Excerpt from the SAR Activity Review Operation Mule Train
On July 1, 1998, the Chief Financial Officer, President, and Vice-President of
a check cashing company were arrested on money laundering charges stemming
from a two-year investigation conducted by the Los Angeles office of the FBI and
the Los Angeles Police Department. According to corporate filings, the company
was one of the largest check cashing enterprises operating in the western U.S.,
and purported to be one of the leading U.S. money transfer agents providing
services to Mexico and Latin America. It was considered a significant and growing
company among the increasing number of independent non-bank financial
institutions operating in many inner-city neighborhoods where banks have reduced
their presence.
The three executives, along with six other employees and associates, were
arrested after a federal grand jury returned a 67-count indictment against
11 defendants, charging multiple conspiracies, money laundering, evading currency
reporting requirements, aiding and abetting, and criminal forfeiture.
The initial target of the investigation was a company store in Reseda, California.
Investigators, working in an undercover capacity, approached the manager,
who agreed to launder “drug” money in exchange for a cash fee. Specifically, the
manager converted large amounts of cash into money orders issued by the company.
As larger sums were laundered, the manager sought the assistance of his
associates working at other store locations. When a new manager took over
operations at the Reseda store in April 1997, he brought in the company’s corporate
officers, including the CEO, the President, and the Senior Vice-President.
Pocketing the cash fee, the corporate officers authorized the issuance of money
orders and the wire transfers of large sums of “drug” money to a secret bank
account in Miami, Florida while the cash was used to maintain operations at the
company stores.
To avoid detection by law enforcement, no SAR forms or CTRs were filed by
the company for any of these transactions; however, SAR forms and CTRs were
filed by the banks into which the cash deposits were made, and these filings
significantly enhanced the value of other information received. In total, the
defendants laundered over $3.2 million dollars of “drug” money. The investigation
is believed to be one of the largest money laundering “sting” operations
targeting a check cashing business in U.S. history. (Source: DOJ)
Excerpted from SAR Activity ReviewOct. 2000 Issue , page 18
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