Week of April 19, 2021 | Issue 26
Ryan Ruddock, Caroline Hilty, Illicit Finance & Economic Threats (IFET)
Numerous Individuals face criminal charges and sentencing for fraudulent schemes
Anti Money Laundering Efforts
Date: Tuesday, April 20, 2021
Location: Brooklyn, New York, USA
Parties involved: Val Cooper; Alex Levin; Garri Smith; US Department of Justice (DOJ); US Attorney’s Office for the Eastern District of New York
The event: On Tuesday, April 20, 2021, the Department of Justice issued a press release announcing the arrest of Val Cooper, Alex Levin, and Garri Smith. The trio was charged with money laundering and conspiracy to violate the Travel Act. The charges stemmed from their involvement in a sophisticated $30 million fraud where they stole money and valuables from safe deposit boxes located in banks, mainly in Eastern Europe. The subjects used high-tech cameras to take pictures of the inside of customers’ safe deposit boxes. After taking the pictures, the group was able to create duplicate keys which they used to gain access to the safe-deposit boxes. The group was arrested and charged in the US because they tried to launder the ill-gotten money they stole through US banks.
The transnational element of money laundering is a persistent threat that law enforcement agencies, governments, and financial institutions need to be continuously vigilant about. Maintaining and enhancing public-private partnerships is highly likely to aid in intercepting future illicit movements of money overseas.
The arrests of the defendants from this case suggest that the financial institution had sufficient mechanisms in place that identified money laundering. If other financial institutions can improve or maintain their anti-money laundering detection procedures, it is highly likely that more money launderers will be identified in the future. When financial intuitions have proper reporting mechanisms for illicit financial flows, law enforcement can gather intelligence, identify patterns, and take appropriate enforcement action.
Date: Thursday, April 22, 2021
Location: Miami, Florida, USA
Parties involved: Larry Ramos Mendoza; The W Trade Group; US Department of Justice; US Attorney’s Office for the Southern District of Florida
The event: On Thursday, April 22, 2021, a federal grand jury indicted 34-year-old Larry Ramos Mendoza for allegedly committing a $21 million investment fraud. Mendoza persuaded his victims to invest in his financial services company, The W Trade Group. He told his victims they would receive investment returns as high as 19 percent. Mendoza also utilized a fake smartphone application to dupe his investors. While clients thought they were monitoring the success of their investments, Mendoza was showing them fake account statements to gain their trust. He did not invest his clients’ money, he used it for himself. Mendoza is currently facing charges including conspiracy to commit wire fraud and five counts of wire fraud. He faces 20 years imprisonment on each count if he is convicted.
The indictment is a positive step because it indicates that tech-savvy and deceptive investment managers will be held accountable for misleading their clients. With the enticing prospect of making substantial amounts of money, it is highly likely that more individuals will try to commit this type of scam in the future. A lengthy prison sentence will likely be a deterrent for other individuals seeking to replicate this scheme.
To avoid financial suffering, prospective investors need to practice more due diligence on the person they are investing with. If a con artist is using phone applications and fraudulent account statements to garner the trust of their clients, investors may need to ask for multiple references and proof that an individual has successfully returned their investors’ money in the past. Investors should arrange to have the investment manager share his or her banking information with investors. The sharing of bank account numbers and routing numbers is highly likely to help prospective investors independently verify claims that may seem too good to be true. Investors would be able to determine the amount of money their investment manager truly has. Without investors demanding this kind of transparency, investors would create the opportunity for a deceptive investment manager to swindle them.
Date: Wednesday, April 21, 2021
Location: Virginia, USA
Parties involved: Mezghan N. Anwari; Abdul Q. Latifi; Mahjoba Raof; Laila Anwari; Rafi M. Anwari; and Zarghona Alizai
The event: On Wednesday, April 21, 2021, a grand jury in Virginia indicted six former employees of a government contractor for their role in recruiting unqualified linguists who would be deployed with the US Armed Forces in Afghanistan. Mezghan N. Anwari, Abdul Q. Latifi, Mahjoba Raof, Laila Anwari, Rafi M. Anwari, and Zarghona Alizai are accused of committing wire fraud. The defendants had individuals with strong language skills impersonate those who have subpar language skills. The skilled impersonators took oral proficiency tests for the less proficient speakers in Dari and Pashto. The defendants allegedly committed this scheme to enrich themselves, since they would receive incentive-based bonuses for advancement in the vetting and recruitment process.
The language proficiency requirements for the US Armed Forces are a way to ensure the national security of US citizens as well as the safety and security of armed forces and US allies overseas. The actions of the linguists betrayed their allegiance or commitment to protecting US interests. There is a possibility that foreign terrorist organizations may seek to replicate a similar scheme to gain financing and intelligence for future terrorist operations.
The US military needs to continuously monitor the activities and contacts of individuals operating in a position of trust such as translators. There is a possibility that other individuals with financial motives will attempt to infiltrate the military with a similar scheme. This indictment may compel the US military to place more scrutiny on translators in the future. A failure to do so could weaken armed forces’ collection of human intelligence (HUMINT). That is significant because it can lead to adverse consequences in Afghanistan and a greater threat to American troops and civilians. As US troops are preparing to withdraw from Afghanistan, it is highly likely that deceptive translators would misguide and provide false information to US troops.
