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Facing a Money Laundering Investigation? Hire the Leading Houston White Collar Crimes Lawyer

The Federal crime of Money Laundering is

traditionally understood to be the practice of

filtering “dirty” money, or ill-gotten gains,

through a series of transactions until the funds

are “clean,” or appear to be proceeds from legal

activities. The United States Criminal Code

takes a broader stance towards money

laundering, and criminalizes knowingly engaging

in a broad array of financial transactions that

involve money either derived from or meant to

promote various illegal activities, or that involve

certain elements of deception.

While money laundering charges are often

perceived as related with drug crimes, they are

more frequently related with business-related

crimes. For example, money laundering charges

may be associated with illegal funds obtained

through business fraud, mortgage fraud/real

estate fraud schemes or other white collar

crimes.

The Charles Johnson Law Firm represents individuals and institutions in matters such as:

Hiding money

Failing to file require cash transaction reports

Making multiple cash withdrawals or deposits slightly below the $10,000 reporting

threshold

Evading taxes by underreporting income

Alleged Patriot Act violations

Illegal wire transfers

Financial transactions involving proceeds of unlawful activity

Other illegal transactions

Federal criminal appeals involving money laundering

Such activities are often viewed by federal prosecutors as indicators of money laundering. Houston Money

Laundering Lawyer Charles Johnson will provide a vigorous defense of clients who have drawn scrutiny from

the federal government for their financial transactions. If the government is able to make the case that your

financial transactions were an effort to “launder” money received from criminal activities such as drug

trafficking or weapons trafficking, you will face forfeiture of your assets. Houston Lawyer Charles Johnson

is available to speak with you directly about your case, anytime night or day, at (713) 222-7577 if

you have been charged with or are being investigated for Money Laundering.

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Overview of Money Laundering in Texas

Although money laundering can be a complex process, it usually involves three distinct steps that can occur

simultaneously or sequentially. These steps are referred to as (1) Placement, (2) Layering, and (3)

Integration.

Placement is the initial process of getting illegal funds into “the system,” or placing unlawful

proceeds into legitimate financial institutions. A common technique used for placement is structuring,

or “smurfing,” which involves dividing the funds into multiple deposits of cash that are below

reporting thresholds and then depositing the funds at one or more institutions, using one or more

individuals to make the deposits. Placement may also be accomplished by purchasing money orders

or travelers checks at one institution and depositing them into accounts at other institutions.

Layering is the process of converting funds after they have entered the legitimate system. This step

involves a series of complex financial transactions that move the funds in order to distance them from

their illegal source. For example, dirty money may be converted to clean money through the purchase

and sale of stocks, bonds, art, or jewelry. It may also be wired as payment for non-existent goods,

disbursement to a non-existent borrower, or simply a transfer to another account.

Integration is the process in which the illegal funds re-enter the legitimate economy and become

virtually indistinguishable from legal funds. The newly cleaned funds, often commingled with

legitimate funds, are then ready for use, be it in investing in real estate, purchasing luxury items, or

financing business ventures.

Common elements that drive the efforts of money launderers throughout this three step process include “the

need to conceal the origin and true ownership of the proceeds, the need to maintain control of the

proceeds, and the need to change the form of the proceeds in order to shrink the huge volumes of

cash generated by the initial criminal activity.”

It is important, when reviewing literature on money laundering, to be aware that a conviction for the crime of

money laundering may not necessarily reflect activity that would traditionally be understood to constitute

money laundering. For example, someone who buys legitimate goods online commits money laundering,

under the federal statute, if the supplier is outside of the country and the supplies are intended to facilitate

one of several crimes — even if the product is itself legal and is being used in a legal way. (For example,

purchasing napkins in such a way would be money laundering, if they were to be used by an illegal casino.)

Off-shore Accounts

Identifying and verifying money laundering is a difficult task, partly because of the complexities of the multi-

transactional process but also because of the legal, political, and economic barriers that interfere with and

often completely prevent investigation or enforcement of U.S. law outside of U.S. borders. Some of these

barriers are reduced through the use of “memoranda of understanding” (MOUs), or mutual agreements —

between agencies or officials of different nations — to exchange information and cooperate in criminal

investigations. However, not all nations enter into these or other cooperative agreements. Examples of these

instances include Nauru, Myanmar, and Nigeria.

