C.I.A. Collects Global Data on Transfers of Money

 

 

By Charlie Savage and Mark Mazzetti

New York Times

The Central Intelligence Agency is secretly collecting bulk records of international money transfers handled by companies like Western Union — including transactions into and out of the United States — under the same law that the National Security Agency uses for its huge database of Americans’ phone records, according to current and former government officials.

The C.I.A. financial records program, which the officials said was authorized by provisions in the Patriot Act and overseen by the Foreign Intelligence Surveillance Court, offers evidence that the extent of government data collection programs is not fully known and that the national debate over privacy and security may be incomplete.

Some details of the C.I.A. program were not clear. But it was confirmed by several current and former officials, who spoke on the condition of anonymity because the matter is classified.

The data does not include purely domestic transfers or bank-to-bank transactions, several officials said. Another, while not acknowledging the program, suggested that the surveillance court had imposed rules withholding the identities of any Americans from the data the C.I.A. sees, requiring a tie to a terrorist organization before a search may be run, and mandating that the data be discarded after a certain number of years. The court has imposed several similar rules on the N.S.A. call logs program.

Several officials also said more than one other bulk collection program has yet to come to light.

“The intelligence community collects bulk data in a number of different ways under multiple authorities,” one intelligence official said.

Dean Boyd, a spokesman for the C.I.A., declined to confirm whether such a program exists, but said that the agency conducts lawful intelligence collection aimed at foreign — not domestic — activities and that it is subject to extensive oversight.

“The C.I.A. protects the nation and upholds the privacy rights of Americans by ensuring that its intelligence collection activities are focused on acquiring foreign intelligence and counterintelligence in accordance with U.S. laws,” he said.

Juan Zarate, a White House and Treasury official under President George W. Bush, said that unlike telecommunications information, there has generally been less sensitivity about the collection of financial data, in part because the government already collects information on large transactions under the Bank Secrecy Act.

“There is a longstanding legal baseline for the U.S. government to collect financial information,” said Mr. Zarate, who is also the author of “Treasury’s War,” about the crackdown on terrorist financing. He did not acknowledge the C.I.A. program.

Orders for business records from the surveillance court generally prohibit recipients from talking about them. A spokeswoman for one large company that handles money transfers abroad, Western Union, did not directly address a question about whether it had been ordered to turn over records in bulk, but said that the company complies with legal requirements to provide information.

“We collect consumer information to comply with the Bank Secrecy Act and other laws,” said the spokeswoman, Luella Chavez D’Angelo. “In doing so, we also protect our consumers’ privacy.”

In recent months, there have been hints in congressional testimony, declassified documents and litigation that the N.S.A. program — which was disclosed by Edward J. Snowden, a former N.S.A. contractor — is not unique in collecting records involving Americans.

For example, the American Civil Liberties Union is fighting a Freedom of Information Act lawsuit for documents related to Section 215 of the Patriot Act, the provision that allows the government to compel companies to turn over business records for counterterrorism purposes. After the government declassified the N.S.A. phone records program, it has released many documents about it in response to the suit.

But the government has notified the A.C.L.U. that it is withholding two Foreign Intelligence Surveillance Court rulings invoking Section 215 — one dated Aug. 20, 2008, and the other Nov. 23, 2010 — because they discuss matters that remain classified, according to Alexander Abdo, an A.C.L.U. lawyer. “It suggests very strongly that there are other programs of surveillance that the public has a right to know about,” Mr. Abdo said.

In addition, a Justice Department “white paper” on the N.S.A.’s call records program, released in August, said that communications logs are “a context” in which the “collection of a large volume of data” is necessary for investigators to be able to analyze links between terrorism suspects and their associates. It did not say that call records are the only context that meets the criteria for bulk gathering.

In hearings on Capitol Hill, government officials have repeatedly avoided saying that phone logs — which include date, duration and numbers of phone calls, but not their content — are the only type of data that would qualify for bulk collection under the Patriot Act provision. In a little-noticed exchange late in an Oct. 3 hearing before the Senate Judiciary Committee, Gen. Keith B. Alexander, the N.S.A. director, appeared to go further.

At the hearing, Senator Mazie K. Hirono, Democrat of Hawaii, asked General Alexander and James R. Clapper Jr., the director of national intelligence, a sweeping question: “So what are all of the programs run by the N.S.A. or other federal agencies” that used either Section 215 of the Patriot Act or another surveillance law that allows warrantless wiretapping of phone and emails?

General Alexander responded by describing, once again, the N.S.A.’s call records program, adding, “None of that is hid from you.” Mr. Clapper said nothing.

Then, moments later, General Alexander interjected that he was talking only about what the N.S.A. is doing under the Patriot Act provision and appearing to let slip that other agencies are operating their own programs.

“You know, that’s of course a global thing that others use as well, but for ours, it’s just that way,” General Alexander said.

In September, the Obama administration declassified and released a lengthy opinion by Judge Claire Eagan of the surveillance court, written a month earlier and explaining why the panel had given legal blessing to the call log program. A largely overlooked passage of her ruling suggested that the court has also issued orders for at least two other types of bulk data collection.

Specifically, Judge Eagan noted that the court had previously examined the issue of what records are relevant to an investigation for the purpose of “bulk collections,” plural. There followed more than six lines that were censored in the publicly released version of her opinion.

Lawmakers on the House and Senate Judiciary Committees have been trying to gain more information about other bulk collection programs.

In September, Representative Jim Sensenbrenner, Republican of Wisconsin and an author of the original Patriot Act, sent a letter to Attorney General Eric H. Holder Jr. asking if the administration was collecting bulk records aside from the phone data. An aide said he had yet to get a response. Even lawmakers on the Intelligence Committees have indicated that they are not sure they understand the entire landscape of what the government is doing in terms of bulk collection.

Senators Dianne Feinstein of California and Saxby Chambliss of Georgia, the top Democrat and Republican on the Senate Intelligence Committee, recently sent a classified letter to Mr. Clapper asking for a full accounting of every other national security program that involves bulk collection of data at home or abroad, according to government officials

Michael Hearns an Anti Money Laundering specialist with over 27 years of AML experience can also be found at:www.launderingmoney.com and on twitter at :http://twitter.com/#!/LaunderingMoneyas well as his blog at:http://moneylaunderingworld.blogspot.com

Mexican Drug Cartels Laundering Money through Horse Stables

By George H Wittman
American Spectator

In recent weeks Mexican cartel money laundering operations in the United States have been exposed as imaginative and daring. In the two principal cases uncovered, very different devices were used by the drug trafficking managers. These cases are an introduction to the breadth of mechanisms available to turn dirty money clean.
Perhaps the operation that had the most elaborate cover, yet a still relatively simple financial structure, was the most forward-looking. One of the top figures in Mexico's Los Zetas drug organization, Miguel Angel Trevino Morales, had a younger brother who liked horses, needed a job, and was available to manage a ranch (bought through an intermediary with drug profits) south of Oklahoma City.

