What is money laundering?

There are various definitions available which describe the phrase ‘Money Laundering’. Article 1 of the
draft European Communities (EC) Directive of March 1990 defines it as:

the conversion or transfer of property, knowing that such property is derived from serious crime, for the
purpose of concealing or disguising the illicit origin of the property or of assisting any person who is
involved in committing such an offence or offences to evade the legal consequences of his action, and

the concealment or disguise of the true nature, source, location, disposition, movement, rights with
respect to, or ownership of property, knowing that such property is derived from serious crime.

Another definition is:

Money laundering is the process by which large amounts of illegally obtained money (from drug
trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a
legitimate source.

If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to
provide a legitimate cover for their source of income. Money laundering plays a fundamental role in
facilitating the ambitions of the drug trafficker, the terrorist, the organised criminal, the insider dealer,
the tax evader as well as the many others who need to avoid the kind of attention from the authorities
that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place
the proceeds beyond the reach of any asset forfeiture laws.

Money laundering happens in almost every country in the world, and a single scheme typically involves
transferring money through several countries in order to obscure its origins. In this article, we'll learn
exactly what money laundering is and why it's necessary, who launders money and how they do it and
what steps the authorities are taking to try to foil money-laundering operations.

Money laundering, at its simplest, is the act of making money that comes from Source A look like it
comes from Source B. In practice, criminals are trying to disguise the origins of money obtained through
illegal activities so it looks like it was obtained from legal sources. Otherwise, they can't use the money
because it would connect them to the criminal activity, and law-enforcement officials would seize it.

What is Cyberlaundering?

Cyberlaundering is the natural evolution of money laundering, or what we call throughout the site
legacy laundering or just plain money laundering". Being that most monetary assets have moved into
the digital realm, it makes sense that one of the most recurrent financial crimes has evolved as well.
Money laundering, in aggregate is simply taking illicit gains from some class of illegal activity and
filtering the funds back into a legitimate economic system. Some definitions strictly say that it is the
transforming of the dirty money into clean money, but the more problematical issue is making the
money appear legitimate in the eyes of the concerning governmental parties (integration, the third step
and last step in the general laundering model).

What is being done to prevent cyberlaundering?

As stated in the previous question, there is very little being done. There is a current fallacy that exists
with those who can take action that cyberlaundering is very considerably distant from being production
ready, and isnt being used by illicit profit bearing groups. Nothing could be further from the truth, as
cyberlaundering tactics have been in place and being used for almost a decade now, and both the
governmental and private sectors have chosen to ignore them for the time being. 

Are there certain countries that practice cyberlaundering more than others?

Yes, however similar to the case of the legacy laundering, the money is typically made in the US and
filtered out. The US will remain the largest conduit of illicit laundering due to the fact that theortically
the largest laundering operations are concerned with the narcotics trade, and the US is the largest
narcostics consuming nation on the planet. As well, it is land bound to the largest narcotics producing
countries in the world, so the math is pretty solid.

What are the benefits to Cyberlaundering as opposed to legacy laundering?

The benefits of cyberlaundering are fairly immeasurable. Not being bound to physical cash anymore
allows a laundering to directly control the flow of money, where it is going, and often times the
movement is instantaneous, leaving little or no paper trail. As well, gathering a team of persons in order
to set up a cyberlaundering campaign is normally an easier endeavor than that of legacy laundering due
to the predominance of IT assets that exist within the United States, and the benefit of covered
outsourcing.

Briefly, what do you think that the steps are in order to eliminate cyberlaundering?

With technological crimes, it requires a fight fire with fire approach. Cyberlaundering cannot be
combated with legislation and bills, rather, it has to be fought on the field by battling the launderers
with outsmarting their techniques, not by enacting bills or building new divisional relationships (i.e. the
recent marriage between the FBI and FinCen). No matter how many datawarehouses are built, no
matter how many new laws are made for prevention, it wont stop a multi trillion dollar industry. We
have to think about it in terms of how much financial instruments we are dealing with and how that
promotes new creativity and the ability to hire the best in the industry, it is literally the worlds third
largest commodity. If you would like my information regarding this, please read my paper on the subject
in the database. 

Does cyberlaundering have to deal with coding or networking?

Elements of both are necessary in any fully standalone outfit. The best equipped cyberlaundering
campaigns normally use a combination of tactics in order to facilitate a discovery and automation
process that is usually tiered similar to a standard software development lifecycle. Meaning, it normally
looks something like this: No AML software disassembly Discovery and Coordination Functional Design
Specifications Generation Networking Engineering Assimilation Coding integration and Association
Implementation and Testing Staging and pre-production Piloting and Finalization Production AML
software disassembly Discovery and Coordination Implemented AML Software Reverse Engineering
Functional Design Specifications Generation Networking Engineering Assimilation Coding integration and
Association Revised Application Security Testing Application Network Adoption Implementation and
Testing Implementation and Testing Staging and pre-production Piloting and finalization Production The
reasoning ... 

Will cyberlaundering phase out legacy money laundering?

Most likely, observe the changes that have been made in the last 5 years with the banking industry. It is
very unusual (at least in my case), to actually enter a bank to make a deposit or to make a withdrawl. It
is a lot easier for me to just go to an ATM, pay my bills online, or make transfers by using an intelligent
transfer client (usually provided by your bank, allowing you to transfer monies between native customer
accounts). I believe that this is the natural evolution of laundering as well, however the age old legacy
techniques will always play a strong role due to their primitive nature, often times it actually makes
them quite effective if a campaign is willing to relinuisgh the benefits that are gained through
cyberlaundering.

Smurf = engage in hacking, launder money

Smurfing = term related to money laundering. The term "smurfing" is derived from the image of the
cartoon characters, The Smurfs, having a large group of many small entities. Miami-based lawyer
Gregory Baldwin is said to have coined the term in the 1980s

Smurf Attack = a type of denial service (DoS) attack on computer networks. This attack relies on a
perpetrator sending a large amount of ICMP echo request (ping) traffic to IP broadcast addresses, all of
which have a spoofed source IP address of the intended victim. If the routing device delivering traffic to
those broadcast addresses delivers the IP broadcast to all hosts (for example via a layer 2 broadcast),
most hosts on that IP network will take the ICMP echo request and reply to it with an echo reply,
multiplying the traffic by the number of hosts responding. On a multi-access broadcast network,
hundreds of machines might reply to each packet. [1]
Money laundering involves concealing the nature, location, source, ownership, or control of proceeds
from an illegal activity or placing them back into further illegal activity.[1] The ill-gotten proceeds are
laundered through a variety of methods to become “clean money.”

With the expansion of the Internet and increased globalization, the methods of money laundering
continue to become increasingly complex and difficult to detect. The Financial Crimes Enforcement
Network (FinCEN), under the Department of the Treasury, indicates that the routes for money
laundering include banks, check cashers, money transmitters, businesses, and casinos. Money
launderers use methods such as complex wire transfers, shell companies, and currency smuggling to
hide their dirty money.

Money laundering became a federal crime in the Money Laundering Control Act of 1986.[2] It came
to Congress’s attention that organized criminals were camouflaging their proceeds,
and Congress strengthened the federal criminal statues to better combat criminal organizations.
Recently, the scope of the money laundering statute has come under examination. The statute prohibits
financial transactions of proceeds from illicit activities, but it does not currently define what constitutes
“proceeds.” The U.S. Supreme Court ruled in United States v. Santos[3] that in the money laundering
statute, the term “proceeds” refers to profits rather than gross receipts.

Internet gambling  Edit

Congress has enacted several statutes to deal with money laundering. It would be difficult for an
illegal Internet gambling business to avoid either of two of the more prominent statutes — 18 U.S.C.
§§1956 and 1957 — both of which involve financial disposition of the proceeds of various state and
federal crimes, including violation of 18 U.S.C. §1084 (Wire Act), 18 U.S.C. §1955 (Illegal Gambling
Business Act), 18 U.S.C. §1952 (Travel Act), or any state gambling law (if punishable by imprisonment for
more than one year).[4] In fact, the courts have frequently upheld money laundering convictions
predicated upon various gambling offenses.[5] The crimes under Section 1956 are punishable by
imprisonment for not more than twenty (20) years or a fine of the greater of not more than twice value
of the property involved in the transaction or not more than $500,000[6]; those under Section 1957
carry a prison term of not more than ten (10) years or a fine of the greater of twice the amount involved
in the offense or not more than $250,000 (not more than $500,000 for an organization).[7] Any property
involved in a violation of either section is subject to the civil and criminal forfeiture provisions of 18
U.S.C. §§981, 982.

Laundering the Proceeds  Edit

Section 1956 is really several distinct crimes: (1) laundering with intent to promote an illicit activity such
as an unlawful gambling business; (2) laundering to evade taxes; (3) laundering to conceal or disguise;
(4) structuring financial transactions (smurfing) to avoid reporting requirements; (5) international
laundering; and (5) “laundering” conduct by those caught in a law enforcement sting.
Promotion  Edit

In its most basic form the “promotion” offense essentially involves plowing the proceeds of crime back
into an illegal enterprise. Like most of the crimes under Section 1956, the elements of the promotion
offense begin with a financial transaction and the knowledge that the proceeds involved flow from a
predicate offense like illegal gambling:

1. knowing

A. that the property involved in a financial transaction,

B. represents the proceeds of some form of unlawful activity,

2. A. conducts or

B. attempts to conduct such a financial transaction

3. which in fact involves the proceeds of specified unlawful activity (A)(i)

4. with the intent to promote the carrying on of specified unlawful activity.[8]

The “knowledge” element is the subject to special definition which allows a conviction without the
necessity of proving that the defendant know the exact particulars of the underlying offense or even its
nature.[9] The “proceeds” may be tangible or intangible, e.g., cash or debt, things of value or things with
no intrinsic value, e.g., checks written on depleted accounts.[10]

“Financial transaction” for purposes of section 1956 make take virtually any shape that involves the
disposition of something represent the proceeds of an underlying crime,[11] including disposition as
informal has handing cash over to someone else.[12]

The jurisdictional requirements of the section may be satisfied in two ways — with a transaction which
affects commerce or with a financial institution whose activities affect commerce. In either case, the
effect on interstate or foreign commerce need be no more than de minimis to satisfy the jurisdictional
requirement.[13]

The “promotion” element of the offense can be satisfied by proof that the defendant used the proceeds
to continue a pattern of criminal activity[14] or to enhance the prospect of future criminal activity.[15]

Concealment  Edit

The “concealment” offense shares several common elements with the other offenses in Section 1956.
Concealment occurs when anyone:

1. knowing

A. that the property involved in a financial transaction

B. represents the proceeds of some form of unlawful activity,

2. A. conducts or

B. attempts to conduct such a financial transaction

3. which in fact involves the proceeds of specified unlawful activity (A)(i)

4. knowing that the transaction is designed in whole or in part to conceal or disguise the nature,
location, the source, the ownership, or the control of the proceed of specified unlawful activity.[16]

The courts have made it clear that conviction for the concealment offense requires proof of something
more than simply spending the proceedings of a predicate offense.[17] That having been said, the line
between innocent spending and criminal laundering is not always easily discerned.

Evidence that may be considered when determining whether a transaction was designed to conceal
includes: [deceptive] statements by a defendant probative of intent to conceal; unusual secrecy
surrounding the transactions; structuring the transaction to avoid attention; depositing illegal profits in
the bank account of a legitimate business; highly irregular features of the transaction; using third parties
to conceal the real owner; a series of unusual financial moves cumulating in the transaction; and expert
testimony on practices of criminals.[18]

Tax Evasion, Smurfing and International Laundering  Edit

The tax evasion[19] and structured transactions (“smurfing”) offenses[20] shadow the promotion and
concealment offenses. A tax evasion, laundering prosecution requires the government to show that the
defendant acted intentionally rather than inadvertently, but not that the defendant knew that his
conduct violated the tax laws.[21]Similarly, conviction for the smurfing offense does not require a
showing that the defendant knew that his conduct was criminal as long as the government establishes
that the defendant acted with the intent to frustrate a reporting requirement.[22] The international
laundering crime replicates the elements of the promotion, concealment and smurfing offenses (but not
the tax evasion offense) and adds an international transportation element.[23] Of course, the proof the
transportation element alone is insufficient without the evidence of an intent to promote, conceal or
smurf.[24]

The final crime found in Section 1956 is a “sting” offense, the proscription drafted to permit the
prosecution of money launderers taken in by under cover officers claiming have proceeds in need of
cleansing from illegal gambling or other predicate offenses.

Introduction 

This article will explore the latest technique in money laundering: Cyberlaundering by means of
anonymous digital cash. Part I is a brief race through laundering history. Part II discusses how
anonymous Ecash may facilitate money laundering on the Intenet. Part III examines the relationship
between current money laundering law and cyberlaundering. Part IV addresses the underlying policy
debate surrounding anonymous digital currency. Essentially, the balance between individual financial
privacy rights and legitimate law enforcement interests. In conclusion, Part V raises a few unanswered
societal questions and attempts to predict the future.

Disclaimer:

Although the author discusses this subject in a casual, rather than rigidly formal tone, money laundering
is a serious issue which should not be taken lightly. As this article will show, fear of money laundering
only serves to increase banking regulations which, in turn, affect everyone's ability to conduct
convenient, efficient and relatively private financial transactions.

Part I Humble Beginnings 

In the beginning, laundering money was a physical effort. The art of concealing the existence, the illegal
source, or illegal application of income, and then disguising that income to make it appear
legitimate 1 required that the launderer have the means to physically transport the hard cash.2 The trick
was, and still is, to avoid attracting unwanted attention, thus alerting the Internal Revenue Service (IRS)
and other government agencies 3 involved in searching out ill-gotten gains.4

In what could be described as the "lo-tech" world of money laundering, the process of cleaning "dirty
money" was limited by the creative ability to manipulate the physical world. Other than flying cash out
of one country and depositing it in a foreign bank with less stringent banking laws,5 bribing a bank teller,
or discretely purchasing real or personal property, the classic approach was for a "smurf"6 to deposit
cash at a bank. Essentially, platoons of couriers assaulted the lobbies of banks throughout the United
States with deposits under the $10,000 reporting limit as required under the Bank Secrecy Act.7 The
result was the formation of a serious loophole under the Bank Secrecy Act, allowing couriers almost
limitless variables in depositing dirty money such as the number of banks, the number of branch offices,
the number of teller stations at one branch office, the number of instruments purchased, the number of
accounts at each bank, and the number of persons depositing the money.

