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Geoffrey S. Berman, the United States Attorney for the Southern District of New York, and Angel M. Melendez, Special Agent in Charge of Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”), announced today that IGNACIO FONCILLAS pled guilty to operating an unlicensed money transmitting business in connection with his transfer of over $9 million between the United States and Mexico. This illegal scheme allowed FONCILLAS’s customers to secretly send money to Mexico while avoiding anti-money laundering safeguards and obligations imposed upon legal money services businesses. FONCILLAS surrendered to federal agents this morning and his plea was taken by U.S. District Judge George B. Daniels.
U.S. Attorney Geoffrey S. Berman said: “As he admitted today, Ignacio Foncillas, an attorney, established an illegal money transmitting service between the U.S. and Mexico. Foncillas did not register his company with FinCEN, the regulatory agency that oversees the U.S. financial system and reports suspicious financial transactions. Attempts by individuals or corporations to circumvent their regulatory obligations will be met with swift justice.”
HSI Special Agent in Charge Angel M. Melendez said: “Foncillas operated a transnational money transmitting business, moving millions without ever ensuring he had the proper licensing. The movement of money is regulated to limit fraudulent and criminal activity, which is why law enforcement is paying close attention to those operating without a license, and looking even more closely at money transactions crossing borders.”
According to the Information and statements made during proceedings in Manhattan federal court:
IGNACIO FONCILLAS is a lawyer in New York, New York. Between approximately September 2013 and September 2014, FONCILLAS used a company he had previously incorporated in Delaware (the “Company”) to transfer millions of dollars from the United States to Mexico. During this time, the Company was not registered with the Financial Crimes Enforcement Network (FinCEN), a component of the U.S. Department of the Treasury, or any of the states in which the Company operated, including New York, Delaware, or California, as required by both state and federal laws applicable to money transmitting businesses like the Company.
Unlicensed money transmitting businesses like the Company enable entities and individuals to move money into and through the U.S. financial system while avoiding licensed U.S. financial institutions that monitor for suspicious activity and report it to U.S. authorities, including through suspicious activity reports, or SARs. Instead, by going through unlicensed entities like the Company, foreign businesses ensure that suspicious patterns of transmissions will not be detected and reported as potential money laundering activity or other financial crime.
In order to move money in this manner, FONCILLAS opened bank accounts in the name of the Company at banks including Bank of America, Citibank, and Wells Fargo. When opening these accounts, FONCILLAS provided false and contradictory descriptions of the Company’s business, including investment, consulting, and wholesale trade. On many occasions, individuals around the country, mainly in the Southern California region, who had no affiliation with FONCILLAS or the Company, deposited cash into the Company’s bank accounts. On other occasions, FONCILLAS deposited cash he had received from others into the Company’s bank accounts in New York. At times, FONCILLAS lied to the banks about the purpose of these large cash deposits, including telling a bank teller that a cash deposit of over $150,000 was money he had been paid for a loan.
Following these deposits, FONCILLAS directed the transfer of that money to individuals and entities in Mexico, minus a fee. This fee was retained by FONCILLAS as payment for this money transmitting service and used to pay personal expenses such as credit cards and other bills. Through this conduct, the defendant and the Company have functioned as an unregulated financial institution, allowing others to move funds through and out of the U.S. with impunity, including not being subject to the filing of SARs that licensed transmitting businesses are required to file.
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FONCILLAS, 50, of New York, New York, pled guilty to one count of operating an unlicensed money transmitting business. The charge carries a maximum penalty of five years in prison. The maximum potential sentence in this case are prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
FONCILLAS is scheduled to be sentenced November 8, 2018.
Mr. Berman praised the outstanding investigative work of the Department of Homeland Security, Homeland Security Investigations.
This case is being handled by the Office’s Money Laundering and Asset Forfeiture Unit. Assistant U.S. Attorneys Daniel M. Tracer and Niketh V. Velamoor are in charge of the prosecution.