for five years, and the Mirza brothers for four years each, for conspiracy to launder criminal property, conspiracy to acquire criminal property and offences related to the possession of false identity documents and other articles for use in fraud. 

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Reports are still sketchy, but apparently the Russian Interior Ministry has announced that investigators have uncovered an international money laundering operation that has been active in Russia since 2007.  A statement from the Ministry said that the group has laundered more than 30 billion roubles [about £700 million], US$440 million [about £295 million] and 123 million euros [about £111 million].  Three commercial banks, 72 Russian and seven foreign commercial institutions were allegedly involved in the money laundering, and three people have apparently already been charged with illegal banking activities and money laundering.  Investigations continue into the group, which the Ministry says opened bank accounts for shell companies, provided cash services to private and corporate investors, and bought and sold foreign currencies.

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In a follow-up to a story dated 14 November 2009, when former US Congressman William Jefferson was jailed for thirteen years for bribery and money laundering, Jefferson's sister and niece have pleaded guilty to fraud and money laundering.  Betty Jefferson, Jefferson’s sister and an elected tax assessor in New Orleans, and her daughter Angela Coleman have pleaded guilty to charges of conspiracy to commit mail fraud, aggravated identity theft, money laundering and tax evasion.  The women admitted that between 1999 and 2006 they participated in a conspiracy to obtain money and property for their financial and political benefit through various public and private organisations.  The pleas were part of a plea agreement, and come about a month before the two were to go to trial along with Jefferson’s brother Mose, and Renee Pratt, a former city councillor and state representative.  Defence attorney Chick Foret said: “The Jefferson family is clearly splintered.  The two folks who pleaded guilty today… will testify against the two remaining defendants.”  Betty Jefferson and Coleman will be sentenced on 26 May 2010; they face up to five years in prison and a $250,000 fine. 

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Frank McGrath, the former deputy leader of Preston Council in Lancashire, has been found guilty of money laundering for a drug trafficker.  McGrath laundered more than £300,000 for Silvano Turchet, who is currently serving 15 years for the importation of Class A drugs.  The money was used to purchase a house in Wrexham, a hangar where Turchet stored an aeroplane used to import drugs, and a £17,000 designer watch.  McGrath also transferred £154,000 to an Italian bank account.  McGrath has been remanded in custody for sentencing on 3 March 2010.

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In a follow-up to a story dated 25 January 2010, Alfonso Portillo, the former president of Guatemala who faces money laundering charges in the US, has been taken to a military hospital.  Portillo was arrested on 22 January 2010 at the request of the US, which is seeking his extradition, and was originally detained in a maximum security prison.  On 19 February he was moved to a pre-trial detention facility.  According to his lawyer, Portillo has contracted bronchitis thanks to the low temperatures at the prison.

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At its plenary meeting taking place in Abu Dhabi, the Financial Action Task Force has issued a list of jurisdictions that have "strategic deficiencies" in their AML/CFT regimes.  The FATF has called on its members to apply countermeasures to Iran.  It has announced that four jurisdictions have "not committed to an action plan to address key deficiencies": Angola, the Democratic People's Republic of Korea, Ecuador and Ethiopia.  And it has said that three further jurisdictions have previously been identified as having deficiencies and have yet to address them: Pakistan, Turkmenistan, and São Tomé and Príncipe.

The FATF has also issued a statement on the progress in improving AML/CFT compliance in the following jurisdictions: Antigua and Barbuda, Azerbaijan, Bolivia, Greece, Indonesia, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Qatar, Sri Lanka, Sudan, Syria, Trinidad and Tobago, Thailand, Turkey, Ukraine and Yemen.

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Russian Viktor Bout (the so-called “Merchant of Death”) is to be charged in the US with money laundering and fraud.  The charges relate to alleged attempts by Bout and Richard Ammar Chichakli to buy two aircraft from US-based companies in violation of economic sanctions.  Bout has already been charged with arms trafficking to Colombia’s Marxist FARC guerrilla group, which the US considers a terrorist group.  Bout was arrested in Thailand in March 2008 and has been held since without bail, although the Thai authorities have refused US requests for his extradition – FARC is not considered a terrorist organisation under Thai legislation.  Chichakli is a US citizen, and Interpol has been asked to help find and arrest him.