In 1986, the Money Laundering Control Act (the Act)8 attempted to close the loopholes in the prior law
that allowed for the structuring of transactions to flourish.9In criminalizing the structuring of
transactions to avoid reporting requirements, Congress attempted to "hit criminals right where they
bruise: in the pocketbook."10Under the Act, the filing of a currency transaction report (CTR)11 is
required even if a bank employee "has knowledge" of any attempted structuring.12 Thus, it appeared as
if the ability to launder the profits from illegal activity would be severely hampered.

As the physical world of money laundering began to erode, the tendency to use electronic transfers to
avoid detection gained a loyal following. Electronic transfers of funds are known as wire
transfers.13 Wire transfer systems allow criminal organizations, as well as legitimate businesses and
individual banking customers, to enjoy a swift and nearly risk free conduit for moving money between
countries.14 Considering that an estimated 700,000 wire transfers occur daily in the United States,
moving well over $2 trillion, illicit wire transfers are easily hidden.15 Federal agencies estimate that as
much as $300 billion is laundered annually, worldwide.16 As the mountain of stored, computerized
information regarding these transfers reaches for the virtual stars above, the ability to successfully
launder increases as the workload of investigators increases.17

Although wire transfers currently provide only limited information regarding the parties involved,18 the
growing trend is for greater detail to be recorded.19 If the privacy of wire transfers is compromised, due
to burdensomely detailed record keeping regulations,20 electronic surveillance of transfers, or other
potentially invasionary tactics,21 then the leap from the physical to the virtual world will be nearly
complete. If laundering is to survive it must expand its approach, entering the world of cyberspace.

While change is often a frighteningly awkward experience, for an enterprising criminal operation, that
wishes to remain open for business, it is a necessity. As the above mentioned race through laundering
history demonstrates, creativity, and not necessarily greed, has been the launderer's salvation. The
recent explosion of Internet access,22 may be the new type of detergent which allows for cleaner
laundry.

Part II Enter, Anonymous Ecash

In the virtual universe of cyberspace the demand for efficient consumer transactions has lead to the
establishment of electronic cash.23 Electronic cash, or digital money, is an electronic replacement for
cash.24 Digital cash has been defined as a series of numbers that have an intrinsic value in some form of
currency.25 Using digital cash , actual assets are transferred through digital communications in the form
of individually identified representations of bills and coins - similar to serial numbers on hard
currency.27 While the ultimate goal of each vendor is to facilitate transactional efficiency, bolster
purchasing power on the Internet, and, of course, earn substantial profit in a new area of commerce,
each vendor plays by slightly different rules.28 Although the intricacies of individual vendors are quite
fascinating, for the purpose of this article, it is fair to say that all but one vendor have one trait in
common: lack of anonymity.

The exception to the general rule of lack of anonymity is DigiCash.29 Digicash is an Amsterdam-based

company created by David Chaum,30 a well respected cryptologist. DigiCash's contribution to Internet
commerce is an online payment product called "ecash."31 According to DigiCash, electronic cash by
DigiCash "combines computerized convenience with security and privacy that improve on paper
cash."32 Ecash is designed for secure payments from any personal computer to any other workstation,
over e-mail or Internet.33 In providing security and privacy for its customers, DigiCash uses public key
digital blind signature techniques.34Ecash, unlike even paper cash, is unconditionally untraceable. The
"blinding" carried out by the user's own device makes it impossible for anyone to link payment to payer.
But users can prove unequivocally that they did or did not make a particular payment, without revealing
anything more.35 While ecash's security technology may be among the best in the business as of this
writing, the focus of this article is upon one aspect of DigiCash that is of particular interest to money
launderers and law enforcement: Anonymity.
Part III The Money Laundering Control Act and Anonymous Laundering

This section examines how the Amendments to the Bank Secrecy Act of 1970, commonly referred to as
the Money Laundering Control Act of 1986,36 apply to cyberspace and cyberlaundering. Without delving
into the actual techniques involved in using public keys, blind signatures or any other encryption or
decryption device, the best way to explain how anonymous digital cash could benefit money launderers'
is by example. The following example will be used to demonstrate the law's application.

Doug Drug Dealer is the CEO of an ongoing narcotics corporation. Doug has rooms filled with hard
currency which is the profits from his illegal enterprise. This currency needs to enter into the legitimate,
mainstream economy so that Doug can either purchase needed supplies and employees, purchase real
or personal property or even draw interest on these ill-gotten gains. Of course, this could be
accomplished without a bank account, but efficiency demands legality. Anyhow, Doug employs Linda
Launderer to wash this dirty money. Linda hires couriers ("smurfs") to deposit funds under different
names in amounts between $7500 and $8500 at branches of every bank in certain cities. This operation
is repeated twice a week for as long as is required. In the meantime, Linda Launderer has been
transferring these same funds from each branch, making withdrawals only once a week, and depositing
the money with Internet banks that accept ecash. To be safe, Linda has these transfers limited to a
maximum of $8200 each. Once the hard currency has been converted into digital ecash, the illegally
earned money has become virtually untraceable; anonymous. Doug Drug Dealer now has access to
legitimate electronic cash.

Doug Drug Dealer is, of course, likely to be found guilty of more than just participating in a money
laundering scheme. However, how the law applies to Linda Launderer and the Internet banks is more
confusing. The purpose of the 1986 Act was to specifically criminalize the structuring of transactions so
as to avoid the reporting requirements.37 Linda and her army of couriers are almost certainly violating
structuring regulations by depositing small amounts in regular bank accounts.38 The problem is how to
apply current money laundering law to cyberlaundering.

In the scenario above, Linda Launderer transfers sums of money less than $10,000 from non-Internet
bank accounts to Internet-based ecash accounts. If the Internet bank is FDIC insured,39 as Mark Twain
Bank40 then federal depository regulations may apply. However, the cyberbank will not automatically
be required to file a CTR regarding these transactions as all are under the $10,000 filing requirement.
Nevertheless, if any employee of the Internet bank has even a suspicion of structuring,41 a CTR may be
filed.42 As in the tangible banking world, the information contained on a CTR is only as insightful as the
information presented by the bank conducting the prior transaction.43 In essence, each record in the
chain of transfers is only as strong as the previous recordation.

The catch is that Linda Launderer's transfer was deposited into an ecash account. According to one
cyberbank which currently accepts ecash,44 ecash accounts are not FDIC insured.45 A lack of federal
insurance protection is understandable for the reason that digital money is currently created by private
vendors, rather than the Federal Reserve.46 Thus, digital cash does not enter into the marketplace of
hard currency thereby affecting monetary supply or policy, yet.

Since Linda Launderer's transfer was deposited into a non-FDIC insured, and thus, presumably non-
federally regulated account, then there should be no mandatory compliance with the filing regulations
contained within the Money Laundering Control Act of 1986. If these assumptions prove correct,
whether digital money is anonymous or not will be of less relevance to money launderers and law
enforcement. If certain cyberbanks, or even specific non-FDIC currency accounts within a cyberbank are
able to operate outside the reach of current federal regulations, laundering on the Web may become
one of the most rapidly expanding growth industries. It should be remembered that a criminal
organization desires to clean its dirty money, not necessarily protect their deposits from institutional
banking failures.

Once the ecash account has been established, digital funds can be accessed from any computer that is
properly connected to the Intenet. A truly creative, if not paranoid, launderer could access funds via
telnet.47 Telnet is a basic command that involves the protocol for connecting to another computer on
the Internet.48 Thus, Linda Launderer could transfer illegally earned funds from her laptop on the Pacific
Island of Vanuatu, telneting to her account leased from any unknowing Internet Service Provider49 in
the United States and have her leased Internet account actually call the bank to transfer the funds, thus
concealing her true identity. This would, of course, leave an even longer trail for law enforcement to
follow. Anyhow, ecash, being completely anonymous, allows the account holder total privacy to make
Internet transactions. Thus, the bank holding the digital cash, as well as any seller which accepts ecash,
has virtually no means of identifying the purchaser. Therefore, the combination of anonymous ecash
and the availability of telnet may give a launderer enough of a head start to evade law enforcement, for
the moment.

In the world of earth and soil, money can be laundered by the purchase of real and personal property.
However, any cash transaction over $10,000 is subject to a transaction filing requirement.50 Real estate
agents and automobile dealers, to name a few, are prime targets for the deposit of large sums of cash.
In fact, such agents and dealers have been indicted for allowing drug money to be used to purchase
expensive property.51

On the Internet, anonymous ecash would allow for anonymous purchases of real and personal property.
This fact yields at least two separate, but interrelated problems. First, the launderer or drug dealer will
be able to discretely use illegally obtained profits to legitimately purchase property. However, currently,
the opportunity to spend thousands of dollars of digital money, or ecash for that matter, on the Internet
is virtually nonexistent.52 Second, the temptation for automobile and real property dealers to become
players in the game for anonymous ecash seems overwhelming. If a seller or dealer understands that it
can not possibly trace who spent ecash at its establishment, the fear of becoming involved with dirty
money is drastically reduced.53 Under current law, a seller of property must file a CTR for any cash
transaction over $10,000.54 If the purchaser's identity is anonymous, and even the bank can not trace
the spent ecash, the force of the Money Laundering Control Act of 1986 is withered into mere words on
a page. Of course, Congress could attempt to legislate in this new area of commerce.
Obviously, transferring hard currency to ecash and then spending the ecash is an appealing opportunity
to potential launderers'. What if the ecash is then transferred back to a regular hard currency account?
This may seem a foolish act as the entire purpose is to reap the benefits of anonymous ecash. However,
presently, there are no opportunities to purchase automobiles or real property by the exclusive use of
anonymous ecash. Thus, the desire to convert private and untraceable ecash into a more functional
means of purchasing is understandable.

Whether a regular, non-Internet currency account already exists or must be created to deposit the
transferred ecash into may be irrelevant. Filing a CTR would be a legal necessity if the transfer amount is
over the $10,000 reporting limit, as the transfer will deposit hard currency in a tangible,
institutionalized, and regulated bank account. A transfer from completely anonymous ecash to hard
currency might alert law enforcement as to the existence of the ecash account. While this alone would
not track down laundered money, it might put a suspicious agent on notice.

In summary, Linda Launderer has knowingly structured financial transactions so as to avoid reporting
requirements. Under current law she is in violation of The Money Laundering Control Act of 1986.
However, if the cyberbanks in which she has ecash deposits are outside the reach of current banking
regulations, these banks have no duty to file any currency transaction reports. Nevertheless, assuming
that cyberbanks which accept anonymous ecash are somehow subject to the same laws and regulations
which financial institutions in the tangible world are, Linda must first be caught before she can be found
guilty. This is where anonymous ecash may save Linda from fines and jail time.55 Even if cyberbanks are
required to file transactional reports pertaining to ecash, the reports will be virtually useless, as the
banks have no knowledge as to which funds are Linda's. Thus, Linda, our overly creative launderer, and
Doug, our devious drug dealer, may enjoy the benefits of completely anonymous money laundering.
That is, unless Congress decides to attempt legislation in the area of digital money and virtual banking,
or FinCen is somehow granted the constitutional authority to secretly monitor all cyberbanking
transactions, despite its lack of accountability to the general population.

Part IV The Struggle For Privacy

To be or not to be... anonymous digital cash! That is the question! The battle that emerges is between
the right to privacy by means of anonymous digital cash verses the desire of law enforcement to ferret
out crime. The fact of complete anonymity guarantees that some money laundering will be easier to pull
off. On the other hand, the lack of anonymity means that every move made on the Internet will be
traceable. Thus, whether money laundering becomes rampant under the guise of anonymous ecash may
be one of the first tests of the practical aspects of DigiCash's future. Any discussion of privacy rights
would be woefully incomplete without mentioning the famous privacy article published by Samuel
Warren and Louis Brandeis in 1890.56 This article, barely a century after the Constitutional Convention,
professed that the "right to be let alone"57 was of the utmost importance. Almost two hundred years
after the Constitution was initially ratified, the Supreme Court defined the scope of privacy58 for an
individual's financial information in two landmark decisions.59
In California Bankers Association v. Schultz, the Court held that bank record keeping requirements do
not violate the Fourth Amendment right to privacy and do not amount to an illegal search and
seizure.60 In United States v. Miller, the Court held that a criminal defendant had no Fourth
Amendment right to protection of his bank records,61 and did not have a legitimate expectation of
privacy regarding these papers.62

Concluding over two centuries of Constitutional erosion, it is apparent that an individual's right to
financial privacy is limited. The issue involving cyberspace is whether financial privacy rights are so
limited that the federal government could monitor a digital cash user's financial transactions in a
detailed fashion. In effect, rendering completely anonymous digital cash completely pointless.

While the Supreme Court has sliced financial privacy rights on several, previously mentioned, occasions,
Congress has attempted to restore financial and informational privacy rights to the individual. The
Privacy Act of 1974,63 The Right to Financial Privacy Act of 1982,64 and The Electronic Communications
Privacy Act of 198665 are currently the three best hopes for individual financial privacy.

First, The Privacy Act of 1974 regulates the practices of federal agencies regarding personal
information.66 With certain exceptions,67 no federal agency may disclose any record contained in its
system to any other person or agency without the written request or consent of the individual.68

Next, The Right to Financial Privacy Act of 1982 ("RFPA") attempted to further protect financial
records.69 Under RFPA, in order to obtain a customer's financial records from a financial institution, the
federal government must serve a subpoena on the customer before or concurrently with service on the
bank.70 The government must show that the records are related to a "legitimate law enforcement
inquiry,"71 and notify the customer that it can take steps to block the bank's disclosure of the
records.72

Finally, The Electronic Communications Privacy Act of 1986 ("ECPA") attempts to protect the individual
against the unauthorized interception of electronic communications.73 Title I focuses on the
interception of wire, oral and electronic communications.74 Title II prohibits an electronic
communications service provider from knowingly divulging the contents of a communication while in
electronic storage.75

Applying current law to the Internet, the result is inadequate protection of individual financial privacy.
The combination of The Privacy Act and RFPA prevent the government from groundless searches of
individual financial records. However, the standard required for a search is only that there exist some
evidence that the records are related to a "legitimate law enforcement inquiry."76 Due to this relaxed
standard, individual financial privacy may be violated without any probable cause.77 A "legitimate law
enforcement inquiry" is clearly an easier requirement to meet than a Fourth Amendment probable
cause standard.