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Costs and Statistics

There is no clear picture of the actual amount of money laundered globally. Estimates based on reported

crimes will tend to underestimate the figure, and estimates based on the size of the underground economy

will tend to overestimate the actual amount. Synthesizing a variety of sources, the International Monetary

Fund cites figure of between ¾ of a percent to 2 percent of the world’s gross domestic product, when using

the reported crime method and 5 to 85 percent of a nation’s economy (depending on the nation) when using

the underground economy method. These two figures can be found in other sources, roughly combined to

give a range of 2-5 percent of the world’s GDP. In 1996, the 2-5 percent formula yielded between 590 billion

and 1.5 trillion dollars. This figure is relatively often quoted as being the range of the magnitude of the

money laundering problem (sometimes “rounded up” to 600 billion)- such as by the FBI. The U.S.

Department of the Treasury has also been quoted as estimating that “$600 billion represents a conservative

estimate of the amount of money laundered each year.” Using 2005’s world GDP of 59.6 trillion, the 2-5%

approach would give one a figure of between 1.2 and 3 trillion dollars. Of course, the research that provided

the main support for the 2-5% figure is itself a decade old, and money laundering has become an issue

commanding much greater legislative, regulative, and law enforcement attention in the wake of September

11th.

In fiscal year 2001, federal law enforcement agencies in the U.S. seized more than $300 million in criminal

assets that were attributable to money laundering.

In 2001, U.S. district courts completed 1,420 money laundering cases and convicted 1,243 individuals, or

more than 87 percent of the defendants prosecuted. Some of these cases involved more than $100 million in

laundered funds, and one-fifth of the cases involved more than $1 million. Of the Money Laundering Control

Act charges made in 2001, 63 percent involved fraud, bank embezzlement, transporting stolen property, and

counterfeiting, and 16 percent involved drug trafficking. Almost half (44 percent) of the money laundering

cases referred to U.S. Attorneys in 2001 occurred in the six geographic areas designated by the U.S.

Departments of Justice and the Treasury as areas of high risk for financial crimes and money laundering

activity (High Intensity Financial Crime Areas or HIFCAs). These areas are (with the year designated a HIFCA)

New York and Northern New Jersey – (2000)

Los Angeles – (2000)

San Juan, Puerto Rico – (2000)

The southwest Texas and Arizona/Mexico border – (2000)

The northern district of Illinois (Chicago) – (2001)

The northern district of California (San Francisco) – (2001)

Southern Florida (Miami) – (2003)

High Profile Examples/Case Studies

In 2006, Charles E. Edwards was sentenced to 13 years in prison and was ordered to pay $320,397,837 in

restitution following his September conviction on charges of wire fraud, money laundering, and conspiracy to

commit money laundering. The evidence showed that from 1996 through September 2000, Edwards, the

founder of ETS Payphones, Inc. (ETS), raised capital to grow his coin-operated payphone business by using a

network of independent insurance agents to sell payphones to investors throughout the United States for

$5,000 to $7,000 per phone. Edwards convinced investors to buy payphones and lease them back to ETS for

what Edwards claimed would be a guaranteed profit of approximately 14 percent per year. The scheme

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defrauded approximately 12,000 nationwide investors out of more than $400 million. Edwards siphoned off

approximately $21 million of the fraud proceeds for himself and his wife. In addition, the evidence showed

that Edwards engaged in a series of unusual and convoluted financial transactions, which served no legitimate

business purpose and were intended solely to conceal and disguise the source, location, ownership, nature,

and control of the proceeds involved in those transactions.In 2006, Edmundo P. Rubi was sentenced to 70

months in prison for conspiracy to commit mail fraud and money laundering. Rubi previously pled guilty to

the charge that he conspired to conduct a scheme to defraud investors out of more than $12 million using his

companies, Knights Express, Ltd. and Djmler Enterprises, Inc. Rubi was also ordered to pay restitution in the

amount of $12,483,000. According to the plea agreement, beginning in 1999 and continuing up to October

