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Money Laundering Cases in the News

The following press releases highlight cases where legitimate businessmen used their enterprises to launder money for criminals. These cases, where defendants knowingly violated provisions of the Bank Secrecy Act, are intended to promote broader awareness of money laundering activity.16

US Attorney?s Office News
FORMER DEALERSHIP OWNER
SENTENCED ON MONEY LAUNDERING CHARGES
Shirland Fitzgerald Will Spend 140 Months In Prison

ROANOKE, VIRGINIA -- For years, Shirland Fitzgerald, owner of Fitzgerald Auto Sales in Danville, Va., associated with known drug dealers. He sold them cars, he allowed them to use the backroom of his business for high stakes gambling and he laundered their drug money. It was a combination of all of these things that will keep Fitzgerald in prison for the foreseeable future.

Following a two-week trial in May, Fitzgerald, age 62, was convicted of six counts of conspiracy to launder money. Yesterday, he was sentenced in U.S. District Court in Roanoke, to 140 months of incarceration and three years of supervised release thereafter. He was also ordered to forfeit $1 million, representing the approximate value of the funds he laundered for three large scale trafficking organization over a six-year period.

?In order to produce higher profits for his business, Mr. Fitzgerald associated with individuals he knew sold drugs,? United States Attorney Julia C. Dudley said today. ?He laundered money, he lied to the Internal Revenue Service and he got caught. Today, justice was served and he was punished for his actions.?

According to evidence presented at trial by Assistant United States Attorney Anthony Giorno and United States Department of Justice Trial Attorney for the Tax Division Mitch Bober, between 1998 and 2004, Fitzgerald used his car dealership on Riverside Drive in Danville to foster relationships with known drug dealers who trafficked in the Danville area.

Fitzgerald, in order to increase sales and profits at his car dealership, engaged in a scheme in which the drug dealers could purchase cars from the defendant using money obtained through the sale of illegal drugs. To further the scheme, Fitzgerald would disguise the identity of the true purchasers, create false paperwork and allow the drug dealers to make incremental payments of less than $10,000, avoiding the need to file a Federal 8300 form.

The defendant also structured his personal and business finances in such a way that all deposits totaled less than $10,000. He devised a false receipt system that showed no payments were ever made over $10,000 and created a false and fictitious interest free ?financing system? that allowed the drug dealers to pay for vehicles over time.

In addition, Fitzgerald assisted his drug dealer associates in the sale of assets for the purpose of avoiding seizure and forfeiture of those assets by law enforcement.

Fred Rodgers pled guilty to two counts of conspiring to launder money and was sentenced to 235 months in prison. The remaining defendants all pled guilty to one count of conspiring to launder money. They were sentenced as follows: Khaleel Rodgers, 40 months, to run consecutive to a current seven-year State sentence for drug trafficking; Lenora Rodgers, 37 months; Teresa Swan Hunt Tyler, 24 months; Sherika Swann, 21 months; Dionne Lakesha Hunt, three years probation; Juanita Rodgers, 24 months; Rontae Perkins, 77 months.

The investigation of the case was conducted by the Internal Revenue Service and the Drug Enforcement Administration. Assistant United States Attorney Anthony Giorno and United States Department of Justice Trial Attorney for the Tax Division Mitch Bober prosecuted the case for the United States.

DISTRICT ATTORNEY - NEW YORK COUNTY
NEWS RELEASE Contact: Alicia Maxey Greene
July 28, 2009 212-335-9400

Manhattan District Attorney Robert M. Morgenthau announced today a 186- count indictment of a check bundler and the owner of check cashing companies for repeatedly falsifying business records to avoid New York State banking and anti-money laundering reporting requirements. The District Attorney also announced the guilty pleas of the owner?s business partner as well as those of four check cashing companies.

The defendants RIAD (a/k/a Steve) KHALIL, 46, the check bundler, and NEIL GOLDSTEIN, 53, an owner of two of the check cashing companies, were indicted for falsifying the business records of VEIL CHECK CASHING CORP. to aid and conceal their structuring of transactions and for failing to file currency transaction reports on those structured transactions. The crimes charged in the indictment occurred between October 27, 2006 and July 11, 2008. The defendant, CHARLES GOLDBERG, 46, who is GOLDSTEIN?s business partner, and corporate defendants, VALE CHECKING OF NEW YORK, Inc. (VALE), VEIL CHECK CASHING CORP. (VEIL), GEM CHECK CASHING, CORP. (GEM) and TOMPKINS EXPRESS CHECK CASHING, CORP. (TOMPKINS) (collectively, the Check Cashing Companies), each pleaded guilty on July 9, 2009, to a Superior Court Information charging them with falsifying business records.

