Ex-Miami DEA Agent Allegedly Part of Huge Colombian Drug-Money-Laundering Ring

By Jerry Iannelli

Last September, the federal government charged Gustavo Yabrudi, a dual Venezuelan-American citizen, in Tampa federal court with conspiracy to commit money-laundering. Yabrudi has since pleaded guilty. But court documents in those cases list four “co-conspirators” who worked alongside Yabrudi throughout South Florida and Latin America: Three of those four lived in Miami-Dade County, according to court records. “Co-conspirator 3” was listed as “a resident of Miami-Dade County, Florida, and Colombia who worked as a Special Agent for the United States Drug Enforcement Agency (DEA).”

The Associated Press yesterday reported that Irizarry was that third conspirator, and that Yabrudi had been working as Iziarry’s DEA informant. (Witnesses said in court transcripts that Yabrudi helped arrange money “pick-ups” between drug-dealers and undercover DEA agents.) Unnamed sourced within the federal government told the AP that Irizarry is now the subject of a criminal probe, and that his alleged corruption scheme is one of the biggest black eyes in DEA history. Given Colombia’s status as a haven for drug traffickers, the agency considers its Colombian offices some of the most important in its (failed) global War on Drugs. Irizarry was reportedly a “star” agent in Miami who racked up tons of high-profile arrests before he was promoted and moved to Cartagena. He declared bankruptcy in 2010 but, by the time he moved to Colombia, was somehow throwing yacht parties. His second wife was also reportedly related to the Colombian mafia.

New Times was not able to independently confirm the AP’s reporting. But court documents reviewed by the newspaper allege the group of five people would skim cash from Colombian drug sales in the United States, ship it back to Colombia, and then convert it into Colombian pesos using extremely favorable, black-market Colombian money-exchange programs. The feds said the group moved $7 million this way: In some cases, the group allegedly used a Miami-based cell-phone company to buy goods using dirty money and then export the phones down to Colombia to be sold for pesos. Prosecutors also stated in recent court filings that Yabrudi worked with Irizarry to open bank accounts across Florida — the two men then deposited money from drug sales into the hidden accounts.

Court records allege that Irizarry also helped the group steal funds from the DEA.

“It was also part of the conspiracy that conspirators would and did obtain illegal drug proceeds held in DEA undercover accounts,” which the group then laundered back into Colombia, a September 2018 government-forfeiture document reads. Prosecutors later added that Irizarry “provided conspirators, including Yabrudi and Co-Conspirator 4, access to funds contained in DEA undercover accounts.” The other conspirators then allegedly paid “kickbacks” to Irizarry.

Of course, Irizarry began to trip up. The Associated Press reported yesterday that the feds caught onto his scheme when the agent started brazenly stealing from the DEA and screwing up legitimate agency business. In one case, an $87,000 wire-transfer to a Cali Cartel drug-trafficker went missing. But that trafficker was apparently an informant for the Miami-Dade County Money-Laundering Strike-Force — county cops then complained to the Justice Department, which reportedly led to Yabrudi’s arrest.

TSA worker accused of money laundering scheme in Stamford

STAMFORD — A furloughed Transportation Security Administration worker has been accused of helping to steal $300,000 from a New Jersey company and stash it under fake names in local banks.

Police say the scheme, however, was not related to the man needing money because of the federal government shutdown.

Dennis Morehead, 48, of Mount Vernon, N.Y., a TSA worker based at John F. Kennedy International Airport, has been charged with racketeering, money laundering, identity theft, forgery, third-degree larceny, criminal attempt at first-degree larceny and conspiracy to commit third-degree larceny. He has been held in lieu of a $350,000 court appearance bond.

Morehead was first arrested in October when police say he tried to open an account using a fake Rhode Island utility bill at the People’s United Bank on Bedford Street in Stamford.

Police said they discovered a pattern of Morehead and another man opening bank accounts and moving money between them.

“It turned out there was a lot more to the story than just this one guy with fake documents opening up bank accounts,” said Stamford police officer Michael Stempien, who investigated the case.

Stempien discovered two of the accounts received $300,000 in wire transfers from businesses that were victims of a phishing scheme where sensitive financial data was gained by trickery, according to Morehead’s arrest affidavit.

Police said the payroll manager of a New Jersey lumber company received an email from someone pretending to be her manager, directing her to make several wire transfers. Police said the woman was tricked into sending more than $400,000 to the suspects.

