Category Archives: Money Laundering

Illinois Couple Sentenced for Money Laundering

Michael McClellan and Tina McClellan, the owners of Paragon Restaurant in Schererville, IN, were sentenced in federal court Tuesday on charges of money laundering, mail fraud, and harboring illegal aliens. Michael McClellan, 40, was convicted of three counts of mail fraud, one count of money laundering, and one count of harboring illegal aliens.  He was sentenced to 51 months in federal prison and ordered to pay restitution in the amount of $203,804.  Tina McClellan, 38, was convicted of a single count of money laundering and received a one year home confinement sentence.  She is also jointly responsible for the restitution.

The couple is guilty of receiving reimbursements of at least $200,000 from the state of Illinois and the Healthy Start program by inflating the number of children that attended T&M Daycare in Calumet City, which they operated.  The grand jury found that they then laundered part of the money by using it to buy Paragon Restaurant in December of 2008.

Michael McClellan was convicted of wire fraud and harboring illegal aliens after the government uncovered that he hired illegal immigrants for his restaurant and housed them in a home next door.  He submitted false quarterly reports that did not account for the restaurant employees that he paid in cash.  The federal government successfully argued that this tactic was all part of a scheme to defraud the Indiana Department of Workforce Development out of unemployment insurance tax contributions.

This case was investigated by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service-Criminal Investigation Division, the US Department of Labor-Office of the Inspector General, the Social Security Administration-Office of the Inspector General, and the Indiana Department of Workforce Development.

Assistant United States Attorney Gary Bell was assigned, and led the prosecution.

Western Union Agent Sentenced for Money Laundering

Itohan Agho-Allen, 39, was sentenced on Tuesday to 15 years in federal prison for his role in a scheme involving a money-transfer station in Pennsylvania.  He was convicted by a federal jury in Harrisburg of criminal conspiracy, eight counts of wire fraud, and 14 counts of money laundering.  Chief United States Court District Judge Christopher C. Conner also ordered Agho-Allen to pay restitution of $2,371,688, a special assessment of $2,300, and to serve three years of supervised release.

Between 2002 and November 2010, money transfers originating in locations in Pennsylvania, including Lebanon, York, Bloomsburg, Berwick, Hazleton, Chambersburg, East Stroudsburg and Montoursville, were transmitted through facilities to fraud participants in Brooklyn, Spain, Romania, Canada and Nigeria. Funds totaling over $7 million were obtained from hundreds of victims throughout the United States through telemarketing schemes that falsely promises financial rewards.

Evidence showed that Agho-Allen entered fraudulent entered identifying information into the MoneyGram or Western Union computer systems to disguise the true nature of the transaction and the identities perpetrating the frauds.  He received between 10-15 percent for each transaction.

Thirty-three other former MoneyGram and Western Union agents have been prosecuted by the United States Attorney’s Office in Harrisburg. Several of them chose to testify as government witnesses at Agho-Allen’s trial.

The case is part of an ongoing investigation by the United States Postal Inspection Service, with assistance from the Federal Bureau of Investigation.

The United States Department of Justice reached a settlement with MoneyGram in November of 2012 which resulted in the forfeiture of $100 million to be used to compensate thousands of victims.

 

Las Vegas Attorney Pleads Guilty to Money Laundering

R. Christopher Reade, 43, pleaded guilty on January 22nd to aiding a client in laundering money he raised through a $16 million Ponzi scheme.  According to United States Attorney Daniel Bogden, Reade could face up to 10 years in prison and a $1,125,000 fine for the federal money laundering charge.  His sentencing hearing has been scheduled for May 2, 2014.  The client, Richard Young, 54, was sentenced to 25 years in federal prison in December 2011 for conspiracy, fraud and money laundering charges.

Reade represented Young and Global One, a Nevada based corporation, beginning in February 2007 with business litigation and transactions.  In the plea agreement Reade acknowledged that Young and Global One funneled $2.3 million, from the Ponzi scheme, into a holding company that Reade created to purchase the currency exchange broker, Trend Commodities.  On August 21, 2007, Reade received $75,000 from Global One for services related to the purchase of Trend.

It was also revealed that Reade falsely told investigators he was unaware of who owned Global One, or how Global One raised the money.  In fact, Reade knowingly assisted Young in an attempt to hinder the investigation of the money laundering charges.

This case was investigated by the IRS Criminal Investigation and the Federal Bureau of Investigation.  Assistant United States Attorneys Steven Myhre and James Keller prosecuted handled the prosecution for the United States.

New Jersey Bank Fined for Money Laundering Violations

Authorities have announced that Saddle River Bank in New Jersey has agreed to pay $8.2 million to settle federal claims that it violated United States anti-money laundering laws.  The settlement comes after a federal investigation revealed that the bank failed to monitor over $1.5 billion of transactions between it and non-bank currency exchange businesses in Mexico and the Dominican Republic.

While prosecutors do not believe any money laundering took place on Saddle River Valley’s accounts, they do accuse the bank of focusing on the revenue it made from the “casas de cambio”, rather than the associated risks.

The office of United States Attorney Paul Fishman also cited Saddle River Valley for not properly detecting and reporting suspicious activity on its casas de cambia accounts and for failing to have experienced employees in charge of their anti-money laundering program.

Saddle River Bank filed over 190 “Suspicious Activity Reports” only after the Office of the Comptroller of the Currency ordered the bank to conduct a “lookback” in a late 2011 enforcement action.