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Steven Mandala, a former Merrill Lynch & Co broker in Manhattan, has been arrested and charged with various offences including money laundering.  The offences relate to his alleged theft of US$780,000 [about £495,000] from the company, some of which was used to buy a Ferrari.  Prosecutors accuse Steven Mandala of overstating his employment history in persuading Merrill to hire him in April 2009: he falsely claimed to be a partner with Maxim Group who oversaw $300 million of client assets, generated $1.5 million of annual revenue, and was paid $765,000.  Mandala then obtained a $780,000 loan from Merrill, and used $245,580 to buy a Ferrari in his father’s (identical) name.  Mandala then rarely showed up for work, and brought in only a handful of clients with about $20,000 of assets.  He resigned from Merrill in June 2009.  Mandala is charged with grand larceny, money laundering, identity theft, criminal possession of a forged instrument and falsifying business records.  He has pleaded not guilty and is being held in custody pending a hearing on 10 March 2010.  If found guilty on all charges, he faces up to 78 years in prison. 

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Oranong Biscoe of Harrow in Middlesex has been jailed for four years after being found guilty of money laundering and running an unlicensed bank.  Biscoe sent £1.3 million, much of it from prostitution in the UK, to her native Thailand and made thousands of pounds charging commission on illegal transfers.  A nationwide police investigation was launched in 2007 after a Plymouth prostitute was rescued by a client who took pity on her.  When a brothel was raided in Aberdeen, police found bank receipts paid into Biscoe’s accounts.  Biscoe, who was a credit controller for Thai Airways in London, was making a 2% commission on the illegal transfers and was also taking a profit from the currency conversions.  She banked £18,000 from one brothel keeper on one day alone and used a network of couriers to take cash out of Britain to Bangkok on Thai Airways flights. 

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Investigators in New York have seized US$1.1 million [about £704,000] in cash from an apartment in Little Italy.  Prosecutors believe the cash – packaged in shrink-wrap and heat-sealed – is profit from a large-scale hydroponic marijuana operation.  Some of the money was on its way to California to fund a Mexican cocaine purchase, while the rest was to be shipped north to Canada.  Officials also are investigating whether the mob gets a cut of the lucrative business, as the apartment is located on the turf of the Bonanno crime family.

Last month, detectives arrested Daniel McGehean, the apartment’s tenant, and Canadian national Richard Doyon.  Investigators also seized records of drug sales, and a photo of McGehean standing in a marijuana field.  Two other suspected members of the ring, Dehran Duckworth (drummer with “auditory kaleidoscope” band Narhed) and real estate agent Richard Burke, were arrested last month with a duffel bag containing five pounds of marijuana hidden in Burke’s BMW.  McGehean and Doyon have been charged with illegal money transmitting, while Duckworth and Burke have been charged with criminal sale and possession of marijuana.

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In a follow-up to a story dated 19 November 2008 (see Old news page), Manhattan investment adviser Alberto Vilar has been sentenced to nine years in prison for fraud and money laundering.  Vilar, famed for his donations to opera companies worldwide, was found guilty of all twelve charges he faced, including conspiracy to commit securities fraud, securities fraud, money laundering, investment adviser fraud, mail fraud and wire fraud.  Vilar and Gary Tanaka, his business partner in Amerindo Investment Advisors, had spent clients’ money on volatile technology stocks instead of the more stable investments they had promised.  After losing millions, Vilar turned to fraud in an effort to pay expenses and to satisfy investors asking for money. 

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Clover May Robinson-Gordon of Montego Bay, Jamaica has been sentenced by a court in the US to 45 months in prison for conspiracy and money laundering in connection with immigration fraud.  Robinson-Gordon operated her own labour brokerage business based in Florida, and conspired with an organisation run by a Belarusian man called Viktar Krus to bring in workers who were then sent to jobs for which they were not authorised.  For example, Robinson-Gordon would request work visas for immigrants to be placed at hotels and restaurants in Virginia, but when the workers arrived they would illegally be diverted to jobs in other states.  The money laundering charges stemmed from about US$50,000 [about £31,000] in payments that Robinson-Gordon sent to Jamaica to secure the workers.