Along with his wife and three children, young José Treviño Morales set about to establish himself as an owner/breeder of quarter horses. He paid for everything in cash or by using false names and accounts of supposed partners. Treviño Morales and his considerable ranch staff of fourteen built a reputation of fair bargaining and quick payment. The 400-plus horse enterprise was the envy of many other breeders with less deep pockets, but any annoyance was quickly salved by the fair and generous business practices of the Treviño Morales operation.

Meanwhile millions of dollars in cash accrued by the drug trafficking operation of the Zetas was "cleansed" in the accounting for the high maintenance quarter horse breeding and racing business. The stable's reputation grew as it began to turn out serious winners on the track and at the auctions in Oklahoma, Texas, New Mexico, and California. The overall operation was incorporated since 2008 as Tremor Enterprises LLC -- and they paid all their bills on time.

The New York Times once again appears to have had an inside source within law enforcement, for when it broke the story on June 12 citing its "investigations lasting months" and anonymous sources, federal authorities, including FBI Special Agents, swooped in on the ranch the same day. They were able to arrest only 7 of the 14 indicted, including José Treviño Morales and his wife. Whether this was due to the Times's early publication has not been surfaced. At this point, however, the U.S. Government has seized 41 of the choicest horses and is arranging for the care of the other 384.

While the Treviño Morales horse breeding operation reportedly successfully "cleaned" tens of millions of dollars -- and won some very large racing purses on the side -- another less romantic money laundering and drug trafficking dance was in process in nearby Western and Midwestern states. Due to the United States' tightening of controls on the production of chemicals used in the making of methamphetamine, the manufacture and shipment of meth from Mexico has grown exponentially.

Many mid-sized American gangs purchase cargos of meth either directly from Mexican cartel producers or intermediaries who have illegally transported the product over the Mexican/U.S. border using both witting and unwitting truck drivers. The meth is then carried from border sites to middlemen in California, Colorado, and elsewhere central to the customer base. One such operation, according to the DEA, owned both a legitimate trucking company and an import/export firm. The latter carried licenses to import goods from China, thus allowing a legal route for money to flow to China and then return in goods or money transfers to Mexico -- and the cycle would begin again.

While there are several versions of the foregoing used in money laundering, one of the most reliable remains the utilization of the real estate market. Purchase and resale of high-end real estate properties (residential or commercial) has been a natural route for cleaning dirty money. Resale at an appropriate price to a bona fide entity creates a cleansed account and money that can be transferred anywhere in the world.

There are many mechanisms now employed by the drug cartels to clean up the cash they obtain through illicit drug sales in the United States and Canada. All that is needed is an intermediary that can maintain the appearance of a legitimate cash flow (such as service and import/export concerns), and careful accounting takes care of the rest. Casinos and high volume restaurants are always an attractive money laundering target. While new and different mechanisms always become available, funneling money into the American stock and commodity markets remains a high priority objective.

The establishment of a legitimate-appearing identity is the sole criterion for creating an investment account allowing considerable sums to be moved around domestically and internationally. Clean identities have evolved through repeated transfers of money from Mexico and other Latin American sources to the Gulf States of the Middle East, China, Southeast Asia and eventually to the usual small countries with discreet banking and taxation laws. It takes quite a bit of imaginative accounting, but it's worth the effort to cover the original sources.

Thus it is the establishment of an acceptable identity that is the key to all illegal money movement. It need not be as elaborate as horse breeding; it can be as simple as what the KGB used to call a "documented legend" that involves a birth certificate, Social Security number -- or equivalent -- and exclusive club membership plus well-distributed cash. This and a few other accoutrements and the money launderer is ready to have a respected friend call his local hard-charging broker with a new client. The securities business swears it's much harder than that, but the Bernie Madoff case showed how social connections and well-covered accounting make a swindle work. The laundering con works the same way



Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Regulators hit Miami Gardens credit union with cease and desist order

 

 

By Brian Bandell

South Florida Business Journal

Federal regulators issued a cease and desist order against North Dade Community Development Credit Union for violations of anti-money laundering laws.

Such enforcement actions against credit unions are rare. This is the only cease and desist order issued by the National Credit Union Administration (NCUA) so far this year.

The credit union has only $5.8 million in assets. It was “well capitalized” on June 30, an improved from its “undercapitalized” status a year ago.

The NCUA order on Aug. 29 gave it 30 days to suspend all transactions for money services businesses that aren’t within its geographic area of membership. Credit unions are only allowed to deal with customers in pre-defined geographic areas. In the case of North Dade Community Development, the area is the north-central part of the county.

The regulatory order also told the credit union to stop all business with money service businesses until it implements adequate Bank Secrecy Act, anti-money laundering and Office of Foreign Asset Control (OFAC) compliance. This includes establishing criteria for identifying high-risk members, detecting when transactions involved prohibited countries or individuals, and timely filing suspicious activity reports and currency transaction reports.

It was given 30 days to find an employee responsible for this job, conditional upon approval by regulators

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at:

http://.launderingmoney.com and on twitter at: http://twitter.com/#!/LaunderingMoney also on http://moneylaunderingworld.blogspot.com

HSBC still in crosshairs of intrest group

By The Huffington Post

Everett Stern didn't realize that becoming a whistleblower would change his life. Not only did he lose his job and career at HSBC, and become blacklisted from the banking industry, he now sleeps with a gun by his bed after receiving death threats on a regular basis. He can barely afford a ticket to New York City to speak at a press conference this Thursday Aug. 29, at noon on the steps of the New York Public Library. But he isn't worried. According to the former bank employee, he will stop at nothing to expose HSBC's continued actions of laundering money for terrorists groups. Although the  bank paid a 1.9 billion penalty in 2009,Stern claims he has evidence that HSBC continued to launder money during his tenure after they admitted that they had stopped in 2010.

"The public needs to know that money is still being funneled through HSBC to directly buy guns and bullets to kill our soldiers. Fines are not acceptable. I want a criminal indictment of HSBC executives," he asserts. "And if I die because of this, my life will have been worthwhile."

A noble cause doesn't mean people will listen to you. During his employment with HSBC as an AML (Anti-Money Laundering officer), Stern found discrepancies and brought them to the attention of his supervisors. Through an Internet search, Stern found a Saudi fruit company was sending millions to a high-ranking figure in the Yemeni wing of the Muslim Brotherhood. Stern also uncovered that HSBC was allowing millions of dollars to be moved from the Karaiba chain of supermarkets in Africa to a firm called Tajco, a company that had been singled out by the US Treasury Department as major financiers of the Lebanese Shiite group, Hezbollah. Stern's supervisors, however, told him to not make waves and keep "clearing the quota of 72 alerts per week."

