132 - Justification behind the PEP classification

If there was ever any doubt on why Politically Exposed Persons (PEPs) were classified for anti-money laundering legislation, the article below should answer any questions.

http://sify.com/news/37-Jharkhand-MLAs-face-criminal-cases-19-are-multi-millionaires-news-National-jmzrkcjcbab.html

37 Jharkhand MLAs face criminal cases, 19 are multi-millionaires

2009-12-25 17:10:00

Nearly half of the 81 newly-elected legislators in Jharkhand have criminal cases registered against them, while 19 of them are 'crorepatis' (multi-millionaires), official documents show.

As per Election Commission records, 37 legislators face criminal cases. The highest number of legislators with cases against them are from the Jharkhand Mukti Morcha (JMM) at 10.

The JMM is followed by the Congress, with seven of 14 legislators with criminal records.

The Jharkhand Vikas Morcha-Prajatantrik (JVM-P) has six legislators with criminal records, while four of five All Jharkhand Students Union (AJSU) members face criminal charges.

Four of the 18 Bharatiya Janata Party (BJP) members of the state assembly also have cases against them.

Two former ministers - Enos Ekka and Harinarayan Rai - who are in jail for amassing wealth disproportionate to their income also won.

Two other ex-ministers, Bandhu Tirkey and Nalin Soren, who also face corruption charges, have also been elected.

Meanwhile, 19 newly-elected legislators have declared assets more than Rs.1 crore.

The highest number of multi-millionaires are from the JMM (6), followed by the Congress (5) and the RJD (2). The BJP, the AJSU and the JVM-P have one each.

Multi-millionaire legislators include Geeta Koda, wife of former chief minister Madhu Koda in jail on money-laundering charges, and Ekka and Rai.

131 - Convergence equals opportunity

It's true - as narcotics trafficking and terrorist financing converge, authorities will have more tools in their arsenal to combat both. Detection of money laundering typologies may lead to possible terrorist financing as a result of the profits derived from narcotics production or sale. Narcotics produce incredibly fat margins, and the ensuing cash flows can provide for a variety of armed forces, whether guerilla or terrorist cell.

Those who require further evidence on the effective merger between narcotics and armed terrorists need only ring their local branch of the Taliban.

http://www.justice.gov/dea/pubs/pressrel/pr121809p.html

News Release
FOR IMMEDIATE RELEASE
December 18, 2009
Contact: DEA Public Affairs
(202) 307-7977

Three Al Qaeda Associates Arrested on Drug and Terrorism Charges

DEC 18 - DEA Acting Administrator Michele Leonhart and United States Attorney Preet Bharara announced today the arrests of three individuals for drug and terrorism charges. OUMAR ISSA, HAROUNA TOURÉ, and IDRISS ABELRAHMAN arrived in the Southern District of New York early this morning to face charges of conspiracy to commit acts of narco‑terrorism and conspiracy to provide material support to a foreign terrorist organization. The charges stem from the defendants' alleged agreement to transport cocaine through West and North Africa with the intent to support three terrorist organizations ‑‑ Al Qaeda, Al Qaeda in the Islamic Magreb ("AQIM"), and the Fuerzas Armadas Revolucionarias de Colombia (Revolutionary Armed Forces of Colombia, or "FARC"). All three organizations have been designated by the United States Department of State as Foreign Terrorist Organizations.

The charges in this case mark the first time that associates of Al Qaeda have been charged with narco‑terrorism offenses. ISSA, TOURÉ, and ABELRAHMAN were arrested in Ghana on December 16, 2009, at the request of the United States; thereafter, they were transferred to the custody of the United States and transported to the Southern District of New York. The defendants are expected to be presented in Manhattan federal court later today before United States Magistrate Judge JAMES C. FRANCIS IV.

"Today's arrests are further proof of the direct link between dangerous terrorist organizations, including Al Qaeda, and international drug trafficking that fuels their violent activities," said DEA Acting Administrator Michele Leonhart. "These narco‑terrorists do not respect borders and do not care who they harm with their drug trafficking conspiracies. Working with our narcotics law enforcement partners in Ghana and across the globe, DEA is making unprecedented progress in dismantling illicit drug networks in western Africa and around the world, and putting the criminals who operate them behind bars, where they belong."

"Today's allegations reflect the emergence of a worrisome alliance between Al Qaeda and transnational narcotics traffickers. As terrorists diversify into drugs, however, they provide us with more opportunities to incapacitate them and cut off the funding for future acts of terror," said United States Attorney PREET BHARARA. "We will continue to work with our partners at the DEA, in Ghana, and around the world to meet the threat narco‑terrorism poses to our national security."

According to the Complaint unsealed today in Manhattan federal court:

Al Qaeda And AQIM

Founded in 1989, Al Qaeda is a terrorist organization which has as its principal goal to attack the United States. Al Qaeda functions on its own and through various terrorist organizations that operate under it. The group now known as AQIM ‑‑ formerly the Salafist Group for Preaching and Combat ("GSPC") ‑‑ was founded in the late 1990s with the assistance of USAMA BIN LADEN. On September 11, 2006, AYMAN AL ZAWAHIRI, a high‑ranking Al Qaeda member and close associate of BIN LADEN, announced that GSPC had joined Al Qaeda and called for "our brothers of the GSPC to hit the foundations of the Crusader alliance, primarily their old leader the infidel United States."

The FARC

From 1964 until the present, the FARC has been an international terrorist group dedicated to the violent overthrow of the democratically elected Government of Colombia. The FARC is highly structured and organized as a military group. To further its goals, the FARC actively engages in narcotics trafficking as a financing mechanism and has evolved into the world's largest supplier of cocaine. For at least the past five years, the FARC has directed violent acts against U.S. persons and commercial and property interests in foreign jurisdictions, including in Colombia. The FARC leadership has directed the kidnapping and murder of U.S. citizens and attacks on U.S. interests in order to dissuade the United States from continuing its efforts to disrupt the FARC's cocaine manufacturing and trafficking activities.

The Narco‑Terrorism And Material Support Conspiracies

Between September 2009 and December 2009, ISSA, TOURÉ, and ABELRAHMAN, who stated that they were associated with Al Qaeda, conspired to assist purported representatives of the FARC in transporting hundreds of kilograms of cocaine from West Africa through North Africa and ultimately into Spain. In a series of telephone calls and meetings with two confidential sources working with the DEA who claimed to represent the FARC (the "CSs"), the defendants stated that they had a transportation route from West Africa through North Africa, and that Al Qaeda could provide protection for the cocaine along that route.

At an initial meeting with one of the DEA confidential sources ("CS‑1"), ISSA stated that his boss, TOURÉ, could facilitate this cocaine transportation. At a subsequent meeting, ISSA introduced CS‑1 to TOURÉ, describing him as a leader of a criminal organization that worked with Al Qaeda‑affiliated groups in North Africa.