Police said Morehead opened fake business accounts at TD Bank, Citizens Bank and Wells Fargo Bank between late-August and mid-October. Police said a second suspect, who has not been identified, opened accounts with fake names at Webster Bank, People’s United Bank and TD Bank.

The money was moved quickly between the fraudulent accounts in an apparent effort to prevent the banks from seizing the funds or determining their true origins, the affidavit said.

Stempien said $50,000 to $60,000 was stolen from the New Jersey lumber company.

“The banks did a great job of recovering the majority of the money, but these guys knew what they were doing, moving the money from one account to the next to obscure and launder the funds,” Stempien said.

How Chinese Crypto Money Laundering Networks Enable Mexican Drug Cartels

By Elizabeth Gail

A recent Senate Judiciary Subcommittee hearing on Border Security and Immigration has revealed that Mexican drug cartels are now more than ever relying on Chinese cryptocurrency money laundering networks.

The Chinese-Mexican crypto money-laundering relationship stems from years of cooperation enabling narcos in the North American nation to obtain precursor chemicals used to process drugs such as methamphetamine.

China is a major supplier of controlled substances such as ephedrine and pseudoephedrine which are vital ingredients in the production of methamphetamine (meth). The East Asian nation is also a major exporter of fentanyl, a synthetic opioid that is about 50 to 100 times more powerful than morphine.

It is medically used as a pain reliever in extreme cases and approved for individuals suffering from painful conditions such as cancer. Fentanyl is now used to lace drugs such as cocaine and heroin to make them more potent.

Mexican cartels are opting to partner with the Chinese due to their vast money laundering networks, which have been propagated by the country’s stringent money transfer limits to foreign markets. Dubbed the Chinese Underground Banking Systems (CUBS), they are made up of an intricate network of money and cryptocurrency brokers who move currencies in and of the economy while sidestepping the country’s banking system.

They traditionally fulfilled the emergent need by affluent Chinese citizens to circumvent the government’s US$50,000 yearly external funds transfer limit. It is not only the Mexicans, but Australian and European drug traffickers who are now relying on the Chinese to launder their illegal proceeds.

Chinese underground banks are estimated to have over 10,000 clients and believed to launder over US$100 billion every year. According to statistics released by the United States Office on Drugs and Crime, about US$2 trillion is laundered on the global market annually.

The director of the U.S. Department of Homeland Security’s Investigations Joint Task Force, Janice Ayala, has publicly stated that Chinese transnational operations are responsible for the recent crypto money-laundering spike.

Chinese networks have been able to push laundered funds through the country’s banking systems, which is then sent back to Mexican shell companies operated by drug cartels. Their crypto money-laundering, financial maneuvers are apparently to blame for the steady decline of cash seizures related to drug dealing activities in Mexico and the United States.

Bitcoin has been observed to be the cryptocurrency of choice for transnational criminal organizations (TCOs) because it is widely accepted in the broader market and can readily be traded on over-the-counter markets, and exchanges with lax know your customer and anti-money-laundering policies.

Chinese brokers involved in money laundering primarily help clients transfer assets from China and enable cash to bitcoin transactions. They also sell bitcoin for cash obtained through illicit means.

That said, however, cryptocurrencies are still not the ideal money laundering facility due to the vicissitudes of the market. They are, however, among the many ways that criminals use to launder money.

Crooks, however, view cryptocurrencies as a safer mode of storing currency holdings and transacting. Privacy coins such as Dash, Monero and Zcash offer feature-rich options that help users maintain anonymity making them an ideal choice for individuals looking to avoid scrutiny.

Cash seizures on the decline

In the past, Mexican drug cartels faced enormous cash seizures. In 2007, for example, hundreds of millions of dollars were seized in one of the properties belonging to Chinese-Mexican businessman, Zhenli Ye Gon, following a money laundering investigation.

He was soon after arrested for allegedly contributing to the Mexican drug trade. This was after being found to have improperly imported four containers of pseudoephedrine and ephedrine. Pseudoephedrine is a major precursor chemical used in the processing of meth. The raid on his home led to the seizure of about US$205 million in cash.

The money, which was mostly in US$100 bills, weighed about two tons and in various other denominations including Hong Kong dollars and Mexican pesos. It became the biggest money seizure in the history of narco-trafficking and so today, cryptocurrencies have offered drug smuggling networks a sanctuary away from such situations and inconveniences.