Viktar Krus and 21 other people were indicted in January 2009 as part of a massive immigration-related fraud case.  Federal agents from the Internal Revenue Service, Homeland Security, Immigration and Customs Enforcement and other agencies have spent years dismantling the ring, which is thought to have ties to Eastern European organised crime.  Krus was sentenced in July 2009 to more than seven years in prison for conspiracy, visa fraud and tax evasion. 

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Anthony Bailey and Jane George, owners of a convenience store in Daytona Beach, Florida have been charged with grand theft and money laundering after they had millions of dollars deposited into their account by mistake.  From October 2007 to November 2008, each time someone used a credit card at their 7-Eleven store, the 7-Eleven company would deposit a small transaction fee into their company bank account.  It totalled US$4.9 million [about £3 million], but the couple did not tell 7-Eleven and the company noticed the error only after a software upgrade.  Bailey and George withdrew the money and paid it into 25 personal accounts at banks all over Florida; they also bought a half-million dollar luxury home and two Mercedes cars.  They have both been released on bail. 

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Theresa Russell, a former staff sergeant in the US Army, has pleaded guilty to money laundering.  From January  to October 2004, Russell was serving near Balad in Iraq.  From April 2004 to February 2005, she received more than US$30,000 [about £18,500] in cash from John Rivard, a former major in the US Army Reserves, and has admitted that she knew the money she received from Rivard was the proceeds of bribery.

In July 2007, Rivard pleaded guilty to bribery and other offences in connection with his service as an Army contracting officer in Iraq.  From April 2004 to August 2005, he conspired with a government contractor to steer federally-funded contracts to the contractor’s company in exchange for hundreds of thousands of dollars in illicit bribe payments.  Rivard instructed Russell to divide the payments she received from him into several smaller monetary bank deposits to avoid the detection of law enforcement authorities.  Russell used the criminal proceeds to pay for a car, cosmetic surgery and household goods.  She will be sentenced on 21 May 2010. 

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Robert Brett-Deans, from West Sussex, has been jailed for money laundering.  On 17 March 2007, police stopped a Ferrari being driven by Brett-Deans and found £20,000 in euros and sterling.  A search of his hotel room revealed three bin liners containing £351,125 in sterling and 30,284.59 in euros.  And a sports holdall containing £70,985.70 in sterling and 50,000 in euros was found in a Porsche parked at his parents’ home.  Brett-Deans said that he was looking after the money for a friend whom he would not name.  He was sentenced to seven years, five years and four years in prison for three counts of possession of criminal property; five years for transferring criminal property; and four years for converting criminal property.  The sentences will be served concurrently.  Police are now seeking to confiscate the money and any other assets deemed to be the proceeds of crime.

Detective Sergeant James Hallums said after the hearing: “Brett-Deans was entrusted with a large amount of money to be used in criminal activity linked to drug trafficking.  He is a very dangerous individual who would have used his connections with organised criminals to use the money to commit further criminal offences.” 

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Raj Arjandas Bhojwani, an Indian businessman, has appeared in the Royal Court in Jersey to be charged with three counts of money laundering relating to US$43.9 million [about £27 million] which is alleged to be the proceeds of corrupt vehicle deals in Nigeria.  Bhojwani was arrested in London on 21 January 2010 and brought to Jersey, as the money is alleged to have come from the sale of hundreds of military vehicles to Nigeria at hugely inflated prices and the movement of millions of dollars from the Nigerian public purse into the Jersey banking system in October 2000.  A former Nigerian president and two other high-profile Nigerian officials are also alleged to be involved.  Bhojwani reserved his plea to all three charges.

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The United States has requested the extradition of Guatemalan former president Alfonso Portillo to face charges of money laundering.  Portillo was elected in 2000 after promising to redistribute wealth, but fled the country shortly after his four-year presidential term ended in 2004 and spent the next four years in Mexico.  In 2008 he was extradited from Mexico to Guatemala to face charges that he had embezzled millions of dollars of public money during his presidency.  The extradition request from the US was approved by a Guatemalan court on 22 January 2010, but police and representatives of the UN-sponsored Commission Against Impunity in Guatemala  have been unable to locate Portillo at any of his numerous properties. 

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Iran has restricted cash withdrawals from banks as part of its efforts to battle money laundering.  From 21 January 2010, individual account-holders will no longer be allowed to withdraw more than 15 million rials [about £940] in cash per day, although they can still write cheques and make electronic transfers for larger amounts.  This measure was first introduced in a law which was passed in January 2008 and finalised in April 2009.  Some analysts, however, claim that although the move is touted as an anti-money laundering measure, it is really aimed at cutting inflation by limiting liquidity in the market.  Iran has been dealing with high inflation and its economy is in disarray, in part because of sanctions.