During meetings with the CSs, TOURÉ described his strong relationship with Al Qaeda groups that controlled areas of North Africa, and discussed other instances in which he had transported drugs with Al Qaeda's assistance. TOURÉ stated that Al Qaeda would protect the FARC's cocaine shipment from Mali through North Africa and into Morocco en route to Spain. More specifically, TOURÉ discussed the option of two different transportation routes: one through Algeria and Libya, and the other through Algeria and Morocco. TOURÉ also discussed the possibility of kidnapping foreign nationals to raise money for the cause.

TOURÉ later agreed to introduce CS‑1 to a representative of the group that would handle the security of the cocaine while it was being transported. The CSs subsequently met with TOURÉ and ABELRAHMAN, who was introduced as a leader of a "militia" of armed men. ABELRAHMAN discussed with the CSs the shared goals of the FARC and ABELRAHMAN's organization, including the fact that they were committed to the same anti‑American cause.

* * *

The defendants each are charged with one count of narco‑terrorism conspiracy, which carries a mandatory minimum sentence of 20 years and a maximum sentence of life in prison, and one count of conspiring to provide material support to a foreign terrorist organization, which carries a maximum sentence of 15 years in prison.

The charges unsealed today were the result of the coordinated efforts of the United States Attorney's Office for the Southern District of New York and the DEA's Special Operations Division and Ghana Office. Mr. BHARARA praised the outstanding investigative work of the DEA and thanked the Department of Justice's Office of International Affairs, its National Security Division, and the Department of State for their assistance. Mr. BHARARA also thanked the Government of Ghana for its cooperation.

Assistant United States Attorneys JEFFREY A. BROWN and CHRISTIAN R. EVERDELL are in charge of the prosecution.

The charges contained in the Complaint are merely accusations and the defendants are presumed innocent unless and until proven guilty.

130 - The Price of Stripping

In January 2009, Lloyds TSB paid a heavy price (USD350m) for stripping information on Iranian applicants and beneficiaries from USD SWIFT payments routed through American correspondent banks in New York.

Rumour has it that Credit Suisse is next on the block, probably in the half-billion dollar range. Perhaps their correspondent banking relationship managers would do well to enrol in ManchesterCF's Advanced Anti-Money Laundering Course (Correspondent banking)? It might save them some money in the long run.

http://www.nytimes.com/2009/12/16/business/16bank.html?hp

December 16, 2009

Credit Suisse to Settle Over U.S. Sanctions on Iran

By CLAUDIO GATTI

Credit Suisse, the second-largest Swiss bank after UBS, is expected to pay a fine of $536 million to settle charges with the federal government and state authorities in New York that it violated sanctions against doing business with Iran and other countries, people involved in the negotiations said Tuesday.

A formal announcement from Credit Suisse acknowledging responsibility for its conduct, which would allow it to avoid prosecution, is expected this week.

In October, Robert M. Morgenthau, the district attorney for Manhattan, announced that his office, the Justice Department and the Federal Reserve were investigating a large international “mainstream bank” for allowing illicit financial transactions with Iran, which has long been subject to sanctions by Washington. At the time Mr. Morgenthau did not identify the institution.

For weeks since then, Credit Suisse executives have been negotiating the amount of the fine with federal and state authorities, according to information obtained by the Italian business newspaper Il Sole 24 Ore, The International Herald Tribune and The New York Times.

In its 2008 annual report, published this year, Credit Suisse, without disclosing that it was a target, said that American “governmental authorities are reported to be conducting a broader review of how certain financial institutions have processed U.S. dollar payments involving U.S. sanctioned countries, persons and entities.”

Credit Suisse declined to comment.

For years, the Justice Department and the Manhattan district attorney’s office have been pursuing financial institutions suspected of not complying with United States sanctions or of helping Iran and other sanctioned countries obtain access to America’s financial system.

In January, Lloyds TSB, a bank based in London that is essentially under British government control, agreed to pay a $350 million fine to the United States government to settle claims that it had helped customers invest funds from Iran, Libya and Sudan despite sanctions against these countries. The British bank admitted responsibility for removing customer information so that transfers from those countries could pass undetected through barriers established at American banks.

It has not been a good year for Swiss banks in the United States. In February, the Justice Department fined UBS $780 million for helping about 50,000 wealthy Americans evade taxes.

UBS admitted criminal wrongdoing in selling offshore banking services that the Internal Revenue Service said it suspected had been used by Americans to avoid taxes. Six months later, in August, UBS turned over the names of about 4,450 of those clients. That move contributed to the decision by 14,700 Americans to join an I.R.S. amnesty program and disclose their previously secret foreign bank accounts.

Last autumn, UBS received a $5.3 billion capital injection from the Swiss government in return for a 9 percent stake. It was allowed to dispose of up to $60 billion of illiquid securities and impaired assets. The Swiss government offered Credit Suisse a similar deal, but that bank opted to raise money from private investors.

Tensions already are heightened between the United States and Iran. The Obama administration recently signaled its intention to push for sanctions that could further constrict Tehran’s economic and commercial activities unless Iran agreed to bring its nuclear activities under stricter international supervision.

Ever since Iran took American hostages in 1979, the United States has had various sanctions in place. In response to evidence that Iran was financing terrorist activities, the sanctions were broadened in the mid-1990s to ban nearly all commercial and economic transactions with Iran by American institutions and individuals. Iran largely depends on oil exports to a handful of countries to pay for international transactions.

In 2007, the United States persuaded the United Nations Security Council to impose broader sanctions against Iran because of its nuclear activities.

At the time, the Treasury Department, led then by Henry M. Paulson Jr., and Stuart A. Levey, the under secretary for terrorism and financial intelligence, pressed dozens of banks to take further actions aimed at limiting commerce and trade with Iran.

Lloyds, as part of its settlement, agreed to share its records with the C.I.A. and the F.B.I. so that they could establish whether any transaction had benefited terrorist organizations. In the case of Credit Suisse this condition was not believed to be part of the settlement.

But investigators found that Credit Suisse’s employees had violated both state and federal laws by falsifying outgoing dollar payment messages that involved Iran. The bank’s employees removed references to Iran or its banks, a practice called stripping.

As a result, investigators say, Iranian banks like Bank Saderat and Bank Melli were able to use Credit Suisse to send hundreds of millions of dollars through New York banks unimpeded.

129 - Money Laundering in the Philippines

A Filippino general was caught manipulating PHP300m through his family. He had declared assets of only PHP2.76m. Both he and his family now face charges of money laundering, as the hundreds of millions of Philippine pesos is alleged to have been derived from "plunder".

The general's family are in the United States, pending extradition to the Philippines, where they face the wrath of the court. Bail for each family member has been set at PHP120,000 apiece, or 0.04% of the good general's known (albeit "illicit") funds.

