Money Laundering

Published on: November 17, 2021

Shrimp company owner’s false claims for federal CDSOA subsidy leads to a criminal conviction

Michael Anderson owned and operated a shrimping business called Shrimpy’s in Savannah Georgia. From 2005 through 2007, Anderson submitted CBP (Customs & Border Protection) Forms 7401 in which he falsely claimed large business expenses as part of a scheme to acquire federal government subsidies under the Continued Dumping and Subsidy Act of 2000 (CDSOA). This federal program is designed to compensate U.S. domestic producers for losses that foreign producers caused by dumping underpriced goods into the American market. Enacted by Congress and administered by Customs, the program allowed the federal government to levy duties on specific foreign goods and distribute the funds to affected domestic producers of products, such shrimpers, who could claim subsidies by identifying their business expenses on the Form 7401 and mailing it to the Customs office in Indiana. Customs would then use the claimed expenses to calculate each qualifying domestic producer’s pro rata share of the funds and distribute the funds accordingly.

Mr. Anderson’s claims for 2005 through 2007 stated he had expenses exceeding $24 million in raw material expenses. He submitted 47 invoices from a company called R&R Seafood, which happened to be identical invoices except they bore different dates ranging from February 2005 to September 2006 and listed different rates for shrimp. The invoices showed he purchased 4.7 million pounds of shrimp for more than $29 million in two years. Based on his CDSOA claims, Anderson received a total of $864,292.40 in federal subsidies.

Published on: December 11, 2020

Fraudulent payment for an I.R.S. debt was a nexus to obstructing I.R.S. administrative proceedings

by The Swartz Law Firm

Graham’s IRS problems started because he only paid a small portion of the money he made running bingo games from 2006 through 2009. When Graham’s payments to the IRS were too small to satisfy his debt, they became more aggressive and after sending lien and levy notices they began to confiscate and selling several pieces of his real estate. Those sales still fell short of is debt which by June of 2014 reached $3.6 million. Graham met a Thomas Walker who claimed to specialize in credit repair. Walker introduced Graham to two individuals Ben and James that he knew who claimed they could help him pay off his taxes with the help of a bill of exchange that would only cost Graham $10,000. After paying the fee, Ben and James sent Graham and Walker a packet of documents which Graham and Walker took to the IRS building in Montgomery, Alabama. Theses documents included a $3.6 million check entitled an “international bill of exchange. The bill of exchanged was not processed because it looked suspicious and determined to be fraudulent. Graham was indicted on one count of passing a fictitious financial instrument in violation of USC 514(a)(2) and one count of corruptly endeavoring to obstruct the administration of the internal revenue laws in violation of 26 USC 7212(a).

Published on: April 12, 2019

Defendant had no standing to contest a vacatur of the criminal forfeiture order

by The Swartz Law Firm

Frank Amodeo pled guilty to conspiracy to defraud the United States for his failure to collect and remit payroll taxes and obstruction of an agency investigation. His offense arose from his scheme to divert his clients’ payroll taxes to his companies’ bank accounts instead of remitting the money to the I.R.S. As part of his plea agreement he agreed to forfeit many assets including properties, luxury cars a Lear jet, and the ownership of several corporations including two corporations: AQMI Strategy Corporation and Nexia Strategy Corporation. After the plea, the district court entered a preliminary forfeiture order for the assets, including the two corporations AQMI and Nexia. The government then moved for and received a final forfeiture order giving clear title to the United States.

Eventually, victims from Amodeo’s scheme filed lawsuits against his corporations, including the forfeited AQMI and Nexia. After the victims served the lawsuits on these two companies, the government moved to vacate the final forfeiture order because both were shell corporations without any assets. The government did not want to defend either corporation. The district court granted the motion and vacated the final forfeiture order as to these two corporations. Amodeo moved to reconsider the partial vacatur on the ground that the district court lacked jurisdiction to alter the final forfeiture order. the district court denied the Amodeo’s motion stating that it had vacated only the final forfeiture order in part and not the preliminary order. the trial court ruled that Amodeo lacked standing to challenge the vacatur of that order.