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Panamanian former president Ernesto Perez Balladares has been put under house arrest while authorities investigate allegations that he laundered money received from a casino called Lucky Games SA.  During his 1994-1999 term, Perez’s government granted the casino an operating licence.  Perez was voted into office in 1994, in what is considered Panama’s first democratic election after the toppling of Manuel Noriega in 1989, and his Democratic Revolutionary Party says that the current allegations are politically motivated.  Opponents accuse Perez of living lavishly from the proceeds of illegal dealings during his time in office but Perez (who owns several luxury homes, a plane, a yacht and luxury cars) says that he earned his wealth legally.

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In a follow-up to a story dated 13 August 2009, David Gilliam, a former captain in the US army, has been jailed for four years and two months for theft and money laundering.  Gilliam pleaded guilty to stealing US$400,000 [about £242,000] in cash between April 2004 and April 2005, while serving at Kandahar Air Base in Afghanistan; he worked as a disbursing officer and took the money while disbursing funds to pay for projects in Afghanistan.  He also pleaded guilty to money laundering (by smuggling the cash to Hawaii and South Carolina) and to filing a false tax return (by not listing the stolen money as income).  Gilliam must also pay the US Government $450,000 in restitution.

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Three carbon traders from Britain and one from the Netherlands have been charged with money laundering by the Belgian authorities.  Officials suspect that the traders have avoided €3 million [about £2.7 million] in VAT payments on carbon permits – which must be bought by heavy industry to cover the cost of their emissions.  The British traders were allegedly operating from Tournai, in Belgium, to take advantage of the country’s 21% VAT on carbon permits.  They deny the claims that they were buying permits in Britain, and selling them on to banks via intermediaries without paying tax – a version of the classic carousel fraud (where goods are imported tax-free from other countries then sold to one or more buyers without charging the tax, and the trader then disappears, pocketing the VAT).

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Disgraced Florida judge Phillip Davis has been sentenced to 20 years in prison for stealing US$82,825.30 [about £51,400] of county and state grants given to his Miami social services agency and intended to help the poor.  Davis and his former assistant Joan Headley were found guilty in November 2009 on nine charges of fraud and money laundering; Headley has been given ten years in prison.

Miami-Dade Circuit Judge Beatrice Butchko told Davis, “You’ve been blessed in this life with gifts that you’ve thrown away on more than one occasion – shame on you.”  She was referring to 1991, when Davis was arrested following an infamous FBI sting (known as Operation Court Broom) during which agents recorded him arranging a $20,000 payoff from a lawyer.  At trial in 1993, Davis admitted snorting cocaine in his chambers and tearfully blamed the bribes on his obsession with the Hollywood maxim “I could have been somebody!”.  In a stunning verdict, jurors acquitted him.  Davis was disbarred but rebounded in the late 1990s by establishing Miami-Dade Resident College, a grant-funded program intended to teach impoverished inner-city residents job and life skills.  Prosecutors said that Davis and Headley inflated salaries and submitted fake bills to the program to steal the money. 

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The Manhattan US Attorney’s Office has charged Mahmoud Reza Banki, a former senior associate at management consultancy McKinsey & Company, with violating the International Emergency Economic Powers Act (IEEPA) and running an unlicensed money transfer business to transfer nearly US$5 million [about £3 million] between Iran and the United States from January 2006 to September 2009.  In order to circumvent US sanctions on Iran, Banki and an unnamed co-conspirator in Iran operated a Hawala network – an informal network that facilitates money transfers via individuals.

Banki, who faces up to 20 years in prison if convicted, received the funds via wire transfers to his Bank of America personal account from companies and individuals in Saudi Arabia, Kuwait, Latvia, Slovenia, Russia and other countries to settle transactions tied to Iran.  He and his co-conspirator used the profits from the scheme to buy a $2.4 million condominium in Manhattan, to fund credit card purchases and to invest in securities.

