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Man Pleads Guilty To Mail Fraud And Money Laundering May 3, 2012

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North Little Rock, AK-Garret Sorenson, 42, plead guilty to money laundering and mail fraud in federal court in Little Rock.  Sorenson a former VP of Advertising for USA allegedly redirected all media inserts for Advertising for USA to a company he co-owned: Multi-Media Management (MMM), without informing Advertising for USA of his ownership interest in MMM.  Sorenson allegedly profited to the amount of $500,000+.

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Wide Spread Corruption and Fraud Epidemic May 3, 2012

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Regulators in the US, Asia and Europe are uncovering a unpresidented amount of fraud schemes from: money laundering, mortgage fraud, Ponzi schemes, insider trading, hedge fund fraud, bribery and boiler room scams.  In a boom economy, many of these crimes remain hidden until the economy has a down turn and then these crimes start to surface.

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Fraud On The Rise March 29, 2012

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Securities fraud and accounting fraud appear to be on the rise.  Proof of just that can be seen in the most recent conviction of R. Allen Stanford, a financier, who was found guilty on 13 counts of fraud that was worth approximately $7 billion.

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Ocean County developer charged with money laundering February 23, 2012

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David Haugland, 39, of Manahawkin is charged with financial facilitation of criminal activity, also known as money laundering, two counts of theft and one count of attempted theft in addition to three counts of issuing bad checks.  The State alleges that Haugland induced people to invest in his projects based upon certain false representations, including that he represented himself to be the record of owner or had authority to act on behalf of the owner of three properties located on Long Beach Island.  The State further alleges that he induced the investors to give him money to finance the construction of new homes on these parcels, yet neither he nor his company, or any entity controlled by him, ever owned or had authority over the properties in question.  As a result, the State alleges that investors lost over $1.1 million.

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Tom Delay convicted of money laundering charges November 24, 2010

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A state jury in Texas today found former U.S. House Majority Leader Tom DeLay guilty of money laundering charges relating to a corporate money swap in the 2002 elections.  DeLay was forced to step down five years ago as the second most powerful Republican in the U.S. House.   He later had to resign from his Sugar Land congressional seat in 2006. 

He was accused of money laundering and conspiracy to commit money laundering. On the conspiracy charge, DeLay faces a sentence of two to 20 years in prison and five to 99 years or life in prison on the money laundering count.  However, rumor is that he is not expected to do much prison time.  Appeals may delay the prison term for quite some time. 

In preparation for the 2002 elections, DeLay cloned his Americans for a Republican Majority political committee as Texans for a Republican Majority (TRMPAC). TRMPAC was designed to help Republicans win a state House majority in preparation for a mid-decade congressional redistricting in 2003.  That redistricting helped the Republicans take a 17-15 majority from the Democrats and win a 21-11 GOP majority in the 2004 elections.

The thrust of the State’s case against DeLay was an exchange of $190,000 in corporate donations to TRMPAC for an equal amount of money donated by individuals to the Republican National Committee. The RNC money was given to seven Texas candidates specified by TRMPAC.  Thus, unlike typical money laundering cases, DeLay did not launder money from drugs or other illegal activities and the money was used for political purposes.  This should help reduce his exposure at sentencing.

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Seventy-Three Members and Associates of Organized Crime Enterprise, Others Indicted for Health Care Fraud Crimes October 17, 2010

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Seventy-three defendants, including a number of alleged members and associates of an Armenian-American organized crime enterprise, were charged in indictments in five judicial districts with various health care fraud-related crimes involving more than $163 million in fraudulent billing.  In this national, multi-agency investigation, 52 were arrested in the largest Medicare fraud scheme ever perpetrated by a single criminal enterprise and charged by the Department of Justice.   The defendants are charged with engaging in numerous fraud activities, including highly-organized, multi-million-dollar schemes to defraud Medicare and insurance companies by submitting fraudulent bills for medically unnecessary treatments or treatments that were never performed. According to the indictments, the defendants allegedly stole the identities of doctors and thousands of Medicare beneficiaries and operated at least 118 different fake clinics in 25 states for the purposes of submitting Medicare reimbursements.