31, 2001, Rubi formed and operated Knights Express Ltd. and Djmler Enterprises, Inc. for the purpose of

soliciting investments from members of the public. In connection with his guilty plea, Rubi admitted that he

made fraudulent representations that investor funds would be used to purchase and resell Federal Reserve

notes in an international trading program. In actuality, no such international trading program

existed. Millions of dollars of investor funds were used instead to pay the periodic returns that investors

received and to make unsecured investments. Rubi also intentionally concealed from investors the fact that

millions of dollars of investor funds were converted for his own personal use and benefit.The Drug

Enforcement Agency (DEA) and U.S. Attorney’s Office in New York completed in 2002 a “long-term

investigation targeting the money laundering and narcotics activities of the Khalil Kharfan Organization

operating in Colombia, Puerto Rico, Florida, and the New York Tri-State area.” Initial statements by the

agencies indicated that more than $100 million in narcotics proceeds were laundered in the scheme. The

organization used members to open fictitious businesses, which they used for the deposit and transfer of

money between countries. Approximately $1 million has been recovered.In 2002, a California jury convicted

two principals in a Costa Rican tax evasion-money laundering ring. Wayne Anderson, 62, and Richard Marks,

58, were arrested in one of the largest undercover stings in IRS history. The two men were charged with

conspiracy to launder $470,000, mostly through offshore trusts that concealed millions of dollars for U.S.

taxpayers who wanted to evade U.S. taxes. The case resulted in seven federal convictions.

“A Nashville, Tennessee man was sentenced to 20 years in jail for his three-year role in a large-scale cocaine

distribution and money laundering organization in the Nashville area. The individual pled guilty to conspiracy

to commit money laundering and conspiracy to distribute cocaine. The defendant used several vehicles with

sophisticated hidden compartments to transport the cocaine and the proceeds to pay for it back and forth

between Chicago and Nashville.”

“On June 21, 2002 a federal jury in North Carolina convicted Mohamad Hammoud and his brother Chawki,

Lebanese immigrants, for providing material support to the terrorist group Hezbollah through racketeering,

conspiracy, and conspiracy to commit money laundering by funneling profits from a cigarette smuggling

operation. In March 2002, several of the Hammoud’s co-defendants pled guilty in North Carolina federal court

to racketeering, conspiracy, and conspiracy to commit money laundering for funneling profits from their

cigarette smuggling operation to purchase military equipment for the Hezbollah terrorists. The case began

when the West Virginia State Police seized a significant quantity of contraband cigarettes. The Federal

indictment alleged that millions of dollars worth of cigarettes were smuggled out of North Carolina to resell in

States, including Michigan, where higher State taxes greatly increase the sales price.”

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The Response/Current Efforts

Legislation and Regulation

The U. S. has imposed a number of legislative and regulatory standards to deter money laundering. The most

significant of these are the following:

The Bank Secrecy Act (BSA), signed into law in October 1970, implemented a reporting system for

large financial transactions (over $10,000) to monitor and deter the flow of criminally obtained

proceeds. (Codified 31 U.S.C. §§ 5311-5330)

The Money Laundering Control Act of 1986 amended the BSA and specifically made money laundering

– spending, saving, transporting, or transmitting proceeds of criminal activity – a federal felony.

(Codified 18 U.S.C. §§ 1956 and 1957)

The Anti-Drug Abuse Act of 1988 increased the penalties and sanctions for money laundering crimes

and amended the money laundering provisions of 18 U.S.C. § 1956 to include financial transactions

with the intent to violate § 7201 (attempted tax evasion) or § 7206 (false tax return) of the Internal

Revenue Code of 1986 (26 U.S.C.). (Pub. L. 100-690)

The Racketeer Influenced and Corrupt Organizations (RICO) Act identified violations of money

laundering statues as “predicate offenses” that constitute racketeering activity and provided for both

civil and criminal actions against violators. (Codified 18 U.S.C. §§ 1961-1968)

The Money Laundering and Financial Crimes Strategy Act of 1998 required that the Secretary of the

Treasury coordinate and implement a national strategy to address money laundering. (Pub. L. 105-

310)

The USA PATRIOT Act of 2001 established new rules and responsibilities affecting financial institutions

and commercial businesses to prevent, detect, and prosecute terrorism and international money

laundering. For example, the Act required banks to actively monitor customer transactions, expanded

the ability of public and private institutions to share information, and increased civil and criminal

penalties for money laundering. (Pub. L. 107-56)

Current Efforts To Reduce Money Laundering

In 2005, the Drug Enforcement Agency (DEA) completed Operation Mallorca, an investigation into the use of

the Columbian Black Market Peso Exchange to launder drug money. Operation Mallorca resulted in the arrest

of 36 individuals and the seizure of 7.2 million dollars, 947 kilograms of cocaine, 7 kilograms of heroin, and

21,650 pounds of marijuana.