Right now, U.S. border customs cash seizures related to Mexican narco-trafficking operations are at an all-time low. In 2011 for example, the Arizona ports authority recorded seizures amounting to about US$12 million. 2016 figures stood at US$960,000, an over 90 percent drop.

Silk Road’s contribution to the current situation

The infamous Silk Road online marketplace pioneered the cryptocurrencies and black market connection. It enabled drug dealers, and sellers of other illegal paraphernalia to carry out trade in anonymity by supporting transactions made primarily in bitcoin.

Named after the ancient trade routes that connected the Eastern and Western hemispheres, it was launched on February 2011 by Ross Ulbricht, who went by the moniker, Dread Pirate Roberts.

The website was shut down by agents from the Federal Bureau of Investigations on October 2013 and Ulbricht arrested. It, however, became a blueprint for future crypto money laundering and black-market websites on the darknet. Numerous variations of the network have been built over the years.

AlphaBay Market is one example. Launched in December 2014, it was shut down in 2017 following a joint effort by law enforcement agencies in Thailand, the United States, and Canada. Its founder, Alexandre Cazes, a Canadian national, died in Thailand three days after he was arrested. He was suspected of having committed suicide.

DEA agent linked to Colombian money laundering scheme, prosecutors say

By Scott Glover

(CNN)An agent with the US Drug Enforcement Administration is under investigation in connection with a scheme to launder millions of dollars for Colombian drug traffickers, CNN has learned.

The years-long conspiracy sometimes “involved the use of undercover accounts controlled by the DEA,” according to court papers filed in US District Court in Tampa, Florida.
The agent is not identified by name but is characterized as a “co-conspirator” in the case against a long-time DEA informant who has pleaded guilty to money laundering for the Colombians.
The agent, according to court papers, received cash payments from an account containing hundreds of thousands of dollars in drug money. The agent also directed additional money to be deposited into the accounts of his family members, the documents state.
A DEA spokeswoman in Washington declined comment.
Though the case was filed in Tampa, the prosecution is being overseen by the US Attorney’s Office in Atlanta, Georgia. The transfer of the matter to another jurisdiction is the sort of step federal authorities sometimes take in investigations involving allegations of official corruption.
Kurt Erskine, a top official in the US attorney’s office in Atlanta, declined comment on the case.
The information about the allegedly rogue agent is contained in a plea agreement between federal prosecutors and former DEA informant Gustavo Yabrudi, a Venezuelan-born Miami resident.
Yabrudi’s defense attorney, Leonardo E. Concepcion, said in an email that the case is “still active” and, “I cannot discuss it as this time.”
Yabrudi worked on and off as an informant for the DEA from 2010 to 2016 with stints in New York, Boston and Miami, according to court records. He was deactivated at one point in 2013 for “unauthorized money movements.”
According to court records, the agent identified as a co-conspirator instructed Yabrudi in 2015 to recruit someone to open a bank account under a false name in Miami. Hundreds of thousands of dollars “from illegal drug sales” was deposited into the account, the records state.
Neither the agent nor Yabrudi informed the DEA of the existence of the account, according to the court records.
The pair subsequently spread the money around among fellow conspirators who laundered the proceeds in various ways and got the money into the hands of traffickers in Colombia, the documents allege.
At least $7 million in “illegal funds” passed through a business account belonging to one co-conspirator, according to Yabrudi’s plea agreement.Yabrubi was charged with money laundering in September. He agreed to plead guilty later that same month.
In December, federal prosecutors and Yabrudi’s defense attorney filed a joint motion requesting that his sentencing be postponed for six months. He is currently set to be sentenced in May.
“The defendant is cooperating against others who facilitated sophisticated money laundering schemes, in part, by using undercover accounts that were shell companies and controlled by law enforcement,” the motion states. “Some of the illegal proceeds laundered during these schemes derived from drug trafficking and public corruption related offenses.” The agent’s current status with DEA is unclear.

Former Ohio City nightclub owner pleads guilty to drug, money laundering charges

By Eric Heisig

CLEVELAND, Ohio — A former Ohio City nightclub owner arrested by the FBI as part of a large-scale investigation pleaded guilty Monday to federal drug and money-laundering charges.

Emad Silmi, 44, the owner of Global Auto Body & Collision in Cleveland’s Puritas-Longmead neighborhood, acknowledged to a federal magistrate judge that he ran a drug ring out of his shop that spread large amounts of marijuana, cocaine and a designer drug similar to “molly” throughout Northeast Ohio.