Expanding into cyberspace, if the Internet falls under the protection of the ECPA, as it is an electronic
communication, then individual financial privacy in cyberspace is afforded as little protection as financial
privacy in the tangible world. Essentially, the government need only claim that it requires access to
financial records due to a "legitimate law enforcement inquiry."

Taking one step further, the application of current financial privacy laws to DigiCash's Ecash may be the
eulogy for completely anonymous digital cash. If the government believes that ecash is overflowing with
money launderers, a "legitimate law enforcement inquiry" into the situation would likely allow access to
ecash account records. Since even the bank can not trace ecash to a user, pressure would be placed on
various agencies to solve the problem.

First, the Federal Reserve would likely announce that all cyberbanks accepting anonymous ecash
conform with FDIC regulations. Thus, these banks would be subject to federal scrutiny and pressured
into insuring anonymous ecash deposits. Since insuring anonymous ecash might prove unprofitable, it is
probable that many timid cyberbanks will succumb to federal intimidation and abandon anonymous
ecash altogether.

Second, cyberbanks could be convinced to implement special "investigatory software" into their
computer systems so as to flag suspicious ecash accounts. While the technical aspects of such a system
are beyond the scope of this article, it is fair to say that if such programming is both possible and
practical, then no ecash account would be safe from the "legitimate law enforcement inquiring"
software.

Finally, if ecash accounts become subject to greater scrutiny, the IRS and FinCen will capitalize on the
additional information being unearthed. Since there is no requirement of probable cause to search an
individual's financial account, the IRS and FinCen could use the preliminary information obtained from
the "legitimate law enforcement inquiry" so as to have sufficient facts to establish probable cause,
enabling a full scale search and seizure of an individual's financial records.

Part V Conclusion

Above, the sky is a swirling mixture of pale blue and chalky white. Waves of liquid life endlessly wash
ashore, greeting the soft warm sand. Palm trees gracefully sway in a quiet dance with the wind. Amidst
this tranquil bliss, Linda Launderer sits on the beach with her laptop computer "jacked-in" to the
Internet. Unlike the AT&T commercial which portrays an individual faxing messages from a sunny beach
to a business associate in a cold northern state, Linda is simply transferring funds into anonymous ecash
accounts so as to conceal the illegally obtained profits of her employer, Doug Drug Dealer. Hence, Linda
is laundering money over the Internet while sipping a Margarita.

If anonymous digital cash becomes a practical reality, the scenario of a far away beach, a portable
"laundering laptop" and one creative launderer may be more fact than fantasy. The truth is that
technology has created the means and ability to launder money by use of completely untraceable digital
currency. While current money laundering laws apply to the fledgling art of cyberlaundering, the actual
effect of these laws  may  be limited.
Structuring of transactions so as to avoid currency reporting requirements becomes less risky if the
funds used to structure are virtually untraceable. In addition, the filing of currency transaction reports
may be pointless if the money can not be traced into a specific account. However, the actual
requirement that a transaction report be filed may be nonexistent if cyberbanks which accept ecash
deposit accounts do not fall under current federal or state regulation of financial institutions.

For these reasons, the federal government is justifiedly worried that the Internet may become a
launderer's paradise. Nevertheless, should completely anonymous digital cash be prohibited or secretly
monitored solely for the reason that it may facilitate some illegal activities? Such action would be one
additional nail in the coffin of privacy rights. Since the business of collecting and then selling information
on individuals is becoming common, shouldn't an individual who desires some protection from prying
eyes have the right to prevent his or her financial history from becoming a mere commodity for sale to
the highest bidder?

The result may be a compromise between federal agencies that wish to have access to all financial
records and the individual desire for some reasonable level of financial privacy.78 Since it has been
determined that there is no legitimate expectation of complete privacy in financial records held at a
financial institution,79 and that the production of such records is not self-incriminating in violation of
the Fifth Amendment,80 then allowing for anonymous digital cash transactions is not as threatening as
once believed. In effect, it may be more difficult to trace criminal activity which uses anonymous
currency. However, if sufficient cause exists,81 the government clearly has the right to compel an
individual and his or her banking establishment to produce all relevant financial records upon court
order. In essence, forcing the ecash account holder to disclose its identity by revealing its "blinding"
factors.82 The result being that the privileged right to privacy regarding digital currency carries a price:
responsibility. If such liberty is misused, then it should be taken away from that specific violator, rather
than confiscated prior to its misuse.

Therefore, prohibiting or secretly monitoring ecash transactions on the grounds that such transactions
are more difficult to trace is not sufficient justification for invasionary tactics aimed at further limiting
financial privacy. Fear of the unknown is not an adequate reason to quash a potential privacy restoring
means of conducting financial transactions.

Hackers in East Europe and elsewhere would steal credit and debit card numbers and PINs through
phishing and other means, then pass the data to so-called mules in the U.S., who would encode the
numbers onto the magnetic stripe of blank cards, then use the cards to withdraw money from the
accounts at ATMs. They would then send the money back to their co-conspirators in East Europe
through Western Union or through e-Gold, an online digital currency.

Authorities say Carranza helped launder about $2.5 million in this way by operating as an e-Gold money
exchanger. The mules would give him cash or deposit money into his bank account, and he would either
transfer the money to the bank account of another e-Gold exchanger who would convert it to e-Gold for
a carder, or he would change the money himself into e-Gold currency through his own e-Gold account,
then transfer it to the e-Gold account of carders in East Europe and elsewhere. They would then use a
local e-Gold money exchanger to convert the digital fund into their local currency.

One such mule who transmitted stolen money in this way described to Threat Level in 2006 how he
obtained hundreds of stolen card numbers from Romanian phishers and Russian hackers that he met
online. The man, who used the nickname “John Dillinger,” withdrew more than $150,000 from ATM
machines before transferring the money back to East Europe through Western Union and through an e-
Gold money exchanger in California.

In addition to laundering stolen funds, authorities say Carranza was a middleman for carders to
purchase “dumps” (account and other data stored on a bank card’s magnetic stripe) from one another.

Between 2003 and 2007, authorities say that more than $2 million went into and out of Carranza’s e-
Gold account.

At the top of the pyramid are sophisticated hackers -- many of them East Europeans -- with the technical
skills to hack databases and online bank accounts. It's the latter who have helped turn carding into a
multibillion-dollar worldwide crime.

From approximately September 2006 through December 2007, VOLYNSKIY and co-defendant
ALEXANDER BOBNEV participated in a scheme to steal funds from bank and brokerage accounts by
hacking into those accounts through the internet, using personal financial information obtained through
computer viruses, and then laundering the stolen proceeds.

To carry out this scheme, BOBNEV and co-conspirators in Russia used concealed computer codes known
as "Trojan Horses" to hack into the personal computers of multiple victims in the United States. These
Trojan Horses were designed to steal personal account information from individual victims as they
accessed their bank and brokerage accounts through the internet. After the Trojan Horses captured the
victims' personal account information, BOBNEV and other co-conspirators used the information to
access victims' bank and brokerage accounts, and thereafter made unauthorized sales of securities and
unauthorized wire transfers out of these accounts.

VOLYNSKIY, along with co-conspirators residing in the United States, then set up various "drop"
accounts to receive the funds stolen from their victims' bank and brokerage accounts. VOLYNSKIY and
his co-conspirators then sent a portion of the stolen funds from the various "drop" accounts in the
United States to co-conspirators in Russia, through money remitting services, keeping a portion of the
fraud proceeds for themselves.

In addition to the scheme to hack into victims' brokerage accounts, from September 2006 through
December 2007, VOLYNSKIY participated in a scheme to steal funds from bank accounts by withdrawing
money from those accounts at ATMs, using stolen credit card numbers. On three separate occasions,
VOLYNSKIY provided a total of 180 stolen credit card numbers to a cooperating witness, directing that
they be fabricated into credit cards.
Anti money laundering office phone number hijacked by scam gang

Submitted by  hitbsecnews  on Wed, 01/26/2011 - 23:00

Computer hackers are using the Anti-Money Laundering Office phone number in a scam to cheat people
out of their money - and the agency is demanding that TOT Plc provide it with better protection.

Amlo acting secretary-general Seehanart Prayoonrat said people had complained to the agency that
they had been cheated by a criminal gang using his office's telephone number.

Most of those cheated said they had received a telephone call from gang members posing as Amlo
officials investigating crimes. The gang fooled them into believing they were being prosecuted for a
crime and they had to transfer money to Amlo to escape prosecution.

Money Laundering Fraud

Fraudsters send unsolicited e-mails or place job offers on legitimate Internet recruitment sites or
forums looking to recruit 'Money Transfer Agents' with bank or Paypal accounts. These bogus
companies offer part-time employment as an agent receiving payments in the form of fake checks or
stolen money transfers, sometimes for goods which the company claims to be supplying, and then
passing the payment on to the company via a money transfer company such as Moneygram and/or
Western Union less an 'agent's percentage', (usually in the range 5-10%).

These job offers are always illegal and fraudulent. Any person who agrees to act as an agent, (more
correctly a money laundering 'mule'), is actually receiving stolen or counterfeit funds into their account.
The final destination of the transferred funds will be an organised crime syndicate, generally overseas.

These companies can be very convincing in their attempts to perpetrate their fraud. Many of them try
and give an air of legitimacy by displaying bogus 'Verisign' and other certificates. Learn to recognise fake
'Verisign' certificates which will simply be .gif images on the criminal's own webserver and when clicked
on will not display information that originates from the genuine Verisign https secure server, but simply
another bogus .gif image from the criminal's site. Always ensure that the URL of the pop-up seal
verification page begins with the address https://seal.verisign.com. If it doesn't, the seal is fraudulent.

"Clearly the good people at Bobbear have upset the bad guys. The criminals have retaliated by trying to
smear the website by sending spam in Bobbear's name and asking for donations. Clearly innocent
people might be tempted into contributing in the fight against internet child abuse and money
laundering, but the only pockets they would be filling belong to the criminals themselves. Bobbear
makes clear on its website that it never sends spam and never asks for donations," said Graham Cluley,
senior technology consultant for Sophos. "It's a dirty trick by the cybercriminals to try and undermine an
organization that is actually trying to do something positive to make the internet a safer place. All email
users need to learn to be suspicious of unsolicited emails and not take everything they read at face
value." 

Saturday, May 21, 2011

Two Estonian Hackers Attacked Nordea Netbank

Two Estonian Hackers Attacked Nordea Netbank

The Finnish National Bureau of Investigation and the the Estonian Police are investigating on an attack
against Nordea internet banking system.

Hackers stole approximately 1.2 million euros – most of which have been tracked and found. Nordea
communicated that the bank has already reimbursed all the damages to the victims.

Police suspects that 17 people were involved in the crime. During the investigation, five people were
arrested and, according to what Police explained, it seems that the crime could have been organized by
two Estonian citizens.

One person is now suspected of aggravated fraud while another one is of aiding and abetting of an
aggravated fraud. Fifteen people are being suspected of money laundering.

The crime was executed in several European countries through a malware program that criminals used
to contaminate customers’ computers and make approximately a hundred bank transfers attacking 89
private individuals or companies’ bank accounts.

The fifteen suspects seemed then to have acted as middlemen transferring money to the two main
ones. Once “in the hands” of the middlemen, the money was transmitted to bank accounts in Finland
and several other European countries registered under the name of the two Estonians.

The investigation on the issue started in January 2011 while the crimes were committed between
December 2009 and April 2010.
The secret is in your SPAM folder

Middlemen, or so-called mules, have been recruited by using direct contacts and through some internet
sites: in internet crime, mules are used as third persons to illegally transfer money and goods.

According to the official reconstruction of the events, it is legitimate to think that the main suspects
used mass e-mails and text messages promising lucrative job opportunities in international finance to
get middlemen involved in this fraud.

Activities as the one under enquiry are in fact often hidden behind messages offering opportunities for
an extra income with tremendously easy requirements as having reached the age of majority, the
possession of an e-mail address and a of a bank account with netbank user ID.

What people usually do not think of while answering to such messages is that once a person is involved
in an action similar to the one discovered by Estonian and Finnish authorities, this very same person
become at risk of crimes as (to say the most common) money laundering.

Nordea adopts new measures: is it enough?

After netbank frauds, Nordea decided to answer improving its netbank’s security.

When attempting to complete considerable bank transfers, the bank now decided to ask for a
confirmation by phone or by text message, so that not everything can be achieved solely online.

A measure, this one, that might still not be enough to guarantee an absolute security of e-banking
environments if it is true that according to the Finnish National Bureau, the police faces similar kinds of
“mule” cases almost weekly.

During the years 2007-2010, Finnish police faced 159 money laundering cases and – good news, if you
like seeing it like this – in half of the cases, police have been able to prevent bank transfers.

The most common destination for illegal bank transfers is Ukraine and Russia. Several money laundering
cases have been revealed in recent years also in Estonia, where the sensational case of a 19 million euro
money laundering issue gained the front page of international papers only one year ago.
Mon Mar 21 2011, 12:10

A BRITISH HACKER has been sentenced to two years' porridge for pilfering £7 million worth of virtual
poker chips.

Ashley Mitchell might consider himself a top quality hacker but his chips were down after he got well
and truly caught. The INQUIRER reported in February that Mitchell had pleaded guilty but his sentence
was just handed down at Exeter crown court.

It turns out that virtual chips are just as easy, if not easier to trace than real ones, as the hacker left an
online trace when he netted £53,612 by selling discounted chips on the social notworking website
Facebook.

He had hacked into the online gaming website Zygna, stolen the identities of two of its staff and snarfed
up 400 billion virtual chips. He later posed as an administrator of its poker games on Facebook.
According to the Guardian, Mitchell managed to sell some of the virtual chips and Zygna's investigators
put the gaming company's potential losses at £7 million, assuming that Mitchell would have gone on to
sell all the chips.

Mitchell's defence team said the losses weren't quantifiable because Zygna could simply conjure up new
virtual chips out of thin air. That obviously didn't go down too well with Judge Philip Wassall.

Judge Wassall handed Mitchell a two year prison sentence for computer misuse and four counts of
money laundering. The hacker also received a 30 week sentence for breaching an earlier suspended
sentence. In 2008 Mitchell had hacked into the network of his previous employer, Torbay council.

"The sentence has to reflect the impact on public confidence in security systems and online business
when someone breaches security in this way," said Judge Wassall. µ

Read more: http://www.theinquirer.net/inquirer/news/2035694/hacker-sentenced-laundering-gbp7-
million-virtual-chips#ixzz1OPtl728v 

The international heist, thought to be lead by Russian hackers, netted more than $3 million dollars from
banks in the United States, and more than $9 million from banks in the UK.
A large scale international law enforcement effort culminated in October with the indictment of more
than 60 people in the US.