Forty-four defendants were charged in two indictments with racketeering conspiracy and conspiracy to commit the following acts: health care fraud, bank fraud, money laundering, fraud in connection with identity theft, credit card fraud, and immigration fraud. In addition, seven defendants were charged with health care fraud, mail fraud, wire fraud, money laundering conspiracy, money laundering, forfeiture, and aggravated identity theft. Six defendants were charged with health care fraud, conspiracy to commit health care fraud, money laundering conspiracy, and aggravated identity theft. Six defendants were charged with health care fraud, mail fraud, conspiracy to commit mail fraud, wire fraud, conspiracy to commit money laundering, and aggravated identity theft. Ten defendants were charged in two indictments with conspiracy to commit bank fraud, bank fraud, money laundering, conspiracy to launder monetary instruments, criminal forfeiture, aggravated identity theft, aiding and abetting, and causing an act to be done.

The Mirzoyan-Terdjanian Organization is named for its principal leaders, Davit Mirzoyan and Robert Terdjanian. The leadership of the organization is based in Los Angeles and New York, and its operations extend throughout the world.  Among the defendants charged with racketeering is Armen Kazarian, who is alleged to be a “Vor,” a term translated as “Thief-in-Law” and refers to a member of a select group of high-level criminals from Russia and the countries that has been part of the former Soviet Union, including Armenia. This is the first time a Vor has ever been charged for a racketeering offense, and the first time since 1996 that a known Vor has been arrested on any federal charge.

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Operation Heat: Over 30 Alleged Mafia Members and Associates Indicted May 14, 2010

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New Jersey Attorney General Paula T. Dow announced the indictment today of two ruling members of the New York-based Lucchese crime family and 32 other members and associates, including alleged current and former top New Jersey capos Ralph V. Perna and Nicodemo Scarfo Jr., on first-degree charges of racketeering, conspiracy and money laundering.

“Operation Heat” uncovered an international criminal gambling enterprise that transacted billions of dollars in wagers, primarily on sporting events, and relied on extortion and violence to collect debts. The indictment also charges a former New Jersey corrections officer and a high-ranking member of the Nine Trey Gangsters set of the Bloods in an alleged alliance with the Lucchese crime family to smuggle drugs and pre-paid cell phones into East Jersey State Prison.

The indictment charges two members of the three-man ruling panel of the Lucchese crime family, Joseph DiNapoli, 74, of Scarsdale, N.Y., and Matthew Madonna, 74, of Seldon, N.Y. The indictment also charges Ralph V. Perna, 64, of East Hanover, and Nicodemo Scarfo Jr., 44, of Ventnor. Perna allegedly became top capo of the New Jersey faction of the family when Scarfo was deposed in 2007.

A warrant has been issued for Scarfo’s arrest but most of the defendants were initially charged and arrested in Operation Heat in December 2007. However, Scarfo and two other men were charged today for the first time in the ongoing investigation. The other two men are Frank Cetta, 71, of Las Vegas, Nevada, who allegedly ran the gambling operation’s Costa Rican wire room, and Gary P. Medure, 56, of New York, N.Y., a close associate of DiNapoli who allegedly managed gambling “packages,” groups of bettors who regularly gambled through the operation.

Three other men named in the indictment were arrested after the initial arrests but prior to today’s indictment. They are Michael A. Maffucci, 24, of Cedar Grove, N.J., Charles J. Bologna, 57, of Port Chester, N.Y., and Robert V. DeCrescenzo, 35, of Port Chester, N.Y. Each of them allegedly managed or assisted in the management of gambling packages.

Each of the first-degree charges of racketeering, conspiracy and money laundering carries a maximum sentence of 20 years in state prison. In addition to those charges DiNapoli, Madonna and Perna were charged with being leaders of organized crime, a second-degree offense.

Most of the defendants – including DiNapoli, Madonna, Perna, Scarfo, Cetta, Medure, Maffucci, Bologna and DeCrescenzo – were also charged with promoting gambling and possession of gambling records, both third-degree offenses.

It is alleged that DiNapoli and Madonna controlled the crime family’s gambling operations and other criminal activities from New York. Both Perna and Scarfo are alleged to have overseen the Lucchese crime family’s operations in New Jersey.