He should be able to pay out of petty cash....

http://businessmirror.com.ph/home/nation/19731-ombudsman-ok-money-laundering-raps-vs-garcias.html

Ombudsman OK money-laundering raps vs Garcias

Nation

Written by Zaff Solmerin / Correspondent

Monday, 14 December 2009 21:25

OMBUDSMAN Merceditas Gutierrez on Monday approved the filing of money-laundering charges against members of the family of cashiered Maj. Gen. Carlos Garcia, more than five years after he was accused of amassing more than P300-million unexplained wealth while in the military service. Included in the charge sheet filed before the Sandiganbayan were Garcia’s wife, Clarita, and their children, Ian Carl, Juan Paulo and Timothy Mark. The new charges were filed upon the recommendation of prosecution officer Marissa Bernal to charge members of Garcia’s family. Prosecutors said various bank transactions by the Garcias involving total deposits of P303.27 million and withdrawals amounting to P73 million and $967,215.99 constitute “unlawful activity” punishable under Republic Act 9160, because the funds involved were allegedly the proceeds of plunder. Records obtained by graft investigators showed the family held accounts in United Coconut Planters Bank, Bank of the Philippine Islands (BPI), Land Bank of the Philippines, Allied Banking Corp., Banco de Oro, Planters Development Bank, Export and Industry Bank, Centennial Bank, Armed Forces and Police Savings and Loans Association Inc. (AFPSLAI) and Air Materiel Wing Savings and Loans Association Inc. (AMSWLAI). It also highlighted Garcia’s 2003 Statement of Assets, Liabilities and Net Worth (SALN), where he declared total assets of only P2.76 million. The prosecution also submitted several graphs or tables detailing the movement of money among the various accounts of the family. One table showed each of the defendants withdrawing huge sums in just four days—October 5 to 8, 2004—to empty their bank balances. This was shortly after then-Ombudsman Simeon Marcelo subpoenaed the Armed Forces for access to Garcia’s service records and SALNs on September 20, 2004. According to the prosecution’s summary, Garcia, Clarita and Ian Carl made several withdrawals from Allied Bank and BPI branches in Blue Ridge, Quezon City, and Iloilo-Main totaling P10.14 million in checks and P2.77 million in cash on October 5, 2004. Based on the same paper, the following day the Garcia couple also took out P18.47 million in cash and P256,556.76 in checks from AFPSLAI, Banco de Oro-Valero branch and BPI-Mandurriao (Iloilo). On the third day, the entire family made separate withdrawals totaling P21.63 million from UCPB-Valero branch and P6 million from AFPSLAI. On the fourth day, Ian Carl and Juan Paulo each got P5 million from AFPSLAI, while Garcia himself moved investments in AMWSLAI worth P3.16 million. From October 5 to 7, 2004, the family also allegedly drained its dollar accounts of $967,215.99. Prosecutors recommended a bail of P120,000 for each of the defendants. Garcia remains in detention owing to the nonbailable plunder charge pending before the antigraft court’s Second Division while the government is exerting efforts to have his wife and children extradited from the United States. They were also named defendants in two forfeiture cases ongoing trial at the Sandiganbayan’s Fourth Division. Garcia has so far been acquitted of three perjury charges and convicted in one count for which he received a short prison sentence, which was mooted anyway by his continuing detention.

128 - The Bugatti Factor

Scott Rothstein is accused of running a massive Ponzi scheme based on fake lawsuits into which investors poured funding by the millions.

Federal authorities in the United States seized Mr. Rothstein's property, including real estate, an 87-foot yacht and 20 luxury motor vehicles, including a Bugatti Veyron, an engineering marvel with a USD1.5-million sticker price.

Common sense would argue that anyone in the fundraising and investment business foolish enough to drive around Florida highways in a Bugatti Veyron displays a notable lack of understanding within the field of risk management.

==================

http://www.nytimes.com/2009/12/02/us/02lawyer.html

December 2, 2009

Lawyer Pleads Not Guilty in Vast Ponzi Scheme Case

By CARMEN GENTILE

FORT LAUDERDALE, Fla. — A South Florida lawyer accused of running a $1 billion Ponzi scheme pleaded not guilty to federal racketeering charges on Tuesday.

The lawyer, Scott Rothstein, 47, is charged with several counts of fraud and conspiracy to commit money laundering in a scheme that involved selling legal settlements. He faces up to 100 years in prison if convicted on all counts.

Mr. Rothstein, who was known for his extravagant lifestyle and his philanthropy, sat quietly and appeared calm while the charges against him were read in the federal courtroom of Magistrate Judge Robin Rosenbaum.

Judge Rosenbaum granted the prosecution’s request for pretrial detention of Mr. Rothstein, based on its assertion that he was a flight risk. He had set up bank accounts in Morocco totaling an estimated $15 million.

Mr. Rothstein, who was taken into custody shortly before 8 a.m. Tuesday, went to Morocco in late October as his business began to unravel, though he returned to South Florida last month.

Witnesses said that while Mr. Rothstein awaited his hearing Tuesday morning, he was overheard providing legal advice to others in his holding cell.

Prosecutors are charging Mr. Rothstein under the Racketeer Influenced and Corrupt Organizations Act, also known as RICO.

Last month, federal authorities filed court documents seeking to seize Mr. Rothstein’s 87-foot yacht, more than a dozen properties and 20 luxury cars, including a 2009 Bugatti Veyron that sells for $1.5 million.

Mr. Rothstein’s lawyer, Marc Nurik, said his client did not provide any information to federal prosecutors about the case, despite previous reports that Mr. Rothstein was cooperating with the authorities and prosecutors by providing details of his investment business.

In the meantime, Mr. Nurik said he would provide “limited information to the government.”

Latour Lafferty, a criminal defense lawyer and a former federal prosecutor, said federal authorities were likely to try to make a deal with Mr. Rothstein for a reduced sentence if he would identify co-conspirators in the case.

“If he is cooperating with the feds, they are going to ask who helped him with the money-laundering transaction,” Mr. Lafferty said. “The billion-dollar question, if you will, is who are the co-conspirators?”

So far, no one else has been charged in connection with the case.

Mr. Nurik said Mr. Rothstein was prepared to make full restitution to all of his “legitimate investors.”

“We made it clear from the very get-go that the legitimate investors would be paid back,” Mr. Nurik told reporters outside the federal courthouse here.

Mr. Nurik declined to elaborate on what he considered a legitimate investor. However, he said that “at this point, he plans on doing the right thing” by paying back money to investors he is accused of defrauding.

He also said that the “actual losses to investors, we suspect, will be less than $500 million.”

Mr. Rothstein was a major donor to local charities and to both political parties in the state. Politicians have begun returning his contributions.