The Zeus Trojan was spread through tainted emails and communications designed to look like messages
from the popular business-oriented social networking service LinkedIn.

Man Pleads Guilty to Hacking Brokerage Accounts for Money Laundering

Alexey Mineev, a New Hampshire (USA) resident, in the 1st week of June 2009 admitted in Manhattan
(USA) federal court that he had been involved in a money laundering scheme.

The court documents state that Mineev agreed to give up $111,954 to compensate the amount he
swindled. Along with that, Mineev has been sentenced to serve prison for up to 20 years and pay
$500,000 in fines.

Reportedly, during November 2008, the New Hampshire man along with two accomplices was legally
charged of running a scam in which a malicious Trojan program was furtively planted on the computers
of brokerage and bank customers. The sinister Trojan stole passwords and account numbers every time
victims accessed their accounts on the Internet.

Investigating officials state that Alexander Bobnev, another conniver, e-mailed the compromised
accounts' screenshots to Mineev, showing the sum transmitted to the latter's drop account. The
screenshots were further accompanied by instructions to withdraw the money immediately.

After this, Mineev transferred the money amounting up to US$10,000 to Russia through the Western
Union money transfer.

When Mineev together with Bobnev were accused in November 2008, the Department of Justice in the
United States charged Aleksey Volunskiy, a third individual from New York, of similarly creating drop
accounts as well as laundering stolen cash.

The defendants knew little that the federal investigators were monitoring their accounts using a secret
informant's services. Consequently, the feds had got a clear picture when the alleged culprits moved
cash from accounts related to investment service vendor Charles Schwab and other places to credit the
sums to their own financial accounts.
The court documents state that the scam operated during September 2006-Decemebr 2007, albeit
Mineev participated in it for only during August-December 2007.

In the meantime, the security researchers commented that hacking accounts was an increasing problem
for brokerage firms and banks. For such illegal activity, cyber criminals often recruit money mules who
engage in siphoning money from compromised accounts to offshore accounts. Many-a-times these
mules hardly know about the fraudulent schemes they work for other than believing that their recruiters
are some international companies.

Former Governor’s Assistant Receives Federal Prison Term

On May 17, 2011, in Raleigh, N.C., Charles Ruffin Poole was sentenced to 12 months and 1 day in prison,
followed by two years of supervised release, and ordered to pay $16,629 in restitution for underpaid
taxes.  In April 2010, Poole pleaded guilty to federal income tax evasion.  According to the plea
agreement, Poole attempted to evade a portion of his 2005 federal income tax liability by concealing his
receipt of $30,000 of income he received in connection with his involvement in the financing of a high-
end community in Carteret County. In the sentencing, Poole was also held accountable for an additional
$25,000 he received from the same source, which was also not reported on his tax returns. As part of
the plea agreement, Poole agreed that he failed to report and correctly identify the source of income
from criminal activity.

Colorado Man Sentenced for Fraud, False Statements, and Money Laundering

On May 12, 2011, in Denver, Colo., Mark Yost, manager of Yost Partnership, L.P., based in Boulder,
Colorado, was sentenced to 78 months in prison for fraud, followed by five years of supervised release,
and ordered to pay $10,880,626 in restitution to the victims.  Yost pleaded guilty in February 2011, to
one count of wire fraud, four counts of false statements to a financial institution, one count of bank
fraud and one count of money laundering.  According to his plea agreement, Yost received investor
funds to trade in securities and to make other investments.  On February 4, 2005, and continuing to on
or about July 6, 2010, Yost devised a scheme to defraud Yost Partnership and the limited partners by
means of materially false and fraudulent pretenses.  As part of the scheme, Yost, at the conclusion of
each quarter of each year, beginning with the first quarter of 2005 and continuing through the second
quarter of 2010, prepared account statements and caused them to be delivered to the limited partners,
knowing each one of the statements to be false in that it overstated the value of the limited partner’s
share of the assets of Yost Partnership.  Yost failed to disclose to the limited partners that a certified
public accountant had not completed an audit because the financial statements included inflated and
improperly recorded values of the partnership’s interests in a privately held company and a publicly
traded company.  During the course of the scheme, Yost diverted money which he was not entitled to
and converted those funds for his own use and benefit.  He also made multiple false statements to
banks and in reports in order to obtain lines of credit. 

West Virginia Man Sentenced on Money Laundering Charges and Illegal Gun Possession

On May 5, 2011, in Charleston, W.Va., Jerry Lee Hanna, of Nicholas County, West Virginia, was
sentenced to 46 months in prison on possession of firearms by a convicted felon and money laundering
charges.  Hanna pleaded guilty to the charges in January, admitting that he was a member of an
oxycodone distribution enterprise operating in and around Nicholas County from 2007 through
September 2008. Hanna admitted that he used cash proceeds obtained from drug trafficking to
purchase two properties, approximately 24 acres of real property and approximately 9 acres of
unimproved hunting property. He subsequently had the deeds to the properties directed to a third party
to conceal the nature, source and ownership of the property and the cash he used to complete the
purchase.  As a result of his conviction, Hanna will forfeit two pieces of real property, $9,000 cash and
his interest in more than 40 firearms.

Last Defendant Sentenced in Elaborate Marijuana Growing Operation in Texas

On May 4, 2011, in Dallas, Texas, Nancy Ann Hargis was sentenced to 42 months in prison following her
guilty plea in September 2010 to one count of money laundering.   Hargis, aka “Deuce,” and five other
defendants were charged in an indictment in June 2010 with felony offenses related to an elaborate
operation to cultivate and sell large quantities of marijuana plants.  Hargis opened separate bank
accounts for three marijuana “grow houses” at three financial institutions.  Money generated from the
marijuana grow operation was deposited into these bank accounts from which Hargis made payments to
cover the operating expenses (e.g., mortgage, property tax and utility payments) of the three houses. 
All defendants, with the exception of one fugitive, have pleaded guilty and have been sentenced.

Co-Defendants in Mail Fraud and Money Laundering Scheme Sentenced

On May 4, 2011, in Raleigh, N.C., Rebecca Plummer was sentenced to 12 months and one day for
conspiring to commit mail fraud, the sale of unregistered securities, and money laundering. She was also
ordered to pay over $400,000 in restitution. On May 5, 2011, Darryl Lynn Laws, of La Jolla, California,
was sentenced to five years’ probation on one count of false statements to a federal officer and one
count of filing a materially false tax return. Laws was ordered to pay $150,000 in restitution. Plummer
and Laws were two co-defendants in the mail fraud and money laundering scheme involving Gregory
Bartko.  A jury convicted Gregory Bartko, a securities attorney, of one count of conspiring to commit
mail fraud, the sale of unregistered securities and money laundering, four counts of mail fraud, and one
count of the sale of unregistered securities in November 2010; he is awaiting sentencing. According to
evidence presented at Bartko’s trial, January 2004, Bartko and Laws had a newly formed fund called the
Caledonian Private Equity Bridge and Mezzanine Fund which accepted more than $701,000 in
fraudulently raised funds. Of that amount $250,000 was paid to Bartko and Laws as “draws” or
compensation for their work as partners in the Caledonian Fund. Laws failed to report or pay taxes on
the $125,000 he received.  In January 2005, Bartko met with potential investors in the offices of Legacy
Resource Management, a business run by Rebecca Plummer and another individual. Bartko asked
Legacy Resource Management to allow him to filter money through their bank accounts. This money
had also been fraudulently raised and did not comply with registration requirements for securities.
Plummer, through Legacy Resource Management, assisted Bartko in the laundering of these fraudulent
proceeds.

Georgia Man Sentenced for Multi-Million Dollar Cargo Theft Conspiracy

On May 3, 2011, in Atlanta, Ga., John Raymond Smith, Jr., aka “Johnny Ray Smith,” of Mableton,
Georgia, was sentenced to 50 months in prison followed by three years of supervised release and
ordered to pay $993,903 in restitution.  Smith pleaded guilty in June 2010 to conspiracy; buying,
receiving, and possessing stolen goods; and money laundering, in connection with the purchase and
distribution of goods traced to interstate tractor trailer and container thefts throughout the
southeastern United States. According to court documents, between May 2005 and July 2009, Smith
operated “Smith Sales Company” out of warehouses in Mableton and Hiram, Georgia.  He conspired
with others to buy and receive goods stolen from nearly two dozen interstate tractor trailer and
container shipments valued at just under $2 million.  The tractor trailers and containers were stolen
while parked at truck stops, motels, and container storage facilities, often at night.  Smith and others
then sold the goods at discounted prices to consumers and wholesalers.

Florida Realtor Sentenced for Tax Evasion

On May 3, 2011, in Fort Myers, Fla., Thomas Daugherty was sentenced to 24 months in prison, followed
by three years of supervised release and ordered to pay $2,063,410 in restitution. According to court
documents, from 1998 through 2005, Daugherty, who was a real estate agent specializing in commercial
real estate transactions, attempted to evade paying approximately $1.6 million in federal income tax.
Daugherty placed real properties in the names of others and purchased cashier’s checks with money he
earned, rather than depositing the money in a bank account from which the money could have been
seized by the IRS. Daugherty cashed the cashier’s checks, as needed, to cover his living expenses. 

Tennessee Woman Sentenced for Investment Fraud Ponzi Scheme

On April 27, 2011, in Nashville, Tenn., Donna Jones, of Dickson, Tennessee, was sentenced to 72 months
in prison and ordered to pay $8,199,954 in restitution for her role in the operation of a massive ponzi
scheme that defrauded investors of more than $12,299,690. Jones was a former office manager of Park
Capital Management Group (PCMG) and personal assistant to convicted Brentwood financial advisor
Michael J. Park. In January 2011, Jones pleaded guilty to charges of mail fraud and money laundering,
admitting that between September 2001 and June 26, 2008, she, along with co-defendant Michael Park,
operated a scheme to defraud investors who deposited funds with PCMG for investment in brokered
stocks and other marketable securities.  Jones fabricated documents designed to deceive investors into
believing that their funds were being actively traded and managed, and that PCMG was generating and
meeting promised growth expectations.  Park and Jones pooled the investor funds and used the funds as
their own personal bank account.  Jones used investor funds to pay her personal expenses, including the
purchase of approximately $19,000 in clothes, home renovations costing more than $300,000, and
approximately $225,000 in cash withdrawals that were deposited into defendant's personal bank
account.

Three Sentenced for Stealing, Laundering Over $500,000 from New Jersey City University

On April 26, 2011, in Newark, N.J., three co-conspirators were sentenced for their roles in a scheme to
steal more than $500,000 in federally subsidized funds.  Shaunette Moody, the former office manager
for the New Jersey City University (“NJCU”) Student Government Organization (“SGO”) was sentenced to
18 months in prison, followed by two years supervised release; her husband, Alexander Moody, was
sentenced to 72 months in prison, followed by three years supervised release. Additionally, they were
both order to pay $516,106 in restitution.  A third co-conspirator, Kimberly Jackson was also sentenced
to three years of probation and ordered to pay $34,315 in restitution.  Alexander Moody pleaded guilty
to money laundering conspiracy and aiding and abetting theft from an organization receiving federal
benefits. Shaunette Moody pleaded guilty to money laundering conspiracy and theft from an
organization receiving federal benefits and Jackson pleaded guilty to conspiring to steal from an
organization receiving federal benefits.  According to court documents, Alexander Moody was the
organizer of the criminal scheme to exploit Shaunette Moody’s position as the SGO office manager to
steal funds from NJCU by cashing unauthorized checks drawn on the SGO bank account. From January 4,
2007, through July 21, 2010, the two stole approximately 275 checks that were then fraudulently signed
and made payable to, among others, the Moodys and co-conspirators Arsenio Willey, Curtis Shearer and
Kimberly Jackson.  In order to conceal and perpetuate their crime, the Moodys falsified documents,
transferred funds among SGO financial accounts, and obtained fraudulent audits of the SGO’s finances. 
Approximately $516,106 was stolen in the course of the scheme. The stolen money was used to
purchase goods and services for the co-conspirators’ benefit, including entertainment and gambling in
Atlantic City.

Alabama Woman Sentenced for Fraud Scheme Based on Non-existent Lawsuit

On April 22, 2011, in Birmingham, Ala., Katherine Hope Lane, of Shelby County, Alabama was sentenced
to 87 months in prison. Lane was also ordered to pay $368,575 in restitution to victims who thought
they were helping her pay the expenses of a personal-injury lawsuit and forfeit proceeds of the fraud
totaling $406,500 to the government.  Lane pleaded guilty to charges of wire fraud, aggravated identity
theft and conspiracy to launder money in August 2011. Lane led family friends and associates to believe
they were helping her pursue a lawsuit filed as the result of her suffering a brutal assault while at work. 
In truth, Lane was never assaulted and there was never a lawsuit. Lane conducted the fraud with her
father, Paul H. Lane Jr., of Pelham, from 2004 through at least November 2008. Paul Lane was indicted in
October 2009 on mail fraud, wire fraud and money laundering charges. Paul Lane is charged with
soliciting money from friends and acquaintances in Michigan, where he once lived, to help pay expenses
for the non-existent lawsuit.

Two Alaskans Sentenced on Money Laundering Charges

On April 15, 2011, in Anchorage, Alaska, Justin M. Standefer was sentenced to 18 months in prison, to
be followed by three years of supervised release, and ordered to pay a $100 special assessment.  Lucas
Allen Deweese was sentenced to 12 months and a day in prison, to be followed by two years of
supervised release, and ordered to pay a $100 special assessment.  According to court documents,
Standefer and Deweese pleaded guilty in June 2010 to conspiracy to launder the proceeds of the
unlawful distribution of controlled substances.  Between December 26, 2008, and April 27, 2009,
Standefer either wire transferred or deposited approximately $46,361 representing the proceeds of the
unlawful distribution of Oxycontin.  Between January 27, 2009, and April 27, 2009, Deweese either wire
transferred or deposited approximately $10,200 representing the proceeds of the unlawful distribution
of Oxycontin.