Stern then took his evidence further, notifying appropriate government agencies such as the FBI, CIA and SEC, about violations of US money laundering laws. All efforts fell on deaf ears -- the excuse being that prosecuting the Too Big To Fail bank would precipitate a financial collapse. Frustrated with the lack of action, Mr. Stern recently decided to take the case public, approaching various media outlets, in addition to Occupy Wall Street. By doing so, he has given up a multi-million dollar whistleblower award.

"This is not a Democrat or Republican issue," he said. "Banks financing drug cartels and terrorists affects every single American. I went to Occupy not because I am a major supporter of the movement. I went because they care enough to hit the streets, carry signs and send a message that I also believe in."

The OWS Alternative Banking Working Group, working in conjunction with Stern for tomorrow's protest, agrees. "Everett Stern is able to give us a mountain of information and point us in the right direction to apply effective pressure," says Cathy O'Neil, the Alternative Banking lead organizer. "In turn, we are able to give him an army of supporters and a populist megaphone with a proven ability to get the public's attention." 

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney  and http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Clashes Reported in Tehran as Riot Police Target Money Changers

 

By Thomas Frdbank

New York Times

Clashes erupted in the center of the Iranian capital on Wednesday between money changers and security forces after riot police on motorcycles used batons and tear gas to shut down a long-tolerated black-market for foreign currency, witnesses reported.

It was the first instance of a violent intervention over the money-changing business in Tehran since the national currency, the rial, which has been gradually losing value in recent years, dropped drastically over the past week, losing 40 percent of its worth against the dollar, to a record low. Economists have called the rial’s plunge a stark reflection of the economic pain in Iran caused in part by the Western sanctions on Iran’s disputed nuclear program.

Witnesses in and around Manoucheri Street, where the black-market money changers do business, described cat-and-mouse chases between motorized riot police and money changers. It was unclear whether there were injuries or arrests. It also was unclear whether the clashes had been confined to the immediate area or had spread.

The violence came a day after President Mahmoud Ahmadinejad, in a nationally televised news conference, asked Iranian citizens not to sell their rials for other currencies, suggesting the problem had been caused in part by speculators.

Mr. Ahmadinejad also warned that a “band of 22 people” with the power to manipulate exchange rates could face arrest, and he accused the United States and unspecified “domestic allies” of waging a psychological war on the country.

As the clashes erupted on Wednesday, garment and jewelry merchants in the city’s main bazaar, less than a mile away, closed their shops, apparently in protest. The semiofficial Mehr news agency said the bazaar, the heart of Tehran’s commercial center, had been closed for “security reasons.”

The secretary-general of the Tehran Bazaar and Trade Union, a powerful official close to the government, accused unspecified outside instigators of pressuring  bazaar merchants to close their shops. The official, Ahmad Karimi Esfahani, was quoted by the Iranian Labor News Agency as saying that most merchants had wanted to remain open for business. “Those now present are trying to show the bazaar as closed,” he was quoted as saying. “They are guided by foreigners.”

Other bazaar traders hinted that the closure of the bazaar was organized by powerful opponents of Mr. Ahmadinejad, who were trying to make him look weak by closing down Tehran’s most popular shopping center.

Members of Parliament and Shiite Muslim clerics have been calling for an end to the black-market currency trade, accusing the money changers of driving down the rial’s value. Others have called upon the government to buy up rials and sell dollars and other foreign currencies warehoused in the central bank’s reserves to restore stability to the national currency.

In the last weeks, traders and regular citizens had gathered by the hundreds on Manoucheri Street in Tehran to buy foreign currencies in anticipation of further weakening in the rial.

During the past months some Iranian leaders and clerics have warned against social unrest over the worsening economic malaise in the country. The fall in the currency’s value has presented Iran with enormous economic risks, including the possibility of starting a severe bout of inflation, which is already high. A rising sense of economic crisis in Iran could also pose new political challenges for the country’s leaders.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Griselda Blanco Queen of Cocaine....hardly!

By Michael Hearns
http://launderingmoney.com


The recent murder of Griselda Blanco in Medellin Colombia closes a sad a and tragic chapter on the brutality of the cocaine trade. At least that is what many would like for you to believe.  Griselda Blanco's murder should be viewed for exactly what it is; another violent end to marginalized sociopath who has been given undeserved iconic status by the print and visual media.

Griselda Blanco was a sociopathic remorseless entrepreneur who slithered through a crevice in American law enforcement that was unprepared and without capable resources and foresight to recognize the tsunami of illicit dollars and power that was being ushered in through the cocaine trade of the 1980's and 90's. Griselda Blanco was an opportunistic individual who used her guile and sociopathology to insulate her as she trampled across the boundaries of decency in what we know to be an indecent business; drug trafficking. She has been given demigod status  for her harsh, abrasive, quick tempered, ruthless, conniving ways and her fast penchant for ordering the execution of those she opposed by her spineless groveling minions.  For all the bluster and for all the talk that that her hired henchmen now spout from the confines of this nation's penitentiaries they themselves had plenty of opportunity to dispatch Griselda Blanco but for either lack of conviction or lack of cerebral mass they  continued to carry out her murderous ways helping to support the fallacy of  Griselda Blanco as a Godmother of Cocaine.

Lets face facts. Griselda Blanco was an integral cocaine trafficker within the Medellin Cartel and she sanctioned, paid for, and demanded that many of her competitors, those who crossed her, and those who stood in the way of her ascension for wealth be murdered. Her distinction from her contemporaries was simply gender. Aside form that she is no different than many of the male drug traffickers who partook in their craft in the 1980's and 90's. As a society we lionize women villains because it grates against the American psyche of women being maternal, nurturing, and a source of comfort. Ma Barker, Bonnie Parker, Aileen Wournos, and Annie Palmer have all ascended to a folklore like status as queens or godmothers of crime and murder.

It is easy to view the life of Griselda Balnco from the viewfinder of a movie camera or the soft glow of a computer monitor and surmise she was the "Queen of Cocaine" or "The Godmother of Cocaine."  Not having the privilege of either but being one of the few who actually had his feet on the ground in the cocaine world for a long time  it is apparent to me that the reality is she was a large scale cocaine trafficker who clawed, cheated, and murderously existed in a business that rewards the victor regardless of the method.

Nothing more.
Nothing less.