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Miko Wady, an Arizona concert promoter accused of making more than US$25 million [about £15.5 million] by booking fake concerts, has been charged with 37 counts of wire fraud and money laundering.  He claimed to be staging concerts for the likes of Mariah Carey, Mary J Blige, 50 Cent, Jamie Foxx, U2 and the Rolling Stones, and over 140 people invested their money.  Wady spent $3 million on a home, a boat and at least 30 cars.  He faces up to 20 years in prison on the wire fraud charges alone.

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In a follow-up to a story dated 16 December 2009, David Murcia Guzman, whose pyramid investment scheme cheated fellow Colombians out of hundreds of millions of dollars, has been extradited to the US to stand trial for money laundering.  He was accompanied on his flight to New York by agents from the US Drug Enforcement Agency.  If convicted in the US, he faces up to 20 years in prison, which he will serve before being sent back to Colombia to sit out his 30-year jail term in La Picota prison in Bogotà.  Murcia used the proceeds from his fraudulent scheme to live a life of luxury in Panama, which included renting out the entire floor of a top-class hotel.  He was extradited to Colombia in 2008 and jailed there in December 2009.

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India has signed Memoranda of Understanding (MoUs) with Russia, Malaysia and Brazil.  The MoUs will enable India's Financial Intelligence Unit (FIU) – a government agency to investigate and disseminate information between financial and law enforcement agencies for identification of suspicious money laundering – to share information with foreign FIUs whenever considered necessary and reciprocally obtain information from them on money laundering activities.  India has already signed MoUs with Mauritius and the Philippines, and negotiations are underway to sign similar agreements with another thirty countries. 

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President Mwai Kibaki of Kenya has signed into law the Proceeds of Crime and Anti-Money Laundering Act.  This Act provides for the offence of money laundering (with penalties of up to seven years in prison), and introduces measures to identify, trace, freeze and seize the proceeds of crime.  It also provides that any person who knows or ought to have reasonably known or suspected that any property is part of the proceeds of crime but conceals or disguises the nature or source of the same commits an offence.  Finally, it provides for the establishment of a Financial Reporting Centre. 

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The People’s Bank of China (PBOC – China’s central bank) has published the country’s first plan to tackle money laundering.  In 2010 China will develop its own anti-money laundering system by providing for harsher punishment under law, building anti-terrorism networks, improving supervision of the financial sector, setting up systems for the supervision of non-financial institutions, strengthening cooperation between government departments, cultivating experts, actively cooperating with international agencies to track money movements overseas.  PBOC Vice governor Su Ning said, “Our work is gradually expanding from financial institutions to non-financial institutions.  Lotteries and clearing institutions are not financial institutions, but they may become channels for money laundering.”  China passed its first AML law in 2006, and in 2009 over 500 financial institutions were punished for violating AML rules. 

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Convicted fraudster and money launderer Bernard Madoff, who is serving a 150-year sentence in Butner, North Carolina, has been taken to the prison medical centre.  The Bureau of Prisons has denied reports that Madoff is suffering from cancer, but said that his symptoms included dizziness and high blood pressure and would remain there for observation.  The Butner complex is renowned for its advanced medical centre, and houses a number of older white collar criminals.

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Following an investigation into false statements made to them by her about her identity and qualifications, the Guernsey Financial Services Commission has issued a public statement about Pippa Marie Harbour.  The statement prohibits Ms Harbour from acting as a “director, controller, partner, manager, general representative or authorised insurance representative” in various regulated sectors.  The statement further comments that: “It is important for regulated financial services businesses and individuals working within them to be aware that false statements about qualifications or other matters that demonstrate a lack of integrity will be investigated and acted upon by the Commission.  The case also underlines the practical importance of financial services businesses meeting their employee screening obligations under the Bailiwick’s anti-money laundering and countering the financing of terrorism framework.”

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In a follow-up to a story dated 19 December 2007 (see Old news page), Rabbi Naftali Tzvi Weisz, the Brooklyn-based Grand Rabbi of the Spinka sect, has been sentenced to two years in prison for his part in a decade-long fraud and money laundering scheme.  Weisz and six associates in Los Angeles, Brooklyn and Israel pleaded guilty in August to participating in a fraudulent kickback scheme in which donors to Spinka charities were refunded up to 95% of their donations, while claiming the full amounts as deductions on their income tax.  In 2006, Spinka charities received nearly US$8.5 million [about £5.3 million] in donations, and made $744,596 in “profit” after deducting the amounts paid back to contributors.

