Archive
Spa Operators Indicted for Alleged Prostitution Ring
A federal grand jury in the District of Nebraska has returned two indictments charging four individuals in connection with the operation of various “spas” in Omaha. According to the indictments, all four individuals were involved in operating spas under various names at different locations in Omaha, all of which were alleged fronts for prostitution. The indictments allege that the individuals conducted an interstate prostitution operation by using various facilities of interstate commerce to run their businesses and, in so doing, attracted clients from both Nebraska and other states.
William R. Knox is alleged during certain time periods to have operated a spa business himself or through managers. Knox is alleged during other time periods to have entered business sublease or purchase arrangements with others, under which the sublessor or purchaser paid Knox a weekly fee in exchange for the opportunity to operate the ongoing spa business on the premises.
Tammy L. Schuck is alleged to have operated a spa business under a sublease with Knox and to have thereafter opened and operated two other spas. Tabatha N. Ashburn is alleged to have managed and operated the spas. Christopher J. Tierney is alleged to have provided computer and electronic services for the spas, including setting up a website and creating a computerized record keeping system.
Knox’s indictment charges him with inducement of another to travel in interstate commerce with intent to engage in illicit sexual conduct (18 U.S.C. § 2422), use of facilities in interstate commerce in aid of racketeering enterprises (18 U.S.C. § 1952), money laundering, and conspiracy. The others indicted are facing similar charges.
Under 18 U.S.C. § 2422, a person can be charged with knowingly coercing or inducing others to travel across state lines in order to engage in prostitution or other illicit sexual acts. This enables the U.S. government to charge an individual with a federal crime without actually identifying those who were coerced or induced. Further, if there is any type of business linked to criminal acts, it can be construed as racketeering. Racketeering and money laundering typically go hand in hand, and as with any business, the paper trail may give away the illicit activity.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Juarez Drug Cartel Member Pleads Guilty and Sentenced to Life in Prison
An alleged leader of the Juarez Drug Cartel in Juarez and Chihuahua, Mexico, pleaded guilty last Thursday in El Paso, Texas, and was sentenced to life in prison for his participation in drug-trafficking and numerous acts of violence in connection with the Barrio Azteca gang.
Jose Antonio Acosta-Hernandez, 34, aka “Diego,” “Dienton,” “Diez” and “Bablazo,” of Chihuahua, was extradited to the United States from Mexico on March 16, 2012. On April 5th, he pleaded guilty to four counts of racketeering, narcotics trafficking and money laundering. Acosta-Hernandez also pleaded guilty to seven counts of murder and weapons charges, which specifically related to the March 13, 2010, triple homicide in Juarez of U.S. Consulate employee Leslie Enriquez, her husband Arthur Redelfs and Jorge Salcido Ceniceros, the husband of another U.S. Consulate employee. Immediately after the guilty plea hearing, Acosta-Hernandez was sentenced to seven concurrent life terms, three additional consecutive life terms and 20 years in federal prison by U.S. District Judge Kathleen Cardone of the Western District of Texas, El Paso Division.
The conviction comes after the issuance of a third superseding indictment, returned on March 2, 2011, alleging that Acosta-Hernandez was an associate of the Barrio Azteca (BA), a violent street and prison gang with ties to the Juarez Drug Cartel. The drug routes through Juarez, known as the Juarez Plaza, are used frequently due to the close proximity to the United States.
Many are unaware that El Paso and Juarez are practically on top of one another, and the area is patrolled constantly by U.S. border agents. With the rise of the Juarez Drug Cartel, the border has become an integral focal point for the U.S. government in their efforts to prevent the importation of drugs into the United States.
It is unclear the motivation behind Acosta-Hernandez’s guilty plea. Many of the counts against him were brought simply because he was determined to be a leader in the cartel and therefore liable for the actions of other cartel members. Because Acosta-Hernandez was extradited to the U.S., he will avoid the dangerous prison conditions in Mexico and may actually live out his life sentence in prison.
A total of 35 individuals were charged in the third superseding indictment and are alleged to have committed various criminal acts, including racketeering, narcotics distribution and importation, retaliation against persons providing information to U.S. law enforcement, extortion, money laundering, obstruction of justice and murder, including the 2010 Juarez consulate murders.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Evading currency reporting requirements? Immigration and Customs Enforcement has a Bulk Cash Smuggling Center for that.
The U.S. government has a plethora of criminal statutes designed to curb the illicit transfer of funds and the flow of money in the underground economy. Federal law enforcement officers can investigate unlicensed money transmitting businesses (i.e. hawala) pursuant to 18 U.S.C. 1960, ensure compliance with reporting requirements in 31 U.S.C. 5316, investigate structured transfers (or “smurfing”) subject to 31 U.S.C. 5324, investigate RICO related foreign travel in 18 U.S.C. 1952, and intercept bulk cash smuggling pursuant to 31 U.S.C. 5332. These are in addition to the anti-money laundering and tax evasion statutes also found in the U.S. code.
Law enforcement officers from the FBI, Customs and Border Protection, Homeland Security Investigations and Immigration and Customs Enforcement rely on these authorities to, either directly or indirectly, disrupt and dismantle criminal networks that move bulk cash. Although you may not consider yourself an associate of a criminal network, you are still at risk of being criminally prosecuted for technical violations of these statutes.
At least since 9/11 and the USAPATRIOT Act the U.S. has identified the link between illicit funds, criminal enterprises, and terrorist organizations that endanger American national security. To curb these threats Congress has unapologetically empowered the executive branch to shine a light on funds transfers by either targeting institutions or individuals that facilitate money transfers or targeting the transfers themselves when they are worth more than $10,000 USD. From the U.S. government’s perspective, if everyone with legitimate funds complied with its financial laws, then the only funds left to be transferred outside the law would be the ones derived from illicit activities. Therefore it is imperative for any individuals looking to move around money to fully comply with Treasury’s reporting requirements and to utilize only licensed money transmitters, in addition to satisfying any tax liabilities. Merely paying your taxes will not exonerate you from violations of the financial criminal statutes listed above.