His arrest came after a federal investigation that lasted more than a year and also resulted in charges against 25 other people. It is the second time the North Olmsted resident, who previously owned the popular club Moda, was caught trafficking drugs.

He was sentenced in 2006 to 57 months in federal prison for similar charges.

Silmi said little more than “yes, your honor” during his plea hearing in front of Magistrate Judge Jonathan Greenberg. A bald, gray-bearded man in an orange jumpsuit, he has been in the custody of the U.S. Marshals Service since his arrest in December 2017. He acknowledged his crimes to the judge as Assistant U.S. Attorney Matthew Cronin read them aloud from a plea agreement.

His lawyer Craig Weintraub said after the hearing his client is looking at a likely sentence of about 10 years in federal prison. Silmi also agreed to forfeit more than $54,000 and a gun, and federal prosecutors agreed to drop several charges in exchange for his plea.

U.S. District Judge Christopher Boyko will sentence Silmi on April 29.

The FBI dubbed the investigation “Operation Snow Globe.” Agents discovered that drugs were shipped through the mail, FedEx and UPS. The drug money was laundered through auto shops throughout Cleveland and in Parma. Agents listened in on phone calls and read text messages, according to court records.

Silmi obtained large amounts of cocaine from Cleveland resident Samer Abu-Kwaik, prosecutors said. He also obtained large amounts of designer drugs from Huron resident Anthony Quinn Greenelee, who obtained it from China.

He sold all the drugs out of his shop and disguised drug payments as business expenses to launder the money.

Others netted in the FBI’s investigation were also caught shipping and selling heroin, fentanyl and the synthetic opioid U-47700 from Puerto Rico, court records said.

Prior to his recent arrest, Silmi was likely best known as the owner of his West 25th Street nightclub, which in its day was frequented by stars such as LeBron James, Shaquille O’Neal, the rapper 50 Cent, Mötley Crüe drummer Tommy Lee and hip-hop mogul Russell Simmons.

The Ohio City club was shuttered in 2006, and its former building now houses the Mitchell’s Homemade Ice Cream shop.

Weintraub described Silmi’s charging and plea as a “fall from grace” for a once-successful businessman.

“That was the club in Cleveland for a while,” the attorney said of Moda. He said Global Auto Body & Collision is still open and is run by Silmi’s wife.

Federal prosecutors accuse multiple Colorado restaurants of drug money laundering

By Trevor Reid

GREELEY — Almansitas Mexican Food restaurant in Greeley is one of 17 restaurants implicated in a federal drug trafficking and money laundering investigation, with each of those restaurants having their accounts frozen and assets seized by federal authorities.

The original court filing from Nov. 13, has been sealed, but court filings in response to the charges from Almansitas owner Ana Cejudo hint at the allegations.

Cejudo in her response says the restaurant has never served as a drug trafficking front, nor has it laundered money, according to federal court filings.

But the response also refers to Drug Enforcement Administration databases and two safe deposit boxes seized by federal authorities containing more than $805,000.

The response also touches on money laundering operations, including a reference to layering — in which criminals use complex financial transactions to hide illegal sources of cash.

The case against Cejudo and Almansitas could also sweep up other Mexican restaurants, including Taco Star, with locations across Colorado, as it appears many of the same people are involved, and those people also appear to share a bank account, according to court filings.

Taco Star, a 24-hour Mexican fast food restaurant with drive-through service, has locations in Longmont, Northglenn, Aurora and Colorado Springs.

Despite the similarities between Almansitas and Almanzas — both 24-hour Mexican food restaurants with similar menus, signs and food — the restaurants are listed under different owners, the latter belonging to a Tomas Lopez Alamilla, according to Secretary of State business filings.

In Cejudo’s response, she asserts that Almansitas and Almanzas are separate entities owned by different people.

Taco Star is filed under a registered agent named Carolina Almanza, who shares a mailing address with Almansitas, according to business filings. But no one with the surname Almanza is listed as a defendant in the case.

In her response, Cujedo admits Cosme Gutierrez, another defendant listed in the court filing, is an owner of Taco Star. Cujedo also admits she, Gutierrez and Almansitas are the claimants for a single bank account, according to court records.

Gutierrez claims to be one of the owners of Almansitas in his response to the initial filing and is listed as a founder of the restaurant in its 2014 articles of organization. Cujedo, Gutierrez, Almansitas and Taco Star are being represented by Thomas Fleener, a Wyoming and Colorado criminal defense attorney based in Laramie.