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Roger Taylor, a Guernsey company director, has been charged with money laundering.  The investigation, codenamed Operation Arboria, involves the Guernsey police and customs service and the UK's Serious Fraud Office, and concerns a UK High Court confiscation order aimed at seizing proceeds of crime totalling £4 million.  Prosecutors allege that Taylor enabled UK resident Michael Summers to retain proceeds of crime worth £750,000.  Taylor was granted conditional bail and the case was adjourned until 21 January 2010.

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David Murcia, whose pyramid investment scheme cheated fellow Colombians out of hundreds of millions of dollars, has been sentenced by a court in Bogotá to 30 years and eight months in prison for money laundering, and been fined US$12.5 million [about £7.75 million].  He is also expected to be extradited to the US to face further money laundering charges.  Murcia’s business, DMG Group Holdings, drew in investors with promises of fantastic interest rates then collapsed in late 2008: Murcia took in $2 billion and returned only $100 million to investors. Judge Jose de los Reyes said that Murcia had been “inebriated by wealth”, and police suspect that Murcia was in fact laundering the proceeds of drug trafficking.

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Teacher Susan Ross, of Utah in the US, has been saved from going to prison for money laundering by pleas from former students.  Ross was director of federal programs for the Davis School District, and she and her husband created a fraudulent book scheme that cost the district more than US$4 million [about £2.5 million] over twenty years: she never divulged to district officials that she owned Notable Educational Writing Services, which copied books and sold those books to the district.  Prosecutors asked for a jail sentence after Ross pleaded guilty to money laundering, but Judge Clark Waddoups said that a number of Ross’s former students had written to him to say that without her help they would not have graduated from high school.  He sentenced Ross to three years’ probation and 3,000 hours of community service, and ordered her to pay $350,115 in restitution to the Davis School District.

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In a follow-up to a story dated 24 September 2009, suspended Florida politician Josephus Eggelletion has pleaded guilty to money laundering in a federal corruption case and resigned from office, ending his two-decade political career.  Last month Eggelletion pleaded not guilty, but changed his plea in a bid to reduce his prison sentence.  He was arrested in September as part of a federal corruption investigation, but the case against him began building in 2006 when an undercover agent donated US$5,000 to Eggelletion’s golf foundation in exchange for partnering on what Eggelletion thought were business deals.  He laundered money through bank accounts in the Bahamas and evaded federal taxes on about $18,200 in cash payments, and will be sentenced on 17 February 2010.

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Naresh Jain, described as the “Hawala King” for his alleged dominance of the secret informal banking system used by terrorists and gangsters to bypass legitimate channels, has been arrested in India after investigations by police in the UK, the US, Italy and Dubai.  They described Jain as one of the world’s biggest money lenders who, along with his associates, is believed to operate a £1.3 billion money laundering scheme.  A raid of the Jain family home in Delhi revealed details of electronic bank transfers to beneficiaries in Afghanistan and Pakistan, records of phone calls to crime figures in those countries, records of 35 companies established by Jain and his two Delhi-based brothers, and around £75,000 in cash.  Jain has been charged with laundering the proceeds of drugs trafficking.

Detectives allege that Jain’s involvement in hawala banking is just one aspect of his money laundering empire, and that his network has been active for over twenty years in five continents.  Italian police mounted a sting operation in 2006 and netted many of his key contacts in that country but failed to land Jain himself.  He was arrested in Dubai in 2007 for breaking their foreign exchange laws, but was released the following year and returned to India.

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Italian weekly investigative magazine “Panorama” has claimed in its 4 December issue that the Vatican Bank is under investigation for suspected money laundering via accounts held at one of Italy’s largest banks, the UniCredit Group.  The magazine claims that prosecutors are probing transactions totalling 180 million euros [about £162 million] handled between 2006 and 2008 by Vatican Bank accounts held at Unicredit’s branch near the Vatican in Rome's Via della Conciliazione.  Some of the funds allegedly came from the sale and purchase of real estate, and the banking operations allegedly break money laundering laws.  Prosecutors told the magazine that they would soon question Unicredit’s senior management over the suspect operations, and that they are also investigating deposits made at other Italian banks.  Prosecutor Nello Rossi is heading the investigation, which is being carried out in conjunction with financial specialists from the Italian tax police. 