127 - Gone Hollywood

Operation C-Chase is now published in a book - "The Infiltrator". Movies rights are in play. Is money laundering going Hollywood? Is international intrigue, mountains of cash, drugs, exotic locales and power now sexy?

What a surprise.

==========

http://www2.tbo.com/content/2009/nov/27/na-agent-details-infiltration-of-cartel/

Agent details infiltration of cartel

By ELAINE SILVESTRINI

esilvestrini@tampatrib.com

Bob Mazur won't be showing up at bookstores to sign copies of his new book.

Nor will he be setting up a table at any book fairs.

His only promotions for "The Infiltrator" will take place in venues he can control - places that meet the former undercover agent's security requirements.

Twenty-one years ago, after learning that the notorious Medellin drug cartel had sent a hit squad to kill him, Mazur had to assume a new identity and move his family from their Tampa home.

Around that time, someone put a bomb in the Tampa office of U.S. Customs, where he worked.

Mazur had angered some dangerous people.

To this day, 11 years after his retirement as a federal agent - after most of the cartel figures are dead or in prison - Mazur still takes precautions. He won't allow photographs that show his face, even as he does interviews to promote the book. For television appearances, he remains cloaked in darkness, his features obscured.

"The Infiltrator" is the behind-the-scenes story of what FBI Director Robert Mueller once described as "one of the largest money-laundering prosecutions in U.S. history." The case ended with the spectacle of smugglers and money launderers arrested at a staged wedding in Tampa. It drew the national media spotlight and was the subject of a U.S. Senate hearing chaired by John Kerry.

The book has been optioned by a Hollywood production company. Mazur says he was inspired to write it when he worked as a consultant on the 2006 movie "Miami Vice" and director Michael Mann urged him to tell his story so Mann could film it.

Mazur's book about the investigation code-named "Operation C-Chase" is a white-knuckle tale of how he gained the trust of crooked bankers and Colombian drug traffickers who would have killed him without a second thought if they knew he was one of "los feos." (The phrase, meaning "the ugly ones," was the bad guys' term for U.S. federal agents.)

Big bank falls

The two-year investigation in the late 1980s helped bring down a huge international financial institution, the Bank of Credit and Commerce International. The bank helped Mazur - posing as Tampa-based businessman Bob Musella - launder tens of millions of dollars for the Medellin cartel; its officers even provided guidance on sophisticated ways to make drug money look legitimate.

Along the way, Mazur did business with the personal banker of Panamanian dictator Manuel Noriega, gathering evidence that would later help convict Noriega in U.S. courts.

There were several heart-stopping near misses, often when his superiors or federal agents in other cities took steps that came too close to exposing his identity.

Once, his partner, Emir Abreu, was getting $2 million in cash from drug smugglers in New York. Abreu knew the bad guys would have him watched, so he met with Customs agents and they agreed to keep their surveillance to a minimum so as not to expose Abreu as an agent.

Ten minutes after Abreu and a New York undercover agent drove away with the money, the Customs surveillance supervisor pulled out in front of their vehicle with a red light flashing on his roof, directing them to follow him to the Customs office at the World Trade Center.

When they arrived, Abreu angrily confronted the supervisor about calling so much attention to them and putting their lives in danger.

"Look pal," Mazur quotes the supervisor as saying. "It's Friday afternoon. I've got a summer home at the Jersey shore, and I've got a cement truck showing up early tomorrow morning to pour a new patio behind my house."

"Once again," Mazur wrote, "the enemy within was proving more dangerous than the enemy we were attacking."

After the arrests started, another federal agent revealed Mazur's identity to a defense lawyer.

Mazur, his wife, Evelyn, and their two children, who were about 11 and 13 at the time, were forced to flee.

Mazur, 59, doesn't want to talk about his family or his personal life.

"This isn't about me," he says.

In the book, there are few references to his family, although it is clear the two-year investigation took a heavy toll.

Mazur sometimes went days without calling his family to let them know he was safe. His wife paid bills, mowed the lawn, got the car fixed, handled house repairs and took care of the children, all while working full-time as a teacher.

But Mazur couldn't allow himself to be sidetracked.

"I felt I couldn't allow distractions that could cause a fatal mistake," he wrote. "My survival instinct forced me to concentrate solely on the case, which inevitably shut out my personal life."

'An underground empire'

Today, Mazur trains agents and others about ways to combat money laundering.

If the problem was widespread 20 years ago, it's rampant now, he says.

Whether it's because of bureaucratic regulations, politics or changing priorities, he says the government doesn't seem up to the challenge of dismantling the huge underworld that trades in illicit money - cash that finances terrorists and fuels the drug trade.

"There is an underground empire creating hundreds of billions of dollars a year."

The U.S. government estimates that the drug trade generates $500 billion worldwide, with only about $1 billion seized by the government, Mazur says.

Since Operation C-Chase concluded, red tape and a redirection of resources have stifled undercover work, says Mazur, who addresses law enforcement agencies nationwide.

"You talk to any government agent," he says. "Most of what we did here (in Operation C-Chase) would not be permitted by management."

He says he's hearing from agents in the field that former Customs agents are now focused on immigration because of the formation of U.S. Customs and Immigration Enforcement.

"Immigration is a very important issue," Mazur says. "It is the highest, highest priority of ICE. Agents who used to work on money laundering cases don't. They're working on immigration stuff."

Mazur says some people may look at this story and say, "This doesn't affect me."

"It affects your everyday life because these billions of dollars get put into legitimate businesses that unfairly compete with those in the global community that want to make an honest living, and they can't," he says. "It affects you because this has an impact upon the integrity of governments.

"Money, unfortunately, turns into power. And that power is very dark. And people need to just sit up and take notice."

126 - Dollars to Pesos

There are numerous cases of bulk cashing smuggling across the United States / Mexico border. Drugs go north and guns, cash and SUVs go south. Now the Mexican authorities seem to be tackling the problem, one that appears to have grown into institutionalised proportions.

==========

http://www.laht.com/article.asp?ArticleId=348142&CategoryId=14091

11 Arrested in Mexico for Money Laundering

MEXICO CITY – Mexican authorities arrested 11 suspected money launderers during raids on 17 finance companies in the northern cities of Culiacan and Tijuana, the Attorney General’s Office said.

The money-laundering ring operated through a series of companies, some of which posed as authorized financial institutions while others were simply shell companies, the AG office said.

These companies “were disguised to appear as legitimate clients before certain formal institutions of the financial system in order to change (into pesos) large sums of dollars” from illicit activities, according to an official statement.

They later deposited the pesos in their bank accounts and subsequently transferred them to accounts in Culiacan and made payments to people with no apparent relationship to those companies.

Among the organizations forming part of the ring were currency exchanges and pawn shops in Tijuana, just across the border from San Diego, California.

Culiacan is the capital of Sinaloa state, birthplace of many of Mexico’s drug kingpins, including fugitive Sinaloa cartel chief Joaquin “El Chapo” (Shorty) Guzman.