Published on: February 9, 2018

Case remanded because the judge failed to personally address the Defendant at sentencing

by The Swartz Law Firm

George appealed his 259 month sentence imposed after a jury trial resulted in his conviction for conspiracy to engage in drug distribution, Hobbs act robbery, possession of unauthorized access devises, and aggravated identity theft activities. He was acquitted of possession of a firearm in furtherance of a drug trafficking offense.

The facts in George’s case began when responded to an advertisement for luxury car rentals and met Pinkow, the owner. Unbeknownst to George, Pinkow, the owner of the car rental company was an informant for the FBI. Pinkow introduced George to Velez, a licensed barber because George expressed and interest in opening a barber salon. The salon did open and was divided into two rooms. The front room contained the barber shop and the back room contained computers, phones, embossing machines, card-scanning machines and items that had nothing to do with the barber business operating in the front room. George also kept a firearm at the front of the salon. Pinkow also rented luxury cars to a man named Banner, a successful drug dealer specializing in marijuana. Pinkow was present when Banner brought duffle bags filled with marijuana to George’s apartment and sold it to George. There was a subsequent sale to George for an amount that exceeded personal use.

Published on: November 28, 2016

Conviction for the failure to file a file Currency Transaction Report upheld.

by The Swartz Law Firm

In U.S v. Leon, Leon appeals from her conviction following a jury trial of three counts of attempting to cause a financial institution to not file a required currency transaction report (a CTR) in violation of 31 U.S.C. § 5324(a)(1). On appeal Leon claimed that the government and the district court constructively amended the indictment allowing her to be tried and convicted of violation §5324(a)(3) and not §5324(a)(1). The indictment alleges that Leon knowingly willfully and for the purpose of avoiding federal reporting requirements attempted to cause Bank of America not to file required CTRs concerning currency transactions exceeding $10,000 while violating another federal law and as part of a pattern of illegal activity involving more than $100,000 in a 12-month period. She was charged with making five cash withdrawals in the amounts of $9,500, $5,500, $1,430, $1,000 and $400. Another count charge her with making three cash withdrawals in amounts of $6,000, $3,995 and $500. And two cash withdrawals in the amounts of $9,846 and $300. The indictments alleged that these withdrawals, when aggregated on a daily basis, triggered Bank of America’s obligation to file CTRs and that Leon make the withdrawals in amounts less than $10,000 to try to cause Bank of America to not file CTRs.

Leon contended that the government’s theory and evidence as well as the district court’s jury instructions constructively amended the federal criminal indictment by allowing her to be convicted of violating §5324(a)(3) instead of §5324(a)(1). She claimed that the offense of structuring is prohibited by §5423(a)(3) but not by §5423(a)(1). Building on this premise Leon argues that there was a constructive amendment allowing her to be convicted of uncharged §5342(a)(3) offenses because the government repeatedly use the term “structuring” when referring to the three counts.

Published on: April 25, 2016

Sufficient evidence of forcing victim to work as a prostitute in the United States and in foreign countries

by The Swartz Law Firm

In US v. Damion St. Patrick Baston (“Baston”), the Defendant worked as a pimp and forced various women to work as prostitutes in Florida and around the world while keeping the money they earned As a result he was indicted for violating 18 U.S.C. 1593 and charged in Miami federal court for sex trafficking by force, fraud, or coercion in Florida and in the countries of Australia and United Arab Emirates. He was also charged with several counts of money laundering in violation of 18 U.S.C. 1956 based his having wired the sex-trafficking proceeds from Australian to Miami.

At his trial the government called three prostitutes that worked for him as witnesses who testified how they met Baston and how he used violence and coercion to force them into prostitution. His defense what that he never coerced the woman into prostitution and they were already prostitute when they met. He said they did it freely and voluntarily and in Australia prostitution is legal trade from which they could make money.
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Published on: April 20, 2016

Search for child pornography on home computer upheld after wife gave valid consent to the search even though the husband later refused to give consent

by The Swartz Law Firm

In USA v. Thomas the Defendant was convicted of knowingly accessing with intent to view child pornography in violation of 18 U.S.C. 2252(a)(4)(B). Prior to his federal court trial he filed a motion to suppress the incriminating images of child pornography that were seized from his desktop computer at his home in violation of the Fourth Amendment. He appealed the trial court’s denial of the motion to suppress asking the Eleventh circuit court of appeals to overturn the trial court’s decision.