Also indicted were Perna’s three sons, Joseph M. Perna, 40, of Wyckoff, John G. Perna, 32, of West Caldwell, and Ralph M. Perna, 38, of West Caldwell. The sons, led by Joseph, allegedly managed day-to-day gambling operations under their father’s oversight. Two other men who were indicted, Michael A. Cetta, 43, of Wyckoff, and Martin Tacetta, 59, of East Hanover, the former New Jersey underboss for the family, allegedly exercised their own management control over family gambling operations. Tacetta is currently serving a life sentence in state prison as a result of a Division of Criminal Justice prosecution in the 1990s. Michael Cetta, who is Frank Cetta’s son, has close ties to the Lucchese family through marriage.

Joseph Perna, John Perna, Michael Cetta and three other defendants are charged with extortion and aggravated assault, both second-degree offenses, in connection with alleged threats and attempts to use violence against individuals who owed money or tried to take business away from the gambling operation.

The Division of Criminal Justice has seized or restrained millions of dollars in assets of the defendants alleged to be subject to forfeiture as criminal proceeds, including seven homes, 16 bank accounts, 15 vehicles, over $200,000 in cash, and numerous watches and items of jewelry. The indictment alleges that Joseph M. Perna and his wife, Roseanna Perna, 36, obtained approximately $900,000 in mortgage funds through fraudulent loan applications. The indictment further charges various tax offenses against the couple, as well as Ralph M. Perna, Michael Cetta and Vita Cetta, 41, of Wyckoff.

The investigation uncovered an international criminal gambling enterprise that, according to records reviewed by the Division of Criminal Justice, transacted an estimated $2.2 billion in wagers, primarily on sporting events, during a 15-month period.

The gambling operation involved agents or “package holders,” each of whom brought in bets from a group of gamblers. The enterprise and all of its packages involved hundreds or even thousands of gamblers. Records showed that one high-rolling gambler wagered more than $2 million in a two-month period. Those indicted include package holders as well as individuals who allegedly acted as collectors for the operation, collecting and paying out wins and losses.

The illicit proceeds allegedly were divided by the package holders and the members they worked under, such as the Pernas, Michael Cetta, Tacetta and Medure, who in turn made “tribute” payments to the New York bosses, including DiNapoli and Madonna. It is charged that collection operations at times took the form of threats or acts of violence.

The gambling operation received and processed the wagers using password-protected Web sites and a Costa Rican “wire room” where bets were recorded and results tallied.

The prison smuggling scheme allegedly involved inmate Edwin B. Spears, 36, of Neptune, and a former corrections officer at East Jersey State Prison in Woodbridge, Michael T. Bruinton, 46, of Ringoes. Spears was at East Jersey State Prison at the time of the alleged conduct. Also indicted were Spears’ brother, Dwayne E. Spears, 30, of Neptune, and Kristen A. Gilliam, 27, of Farmingdale. Another defendant, Francine Hightower, 52, of Tinton Falls, pleaded guilty on Feb. 21, 2008, to conspiring to launder money.

It is charged that Edwin Spears, an admitted “five-star general” in the Nine Trey Gangsters set of the Bloods, formed an alliance with Joseph Perna and Michael Cetta to smuggle drugs and cell phones into East Jersey State Prison through Bruinton. The alliance allegedly extended beyond smuggling. In one instance, Joseph Perna allegedly sought assistance from Spears to stop an individual associated with the Bloods from extorting money from a man with ties to the Lucchese family.

It is charged that Perna and Cetta would provide money to Dwayne Spears to acquire contraband including heroin, cocaine, marijuana and pre-paid cell phones. Dwayne Spears allegedly would give the contraband to Bruinton to smuggle into East Jersey State Prison. The drugs and cell phones were allegedly distributed to inmates who had previously placed orders through Edwin Spears. Cell phones are prohibited in prison. It is charged that the purchasers paid by sending money orders or checks to individuals including Hightower and Gilliam, who delivered the proceeds to Cetta to “re-invest” in the smuggling scheme. Samuel A. Juliano, 65, of Glen Ridge, is charged with supplying drugs for the smuggling scheme.

In addition to the first-degree charges of racketeering, conspiracy and money laundering, Bruinton, Edwin Spears, Dwayne Spears, Gilliam, Joseph Perna, Michael Cetta and Juliano are charged for the alleged smuggling operation with conspiracy (2nd degree), official misconduct (2nd degree), bribery (2nd degree), and unlawful possession of a cell phone in prison (3rd degree).