Tijuana is the seat of the cartel of the Arellano Felix brothers, a group that has dwindled following the capture or death of several of its main bosses and that is now battling the Sinaloa and Gulf outfits for control of its home turf.

Every year in Mexico some $16 billion are laundered, of which $10 billion are processed through the financial system and $6 billion through currency exchanges, federal prosecutors say. EFE

125 - Defrauded? Sue a Bank!

Washington Mutual Bank (now owned by JPMorgan Chase after the mortgage crisis plunged its balance sheet into dust) was citied in the recent past for AML regulatory violations. WaMu is now accused of having been lax in its due diligence of a customer who perpetrated a USD150-million Ponzi scheme in a civil suit brought about by investors fleeced in the Ponzi scheme.

It would appear that the fleeced investors firmly believe that if a bank is vigilent in its fight against money laundering, it should be able to detect a major fraudster, especially after having conducted two audits while in the process of granting the fraudster "reverse ATM" capabilities and advanced cash management software.

As more investors become fleeced in Ponzi schemes, more lawyers will realise that the best target to make investors whole is the bank that offered services to the fraudster. In a litigious society, this game will play out often, especially against those banks who incur regulatory sanctions for AML non-compliance.

Banks now have another reason to boost AML compliance, however that challenge is particularly accute, given the slashing of budgets within most financial institutions' financial crime risk management functions.

==========

http://newsblaze.com/story/2009111814350800001.wi/topstory.html

Washington Mutual Facilitates a Multi-Million Dollar Ponzi Scheme

Newswise - Attorneys have filed an action in the US District Court for the Northern District of California accusing yet another bank of nurturing a Ponzi scheme. The complaint was filed as a class action suit on behalf of victims of a $150 million Ponzi scheme involving thousands of defrauded investors and the promise of safe, high yield CDs. The scheme, centered in Napa, California, was the brainchild of William Wise, who has a long a record of securities violations. The defendant in the case is Washington Mutual Bank, which Wise used to facilitate the operation of his scheme.

Specifically, Wise used two branches of WAMU located in Napa California to deposit, transfer and wire throughout the world the money earned from his illicit activities. Eventually, as Wise's account grew, WAMU's branch manager in Napa suggested he obtain a remote deposit facility (often referred to as a reverse ATM). Before that device was provided, WAMU was required to audit Wise. WAMU also suggested Wise obtain software offered to the bank's larger clients to direct and manage a high volume of wire transfers. This tool again required a WAMU audit. This second audit was run from WAMU's treasury department in Seattle, Washington. By providing these special services, WAMU knowingly provided Wise with his own private "bank within a bank".

As the complaint alleges, WAMU learned of Wise's illicit scheme thorough two audits by two different managing departments, but nevertheless allowed Wise's activities to remain unchecked. WAMU's complicity in the scheme resulted in the defrauding of millions of dollars from thousands of investors.

During this time period, WAMU had been operating under a Consent Decree issued by the US Office of Thrift Supervision in 2007. The decree was in direct response to WAMU's previous failures to comply with numerous federal anti-money laundering statutes including the International Money Laundering Abatement and financial Anti-Terrorism Act of 2001, the Money Laundering Control Act of 1986, and the Bank Secrecy Act of 1970. The Consent Decree, among other things, ordered strict compliance with bank secrecy and money laundering requirements, and called for new and improved policies for maintaining compliance with federal banks secrecy and money laundering laws.

Berk Law, and the Law Offices of Keith L. Miller, in tandem with Cotchett, Pitre & McCarthy filed the case. Steven N. Berk, counsel for the plaintiffs, remarked, "WAMU's history of putting profits above compliance to capitalize on the mortgage bubble is well documented, but only now are we seeing that same corporate culture spilling over into taking risks in other areas such as the support of illegal and shady investment schemes."

The suit names JPMorganChase as the successor in interest to WAMU and seeks damages from JPMorganChase for the thousands of defrauded investors.

Source: NewsWise

124 - Mustering the Troops

The Obama Administration today announced the formation of a Financial Fraud Enforcement Task Force to combat significant financial crimes relating to the current financial crisis. Banks will certainly be asked to assist in the fight against financial fraud and money laundering.

If financial institutions thought the regulators' emphasis on solvency risk would trump any scrutiny of financial crime risk, they are sorely mistaken.

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http://www.justice.gov/ag/speeches/2009/ag-speech-091117.html

Attorney General Eric Holder Speaks at the Financial Fraud Enforcement Task Force Press Conference

Washington, D.C. ~ Tuesday, November 17, 2009

Good afternoon. I am joined here by some of my partners in the new effort we are launching today, Secretary of the Treasury Tim Geithner, Secretary of Housing and Urban Development Shawn Donovan, and Robert Khuzami, the Director of Enforcement at the Securities and Exchange Commission, who is here representing SEC Chairwoman Mary Schapiro.

I am pleased today to announce the launch of an interagency Financial Fraud Enforcement Task Force to combat financial crime. The Task Force is designed to strengthen our collective efforts -- in conjunction with our federal, state, and local partners -- to investigate and prosecute significant financial crimes relating to the current financial crisis; to recover ill-gotten gains; and to ensure just and effective punishment for those who perpetrate financial crimes.

We face unprecedented challenges in responding to the financial crisis that has gripped our economy for the past year. Mortgage, securities, and corporate fraud schemes have eroded the public’s confidence in the nation’s financial markets and have led to a growing sentiment that Wall Street does not play by the same rules as Main Street. Unscrupulous executives, Ponzi scheme operators, and common criminals alike have targeted the pocketbooks and retirement accounts of middle class Americans, and in many cases, devastated entire families’ futures.

We will not allow these actions to go unpunished, which is why President Obama has established this Financial Fraud Enforcement Task Force to investigate and prosecute fraud and financial crime.

In the tough economic environment we face today, one of this Administration’s most important missions is to draw upon all of the resources of the federal government to fight financial fraud in all of its forms. The Financial Fraud Enforcement Task Force will wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. We will marshal the criminal and civil enforcement resources of the executive branch to investigate and prosecute financial fraud cases; recover stolen funds for victims; address discrimination in lending and financial markets; and enhance coordination and cooperation among federal, state, local, tribal, and territorial authorities responsible for investigating and prosecuting significant financial crimes and violations.

This Task Force’s mission is not just to hold accountable those who helped bring about the last financial meltdown, but to prevent another meltdown from happening. By punishing criminals for their actions, we will send a strong message to anyone looking to profit from the misfortune of others: We will investigate you, we will prosecute you, and we will incarcerate you. We will be relentless in our investigation of corporate and financial wrongdoing, and will not hesitate to bring charges, where appropriate, for criminal misconduct on the part of businesses and business executives.