The biggest current mistake being made is the assumption that Griselda Blanco was murdered  to settle an old score or to appease a long time  former adversary. More than likely it is because the criminal element of Medellin has been able to exist quietly in the shadow of the Mexican Cartel and Griselda Blanco's notoriety was becoming troublesome. Talks of more movies and books have filled the air. Crime and notoriety usually never mix well. In this case the celluloid film and the pen may have actually been stronger the sword.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney  and http://moneylaunderingworld.blogspot.com/  

Where the Mob Keeps Its Money

By Roberto Saviano

New York Times

The global financial crisis has been a blessing for organized crime. A series of recent scandals have exposed the connection between some of the biggest global banks and the seamy underworld of mobsters, smugglers, drug traffickers and arms dealers. American banks have profited from money laundering by Latin American drug cartels, while the European debt crisis has strengthened the grip of the loan sharks and speculators who control the vast underground economies in countries like Spain and Greece.

Mutually beneficial relationships between bankers and gangsters aren’t new, but what’s remarkable is their reach at the highest levels of global finance. In 2010, Wachovia admitted that it had essentially helped finance the murderous drug war in Mexico by failing to identify and stop illicit transactions. The bank, which was acquired by Wells Fargo during the financial crisis, agreed to pay $160 million in fines and penalties for tolerating the laundering, which occurred between 2004 and 2007.

Last month, Senate investigators found that HSBC had for a decade improperly facilitated transactions by Mexican drug traffickers, Saudi financiers with ties to Al Qaeda and Iranian bankers trying to circumvent United States sanctions. The bank set aside $700 million to cover fines, settlements and other expenses related to the inquiry, and its chief of compliance resigned.

ABN Amro, Barclays, Credit Suisse, Lloyds and ING have reached expensive settlements with regulators after admitting to executing the transactions of clients in disreputable countries like Cuba, Iran, Libya, Myanmar and Sudan.

Many of the illicit transactions preceded the 2008 crisis, but continuing turmoil in the banking industry created an opening for organized crime groups, enabling them to enrich themselves and grow in strength. In 2009, Antonio Maria Costa, an Italian economist who then led the United Nations Office on Drugs and Crime, told the British newspaper The Observer that “in many instances, the money from drugs was the only liquid investment capital” available to some banks at the height of the crisis. “Interbank loans were funded by money that originated from the drugs trade and other illegal activities,” he said. “There were signs that some banks were rescued that way.” The United Nations estimated that $1.6 trillion was laundered globally in 2009, of which about $580 billion was related to drug trafficking and other forms of organized crime.

A study last year by the Colombian economists Alejandro Gaviria and Daniel Mejía concluded that the vast majority of profits from drug trafficking in Colombia were reaped by criminal syndicates in rich countries and laundered by banks in global financial centers like New York and London. They found that bank secrecy and privacy laws in Western countries often impeded transparency and made it easier for criminals to launder their money.

At a Congressional hearing  in February, Jennifer Shasky Calvery, a Justice Department official in charge of monitoring money laundering, said that “banks in the U.S. are used to funnel massive amounts of illicit funds.” The laundering, she explained, typically occurs in three stages. First, illicit funds are directly deposited in banks or deposited after being smuggled out of the United States and then back in. Then comes “layering,” the process of separating criminal profits from their origin. Finally comes “integration,” the use of seemingly legitimate transactions to hide ill-gotten gains. Unfortunately, investigators too often focus on the cultivation, production and trafficking of narcotics while missing the bigger, more sophisticated financial activities of crime rings.

Mob financing via banks has ebbed and flowed over the years. In the late 1970s and early 1980s organized crime, which had previously dealt mainly in cash, started working its way into the banking system. This led authorities in Europe and America to take measures to slow international money laundering, prompting a temporary return to cash.

Then the flow reversed again, partly because of the fall of the Soviet Union and the ensuing Russian financial crisis. As early as the mid-1980s, the K.G.B., with help from the Russian mafia, had started hiding Communist Party assets abroad, as the journalist Robert I. Friedman has documented. Perhaps $600 billion had left Russia by the mid-1990s, contributing to the country’s impoverishment. Russian mafia leaders also took advantage of post-Soviet privatization to buy up state property. Then, in 1998, the ruble sharply depreciated, prompting a default on Russia’s public debt.

Although the United States cracked down on terrorist financing after the 9/11 attacks, instability in the financial system, like the Argentine debt default in 2001, continued to give banks an incentive to look the other way. My reporting on the ’Ndrangheta, the powerful criminal syndicate based in Southern Italy, found that much of the money laundering over the last decade simply shifted from America to Europe. The European debt crisis, now three years old, has further emboldened the mob.

IN Greece, as conventional bank lending has gotten tighter, more and more Greeks are relying on usurers. A variety of sources told Reuters last year that the illegal lending business in Greece involved between 5 billion and 10 billion euros each year. The loan-shark business has perhaps quadrupled since 2009 — some of the extortionists charge annualized interest rates starting at 60 percent. In Thessaloniki, the second largest city, the police broke up a criminal ring that was lending money at a weekly interest rate of 5 percent to 15 percent, with punishments for whoever didn’t pay up. According to the Greek Ministry of Finance, much of the illegal loan activity in Greece is connected to gangs from the Balkans and Eastern Europe.

Organized crime also dominates the black market for oil in Greece; perhaps three billion euros (about $3.8 billion) a year of contraband fuel courses through the country. Shipping is Greece’s premier industry, and the price of shipping fuel is set by law at one-third the price of fuel for cars and homes. So traffickers turn shipping fuel into more expensive home and automobile fuel. It is estimated that 20 percent of the gasoline sold in Greece is from the black market. The trafficking not only results in higher prices but also deprives the government of desperately needed revenue.

Greece’s political system is a “parliamentary mafiocracy,” the political expert Panos Kostakos told the energy news agency Oilprice.com earlier this year. “Greece has one of the largest black markets in Europe and the highest corruption levels in Europe,” he said. “There is a sovereign debt that does not mirror the real wealth of the average Greek family. What more evidence do we need to conclude that this is Greek mafia?”

Spain’s crisis, like Greece’s, was prefaced by years of mafia power and money and a lack of effectively enforced rules and regulations. At the moment, Spain is colonized by local criminal groups as well as by Italian, Russian, Colombian and Mexican organizations. Historically, Spain has been a shelter for Italian fugitives, although the situation changed with the enforcement of pan-European arrest warrants. Spanish anti-mafia laws have also improved, but the country continues to offer laundering opportunities, which only increased with the current economic crisis in Europe.

The Spanish real estate boom, which lasted from 1997 to 2007, was a godsend for criminal organizations, which invested dirty money in Iberian construction. Then, when home sales slowed and the building bubble burst, the mafia profited again — by buying up at bargain prices houses that people put on the market or that otherwise would have gone unsold.

