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/

Houston money laundering ring accused of moving $27 million

 

 

By Dane Schille
Houston Chronicle
Federal authorities arrested at least three people as part of a $27 million scheme known as the "Black Market Peso Exchange," which provided professional money-laundering services to drug traffickers through Houston banks.
Specifically, the culprits are charged with using the various Houston accounts to mask drug proceeds as legitimately earned cash, federal prosecutors said.
The banks are not yet named, aside from one involved in a $90,000 wire transfer to buy an airplane later used to shuttle bulk cash.
Those charged so far include Enrique Morales, 42, who lived in Houston and Guadalajara, Mexico, and was arrested upon entering the United States at Laredo; Willie Whitehurst, 44, of Houston; and Sarah Combs, 48, of Dickinson.
The names of other defendants, both in the United States and Mexico, are being kept secret by prosecutors pending their arrests.
Prosecutors claim the ring picked up money from drugs sales in several cities, including Dallas and Charlotte, N.C., and also had that money dropped off at their headquarters in Houston, which they then deposited in banks.
"Professional money launderers are integral to criminal organizations," Assistant U.S. Attorney General Lanny Breuer said Friday in a statement from the U.S. Department of Justice.
"According to the indictment, the defendants enabled dangerous narcotics traffickers to access their ill-gotten gains and evade law enforcement."
Morales was a director for the conspiracy and apparently recruited clients who had large amounts of U.S. dollars they wanted converted to Mexican pesos. He is accused of instructing Whitehurst to travel to various cities to pick up the drug proceeds. Combs was an office manager for the organization at an office at 16215 Westheimer, Suite 107, in Houston.

Funds seized 4 times
None of them could be reached for comment.
The indictment describes four instances last year in which money was seized, including $364,810 by Houston police in April; $350,178 and $319,430 in June; $220,998 by police in North Carolina in August; and $319,430 by police in Georgia in November. It does not name anyone charged or convicted with drug trafficking, or point to any specific trafficking organization.
The $27 million would be a fortune to an individual, but considered small compared to the many billions of dollars a year generated by multinational drug cartels.
Money-laundering prosecutions are rare compared to the number of people charged with trafficking drugs, but they get to the heart of some of the biggest problems for traffickers: where to hide and how to spend their riches without drawing heat.

'Shell companies'
The money-transmitting business operated from October 2009 through September 2011, records show.
Money laundering often involves a complex series of moves aimed at making it difficult to know for sure where earnings originated, as well as make it tough for authorities to prove the funds were gained illegally.
The drug money supposedly was first tucked into bank accounts in the name of "shell companies," owned and controlled by those arrested. The money was then transferred to accounts owned by "retailers" in the United States and Mexico.
In exchange for this, pesos were transferred back into accounts for the defendants' clients.

