WASHINGTON – Seven individuals and four check cashing businesses were charged today in the Eastern District of New York and the Central District of California for their alleged roles in separate schemes to violate the Bank Secrecy Act (BSA). The defendants allegedly failed to follow reporting and anti-money laundering requirements for transactions totaling more than $50 million.
The enforcement actions were announced today by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Loretta E. Lynch of the Eastern District of New York; U.S. Attorney André Birotte of the Central District of California; U.S. Immigration and Customs Enforcement (ICE) Director John Morton; FBI Assistant Directors in Charge Janice K. Fedarcyk and Steven Martinez; Richard Weber, Chief of the Internal Revenue Service Criminal Investigation (IRS-CI); Daniel R. Levinson, Inspector General of the Department of Health and Human Services (HHS); and Benjamin M. Lawsky, Superintendent of the New York State Department of Financial Services.
Four indictments filed under seal on June 12, 2012, and unsealed today, charge the defendants with failure to file currency transaction reports (CTRs) or falsely filing CTRs, as well as failure to have an effective anti-money laundering program, all violations under the BSA.
Two of the indictments, charging three individuals and two check cashing businesses, were returned in Los Angeles and two indictments, charging four individuals and two check cashing businesses were returned in Brooklyn, N.Y. All seven individual defendants were arrested or surrendered to authorities today.
The BSA is a set of laws and regulations enacted by Congress to address an increase in criminal money laundering through financial institutions, which includes check cashing businesses. Check cashers enable people to cash checks without having to go to a bank or maintain a bank account. A check casher will typically charge a fee for this service.
Under the BSA, financial institutions, including check cashers, are required to file a CTR with the Department of Treasury for any transaction involving more than $10,000 in currency. As part of the CTR, the check casher is required to verify and accurately record the name and address of the individual who conducted the currency transaction, the individual on whose behalf the transaction was conducted, as well as the amount and date of the transaction. CTRs are important law enforcement tools for uncovering criminal activity.
The BSA also requires financial institutions, including check cashing businesses, to maintain an effective anti-money laundering (AML) program. The purpose of an AML program is to effectively detect and prevent attempts to facilitate money laundering. Check-cashing businesses are therefore required to have written policies and procedures regarding CTR filings, records maintenance and responses to law enforcement.
According to the indictments, despite these regulations, check-cashing businesses are a common venue for individuals who want to anonymously cash large numbers of checks to facilitate fraud and money laundering schemes. According to the indictments, the use of check cashers to launder money is particularly prevalent in the area of health care fraud, where fraudulent health care businesses commonly convert the proceeds of their fraud into cash by presenting checks to check cashers who they know will not ask for proof of the payee’s identity and will either not file CTRs or file false CTRs.
“Today’s indictments put unscrupulous check cashers on notice that we are scrutinizing their conduct,” said Assistant Attorney General Breuer. “They may think that they are flying under the radar, but they are not. These defendants are charged with filing false currency transaction reports, or not filing them at all, and other serious violations of the Bank Secrecy Act. We will not tolerate check cashing businesses evading anti-money laundering laws.”
“These indictments send a clear message that we will not tolerate the willful failure of check-cashing businesses to take all steps under the law to prevent their businesses from being used to launder the proceeds of crime,” said U.S. Attorney Lynch. “We are pleased to be working closely with the Asset Forfeiture and Money Laundering Section of the Department of Justice and our federal law enforcement partners in the investigation and prosecution of these important cases.”
“The Bank Secrecy Act provides law enforcement with a powerful tool to detect and prevent crime by requiring financial institutions to document and submit reports on certain currency transactions,” said U.S. Attorney Birotte. “Those who seek to evade the restrictions of the Bank Secrecy Act – both individuals and financial institutions – will be aggressively pursued by the Department of Justice and its partners in federal, state and local law enforcement.”
According to a superseding indictment filed in the Eastern District of New York, Belair Payroll Services, a check cashing store in Flushing, N.Y.; its owner, Craig Panzera; and two other individuals, Lasha Goletiani and Zhan Petrosyants, are charged for their alleged roles in a scheme to violate the BSA. Specifically, Goletiani and Petrosyants allegedly caused Belair to file false CTRs and Panzera allegedly caused Belair to fail to have an effective AML program. In addition, Panzera has been charged with conspiring to commit tax violations with respect to the fees Belair received in connection with the scheme.
As part of the scheme, which lasted from June 2009 through June 2011, Goletiani, 32, and Petrosyants, 30, presented to Belair’s manager and other employees, checks to be cashed at Belair. The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business. The shell corporations and their corresponding bank accounts on which the checks were written, were established in the names of foreign nationals, many of whom were no longer in the United States.
The indictment alleges that employees at Belair accepted these checks and provided cash in excess of $10,000 to Goletiani or Petrosyants. Panzera, 46, and others at Belair never obtained any identification documents or information from Goletiani or Petrosyants. Belair allegedly filed CTRs that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair allegedly failed to indicate the full amount of cash provided to Goletiani or Petrosyants. Goletiani and Petrosyants cashed more than $19 million through Belair during the course of the scheme. The indictment unsealed today supersedes an indictment returned against Goletiani in July 2011, for conspiring to cause Belair to file false CTRs. Approximately $3.2 million has been seized from Belair’s bank accounts in connection with this conduct.