In 2006, Spain’s central bank investigated the vast number of 500-euro bills in circulation. Criminal organizations favor these notes because they don’t take up much room; a 45-centimeter safe deposit box can fit up to 10 million euros. In 2010, British currency exchange offices stopped accepting 500-euro bills after discovering that 90 percent of transactions involving them were connected to criminal activities. Yet 500-euro bills still account for 70 percent of the value of all bank notes in Spain.

And in Italy, the mafia can still count on 65 billion euros (about $82 billion) in liquid capital every year. Criminal organizations siphon 100 billion euros from the legal economy, a sum equivalent to 7 percent of G.D.P. — money that ends up in the hands of Mafiosi instead of sustaining the government or law-abiding Italians. “We will defeat the mafia by 2013,” Silvio Berlusconi, then the prime minister, declared in 2009. It was one of many unfulfilled promises. Mario Monti, the current prime minister, has stated that Italy’s dire financial situation is above all a consequence of tax evasion. He has said that even more drastic measures are needed to combat the underground economy generated by the mafia, which is destroying the legal economy.

Today’s mafias are global organizations. They operate everywhere, speak multiple languages, form overseas alliances and joint ventures, and make investments just like any other multinational company. You can’t take on multinational giants locally. Every country needs to do its part, for no country is immune. Organized crime must be hit in its economic engine, which all too often remains untouched because liquid capital is harder to trace and because in times of crisis, many, including the world’s major banks, find it too tempting to resist

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Millions stolen from Medicare wound up in Cuban banking system

By Michael Sallah
Miami Herald

In an unprecedented case, federal prosecutors have charged a Miami man with engaging in a massive money-laundering operation that moved millions stolen from the federal Medicare program into Cuban banks.
Prosecutors say Oscar Sanchez, 46, was a key leader in a group that funneled $31 million in Medicare dollars into banks in Havana — the first such case that directly traces money fleeced from the beleaguered program into the Cuban banking system.Most of the money moved through an intricate web of foreign shell companies before ending up in Cuba, to avoid being detected in the United States, said investigators.

“We’re obviously dealing with a very sophisticated network,” said Ron Davidson, an assistant U.S. attorney, during a court hearing on Monday.

The federal investigation marks the first time prosecutors have brought a cash-for-Cuba case in the ongoing battle against Medicare fraud in South Florida, which leads the nation in dollars fleeced from taxpayers.
Despite arguments from Sanchez’s lawyer on Monday that his client was not a flight risk and has family ties to Miami, U.S. Magistrate Jonathan Goodman ordered the defendant be held without bail. “The fact that [he] has made more than 78 trips out of the country over the years” was a major reason, the judge said.
For years, Sanchez was a player in a global organization that spanned from Montreal to Havana, prosecutors said. Though no one else has been charged so far, prosecutors say Sanchez, who owned a check-cashing business, was in a position to launder millions in government checks and wire payments doled out to crooked providers between 2005 and 2009.  He was charged last week with one count of conspiracy to commit money laundering.
“Oscar Sanchez was a financier for fraudsters and a capitalist for the Cuban banks,” prosecutors said in a court motion. While Sanchez was a target of the ongoing investigation, prosecutors say dozens of crooked Medicare providers — who offered HIV and medical equipment services — all took part in the laundering scheme set up for one reason: To hide the money.

15 accounts

With millions pouring in from Medicare, suspects opened 15 bank accounts in Canada and Trinidad to move the money from the United States, court records state.
In one major tactic, the ringleaders plunked down millions to buy reams of money orders — 20 boxes in all — and then put the money into an account in the Royal Bank of Canada in Montreal. To make the purchases, they used a host of names, including a famous alias: Bill Clinton.
Then, after the money was concealed in the bank accounts, it was immediately wired to several accounts at Republic Bank in Trinidad. Investigators later found out that the accounts were not actually opened in Trinidad, but at the branch of Republic bank in Havana, records state.
In addition, the bank had firm instructions on two of those accounts to wire all the money immediately into the Cuban banking system. So far, prosecutors, who are gathering their information from financial records and unnamed witnesses, said they have traced $63 million into Cuban banks — nearly half tied to Sanchez’s case.
“This is not a traditional money-laundering case,” prosecutors said.
One reason that the rogue healthcare providers turned to Sanchez was because he acted like a money machine: providing much-needed cash to them while they were waiting for their money to be laundered, prosecutors charged.

Fast, efficient

“The defendants’ money laundering operation was faster, more efficient, and financially benefitted everyone involved, including [Oscar Sanchez], who charged a fee for his services,” prosecutors wrote.
In all, 70 medical company owners in South Florida submitted more than $374 million in claims to Medicare, and were reimbursed about $70 million. Many of those providers wanted to withdraw their proceeds in cash to “purchase luxury items or to pay illegal kickbacks,” Davidson wrote. Though prosecutors charged that Sanchez would be a flight risk if released on bail — saying he traveled from the country 78 times since 2002 — defense lawyer Peter Raben said most of the trips were to Mexico where his client owned a condo.He said charging Sanchez in the international money-laundering ring was “a big red herring” to taint his client, w ho has no prior convictions. Prosecutors say Sanchez was part of a much larger scheme to get money into Cuba, a Communist country that does not extradite fugitives from the United States.As part of the Sanchez case, prosecutors are asking the court to seize seven homes he owns in Miami-Dade, Lee and Collier counties as well as two vehicles to recover the millions in laundered money.
Experts who have watched Miami-Dade emerge as the nation’s Medicare fraud capital say the Cuban government’s involvement would not be too far-fetched — though they have no proof to back it up.
Andy Gomez, a senior fellow of Cuban studies at the University of Miami, said he has heard from sources in Miami and Cuba that the Castro government extorts Medicare bounty from criminals who are allowed to travel freely between here and the island nation.  More than two dozen people charged with Medicare fraud have fled back to Cuba over the last five years, and many more are suspected of hiding there.

