Archive

October 29, 2018

Matthias Krull, a former executive of Swiss bank Julius Baer Group Ltd., was sentenced to ten years in prison following his guilty plea to charges arising from his involvement in an international scheme to launder more than a billion dollars embezzled from Venezuela’s national oil company, Petroleos de Venezuela SA or PDVSA.  DOJ

June 27, 2018

Egbert Yvan Ferdinand Koolman, an Aruban telecommunications purchasing official was sentenced to 36 months in prison related to money laundering charges in connection with a scheme to arrange and receive payment to influence the awarding of contract with an Aruban-owned company. Koolman along with others admitted to transmitting funds from Florida and other areas of the United States to Aruba and Panama in a wire fraud scheme that violated the Foreign Corrupt Practices Act (“FCPA”). DOJ

June 19, 2018

Luis Diaz and Luis J. Diaz, owners of a Miami-based export business, were convicted of operating an unlicensed money transmitting business and running a large, international money laundering scheme. The Diaz brothers avoided the anti-money laundering safeguards required of licensed institutions and moved over $100M through US banks and other financial institutions. Both brothers were sentenced to two years in prison. USAO Southern District of New York

May 16, 2018

The SEC announced settled charges against broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) for failing to report suspicious sales of billions of penny stock shares. Broker-dealers are required to file Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose. According to the SEC, from October 2013 to June 2014, Chardan, an introducing broker, liquidated more than 12.5 billion penny stock shares for seven of its customers and ICBCFS cleared the transactions. Chardan failed to file any SARs even though the transactions raised red flags, including similar trading patterns and sales in issuers who lacked revenues and products. The SEC found that ICBCFS similarly failed to file any SARs for the transactions despite ultimately prohibiting trading in penny stocks by some of the seven customers. The SEC’s orders found that Chardan and ICBCFS violated the Exchange Act and an SEC financial recordkeeping and reporting rule and that Chardan’s anti-money laundering (AML) officer, Jerard Basmagy, aided and abetted and caused the firm’s violations. The SEC also found that ICBCFS failed to produce documents promptly to SEC staff.  Without admitting or denying the SEC’s findings, the parties agreed to settlements requiring Chardan to pay a $1 million penalty, ICBCFS to pay $860,000, and Basmagy to pay $15,000.  Both firms consented to censures and, along with Basmagy, to cease and desist from similar violations in the future.  Basmagy also agreed to industry and penny stock bars for a minimum of three years. SEC

March 28, 2018

Aegis Capital Corporation, a New York-based brokerage firm, has admitted that it failed to file Suspicious Activity Reports (SARs) on numerous suspicious transactions.Broker-dealers are required to file SARs for certain transactions suspected to involve fraudulent activity or have no business or apparent lawful purpose. The SEC’s order found that Aegis failed to file SARs on suspicious transactions that raised red flags indicating the transactions were potentially related to the market manipulation of low-priced securities. The SEC’s order found that Aegis willfully violated an SEC financial recordkeeping and reporting rule. Aegis agreed to pay a $750,000 penalty and retain a compliance expert.  FINRA also announced a settlement with Aegis today that includes an additional $550,000 penalty. In a separate settled order, Aegis’ former anti-money laundering (AML) compliance officer Kevin McKenna was found to have aided and abetted the firm’s violations. Aegis CEO Robert Eide was found to have caused them. Without admitting or denying the SEC’s findings, Eide and McKenna agreed to pay penalties of $40,000 and $20,000, respectively.  McKenna also agreed to a prohibition from serving in a compliance or AML capacity in the securities industry with a right to reapply. SEC 

February 7, 2018

Rabobank National Association, the California subsidiary of Netherlands-based Coöperatieve Rabobank U.A., pleaded guilty to concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC’s examination of Rabobank. Rabobank will forfeit roughly $369 million as a result of allowing illicit funds to be processed through the bank without adequate Bank Secrecy Act or AML review. DOJ

May 22, 2017

Los Angeles-based Citigroup subsidiary Banamex USA agreed to forfeit $97.44 million to resolve an investigation into BUSA’s Bank Secrecy Act (BSA) violations.  In its agreement, BUSA admitted to criminal violations by willfully failing to maintain an effective anti-money laundering compliance program to guard against money laundering and willfully failing to file Suspicious Activity Reports. DOJ

January 25, 2017

The SEC announced administrative proceedings against New York-based brokerage firm Windsor Street Capital and its former anti-money laundering officer John D. Telfer.  The SEC alleges that the firm, formerly Meyers Associates L.P. failed to file Suspicious Activity Reports (SARs) for $24.8 million in suspicious transactions, including those occurring in accounts controlled by microcap stock financiers Raymond H. Barton and William G. Goode who were separately charged by the SEC with conducting a pump-and-dump scheme.  The SEC alleges that Windsor and Telfer should have known about the suspicious circumstances behind many transactions occurring in customer accounts.  Customers like Barton and Goode allegedly deposited large blocks of penny stocks, liquidated them typically amid substantial promotional activity, and then transferred the proceeds away from the firm.  The SEC further alleges that the shares deposited by Barton and Goode could not be sold legally because no registration statement was in effect and no registration exemption was available.  Rather than conduct a reasonable inquiry into the deposits, Windsor allegedly accepted claims of exemption at face value.  The SEC separately filed a complaint in federal court against Barton and Goode along with Matthew C. Briggs, Kenneth Manzo, and Justin Sindelman.  The complaint alleges that they participated in a pump-and-dump scheme that acquired shares of dormant shell companies supposedly in the dietary supplement business, falsely touted news and products stemming from those companies, and dumped the shares on the market for investors to purchase at inflated prices.  Barton, Goode, Briggs, and Manzo will pay almost $8.8 million collectively to settle the charges brought against them.  SEC

January 19, 2017

Colorado-based global money services business Western Union Company agreed to forfeit $586 million and enter into agreements with DOJ, FTC, and the U.S. Attorney’s Offices for the Middle District of Pennsylvania, the Central District of California, the Eastern District of Pennsylvania and the Southern District of Florida to settle criminal violations relating to the company's failure to maintain an effective anti-money laundering program and aiding and abetting wire fraud. According to company admissions, Western Union violated the Bank Secrecy Act (BSA) and anti-fraud statutes by processing hundreds of thousands of transactions for Western Union agents and others involved in an international consumer fraud scheme. As part of the scheme, fraudsters contacted victims in the U.S. and falsely posed as family members in need or promised prizes or job opportunities. The fraudsters directed the victims to send money through Western Union to help their relative or claim their prize. Various Western Union agents were complicit in these fraud schemes, often processing the fraud payments for the fraudsters in return for a cut of the fraud proceeds. The company also agreed to pay a $586 million judgement to settle related FTC charges. DOJ

February 4, 2016

Miami-based brokerage firm E.S. Financial Services, now known as Brickell Global Markets, will pay a $1 million penalty to settle charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of non-U.S. citizens who beneficially owned them.  Federal law requires all financial institutions to maintain an adequate customer identification program to ensure they know their customers and do not become a conduit for money laundering or terrorist financing.  But during SEC examinations, the firm twice failed to provide required books and records identifying certain foreign customers whom they were soliciting directly and to whom they were providing investment advice.  An ensuing investigation found that the firm’s customer identification program failed to obtain and maintain documentation to verify the identities of 23 non-U.S. citizens, the beneficial owners of 13 non-U.S. corporate entities, who executed more than $23 million in securities transactions through a brokerage account opened by a Central American bank affiliated with the firm.  SEC