As Operation Heat proceeded it yielded evidence that was pursued by the Manhattan District Attorney’s Office in an investigation that culminated on Oct. 1, 2009 with the indictment of 29 defendants, including DiNapoli, Madonna and other Lucchese crime family members, alleged to have run a criminal enterprise that bribed city building inspectors, among other crimes.

In addition to the defendants already named in this press release, the indictment also charges:

John V. Mangrella, 67, of Clifton;
Alfonso “Tic” Cataldo, 68, of Florham Park;
Antonio “Curly” Russo, 73, of Bloomingdale;
Elliot Porco, 47, of Bronx, N.Y.;
Gianni Iacovo, 34, of Elmwood Park;
James Furfaro Jr., 30, of Parsippany;
John N. Turi, 31, of Clifton;
Michael T. Ramuno III, 36, of Philadelphia;
Robert A. Romano, 31, of Brick;
Ron Scrips, 46, of Staten Island, N.Y.;
Shpetim “Tim” Hani, 33, of North Haledon;
Blerim Ibraimi, 29, of Hawthorne; and
George Maiorano, 65, of Belleville.
The indictment charges the defendants as follows:

Count 1 – Racketeering – First Degree
All Defendants

Count 2 – Leader of Organized Crime – Second Degree
Joseph DiNapoli and Matthew Madonna

Count 3 – Leader of Organized Crime – Second Degree
Ralph V. Perna

Count 4 – Conspiracy – Second Degree
Joseph DiNapoli, Matthew Madonna, Ralph V. Perna, Nicodemo Scarfo Jr., Joseph M. Perna, Michael Cetta, Frank Cetta, John G. Perna, Ralph M. Perna, John Mangrella, Gary Medure, Elliot Porco, Martin Taccetta, Antonio Russo, Alfonso Cataldo, Michael Ramuno III, Ronald Scripps, Gianni Iacovo, Robert Decrescenzo, Charles Bologna, James Furfaro, Robert Romano, John Turi, Michael Maffucci, George Maiorano, Blerim Ibriami, Shpetim Hani, Vita Cetta and Rosanna Perna

Count 5 – Promoting Gambling – Third Degree
Joseph DiNapoli, Matthew Madonna, Ralph V. Perna, Nicodemo Scarfo, Jr., Joseph M. Perna, Michael Cetta, Frank Cetta, John G. Perna, Ralph M. Perna, John Mangrella, Gary Medure, Elliot Porco, Martin Taccetta, Antonio Russo, Alfonso Cataldo, Michael Ramuno III, Ronald Scripps, Gianni Iacovo, Robert Decrescenzo, Charles Bologna, James Furfaro, Robert Romano, John Turi, Michael Maffucci, George Maiorano, Blerim Ibriami, Shpetim Hani, Vita Cetta and Rosanna Perna

Count 6 – Possession of Gambling Records – Third Degree
Joseph DiNapoli, Matthew Madonna, Ralph V. Perna, Nicodemo Scarfo Jr., Joseph M. Perna, Michael Cetta, Frank Cetta, John G. Perna, Ralph M. Perna, John Mangrella, Gary Medure, Elliot Porco, Martin Taccetta, Antonio Russo, Alfonso Cataldo, Michael Ramuno III, Ronald Scripps, Gianni Iacovo, Robert Decrescenzo, Charles Bologna, James Furfaro, Robert Romano, John Turi, Michael Maffucci, George Maiorano, Blerim Ibriami, Shpetim Hani, Vita Cetta and Rosanna Perna

Count 7 – Attempted Theft by Extortion – Second Degree
Joseph M. Perna, John G. Perna, Michael Cetta, Gianni Iacovo, James Furfaro and Robert Romano

Count 8 – Aggravated Assault – Second Degree
Joseph M. Perna, John G. Perna, Michael Cetta, Gianni Iacovo, James Furfaro and Robert Romano

Count 9 – Possession of a Weapon for Unlawful Purpose – Third Degree
John G. Perna and Robert Romano

Count 10 – Theft by Deception – Second Degree
Joseph M. Perna

Count 11 – Falsifying Records – Fourth Degree
Joseph M. Perna

Count 12 – Theft by Deception – Second Degree
Joseph M. Perna and Rosanna Perna

Count 13 – Falsifying Records – Fourth Degree
18 months / $ 10,000
Joseph M. Perna and Rosanna Perna