“The Cuban government knows what’s going on,’’ Gomez told The Miami Herald last year.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/  money-laundering

Colorado Man Indicted for Human Trafficking, Money Laundering

By Olvia Katradian

A Colorado CEO is accused of luring foreigners to the United States to work for a nonexistent university and then stealing portions of their salaries after setting them up with other jobs in what the government has called an "elaborate scheme."
Kizzy Kalu, 47, of Highlands Ranch, Colo., allegedly enticed foreign nurses to work as teachers at an Adam University in Denver, an institution that Kalu's alleged accomplice, Philip Langerman, 77, of McDonough, Ga., made up, according to a federal indictment.
Langerman was also indicted, but remains at large. Kalu is being held by U.S. Marshals, and phone calls to his companies were not returned.
Kalu promised a salary of between $68,000 and $72,000 annually for the fictional teaching positions through the Foreign Healthcare Professional Group (FHPG), a company he operated, according to the indictment. The fictional positions were considered to be "specialty occupations" under U.S. immigration regulations.
Langerman obtained state authorization in 2005 for Adam University to deliver degree programs in Colorado, based on false claims, according to the indictment. This status permits a university to submit an unlimited number of H-1B specialty occupation visas, which allow a foreign national to be employed while in the United States.
The foreign nationals had to pay fees to FHPG and Kalu in exchange for assistance in obtaining the visas, according to the indictment.
Once they were in the United States, Kalu informed them that the aforementioned positions were no longer available, and put them to work at various long-term care facilities, the indictment states.
The facilities paid the foreign nationals' salaries to Kalu's company, but Kalu allegedly passed on only 65 percent of the wages to his employees, which was 50 percent of the salary originally promised to them by FHPG and less than 50 percent of what Adam University told the United States they would be paid, according to the indictment.
Kalu was arrested without incident last Sunday and arraigned Thursday when a federal magistrate judge ordered that he be released on bond. The U.S. Attorney's Office immediately appealed to the District Court, which then ordered that Kalu not be released until the appeal is heard Thursday. Kalu is in federal custody, being held by the U.S. Marshals, despite other news reports that he is out on bond, according to the U.S. Attorney's Office.
"He was not let off on bond. Those stories are completely inaccurate," Jeff Dorschner, a spokesman for the U.S. Attorney's Office, told ABC News today.
Dorschner said the U.S. Attorney's Office believes Kalu is a flight risk. "The reason we don't want him released is we think he will flee the country and not return for future court appearances," said Dorschner.
Kalu faces 132 charges, including visa fraud, forced labor, money laundering, human trafficking, criminal forfeiture and mail fraud. If convicted, he could spend up to 20 years in prison.
Langerman is listed as a Ph.D and one of Adam University's directors, according to the indictment. Kalu is a graduate of the University of Jos in Nigeria, according to his online LinkedIn profile.
Kalu is the chairman and CEO of Global Energy Initiatives (GEI), which manufactures and deploys hydro-kinetic power generators to Brazil and other developing countries, according to its website. Photographs on Kalu's Facebook page Saturday showed Kalu with his wife, Nicole, at the White House for an energy briefing in September. The photos were taken down today and are no longer publically available.
Kalu also operates the Global Village Hope Foundation, an international voluntourism program whose motto is "You are the hope for the hopeless."
On the foundation's website, supporters are asked to send donations to 5630 Wickerdale Lane in Highlands Ranch, Colo., Kalu's residence.
Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

US levies new sanctions on Iran’s Central Bank

By Julie Pace
St. Louis Tribune

In In a fresh swipe at Iran, President Barack Obama has ordered new sanctions on the Islamic republic, including its Central Bank, moving to enforce a law he signed in December.
In a letter to Congress Monday, Obama said more sanctions are warranted "particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks." He said the problems included the hiding transactions of sanctioned parties, the deficiencies of Iran's anti-money laundering regime and the unacceptably high risk posed to the entire international financial system posed by Iran's activities.
The Central Bank sanctions were included as an amendment in the wide-ranging defense bill Obama signed into law at the end of 2011. The White House said Obama signed the executive order approving the sanctions on Sunday.
The new measures come as the White House tries to both ratchet up pressure on Tehran to abandon its nuclear program and dissuade Israel from launching a unilateral strike on Iran, a move that could roil the Middle East and jolt the global economy.
Obama said Sunday that he does not believe Israel has yet decided whether to attack Iran. The president said he still believes a diplomatic solution is possible.
Iran insists its nuclear pursuit is for peaceful purposes, but the West accuses Iran of developing the know-how to build a nuclear bomb. Defense Secretary Leon Panetta last week would not dispute a report that he believes Israel may attack Iran this spring in an attempt to set back the Islamic republic's nuclear program.
In recent weeks, both the U.S. and European Union have imposed harsher sanctions on Iran's oil sector, the lifeblood of its economy.
In Washington, the Senate Banking Committee easily approved yet more penalties on Tehran last week. The sweeping measure, which is not yet law, would target Iran's Revolutionary Guard Corps, require companies that trade on the U.S. stock exchanges to disclose any Iran-related business to the Securities and Exchange Commission, and expand penalties for energy and uranium mining joint ventures with Tehrana fresh swipe at Iran, President Barack Obama has ordered new sanctions on the Islamic republic, including its Central Bank, moving to enforce a law he signed in December.
In a letter to Congress Monday, Obama said more sanctions are warranted "particularly in light of the deceptive practices of the Central Bank of Iran and other Iranian banks." He said the problems included the hiding transactions of sanctioned parties, the deficiencies of Iran's anti-money laundering regime and the unacceptably high risk posed to the entire international financial system posed by Iran's activities.
The Central Bank sanctions were included as an amendment in the wide-ranging defense bill Obama signed into law at the end of 2011. The White House said Obama signed the executive order approving the sanctions on Sunday.
The new measures come as the White House tries to both ratchet up pressure on Tehran to abandon its nuclear program and dissuade Israel from launching a unilateral strike on Iran, a move that could roil the Middle East and jolt the global economy.
Obama said Sunday that he does not believe Israel has yet decided whether to attack Iran. The president said he still believes a diplomatic solution is possible.
Iran insists its nuclear pursuit is for peaceful purposes, but the West accuses Iran of developing the know-how to build a nuclear bomb. Defense Secretary Leon Panetta last week would not dispute a report that he believes Israel may attack Iran this spring in an attempt to set back the Islamic republic's nuclear program.
In recent weeks, both the U.S. and European Union have imposed harsher sanctions on Iran's oil sector, the lifeblood of its economy.
In Washington, the Senate Banking Committee easily approved yet more penalties on Tehran last week. The sweeping measure, which is not yet law, would target Iran's Revolutionary Guard Corps, require companies that trade on the U.S. stock exchanges to disclose any Iran-related business to the Securities and Exchange Commission, and expand penalties for energy and uranium mining joint ventures with Tehran

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Mexican drug kingpin Benjamin Arellano Felix pleads guilty to US charges in San Diego

