Examples of Money Laundering Investigations - Fiscal Year 2013
The following examples of money laundering investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
New Jersey Man Sentenced for Money Laundering
On December 19, 2012, in Newark, N.J., Juan Carlos Done, of Morristown, N.J., was sentenced to 92 months in prison and three years of supervised release for his involvement in a conspiracy to launder narcotics proceeds from 2007 through June 2009. According to court documents and statements made in court, Done agreed to conduct financial transactions with drug proceeds in a manner intended to conceal the source of the funds. He and others made anonymous cash deposits of drug proceeds into various bank accounts in New Jersey, Pennsylvania, and North Carolina. The amount of these deposits was intended to avoid federal transaction reporting requirements. Done’s brother, Enrique Done, was previously sentenced to 75 months in prison for his role in a conspiracy to possess heroin with intent to distribute in New Jersey and elsewhere.
Former President of CORF Licensing Services Sentenced on Conspiracy and Money Laundering Charges
On December 11, 2012, in Phoenix, Ariz., David Steven Goldfarb, of Scottsdale, Ariz., was sentenced to 36 months in prison and ordered to pay $19,567,512 in restitution. Goldfarb pleaded guilty on September 19, 2012, to conspiracy to commit mail fraud and transactional money laundering for his role in a multi-million dollar investment fraud scheme. Goldfarb, along with co-defendants, owned and operated CORF Licensing Services, LP (CLS) and CORF Management Services, LP (CMS) from 1999 until May 2003, when the companies declared bankruptcy. Goldfarb served as the president of both companies. During the life of CLS and CMS, the defendants convinced hundreds of investors to contract with CLS to establish a for-profit Comprehensive Outpatient Rehabilitation Facility, which they claimed would provide an alternative to hospitals for rehab services. For an investment fee of $100,000 to $165,000, CLS was supposed to establish a profitable, Medicare-certified, business for the investor. The defendants entered into 338 contracts and collected over $40,000,000. However, CLS was unable to establish medical businesses for over two thirds of its clients. In addition, at the facilities CLS did establish, its clients were losing substantial sums of money. Despite these problems, Goldfarb and his partners convinced hundreds of investors to pay CLS through an elaborate fraudulent scheme. Goldfarb and his co-defendants placed ads in newspapers and magazines that falsely represented that an investor could expect to make $450,000 in net profit during the first year. Goldfarb and his co-defendants held sales seminars at an upscale and exclusive country club in Scottsdale, Ariz., to convey the impression that CLS and its existing clients/investors were financially successful. Goldfarb and his co-defendants gave prospective investors a false impression that CLS clients were successful and were collecting more than $1,000,000 a year. As part of the fraud scheme, investors were directed to speak to owners who were identified as “independent” references. Goldfarb and his co-defendants paid the “independent” references approximately $2,000,000 to provide misleading information. When speaking to prospective investors, the “independent” references falsely confirmed the financial representations Goldfarb and his co-defendants had made. Goldfarb received over $3,000,000 from CLS during the life of the company.
West Virginia Man Sentenced on Wire Fraud and Money Laundering Charges
On December 3, 2012, in Martinsburg, W.Va., David F. Brackett, Jr., of Shepherdstown, West Virginia, was sentenced to 282 months in prison and three years of supervised release. Brackett pleaded guilty on August 27, 2012, to wire fraud and money laundering. According to court documents, Brackett obtained “loan” money from victims and falsely promising to repay the victims with substantial lottery winnings that he had never won. Brackett also fraudulently obtained money by making materially false statements about his assets and expected profitability of his business ventures. In total, Brackett fraudulently obtained over $5.5 million from his victims and laundered his money through a variety of bank transactions involving different banks and accounts.
