Stop Press
Part of the work of Thinking
about Crime Limited is keeping up with developments
and changes in legislation, regulation and guidance in the
global world of money laundering.
This page highlights money
laundering (and connected) stories, issues and
developments that may be of concern to you.
Please note that this is for
information only: you should seek your own legal and
compliance advice before taking action based on anything
you read on this page.
For older news items, please visit
the Old news page - this
contains stories dating back to January 2002.
Please excuse the seemingly
random variations in text size on this page - I have done my
darnedest to sort this out but without success. Let's
just think of it as one of the delightful quirks of life
online.
US authorities drop investigation
into cyclist for doping, drug trafficking and money
laundering
- 3 February 2012
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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Ohio couple sent to prison for
laundering through luxury cars
- 2 February 2012
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 given custodial sentences
for commercial corruption in UK energy sector
- 1 February 2012
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 whistleblowing hotline will
not be launched as planned
today
- 1 February 2012
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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Toy company owners sent to prison
for laundering drug money
- 31 January 2012
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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Nurse and pharmacist found guilty
of illegal drug sales and money laundering
- 31 January 2012
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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Lawyer and two others jailed for
forgery involving Guernsey and Switzerland
- 30 January 2012
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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Leading Bulgarian mafia figure
sent to jail for money laundering
- 26 January 2012
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 finally goes on
trial for fraud and money laundering
- 25 January 2012
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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Three properties to be civilly
recovered from Scottish businessmen
- 25 January 2012
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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Southampton newsagent sent to
prison for money laundering
- 24 January 2012
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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Arrests made in Thai FIU scam
enquiry
- 23 January 2012
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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Perfume shop owner sent to prison
for money laundering
- 21 January 2012
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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US accuses Guatemalan lottery of
being front for money laundering
- 19 January 2012
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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Husband of accused Jakarta bank
employee found guilty of money laundering
- 19 January 2012
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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Belfast businessman ordered to
hand over nineteen houses to SOCA
- 16 January 2012
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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Indonesian police chief sent to
prison for drug trafficking and money laundering
- 13 January 2012
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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Money laundering case collapses
owing to police error
- 12 January 2012
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 pleads guilty to theft
from his own chambers
- 12 January 2012
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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Lancashire solicitor sent to
prison for money
laundering
- 11 January 2012
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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Manchester men sent to prison for
mortgage fraud and money laundering
- 10 January 2012
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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Thai FIU implicated in phone scam
- 10 January 2012
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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Rabbi sent to prison for money
laundering
- 4 January 2012
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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Oklahoma property developer sent
to prison for money laundering
- 29 December 2011
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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Australian executive to be
extradited to the UK to face charges of corruption and
money laundering
- 29 December 2011
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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UAE gold and cash laundering ring
cracked
- 26 December 2011
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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Senior Italian policeman to face
trial for money laundering
- 24 December 2011
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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Salford "Premiership lifestyle"
couple sent to prison for money laundering
- 23 December 2011
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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Allen Stanford declared fit to
stand trial for fraud and money laundering
- 23 December 2011
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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NZ "accidental millionaire"
charged with theft and money laundering
- 23 December 2011
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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Entire police force sacked in
fight against corruption in Mexico
- 22 December 2011
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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Founder of online poker site
pleads guilty to fraud, illegal gambling and money
laundering
- 21 December 2011
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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Pair jailed for laundering £4.6
million through bogus diamond business
- 21 December 2011
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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Operation Euripus sends fifteen to
jail for VAT fraud and money laundering
- 20 December 2011
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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Tax cheat and laundering family
members given prison sentences
- 19 December 2011
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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US authorities accuse bank of
laundering for Hezbollah
through used car dealerships
- 19 December 2011
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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Jacques Chirac found guilty of
corruption and given suspended sentence
- 15 December 2011
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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Second US Army Major jailed for
bottled water corruption and laundering
- 13 December 2011
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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Lebanese man indicted in the US
for large-scale drug trafficking and money laundering
- 13 December 2011
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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SOCA gets its men after eleven
years
- 12 December 2011
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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Noriega arrives back in Panama
- 12 December 2011
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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Laundering lawyer finally heads to
prison after thirteen years
- 7 December 2011
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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Drug trafficker ordered to pay
back a further £800,000
- 6 December 2011
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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Mortgage fraud was the family
business in Ohio
- 2 December 2011
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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Fifteen Kuwaiti MPs under
suspicion of money laundering
- 2 December 2011
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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TI publishes Corruption
Perceptions Index 2011
- 2 December 2011
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 jailed for six years
for laundering drug money
- 1 December 2011
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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Fraudster's wife and son found
guilty of money laundering
- 29 November 2011
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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Lawyer defrauds children's
hospital of £1.1 million
- 28 November 2011
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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Launderer ordered to sell house to
repay, or face jail
- 26 November 2011
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 email scam targets the
great and the good
- 25 November 2011
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 goes back to jail for
not reporting his finances
- 25 November 2011
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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Football club owner arrested to
face bank asset-stripping charges in Lithuania
- 25 November 2011
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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France approves extradition of
Noriega to Panama
- 23 November 2011
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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Prison sentences for Ohio mortgage
fraud trio
- 21 November 2011
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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UK Treasury imposes financial
restrictions against all Iranian banks
- 21 November 2011
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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Three Idaho car dealers caught in
IRS laundering sting operation
- 18 November 2011
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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First Bribery Act conviction gets
three-year prison sentence
- 18 November 2011
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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Two sportsmen given sentences for
money laundering through eBay
- 16 November 2011
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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Guatemala agrees to extradite
former president Portillo to the US to face laundering
charges
- 15 November 2011
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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School executive convicted of
spending stolen money on prostitutes
- 14 November 2011
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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Trio jailed for laundering through
Manchester money services bureau
- 11 November 2011
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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US drug dealers launder money
through superhero comics
- 10 November 2011
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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Yet another Madoff-related lawsuit
reaches the New York courts
- 9 November 2011
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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Citibank Indonesia ex-employee
goes on trial for theft and money laundering
- 8 November 2011
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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Texas car dealer sent to prison
for laundering cash for criminal customers
- 6 November 2011
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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Singapore civil servants jailed
for cheating and money laundering
- 4 November 2011
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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Texas Ponzi fraudster jailed for
seventeen years
- 4 November 2011
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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Man jailed for laundering money
through a travel agency
- 4 November 2011
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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Victor Bout found guilty of arms
dealing offences
- 2 November 2011
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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TI releases Bribe Payers' Index
2011 - bad news for Russia and China
- 2 November 2011
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 19th while Brazil is 14th.