Mexican drug kingpin Benjamin Arellano Felix pleaded guilty Wednesday to racketeering and conspiracy to launder money, avoiding the spectacle of a trial for the leader of a cartel that once smuggled hundreds of tons of cocaine and marijuana into the United States and dissolved bodies of its rivals in vats of lye.
Under an agreement with federal prosecutors, Arellano Felix, 58, can be sentenced to no more than 25 years in prison — a lighter punishment than ordered for lower-ranking members of his once-mighty, Tijuana-based cartel.
Prosecutors agreed to dismiss other charges that could have brought 140 years in prison if he was convicted.
The half-hour hearing was an anticlimactic finish to the U.S. government’s pursuit of one of the world’s most powerful drug bosses during the 1990s. His cartel, with its iron-tight grip on the drug trade along California’s border with Mexico, was portrayed in the Steven Soderbergh film “Traffic” but has struggled in recent years as other cartels have become more ruthless than ever.
Laura Duffy, the U.S. attorney in San Diego who built much of her career on the case, said Arellano Felix will likely spend the rest of his life in U.S. prison but did not elaborate on the reasoning for the plea deal.
“Today’s guilty plea marks the end of his reign of murder, mayhem and corruption, and his historic admission of guilt sends a clear message to the Mexican cartel leaders operating today: The United States will spare no effort to investigate, extradite and prosecute you for your criminal activities,” Duffy said.
Arellano Felix stood attentively in court, acknowledging his guilt as U.S. District Judge Larry Burns recited parts of a 17-page plea agreement. He told the judge that he has been suffering migraine headaches almost daily but that the problem didn’t impair his judgment to accept the plea agreement.
Anthony Colombo Jr., Arellano Felix’s attorney, said his client could be released from U.S. prison in 20 years if credited for time served in this country and good behavior, assuming he gets the maximum 25-year sentence. As a Mexican citizen, he would then be deported to Mexico, where he still has nine years left on a sentence for related crimes.
Colombo said the government may have agreed to the deal to avoid having to bargain with 21 potential government witnesses for reduced sentences in exchange for their testimony. They also may have wanted to avoid a lengthy trial.
“They have to consider years and years of litigation, plus the expense, is avoided by this resolution,” Colombo told reporters.
John Kirby, a former federal prosecutor who co-wrote the 2003 indictment against Arellano Felix, said the case rested entirely on cooperating witnesses, instead of wiretaps or physical evidence. He said those cases weaken over time as witnesses die, get into more trouble or change their minds about testifying.
“This kind of case is based solely on witness testimony, and it slowly disintegrates,” Kirby said. “Maybe from the time when we put it together and now, it’s not such a great case anymore.”
The cost of a trial was unlikely to have influenced prosecutors, Kirby said.
“The government doesn’t care about the expense, the government cares about winning,” he said.
Francisco Javier Arellano Felix, a younger brother who led the cartel after Benjamin was arrested in Mexico in 2002, was sentenced in San Diego to life in prison in 2007, a year after he was captured by U.S. authorities in international waters off Mexico’s Baja California coast. Jesus Labra Aviles, a lieutenant under Benjamin Arellano Felix, was sentenced in San Diego to 40 years in prison in 2010.
Benjamin Arellano Felix was extradited from Mexico in April 2011 to face drug, money-laundering and racketeering charges, one of the highest-profile kingpins to face prosecution in the United States.
The U.S. indictment said Arellano Felix was the top leader of a cartel he led with his brothers, going back to 1986. It says the cartel tortured and killed rivals in the United States and Mexico as it smuggled Mexican marijuana and Colombian cocaine.
“He was the top of the chain,” Kirby said. “The brothers were at the top, and he was at the very top. He had the final say ... He was like the CEO of the operation.”
The cartel began to lose influence along California’s border with Mexico after Arellano Felix was arrested in 2002. A month earlier, his brother, Ramon, called the cartel’s top enforcer, died in a shootout with Mexican authorities.
Benjamin Arellano Felix was incarcerated in Mexico after his 2002 arrest and was later sentenced to 22 years in prison on drug trafficking and organized crime charges.
Arellano Felix also agreed to forfeit $100 million, a figure that will be difficult for the government to collect.
“Whether there is anything out there that (the government) can seize, I don’t know,” Colombo said.
Sentencing was set for April 2.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Feds: Tampa car dealer received more than $3 million in Hezbollah-related money-laundering scheme

By Danny Valentine
Times Staff WriterTampa Bay Times

A Tampa used car dealer received more than $3 million from Hezbollah-related organizations as part of a large money-laundering scheme designed to funnel cash to the terrorist group, the U.S. government claims.
Mansour Brothers Auto Trading Inc., which specializes in exporting vehicles, is one of 30 used car dealers that were wired at least $329 million over a four-year period, according to the complaint.
The case, filed late last week by the U.S. Attorney's office for the Southern District of New York, is seeking the seizure of those proceeds — including the $3 million sent to Mansour Brothers, located on Kennedy Boulevard. It follows an investigation led by the U.S. Drug Enforcement Agency.
Mansour Brothers received 40 wire transfers totalling about $3.25 million between 2007 and 2011, according to the complaint. It does not allege that any of the used car dealerships, including Mansour Brothers, knew about the money laundering, and they are not being charged criminally.
Tim Shusta, a Tampa attorney who represents Sammy Mansour of Mansour Bros., said Saturday that his client had no knowledge of the scheme.
He also said the money was wired to buy cars and ship them to Africa. They didn't make a profit of $3 million from the transactions.
"It's not clear to me that they have the right to recover the $3 million," Shusta said.
Federal authorities described the operation this way: Lebanese financial institutions, including a bank and two exchange houses linked to Hezbollah, wired funds to the United States, where the money was used to buy cars. The cars were then shipped to West Africa and sold for cash.
The cash from those car sales was then taken, along with money from drug trafficking and other crimes, to Lebanon. Hezbollah members and supporters were involved at various points, including financing and facilitating the purchase of some of the used cars.
"The intricate scheme laid out in (the) complaint reveals the deviously creative ways that terrorist organizations are funding themselves and moving their money," said Preet Bharara, U.S. Attorney for the Southern District of New York.
Hezbollah is a radical Islamic group that aims to create an Iranian-style Islamic republic in Lebanon. It is strongly anti-Israel and has been linked to bombings at a U.S. embassy and Marine barracks in the 1980s. Hezbollah, which holds about 10 percent of the seats in the Lebanese Parliament, receives weapons, money and organizational support from Iran, according to the U.S. Department of State.
Shusta said his client had no way of knowing that money was being passed to him by anyone who had anything to do with terrorism.
"They are an innocent party in the whole thing," Shusta said. "There are no allegations that allege that our client did anything wrong."
Shusta said Mansour Bros. is a very small company that's been open since 2005.
His client has been living in Tampa for about 30 years, he said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Hezbollah Money Laundering Probe Focuses On Tulsa Car Dealership

Havonnah Johnson,

News 9

The DEA launches an investigation into a multi-million dollar money laundering scheme which starts in Oklahoma and involves Americans helping terrorists.