As if the federal government didn’t have enough assistance from the authority granted to it by Congress, ICE provides a law enforcement resource known as the Bulk Cash Smuggling Center (BCSC). The BCSC provides real-time tactical intelligence, investigative support and expertise to federal, state, tribal, local, and foreign law enforcement authorities. This center is available to law enforcement officers 24-hours a day so that they always have access to financial investigative expertise that will help them better follow the money trail, seize and forfeit criminal proceeds. In addition to using K-9 units to identify large amounts of cash, BCSC has awarded government contracts to technology firms to research and develop nonintrusive technology that can more accurately identify large amounts of U.S dollars, Canadian dollars, and Euros. These efforts have recently made enforcement more effective than ever. In 2010 alone 203 individuals were arrested and over $101 million USD was seized. Many of the offenses can lead to sentences that could be as severe as several years in prison.
So please, be mindful of these laws the next time you need to transport money internationally between family members or friends. There is no law limiting the amount of money you can move, so long as you follow the rules associated with moving it.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
Federal judge considers seizing motorcycle gang’s trademark and logo
Southern California Public Radio is reporting that a federal judge in Los Angeles is considering whether to allow the government to seize the trademarked name and logo of the Mongols motorcycle gang. The judge, Honorable Otis D. Wright II, told prosecutors to prepare a proposed order for the forfeiture of the gang’s trademark, which members display as part of their colors, or patch.
Back in 2008 almost 80 members of the gang were indicted on racketeering charges including murder, torture, and drug trafficking. The gang was formed in the 1970′s by a group of Latinos who had been rejected by the Hells Angels. The gang has an estimated 500-600 members, mostly located in Southern California, who allegedly fund their operations with sales of meth. Now, Judge Wright wants to consider forfeiting the gang’s Genghis Khan looking image. The U.S. Attorneys Office in Southern California stated that this would be the first time the government has ever attempted to seize a gang’s trademarks. We discussed another interesting case of criminal forfeiture in a previous post.
In that post we discussed Federal Rule of Criminal Procedure 32.2(b). This rule guides the determination of the scope of forfeitable property. In the instant case the court has identified the property subject to forfeiture and has asked the U.S. Attorneys Office to write a brief demonstrating the “requisite nexus between the property and the offense.” Implicit in this nexus requirement is the determination of the defendant’s guilt. The article mentions that the U.S. Attorneys Office has already obtained numerous guilty pleas from former gangmembers, but connecting the proven guilty actions of some to the broader organization may prove to be an onerous task for federal prosecutors. However, it probably helps the government’s case that the 80 or so gangmembers were implicated in a Racketeer Influenced and Corrupt Organizations (RICO) indictment.
Establishing the requisite nexus between the organization’s trademark and guilt under RICO offenses seems to make more sense than if the bikers were indicted individually. In essence, the RICO charges require the defendants to commit a pattern of racketeering activity that is in some way intertwined with an enterprise. In this case its the murder, torture and drug trafficking acts connected to an investment, ownership or control of a motorcycle gang. Thus, if prosecutors can demonstrate to the court that the 80 or so convicted bikers’ criminal conduct likely contributed to the sale and profitability of the Mongol’s trademarks, they may have a legitimate chance at succeeding in this forfeiture action. Depending on the outcome, we may see prosecutors seeking brand new forfeiture orders for previously obtained gang related convictions. The potential implications of this case can be worth millions of dollars.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
New York Appellate Court Broadens Reading of “Enterprise” Element of Racketeering Law – A “Cyber Crime” Enterprise
A majority panel of New York State Appellate Court judges reversed a lower court’s decision to throw out an indictment against an online money-transfer business for catering to buyers and sellers of stolen credit card information. The court determined that providing an online forum that facilitates some transactions between criminals is an ascertainable structure distinct from the criminal conduct itself.
Unlike an “enterprise” under the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, New York state law requires an enterprise to have “an ascertainable structure distinct from that pattern of [criminal] activity.” Section 460.10. However, New York law does not require any particular structure for the enterprise, and nowhere does it indicate that it contemplates a traditional hierarchial organized model. Relying heavily on this last point, the court further eroded the difference between federal and state corrupt enterprises when it decided to reinstate the indictment against Western Express International.
The court stated that nothing in the statute requires the structure of a targeted enterprise to represent a “corporate flow chart,” “structure,” or “chain of command.” The opinion stated further that the indictment’s allegation that Western Express was a “cyber crime” enterprise was accurate since it enabled criminals to associate. The court opined that Western Express and its internet based business knowingly provided the forum and means with which criminals sold and purchased stolen credit card information. The court summarized the critical element opening Western Express to criminal liability with this: “the ‘structure’ at issue here is, essentially, a web site.”
The court went on to justify its position by stating that “although the forms of Internet crime have been evolving and becoming far more sophisticated over the decades since the [corrupt enterprises law] was first enacted, the question is not whether the Legislature had this particular type of criminal enterprise in mind when it formulated the language of the statute. Rather, we need only decide whether the structure of the enterprise at issue falls within its definition of enterprise corruption.”
The dangers of including websites as distinct structures for purposes of establishing a corrupt enterprise are apparent. Very little keeps an aggressive prosecutor from indicting websites that host chat rooms, publish comments, or any other online services that can be used by criminals to facilitate their activities. Blurring the line between reality and the seemingly anonymous world of the internet can sweep up more innocent individuals into the web that is criminal investigations.
The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.