Date: Thursday, April 22, 2021
Location: Houston, Texas, USA
Parties involved: Bobby Rouse; Steven Houseworth; Jeffery Parsons; David Edson; Continuum Healthcare; US District Judge Gray Miller; US Department of Justice; US Attorney’s Office for the Southern District of Texas; Westbury Community Hospital
The event: On Thursday, April 22, 2021, the four former executives of the healthcare company Continuum Healthcare were sentenced to prison following their involvement in a $189 million USD healthcare fraud scheme. Continuum Healthcare owned Westbury Community Hospital and mental health centers in the Houston area. The health centers were known by their locations as Baytown, Missouri City, and Hornwood. In exchange for payment, a multitude of people was referred to facilities operating under Continuum Healthcare. They were referred for treatment. The mental health facilities operated under a partial hospitalization program (PHP), a treatment program for those with mental illnesses. Most of the people referred for treatment did not qualify for the PHP program. The former executives billed $189 million USD for fraudulent PHP services and Medicaid paid $66 million USD for those claims. US District Judge Gray Miller sentenced Rouse to 120 months in prison. Edson was given a 48-month prison sentence. Parsons and Houseworth were both given 30-month sentences.
Multi-million dollar healthcare frauds put a strain on Medicaid as well as those who are experiencing debilitating conditions that require attentive treatment. Healthcare fraud not only results in the theft of money, but it also deprives access to care for thousands of individuals who may not be able to find other forms of healthcare at an affordable price.
This is a positive development because it demonstrates that the US government is committed to ensuring individuals who commit healthcare fraud will be held responsible. This means that funding will be directed to the most worthy recipients in the most needed areas. For instance, individuals suffering from mental health issues such as dementia, Alzheimer’s, or psychiatric conditions already have an impaired quality of life. A lack of funding and treatment compounds the severity of their conditions and denies them life-saving treatment. By receiving the funding they are more likely to receive beneficial care that may improve their quality of life.
Date: Friday, April 23, 2021
Parties involved: Faruk Fatih Özer; Thodex; Anadolu Agency
The event: On Friday, April 23, 2021, it was reported that Thodex, a crypto firm based in Turkey, has been temporarily closed due to issues with the company accounts. The issue is likely since the founder of the firm, Faruk Fatih Özer, has reportedly flown to Albania, stealing over $2 billion USD investors' funds with him. Turkish authorities have issued an international arrest warrant for his arrest and Turkish police have detained 62 people across eight cities related to the investigation. Thodex currently has 400,000 users, 390,000 of them currently active.
Many Turkish citizens have turned to cryptocurrency for savings due to the increased inflation and weakening of the Turkish lira. They have taken advantage of Thodex’s exclusive offer for free dogecoin, a popular cryptocurrency. Since the investigation is ongoing, it remains unclear whether those who have lost their investments will have their investments returned or receive some form of compensation. It is currently unknown how many of the 390,000 active users were affected but it is likely that a decent amount of them lost their savings.
Regulation regarding cryptocurrency has not kept up with the cryptocurrency market, both in Turkey and internationally. In Turkey, the central bank has banned the use of cryptocurrencies for buying goods and services. Turkish President Erdogan has called for more regulations and has warned his citizens of pyramid schemes in the market.
Date: Thursday, April 22, 2021
Location: Poland; Mexico
Parties involved: Pfizer; World Health Organization (WHO); US Department of Justice; Lev Kubiak
The event: On Thursday, April 22, 2021, US pharmaceutical company Pfizer stated that it had identified counterfeit versions of its COVID-19 vaccines in Mexico and Poland. Products seized in Mexico had false labels, and products seized in Poland are believed to be an anti-wrinkle treatment. About 80 people at a clinic in Mexico received the fake vaccine but it appears to be relatively harmless. No one received the fake vaccine that was seized in Poland.
The World Health Organization recently warned that fake vaccines pose a very serious risk to the world’s public health. Fake vaccines are not the only products that criminals are fabricating during the COVID-19 pandemic. Fake medical equipment, supplies, and antibody tests have been seized all over the world over the past year. Fake medical supplies will likely lead to unnecessary loss of life as the medical field is desperate for many supplies such as masks and oxygen. People who take the fake vaccine may get sick from it or just think they are now safe from severe COVID-19 complications when they are not. This will also lead to more funds for the illicit groups that are selling the products.
This will likely not be the last incident of a fake vaccine to occur and consumers must remain vigilant to potential scams when it comes to vaccines or other medical scams.
 Three Brooklyn Residents Charged in Money Laundering Scheme with Stealing Over $30 Million from Foreign Banks, US Department of Justice, April 2021, https://www.justice.gov/usao-edny/pr/three-brooklyn-residents-charged-money-laundering-scheme-stealing-over-30-million
 Miami Man Indicted for Investment Fraud, US Department of Justice, April 2021, https://www.justice.gov/usao-sdfl/pr/miami-man-indicted-investment-fraud
 Six Language Recruiters Indicted for Recruiting Unqualified Linguists for Deployment with U.S. Armed Forces in Afghanistan, US Department of Justice, April 2021, https://www.justice.gov/opa/pr/six-language-recruiters-indicted-recruiting-unqualified-linguists-deployment-us-armed-forces
 Final four sentenced in $189M Health Care Fraud Scam, US Department of Justice, April 2021 https://www.justice.gov/usao-sdtx/pr/final-four-sentenced-189m-health-care-fraud-scam
 Turkish crypto exchange boss goes missing, reportedly taking $2 billion of investors’ funds with him, CNBC, April 2021, https://www.cnbc.com/2021/04/23/bitcoin-btc-ceo-of-turkish-cryptocurrency-exchange-thodex-missing.html
 Catch Me if You Can: Counterfeit Medical Schemes Persist a Year Into the Global Coronavirus Pandemic, JD Supra, February 2021, https://www.jdsupra.com/legalnews/catch-me-if-you-can-counterfeit-medical-7618035/