Count 14 – Failure to File Tax Return – Third Degree
Joseph M. Perna and Rosanna Perna

Count 15 – Failure to Pay Gross Income Tax – Third Degree
Joseph M. Perna and Rosanna Perna

Count 16 – Failure to Pay Gross Income Tax – Third Degree
Ralph M. Perna

Count 17 – Failure to File Tax Return – Third Degree
Michael Cetta and Vita Cetta

Count 18 – Failure to Pay Gross Income Tax – Third Degree
Michael Cetta and Vita Cetta

Count 19 – Conspiracy – Second Degree
Joseph M. Perna, Michael Cetta, Edwin Spears, Samuel A. Juliano, Michael Bruinton, Dwayne Spears and Kristen Gilliam

Count 20 – Official Misconduct – Second Degree
Joseph M. Perna, Michael Cetta, Edwin Spears, Samuel A. Juliano, Michael Bruinton, Dwayne Spears and Kristen Gilliam

Count 21 – Bribery – Second Degree
Joseph M. Perna, Michael Cetta, Edwin Spears, Samuel A. Juliano, Michael Bruinton, Dwayne Spears and Kristen Gilliam

Count 22 – Unlawful Possession of Certain Electronic Devices in Prisons – Third Degree
Joseph M. Perna, Michael Cetta, Edwin Spears, Samuel A. Juliano, Michael Bruinton, Dwayne Spears and Kristen Gilliam

Count 23 – Possession of Oxycodone with Intent to Distribute – Second Degree
Samuel A. Juliano

Count 24 – Possession of Cocaine with Intent to Distribute – Second Degree
Samuel A. Juliano

Count 25 – Possession of Cocaine and Oxycodone – Third Degree
Samuel A. Juliano

Count 26 – Certain Persons Not To Have Weapons – Second Degree
Samuel A. Juliano

Count 27 – Unlawful Possession of a Weapon – Third Degree
Samuel A. Juliano

Count 28 – Unlawful Possession of a Weapon – Third Degree
Samuel A. Juliano

Count 29 – Prohibited Weapon – Third Degree
Samuel A. Juliano

Count 30 – Possession of Weapons During Commission of Certain Crimes – Second Degree
Samuel A. Juliano

Count 31 – Prohibited Weapon – Fourth Degree
Samuel A. Juliano

Count 32 – Prohibited Weapon – Fourth Degree
Samuel A. Juliano

Count 33 – Conspiracy – First Degree
All Defendants

Count 34 – Money Laundering – First Degree
All Defendants

Understanding Willful Blindness April 3, 2010

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If the Government is investigating your client for money laundering, they may mention that your client is guilty via “willful blindness”.  Unlike most crimes which require a specific mental intent, money laundering via willful blindness will ensnare defendants who simply turned a blind eye to the crime.  As a result, your client may have a hard time understanding how he did anything wrong. 

The line between innocence and guilt due to willful blindness can be rather thin and a careful examination of all of the surrounding facts and circumstances will help you make a proper determination.  Of course, early attorney involvement and cooperation with the Government may prevent prosecution even if the facts tend to show guilt.   A good example of willful blindness is found in the case of U.S. v. Flores, 454 F.3d 149, 156 (3d Cir. 2006.

Luis Flores was an attorney who had a solo practice in Queens. In 1998, he was visited in his office by German Osvaldo Altamirano-Lean (“Altamirano”).  Altamirano presented himself as an Ecuadorian businessman eager to establish his flower, fruit, and seafood import/export business in the United States. According to Flores, a naturalized American citizen and native of Chile, he was persuaded that Altamirano was who he purported to be. Flores had recently finished work on a matter for the Republic of Argentina, and was interested in developing a practice assisting
South American businessmen.  Over the next several years, Flores opened several corporations for Altamirano, ultimately naming himself as the
nominal president of those companies. He also established several business checking accounts for each of the corporations at different banks, signed myriad blank checks drawn on those accounts, and authorized numerous wire-transfers from the accounts to various foreign and domestic recipients.