The scheme begins at used cars lots which are used as a cover for drugs and illegal activity.

Federal agents say it is a complicated scheme to cover the funding of terrorists. It involves 20 states and least 30 used car lots. The investigation is just beginning.

Undercover agents closed in on one used car dealership in Tulsa Friday. It is but one of dozens officials say are involved in a multi-layered money laundering scheme

Fifty-six terrorists groups all over the world are looking for new sources of funding. One of the ways they can find it is through drug sourcing activities.

Here is how it works. Used cars are shipped from the U.S. to several West African countries. After they are sold at a 15- to 20-percent mark-up, the profit goes to Hezbollah. Some money then gets returned to the United States to buy more cars.

In all, 30 domestic companies are being investigated. The red flag for the deal? A small call dealership in Tulsa. Authorities say Ace Auto in Tulsa received more than $20 million in wire transfers.

A joint terrorism task force is looking for more than $480 million dollars from Lebanese institutions.

No one was arrested in Tulsa, but authorities should reveal more in the coming weeks

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

12 charged with laundering money from behind prison bars

By Jennifer van der Kleu

     

The Santa Clara County District Attorney’s Office, in partnership with the Santa Clara County Sheriff’s Department, has uncovered a money laundering scheme within the walls of the Milpitas-based Elmwood Correctional Facility  that has left 34 victims with a total of $17,000 in losses.
According to County District Attorney Jeffrey Rosen and Deputy District Attorney Tom Flattery, an Elmwood inmate identified as 26-year-old Darin Volk of Turlock headed up the scheme with 11 others.
Volk allegedly enlisted the help of fellow inmates for the use of their commissary and telephone accounts to launder money obtained from stolen credit card accounts. Commissary accounts are given to inmates in prison and allow them to either deposit funds they earn from prison jobs, or allow friends and family to deposit funds for them, which can then be used to purchase items from the prison’s commissary store. Inmates can also authorize friends and family on the outside to withdraw money from their commissary accounts.
According to the District Attorney’s Office, one of Volk’s co-conspirators on the outside, Brian Hoar of Turlock, used stolen credit card accounts to deposit money into the commissary and telephone accounts of Volk and several other inmates.
Volk would then direct three other co-conspirators—Heather Murphree of Turlock, Shanna Conroy of San Jose, and Jaimelynn Sakoda of San Jose—to withdraw a portion of the funds from the inmate accounts. If the inmates authorized the withdrawals from their accounts, they were rewarded by retaining the remainder of the funds, as payment for their cooperation.
“Jail personnel followed standard procedure and issued Santa Clara County checks to the three women without knowing that the accounts had been funded by fraud,” District Attorney Rosen said in a statement about the case.
Volk and his co-conspirators are being charged with conspiracy to commit identity theft, and identity theft.
Rosen also said that Volk and several others are being charged with “conspiracy to possess a cell phone in jail,” which is a crime.
“It is also alleged that, for a short time, Volk and other inmates had the use of a contraband cell phone inside the Elmwood facility,” said Rosen.
From April 24 to May 3, of this year, Rosen explained that the contraband cell phone was used to make 1,375 unauthorized calls from within jail, including 367 calls placed to online retailers, banks and shipping businesses.
“It is alleged that Volk arranged fraudulent commissary trust account deposits as payment for access to the contraband cell phone,” Rosen said.
The Elmwood money laundering scheme is not Volk’s first foray into the world of identity theft—the District Attorney’s Office said that, at the time he committed these crimes, Volk was serving time at Elmwood for a large-scale, multi-jurisdictional, counterfeit credit card manufacturing scheme.
For his part in the money laundering scheme, Volk faces an additional 25 years of local incarceration. Deputy District Attorney Flattery says Volk has been arraigned, and all of the defendants are scheduled to appear in court for a plea date on Wednesday, Dec. 21.
This case comes on the heels of a big announcement California Attorney General Kamala Harris is expected to make today in San Jose, regarding a new task force she is forming dedicated to investigating technology crimes and identity theft.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at:


 www.launderingmoney.com
 and on twitter at : http://twitter.com/#!/LaunderingMoney
 http://moneylaunderingworld.blogspot.com/
 http://launderingmoney.com/

Leader of Zapata drug trafficking, money laundering organization convicted

By Jim Kouri,

Public Safety Examiner

Pedro Navarro Jr., of Zapata, Texas, pleaded guilty Thursday before U.S. Magistrate Judge Guillermo Garcia to his roles in distributing marijuana and methamphetamine and then laundering proceeds from those drug sales.

The 36-year old Navarro is the leader of a drug trafficking and money laundering organization operating out of the Zapata, Texas, area from approximately June 2006 through June 2011.

During his plea hearing Thursday, Navarro admitted that between February 2008 and June 2011, he was responsible for transporting numerous shipments of controlled substances from the Zapata area to other parts of Texas and beyond.

Some of these drug shipments were interdicted by law enforcement, including numerous loads of marijuana totaling thousands of kilograms and approximately five kilograms of methamphetamine which was seized in Beasley, Texas, on April 5, 2011.

During his plea hearing, Navarro also confessed to being a member and leader of the drug trafficking conspiracy responsible for these marijuana and methamphetamine loads. In addition to being responsible for transporting drugs, he also admitted he used a residence on Falcon Lake to store the marijuana after it had been smuggled from Mexico into the United States.

This marijuana would normally be ferried across the lake from Mexico at night in small boats, which would pull up to his residence on the lake where individuals would then unload the marijuana. Later, Navarro would then ensure the marijuana was loaded into passenger vehicles at the residence which would be driven to wherever the drugs were destined

Navarro also admitted that he conspired with others to launder money, which represented the proceeds of his drug trafficking. He agreed to transport large amounts of United States currency, which were the proceeds of drug trafficking, from the Zapata area to Mexico, and did so with the intention of promoting the continued operation of his drug trafficking business.

Navarro specifically agreed to help transport this money to Mexico, where it would be given to other members of the drug trafficking and money laundering conspiracies.

These persons provided the drugs which were being trafficked as well as provided them the money in question, thereby ensuring their illegal drug trafficking business would continue in operation. One of the specific loads of money for which Navarro was responsible included approximately $23,425 seized at or near Hebbronville, Texas, on March 9, 2010.

Navarro also used some of the proceeds he made from drug trafficking to build a residence in Zapata. During the course of the drug trafficking conspiracy, the members of conspiracy were responsible for generating proceeds from that activity in the amount of at least $18 million.

Navarro's sentencing date has yet to be scheduled.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/