The responses reference analyses of seized accounts dating back to October 2015. The responses also reference a section of the original filing titled “Connections between Jose Aguilar and Narcotics Trafficking.” The same Aguilar appears to own a bank account also associated with a business called El Potosino Foods, LLC, prosecutors asserted in the original filing.

When asked over a Friday evening phone call about the federal case, an Almansitas employee spoke with a man working at the restaurant before responding that they can’t give any information out.

East Bay defense contractors charged with money laundering, fraud, conspiracy

MARTINEZ — Three members of a respected San Ramon business family have been accused of engaging in money laundering, bribing employees, and insurance fraud, all while their companies were contracting with the U.S. Armed forces.

Wife and husband Selina Singh, 55, and Manjinder Paul “MP” Singh, 57, along with their son, Kabir Singh, 28, were charged in November with conspiracy, $1.5 million in money laundering and several counts of workers compensation fraud and insurance fraud, according to court records. The charges are tied to two San Ramon businesses owned by the family, Bara Infoware and Federal Solutions Group.

Selina and Kabir Singh have both posted bail, and are out of custody. MP Singh has not yet been arrested, prosecutors said. On Monday, a judge will review a prosecution motion to increase the bail amount to $500,000.

The charging documents allege that the defendants instructed employees not to report injuries, sometimes giving them bribes as an incentive, in order to avoid paying insurance fees. They’re also accused of providing false information to insurance companies.

Both companies are construction businesses that contract with the Department of Defense, according to the companies’ websites. Federal Solutions Group’s website says its clients include the U.S. Armed Services, the Federal Bureau of Prisons, the National Guard, and the U.S. Army Corps of Engineers.

Neither business nor Selina Singh immediately returned email requests for comment. A 2016 article by a business news site called American City Business Journals says Singh is Federal Solution’s Group’s CEO. She is quoted in the article saying she immigrated to the United States from Northern India and had no business experience in the U.S. when she started. She talked about the need for obsessive attention to detail in her field.

“One failed project can bring you down after five or six years of work,” she told the publication. “So we have to be extremely diligent in everything we do.”

A former manager at Federal Solutions Group is quoted in the story saying Singh “takes care of her employees.”

The charging records cover a seven-year period, starting in September 2010 until December 2017. All told, the Contra Costa District Attorney’s office filed 14 felony charges, including enhancements alleging aggravated white-collar crime.

What drives a public official to white-collar crime? ‘Greed’

By Jennifer Bowman

ASHEVILLE — Buncombe County officials illegally used taxpayer dollars to enrich themselves, paying for daytime shopping trips, private phone bills, meals, vacations, spa treatments and other personal pleasures, according to federal indictments. Three of them have admitted as much.

Research says they’re not the first to try out government corruption.

A 2018 report by the Association of Certified Fraud Examiners found occupational fraud in government and public administration caused organizations a median loss of more than $125,000, most commonly through corruption schemes. Financial damage was worse when the fraud was committed by a person of authority like a manager or executive, and even greater when multiple perpetrators were involved.

What is the cost to Buncombe County?

In Buncombe, federal prosecutors say corruption has cost much more. Even without quantifying the alleged kickbacks received by former managers Wanda Greene, Mandy Stone and Jon Creighton, the U.S. Attorney’s Office cited more than $200,000 in illegal credit card purchases and more than $2.5 million used for life insurance policies.

That’s not including millions of dollars in other controversial expenses made under Greene’s 20-year tenure as county manager, prosecutors allege.

What would drive Buncombe’s highest-ranking administrators — already paid handsomely with six-figure base salaries, bonuses, retention incentives and some of the best benefits in the state — to behave in such a way?

If they’re like any white-collar criminal, it’s greed, said Michael Clark, a former FBI agent with decades of experience investigating public corruption.

“They go in there usually with pretty good intentions, and they see (money) all around them,” Clark said. “They’re giving out a million-dollar contract to a sewer guy, another million to a road guy. Everyone’s getting rich around them — they have a lot of money, beach houses, ski trips, trips to Florida.

“The county manager — they’re civil servants. They’re making a set salary, which is comfortable but not rich. They kind of feel this sense of entitlement. ‘I’m as smart as these guys. They’re rich. I’m stuck with a civil service job. I deserve the perks.’ The greed part steps in. And we saw that time after time after time.”