Illinois Man Sentenced for Structuring Financial Transactions

On April 13, 2011, in Chicago, Ill, Robert Anthony Bryant was sentenced to 108 months in prison, three
years of supervised release, and was ordered to pay $1,131,600 in restitution.  Bryant pleaded guilty in
August 2010 to one count of structuring financial transactions to avoid the requirement that financial
institutions report currency transactions of more than $10,000.  According to court documents, Bryant
owned and operated Taxbiz, Inc., which bought and sold tax certificates.  Bryant offered a guarantee to
purchasers of the tax certificates that if the property owner redeemed the property, or the County
declared the tax sale void, Bryant would refund 100 percent of the purchase price of the tax certificate.
In fact, Bryant was financially unable to refund the purchase price as promised, in part because he
frequently used purchasers' money for his personal purposes. In March 2006, Bryant purposefully
structured approximately $54,000 by writing six $9,000 checks to cash from three different accounts at
two different banks.
New Jersey-Based Real Estate Developer Sentenced for Money Laundering and Corruption

On March 31, 2011, in Newark, N.J., Moshe Altman was sentenced to 41 months in prison, followed by
two years of supervised release.  Altman pleaded guilty to conspiracy to obstruct commerce by extortion
under color of official right and conspiracy to launder money.  According to court documents, Altman
arranged for payment of a $20,000 bribe to pay a Jersey City Housing Department property
improvement field representative.  The money laundering charge arose from a scheme in which Altman,
along with co-conspirators, used purported charitable, non-profit entities to “wash” approximately
$668,000 in dirty checks.  Altman admitted that he engaged in approximately 15 transactions between
May 2007 and July 2009 in which he accepted checks and returned cash, less a fee for laundering the
money, collecting approximately $109,300 in fees over the course of the scheme.  

Cigarette Smuggler Sentenced to Prison

On March 29, 2011, in Norfolk, Va., Yong Jin Li was sentenced to 36 months in prison, three years of
supervised release, and was ordered to pay $4,593,439 in restitution. In September 2010, Li pleaded
guilty to one count of money laundering.  According to the Indictment, Li and co-conspirators Fajun
Zhang and his daughter, Mei Zhang, were involved in a scheme to purchase contraband cigarettes in
Virginia and Maryland that they would sell to purchasers in New York and New Jersey for the purpose of
evading state and local taxes in those states.  In total, from June 11, 2009, through June 9, 2010, the
defendant and his co-conspirators engaged in 63 cigarette transactions with ATF undercover agents
from whom they purchased 137,223 cartons of contraband cigarettes. It was further part of the
conspiracy that Li and Fajun Zhang knowingly conducted financial transactions affecting interstate and
foreign commerce which involved the proceeds of unlawful activity in that they used the proceeds of
selling contraband cigarettes to purchase additional contraband cigarettes.  On December 21, 2010,
Fajun Zhang was sentenced to 48 months in prison; three years supervised release, and was order to pay
$4,405,876 in restitution.  On that same date, Mei Zhang was sentenced to two years on probation and
ordered to pay $4,215,378 in restitution.

Florida Man Sentenced on Conspiracy and Money Laundering Charges

On March 25, 2011, in Pittsburgh, Pa., Yakov Shakhanov, of Delray Beach, Fla., was sentenced to 33
months in prison followed by three years of supervised release on his conviction of conspiracy to harbor
illegal aliens and conspiracy to launder monetary instruments.  Shakhanov was also ordered to forfeit
cash and property to the United States.  According to court documents, between approximately 1999
and 2001, and later in 2005, Shakhanov ran the Cleveland and Pittsburgh franchises of ARRA
Corporation, a Cincinnati company which leased out-of-status alien employees to hotels.  The term “out-
of-status” alien refers to aliens who had lawfully entered the US but had exceeded the authorized terms
of their stay, thereby converting themselves to out-of-status, meaning, out of legal status.  Over 100
out-of-status aliens worked for the company and were charged for housing and transportation to and
from jobs.  While managing these franchises, Shakhanov paid royalties to ARRA, based on the employee
hours worked.  Although the client businesses paid over $6.8 million to Shakhanov and others on behalf
of all workers, only approximately $4.9 million was paid as wages to the workers. 
Pennsylvania Woman Sentenced to Over Five Years for Laundering Drug Money

On March 22, 2011, in Pittsburgh, Pa., Jody Taylor was sentenced to 63 months in prison followed by
three years of supervised release on her conviction of money laundering.  According to information
presented to the court, between 2005 and approximately June 2008, while running a daycare center out
of her home, Taylor financed trips to Newark, New Jersey, where drug couriers obtained funds for
heroin purchases from Taylor, often $100,000 to $200,000 for each trip. On March 6, 2008, a search
warrant was executed at Taylor's residence where $102,535 in drug proceeds were recovered.  Taylor
also wired drug proceeds to various nominees in the Dominican Republic intended for her sister, Angie
Morgan, who was then a fugitive from related drug charges in Allegheny County.

Pennsylvania Man Sentenced for Bank Fraud and Money Laundering

On March 22, 2011, in Pittsburgh, Pa., Nicholas DeRosa, of New Castle, Pa., was sentenced to 41 months
in prison, followed by three years of supervised release, and ordered to pay more than $300,000 in
restitution.  According to information presented to the court, the Lawrence County Housing Authority,
under the direction of then Lawrence County Treasurer Gary Felasco, either lent or made a grant of
$200,000 to Affordable Housing of Lawrence County, a then newly formed not for profit entity. 
Affordable Housing's purported purpose was to purchase homes, fix them up, and then rent or sell them
to the elderly or disabled.  In 2004, Affordable Housing hired Robert Ratkovich, the president of New
Castle City Council and a maintenance employee for the Lawrence County Housing Authority.  Ratkovich,
among other things, was to search for suitable homes for Affordable Housing to purchase as part of its
purported mission.  After Affordable Housing paid Ratkovich approximately $60,000 in consulting fees,
Ratkovich recommended that Affordable Housing purchase seven properties.  Four of the seven
properties were owned or associated with DeRosa, former member of New Castle City Council, the now
retired Assistant Superintendent of the New Castle Area School District.  Two of the other properties
were owned by DeRosa's cousin, and the seventh property was owned by one of DeRosa's longtime
friends.  Many of these homes were in dreadful condition, and Ratkovich recommended these homes
despite the availability of homes in better condition and for less money.  Affordable Housing lacked
sufficient funds to purchase these homes, and therefore, through Ratkovich, it applied for a loan
through First Commonwealth Bank.  Anthony J. Staph, Jr., the son of one of DeRosa's friends, submitted
fraudulent appraisals of the properties that drastically overstated the values of the homes. First
Commonwealth financed the majority of the purchases through a $250,000 loan, and Affordable
Housing contributed approximately $90,000 toward the purchases.  By March 2006, Affordable Housing
defaulted on the loan.  In September 2006 Affordable Housing auctioned all but one of the properties. 
First Commonwealth received pennies on the dollar when Affordable Housing auctioned off the
properties.  As far as the money laundering conspiracy charge, DeRosa, Ratkovich and Felasco funneled
some of the money from the housing schemes through a series of transactions to Felasco's attorney who
did not know that the money was illegally obtained funds.  Felasco was, at that time, facing state
corruption charges.  In summary, the co conspirators arranged for cash from the transactions to be
deposited into the account of an individual who ran a business that received cash receipts.  That
individual then forwarded money to Felasco's attorney.  The idea of depositing the money into the
account of this individual was to disguise the illegal nature of the funds and its connection to them, and
try to make it look like legitimate money.

Tennessee Resident Sentenced in Embezzlement Scheme

On March 21, 2011, in Chattanooga, Tenn., Glenna R. Campbell, of McMinnville, Tenn., was sentenced
to 41 months in prison, three years of supervised release, and ordered to pay $119,835 in addition to
$100,000 in forfeiture already paid in cash to the victim, Stewart's Pharmacy, McMinnville, Tenn. 
Campbell was convicted by a federal jury in November 2010 on six counts of mail fraud, one count of
wire fraud, and one count of money laundering. Evidence during the trail proved that from 2002 until
about July 6, 2009, she devised a scheme to defraud her employer, Stewart Pharmacy, Inc., of
approximately $407,000. She embezzled cash and money orders from her employer which she then
converted into her own personal use. Campbell used the funds to purchase services, goods, and
merchandise, including an Allegro motor home, jewelry, a Tracker Pontoon boat, jet skis, vehicles,
Tennessee Titan football tickets, and other luxury items.

Illinois Man Sentenced for Embezzlement, Filing False Tax Returns and Money Laundering

On March 15, 2011, in Urbana, Ill. Kenneth M. Best, Jr., was sentenced to 30 months in prison, ordered
to pay a fine of $250,000 and $81,129 in restitution to the Internal Revenue Service.  Best, who operated
not-for-profit organizations that served the developmentally disabled, pleaded guilty in April 2010 to
embezzling approximately $667,000, filing false income tax returns and money laundering.  According to
court documents, Best admitted that from 2002 to 2006, he embezzled $667,000 from the organization
and that he transferred the funds to non-organization bank accounts which he controlled, and used the
funds for his personal benefit.  Best further admitted that he filed false income tax returns for the
federal tax years 2002 through 2006, resulting in failure to pay more than $80,000 in federal income tax.

Liquor Store Operator Sentenced for Structuring

On March 11, 2011, in Peoria, Ill., Mohamed Nimer Asad was sentenced to 36 months in prison,
followed by two years supervised release, and ordered to pay $1,476,769 in restitution.  In June 2010, a
jury convicted Asad of conspiracy to structure and unlawful money structuring of approximately $4.4
million in monetary transactions to avoid reporting requirements related to the business practices of
WISAM 1 Inc., doing business as Sheridan Liquors.  The government presented evidence that Asad, who
was involved in the management and operation of Sheridan Liquors from August 2005 to March 2007,
structured cash withdrawals from the business’s bank account for the purpose of evading the
requirement of filing currency transaction reports with the U.S. Treasury.  According to court
documents, Sheridan Liquors’ primary business was the sale of liquor and other products; however the
government presented evidence that the business cashed checks for a fee without a license by the State
of Illinois to operate a check cashing business.  Asad withdrew cash from Sheridan Liquors’ bank account
by writing checks payable to cash which were structured to avoid the reporting requirements.

Arizona Man Sentenced in Investment Fraud Scheme

On March 7, 2011, in Phoenix, Ariz., James S. Cundiff was sentenced to 24 months in prison, followed by
two years of supervised release, and ordered to pay $313,180 in restitution and a $100 special
assessment.  Cundiff pleaded guilty to one count of money laundering in November 2010.  According to
his plea agreement, Cundiff and his two sons operated TransCapital LLC, a company established solely to
secure "investment" financing for concerts and tours.  Dezert Heat Worldwide, LLC, a joint venture
among the Cundiffs and an alleged tour promoter, also was used to obtain victim investor funds to
finance purported concerts and tours..  From on or about August 2004 through on or about March 2007,
the Cundiffs, through TransCapital or Worldwide, entered into loan and event funding agreements with
more than 250 victim investors, and obtained no less than $50,000,000 to finance approximately 150
concerts or concert tours. Because the alleged tour promoter had no association or contractual
arrangements with any of the concerts or tours, the investor funds given to the alleged tour promoter
from the Cundiffs were not used as represented to the victim investors.  Most of the funds were instead
returned by the promoter to the Cundiffs within a short period of time under the guise that these
repayments represented the net proceeds from some other concert or tour that was recently
completed.  From in and between January 25, 2007 and February 20, 2007, the alleged tour promoter
made four intra-bank electronic transfers totaling $313,180 to the personal checking account of
Cundiff’s wife.  On March 28, 2007, Cundiff’s wife, at the direction of Cundiff, converted $230,000 of the
funds to a cashier's check made payable to the daughter of Cundiff’s wife.  The daughter deposited the
cashier's check into a savings account held in the name of Splash International, LLC.  The next day,
March 29, 2007, the daughter obtained a cashier's check in the amount of $57,136 that was used to
purchase Cundiff’s residence located in Chandler, Arizona.

New Jersey Man Sentenced to 71 Months in Prison for Scamming Victims with Phony Real Estate, Film
and Television Investments

On March 10, 2011, in Trenton, N.J., Martin Gevers was sentenced to 71 months in prison for a scheme
in which he sought investments purportedly for real estate, film, and television ventures, then took the
money for his personal use.  Gevers pleaded guilty on November 9, 2010, to an Information charging
one count each of wire fraud and money laundering.  According to documents filed in this case and
statements made in court, Gevers solicited loans allegedly to fund real estate ventures and movie and
television productions, providing false tax returns and false financial statements to potential investors. 
Those documents purported to show he had an adjusted gross income of more than $1.5 million and a
net worth of more than $14 million.    Investors were told they would receive returns ranging from
twenty-five to seventy percent, or more.  However, Gevers did not invest the money he received.
Instead, he used it for personal expenditures, including payments to credit card companies, cash
withdrawals and payments on personal loans.  Gevers fraudulently obtained more than $1.5 million
dollars as a result of the scheme.  In addition to the prison term, Gevers was sentenced to three years of
supervised release and ordered to pay a total of $1,190,272 in restitution to 11 victims of his scheme.

Texas Methamphetamine Distributor Sentenced in Waco

On March 2, 2011, in Waco Texas, John Milligan was sentenced to 262 months in prison, 5 years of
supervised release and ordered to pay more than $2,500 in fines for money laundering, distribution of a
controlled substance and other charges.  According to court documents, Milligan was one of fourteen
people indicted in this investigation.  Evidence presented at trial revealed that from July 2007 until the
spring of 2010, Milligan and others distributed in excess of 300 pounds of methamphetamine.  The
methamphetamine was often “fronted” to other distributers which is the practice of buying and selling
methamphetamine on consignment. Some members of the organization also placed assets in nominee
names to hide the true ownership of those assets. Members of the organization distributed in excess of
300 pounds of methamphetamine.

Financial Advisor Kenneth Starr Sentenced to 90 Months in Prison

On March 2, 2011, in Manhattan, N.Y., Kenneth Starr was sentenced to 90 months in prison in
connection with a multi-million dollar scheme to defraud his clients. Starr pleaded guilty in September
2010 to one count of wire fraud, one count of money laundering, and one count of fraud by an
investment adviser.  According to documents filed in federal court and statements Starr made at his
guilty plea proceeding, Starr served for decades as a financial planner and investment adviser to
numerous clients including high net-worth businessmen and well-known celebrities. Through his two
companies, Starr & Company, LLC and Starr Investment Advisers, LLC (collectively, "Starr & Co."), Starr
managed his clients' finances, paid their bills, advised them about their taxes, and made investments on
their behalf and for their benefit. In some cases, he assumed total control over his clients’ finances by
collecting their earnings, investing their savings, and paying their bills.  Between 2005 and 2010, Starr
participated in fraudulent schemes that involved more than $33 million in actual or intended losses.
First, between March 2009 and April 2010, Starr stole millions of dollars from his clients by directing
unauthorized transfers of funds from his clients' accounts to one of two attorney escrow accounts, and
by causing funds to be transferred from the attorney escrow account for his benefit. Second, between
2005 and 2010, while serving as an investment adviser in Manhattan, Starr made material
misstatements and/or material omissions in an effort to fraudulently induce his clients to make certain
investments. Under the terms of his plea agreement, Starr admitted that he was responsible for
$33,312,782 in actual or intended loss.  He further agreed to pay restitution in the amount of
$29,112,782. To satisfy his restitution obligation, Starr has already forfeited his interest in a Luxury
Apartment.  A final restitution amount will be determined at a later date.