The investigation leading to the indictment and guilty pleas arose from the District Attorney?s investigation into the financial affairs of The John Galt Corporation and related companies, Regional Scaffolding & Hoisting, Windham Enterprises Inc., Windham Construction Corporation, Eastern States Construction and Elm Suspension Systems, Inc.

The John Galt Corporation was the subcontractor hired by Bovis Lend Lease to abate and deconstruct the Deutsche Bank building in March 2006. Regional Scaffolding & Hoisting, in a joint venture with Safeway Environmental, contracted with the owner of the Deutsche Bank building ? the Lower Manhattan Development Corporation ? to erect the scaffolding that surrounds the building and to abate its exterior vestibules. Following the completion of that portion of the project, Regional remained connected to the site to maintain and deconstruct the scaffolding as the building was abated and deconstructed.

The investigation revealed that GOLDBERG owns all four corporate defendants and that GOLDSTEIN had an ownership interest in Vale and Veil. In the late summer of 2006 GOLDBERG, GOLDSTEIN and the Check Cashing Companies formed a business relationship with KHALIL. KHALIL, though unlicensed to do so, received checks made out to or by various companies and individuals, including The John Galt Corporation and Regional Scaffolding & Hoisting, which he then cashed at VALE in downtown Brooklyn. Soon after forming their business relationship, GOLDBERG, GOLDSTEIN and KHALIL reached an agreement pursuant to which GOLDBERG and GOLDSTEIN structured KHALIL?s check cashing transactions to avoid filing Currency Transaction Reports (CTRs). The New York State Banking Law, New York State Banking Department regulations, and related Federal Bank Secrecy Act and anti-money laundering laws require licensed check cashers, such as the Check Cashing Companies, to file CTRs with the government with respect to transactions that result in one person or company conducting a cash transaction in an amount over $10,000 within a single business day.

During the entire two-year period of KHALIL?s relationship with GOLDBERG, KHALIL bundled and cashed checks for dozens of construction related corporations and conducted hundreds of transactions with the Check Cashing Companies.

When KHALIL brought in multiple checks issued to the same payee that totaled more than $10,000 to the Brooklyn VALE location, GOLDBERG or GOLDSTEIN processed the checks either through their different check cashing companies, including those located in New York County, or on different days. In exchange for these services, KHALIL continued to use the Check Cashing Companies as his primary check cashers and to pay them a commission on each transaction. At the height of their relationship, KHALIL processed up to $800,000 per week in both structured and non-structured transactions through the Check Cashing Companies. The District Attorney?s Office estimates that during the two-year period of their scheme KHALIL cashed in excess of $40 million in checks through GOLDBERG?s companies.

In structuring the transactions at the urging of KHALIL, GOLDBERG and GOLDSTEIN falsified the Check Cashing Companies? check registers, which the Check Cashing Companies were required to maintain pursuant to New York State Banking Law and related regulations. The check registers were false in several ways. First, the check registers indicated that the presenter of the check was the payee of the check when in fact the presenter was KHALIL. Second, because all of the checks that KHALIL brought to GOLDSTEIN and GOLDBERG were cashed at VALE in Brooklyn, all of the entries in the logs of the Manhattan stores relating to those checks were false. Lastly, GOLDBERG and GOLDSTEIN frequently falsified the dates of the transactions on these reports.

From May to August 2007, the Check Cashing Companies cashed checks issued by Regional Scaffolding & Hoisting to various vendors and checks written to The John Galt Corporation. The 18 checks issued by Regional totaled $145,000 and the 43 checks written to The John Galt Corporation totaled $227,637. KHALIL brought these checks to GOLDBERG and GOLDSTEIN, and the records of the Check Cashing Companies reflect that more than half of these checks were structured illegally through the various check cashing stores.

The New York State Banking Department joined in the investigation. Superintendent Richard H. Neiman has pledged to continue to work with the District Attorney?s Office to take every step necessary to ferret out those who attempt to avoid their reporting obligations under the law. As this case demonstrates, these joint efforts will ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.

16 The inclusion of these cases in The SAR Activity Review neither confirms nor denies whether SARs were filed in the specific cases.

Excerpted from SAR Activity Review Issue 16, page 43

First published on 10/01/2009

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