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/

Miami’s international banking clients move money to protect financial privacy

By Anna Edgerton
Miami Herald

Miami’s position as a hemispheric banking capital could be weakened as some foreign depositors close their accounts in U.S. banks to avoid new disclosure regulations.
The new rules, set to go into effect early next year, require U.S. banks to report interest information on accounts held by nonresident foreign nationals to the Internal Revenue Service, which could then share it with depositors’ home countries. To protect their financial privacy, some international clients have already moved their money to more discreet havens like Panama and the Cayman Islands. “Since April 19 [when the regulation was passed], we’ve heard that several hundred million dollars have left Florida for foreign jurisdictions,” said David Schwartz, executive director of the Florida International Bankers Association. “Customers have said ‘we’re aware of what’s going on, and we prefer to take our money overseas.’”
At play is more than $14 billion in South Florida banks that comes from offshore individuals according to a 2011 survey by the Florida Office of Financial Regulation. That breaks down to 41 percent of total deposits in Florida-chartered banks — generally community banks — plus 90 percent of total deposits in foreign-owned financial entities regulated by the state. Those numbers do not include foreign funds in nationally chartered or federally regulated institutions — a figure that likely would “substantially’’ exceed the $14 billion, according to the survey.
Banking and business groups have opposed the rule, continuing the fight this week by convincing lawmakers to include the tax rule in a Congressional bill that would freeze all “significant regulatory action’’ until the unemployment rate drops to 6 percent. Though the measure passed the House of Representatives Thursday, it is not expected to become law.
The stakes are especially high for South Florida banks because of the concentration of foreign deposits in the region. The Florida OFR survey indicates that 11 of 16 South Florida’s locally based banks could risk failure if faced with a deposit run-off. For 16 of the region’s 22 state-regulated foreign institutions, foreign deposits account for at least 90 percent of holdings. The survey does not name the institutions surveyed.
The impact could go beyond the institutions that are directly involved. Fewer deposits translates into less money to lend; the OFR study shows that a 20 percent decrease in foreign deposits would result in a $25 billion decrease in funds available for community lending.
And if withdrawals were to cause banks to fail, U.S. taxpayers would be stuck with at least part of the tab. The // taxpayer-funded Federal Deposit Insurance Corporation insures $250,000 for each account in a qualifying institutions, regardless of whether the depositor is a resident.
Local business people worry that if the foreign bank accounts go, other types of invetment could go too.
“I don’t see why we would want to make any of these offshore depositors nervous, because they bring tremendous value to us,” said Richard Dailey, president and CEO of Apollo Bank where about 40 percent of accounts are held by foreign nationals. “We use that money to make loans, and they buy real estate and make other investments here.”
Yet some local experts doubt the new disclosure rule will cause a massive outflow of cash from South Florida. Few banking systems are as secure as that of the U.S. Plus, the trend toward increased transparency isn’t limited to U.S. banks. Governments around the world are starting to crack down on tax evasion, which is responsible for up to $280 billion in uncollected income tax globally, according to a report from the Tax Justice Network.
“The effect of this regulation may not be as onerous as some people unfortunately fear,” said Miami-based banking lawyer Bowman Brown. Foreign depositors are “looking at the same thing world wide,” he said, so even those who who want to take their money out of the U.S. may have few alternatives.
Defenders of the new regulation say it’s a necessary gesture so the IRS can access information on accounts held by American nationals in other countries.
“The IRS is not just doing something because they want to penalize banks. They don’t want to waste their time and resources saying that the bankers are the bad guys,” said Ken Thomas, an economist and Miami banking expert. “They must believe that there’s a significant amount of lost revenue to pass something as controversial as this. The banking lobby is very strong.”
Bill Sharp, a tax lawyer with offices in Tampa, San Francisco and Zurich, has been watching what he calls the “mega-trend of global compliance” unfold for more than two decades, beginning in the late 1980s with a trickle of voluntary disclosure campaigns allowing Americans to declare offshore wealth without facing penalties. When authorities started cracking down on funding for terrorism after September 11, 2011, they also uncovered rampant tax evasion that had long gone unchecked.
A major shift came in February of 2009, when the U.S. Department of Justice reached an agreement with the Swiss government that breached the famous secrecy of Swiss banks. The catalyst was a federal case against banking giant UBS that alleged, among other things, that UBS bankers courted wealthy clients at Art Basel Miami Beach, pitching ideas for offshore accounts. UBS entered into a deferred prosecution agreement, agreeing to pay a $780 million penalty and to disclose information on hundreds of U.S. taxpayers who had accounts with the Zurich-based bank.
The IRS saw this case as “the poster child for why we need to attack bank secrecy,” said Sharp, not just for the penalty collected, but also for the thousands of Americans who voluntarily came forward to confess their offshore tax transgressions.
Critics of this recent IRS rule argue that while the new standard of transparency makes sense for countries in Europe and the Caribbean that harbor hidden accounts, few Americans keep their money in Pakistan or Portugal. In total, almost many of the 80 countries are included on the list of countries with which the IRS has promised to share information.
“What American has a banking account in Peru? In Chavez’s Venezuela?” asked Alex Sanchez, president and CEO of the Florida Bankers Association and an outspoken critic of the regulation. “You know what is the No. 1 extortion and kidnapping country in the world? Mexico. What American is going to keep their money there?”
Those dangers are one reason international clients want their finances to remain private. The regulation does include a clause that gives the IRS the option of withholding// financial information in certain situations, but Miami bankers say that this vague promise is not enough to reassure clients. worried about their financial privacy and physical safety.“[Reciprocity] is a great concept if authorities on both sides are reputable, adhere to standards of confidentiality and have a government structure that controls this information,” said Carlos Fernandez-Guzman, president of Miami-based Pacific National Bank, where more than 70 percent of depositors are foreigners. “But that is not necessarily the case in all these countries.
“I have Latin American customers who say ‘don’t send me any bank statements; keep them in the U.S. and I’ll pick them up when I come.’ All of that is for security reasons,” he said. “They don’t want people knowing the extent of their wealth, especially what’s in the U.S., because in their home country it’s a volatile political and criminal environment.”
At the very least, the new rules are causing jitters. His larger depositors, “especially the top 5 to 10 percent,” Fernandez-Guzman said, are “actively beginning to do due diligence.’’
One option for international clients is to put their money into noninterest-bearing accounts that are not subject to the disclosure requirements. Savings accounts are earning little interest at current low rates, and the full amount in checking accounts is insured under the FDIC’s Transaction Account Guarantee program. Though that is set to expire at the end of the year, observers say it could be extended.
The potential loss of foreign deposits comes at the same time that banks face higher capital reserve requirements and a slew of new regulations requiring extensive — and expensive — compliance efforts.
“All of this kind of adds up to the whole regulatory puzzle that we’re all trying to navigate,” said Raul Valdes-Fauli, president and CEO of Professional Bank in Miami. “There’s a lot of uncertainty, and it’s hard to make sure you’re getting your arms around it and implementing the necessary measures. This is a huge burden, especially on smaller banks.”
Still, Miami’s advantages of language and geography— factors that originally helped develop the city’s banking and business culture — will most likely continue to attract foreign depositors, especially from Latin America.
“Miami will continue to be Miami,” said Thomas, the banking expert. “Just at a greater cost.”



