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65 Count Indictment Against Texas Man for Bankruptcy Fraud and Structuring Financial Transactions
The U.S. Attorney’s Office for the Western District of Texas announced charges against Jack Texas Alves. The grand jury returned a 65 count indictment against Mr. Alves for one count of bankruptcy fraud in violation of 18 U.S.C. 152 and 64 counts of structuring domestic financial transactions in violation of 31 U.S.C. 5324(a)(3).
The indictment alleges that in a bankruptcy court filing on May 23, 2008, Mr. Alves falsely stated the amount of cash he had in his possession was $4,000 when in fact, Mr. Alves knew he possessed substantially more cash which he concealed from the bankruptcy court and creditors. The indictment further alleges that Mr. Alves engaged in a pattern of structuring bank deposits, totaling more than $100,000 in a 12 month period, for the purpose of evading reporting requirements. According to a detailed list in the indictment, from February 24, 2010 until May 12, 2011, Mr. Alves made a total of 64 bank deposits-each one between $5000 and $8100.
Not mentioned in the accouncement or the indictment is whether Mr. Alves’ bank notified FinCEN of these transactions by filing suspicious activity reports or SARs. The indictment dates all of the transactions and it isn’t suprising that the bank caught on to Mr. Alves activities. For example, Mr. Alves made a deposit almost every business day for nearly two months. Each deposit was shy of the standard trigger for reporting purposes, $10,000. Bank’s are instructed to report structured transactions when series of deposits in a short duration of time add up to an amount that would have otherwise been reported if deposited together. Furthermore, banks are prohibited from telling a person that they filed an SAR about them to FinCEN. Thus, Mr. Alves likely had no idea that the bank had sent the SAR to FinCEN where it was being processed by analysts who eventually coordinated with law enforcement officials about the transactions.
The indictment also indicates that the government is seeking forfeiture of two bank accounts currently seized. Pursuant to 18 U.S.C. 981(a)(1)(C), 28 U.S.C. 2461 and Federal Rules of Criminal Procedures Rule 32.2, the government is seeking to forfeit funds that Mr. Alves alledly concealed from the bankruptcy court and creditors. Pursuant to 31 U.S.C. 5317(c)(1)(A) and Rule 32.2 the government also seeks forfeiture of the funds involved in the structured transactions. The funds the government looks to forfeit amount to nearly $400,000.
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.
Suspicious Activity Report (SAR) Leads to Recovery of Funds Derived from Foreign Corruption
As was reported in our last blog post about Suspicious Activity Reports (SARs), such reports are critically important to the U.S. government’s efforts to detect complex criminal activity. FinCEN, the U.S. Department of the Treasury’s office responsible for analyzing such filings, has been more active than ever in detecting criminal activity. Since SARs are filed by a financial institution without the target’s knowledge they give the government a head start in their investigations. The information contained in the reports is analyzed by teams of government analysts who develop trends and establish findings that assists the government’s subsequent investigation.
One area of criminal activity SAR analysts focus on is foreign corruption. Analysts will search SARs for key terms such as “politically exposed person” or “PEP,” “foreign corruption,” and “senior foreign political figures.” In 2010 analysts documented 1,294 SARs related to the terms mentioned above. Most of the reports are filed by depository institutions like banks, but other institutions like securities dealers and money services businesses also filed “foreign corruption” related SARs. Most of the reports involved amounts or aggregate amounts between $100,000 and $50,000,000 and identified the activity as BSA/Structuring/Money Laundering.
One such SAR exposed a foreign corruption scheme to Federal officials. The government ultimately seized and forfeited criminal proceeds valued at more than $100 million from the findings of that initial SAR and its subsequent investigation. The investigation revealed that several subjects conducted a complex series of transactions, over a period of several years, using the proceeds of foreign corruption.
The investigation centered on the circumstances surrounding a foreign civil case in which the judge found for the plaintiff and ordered the defendant to pay the plaintiff (and heirs) the U.S. equivalent of half a billion dollars. Soon after the judgment in the civil case, law enforcement commenced an investigation into the possibility that the decision in the civil case was the result of a bribe, worth tens of millions of dollars, paid to the judge through a group of attorneys. This investigation led to the arrest of several individuals involved in the civil case, including the plaintiff’s heirs, the judge, and the attorneys. The judge and attorneys were convicted of bribery.
After the bribery scandal broke, a financial adviser (and co-conspirator) helped the plaintiff and his heirs set up corporate and trust structures to conceal and launder large portions of the public corruption proceeds. A significant portion of the corruption proceeds were then moved through these entities to or through bank and investment accounts located in the United States.
U.S. authorities became involved when members of the plaintiff’s family attempted to open accounts in the United States. Through the use of Bank Secrecy Act (BSA) data, especially SARs, and investigative information provided by foreign authorities, investigators identified approximately 2 dozen accounts in the United States that contained the proceeds of the fraud and bribery schemes.
All of the plaintiff’s family and heirs involved the scheme were arrested, pleaded guilty, and were sentenced to prison. The financial advisor was arrested and has yet to be tried.
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.