No oversight? ‘That just opens the floodgates’

The report by the Association of Certified Fraud Examiners, conducted annually and in its 10th edition, said most employees never commit fraud. But when they do, researchers said, they can cause “enormous damage.”

Of nearly 2,700 cases across more than 100 countries, the study found that most occupational fraud costs a victim organization less than $200,000. Twenty-two percent, however, exceed $1 million in financial damage.

The schemes last an average of 16 months, according to the report. Government and public organizations are among the industries with the highest proportion of corruption cases.

Prosecutors allege fraud in Buncombe County government is wide-ranging, involves multiple longtime officials and dates back to more than a decade ago.

Four officials have been indicted: Greene, Stone, Creighton, and Michael Greene, Wanda Greene’s adult son and the county’s former business intelligence manager.

All but Wanda Greene have reached deals with the U.S. Attorney’s Office, pleading guilty to conspiracy charges. Joe Wiseman, a Georgia-based engineer said to be at the center of the yearslong kickback scheme with the former managers, has not been charged.

The four ex-officials represent a total of nearly 110 years as county employees. Wanda Greene served as county manager for two decades — nearly three times longer than the average tenure of city and county managers in the U.S. Stone and Creighton were Buncombe staffers for even longer.

Fraudsters who had been working with their company longer stole twice as much, according to fraud examiners’ findings: If the perpetrator had worked more than 10 years at the organization, the financial damage increased by over six times more than the median loss caused by the fraudulent scheme of someone who worked there less than one year.

“Some people get in these positions and there’s no oversight,” said Thomas Raftery III, a former FBI agent who investigated construction and contract fraud in the Afghanistan war zone.

“And that just opens up the floodgates. You gotta have some type of system of checks and balances and it doesn’t look like this county had any.”

The FBI investigation: 18 months and counting

Federal officials confirmed Wanda Greene “and others” were under investigation in August 2017, more than a month after county officials flagged financial irregularities during Greene’s last week as manager.

The investigation continues nearly a year and a half later. That’s common, former FBI agents said.

“Some of these types of investigations, they’ve taken several years — as many as five years,” Raftery said. “It depends on what’s involved, what else is going on. The agents typically have other cases, so there’s peaks and valleys in attention.”

Raftery said it’s likely the county investigation has required “a whole host of subpoenas.” The superseding indictment, in which a grand jury indicted Greene for additional charges in August, is evidence that investigators likely are picking up additional information along the way, he said.

Raftery, who has 23 years of federal law enforcement experience and served as the first inspector general for the Delaware River Port Authority, said the FBI also pays special attention to professional services contracts like those granted to Wiseman. In North Carolina and other states, they’re not subject to bidding requirements and “are a great way to shield bribes,” he said.

“They’re just more prone to manipulation,” Raftery said.

Clark said corruption cases can be complicated. A 22-year veteran of the FBI, he supervised the investigation of former Connecticut Gov. John Rowland, a case that ultimately led to the governor’s imprisonment for corruption and fraud.

Clark also oversaw major bribery and kickback investigations of several mayors throughout the state, and his work on high-profile corruption cases made the bureau’s public integrity operation in Connecticut a national model. He now is a senior lecturer in the criminal justice department at the University of New Haven.

Investigators looking into Buncombe County likely have been working through subpoenaed records, from credit card statements to travel documents, Clark said. And corruption cases often work on “moving up the food chain,” he said — finding others, perhaps more significant participants, potentially engaged in corruption.

“Let’s say they get a plea or someone decides to cooperate,” Clark said. “They’re cooperating behind the scenes before they even plead, most of the time. (Investigators) are lifting up the rocks and taking a peek and looking around, and they are sent down a whole new path.”

And the decision to cooperate is a common one, he said.

“For the most part, they’re not hardened criminals who are used to doing jail time,” Clark said. “If you’re a drug dealer or in the mob, that’s a red badge of courage. With a white-collar crime person or a public official, that’s not the case.

“They’ll cut a deal.”

‘There’s got to be checks and balances’

Internal control weaknesses were responsible for nearly half of all fraud cases, according the fraud examiners’ report. In Buncombe, officials quickly became aware of what they lacked, albeit after the fact.

“When they’ve been in that one job for that long, they certainly know how to manipulate the system, there’s no question about that,” Clark said. “They know where they can hide things or grab things from, things along those lines.”

The investigation revealed glaring problems in Buncombe County government.