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/

U.S. bank looked other way to Mexican drug war money laundering, agent says

A former compliance officer with the U.S. bank Wachovia, Martin Woods has seen the Mexican drug war and its illicit money unseen by even the most seasoned observers. Woods started asking questions about billions of dollars pouring into Wachovia accounts in the U.S. from Mexican currency exchanges back in 2006. "I guess what surprised me most was my own naïveté . I aggravated my own employers (by bringing forward evidence of laundering) and also the regulators themselves."


Wachovia, currently owned by Wells Fargo, settled out of court for the largest violation of the Bank Secrecy Act in U.S. history in 2010, paying a fine of $160 million for laundering a staggering $378.4 billion from Mexican currency exchange houses between the years 2004 and 2007.
The majority of the cash is believed to be drug money, moved without proper documentation from Casa's de Cambio in Mexico to U.S. banks. "There was no consequence for anyone dealing with that money. Some other compliance officers broke the rules and they kept their jobs. I obeyed all the rules, blew the whistle and lost my job," Woods says.


This is a side of the Mexican drug war that few people see. Ever since Mexican President Felipe Calderon used his nation's military against the drug cartels, an estimated body count has soared past 50,000 people dead.
Public beheadings have become commonplace and the cartels have brazenly gunned down unarmed civilians in public. Financial analysts, then say there is no exaggeration in accusing bankers of laundering blood money for international assassins."The whole point of being a drug dealer is money," Heather Lowe, a Washington-based lawyer with Global Financial Integrity says. "Identifying and stopping that money flow is crucial."


The U.N. Organization on Drugs and Crime estimates that illegal narcotics represent the world's third-biggest export, after oil and the arms trade, worth more than $300 billion annually."You have these horrendous crimes being committed, people being shot 10, 20 or 30 at a time," Walter MacKay, a former Canadian police officer who has trained Mexican security forces says. "This dirty money washing through economies just exacerbates everything," he told Al Jazeera. Illicit drug sales in the United States generate annual revenues between $18 billion and $39 billion, according to the U.S. Justice Department's Federal Bureau of Investigation. The money in turn flows back into Mexico, where cartels use it to pay underlings, bribe politicians, invest in legitimate businesses and purchase raw product.


Most tragically, the "war on drugs" doesn't seem likely to end anytime soon. Many analysts believe the military solution isn't working as violence is increasing. Some policy experts and forensic accountants believe tracking money earned by cartels, along with waging a PR campaign to tackle the demand side of the equation in the U.S., is the best in a series of bad options."In order to weaken organized crime, it is far safer and more effective in the long run to erode its financial base," Laura Carlsen, director of the Americas program of the International Relations Centre in Mexico City says.


Currency exchange houses, like the ones used by Wachovia, are probably the most common way for cartels to launder funds. Traffickers normally "contract with money brokers to use their networks of bank accounts and business connections to structure large sums for transport across the border"; former Arizona Attorney General Terry Goddard told a gathering at Woodrow Wilson Center 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/

Ireland levies first fine under money laundering law

* UBS says has addressed the control weaknesses identified

The Central Bank of Ireland has reprimanded and fined the Dublin-based life assurance arm of Swiss bank UBS after it failed to comply in a timely manner with anti money-laundering legislation introduced in 2010.
The CBI said it had fined UBS International Life Limited (UBSIL) 65,000 euros ($81,900) for failing to instruct its staff on changes to the law embodied in the Criminal Justice Act 2010.
"This is the first fine we have issued under this anti money-laundering legislation," said CBI spokeswoman K atie Philpott.
The law, which came into force in July 2010, is designed to protect Ireland's financial system from exposure to money laundering and terrorist financing, the CBI said.
The CBI also said UBSIL had failed to show it was adequately checking information on policy holders provided by third parties, thus failing to comply fully with "know your customer" requirements.
UBSIL had also failed to adopt adequate written policies and procedures for identifying and reporting suspicious transactions, the CBI said.
"The breaches identified related to delays by UBSIL in implementing certain requirements of the act after it was implemented on 15 July, 2010," said UBS in a statement, adding that it had dealt with all the control weaknesses identified.
A spokesman for UBS said UBSIL had worked closely with the CBI to redress the control weaknesses, and had received a near 30 percent discount on the fine originally proposed as a result, adding that UBSIL had not committed any contraventions in doing business.

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.
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