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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The Mounties get their man,
even on the water
- 1 November 2011
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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New £50 note goes into circulation
in the UK
- 1 November 2011
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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Father of former (laundering)
mayor sent to prison for fraud
- 31 October 2011
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 seize
£700,000 cash at Dover
- 31 October 2011
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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Bristol-based launderers face
deportation after jail
- 28 October 2011
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 executives of chemicals
company charged by the SFO with corruption offences
- 27 October 2011
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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Sentences totalling more than 250
years given to Liverpool-based drug gang
- 27 October 2011
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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Longest-ever sentence handed down
under US anti-bribery legislation
- 25 October 2011
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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UNODC issues two reports on money
laundering
- 25 October 2011
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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Political consultant found guilty
of theft and larceny
- 21 October 2011
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 charge man with money
laundering in relation to Parmalat collapse
- 20 October 2011
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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Soft drink CEO given twenty years
for fraud and money laundering
- 20 October 2011
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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Cash seized from bank owned by
Georgian billionaire
- 19 October 2011
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 makes yet another
appeal against his conviction
- 19 October 2011
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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Mubarak's sons under investigation
for money laundering in Switzerland
- 17 October 2011
The
Egyptian authorities have alleged that the two sons of
deposed Egyptian President Hosni Mubarak have £215 million
in Swiss bank accounts. Assem al-Gohari, Egypt’s deputy
justice minister and head of its Illicit Gains Authority,
said that most of the funds – now frozen by the Swiss
authorities – were in the name of the older son Alaa.
Alaa is a businessman who largely kept out of politics,
while Gamal was a leading politician widely seen as his
father’s heir apparent. Both men are on trial for
corruption and complicity in the killing of protesters who
were campaigning in January and February 2011 to depose
President Mubarak after three decades in power. The Swiss
authorities are now investigating whether Alaa was also
involved in money laundering, and last week promised to
speed up the return of funds once held by members of the
Mubarak government and those of the ousted Tunisian
President Zine al-Abidine Ben Ali.
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London brothel-keeper given
suspended sentence for laundering
- 17 October 2011
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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First conviction under UK's
Bribery Act 2010
- 14 October 2011
In the
first case brought under the Bribery Act 2010, Munir Yakub
Patel has pleaded guilty to asking for a £500 bribe to help
clear a driving offence from someone’s record. Patel, an
administrative law clerk at Redbridge Magistrates’ Court in
London, pleaded guilty to requesting and receiving a bribe
under section 2 of the Bribery Act, and also to misconduct
in public office. He will be sentenced on 11 November 2011,
and faces up to ten years in prison.
The Bribery Act
2010 came into force on 1 July 2011 and is mainly prosecuted
by the Serious Fraud Office; however, the Crown Prosecution
Service (CPS) takes on domestic bribery cases.
Gaon Hart, a lawyer for the CPS’s special crime and
counter-terrorism unit, said: “Public corruption is an
extremely serious offence that undermines public faith in
the integrity of those who work in the criminal justice
system.
Public servants are
required to act with integrity, honesty, objectivity and
impartiality but Patel’s actions could not have been further
from each of these. His conduct has brought into
disrepute the criminal justice system as he sought to
undermine the very laws which he was employed to uphold.
The public rightly expects criminal cases to be dealt with
fairly and professionally, and the police, courts and CPS
have all worked together to deal with this case swiftly and
robustly.
This prosecution is the first of its kind under the Bribery
Act 2010 which has provided a significant weapon in the
armoury of prosecutors that enables us to focus on the
bribery element rather than general misconduct behaviour. We
will continue to target those who act corruptly purely for
personal gain and tailor the charge to reflect their
wrong-doing.”
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One of Mubarak's closest aides
found guilty of money laundering
- 12 October 2011
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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Farewell to Proton Bank, hello to
New Proton Bank
- 10 October 2011
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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Sophisticated identity theft ring
cracked in the US
- 8 October 2011
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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Church bookkeeper pleads guilty to
theft and money laundering
- 7 October 2011
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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Scottish fraudsters ordered to pay
back the money
- 6 October 2011
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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Latvian launderer jailed for
participation in e-fraud
- 4 October 2011
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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