3 MEN PLEAD GUILTY TO BANK SECRECY ACT VIOLATIONS

FROM:  U.S. JUSTICE DEPARTMENT 
Monday, February 24, 2014
Three Plead Guilty to Bank Secrecy Act Violations in Connection with Check Cashing Scheme

Three men have pleaded guilty in Brooklyn, N.Y., for their roles in a check cashing scheme designed to evade anti-money laundering reporting requirements, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and United States Attorney Loretta E. Lynch of the Eastern District of New York.

Robert Petrosyants, 32, and his twin brother Zhan Petrosyants, 32, both of Fort Lee, N.J., pleaded guilty today before United States District Judge Frederic Block at the federal courthouse in Brooklyn to conspiring to violate the Bank Secrecy Act by causing the filing of false Currency Transaction Reports (CTRs) for cash transactions in excess of $10,000.  On Feb. 21, 2014, Lasha Goletiani, 34, of Brooklyn, pleaded guilty to the same charge.  They each face a maximum penalty of five years in prison at sentencing, which will be determined at a later date.

According to court filings and facts presented during the plea proceedings, the Petrosyants twins operated medical billing companies, including DJR Capital Inc., formerly located at 45 Main Street in the DUMBO section of Brooklyn.  Those billing companies filed no-fault accident claims with insurance companies on behalf of medical clinics and equipment providers.  Upon receipt of payment from the insurance companies in settlement of the claims, the conspirators drew checks payable to a complex web of shell companies.  These shell companies appeared to be health care related but in fact did no legitimate business and were incorporated in the names of students who had received special short-term visas to study in the United States.  The checks were then cashed by Goletiani and Zhan Petrosyants at Belair Payroll Services Inc., a Flushing-based check cashing business.

Belair and its owner, Craig Panzera, pleaded guilty in November 2013 to failing to maintain an effective anti-money laundering program and agreed to forfeit over $3.2 million.

According to court documents, Goletiani and Zhan Petrosyants provided false names to Belair when cashing checks and caused Belair to file CTRs stating that the shell companies or their nominee owners received the cash.  Goletiani and Zhan Petrosyants received all of the cash from checks in the names of the shell companies.  At the time that many of these transactions occurred, the nominee shell company owners were not even in the country when Goletiani and Zhan Petrosyants were cashing checks in their names.

Under the Bank Secrecy Act, financial institutions, including check cashers, are required to file a CTR with the Department of the Treasury for any transaction involving more than $10,000 in currency on a single day.  As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction and the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction.  

Goletiani and Zhan Petrosyants pleaded guilty to a second superseding indictment filed on Nov. 6, 2013, charging them with conspiring to cause Belair to file false CTRs.  Robert Petrosyants pleaded guilty to a separate information charging the same conspiracy.

The investigation was conducted by U.S. Immigration and Customs Enforcement, Homeland Security Investigations and the Internal Revenue Service, Criminal Investigation Division.  The case is being prosecuted by Trial Attorneys Kevin G. Mosley, J. Randall Warden and Claiborne Porter of the Money Laundering and Bank Integrity Unit of the Criminal Division’s Asset Forfeiture and Money Laundering Section, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

CHECK CASHING COMPANY OWNER PLEADS GUILTY RELATED TO $19 MILLION MONEY LAUNDERING SCHEME

FROM:  U.S. JUSTICE DEPARTMENT 
Tuesday, November 5, 2013
New York Check Cashing Company and Owner Plead Guilty for Roles in $19 Million Scheme

Belair Payroll Services Inc. (Belair), a multi-branch check cashing company in Flushing, N.Y., and its owner, Craig Panzera, 47, pleaded guilty today for failing to follow reporting and anti-money laundering requirements for more than $19 million in transactions, in violation of the Bank Secrecy Act (BSA).   Panzera also pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), and Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

As part of the guilty plea, Belair will forfeit $3,267,252.10, and Panzera will pay restitution in the amount of $946,841.17 to the IRS.  Sentencing for Belair and Panzera will be determined at a later date.

According to court records, from in or about June 2009 through June 2011, certain individuals presented to Belair’s manager and other employees checks to be cashed at Belair.  The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business.  The shell corporations and their corresponding bank accounts on which the checks were written were established in the names of foreign nationals, many of whom were no longer in the United States.

Belair accepted these checks and provided cash in excess of $10,000 to the individuals. Panzera and others at Belair never obtained any identification documents or information from those individuals.  Belair filed currency transaction reports (CTRs) that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair failed to indicate the full amount of cash provided to the individuals.  The individuals cashed more than $19 million through Belair during the course of the scheme.  Panzera and Belair willfully failed to maintain an effective anti-money laundering program by cashing these checks.