Romeo, Michigan Home Builder Gets Jail Time in Mortgage Fraud Scheme

On February 22, 2011, in Detroit, Mich., Giuseppe Cracchiolo was sentenced to six months in prison, six
months home confinement, three years of supervised release and ordered to pay nearly $1.7 million in
restitution for mortgage fraud.    According to court documents, from 2002 through 2005, Atiim Collins,
owner of Edgewood Property Management recruited and paid individuals to act as straw buyers in
fraudulent mortgage loan transactions.  The scheme involved homes built by Cracchiolo, through his
company, Mark Christian, Inc (MCI). The straw buyers generally had good credit ratings, but not enough
income, and lacked the qualifications necessary to purchase the properties. Ted Carter participated in
the conspiracy by creating false documents, including fictitious W-2 forms and pay stubs.  These false
documents were used by the straw buyers to support the fraudulently inflated asset and income
information submitted on their mortgage loan applications.  After the loans were approved by the
lending companies, Cracchiolo used MCI to receive and disburse the illegally gained proceeds. This
scheme resulted in the approval and disbursement of over $4.1 million in fraudulent mortgage loans. 
Cracchiolo admitted that, during the conspiracy, he arranged to have the illegally obtained loan
proceeds transferred back to borrowers and others without the knowledge and approval of the lending
companies. All of the properties involved in the fraud went into foreclosure resulting in approximately
$2.5 million in losses to the lenders.  On December 3, 2010, Carter was sentenced to one year and a day
imprisonment, followed by two years supervised release. On December 6, 2010, Collins was sentenced
to five years probation, with one year to be served at a residential reentry center and six months home
confinement. They must also pay restitution.

Lawrence Man Sentenced to 48 Months for Laundering $315,000 in Drug Money

On February 16, 2011, in Boston, Mass. Freddy Arias-Cartagena was sentenced to 48 months in federal
prison for his role in laundering $315,000 in drug money.  In July 2010, Arias-Cartagena pleaded guilty to
seven separate counts of laundering drug money.  Arias-Cartagena’s guilty plea arose from a joint
IRS/DEA investigation beginning in 2007, involving the laundering of drug money.  In that investigation,
law enforcement authorities made extensive use of a cooperating witness (CW).  Over the course of the
next 14 months, the CW made six separate deliveries of money represented to be drug proceeds to
Arias-Cartagena and his co-conspirators, in the Lawrence area, totaling approximately $315,000.  Arias-
Cartagena then used his shipping business, ARIAS Shipping & Towing to wire the purported drug money
to the Dominican Republic.  The money was then picked up in the Dominican Republic (minus Arias-
Cartagena's percentage fee) by a DEA undercover agent several days after being given to Arias-
Cartagena.

Embezzlement by Former Billing Service Employee Results in 27 month Sentence

On February 15, 2011, in Oklahoma City, Okla., Melissa Dover was sentenced to 27 months in prison,
three years of supervised release and ordered to pay nearly $374,000 in restitution for tax fraud and
wire fraud.  According to court documents, Dover was employed as an Accounts Receivable Manager by
Comprehensive Medical Billing Solutions, Inc. (CMBS) and had authority to refund overpayments using a
credit card terminal. From October 2005 through January 2007, Dover illegally diverted money from
CMBS’ bank account to her personal credit and debit card accounts. In addition, Dover pled guilty to
filing a false tax return for the 2006 tax year.

Former President and CEO of Charlie Brown's Restaurants Sentenced to Two Years in Prison for Fraud
Conspiracy and Tax Evasion

On February 10, 2011, in Trenton N.J., Russell D'Anton was sentenced to 24 months in prison, followed
by two years of supervised release for conspiring to defraud the company by accepting more than $1
million in kickbacks in exchange for awarding contracts to vendors.  According to court records, from at
least as early as 1999 through 2008, D'Anton and a co-conspirator used their positions as executives to
direct business to vendors who paid kickbacks in the form of cash, checks and in-kind payments. 
D'Anton also took steps to conceal the payments from his employer, purposely failing to report the
value of the kickbacks as income on his personal federal tax returns.
Springfield Man Sentenced for Internet Fraud; Investors Lost More Than $1 Million

On February 7, 2011, in Springfield, Mo., John Michael Sheehan was sentenced to 64 months in prison
and ordered to pay $1,038,670 to 21 individual victim investors for using the Internet to promote a real
estate scheme in which investors lost more than $1 million.  On August 3, 2010, Sheehan pleaded guilty
to conspiracy to commit mail and wire fraud as well as a money laundering conspiracy.  Sheehan used
his businesses, John Michael Investment, LLC, (JMI) and 3MOM, Inc., to defraud investors who paid to
purchase and rehabilitate residential properties from June 1, 2005, through June 30, 2006.  Sheehan
used a Web site to solicit investments to purchase and rehabilitate single family residential homes,
which would then be sold and the proceeds split between the investors and JMI. The Web site promoted
John Sheehan (using the name of “John Michael”) as “the King of Bling” and promised investors a 10 to
18 percent return within a year on a minimum investment of $15,000. Investors also attended
investment seminars hosted by Sheehan. Although investors were told that they would be the sole
investor on each property, Sheehan admitted that he collected investments from multiple investors for
the same properties. Sheehan also admitted that he diverted some of these investments and did not
actually use the money to purchase or rehabilitate the properties. 

Former New Jersey Real Estate Agent Sentenced to 40 Months in Prison for Role in Mortgage Fraud,
Property-Flipping Scheme

On January 31, 2011, in Newark, N.J., Michael Eliasof was sentenced to 40 months in prison, three years
of supervised release and ordered to pay $8,578,569 in restitution in connection with a mortgage fraud
and property-flipping scheme involving rental properties.  Eliasof pleaded guilty to one count of money
laundering conspiracy.  Eliasof conspired with several others to originate mortgage loans fraudulently
and to launder proceeds of the loans during 2004 and 2005.  According to court documents, from 2002
through 2005, Eliasof obtained mortgage loans for various borrowers to purchase two- and three-family
homes, knowing that the borrowers would not qualify for the loans. Eliasof induced the borrowers to
buy properties by claiming that the properties would be good investments and that they would not have
to pay deposits and closing costs, make monthly mortgage payments, or manage the properties because
Eliasof would do that for them. In addition, Eliasof told borrowers they would receive monthly cash
payments and a percentage of future sales profits when the properties were sold. To help borrowers
qualify for mortgage loans, Eliasof prepared contracts of sale that included fictitious deposits and down
payments. He also placed money into their bank accounts to make them appear more creditworthy. 
During the scheme, Eliasof grossed millions of dollars in real estate commissions and payments to
entities that he controlled for supposed repairs to the properties. Eliasof used much of this money to
cover carrying costs and to pay kickbacks and bribes. When problems arose with keeping the mortgage
loans current, Eliasof would arrange to pay them off by refinancing them with new, fraudulent mortgage
loans. In addition, by April 2004, to hide from the lenders how much money he was receiving from these
transactions, Eliasof began diverting checks from the closings to himself.

California Man Sentenced on Money Laundering Charges

On January 27, 2011, in Sacramento, Calif., Robert Brogan was sentenced to 37 months in prison,
followed by three years of supervised release, and ordered to pay $162,290 in restitution.  Robert
Brogan pleaded guilty in February 2010 to conspiracy to commit money laundering.  According to court
documents, Brogan assisted his nephew, Raymond Brogan, in controlling fraudulently obtained life
insurance proceeds.  The proceeds were from a woman who received approximately $200,000 as the
result of the death of her son, a United States Marine.  Robert Brogan deposited $31,900 of the
fraudulently obtained money into his bank account.  He then wrote a check for $13,539 to Norcal
Distributing, Inc.  At the time he did this, he was aware this check had been fraudulently obtained by
Raymond Brogan from the victim’s checkbook.  The memo portion of the check written to Norcal states:
“Supplies and office equipment.”  In fact, the money was used to purchase a number of items including
two LG model 77” and 45” flat screen televisions.  In all, Raymond and Robert Brogan obtained
approximately $163,000 for their own benefit.  Raymond Brogan was sentenced in October 2009 to 33
months in prison and ordered to pay $190,747 in restitution to the victim.

North Carolina Attorney Sentenced for Mortgage Fraud

On January 24, 2011, in Charlotte, N.C., Troy Anthony Smith was sentenced to 18 months in prison and
three years of supervised release. On December 22, 2008, Smith pleaded guilty to two counts of
mortgage fraud conspiracy and two counts of money laundering conspiracy. According to the
indictment, Smith was an attorney with an office in Waxhaw, North Carolina. Smith served as a closing
attorney for two mortgage fraud cells operating in Union and Mecklenburg Counties in North Carolina. 
The mortgage fraud cells would agree with a builder to purchase a property at a set price.  The cell
would then arrange for a buyer to purchase the property at an inflated price, which was usually between
$200,000 and $500,000 above the true price.  The builder would sell the property to the buyer at the
inflated price and the lender would make the mortgage loan on the basis of the inflated price. The
difference between the inflated price and the true price would be distributed among the members of
the cell.  To induce lenders to make the mortgages, cell participants caused loan packages to be
prepared and submitted to lenders that contained false and fraudulent information. Smith and other
attorneys received the proceeds of the fraud into their trust accounts and distributed the funds to the
members of the mortgage fraud cells.

Kansas Man Sentenced to Federal Prison in $3 Million Mortgage Fraud

On January 25, 2011, in Kansas City, Kan., Eric Rabicoff was sentenced to 51 months in prison and
ordered to forfeit $50,000 for money laundering.  According to court documents, Rabicoff admitted he
was the leader of a scheme to defraud mortgage lenders that resulted in more than $3 million in loans
to straw buyers who were not qualified to receive them. Rabicoff and his co- conspirators arranged for
straw buyers to purchase homes in Olathe, Kan., Kansas City, Mo., and Lee’s Summit, Mo. that were for
sale by owners.  They obtained financing for the deals by submitting false loan applications to lenders. 
They provided false information including employment, income and rent history in order for the straw
buyers to obtain loans.  The scheme also called for contract prices to be increased and for conspirators
to receive money by submitting false invoices to title companies for improvements on the houses that
never were made.  Rabicoff directed conspirators in recruiting straw buyers and assembling fraudulent
loan files. He and the conspirators, under his direction, submitted false invoices to title companies for
purported improvements made to the properties. The invoices were submitted in the name of MSM
Enterprises, a company Rabicoff controlled. The title companies paid MSM Enterprises from the loan
proceeds at closing, not knowing that the company made no actual improvements to the properties.  On
April 5, 2006, Rabicoff committed the crime of money laundering by transferring $50,000 in money
criminally derived from the conspiracy from his MSM account to another conspirator’s account held in
the name of Cappo Investment Agency.

Former Loan Officer Sentenced for Role in Mortgage Fraud, Property-Flipping Scheme

On January 24, 2011, in Newark, N.J., Gerald Carti, was sentenced to 27 months in prison for wire fraud
and money laundering conspiracy in connection with a mortgage fraud and property-flipping scheme
involving rental properties in Paterson, N.J.  According to court documents and statements made in
court, from 2002 through 2004, Carti conspired with several others to obtain mortgage loans for various
borrowers to purchase two- and three-family homes in Paterson, knowing that the borrowers would be
putting no money down to purchase the properties. Carti further permitted the borrowers to submit
loan applications falsely stating that they had made substantial down payments and allowing the
mortgage company to fund the loans, even though the borrowers had not made any down payments. At
the time of the closings of the loans Carti received as a commission 50 percent of the fees that the
mortgage company received for each loan. When many of these loans began defaulting, Carti helped
arrange their repayment through new fraudulent loans.  In addition to the prison term, Carti was
sentenced to three years of supervised release and ordered to pay $1,034,956 in restitution.

Former Controller of a Miami-Dade County Telecommunications Company Sentenced for His Role in
Foreign Bribery Scheme

On January 21, 2011, in Miami, Fla., Antonio Perez, of Miami, was sentenced to 24 months in prison for
participating in a conspiracy to pay and conceal bribes to former Haitian government officials. Perez was
also ordered to serve two years of supervised release and to forfeit $36,375.  Perez pleaded guilty on
April 27, 2009, to conspiring to making corrupt payments for a Miami-Dade County telecommunications
company to officials of the Republic of Haiti’s state-owned national telecommunications company,
Telecommunications D’Haiti, in violation of Foreign Corrupt Practices Act (FCPA) and money laundering
laws. In his guilty plea, Perez admitted to conspiring to make corrupt payments to foreign government
officials to secure business advantages for the telecommunications company from Telecommunications
D’Haiti.  According to court documents, Perez conspired with Robert Antoine, the former director of
international relations for Telecommunications D’Haiti and Juan Diaz, the owner of J.D. Locator Services,
along with others.  Perez and his co-conspirators concealed the bribe payments in part by conducting
financial transactions that involved wiring money to shell companies and mislabeling invoices, checks
and ledgers.   Perez admitted that he was personally involved with two bribe payments totaling
approximately $36,375. On July 30, 2010, Diaz was sentenced to 57 months in prison after pleading
guilty to paying and concealing $1,028,851 in bribes to former Haitian government officials while serving
as an intermediary for three private telecommunications companies.  Antoine admitted accepting
bribes, including bribes from Diaz, and pleaded guilty on March 12, 2010, to money laundering
conspiracy.  Antoine was sentenced to four years in prison. 