In 2005, the multinational Organized Crime Drug Enforcement Task Force completed Operation Cyber Chase,

an investigation that targeted illegal Internet pharmacies. These pharmacies used more than 200 websites to

sell controlled substances internationally and to launder the proceeds. Just one of the organizations involved

used this system of web-based distribution to move approximately 2.5 million dosage units of Schedule II-V

pharmaceuticals (including Vicodin, amphetamines, and anabolic steroids) permonth.

“Operation Wire Cutter,” a two and a half year joint effort of U.S. and Colombian law enforcement, uncovered

a massive money laundering operation for several Colombian narcotics cartels that channeled money through

New York, Miami, Chicago, Los Angeles, San Juan, and Puerto Rico using the Black Market Peso Exchange. The

efforts resulted in 37 arrests – 29 in the U.S. and eight in Colombia – as well as the seizure of more than $8

million, 400 kilos of cocaine, 100 kilos of marijuana, 6.5 kilos of heroin, nine firearms, and six vehicles.

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Since the attacks of September 11, 2001, efforts to reduce money laundering – throughout the world – have

increased significantly, with particular attention paid to associations with terrorist activities. Effective

September 24, 2001, for example, President Bush issued Executive Order 13224, “blocking property and

prohibiting transactions with persons who commit, threaten to commit, or support terrorism.” Initially, 27

individuals and organizations were identified as Specially Designated Global Terrorist (SDGT) entities under

Executive Order 13224. By June 6, 2003, 282 individuals and organizations had been identified as SDGTs, and

over $137 million in associated assets had been frozen worldwide.

In July 2002, the second National Money Laundering Strategy issued by the U.S. Department of the Treasury

pointedly addressed the issue of money laundering as “integral to the war on terrorism.” Specifically, the

strategy (1) presented “government’s first plan to attack financing networks of terrorist entities” and (2)

focused on “the use of charities and other non-governmental organizations to raise, collect, and distribute

funds to terrorist groups.”

Penalties for Money Laundering Charges in Texas

Money laundering refers to the process of concealing financial transactions. Various laundering

techniques can be employed by individuals, groups, officials and corporations. The goal of a money laundering

operation is usually to hide either the source or the destination of money in connection with a criminal act.

Money laundering is a white collar crime that will be investigated by many different sources including: local,

state and federal investigators that may also include the Department of Justice, the State Department, the

Federal Bureau of Investigation (FBI), the Internal Revenue Service (IRS) and the Drug Enforcement Agency

(DEA).

A person can be charged with money laundering if suspected of receiving, concealing, possessing,

transferring, transporting or having any interest in the proceeds of criminal activity. In fact a money

laundering charge can be filed against a person that has almost anything at all to do with the proceeds of a

criminal act. In Texas, money laundering charges have varied penalties depending on the amounts involved:

1. Value from $3000 to $19,999 = third degree felony (2-10 years in prison plus a hefty fine if

convicted)

2. Value from $20,000 to $99,999 = second degree felony (2-20 years in prison plus a hefty

fine if convicted)

3. Value from $100,000 and up = first degree felony (5 to life years in prison plus a hefty fine

if convicted)

There are several different types of money laundering charges you can face. Some are more serious than

others and could result in severe punishments and steep fines. In fact, if you are convicted of money

laundering, you could be forced to pay a fine up to twice the amount of the total dollar amount of funds

involved in the illegal activity.

It is important that you contact Houston White Collar Crimes Lawyer Charles Johnson as soon as you

are aware of charges against you or a loved one. If you are confronted with federal charges, you will want an

experienced attorney who is familiar with federal court procedure as it is quite different from the state court

process. Attorney Charles Johnson is well-versed in both federal and state law and court

procedure. No matter what your money laundering charges or other white collar crime charges entail, you

can trust that he will prepare a solid defense on your behalf.