The charges in the indictment against Panzera’s and Belair’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

The cases are being investigated by agents from ICE Homeland Security Investigations and IRS-CI.  These cases are being prosecuted by Trial Attorneys Claiborne W. Porter and Kevin G. Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section’s (AFMLS) Money Laundering and Bank Integrity Unit, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit, and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The Unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

JUSTICE DEPARTMENT OFFICIAL'S REMARKS ON ANTI-MONEY LAUNDERING REGULATION

FROM: U.S. DEPARTMENT OF JUSTICE
Remarks as Prepared for Delivery by Assistant Attorney General Lanny A. Breuer at Public Hearing on Potential Regulation to Strengthen Anti-Money Laundering Safeguards WASHINGTON, D.C. ~ Tuesday, July 31, 2012

Thank you, Jamal. I am delighted to be here and want to thank my friend, Under Secretary David Cohen, for inviting me to this important event. The proposed rulemaking we are here to discuss is critically important, and I am here to tell you that the Department of Justice strongly and unequivocally supports it. We believe that this rule will assist us in preventing criminals from using the United States financial system to commit crimes.

A public hearing such as this one on the proposed regulation is very valuable. We want to advance an effective rule, so having representatives from the financial industry here today is so very important. Indeed, financial institutions are often law enforcement’s first line of defense. Protecting the financial system requires close collaboration between law enforcement and the private sector, and the proposed customer due diligence rulemaking would also require working closely together.

I am aware that there may be some concern in this room about the potential burdens of the proposed rulemaking. So I want to take this opportunity to explain why the rule is so important to law enforcement.

We know that a key way in which criminals launder the proceeds of their crimes is through the use of shell companies. They open bank accounts in the name of a shell company, for example, and then use that shell company to conduct business transactions that appear legitimate. In short, these individuals use the United States financial system to commit, or facilitate, crimes.

We have seen this occur with respect to corrupt officials, health care fraudsters, organized criminal groups in the United States and abroad, Mexican drug cartel members, and many others. And without access to the shell company account’s beneficial ownership information, law enforcement is often stymied in what it can accomplish. If financial institutions were required to collect beneficial ownership information, however, that would go a long way toward helping us to fight money laundering.

In the Criminal Division, the Asset Forfeiture and Money Laundering Section is at the forefront of our anti-money laundering efforts and has been a strong advocate for the proposed rulemaking. One area in particular in which we have seen very extensive use of shell companies is that of kleptocracy.

Over the past two years, we in the Criminal Division have been building up our Kleptocracy Asset Recovery Initiative, through which we bring civil suits to forfeit the proceeds of foreign official corruption.

We have recently had our first successes in this area, each of which involved the use of shell companies. Last month, we announced that we had forfeited over $400,000 in assets traceable to Diepreye Solomon Peter Alamieyeseigha, or DSP, a former governor of the oil-producing Bayelsa State in Nigeria. We allege that DSP’s official salary for the entire period that he was governor was approximately $81,000, and that he had a total declared income during that period of approximately $248,000, but that he nevertheless accumulated millions of dollars in wealth at the same time – through corruption. We allege that DSP used shell companies to launder his corruption proceeds and, indeed, he pleaded guilty in Nigeria to money laundering violations on behalf of certain of those shell companies. In addition to the money that we recently forfeited, we are also seeking to forfeit, in a separate action, $600,000 worth of property held in the name of one of his shell companies.

A second example involves James Onanefe Ibori, the former governor of the oil-producing Delta State in Nigeria. Last week, we announced that we had secured a restraining order against more than $3 million in corruption proceeds related to Ibori. Ibori was convicted in the United Kingdom on money laundering and fraud charges and sentenced to 13 years in prison. We allege that he used shell companies and bank accounts in the United Kingdom and the United States to hide his money.

There are many more examples of criminals using shell companies to hide their illicit gains outside the kleptocracy area. For example, last month, we announced charges against seven individuals and four check cashing businesses for schemes to violate the Bank Secrecy Act. A key aspect of our allegations with respect to those charges is that certain defendants allegedly used shell companies that appeared to be health care related in order to conceal their illegal activity.

For every shell company scheme that we uncover, however, there are many we of course never find out about. In part, that is because financial institutions are not routinely collecting beneficial ownership information as part of their customer due diligence programs. This has significant effects on our domestic law enforcement efforts because it deprives us of critical information.

The lack of beneficial ownership information also affects our ability to provide information in response to requests from our foreign allies, who are conducting their own investigations.

The proposed customer due diligence rulemaking under consideration will help us to address these challenges, and hopefully discourage criminals from using the United States financial system to commit crimes.

The concerns some of you may have about the proposed rulemaking should be considered as the rule is finalized. But we should not let those concerns obscure the key point – that the collection of beneficial ownership information will help law enforcement bring money launderers to justice.

This rulemaking presents an important opportunity to close a gap in our financial regulations that makes it easier for criminals to move illicit proceeds through the United States financial system. Today’s hearing is an important step in the rulemaking process.

Thank you for having me here. I wish you a productive hearing today and look forward to working with my colleagues at the Treasury Department and others as this rulemaking progresses