Ultimately, Altamirano, Flores and others were indicted for conspiracy to commit money laundering and other offenses. Altamirano cooperated with the Government and testified at Flores’ trial. The Government’s theory of the case was that Flores was “willfully blind” to Altamirano’s unlawful activities. The defense, on the other hand, argued that Altamirano had
deceived Flores into believing that he was a legitimate businessman and that Flores was Altamirano’s unknowing victim and not his co-conspirator.

In January 1999, Flores attemptedto obtain tax identification numbers for three corporations using first one and then another social security number provided byAltamirano, but in each instance Flores was informed that the
numbers were false. He warned Altamirano about the unlawfulness of using invalid social security numbers, and offered to take steps to obtain valid numbers. Instead, Altimirano removed the corporate books from Flores and gave them to co-conspirator Victoria Hernandez. Altamirano paid Hernandez $2,000 per week to open corporations and manage
his relationships with the banks. In April 1999, Altamirano learned that Hernandez had been stealing from him. Altamirano thus decided to return the books to Flores, who agreed to open and oversee bank accounts for the corporations in exchange for the $2,000 weekly salary that Hernandez had received. Flores was paid the $2,000 each week in cash.

In early May 1999, Flores arranged for the incorporation of three new companies and opened an account for each of them at four banks: Republic National Bank, European American Bank, Chase Manhattan Bank, and Citibank. As noted previously, Flores held himself out as the president of these corporations, and was the only person authorized to sign
checks, transfer money, and act on behalf of the entities. For each checkbook, Flores signed about 25 to 30 blank checks; Altamirano retained two or three of these checks to make transfers from one account to another, and sent the remaining checks to Columbia. As soon as the accounts were opened, multiple cash deposits were made and money began to be wired
in and out of the accounts and between accounts. Individual deposits were always less than $10,000, but on any given day the aggregate amount deposited in any account could exceed $10,000.

Just weeks after he had opened the new accounts, Flores received a letter from Republic National Bank (1) explaining what “structured” transactions are and why they are illegal, and (2) informing him that “when an account receives a large incoming wire [transfer of money] and immediately sends an outgoing wire or wires for approximately the same amount,
without apparent commercial justification, it mirrors the activity of an account opened by money launderers.” Flores and Altamirano were asked to attend an in-person meeting at Republic National Bank in late May 1999, at which they were expected to supply documentation of the source of the funds in the bank accounts. When they failed to do so, a bank employee
requested they speak with the bank manager, Thomas Grippa.

In response to Grippa’s questions concerning the number of accounts and seemingly “structured” cash transactions,  Altamirano stated that he maintained multiple accounts to create the appearance for his Ecuadorian suppliers that he had many profitable businesses and to get certain credits from the government of Ecuador. He also explained that he was paid in
cash by a customer at the Hunts Point produce market and that he had lost a lot of money after a hurricane delayed his ship and a large shipment of food spoiled. Grippa testified that he did not accept any of these excuses. Ultimately, both Republic National Bank and European American Bank closed the accounts. Flores told Altamirano that he felt more comfortable
working with Citibank and Chase, where he had personal contacts.

Flores’ accountant, Israel Rivera, who was hired to perform work for Altamirano in April 1999 due to the increasing difficulty of balancing Altamirano’s books, testified that he asked Flores for copies of invoices to document the source of funds in the accounts. He also reported that he had voiced concern to Flores about large payments to European
companies that bore no apparent relationship to the import/export of fruit, flowers, and fish from Ecuador. According to Rivera, he received neither an explanation nor copies of invoices in response to his requests.
Flores remained the sole signor and receiver of the companies’ multiple account statements for several additional months, during which approximately $1,288,085 passed through the companies’ remaining bank accounts. It is undisputed that the cash was transferred via checks and wire transfers signed by Flores to recipients in Columbian-operated
brokerage houses on the Black Market Peso Exchange. As a result of these activities, the Government charged Flores with
conspiracy to launder money, money laundering, and conspiracy to structure currency transactions. A jury convicted Flores on
all counts.
Flores argues that the Government failed to prove beyond a reasonable doubt that he knew or was willfully blind to the fact that the money laundered by Altamirano either “represent[ed] the proceeds of some form of illegal activity,” 18 U.S.C. § 1956(a)(1), or was “criminally derived property,” 18 U.S.C. § 1957(a). According to Flores, “[t]he only form of
unlawful activity identified at trial was drug trafficking. Yet the evidence the Government presented was wholly insufficient to establish [his] knowledge of, or willful blindness to, the fact that the funds originated in drug trafficking or any other crime.”