These are the facts of the seizure. A police officer arrived at Thomas’s home in response to a telephone report from Thomas’s wife that there was child pornography on a computer within the home. The officer was greeted by Thomas’s wife who told the officer that she found eight to ten child pornography websites on a computer in their shared home. The wife described what appeared to be minors engaged in sexual conduct with an adult. The wife told the officer that the defendant was home but sleeping and did not give consent to view the computers, but the wife said they both use the computer though Thomas used the computers more often, and the wife gave permission to search all the electronic equipment. Other officers arrived while Thomas still slept and approached the computer screen where they saw in plain view web sites “pictures of young girls that had only their underwear on” though not engaged in any sexual activity. The officers learned from the wife that she had seen nude photos of 4 – 13 year old children in sex poses and being sexually abused but the wife mistakenly closed the web pages before the police arrived. The officer started to conduct a forensic search/scan of the hard drive of the computer and began a forensic search.
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Published on: May 24, 2014

No credit against loss where the guideline sentence is based on intended loss and there is no victim

by The Swartz Law Firm

In U.S. v. Massam, the defendant was convicted of theft and embezzlement of an employee benefit fund (E.R.I.S.A) he set of for himself and his employees and for which he served as the pension plan administrator. After divorcing his fifth wife, the state divorce court entered a distribution order to his ex-wife in the amount of $452,242. The defendant then attempted to illegally transfer of the funds in the pension plans to a foreign bank account so he could later withdraw the funds. His attempt to transfer the funds failed when the foreign bank refused to accept the wire and the funds were returned to the domestic bank. Following that failed attempt he appealed the state court judgment awarding his wife’s funds pension funds, and in filing the appeal he posted a supersedeas bond in an amount which covered the court ordered amount for the ex-wife. Subsequently, the divorce court order was affirmed and his obligation to pay her was met by the supersedeas bond. Following all that, the defendant was investigated for his theft of the pension plans and eventually indicted and he pleaded guilty to the federal crime of theft, embezzlement, and money laundering in connection with his attempted transfer of the employee benefit funds.

His presentence investigation report calculated is guideline range based on the intended loss of $1,185,863.00 which was the amount that he attempted to transfer to the foreign bank. The presentence report gave him some credit for the funds still remaining in the pension fund. The district court rejected his argument that he should receive credit and for the amount he paid out of the bond to satisfy his pension related obligations to in his ex-wife under the asset allocation order. Credit for this amount would have reduced his sentencing guideline range significantly but the district court refused to give them credit.

The 11th Circuit found that he should not be given credit for the bond posted to pay his ex-wife because in his case the sentencing guidelines required that the calculation be based upon the intended loss which was the amount the defendant attempted to transfer to the foreign bank. It rejected his argument that his guideline should be reduced by the amount his wife received from the bond posted after he appealed from the divorce order. While the guidelines provide that a loss they would be reduced by the money returned by the defendant, the credit-against-loss is not available where the guideline range is based upon intended loss alone. It is also not available here because there is no victim in the case of an intended loss. The 11th Circuit also rejected the defense argument that the wife became a victim because her property interests was imperiled by the attempted overseas transfer. The court found the overseas transfer attempt took place long before his wife was due to receive the funds, which she eventually received from the supersedeas bond.

Published on: March 30, 2014

Money laundering sentence incorrectly enhanced by defendant’s role in the drug conspiracy

by The Swartz Law Firm

The defendant in U.S. v. Salgado was indicted and convicted of the federal crimes of drug conspiracy, money laundering conspiracy, and possession with intent to distribute as least one kilogram of heroin. Prior to sentencing the presentence investigation report (psi) calculated his guidelines sentence range by grouping his convictions together under USSG § 3D1.2(c) because the drug conspiracy and distribution offenses were “the underlying offenses from which the laundered funds were derived.” The psi used the money laundering guideline, USSG § 2S1.1 to determine the defendant’s base offense level. To calculate the offense level under § 2S1.1, the psi set his base offense level using the guideline for the underlying conspiracy to distribute heroin. Under the facts of this case it came to a level 34. It then determined that certain enhancements applied under § 2S1.1, including a role enhancement, for his role in the heroin transactions that qualified him as a manager, leader or supervisor.