Even before the launch of this Task Force, we have increased our efforts to prosecute financial fraud, including securities and commodities fraud, market manipulation, and various Ponzi schemes. In just the last ten months, we have secured the convictions of Bernard Madoff and several of his associates, and working alongside the SEC, have indicted several officers of Stanford Financial Group for their involvement in another massive Ponzi scheme.

Last month, we arrested individuals on charges stemming from what has been described as the largest hedge fund insider trading case in history. We also recently secured a 20-year sentence for the president and owner of Gen-See Capital Corp., who perpetrated a $31 million Ponzi scheme between 2002 and 2009 involving more than 500 victims, as well as 30-year and 25-year sentences for two executives of National Century Financial Enterprises following their convictions on conspiracy, fraud, and money-laundering charges.

We also have devoted substantial attention to preventing and prosecuting mortgage fraud. The FBI is currently investigating more than 2,800 mortgage fraud cases, up almost 400 percent from five years ago. The Bureau has more than doubled the number of agents investigating mortgage scams, and has created a National Mortgage Fraud Team at headquarters here in Washington. And last summer, we launched a coordinated state/federal mortgage fraud initiative with state attorneys general from around the country. This initiative will result in enhanced information-sharing, improved criminal and civil enforcement efforts, and a more effective approach to fighting discrimination in the housing and lending markets.

These were important steps, and by launching this new Task Force today we will build on them in moving forward.

This Task Force will be a robust, substantial working partnership with concrete follow-through. We will enhance training and information-sharing across the government, so that our prosecutors, regulators, and law enforcement agencies work seamlessly, employing the best available practices to fight financial crime.

We will work tirelessly with the victims of financial crime to ensure that their rights are restored and their financial futures preserved.

And at the core of the Task Force’s mission will be our enforcement efforts, which will focus on the types of financial crime that affect us most significantly in this time of economic recovery: These crimes include:

• mortgage fraud –from the simplest of "flip" schemes to systematic lending fraud in the nationwide housing market;
• securities fraud – including traditional insider trading, Ponzi schemes, and misrepresentations to investors;
• Recovery Act and rescue fraud – we will ensure that the taxpayers’ investment in America’s economic recovery is not siphoned away by a dishonest few; and,
• discrimination – this Task Force will work to ensure that the financial markets work for all Americans, and that no one is unfairly targeted based on impermissible characteristics.

Our Task Force will take full advantage of the new legislative authorities Congress provided us earlier this year when it gave our agencies stronger tools to investigate and prosecute financial fraud. That legislation, the Fraud Enforcement and Recovery Act of 2009, was an important bipartisan endorsement of the work we will undertake in this area.

Our enforcement priorities will continue to be informed by the realities of the crisis we face. We will protect borrowers and ensure the integrity of the financial services industry by combating mortgage fraud head-on. We will protect investors and our capital markets by vigorously attacking securities fraud. We will ensure that recipients of federal financial rescue funds do not obtain them through fraud, or use them for improper purposes. And we will make sure that federal stimulus funds are well-spent by vigilantly protecting the integrity of federal procurement and grant processes. By carrying out this mission aggressively and effectively, we will promote the integrity of our markets, preserve taxpayers’ resources, and protect the vast majority of consumers, investors, and companies that play by the rules and adhere to the law.

I now turn it over to Secretary Donovan.

123 - Madoff's Mathematics

Two academics have released a paper on the mathematics of Bernard L. Madoff's alleged split/strike conversion derivatives strategy, the underlying foundation of his investment marketing to prospective clients. It should make very interesting.

I trust that investment market regulators will be incorporating this mathematics into their analytical models for hedge fund compliance.

http://www.iijournals.com/doi/abs/10.3905/JOD.2009.17.1.062

122 - Physical securities

Benny Judah has pled guilty to selling fraudulent debentures and operating a Ponzi scheme. Solicitations were sent in the mail to prospective investors. Once they signed on, investors received the physical debentures for their signature, and then mailed them back to Excel Lease Fund, the corporation controlled by Judah.

Receipt of physical securities for signature from an unproven investment vehicle is never a good sign. Whenever paper securities are issued, red flags should run up the flagpole.

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http://www.justice.gov/usao/txn/PressRel09/judah_securities_ple_pr.html

FOR IMMEDIATE RELEASE

MEDIA INQUIRIES: KATHY COLVIN

THURSDAY, NOVEMBER 12, 2009

http://www.usdoj.gov/usao/txn/

PHONE: (214)659-8600

LUBBOCK BUSINESSMAN ADMITS CAUSING MORE THAN $50 MILLION IN LOSSES TO INVESTORS

Federal Judge Orders Benny Lee Judah Into Federal Custody Following Guilty Plea

LUBBOCK, Texas — Benny Lee Judah, 50, a businessman from Lubbock, Texas, was remanded into federal custody this afternoon following his guilty plea to felony offenses stemming from his defrauding at least 250 investors of more than $50 million, announced U.S. Attorney James T. Jacks of the Northern District of Texas (NDTX). U.S. District Judge Sam R. Cummings ordered a pre-sentence investigation report with a sentencing date to be set upon the completion of that report.

Specifically, Judah, who operates numerous restaurants and related businesses, including Excel Lease Fund, Inc., pleaded guilty to one count of money laundering and one count of sale and delivery after sale of unregistered securities. The money laundering count carries a maximum statutory sentence of 20 years in prison and a $250,000 fine; the securities count carries a maximum statutory sentence of five years in prison and a $250,000 fine. As part of the plea agreement with the government, parties agree that the loss in the case is $50,162,707 and that the restitution owed is $48,394,207.

On February 1, 2001, in U.S. District Court for the NDTX, Judah and his company, Excel, were subjects of a final judgment of permanent injunction filed by the Securities and Exchange Commission (SEC) that permanently restrained and enjoined them in the offer or sale of unregistered securities, in providing through the mails any communication employing any scheme to defraud or material misrepresentation, or from engaging in any transaction or practice which would operate as a fraud or deceit on any purchaser. Judah and Excel were ordered to pay a $50,000 civil penalty as part of the Court’s final judgment, and Judah was put on notice of the illegal fraudulent securities violations in which he had engaged.

Judah, an accountant by education and training, is not a licensed securities broker. Since at least 2001, he has sold Excel debentures, guaranteeing a high rate of return. Essentially, however, while purporting to manage and operate the Excel leasing business, Judah was actually operating a Ponzi scheme.

Judah admitted that from October 2005 until April 2009, he schemed to fraudulently obtain $50,162,707 from victim investors in Excel who purchased Excel debentures. He operated this scheme successfully until April 21, 2009, when the SEC filed a civil Complaint against him and Excel alleging violations of federal securities laws. That same day, the Court granted the SEC’s motion to appoint a receiver, signed an order freezing their assets, and signed an injunction prohibiting them from taking further actions in violation of federal securities laws.