Marine Major Sentenced On Financial Crimes

On January 10, 2011, in Phoenix, Ariz., Marine Major Richard Fuller, of Yuma, Ariz., was sentenced to 12
months and a day in prison for his role in illegally depositing over $440,000 into U.S. bank accounts.
Fuller is a Marine Major who was deployed to Iraq from February 15, 2005, to September 27, 2005. 
While in Iraq, Fuller served as a Project Purchasing Officer for the Commander’s Emergency Response
Program (CERP) assigned to the Fifth Civil Affairs Group, Camp Fallujah.  In this capacity, Fuller identified
and selected reconstruction projects, awarded reconstruction projects to Iraqi contractors, negotiated
contract terms, and verified the completion of projects.  CERP funds were distributed to the Iraqi
contractors in the form of brand new $100 United States Currency notes. Soon after returning from his
deployment in Iraq, Fuller began making cash deposits with brand new $100 U.S. Currency notes.  
Between October of 2005 to April of 2006, Fuller made 91 cash deposits totaling over $440,000 into
bank accounts with Bank of America, Chase Bank and the Navy Federal Credit Union.  Fuller made
multiple cash deposits under $10,000 into various bank accounts to evade federal currency reporting
requirements.

Former Investment Manager Sentenced to 10 Years for Laundering Investor Funds

On December 21, 2010, in Oklahoma City, Okla., Mark Trimble was sentenced to 120 months in prison,
two years of supervised release and ordered to pay more than $9,000,000 in restitution for money
laundering.  Mark Trimble owned and operated Phidippides Capital Management, LLC, an Oklahoma
limited liability company with offices in Edmond and Oklahoma City.  According to court records, on May
9, 2007, an investor gave Trimble $2,000,000 and was told it would be invested in various securities
through Phidippides. The funds were then deposited into the bank account of Phidippides.  Five days
later, Trimble transferred $1,000,000 of the funds to his personal bank account. Then, on May 17, 2007,
Trimble transferred those same funds to his personal investment account.  Trimble pleaded guilty to
money laundering on April 12, 2010.

Father and Daughter Sentenced in Conspiracy to Purchase and Sell Contraband Cigarettes

On December 21, 2010, in Norfolk, Va., Fajun Zhang and his daughter, Mei Zhang, aka Michelle, were
sentenced for their roles in a conspiracy to purchase and sell contraband cigarettes. Fajun Zhang was
sentenced to 48 months in prison, followed by three years of supervised release, and ordered to pay
$4,405,876 in restitution.  He pleaded guilty in September 2010 to one count of money laundering. Mei
Zhang was sentenced to two years probation of which 12 months will be served on home detention with
electronic monitoring, and ordered to pay $4,215,378 in restitution.  She pleaded guilty in September
2010 to one count of conspiracy.  According to court documents, Fajun and Mei Zhang and others drove
to the Hampton Roads region in Virginia on a regular basis to purchase contraband cigarettes and sell
them at a profit.  In addition, the defendants sold counterfeit Virginia cigarette tax stamps at a price of
3.8 cents per stamp. The true value of the Virginia cigarette tax stamp is 30 cents.  As stated in the
indictment, the co-conspirators would pay for a portion of the cost of the contraband cigarettes using
counterfeit goods and counterfeit Virginia cigarette tax stamps.  The Zhangs and others purchased over
$3 million in contraband cigarettes, which they attempted to sell in New York and New Jersey.

Prolific Identity Thief Sentenced For Stealing $1.15 Million

On December 15, 2010, in Portland, Ore., Eduard Anatolyevich Kholstinin (aka Edward Belozor) was
sentenced to 22 months in prison to run concurrently with his sentence in a New York State case. In
addition, Kholstinin will serve three years of supervised release and pay $1,151,382 in restitution. On
September 9, 2010, Kholstinin pleaded guilty to one count each of interstate transportation of stolen
property, structuring of monetary transactions, and fraud and misuse of visas, permits, and other
documents. Kholstinin, a Russian citizen, also agreed to forfeit $80,000 from the sale of gold coins, along
with two automobiles, an ATV and computers. According to court documents, between May 2006 and
May 2007, Kholstinin used fraudulent credit cards to gain unauthorized access, via hundreds of ATM
machines in California and elsewhere, to bank accounts held by victims in Oregon, Washington,
California and elsewhere. This scheme resulted in a loss of over $463,000 to Wells Fargo Bank and over
$687,000 to Citibank. In late May 2007, Kholstinin took stolen bank funds from Anderson, California to
Oregon where he used phony driver’s licenses, which he created, to wire transfer at least $124,000 to
various individuals in Russia. The wire transfers were all made at non-bank locations such as grocery
stores, pharmacies, and retail stores. Receipts for 47 of the wire transfers, purchased with currency for
between $1,920 and $2,870, show that he structured the transfers and made the transactions at
multiple locations on the same date, to not trigger the filing of Suspicious Activity Reports or Currency
Transaction Reports with the Internal Revenue Service (IRS).

Minnesota Man Sentenced for Mortgage Fraud

On December 20, 2010, in Minneapolis, Minn., Brett Thielen was sentenced to 27 months in prison on
one count of mortgage fraud through the use of interstate wire and one count of engaging in a
monetary transaction in criminally derived property. In his plea agreement, Thielen admitted that from
August of 2006 through April of 2007, he defrauded certain mortgage lenders by arranging for the
fraudulent purchase of condominiums by various unqualified buyers at prices exceeding the true values
of the units. According to Thielen’s plea agreement, the recruited buyers paid for the condos entirely
with borrowed funds. In order to obtain those funds, the buyers allowed some of Thielen’s accomplices,
who were mortgage brokers, to fill out loan applications on their behalf. Those applications contained
false information about buyer income and credit worthiness. In addition, they falsely indicated the value
of the condos. Thielen and his accomplices, as well as the buyers, received substantial kickbacks out of
the funds borrowed from the mortgage lenders, which was not made known to the lenders. From
September 2006 through April 2007, 13 condos were purchased by unqualified buyers, resulting in
losses to mortgage lenders in excess of $2.5 million.

Real Estate Agent Sentenced to Prison for Fraud

On December 13, 2010, in Tucson, Ariz., Roy Fife was sentenced to 30 months in prison, five years of
supervised release, and ordered to pay restitution of $1,820,977. On December 15, 2009, Fife pleaded
guilty to wire fraud and conspiracy to commit money laundering. According to his plea agreement, Fife,
a licensed real estate agent, participated in a "cash back" mortgage fraud scheme that also involved
Chris Nero and others in Arizona.  Using his business relationships with local mortgage brokers, he
assisted buyers in qualifying for mortgages.  Fife admitted that he knew some of these buyers were
being paid to be straw buyers and were purchasing multiple properties that they were not going to live
in.  Further, he knew some of the buyers were submitting materially false loan applications that included
false statements regarding assets, liabilities, and the intent to occupy the subject properties as primary
residences.  As part of the scheme and to hide his involvement, Fife did not receive documented real
estate commissions even though he was a licensed realtor at the time of the transactions.  All
disbursements at the close of a property must be disclosed to the lender. Fife received at least $225,000
in cashier's checks from Chris Nero and his surrogates outside the close of escrow.  Chris Nero was
previously sentenced to 58 months in prison for his role in the conspiracy and for tax evasion.

Omaha Man Sentenced to Prison

On December 9, 2010, in Omaha, Neb., Lee A. Weinstein, of Omaha, was sentenced to serve 180 months
in prison for conspiracy to distribute more than 1,000 kilograms of marijuana and money laundering.
Weinstein was the leader/organizer of a drug trafficking operation with ties to Nebraska, Arizona,
California and Mexico.  At the time of his March 2010 arrest, agents were able to attribute over 13,000
pounds of marijuana and 2.9 million dollars to Weinstein’s drug operation. Agents in Nebraska and
Arizona have seized over $400,000 and numerous vehicles, including a 1967 Cessna--U206B, as part of
this investigation.

Four Sentenced In Mortgage Fraud

On December 7, 2010, in Kansas City, Kan., four defendants were sentenced on charges of taking part in
a $3 million mortgage fraud scheme. Bora Ly, of Raytown, Mo., was sentenced to 18 months in federal
prison; Debora Saulmon, of Olathe, Kan.,  to 15 months; Kong Bun Ly, of Kansas City, Mo., to 12 months;
and Rebecca Gelwix, of Des Moines, Iowa, to eight months. Each of the defendants pleaded guilty to one
count of conspiracy to commit bank fraud, money laundering and wire fraud. They admitted conspiring
with co-defendant Eric M. Rabicoff and others to defraud mortgage lenders and obtain more than $3
million in loans to straw buyers who were not qualified to receive them. They obtained financing by
submitting loan applications to lenders that contained false information on employment, income and
rent history. The scheme also called for contract prices to be increased and for conspirators to receive
money by submitting false invoices to title companies at closing. Two defendants in the scheme have
been previously sentenced and four more await sentencing.  

North Carolina Man Sentenced on Money Laundering Charges

On December 1, 2010, in Raleigh, N.C., Kimithi L. Davis, of Knightdale, North Carolina, was sentenced to
53 months in prison and ordered to pay $2,045,854 in restitution.  According to a Criminal Information
filed on April 1, 2010, Davis was charged with conspiracy to commit money laundering.  Davis operated a
business known as “Pro Bowl Brokerage” and “Pro Bowl Consulting, LLC” that purported to help people
secure loans and real estate financing.  Though neither Davis nor his business had any relevant
brokerage license, they collected a fee from the proceeds of the loans in an amount misrepresented to
the victim lenders.  During the scheme, Davis and others secured financing for themselves and others
based on materially false and fraudulent representations to lending institutions. Davis then engaged in
financial transactions with these ill-gotten gains.

Mortgage Fraud Defendant Gets 14 Years in Federal Prison

On November 19, 2010, in Kansas City, Kan., Maurice Ragland was sentenced to 168 months in prison
for mortgage fraud.  According to court documents, Ragland pleaded guilty to one count of wire fraud
and one count of money laundering.  In his plea, he admitted that in 2003 and 2004 he conspired with
co-defendant Wildor Washington, Jr. and others to obtain mortgage loans by submitting inflated
property appraisals and other false information to lenders.  The conspirators targeted borrowers with
low incomes and little knowledge of the real estate industry.  They urged borrowers to apply for real
estate loans that were processed through various entities the conspirators controlled including Heritage
Financial Investments, Legacy Enterprises, Atlantic Mortgage, Inc., T.E.R.M. Appraisers, the Real Estate
Group, J.T.F. Enterprises, Liberty Escrow and AMSTAR Mortgage.  Many of the real estate appraisals
submitted by Ragland and the conspirators contained inflated property values and forged signatures of
licensed appraisers whose identities had been stolen.  In addition, Ragland and other conspirators acted
as home buyers and submitted loan applications containing false income and asset information, as well
as false information about the appraiser of the property and the intended use of the property.  Two
conspirators, Eryc Reese and Lydell Flowers, are awaiting sentencing.  The following co-defendants have
been sentenced in the case:

 Wildor Washington, Jr., sentenced to 200 months.

 Terrell Ford sentenced to 135 months.

 Ryan Miller sentenced to 135 months.

 Ron Brown sentenced to 121 months.

 Les Saunders sentenced to 108 months.

 Greg Stevenson sentenced to 97 months.

 Terrence Cole sentenced to 37 months.

 Kara E. Robinson-Franks sentenced to 36 months.

 Victoria Bennett sentenced to 24 months.

 Scott Alexander sentenced to 12 months and a day.

 Emma Holmes sentenced to 12 months and a day.

 Amanda Childs sentenced to 12 months and a day.

Leader of Multi-Million-Dollar Investment Fraud Sentenced to Over 11 Years in Prison

On November 12, 2010, in Nashville, Tenn., Sheila Kennedy, of Clarksville, was sentenced to 136 months
in prison for her part in an elaborate investment-fraud scheme.  Kennedy pleaded guilty in March 2009
to one count of wire fraud, one count of mail fraud, and two counts of money laundering.  At the plea
hearing, Kennedy provided extensive details of investment-fraud schemes spanning several years which
included several co-conspirators and at least two separate schemes to defraud investors.  Kennedy
admitted that between 2005 and 2006, she and co-defendant Ann Scarborough solicited investors to
invest in fraudulent real estate opportunities.  The real estate scheme required that investors give
Kennedy and Scarborough money – often in the form of checks payable to “ASK, LLC,” a company
operated by Kennedy and Scarborough, and in return, receive so-called “promissory notes” or “time
notes.”  Kennedy admitted that, contrary to her representations to the investors, she never intended to
invest the funds in real estate and, in fact, no such real estate opportunities had ever existed.  She
further admitted that, instead of investing the money she received from investors, she converted the
funds to her own personal use and for the benefit of her co-conspirators.  Kennedy also admitted that,
between 2005 and 2009, she and co-defendant Philip Russell solicited investors to invest in additional
fraudulent real estate opportunities.  Like the earlier scheme, Kennedy admitted that she used the funds
received from these investors for her own and other’s benefit as well.  Kennedy also admitted that, as a
further inducement, she falsely represented to investors that she was about to receive an extremely
large inheritance from which she would guaranty each investor’s investment, thus encouraging investors
to extend the deadline for receiving the return of their original real estate investment.  In addition,
Kennedy promised certain investors that if they made a new investment, their new funds would be used
to facilitate Kennedy obtaining her purported inheritance, and that those investors would receive an
additional return on their new investment from the inheritance funds.  Two of Kennedy’s co-defendants
– her husband, Kenneth Kennedy, and her former business partner Ann Scarborough, were recently
convicted after a jury trial of multiple counts of wire fraud, mail fraud, and money laundering.  They
await sentencing.  A third co-defendant, Philip Russell, who was scheduled to be tried with Kenneth
Kennedy and Ann Scarborough, failed to appear and remains a fugitive from justice.

Owner of Residential Roofing Company Sentenced for Illegally Structuring Cash Deposits

On November 15, 2010, in Hartford, Conn., Karl Gagnon, of Winsted, was sentenced to 12 months and
one day in prison to be followed by two years of supervised release. Gagnon pleaded guilty on July 22,
2010 to charges of structuring cash transactions for the purpose of evading federal reporting
requirements.  Federal law requires all financial institutions to file a Currency Transaction Report (CTR)
for transactions that exceed $10,000.  To evade the filing of a CTR, individuals will often structure their
currency transactions so that no single transaction exceeds $10,000.  According to court documents and
statements made in court, Gagnon was a self-employed general contractor, doing business as Karl
Gagnon Construction, specializing in residential roofing.  Between September 6 and October 6, 2006,
Gagnon deposited approximately $277,306 at various branches of Northwest Community Bank and
Webster Bank by making 29 separate cash deposits in amounts equal to or less than $10,000.  In
addition, Gagnon had not filed federal income tax returns from 1999 to 2006.