Under the settlement, Saddle River Valley Bank agrees to pay a $4.1 million fine to Financial Crimes Enforcement Network and forfeit another $4.1 million to the OCC and the United States Attorney’s Office of New Jersey.

An external spokeswoman for the majority owner of Saddle River Bank, J.C. Flowers, and an attorney representing the bank both declined to comment.

Six Million Dollar Restitution Order in White-Collar Case Overturned on Appeal by Eleventh Circuit

In white-collar federal criminal cases, such as wire fraud or money laundering, the United States government often seeks an order from a court to require a defendant who is found guilty to pay restitution. This general policy is codified in the Mandatory Victims Restitution Act (MVRA), passed in 1996. Similar provisions exist in federal criminal prosecutions for seizures of vehicle or aircraft involved in an alcohol-related federal proceeding.

It is important to note, as suggested by the title, that the MVRA makes restitution mandatory for certain white collar criminal defendants. The Act requires that restitution be made to victims of the charged criminal activity. However, courts in the Eleventh Circuit have interpreted the term “victim” broadly, to include persons who are injured by criminal activity that is related to, but not identical with, activity charged by the federal government. In this way restitution orders under the MVRA can quickly grow.

The MVRA contains certain limits on restitution orders, however. Once a court has determined the monetary value of harm suffered by victims in the case, it is then required to consider a defendant’s financial ability to pay restitution. This was the issue in the recent case of U.S. v. Edwards, decided by the Eleventh Circuit Court of Appeals on September 6, 2013.

In Edwards, the Defendant was convicted of wire fraud, mail fraud, and money laundering as a result of an investment scheme where the Defendant encouraged parties to send him money for supposedly protected investments. In reality, the Defendant never invested the funds and instead spent the money on personal travel and luxury items. As a result of the scheme, the trial court ordered Edwards to pay approximately $6.8 million in restitution to both parties that he directly dealt with as well as victims who did not testify at his criminal trial. The order also required Edwards to pay restitution to persons who had not dealt with him but only a co-defendant, Reece.

The trial court did not specifically identify how Edwards had harmed the individuals who had only dealt with Reece. As a result, the restitution order was overturned and the case remanded to the district court in order to determine whether these individuals were entitled to restitution from Edwards.

Although the Order was overturned, it serves as an example of how mandatory restitution under the MVRA is often an issue in white collar criminal defense cases. The attorneys at Parkman and White, LLC are very familiar with orders of restitution, civil forfeiture efforts, and other proceedings associated with white collar criminal prosecutions. If you or someone you know is facing such charges please contact the firm at (855) 569-1678.

IRS Employee Charged with Money Laundering

Maggie Cooper, of Memphis, TN, has been charged in a 38 count indictment for money laundering and money laundering conspiracy.  Cooper, 62, is alleged to have committed these crimes while working as a tax analyst for the Internal Revenue Service.  The charges were announced by Edward L. Stanton III, U.S. Attorney for the Western District of Tennessee, and Christopher A. Henry, Special Agent in Charge of IRS-Criminal Investigation.

The indictment alleges that in a scheme that ran from 2011 to September 2012, Cooper conspired with others to conduct financial transactions with money made from marijuana trafficking.  Specifically, Cooper made purchases in her name with money from her co-conspirators’ illegal activity.  These transactions included items such as a 2007 Jaguar XKR.  There was an understanding in place that the purchased items would be paid for and owned by the co-conspirator.  Cooper, who held her position at the IRS for 27 years, is also accused of allowing bank accounts to be opened in her name specifically for the purchase and sale of marijuana.

If she is found guilty of money laundering, Maggie Cooper faces a maximum sentence of 20 years in a federal prison, fines up to $500,000, and criminal forfeiture.

This case was investigated by IRS-Criminal Investigation, U.S. Treasury Inspector General for Tax Administration (TIGTA), and the Memphis Police Department Organized Crime Unit.  Assistant United States Attorney Deb Ireland is representing the government.

Toy Company Co-Owner Sentenced for Money Laundering

The co-owner of Woody Toys Inc., Dan Xin Li, was sentenced on Monday, May 6th to eight months in prison for her role in money laundering for Columbian and Mexican drug traffickers.  She will also receive six months of home detention for her involvement in a scheme that has been dubbed as the Black Market Peso Exchange.  Li, and her husband Jia Hui Zhou, pleaded guilty in September to conspiring around filing currency transaction reports with a bank by structuring deposits as to not raise suspicions. Sentencing for Jia Hui Zhou was delayed until January 6th, 2014.  As a result of their plea deal the couple agreed to forfeit $2 million in proceeds they made from the money laundering scheme.

Between 2005 and 2011, about $3 million generated from drug sales was deposited into the business accounts of Woody Toys, Inc.  The deposits were usually below $10,000 to ensure they wouldn’t have to report the funds to federal authorities.  Woody Toys, Inc. would then purchase merchandise from companies in Columbia and Mexico with the money from these transactions.  According to authorities, this would allow the money to be funneled back to the drug dealers.

Prosecutors referred to Woody Toys as the “last spoke in the wheel, ‘that cleaned illicit proceeds and enabled drug trafficking organizations to convert their dirty dollars into clean pesos”.

The U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, IRS-Criminal Investigation, and the multi-agency Southern California Drug Task Force conducted the investigation.