As part of his scheme, Judah misrepresented the viability of Excel by failing to disclose the true and actual use of investor funds, and the true financial condition of Excel, thus allowing him to conceal, disguise and convert investor monies for unauthorized purposes. He generated false documents consisting of prospectuses, balance sheets, income statements and interest accrual letters that were represented to be true in order to perpetuate the image of a successful company. He mailed these fraudulent documents to investors and received approximately $50,162,707. He represented to investors that Excel was profitable, when it was not, and grossly overstated the value and nature of Excel’s assets.

After an investment was made, Judah would mail the victim investors the debentures for the investor to sign and then the investors would mail the signed debentures back to Excel and Judah. Oftentimes, Judah would mail false account statements to the investors showing that their investments were earning interest at the 10% rate he had represented. Regarding the money laundering charge, Judah knew that while conducting and attempting to conduct his financial transactions, that the property involved in those financial transactions represented proceeds of his unlawful activity of mail fraud.

Judah admitted using investor proceeds in a manner grossly inconsistent with representation he had made. For example, he lost at least $5 million of the proceeds by “day trading” and used investment proceeds to provide related-party loans to himself and to other businesses he controlled.

The case is being investigated by the Lubbock offices of Internal Revenue Service - Criminal Investigation and the FBI. Assistant U.S. Attorneys Dick Baker and Ann C. Roberts of the U.S. Attorney’s Office in Lubbock are prosecuting.

121 - Acting like a bank

The founder of an alleged Ponzi scheme has asked investors "...to think like a bank." What type of bank? A Lehman Brothers? Bear Stearns? Northern Rock? RBS? In these turbulent economic times, such advice is ironically flawed.

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http://www.justice.gov/usao/ut/press/releases/Koerber%20indictment.pdf

U.S. Department of Justice

Brett L. Tolman

United States Attorney

District of Utah

________________________________________________________________________

FOR IMMEDIATE RELEASE CONTACT: MELODIE RYDALCH

MAY 26, 2009 801-325-3206

801-243-6475 (CELL)

PRESS RELEASE

INDICTMENT CHARGES KOERBER WITH MAIL, WIRE FRAUD AND TAX EVASION IN CONNECTION WITH REAL ESTATE INVESTMENT SCHEME

INVESTMENT SCHEME TOOK IN ABOUT $100 MILLION IN INVESTOR FUNDS; MORE THAN $50 MILLION USED TO MAKE PONZI PAYMENTS WHILE OTHER INVESTOR MONEY WAS DIVERTED TO OTHER USES

SALT LAKE CITY – A federal grand jury returned a three-count indictment Tuesday morning charging Claud R. Koerber aka Rick Koerber, age 36, of Alpine, with mail fraud, wire fraud, and tax evasion in connection with an alleged fraudulent investment scheme he devised to get money from investors. Koerber was involved with several businesses in Utah, including Founders Capital, Franklin Squires Investments, and Franklin Squires Companies, during the course of the scheme which the indictment alleges operated from sometime in 2004 to about Dec. 31, 2008.

The indictment alleges that in 2004, Koerber created and presented a series of seminars designed to encourage individuals to make money through a real estate program that he named the “Equity Mill.” The indictment alleges Koerber accepted money from individuals and companies through Founders Capital by means of representations that Founders Capital would use the money to make “hard money” or bridge loans to other entities associated with Founders Capital.

The indictment alleges Koerber used seminars, phone calls, mailings, radio programs, web sites and advertisements to communicate with investors and potential investors.

According to the indictment, Koerber represented to investors and potential investors that substantial amounts of money could be made through the “Equity Mill.” Koerber, according to the indictment, paid varying amounts of interest on the money provided to Founders Capital, but generally paid 5 percent per month to its first line investors.

Koerber, as a part of his seminars, encouraged first line investors “to act and think like a bank,” according to the indictment, by obtaining money from other people to place with Founders Capital. It was suggested that first line investors could pay 3 percent per month to second line investors, and in turn, second line investors, also thought to think and act like a bank, could pay 1 percent per month to third line investors.

Koerber represented to investors that Founders Capital provided an opportunity for families to loan their funds directly to Founders Capital in exchange for an aggressive interest payment and a high degree of liquidity. Founders Capital would then re-loan the money to parties that met Founders Capital’s lending criteria, Koerber said. The indictment alleges Koerber represented to investors and potential investors that the funds loaned to Founders Capital were secured by real property of greater or substantially similar value. The indictment alleges the money invested through the program would be used as “short term” financing to acquire and improve real property investments prior to obtaining more permanent cost effective financing.

The indictment alleges that Koerber told investors that when individuals or families make loans to Founders Capital, typical interest rates on the loaned funds would range between 1 and 10 percent a month, and that typical levels or security or collateralization ranged between 50 and 150 percent.

In fact, the indictment alleges, Koerber knew that those representations were false, or that Koerber made them false by using some of the money for purposes other than real estate bridge loans and to purchase real property. Furthermore, the indictment alleges, most of the money placed with Founders Capital was not secured or collateralized by real estate, and was diverted by Koerber for other purposes.

The indictment alleges Koerber used investor funds for personal housing, expensive automobiles, investments into restaurants, and investments into other businesses. For example, Koerber spent $850,000 on restaurants, loaned $800,000 to an associate for a restaurant, and spent more than $1 million on expensive automobiles. In addition, the indictment alleges, Koerber spent more than $5 million on making movies.

Koerber operated Founders Capital and other related entities as a ponzi scheme to convince earlier investors that their funds were earning money and to convince potential investors that the program was working and earning money. The ponzi payments created the false impression that the businesses were profitable, investments were safe, and interest was being paid.

At no time during the operation of the scheme, according to the indictment, did the Founders Capital or Franklin Squires entities operated by Koerber as a part of his Equity Mill scheme make a profit. Koeber obtained approximately $100 million in investor funds and over $50 million of those investor funds were used to make ponzi payments.

The number of victims involved in the alleged fraud scheme has not been determined, although it could be in the hundreds. Determining the number of victims is difficult because of the different tiers of investors involved. Authorities believe most victims live in Utah.

Count one of the indictment, mail fraud, charges Koerber with using the mail to send a letter addressed “To Our Lenders” which contained many of the false and fraudulent representations of the scheme. The potential penalty for one count of mail fraud is up to 20 years in federal prison and a fine of $250,000.

Count two of the indictment charges Koerber with transferring $1 million of investor money to a Founders Capital account. The potential penalty for wire fraud is up to 20 years in federal prison and a fine of $250,000.

Count three of the indictment, tax evasion, alleges Koerber had a taxable income of $900,000 for 2005 and owed federal tax in excess of $250,000 but failed to file an income tax return for the year. The indictment alleges Koerber caused various business entities under his control to pay personal expenses on his behalf. The potential maximum penalty for the tax count is up to five years and a fine of $250,000.

