Oregon Man Pleads Guilty to Operating Illegal Money Transmitting Business That Moved More Than $172 Million Through Shell Corporations in the United States
WASHINGTON – Victor Kaganov, who emigrated from Russia and set up numerous shell corporations in Oregon on behalf of Russian clients, pleaded guilty today to charges of operating an unlicensed money transmitting business, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Dwight C. Holton for the District of Oregon. The shell corporations were used to move more than $172 million into the United States and out to more than 50 countries.
"Using shell corporations to hide his illegal activities, Mr. Kaganov funneled more than $170 million into the United States and then back out to more than 50 countries around the world," said Assistant Attorney General Breuer. "Following the money trail is a hallmark of good law enforcement, but those efforts depend on transparency in financial transactions. Now more than ever, we are determined to bring to justice those who attempt to hide funds in U.S. financial institutions."
"When shell corporations are illegally manipulated in the shadows to hide the flow of tens of millions dollars overseas, it threatens the integrity of our financial system. Sunshine kills the stink of corruption – our laws aim to bring the sunshine in, and we will enforce these laws vigorously," said U.S. Attorney Holton.
"We will not allow Oregon to be used like the corner ATM for people in foreign countries," said Arthur Balizan, Special Agent in Charge of the FBI in Oregon. "Crimes like these eat away at the stability and prosperity of the American financial system."
Kaganov, 69, a naturalized U.S. citizen living in Tigard, Ore., pleaded guilty to one count of operating an unlicensed money transmitting business after more than 4,200 wire transactions had been made. Kaganov was charged with the offense on March 3, 2010.
According to court documents, Kaganov emigrated from Russia to the United States in 1998. In order to move money in and out of the United States, Kaganov created various shell corporations under Oregon law, and then opened bank accounts into which he deposited money he received from his Russian clients. Kaganov admitted he would then wire the money out of the accounts based on wire instructions he received from his clients.
According to court documents, Kaganov did not comply with Oregon laws requiring him to obtain a license to operate the money transmitting business and he failed to register his money transmitting operation with the U.S. Department of Treasury, as required by federal statutes and regulations.
At sentencing, scheduled for April 19, 2011, Kaganov faces a maximum penalty of five years in prison, a $250,000 fine and three years of supervised release following the prison term. However, as part of Kaganov’s plea agreement, the government has agreed to recommend a sentence of not more than 18 months.
This case was investigated by the FBI as part of a larger investigation into the use of Oregon shell corporations by foreign businesses and individuals to facilitate the movement of illicit funds. This case included significant assistance received from FBI field offices located throughout the United States, as well as various FBI Legal Attaché offices in Europe and Asia.
This case is being prosecuted by Assistant U. S. Attorney and Senior Litigation Counsel Allan M. Garten for the District of Oregon, Trial Attorney Robert Livermore of the Criminal Division’s Organized Crime and Racketeering Section and Trial Attorney Michael Mosier of the Criminal Division’s Asset Forfeiture and Money Laundering Section.