John McKay, United States Attorney for the
Western District of Washington, Leigh H. Winchell,
Special Agent in Charge, U.S. Immigration
and Customs Enforcement (ICE), and Steve Pasholk,
Special Agent in Charge of the Criminal Investigation
Division, Internal Revenue Service today announced
that HUSSEIN ALSHAFEI of Edmonds has been
sentenced by Chief Judge John C. Coughenour
to eight months in prison followed by three
years of supervision plus a fine of $5,000
for his role in transferring in excess of
$12,000,000 in cash and goods to Iraq between
1996 and 2002.
Judge Coughenour also granted the government's
motion to forfeit funds in two ALSHAFEI bank
accounts which the defendant had used to facilitate
his criminal activity; the Court also ordered
the forfeiture of the equity in the defendant's
Edmonds residence as the result of a bond
violation while on pre-trial release.
In June, HUSSEIN ALSHAFEI had entered a plea
of guilty to a felony charge of money laundering
in connection with the transfer of funds and
economic resources to persons in Iraq between
1996 and 2002 in violation of the United States
sanctions against that country. The guilty
plea followed the filing of a Superseding
Information charging ALSHAFEI with a conspiracy
to engage in monetary transactions in criminally
derived property of a value greater than $10,000.
ALSHAFEI also admitted that he had under-reported
the income he earned from this activity on
his federal tax returns.
HUSSEIN ALSHAFEI and others were indicted
in December 2002 following an investigation
by Seattle ICE agents into ALSHAFEI'S activities
which he operated through a business named
ALSHAFEI FAMILY CONNECT INC. and a coordinated
investigation by agents of the Internal Revenue
Service into ALSHAFEI'S income tax returns.
According to papers filed today in federal
court, ALSHAFEI began collecting money from
members of the Northwest Iraqi immigrant community
in order to facilitate a business in Bagdad
operated by his brother-in-law, identified
as Abu Haider. The money collected in the
Edmonds area and later in other cities throughout
the United States was used to enable Abu Haider
to pay for various commodities worldwide.
ALSHAFEI'S role was essential to the operation
because Abu Haider was unable to transfer
funds abroad from Iraq to acquire these goods.
HUSSEIN ALSHAFEI, a naturalized U.S. citizen,
acknowledged in his guilty plea that while
members of the Iraqi immigrant community contributed
funds to assist family members who remained
in Iraq, ALSHAFEI'S motives included profiteering
from their situation. ALSHAFEI charged between
4% and 6% for this service and, as he also
acknowledged, he did not truthfully report
on his federal income tax returns the amount
of money he was earning through AFCI.
According to the investigation, HUSSEIN ALSHAFEI
collected more than
$12 million which was transmitted to overseas
corporate accounts or accounts controlled
by his brother-in-law who would then deliver
cash to persons in Iraq – all in violation
of U.S. law -- which prohibited direct or
indirect fund transfers to Iraq. On many occasions
various corporations shipped goods to Iraq
after receiving these deposits. These goods,
acquired for unknown purposes, and later sold
in Iraq permitted Abu Haider to make payments
in Iraq to the family members and friends
of U.S. residents who had deposited money
with the defendant. Additional cash was available
to Abu Haider as well based on funds directly
transferred by ALSHAFEI to bank accounts in
Amaan, Jordan to which Haider had access.
United States Attorney McKay praised the work
of the ICE agents in Seattle and throughout
the country who made this investigation a
priority. The sanctions against Iraq maintained
by all of the United States Presidents between
1990 and 2002 were in addition to the United
Nations sanctions imposed on that country
during the reign of Sadaam Hussein. U.S. Attorney
McKay said it was important to pursue those
who violate trade sanctions especially in
cases where the sanctions, such as those with
respect to Iraq, have been imposed pursuant
to United Nations Resolutions and in the interest
of United States national security. The President
lifted those sanctions in May 2003 because
the regime that the sanctions were directed
against no longer ruled Iraq.
This case was prosecuted by Assistant United
States Attorneys Francis J. Diskin and Tessa
M. Gorman. For questions, please contact Assistant
U.S. Attorney John Hartingh at (206) 553-4110.