To prove conspiracy to commit money laundering, the Government was required to show, inter alia, that Flores consorted with others in a money laundering scheme, knowing that the property involved in a financial transaction represent[ed] the proceeds of some form of unlawful activity [and] conduct[ed] or attempt[ed] to conduct such a financial transaction which in fact involves the proceeds of specified unlawful activity. 18 U.S.C. § 1956(a)(1). It is undisputed that the financial transactions Flores conducted on behalf of Altamirano “in fact involve[d] the proceeds of specified unlawful activity,” to wit, narcotics trafficking. Thus, the only question is whether the Government produced evidence that Flores knew of or was willfully blind to the fact that the funds originated in some form of unlawful activity, sufficient to obtain a conviction under § 1956(h). See 18 U.S.C. § 1956(c)(1) (stating that it is sufficient if “the person knew the property involved in the transaction represented proceeds from some form, though not necessarily which form, of activity that constitutes a felony under State, Federal, or foreign law”) (emphasis added). Accordingly, the defense’s argument that the Government needed to prove that Flores knew of, or was willfully blind to, the fact that the funds originated in drug trafficking is off point.

To prove money laundering, the Government was required to show that Flores, knowingly engage[d] or attempt[ed] to engage in
a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity. 18 U.S.C. § 1957(a). Again, because the monetary transactions that Flores conducted on behalf of Altamirano were “derived from specified unlawful activity,” the only question is whether the Government produced sufficient evidence that Flores knew that the monetary transactions represented the proceeds of criminally derived property. For the same reasons provided above, the defense’s argument—that the Government needed to prove that Flores knew of, or was willfully blind to, the fact that the funds originated in drug trafficking to obtain a money laundering conviction—fails. See 18 U.S.C. § 1957(c) (“[T]he Government is not required to prove that the defendant knew that the offense from which the criminally derived property was derived was specified unlawful activity.”).

Our remaining task is to determine whether there is substantial evidence in the record, viewed in the light most favorable to the Government, that Flores knew that the property involved in the financial transactions represented the proceeds of some form of unlawful activity and/or criminally derived property. Knowledge may be demonstrated by showing that a defendant either had actual knowledge or “deliberately closed his eyes to what otherwise would have been obvious to him concerning the fact in question.” United States v. Stewart, 185 F.3d 112, 126 (3d Cir. 1999). The Government establishes willful blindness by proving that a defendant “was objectively aware of the high probability of the fact in question,” Brodie, 403 F.3d at 148 (citation omitted), and “could have recognized the likelihood of [illicit acts] yet deliberately avoided learning the true facts.” Stewart, 185 F.3d at 126.

Here, the jury reasonably concluded that Flores participated in the money laundering conspiracy either knowingly or with willful blindness. The following record evidence, inter alia, created in Flores objective awareness of the high probability that Altamirano was involved in money laundering: (1) one of Flores’ initial interactions with Altamirano involved the supply of two false social security numbers; (2) as soon as Flores opened multiple bank accounts for the corporations, large amounts of cash began flowing in and out of the accounts, despite the fact that the corporations
had just opened for business and had no physical location other than Flores’ own offices; (3) Flores received a letter from the Republic National Bank explaining what “structured” transactions are and why they are illegal, and informing him that “when an account receives a large incoming wire and immediately sends an outgoing wire or wires for approximately
the same amount, without apparent commercial justification, it mirrors the activity of an account opened by money launderers”; (4) the manager of Republic National Bank disbelieved Altamirano’s explanation concerning his numerous accounts and financial transactions and told Altamirano and Flores that the accounts were “evidently” being used for “money
laundering”; (5) Flores’ accountant, Rivera, testified that he had sought invoices documenting the source of the funds but never received the documentation he requested; and (6) Rivera also questioned Flores about why the funds were being sent to foreign companies with no apparent relationship to the Ecuadorian fruit, fish or flower trade.

