Architect Of Offshore Fraud Haven Pleads Guilty To $250 Million Money Laundering Scheme
Defendant Incorporated More Than 5,000 Shell Companies in Belize and the West Indies to Facilitate Numerous Securities and Tax Fraud Schemes
BROOKLYN, NY – Earlier today, Robert Bandfield, a U.S. citizen and resident of Belize, pleaded guilty to money laundering conspiracy for facilitating the stock manipulation of more than 40 U.S. publicly-traded companies and then laundering more than $250 million in profits through unidentifiable debit cards and attorney escrow accounts. Pursuant to his plea agreement with the government, Bandfield has agreed to forfeit, among other things, $1 million and all his rights and interests in three corporate entities -- IPC Management Services LLC, IPC Corporate Services Inc., and IPC Corporate Services LLC (collectively, IPC Corp.) -- that he founded and controlled in Belize. When sentenced, Bandfield faces up to 20 years in prison.
The guilty plea was announced by Robert L. Capers, United States Attorney for the Eastern District of New York; Diego Rodriguez, Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); Shantelle P. Kitchen, Special Agent-in-Charge, Internal Revenue Service, Criminal Investigation, New York (IRS-CI); and Angel M. Melendez, Special Agent-in-Charge, U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations, New York (HSI).
In announcing the guilty plea, Mr. Capers extended his grateful appreciation to the agencies that led the government’s investigation and thanked the Securities and Exchange Commission (SEC), the Department of Justice’s Office of International Affairs (OIA), the Department of State’s Diplomatic Security Service (DSS), and the Financial Industry Regulatory Authority, Inc., Criminal Prosecution Assistance Group (FINRA CPAG) for their cooperation and assistance in the case
According to the court filings and facts presented at the plea hearing, between January 2009 and September 2014, Bandfield and his co-conspirators engaged in three interrelated schemes: (1) to induce U.S. investors to purchase stock in various thinly-traded U.S. public companies through fraudulent promotion of the stock, concealment of their ownership interests in the companies, and fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (2) to circumvent the payment of capital gains taxes and the IRS’s reporting requirements under the Foreign Account Tax Compliance Act (FATCA); and (3) to launder the fraudulent proceeds from the stock manipulation schemes to and from the United States through debit cards and attorney escrow accounts. Through these schemes, Bandfield helped his corrupt clients -- who included more than 100 U.S. citizens and residents -- launder more than $250 million in fraudulent proceeds.
To facilitate these interrelated schemes, Bandfield and his co-conspirators created shell companies in Belize and the West Indies for the corrupt clients and placed nominees at the helm of these companies. This structure was designed to conceal the clients’ ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enable the corrupt investors to engage in trading under the nominee’s names through brokerage firms also set up in Belize. For example, this structure enabled Bandfield’s clients to manipulate the stock of Cynk Technology Corp, which traded on the U.S. OTC markets under the ticker symbol CYNK. Bandfield’s clients concealed their ownership of “all the free trading” or unrestricted shares of CYNK through shell companies incorporated by IPC Corp. Prior to May 15, 2014, there had been no trading in CYNK stock for 24 trading days. Over the next two months, the stock of CYNK rose from $0.06 per share to $13.90 per share, a more than $4 billion stock market valuation for a company that had no revenue and no assets.
Bandfield’s scheme also enabled the U.S. corrupt clients evade reporting requirements to the IRS by concealing the proceeds generated by the manipulated stock transactions through the shell companies and their nominees. For example, in response to a request received by a U.S. corrupt client from a U.S. transfer agent who had to determine whether the proceeds from manipulative stock trading transaction were taxable under U.S. law, Bandfield forwarded an IRS Form signed by co-defendant Andrew Godfrey as the nominee for the shell company which had been set up at the request of the client. At one point during the government’s investigation, Bandfield boasted to an undercover law enforcement agent that he had specifically designed this “slick” corporate structure to counter President Barack Obama’s new laws, a reference to FATCA.
An example of how the defendants’ scheme enabled U.S. corrupt clients to launder the proceeds from their fraudulent trading in U.S. public companies was the production of unidentifiable debit cards for the clients allowing them to freely transfer their proceeds back into the United States.
Today’s guilty plea took place before United States District Judge I. Leo Glasser.
The government’s case is being prosecuted by the Office’s Business and Securities Fraud Section. Assistant United States Attorneys Jacquelyn Kasulis, Winston Paes, and Michael Keilty are in charge of the prosecution. Assistant United States Attorney Brian Morris of the Office’s Civil Division is responsible for the forfeiture of assets.
The charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices, and state and local partners, it is the broadest coalition of law enforcement, investigatory, and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state, and local authorities; addressing discrimination in the lending and financial markets; and conducting outreach to the public, victims, financial institutions, and other organizations. Since fiscal year 2009, the Justice Department has filed over 18,000 financial fraud cases against more than 25,000 defendants. For more information on the task force, please visit www.StopFraud.gov.
Belize City, Belize
EDNY Docket No. 14-CR-476 (ILG)