Colombian National Sentenced to 80 Months in Prison in Money Laundering Conspiracy

On November 12, 2010, in New Haven, Conn., Francisco Dario Duque-Duque, of Medellin, Colombia, was
sentenced to 80 months in prison for his role in an international money laundering conspiracy. 
According to court documents and statements made in court, a Colombian-based organization
employed operatives in the United States and funneled millions of dollars in drug proceeds from the U.S.
to Medellin, Colombia.  The organization also used “stored value cards,” which function like debit cards
and enabled cardholders to deposit U.S. dollars into accounts locally, to be withdrawn later from banks
in Medellin as Colombian pesos.  More than $7 million in drug proceeds were laundered through this
scheme.  Duque pleaded guilty in January 2010 to one count of conspiracy to commit money
laundering.  He will be deported upon completion of his sentence.

Man Sentenced to Two Years in Federal Prison for Laundering Money from Ecstasy Sales

On November 5, 2010, in Las Vegas, Nev., Shawn Ignatious Nunes was sentenced to 24 months in prison,
three years of supervised release, and ordered to pay a $3,000 fine and forfeit $2,200. Nunes was
charged in June 2009, and pleaded guilty on August 6, 2010, to one count of money laundering. 
According to the plea memorandum, Nunes received $2,000 in exchange for distributing approximately
500 ecstasy pills in September 2008.  In addition, Nunes previously received $200, which he knew were
profits from illegal drug dealing. 

Owner of Internet-based Business Sentenced in Anabolic Steroids and Money Laundering Conspiracy

On November 3, 2010, in Mobile, Ala., Brett W. Branch was sentenced to 87 months in prison and
ordered to pay $4,600 in special assessments.  According to the indictment, Branch, of Eaton, Colorado,
was charged with drug conspiracy, drug distribution, drug distribution to a person under age 21, and
money laundering conspiracy.  Branch owned Infinite Health, an Internet-based business, and solicited
three doctors in Greeley, Colorado, to write steroid prescriptions for his customers.  Many of the
prescriptions included veterinary steroids.  Branch, who is not a physician, decided what mix of drugs
would be prescribed and sold to the user.  The doctor signed the prescription form that Branch had
prepared and faxed the form to Applied Pharmacy Services, Inc. (APS).  APS filled and shipped the
orders.  The drugs were unlawfully distributed to hundreds of users, including teenagers, in nearly every
state across the nation.

Securities Attorney and Former Stock Broker Each Sentenced to More Than 12 Years in Prison for $43
Million Pump-and-Dump Stock Manipulation Scheme

On October, 29, 2010, in Tulsa, Okla., G. David Gordon, a securities attorney, and Richard Clark, a
businessman and former stock broker, were sentenced to 188 months and 151 months, respectively and
ordered to forfeit more than $43 million for wire fraud, securities fraud and money laundering. 
According to court documents, between April 2004 and December 2006, Gordon, Clark and other
conspirators devised a scheme to defraud investors known as a "pump and dump," in which they
manipulated three publicly traded stocks. The evidence at trial established that the conspirators
obtained approximately $43 million in proceeds from the manipulation of the three penny stocks.  Two
companies based in Tulsa at the time of the scheme were among those whose stock was manipulated:
Deep Rock Oil & Gas Inc., and Global Beverage Solutions Inc., formerly known as Pacific Peak
Investments.  Clark is the former chief executive officer of Global Beverage. The third company, National
Storm Management Group Inc., is based in Glen Ellyn, Ill.  Gordon and Clark executed the scheme by
obtaining a majority of the free-trading shares of stock they intended to manipulate, using fraudulent
and deceptive means to acquire the stock and/or remove the trading restrictions on the shares they
obtained.   They hid and "parked" their shares with various nominees, such as friends, relatives or other
entities that they owned and controlled.  Then they coordinated trading to create the appearance of an
emerging market for these stocks, after which they conducted massive promotional campaigns in which
unsolicited fax and e-mail "blasts" were sent to millions of recipients.  These blasts touted the respective
stocks without accurately disclosing who was paying for the promotions, omitted that the defendants
intended to sell their shares, and induced unsuspecting investors to purchase stock in the companies.  E-
mail and fax blasts promoting two companies, National Storm and Deep Rock Oil & Gas, touted
investment opportunities purportedly created by Hurricane Katrina. The defendants and their nominees
obtained significant profits by selling large amounts of shares after they had artificially inflated the stock
price.  For each of the three manipulated stocks, the defendants’ sell-off caused declines of the stock
price and left legitimate investors holding stock of significantly reduced value.

Two Portland Men Sentenced in $1.5 Million Tax Refund Scheme

On October 28, 2010, in Portland, Ore., Lee Vinton Howlett was sentenced to 60 months in prison and
Todd Martin Howlett to five years of probation for their roles in a fraudulent tax refund scheme. Lee
Howlett, who pleaded guilty to filing false claims on June 30, 2010, was also sentenced to three years of
supervised release and was ordered to pay $754,214 in restitution to the Internal Revenue Service (IRS).
He had previously returned $341,275 to the IRS, in addition to $285,026 being seized from his bank
accounts. In July 2009, while under federal court supervision for his previous conviction for conspiring to
make false statements to financial institutions relating to mortgage fraud, Lee Howlett began filing
phony corporate income tax returns with the IRS and depositing the resulting refund checks. This
continued up to the time of his arrest in February 2010 by IRS agents.  Lee Howlett filed corporate tax
returns for shell companies he had previously established in Oregon. After being confronted with the
phony refunds in October 2009, Lee Howlett repaid more than $340,000 to the IRS. Once the
repayments were made, Lee Howlett continued receiving and processing fraudulent refunds. In all, Lee
Howlett attempted to defraud the government of over $1.5 million through the filing of two dozen
phony corporate tax returns, and did in fact receive over $1.3 million in fraudulent refunds. He used
hundreds of thousands of dollars of this stolen money for gambling. Lee Howlett enlisted the assistance
of his brother, Todd Howlett, also of Portland, to help carry out his scheme. Todd Howlett pleaded guilty
to structuring, which involved him making four $5,000 currency withdrawals from a bank over two days
to evade the bank's requirement to report the transactions to the IRS on a Currency Transaction Report.
The account from which Todd Howlett withdrew the funds contained the proceeds of one of Lee
Howlett’s fraudulent tax refund checks.

Two Defendants Sentenced in $1.2 Million Money Laundering Scheme

On October 26, 2010, in Charlotte, N.C., Donald Eugene Bess, of Bessemer City, North Carolina, was
sentenced to 24 months in prison and ordered to pay $549,789 in restitution.  On June 7, 2010, Ray
Eugene Rohm, of Dallas, North Carolina, was sentenced to 24 months in prison and ordered to pay
$842,288 in restitution.  In addition, each defendant was ordered to forfeit all property involved in the
money laundering conspiracy.  According to court documents, Rohm owned and operated Rohm
Enterprises, a window treatment services business and Bess operated a body shop business named Bess
Used Car Wrecker Service.  From in or about April 2001 to in or about January 2007, Bess and Rohm
deposited into their respective business accounts $1.2 million in fraudulently obtained checks generated
by a former claims manager of Farm Bureau Insurance.  Although Rohm and Bess were aware that the
checks were obtained through an insurance fraud scheme, they deposited the checks on his behalf and
collected a fee in return for conducting the financial transaction.

Mastermind Behind Multimillion-Dollar Stock Manipulation and Money Laundering Scheme is

Sentenced to 10 Years in Prison

On October 22, 2010, in Camden, N.J., Alfred P. Avasso, of Port St. Lucie, Fla., was sentenced to 120
months in prison, followed by three years of supervised release and ordered to pay $1,992,862 in
restitution.  Avasso was also ordered to forfeit $2,101,313 to be paid to the victims of his crimes. 
According to court documents, Avasso was the mastermind behind a multimillion-dollar stock
manipulation and money laundering scheme involving Accident Prevention Plus, Inc. (APP).  At his plea
hearing, Avasso admitted that from approximately July 1998 to January 31, 2005, he conspired with
others to manipulate the price of securities and to conceal the ownership, control, influence, and
proceeds from the sale of securities in APP.  Avasso also admitted that he laundered the proceeds of the
APP fraud.  Avasso caused APP to enter into a false and fraudulent consulting agreement with his
company, Bristol Consulting.  However, the only services Bristol Consulting provided concerned fund-
raising, and the real purpose of the consulting agreement was to conceal from the investing public the
fact that APP was transferring free-trading shares of APP stock to Avasso for his financial benefit.  Avasso
admitted that he caused at least 4,129,800 shares of APP stock to be issued to Bristol Consulting under
the consulting agreement.  Avasso also sold some of the illegally acquired stock and deposited the
proceeds into an account in the name of Bristol Consulting, from which he would transfer money for his
personal benefit.  Over the course of the scheme, Avasso caused over $1 million in unlawful payments
to be made to Bristol Consulting.  The losses from the fraud exceeded $5 million.

Former Home Depot Employee Sentenced for His Role in Conspiracy; Defendant Took Over $1.4
Million in Bribes

On October 19, 2010, in Atlanta, Ga., Ronald Douglass Matheny, II, of Chattanooga, Tennessee, was
sentenced to 27 months in prison, followed by three years of supervised release, and ordered to
perform 200 hours of community service.  In addition, Matheny was ordered to pay a $7,500 fine and
$502,000 in restitution.  Matheny pleaded guilty on May 19, 2009 on charges of conspiracy to commit
mail fraud and wire fraud and conspiracy to commit money laundering.  According to court documents,
Matheny was employed by Home Depot from May 1987 until July 2007. From May 2002 through April
2005, Matheny held the position of Product Merchant in Home Depot's Flooring Department.  He was
responsible for overseeing the location of flooring merchandise in all of Home Depot's retail stores and
for locating outside firms to facilitate the display of flooring products within those stores. Matheny and
several unnamed co-conspirators arranged for Home Depot to purchase items for resale in Home
Depot's retail stores on less than the most advantageous terms to Home Depot, and to have the co-
conspirators supply services on less than the most advantageous terms to Home Depot. In return,
Matheny's co-conspirators paid him approximately $1,471,467.

Defendant Sentenced to 15 Years on Drug and Money Laundering Charges

On October 13, 2010, in Columbia, S.C., Reginald Christopher Mack, aka Reggie, was sentenced to 180
months in prison, to be followed by ten years of supervised release, and ordered to pay a $200 special
assessment.  Mack pleaded guilty in May 2009 to conspiracy to possess with intent to distribute cocaine
and conspiracy to launder drug proceeds. According to court documents, Mack conspired with others in
the distribution of cocaine within South Carolina and other areas.  Around May 2007, Mack conspired
with others to launder the proceeds from the sale of drugs.

Former South Carolina Lawyer Sentenced in Money Laundering Conspiracy

On October 13, 2010, in Columbia, S.C., John W. Harte, of Aiken, South Carolina, was sentenced to 12
months and a day in prison and ordered to pay $482,000 in restitution. Harte pleaded guilty on
September 18, 2009, to money laundering and conspiracy to commit mail fraud.  According to court
documents, Harte admitted to being involved in a conspiracy to liquidate and conceal monies and
property which had been stolen by a former client, William J. Trier, II, from his employer.  Two other
attorneys involved in the same scheme, John Fitzgerald O’Connor, Jr., and Michael D. Shavo have
entered guilty pleas.  Harte and O’Connor assisted Trier in laundering embezzled funds. From 1997
through January 2007, Trier served as the director of logistics in the shipping department of Crane, a
vending machine manufacturing company in Aiken County.  Trier embezzled funds from Crane by
creating phony invoices from two fictitious freight transport companies and submitting them to Crane
for payment.  He used his position to approve the payment of the fraudulent invoices, and received
company payments mailed to a post office box he had opened as the mailing address for the phantom
companies.  Over a ten year period, Trier collected approximately $5,200,000 using the false invoice
scam. When Trier learned that he was under investigation, he contacted Harte to help him hide assets.
According to Harte, he enlisted the help of O’Connor and others.  In January 2007, Trier was terminated
from Crane Company.  Trier was sentenced to 63 months in prison, ordered to pay $5,272,556 in
restitution, and to forfeit millions of dollars in assets.

Former Chief Operating Office of Law Firm Sentenced in Connection with Money Laundering
Conspiracy in Ponzi Scheme
On October 8, 2010, in Ft. Lauderdale, Fla., Debra Villegas, former Chief Operating Officer of the law firm
of Rothstein, Rosenfeldt & Adler, was sentenced to 120 months in prison.  In addition, Villegas was
found jointly liable for $363 million in restitution and ordered to forfeit certain assets.  Villegas pleaded
guilty in June 2010 to a criminal Information charging that she and co-conspirators participated in an
investment Ponzi scheme.  The scheme involved the sale of purported confidential settlement
agreements in sexual harassment and/or whistle blower cases that were purportedly handled by
attorneys at Rothstein, Rosenfeldt and Adler, PA.  According to the charges and statements made in
court during her plea, Villegas participated in the scheme by assisting with the fabrication of names for
fictitious plaintiffs and defendants who were purportedly parties in the confidential settlements.  In
addition, Villegas assisted in the preparation of documents relating to the purported confidential
settlements.  Criminally derived proceeds from the scheme, in excess of $10,000, were transferred
between and among accounts at financial institutions.

Ring Leader of Sophisticated Identity Theft and Money Laundering Scheme Sentenced; Ordered to Pay
over $2.7 Million in Restitution

On October 7, 2010, in Newark, N.J., Hakeem Olokodana was sentenced to 69 months in prison,
followed by three years of supervised release, and ordered to pay $2,739,874 in restitution. Olokodana,
of Queens, N.Y., pleaded guilty in November 2009, to an Information charging him with conspiracy to
commit bank fraud, money laundering, and aggravated identity theft.  According to court documents,
Olokodana was part of a multi-national identity theft ring that operated in the United States, the United
Kingdom, Canada, China, Japan, Vietnam, South Korea, and other places. Olokodana acquired identity
information of thousands of victims and used that information to conduct numerous fraudulent
schemes, including depleting the victims’ home equity lines of credit accounts.  Olokodana and his co-
conspirators gained access to confidential customer and account information used by customers of
banks, credit unions, and credit card issuers to conduct financial transactions in the United States. To
further the fraud and to avoid detection, co-conspirators routinely traded confidential customer
information over e-mail; impersonated bank customers on the phone with customer service
representatives in a process known as “social engineering”; used technology to disguise caller
identification information; and changed customer address information in bank files. Proceeds from the
scheme were sent to conspirators in Japan, Nigeria, Canada, South Korea, and other countries