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Defenses for Money Laundering Charges in Texas

Absence of intent to commit a crime — Most crimes require intent to commit the crime. In terms

of money laundering, people who are accountants, bankers, or others who deal with large amounts of

money are often charged with money laundering without even knowing they committed a crime. If

you can prove you were unaware the money obtained was illegal, then there is no way you can have

intent to commit money laundering.

Duress — Duress occurs when a person truly believes there will be some danger or harm if they do

not participate in the crime. In money laundering, criminals often force accountants or bankers to

launder illegally obtained money or else be subjected to harm. If this is the case, you will have a

good duress defense (as the banker or accountant).

Insufficient evidence — A criminal charge can be dismissed if there is insufficient evidence to

prosecute. In money laundering, an intention to prevent illegally obtained funds from being traced to

its origin is required for a conviction. A conviction also requires proving the money laundered came

from a specific illegal activity. If one of these two things is missing, then there is a possibility this

defense will work.

The main defense to Money Laundering is the defendant’s lack of knowledge that the funds were from an

unlawful activity. Attorney Charles Johnson may be able to establish that you did not intend to promote

unlawful activity or that the transaction was not designed to conceal the unlawful activity. This is usually a

valid defense when a person is merely an employee of a business, or a non-involved partner who is basically

“duped” into managing a business whose proceeds are the result of an illegal activity. This defense can be

supported with evidence from the company’s financial statements or accounting records showing material

misrepresentation or omissions, committed by someone else other than the defendant. Many times one

devious business partner will ask another partner to “sign off” on certain loan documents or tax returns

without telling the defendant that the information contained therein is false misleading. Just because a

defendant has signed off on paperwork that might be designed to cover up the source of money or funds does

not mean the defendant actually knew about the source of the funds. It is important to interview all of the

parties involved to ascertain the defendant’s good character and honesty and lack of control over this area of

the company’s finances, and to emphasize the partner’s bad character. Another defense is tracing the funds

involved in the transactions and proving that these specific funds did not fund, nor were the proceeds of, any

unlawful activity. The defenses for Money Laundering are quite complex (as are all white collar cases) and

involve many hours of records research by attorneys and expert witnesses. It is often beneficial to utilize a

“forensic accountant” to also go through the documents in order to defend against the Government’s

allegations.

Additionally, because the Charles Johnson Law Firm fights

conviction from all angles, they will assert a wide range of

defenses and challenges to constitutional violations that apply

in all criminal cases. The possibilities are numerous and

diverse. One of those is the “denial of right to Counsel”.

This occurs when a suspect is in custody and requests to

speak to their attorney, but is denied and questioning

continues. Other defenses may include challenging the

validity of any search warrant, or whether there were any

“forensic flaws” during the investigation of your case.

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Depending on what else you have been charged with, this could include exposing flawed procedures regarding

fingerprints analysis; computer analysis/cloning hard drive procedures; GPS tracking monitors; forensic

financial accounting reviews; etc.. Lastly, one of the most common defense tactics isexposing sloppy or

misleading police reports which include everything from misstatements, false statements, flawed photo

line-ups and inaccurate crime scene reconstruction. It is important to hire a skilled Money Laundering lawyer

to defend you who has knowledge of all the possible defenses to assert in your case.

While related charges can further complicate a money laundering defense or other type of case, it is important

to remember that just because you have been accused, doesn’t mean you are guilty. Contact Houston

White Collar Crimes Lawyer Charles Johnson immediately for your free phone consultation. Attorney Johnson

will take your call 24/7 365 days/year at (713) 222-7577 to discuss your case. Put his knowledge to work

for you.

Hire the Best Houston Money Laundering Lawyer: Houston White Collar Crimes Lawyer Charles Johnson

At the Charles Johnson Law Firm, our attorneys possess the necessary skills and knowledge to successfully

defend individuals facing federal money laundering charges. Unless you retain counsel who will aggressively

investigate the matter on your behalf, you may have a poor chance of avoiding a lengthy prison term among

other severe consequences.

Money laundering is a serious offense with potential long-term consequences including jail

time. When your future is at stake, contact the Leading Houston Criminal Lawyer at the Charles Johnson Law

Firm. You can reach Attorney Johnson directly anytime night or day at (713) 222-7577,

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Facing a Money Laundering Investigation? Hire the Leading Houston White Collar Crimes Lawyer

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Call us at 713-222-7577 or toll free at 877-308-0100.

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