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In a follow-up to a story dated 7 October 2009, Jersey’s Royal Court has handed out stiff sentences to six men found guilty of attempting to import cannabis with a street value of a million pounds.  Curtis Warren – the ring-leader and once Britain’s biggest drugs baron and Interpol’s most wanted man – was sentenced to 13 years.  He will serve it in the UK, probably at high-security Belmarsh Prison.  His local lieutenant, John Welsh, was sentenced to 12 years, while the man who was going to bring the drugs into Jersey by speedboat, James O’Brien, was sentenced to ten years.  The three other members of the gang – Paul Hunt, Jason Woodward and Oliver Lucas – were to act as financiers and couriers, and were each sentenced to five years.  These sentences mark the end of a complex police operation, which has involved officers from the States of Jersey Police, the UK’s Serious Organised Crime Agency (SOCA), Merseyside Police, and the police forces of France, the Netherlands and Belgium.

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Bulgarian nationals Ivaylo Pletnyov and Nikolay Minchev have been sentenced in Washington DC for an online money laundering scheme that bilked about US$1.2 million from US residents and transferred it to criminals in eastern Europe.  Between July 2005 and May 2006, the pair used eBay and other websites to advertise expensive vehicles and boats they did not own.  When victims expressed interest in the vehicles or boats, they were emailed by the purported seller and instructed to wire transfer payments through eBay Secure Traders, an entity with no affiliation to eBay.  The money was then wired directly into bank accounts controlled by Pletnyov and Minchev in Hungary, Slovakia, the Czech Republic and Greece.  Pletnyov was sentenced to four years in prison for money laundering and ordered to pay $306,502 in restitution.  Minchev was sentenced to 30 months in prison for conspiracy to commit wire fraud and ordered to pay $270,444 in restitution.

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John Cockerham, a former US Army contracting officer, has been sentenced to 210 months in prison for taking bribes and laundering the proceeds.  He also was ordered to serve three years of supervised release following the prison term and to pay US$9.6 million [about £5.8 million] in restitution.  His wife Melissa, sister Carolyn Blake, and niece Nyree Pettaway were also sentenced for their parts in the scheme.  Cockerham pleaded guilty in February 2008 to conspiracy, bribery and money laundering relating to his time serving as an Army contracting officer in Kuwait in 2004 and 2005.  Cockerham was responsible for awarding contracts for services to be delivered to troops in Iraq, including bottled water, and admitted that in return for awarding contracts, he received more than US$9 million in bribes.  He then directed the contractors to pay his wife and sister, among others, in order to conceal the receipt of bribe payments.  His wife Melissa accepted $1.4 million on her husband’s behalf and stored the money in safe deposit boxes at banks in Kuwait and Dubai.  Carolyn Blake accepted more than $3 million and stored the money in safe deposit boxes at banks in Kuwait, taking 10% of the money as her fee.  Nyree Pettaway helped devise cover stories for the money, and also travelled to Kuwait in January 2007, received the cash from Blake, and gave it to others to hold for Cockerham. 

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The Sofia City Court in Bulgaria has sentenced Peter Petrov to five years in jail for laundering 99 million levs [about £46 million], and fined him 25,000 levs.  Petrov was found guilty of setting up a criminal group involved in laundering funds from cigarette smuggling between 1997 and 2002.  The court also gave a three-year suspended sentence in absentia to Tsveta Manavska, a member of Petrov’s group, and fined her 10,000 levs.  Petrov and Manavska worked with Ivan “The Doctor” Todorov, who was gunned down in broad daylight in Sofia in 2006 and was known as Bulgaria’s biggest cigarette smuggler.

Bulgaria is under growing pressure from the European Union to prove that it can put organised crime bosses and high-level corrupt officials behind bars.  The new centre-right government, which came into power in July 2009, has until July next year to win back EU trust and prevent further sanctions from hitting more than 11 billion euros in aid that Sofia can receive until 2013; in 2008, Brussels cut the access of Bulgaria – the EU’s poorest nation – to other EU aid over concerns about fraud.  Since August 2009, Bulgarian prosecutors have charged the defence and agriculture ministers of the former Socialist government with abuse of power and fraud.  Former Prime Minister Sergei Stanishev has been accused of losing classified reports on crime, and ex-labour minister Emilia Maslarova has been accused of large-scale embezzlement. 