Former Penn State Professor Sentenced for Misappropriation of Federal Grant Funds
On November 30, 2012, in Harrisburg, Pa., Craig Grimes, a former Pennsylvania State University professor, was sentenced to 41 months in prison and ordered to pay $640,660 in restitution. On January 31, 2012, Grimes was charged in a three-count Information with wire fraud, false statements, and money laundering. During the time period contained in the Information, Grimes was a Professor of Electrical Engineering at Pennsylvania State University. According to court documents, between June 30, 2006 and February 1, 2011, Grimes defrauded the National Institutes of Health (NIH) of federal grant monies. The NIH provides funding for medical research through grants. Grimes, acting through his solely-owned company, SentechBiomed, requested a $1,196,359 grant from NIH. The NIH funded the clinical trial. In the application, Grimes specifically represented to the NIH that he would direct approximately $509,274 to a Medical Center to conduct clinical research. However, the money was never paid. Instead, the grant funds were misappropriated, in part, by Grimes for his own personal use. The clinical studies/trials were not performed. Grimes also made false statements to the United States Department of Energy in connection with a second federal grant. In August 2009, Grimes completed a grant application seeking a $1,908,732 from the Advanced Research Projects Agency - Energy (ARPA-E). Due to the limited amount of funds available for research, ARPA-E seeks to avoid funding research already funded by other government and private entities. It requires applicants for grants to disclose other funding sources. In the application Grimes completed and submitted to ARPA-E, he stated there was no other funding, when, in fact, he had received a grant for the same research from the National Science Foundation.
Former Executive Director of Alaska Eskimo Whaling Commission Sentenced on Federal Charges
On November 29, 2012, in Anchorage, Alaska, Maggie Ahmaogak was sentenced to 41 months in prison and ordered to pay $393,000 in restitution. Ahmaogak was sentence on two counts of intentional misapplication of funds from an organization receiving federal grant money and one count of money laundering. According to court documents, Ahmaogak was the executive director for the Alaska Eskimo Whaling Commission (AEWC) from 1990 until April 2007. AEWC receives funding from several sources, with the majority of its budget coming from grants issued by the U.S. Department of Commerce, National Oceanic and Atmospheric Administration (NOAA). Between 2004 and April 2007, AEWC received federal grant funds from NOAA totaling approximately $2.3 million. Ahmaogak intentionally misapplied $393,000 of AEWC funds, including federal grant money, to purchase luxury items and for gambling.
Former Kentucky Fire Chief Sentenced for Embezzlement and Money Laundering
On November 19, 2012, in Louisville, Ky., Paul Barth was sentenced to 41 months in prison, three years of supervised release and ordered to pay $190,000 in restitution to the Crusade for Children and $8,277 in restitution to the McMahan Fire Protection District (MFPD). Barth pleaded guilty on June 21, 2012 to mail fraud, wire fraud, and money laundering. According to court documents, from January 2001 through November 2009, Barth, while employed as the Chief of the MFPD, used money donated to MFPD and the Crusade for Children for his own personal use. Barth deposited approximately $218,995 into a bank account that he solely controlled in the name of the Crusade. He then used the majority of these funds to pay for personal expenses that included Disney World vacations, Corvette Club expenses, and vehicle property taxes. Barth also used the MFPD credit card to pay for more than $36,000 in expenses.
Missouri Man Sentenced on Money Laundering Charge
On November 15 ,2012, in Springfield, Mo., Richard B. Gillette, of Springfield, was sentenced to 24 months in prison and ordered to pay $1,292,256 in restitution. On May 23, 2012, Gillette pleaded guilty to money laundering, which was related to a mortgage fraud scheme. According to court documents, in May 2006, Gillette obtained two loans totaling $1,125,000 from Homecomings Financial to refinance existing loans on his residence. In the loan applications, Gillette claimed that his monthly income was $35,000; in reality, it was substantially less than that amount.
Two Texas Men Sentenced for Money Laundering
On October 30, 2012, in Laredo, Texas, Nelson Casarez and Miguel Santos were sentenced their roles in laundering millions of drug proceeds for the Los Zetas organization. Casarez was sentenced to 108 months in prison and ordered to forfeit $$2,999,310. Santos was sentenced to 72 months in prison and ordered to forfeit $4 million. According to court documents, Casarez provided a tractor trailer yard in Laredo for use by Los Zetas as a receiving station for other co-conspirators who transported bulk cash drug proceeds from the Chicago, Ill., area to Laredo. Casarez then coordinated the receipt and transfer of bulk cash drug proceeds to other co-conspirators who would transport it to Nuevo Laredo, Mexico. Casarez was involved in the laundering of approximately $5 million. Santos was a commercial truck driver who transported drug proceeds from the Chicago area to Laredo. Santos transported drug proceeds on at least two occasions in 2010 with each bulk shipment totaling approximately $2 million.
