WASHINGTON – A Los Angeles check cashing store, its head manager and its designated anti-money laundering compliance officer were sentenced today in the Central District of California for failing to follow reporting and anti-money laundering requirements for over $8 million in transactions in violation of the Bank Secrecy Act (BSA), announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney for the Central District of California André Birotte Jr; Assistant Director in Charge Bill L. Lewis of the FBI Los Angeles Division; Chief of the Internal Revenue Service Criminal Investigation (IRS-CI) Richard Weber; and Glenn R. Ferry, Special Agent in Charge of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles region.
G&A Check Cashing, its manager, Karen Gasparian, and its compliance officer, Humberto Sanchez, were sentenced today by Judge John F. Walter in the Central District of California. Judge Walter sentenced Gasparian to serve 60 months in prison and two years of supervised release. Sanchez was sentenced to serve eight months in prison and two years of supervised release. And G&A was ordered to pay a fine of $962,932 and sentenced to two years probation. In addition, Gasparian and G&A were ordered to forfeit $240,733 related to the funds going through G&A for which currency transaction reports (CTRs) should have been filed.
“Karen Gasparian, Humberto Sanchez and their company G&A Check Cashing purposefully thwarted the Bank Secrecy Act, making it easier for others to use G&A to commit illegal activity,” said Assistant Attorney General Breuer. “They knew they were required to report transactions over $10,000, but deliberately failed to do so. As this case shows, check cashing businesses must adhere to our anti-money laundering rules, or else pay the consequences.”
On Oct. 2, 2012, G&A, a financial institution located in Los Angeles, pleaded guilty to one count of conspiring to fail to file CTRs and one count of failing to have an effective anti-money laundering program. On Sept. 20, 2012, Gasparian, 31, of Canyon Country, Calif., pleaded guilty to the same charges. On Oct. 2, 2012, Sanchez, 51, of Alhambra, Calif., pleaded guilty to one count of failing to have an effective anti-money laundering program (AML).
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 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.
In failing to have an effective anti-money laundering program, G&A, Gasparian and Sanchez failed to, among other things, create or retain required records, verify customer identification and file required reports such as CTRs. As a result, G&A and Gasparian engaged in multiple transactions involving $8,024,446, in which required CTRs were not filed.
As court documents filed in this case indicate, 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, precisely because they often fail to file required reports and to have effective anti-money laundering programs. 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.
“IRS-CI will take all necessary steps to identify, investigate and prosecute those who attempt to avoid their reporting obligations under the law,” said IRS-CI Chief Weber. “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.”
“Check cashing businesses and other financial institutions that enable healthcare fraud will pay a heavy price,” said HHS-OIG Special Agent in Charge Ferry. “We will use sophisticated computer analytics as well as traditional investigative techniques to bring these criminals to justice.”
On Nov. 7, 2012, Aaron Krkasharyan, 48, of Los Angeles, pleaded guilty in a related case for making false statements to federal law enforcement officials investigating BSA violations at G&A. On Jan. 7, 2013, Judge Walter sentenced Krkasharyan to three years probation, which included a six-month term in a residential reentry center, and a $10,000 fine.
The indictment filed in this case was one of four indictments, unsealed on June 14, 2012, that charged several individuals and check cashing businesses in Los Angeles, Brooklyn, N.Y., and Philadelphia with failing to file CTRs or falsely filing CTRs as well as failing to have effective AML programs.
In another Los Angeles case included in this widespread prosecution, AAA Cash Advance and its manager, Diana Brigitt, pleaded guilty on Sept. 19, 2012, in the Central District of California to various BSA violations. Brigitt pleaded guilty to eight counts of failing to file CTRs and one count of failing to maintain an effective anti-money laundering program. AAA pleaded guilty to one count of failing to maintain an effective AML program. On Oct. 15, 2012, AAA was sentenced to a statutory maximum term of five years probation and was also ordered to pay a fine. At sentencing, AAA also agreed to shut down its business permanently once its fine was paid. At sentencing, Brigitt faces a statutory maximum sentence of 45 years in prison and a fine of $2.25 million.
The cases announced today are being prosecuted by Money Laundering and Bank Integrity Unit Trial Attorneys Kevin Mosley and Matthew Klecka of the Criminal Division’s Asset Forfeiture and Money Laundering Section (AFMLS), AFMLS Forfeiture Unit Acting Assistant Deputy Chief Jeannette Gunderson and Trial Attorney Anand Sithian and Assistant U.S. Attorney David L. 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 FBI, IRS-CI and HHS-OIG.