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Campaigning Spanish High Court judge Baltazar Garzon has threatened to seize up to US$100 million [about £60 million] from Banco de Chile and individuals suspected of laundering funds for Augusto Pinochet – including the former Chilean dictator’s widow Lucia Hiriart.  Judge Garzon also ordered the Banco de Chile, Hiriart and three Chilean bankers to pay $77 million as a bond while his investigation proceeds.  Garzon, who has been investigating Hiriart and the bankers since 2004 and tried to extradite Pinochet in 1998 for human rights abuses, said that if they did not pay up in ten days, he would order the seizure of $100 million from their bank accounts.  In 2005, Garzon secured an $8 million settlement for victims of Pinochet’s 1973-1990 dictatorship from Riggs National Corp, which admitted helping Pinochet to launder money.

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Loyalist Thomas Matthews, a former associate of murdered Ulster Defence Association leader Jim Grey, has agreed to hand over a house and the contents of eight bank accounts to the Serious Organised Crime Agency (SOCA).  SOCA had claimed that Matthews and his wife Lucinda had derived the majority of their assets “through money laundering and false accounting”, and that Matthews had been involved in extortion and blackmail.  The case was originally sent to the Assets Recovery Agency in 2007, and later that year property and bank accounts belonging to the couple, valued at £336,000, were frozen by the High Court.  These will now be handed over to SOCA.

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Margaret Cole, Director of Enforcement at the Financial Services Authority, has given a speech to the British Bankers' Association on the theme of "The FSA's agenda for fighting financial crime".  In her speech, she said: “Senior management should take clear responsibility for managing financial crime risks.  These risks should be treated like any other risk faced by the business - they should be understood, assessed and monitored, and judgements should be made about how best to mitigate them.  We expect to see senior management demonstrating leadership on financial crime issues.  We look for evidence that senior management understand and are shaping their firm’s approach to financial crime risks.  And we want to see suitably senior and independently-minded staff with sufficient resources taking responsibility for mitigating financial crime risks… We will treat very seriously the discovery that a regulated firm is itself involved in financial crime... We envisage that supervisors may in the future be asking whether a firm’s geographical reach, customer base, product lines, or sales channels make it vulnerable to the risk that staff pay or receive bribes.  Firms that use go-betweens to generate new business in jurisdictions associated with systemic levels of corruption may receive particular attention.  I would expect firms in this position to be actively implementing measures to mitigate the threat.” 

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Transparency International has published its Corruption Perceptions Index 2009 (CPI).  The CPI measures the perceived levels of public sector corruption in a given country and is a composite index, drawing on 13 different expert and business surveys.  The 2009 edition scores 180 countries (the same number as in 2008) and the vast majority of the 180 countries score below five on a scale from 0 (perceived to be highly corrupt) to 10 (perceived to have low levels of corruption).  The least corrupt country in the world is perceived to be New Zealand, while the most corrupt is perceived to be Somalia.

It is clear from the CPI that no region of the world is immune to the perils of corruption.  “At a time when massive stimulus packages, fast-track disbursements of public funds and attempts to secure peace are being implemented around the world, it is essential to identify where corruption blocks good governance and accountability, in order to break its corrosive cycle,” said Huguette Labelle, Chair of Transparency International. 

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Spain has joined sixteen other countries that have signed the OECD/Council of Europe Convention on Mutual Administrative Assistance in Tax Matters.  The Convention provides for exchange of information, multilateral simultaneous tax examinations and cross-border assistance in tax collection, while imposing extensive safeguards to protect the confidentiality of the information exchanged.  Existing parties to the Convention are Azerbaijan, Belgium, Denmark, Finland, France, Iceland, Italy, the Netherlands, Norway, Poland, Sweden, the Ukraine, the United Kingdom and the United States; Canada and Germany have signed the Convention and are awaiting ratification.

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In a follow-up to a story dated 5 August 2009, former US Congressman William Jefferson (Republican, Louisiana) has been jailed for thirteen years for bribery and money laundering.  He was found guilty in August of soliciting millions of dollars in bribes from a dozen companies while using his political position to broker business deals in Africa.  FBI agents found US$90,000 [about £53,000] in a freezer at Jefferson’s home, wrapped in foil and hidden in boxes of pie crust. 

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