Commissioners never received line-item budgets under Greene, never gave her annual performance reviews and did not regularly ask for information about her expense reports. Greene, meanwhile, redacted receipts she submitted for reimbursement, was accused of using bullying and intimidation techniques, and never reported back to commissioners on no-bid contracts,.

The county has since overhauled its policies, clamping down on how economic development money is spent, capping performance bonuses and promoting their whistleblower hotline. They’ve also changed auditing firms, strengthened the role of the county’s internal auditor and required more public reporting of contract activity.

Raftery said oversight is key, even if it’s unpopular in the organization. As inspector general, he said he regularly received pushback after issuing negative reports and implementing policies against waste and fraud. He left the job in 2014, penning a scathing resignation letter that accused officials of interfering with his independent watchdog role and preventing him from issuing audits.

Commissioners need to take responsibility for their fiduciary duty, Raftery said, and that includes being aware of contracts that don’t require their approval.

And they should remember that the county manager works for them, not the other way around, he said.

“What little I saw (about the case) just struck me — where is the oversight?” Raftery said. “Nobody’s watching. You’ve got two, three people there it looks like just doing whatever they wanted to do.

“And they got caught. Because, eventually, you’re going to get caught.”

A New Business Internet Scam Puts Companies in Legal Hot Water

By Erick Sherman

Criminals are trying to turn companies into money mules, according to the FBI.

Under the scam, criminals with illegally gained money—often through other Internet frauds—get a company to receive cash and then forward it to an account in another country. The intent is to get around official scrutiny of financial transactions.

Money mule schemes themselves aren’t new. In the past they targeted consumers, some of whom were aware of the schemes and others taken in by a con artist. The criminals often disguised themselves as work-from-home opportunities, according to the U.S. Computer Emergency Response Team (CERT), although another popular approach was romantic interaction that starts on a dating site.

Now companies are targets, according to the Associated Press. One executive in Connecticut received an email from someone who seemed to be the small business’s owner requesting a money transfer. It was really a money mule plot targeting companies, schools, and non-profits.

“They trial and error this stuff and they see what works and they see what doesn’t,” FBI supervisory special agent James Abbott told AP.

Not only will money mule scammers try what seem to be legitimate requests, but also might try attacking computer systems for covert access to bank details.

The Department of Justice began to more heavily target money mule scams starting October 1, the agency said in a press release. It has worked to stop 400 money mules in 65 federal districts.

Potential consequences for being a money mule include frozen bank accounts, prosecution, and liability for others’ losses. The consequences can be serious, so companies should be on guard. CERT suggests companies use anti-virus and anti-spyware, limit access to sensitive data, regularly check employee lists and financial transactions, and consider isolating computers that perform banking functions from other systems.

Morgan Stanley Fined Over Anti-Money Laundering Program

By Ross Snel

Finra has slapped Morgan Stanley Smith Barney with a $10 million fine for problems in its anti-money laundering program that lasted more than five years.

In an announcement Wednesday, the self-regulator for the brokerage industry said Morgan Stanley’s AML program failed to meet requirements of the Bank Secrecy Act because of three shortcomings:

•Morgan Stanley did not allocate enough resources to review alerts generated by that surveillance system, so its analysts frequently closed alerts without sufficient investigation and/or documentation.

•The company’s AML department failed to “reasonably monitor” customers’ deposits and trades in penny stocks for suspicious activity.

Finra said it found other problems, including a failure to create and maintain a supervisory system capable of complying with securities laws that generally prohibit the offer or sale of unregistered securities. According to the regulator, the company divided responsibility for reviewing customers’ deposits and sales of penny stocks among branch managers and two home-office departments with insufficient coordination among them.

Additionally, Finra said the Morgan Stanley failed to implement policies and procedures to ensure it was conducting periodic risk-based reviews of correspondent accounts it kept for some foreign financial institutions.

The action underscores the importance for broker-dealers of developing and maintaining robust AML programs that are in full compliance with the law.

“As we stated in our Report on Finra Examination Findings released earlier this month, Finra continues to find problems with the adequacy of some firms’ overall AML programs, including allocation of AML monitoring responsibilities, data integrity in AML automated surveillance systems, and firm resources for AML programs,” said Susan Schroeder, Finra executive vice president, Department of Enforcement, in the announcement. “Firms must ensure that their AML programs are reasonably designed to detect and cause the reporting of potentially suspicious activity.”