In response to the substantial evidence that Altamirano was involved in some sort of illegal activity, Flores willfully blinded himself to the truth. He never requested any proof of the legitimacy of the transactions from Altamirano or even any further explanation addressing either the bank manager’s or accountant’s concerns. That Flores “did not ask the natural
follow-up question[s] to determine the source of those funds could reasonably be considered by a jury to be evidence of willful blindness.” United States v. Wert-Ruiz, 228 F.3d 250, 257 (3d Cir. 2000). Indeed, when faced with the above-detailed
evidence, instead of making obvious inquiries, Flores engaged in additional money laundering transactions. For example, he continued to sign checks and wire transfers and to receive account statements documenting the flow of over $1,200,000 through the accounts. Moreover, Flores dissuaded Altamirano from discontinuing suspicious financial transactions after the
meeting with Republic National, and instead opened accounts at other banks, stating that he needed the $2,000 per week he was being paid in cash to oversee the bank accounts. Thus, the jury could have inferred that Flores was motivated to avoid learning the truth because the money laundering operation was profitable to him. See Brodie, 403 F.3d at 158.

Two Denver Men Indicted for Mortgage Fraud March 18, 2010

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Shawn R. Tieskotter, age 36, of Greenwood Village, Colorado, and Craig D. Patterson, age 30, of Littleton, Colorado, were indicted by a federal grand jury in Denver on March 10, 2010, on charges of money laundering, wire and mail fraud. Patterson was arrested by federal agents without incident. He appeared in U.S. District Court in Denver on March 12, 2010, for an initial appearance where he was advised of the charges pending against him.

According to the indictment, between March 26, 2005, and continuing through June 30, 2005, in Colorado and elsewhere, Shawn Tieskotter and Craig Patterson knowingly executed and attempted to execute a scheme to defraud various financial institutions as well as commercial mortgage lenders. The scheme was executed in connection with residential mortgage loan applications relating to 13 properties in the Denver, Colorado metropolitan area. The neighborhoods included Aurora, Centennial, Littleton, Parker and Castle Rock.

As part of the scheme, Tieskotter and Patterson prepared, submitted and caused to prepare and submit applications for residential mortgage loans and related documents in Tieskotter’s name. The applications included a first mortgage and second mortgage for each of the 13 properties. Each of these applications contained materially false and fraudulent representations that Tieskotter intended to use the property as his primary residence and most of the applications contained materially false and fraudulent representations about the extent of Tieskotter’s liabilities related to the other residential mortgage loans.

It was further part of the scheme for Tieskotter and Patterson to hide from lenders the extent of Tieskotter’s liabilities for the other mortgages, before such liabilities would appear on Tieskotter’s credit reports. At the time of closing, Tieskotter and Patterson caused additional disbursements of monies to PK Design Group, LLC, an entity controlled by Patterson, or Dream Design, a trade name for an entity controlled by Tieskotter. Tieskotter and Patterson concealed from the lenders and other parties associated with the transactions their control of these entities.

Upon conviction of the alleged offenses, Tieskotter and Patterson shall forfeit to the United States all property constituting or derived from proceeds traceable to the commission of the offense, including but not limited to a sum of money equal to $219,566 for money laundering and $4,710,666.86 for wire and mail fraud charges.

Former Fuel Purchaser Arrested for Defrauding Royal Caribbean Cruises February 26, 2010

Posted by jefhenninger in News.
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Jamil Murni, 60, of Houston, Texas, has been arrested on an indictment charging him with nine counts of wire fraud and one count of money laundering. He will appear in federal court in Texas before facing charges in Miami. 

According to the indictment, Murni was a Commodity Manager for Royal Caribbean Cruises, Ltd. In that position, he was responsible for negotiating fuel prices and deliveries for Royal Caribbean. From late 2003 through late 2006, he allegedly devised a scheme to defraud Royal Caribbean of over $600,000. 

According to court documents, in 2003, Murni registered “Sea Fuels Trading” as a fictitious name with the Florida Department of State’s Division of Corporations. He then opened and maintained a bank account in the name of Sea Fuels Trading. On December 19, 2003, Murni applied to have Sea Fuels Trading become a fuel provider for Royal Caribbean. In that application, he fraudulently concealed his ownership of the company. Royal Caribbean subsequently approved Sea Fuels Trading as a fuel vendor and paid Murni’s company money at a rate greater than would have been paid to a legitimate fuel vendor.  Why this was not picked up by anyone else at Royal  Caribbean remains unclear.