Former General Manager of West Coast Car Company Sentenced
On October 16, 2012, in Boise, Idaho, Kurt Bates, of Nampa, Idaho, was sentenced to 12 months in prison, three years of supervised release and ordered to pay a fine of $1,000 for misprision of a felony. Bates, former general manager of West Coast Car Company, pleaded guilty to a superseding information on June 5, 2012. According to the plea agreement, Bates admitted that on September 16, 2008, he became aware that one or more persons committed the felony crime of money laundering. These individuals conspired to conduct a sale of two automobiles for cash represented to be the proceeds of drug dealing activities. Bates admitted that he failed to notify law enforcement officers or other authorities that this crime had been committed. Bates was interviewed by law enforcement personnel about the money laundering activities on January 22, 2009, and failed to answer their questions truthfully. Bates’ co-defendant, Joseph Monte Johnson, formerly of Idaho Falls, pleaded guilty in August 2011 to conspiracy to launder monetary instruments. Johnson, the former finance manager of West Coast Car Company, is currently serving 40 months in federal prison.
Operator of Illegal Gambling Business Sentenced
On October 10, 2012, in Urbana, Ill., Jimmy A. LaCost, of Kankakee, Ill., was sentenced to 12 months and one day in prison. LaCost was convicted in April 2012 for structuring financial transactions and laundering the proceeds of his illegal gambling business. LaCost’s son, Michael, was sentenced to 12 months of home confinement with electronic monitoring. LaCost Amusements, Inc., was sentenced to three years of probation. The court also ordered Jimmy LaCost, Michael LaCost and LaCost Amusements, Inc., to jointly forfeit $4,285,829 in illegal gambling proceeds, 300 illegal video gambling machines, and nine separate properties. In April 2012, a jury found Jimmy LaCost guilty of 54 counts of structuring financial transactions and one count of money laundering. The jury found that Jimmy LaCost structured approximately $6.4 million in cash deposits over four years, from January 2005 to July 2009, to evade Currency Transaction Reporting requirements. In addition, the jury found Jimmy LaCost guilty of money laundering related to the bank deposits of proceeds from the operation of the illegal gambling business.
North Carolina Man Sentenced in Illegal Credit Scheme
On October 4, 2012, in Raleigh, N.C., James Walter Goddard, aka Walter James Karbley, Jr., was sentenced to 224 months in prison and five years of supervised release. Goddard was also ordered to pay $1,112,132 in restitution and a $900 special assessment. On May 5, 2011, Goddard pleaded guilty to one count of bank fraud, three counts of wire fraud, three counts of money laundering, one count of obstruction of justice, and one count of aggravated identity theft. According to the indictment, from 2005 to 2009, Goddard submitted hundreds of false credit card and lines of credit applications in the names of multiple individuals or businesses to various banks. Goddard, who called himself the Credit Doctor of North Carolina, met with individuals/business owners during which time they provided him some personal information. Goddard touted his specialized skills included obtaining credit for newly formed businesses as well as credit repair charging a 15 percent fee on each credit line he obtained. The individuals believed they were only going to get one or two credit cards. However, Goddard submitted falsified applications and was approved for between 10-20 cards on the individuals’ behalf. Through the use of a return preparer, fictitious tax returns were also created. Goddard, collecting his 15 percent by charging the credit cards under the merchant name, Goddard, Inc., laundered over $950,000 in merchant payments to his bank accounts from 2006-2009. In addition, from 2005 to 2011, Goddard has caused over $4,000,000 in credit application and wire fraud. Also, the indictment alleged Goddard applied for and was approved for 14 business credit cards in which he overstated his income and/or falsified his date of business establishment.
Fiscal Year 2012 - Money Laundering Investigations
Fiscal Year 2011 - Money Laundering Investigations
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