Stay Vigilant Folks – The Bad Guys Can Be Anywhere…….
Written by Shari R. Pogach, Regulatory Paralegal, NCBSO
A government report on money laundering and terrorist financing threats indicates that more than $300 billion in concealed transactions is moved around the United States. To help combat this growing money laundering threat, the FBI announced the addition of more resources to its Money Laundering Union in the Criminal Investigative Division. This specialized unit will focus on the professional middlemen who help hide this flow of cash such as lawyers, accountants and brokers.
The FBI website also offers a list of common fraud scams along with tips to help prevent being victimized by such schemes. Take a look as your members may be susceptible to some of these very scams.
Here are a few recent cases concerning money laundering and financial fraud from the FBI's press releases:
Theodore J. Longust, age 51, formerly from Columbia, Illinois, was sentenced to a total of 121 months in prison as a result of his convictions in a nine-count indictment. Longust was an employee of Scott Credit Union in the commercial loan department from November 7, 2005 through December 8, 2014, as its business relationship manager. He embezzled credit union funds by creating fraudulent loans, paying loans by the misapplication of funds from other loans, increasing credit limits on loans that did not have the requisite board approval, issuing business loans without the required documentation or security and issuing letters of credit without the required documentation and security. Longust also knowingly submitted a false report to the credit unon for the third quarter of 2014 that misstated loan balances and omitted loan amounts and underreported loans of over $12,000,000. There was evidence at sentencing that the overall loss to Scott Credit Union, which included criminal and civil losses, was approximately $25.8 million. Criminal direct losses were determined to be $13,719,947.21. The court ordered Longust to pay restitution of $5,012,362.52 to the credit union and $9,114,560.69 to CUMIS Mutual, its bonding company. The safety and soundness of Scott Credit Union has not been adversely affected by the criminal conduct.
A Bergen County, New Jersey, woman was sentenced to 81 months in prison for embezzling more than $1 million while she worked at a bank in Fort Lee, New Jersey. Miye Chon, a/k/a/ Karen Chon, 36, was employed by BankAsiana, a federally insured financial institution, as an operations officer and later as an assistant vice president and operations officer at the Fort Lee branch until the bank was acquired by Wilshire Bank in October 2013. She had access to customer accounts and the bank's internal account records, computer system and vault. Over several years, Chon stole more than $1 million from the bank's customer accounts by regularly making unauthorized transfers from customer certificate of deposit (CD) accounts into BankAsiana's vault cash account and then physically removing cash from the bank's vault.
She did this on dozens of occasions, typically taking tens of thousands of dollars at a time. One time, she converted $100,000 from a customer's CD account. As part of the scheme, Chon also opened up a bank account in an individual's name and forged checks using that individual's name without permission.
Paul Ryan, 49, a former loan officer at Broadway Federal Bank, who took more than $350,000 in kickbacks in exchange for considering mortgage applications submitted by churches in relation to a fraud scheme that resulted in losses of at least $4.2 million, was sentenced to 18 months in federal prison. During the time he worked at the bank, from early 2007 until March 2010, the bank paid rebates to brokers who brought loans applications to the bank. Ryan demanded from the brokers that all or part of that rebate amount be paid to him...intending to be rewarded and influenced in his processing and approval of these church loans, according to court documents. He worked with the brokers and provided a template for presenting financial information for the churches that ensured the loan applications would be approved. Based on this false information, the bank issued loans to the churches.
Jury Finds Texas Lawyer and Others Guilty Of International Money Laundering and Fraud Conspiracies
According to court documents, Perry Don Cortese (53, Little River, Texas), Priscilla Ann Ellis (51, Killeen, Texas) and Kenietta Rayshawn Johnson (35, Leavenworth, Kansas) were members of an international criminal organization that defrauded dozens of victims across the United States and then laundered the funds, much of it sent overseas. Many victims were law firms solicited online to perform legal work, provided counterfeit cashier's checks for deposit into the firms trust accounts, and then directed to wire money to third-party shell businesses controlled by the conspirators. Others were title companies defrauded in phony real estate transactions. Other victims were targeted and defrauded by fake suitors on dating websites. Hackers were also hired to compromise both individual and corporate email accounts, ordering wire transfers from brokerage and business accounts to shell accounts controlled by conspirators.
Victims were instructed to wire money into funnel accounts held by money mules. The funds were then quickly moved to other accounts in the U.S. and around the world before victims could discover the fraud. Bank records presented at trial indicate that, from 2012 to 2015, several millions dollars worth of wires were received. Conspirators in Canada, Nigeria, South Korea, Senegal and elsewhere helped coordinate the fraud and money laundering activity from abroad.
Cortese, a licensed attorney in Texas, worked for the conspirators by laundering victim money through his interest on lawyers trust accounts (IOLTAs). He also met with individuals in person to retrieve cash withdrawn from receiver accounts. Cortese recruited his paralegal and others to open such accounts to launder funds. The evidence further showed that Johnson, then a bank employee at Capital One, helped create counterfeit checks and monitor money flows between accounts controlled by conspirators.
These cases serve as a reminder that compliance officers must always be: semper vigilans!