Defendants charged in indictments are presumed innocent unless or until proven guilty in court.

A summons will be issued to Koerber to appear for an initial appearance in federal court. The investigation, which is being conducted by the FBI, the IRS, and the Utah Department of Securities is continuing.

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120 - This case has it all

Switzerland, Isle of Man, St. Moritz, Wall Street fraud, multi-million dollar payments, the British Royal Family, the Bulgarian Health Service and, above all, the Miss World competition.

This case has it all.

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http://www.telegraph.co.uk/news/uknews/crime/6319458/Miss-World-investor-faces-jail-for-111m-Wall-Street-scam.html

Miss World investor faces jail for £111m Wall Street scam

Trevor Baines, a ''Rich List'' business tycoon and former investor in Miss World, faces a long jail term after being convicted of a £111 million ($175m) Wall Street share scam.

The multi-millionaire, 69, who was included in the Sunday Times Rich List, reportedly collapsed in the dock and had to be taken to hospital after he was refused bail by a judge at the courthouse in Douglas on the Isle of Man.

Mr Baines, whose business interests included the Miss World competition, and his wife Wendy Nicolau de Almeida Baines, 50, were both convicted after a five-week trial accused of a complex money laundering scam involving false accounting and inflating the value of securities, police said.

Mr Baines was ranked at 349th on the Sunday Times Rich List in 2008, alongside rock stars Eric Clapton and Phil Collins, after making his £130 million fortune working for the Africa House Group, his trading and private banking operation.

It is run from their home, a rambling five-bedroom £2.75 million Victorian villa in Douglas, which boasts a disco, indoor swimming pool, snooker room, library, gym and garage for his vintage Jaguar car collection.

His wealth was made mainly from his property empire but he is also understood to have been one of the early investors in the Miss World franchise.

Mr Baines has also taught beginners on the Cresta Run in the millionaire-playground of St Moritz - including, he claimed, Pippa Middleton, the sister of Prince William's girlfriend Kate Middleton.

He now faces up to 14 years in jail and will be held at Jurby Prison, the only jail on the Isle of Man, before he is sentenced next month.

He was convicted of transferring 175 million dollars (£111 million) from Switzerland to bank accounts in the Isle of Man, knowing or suspecting the money was from the proceeds of crime, according to the prosecution.

The money had been amassed dishonestly by Roys Poyiadjis, the crooked senior executive of American software firm AremisSoft.

During a complex five-week trial the jury heard evidence of a complex scam to defraud investors orchestrated by Poyiadjis, 44, who awaits sentencing in New York after pleading guilty to securities fraud.

Greek Cypriot Poyiadjis duped Wall Street investors by falsely inflating AremisSoft's share price in a so-called ''pump and dump'' con.

Reports inflated the company's market value, causing the share price to rocket from £5 to £55, netting Poyiadjis a vast but dishonest fortune from the sale of AremisSoft stock which he stashed away in Swiss bank accounts.

Mr Baines was one of three trustees holding assets on Poyiadjis's behalf, and played a leading role in moving the funds to the Isle of Man.

He insisted he never knew or suspected that the AremisSoft business was criminal or the money he helped transfer was proceeds of crime.

Mr Baines and his wife also denied creating a bogus invoice that the Crown alleged was deliberately falsified as part of a wider Poyiadjis scam to cover up missing revenues from AremisSoft's contract with the Bulgarian health service.

Mr Baines denied money laundering and false accounting and Wendy Baines denied false accounting. Both were found guilty of the charges. His wife was granted bail but Mr Baines was remanded into custody.

Both will be sentenced on November 12.

Officials on the Isle of Man today stressed such serious money laundering offences can affect the island's standing in the international community, which in the current global financial climate is of the utmost importance to the island's future.

Detective Chief Inspector John Mitchell, head of the Isle of Man Police Financial Crime Unit, said: ''This was a very lengthy and complex investigation involving multiple jurisdictions around the world.

''The logistics of such an investigation would test any law enforcement authority, and I am very proud and pleased that the Financial Crime Unit has been able to undertake and complete such an investigation in a successful manner.''

119 - Here we go again

An editorial contributor to the Wall Street Journal has written an article regarding the possible use of the Asian Clearning Union (ACU) - an organisation that settles international transactions using an offsetting arrangement between member currencies instead of international currency markets - to launder "illicit" payments in contravention to the United States sanctions on Iran. Further information on the ACU is available at http://www.asianclearingunion.org

The article's author - Avi Jorisch - strongly believes that Iranian firms are paying foreign exporters with USD co-ordinated through the ACU settlement process. Mr. Jorisch pledges his belief in the dominance of the USD by stating, "Given the nature of international trade, it is unlikely that Iran has now shifted all of its ACU transaction [sic] to the euro."

Mr. Jorisch suggests that Section 311 of the United States PATRIOT act be invoked and that the ACU be declared a "primary money laundering concern", dramatic action in response to an allegation in a newspaper instead of a proven case.

Mr. Jorisch's analysis of international trade denominated in USD is flawed for three reasons:

1. Any international firm wishing to export in Iran will know immediately not to denote the transaction in USD in order to prevent any contact with USD clearing banks in New York. The euro - or any currency that can be cleared through a non-FX market settlement mechanism - is a top choice and readily acceptable to any trading company in the region with even a basic grasp of current financial realities.

2. With the United States Treasury running the printing presses night and day, the value of the USD has plummeted against all major currencies. Without access to foreign exchange hedging, no international trading firm would want to denote a long-dated transaction in USD. And if you're transacting in USD with an Iranian entity, you'll not get access to USD futures or options, unless they're local ACU-member country OTC and probably very expensive.

3. The very "raison d'etre" for an inter-regional currency settlement mechanism is to avoid exposure to expensive and inaccessible foreign currencies, thereby eliminating their use within the transaction as a reference currency. If the exporter is hoarding USD instead of paying his local operating expenses in local currency, then Mr. Jorisch's analysis may apply, however no trading business would operate long with that financial perspective.

Mr. Jorisch is a senior fellow at the Foundation for Defense of Democracies - http://www.defenddemocracy.org - an organisation that boasts members such as Richard Perle, Bill Kristol, Joe Lieberman, Dr. Michael Ledeen and other esteemed alumni of various think-tanks who trumpeted loudly that invading Iraq was effective use of American foreign policy. History has proven them tragically wrong.

Is this the same crowd influencing American pressure on the FATF and steering the international financial crime risk management community into another dreadful quagmire? At what point are the shattered remnants of their credibility paraded before the public eye as firm evidence of their sensational ignorance? At what point is the FATF reclaimed to fulfill its original mandate?

http://online.wsj.com/article/SB10001424052748703298004574457322960633830.html?mod=googlenews_wsj