A second indictment filed in the Eastern District of New York charges Bargain Island, a check cashing business in Philadelphia, and its owner and operator, George Gonchar, 51, with failure to file CTRs and failure to have an effective AML program. According to the indictment, from October 2009 through October 2010, individuals acting as check couriers brought multiple checks from Brooklyn made payable to various medical services companies, to Bargain Island and presented them to Gonchar for cashing. On almost all occasions, the checks exceeded, in the aggregate, $10,000. As alleged in the indictment, Gonchar knew that the check couriers presenting the checks to Bargain Island had no connection to the checks other than acting as couriers. Despite this knowledge, Gonchar falsely indicated in CTR filings that the checks were cashed on behalf of the couriers themselves or for companies associated with the couriers. Bargain Island cashed more than $5.8 million in checks from couriers in this manner.
A third indictment filed in the Central District of California charges G&A Check Cashing, a check cashing business in Los Angeles; its general manager, Karen Gasparian, 31; and an employee and designated compliance officer, Humberto Sanchez, 53, with BSA violations. The indictment alleges that two separate cooperating witnesses presented bundles of checks totaling more than $10,000 to Gasparian and Sanchez at G&A. The checks were written on accounts for businesses that purported to be health care businesses. G&A deposited the checks into its operating accounts over a period of several days, and then provided cash, in excess of $10,000 to the cooperating witnesses. Neither Gasparian nor Sanchez filed CTRs on these transactions even though they were well aware of the requirement to do so. More than $100,000 in checks were cashed in this manner over the course of 10 transactions, yet no CTRs were ever filed. This practice extended beyond the cooperating witnesses. From 2006 through 2012, G&A conducted approximately 800 transactions that were each in excess of $10,000 and paid out more than $20 million in cash on those transactions without ever filing a CTR.
A fourth indictment filed in the Central District of California charges AAA Cash Advance, a check cashing business in Los Angeles, and its manager, Diana Brigitt, 35, with violations of the BSA. From August 2010 through February 2012, Brigitt, on behalf of AAA, allegedly repeatedly cashed bundles of checks totaling more than $10,000 without filing any CTRs. The checks were presented by a cooperating witness and were written on accounts that appeared to be for health care businesses. More than $100,000 in checks were cashed in this manner over eight transactions, yet no CTRs were ever filed. From January 2008 through February 2012, AAA’s banks reported that AAA had withdrawn approximately $5 million in cash, yet during this same time period, AAA filed only seven CTRs on transactions greater than $10,000.
“This complex financial investigation, conducted by Homeland Security Investigation’s (HSI) El Dorado Task Force and our law enforcement partners, is indicative of the lengths that criminal enterprises go in an effort to conceal their illicit conduct,” said ICE Director John Morton. “These individuals permitted the cashing of over $19 million in checks with a blatant disregard for the legal safeguards intended to prevent criminals access to our financial system. HSI is determined to expose these vulnerabilities and to shutdown money laundering operations that threaten our nation’s security.”
“Money laundering is at the foundation of so many criminal schemes, which is why the FBI and our partners place a high priority on policing it,” said FBI Assistant Director Fedarcyk. “By cracking down on money laundering, we put teeth in the truism that crime doesn’t pay.”
“The charges exemplify the increasingly complex schemes devised to evade anti-money laundering laws,” said FBI Assistant Director Martinez. “The FBI and our trusted partners are resolute in our commitment to match and counter those efforts with the resources and long-term focus necessary to decipher these schemes that cost taxpayers hundreds of millions annually in the Los Angeles area.”
“From coast to coast the IRS will take every step necessary to ferret out those who attempt to avoid their reporting obligations under the law,” Chief Weber of IRS-CI. “This joint effort continues to demonstrate our efforts to ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.”
“Anti-money laundering laws are an important tool in the fight against health care fraud, as check cashers are often used to convert ill-gotten Medicare proceeds,” said Inspector General Levinson.
“These vital investigations show the need for constant vigilance against dirty check cashers,” said Superintendent Lawsky. “We will use all our enforcement tools to stamp out the use of check cashers to facilitate crime such as health care fraud. We will continue to work with all our law enforcement partners on these important investigations.”
The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Matthew Haslinger, Matthew Klecka and Claiborne Porter and Forfeiture Unit Trial Attorney Jeanette Gunderson from the Asset Forfeiture and Money Laundering Section of the Justice Department’s Criminal Division and Assistant U.S. Attorney Charles Kleinberg of the Eastern District of New York and Assistant U.S. Attorney David Kirman of the Central District of California. The department acknowledges the invaluable assistance of the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes. The unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.
The cases are being investigated by agents from the ICE-HSI, FBI, IRS-CI, HHS-OIG and the New York State Department of Financial Services.
An indictment is merely a charge and defendants are presumed innocent until proven guilty.