The issue in this appeal was not whether Salgado’s role in the heroin distribution conspiracy made him a manager, leader, or supervisor. Instead, the issue was whether the district court misapplied the guidelines by using Saldgado’s conduct in the underlying drug conspiracy to impose a role enhancement when calculating his offense level for money laundering under USSG § 2S1.1(a)(1).

According to §1B1.5(c), if the offense level adjustments is determined by reference to another guideline, the Chapter Three adjustments also are determined in respect to the referenced offense guideline “except as otherwise expressly provided.” This means that where a guideline determines a defendant’s offense level by reference to another offense, the Chapter Three adjustments are to be based on the guideline and rules for that other offense. But the 11th Circuit pointed out that this is a default rule because the “except as otherwise” provided language. Application note 2(c) of § 2S1.1 is one of the otherwise provided exceptions. It instructs courts that when setting an offense level under § 2S1.1(a)(1), a court should make Chapter Three adjustments based on the defendant’s conduct in the money laundering offense itself, and not based on his conduct in the offense from which the money that was laundered was obtained. This meant that when the district court calculated Salgado’s offense level under § 2S1.1(a)(1), it could base his role enhancement on conduct in the money laundering conspiracy but not on his conduct in the underlying drug offense.

Published on: November 8, 2013

Structuring indictment thrown out because each count found insufficient

by The Swartz Law Firm

In U.S. v. Lang the defendant was indicted on 85 counts of violating 18 U.S.C. § 5324 which makes it a crime to structure cash transactions for the purpose of evading the requirement that a financial institution file a report with the Department of Treasury of a cash transaction by any person on a single day exceeding $10,000. He was convicted of 70 counts and on appeal he challenged the sufficiency of the indictment. The statute prohibits a person from structuring any transaction with one or more domestic financial institutions, in an amount which by regulation is $10,000. In this federal white collar crime, the issue here is whether one or more structuring crimes has been committed for an evasion involving breaking down a single amount that exceeds $10,000. Structuring according to the Supreme Court precedent is breaking up a single transaction above the reporting threshold into two or more separate transactions for the purpose of evading a financial institutions reporting requirement. The court of appeals concluded that in order to evade the reporting requirements the structured transaction must involve an amount that is more than $10,000 or else there could be no evasion. A single cash transactions were not sufficient to set forth each structuring count. The court considered other circuit decisions regarding the question about the proper unit of prosecution for structuring. The Seventh and the Tenth Circuits found that the structuring itself and not the individual deposits is the unit of the crime. The Tenth Circuit reached the same conclusion in a case where a defendant paid a bank three separate payments of 9,000, 9,000 and 6,000 on three separate days to avoid a $24,000 cash payment.

In this case the indictment charged a separate structuring crime for each check less than $10,000 and no combination of two or more checks is alleged in any count. A cash transaction in an amount below the reporting threshold cannot in itself amount to structuring because the crime requires a purpose to evade the reporting requirement and that requirement does not apply to a single cash transaction below the threshold. The government’s theory is that Lang received from one source 21 payments exceeding $10,000 over a period of 8 months and had broken down the larger payments into multiple checks each of which was less than $10,000 and he cashed those checks separately to evade the reporting requirements. Instead of a series of counts each alleging payments totaling more than $10,000 that were structured into checks of smaller amounts, which were cashed, the indictment consists of 85 counts each of which separately alleges that a single check in an amount less than $10,000 was structured. “When cashed checks come to the structuring dance, it takes two to tango.” Allegations from separate counts cannot be combined to allege what is missing in the count itself. For these reasons the indictment was found to be so defective that it does not, by any reasonable construction, charge an offense for which the defendant was convicted.