State and Local Law Enforcement Use of SAR Data

The following cases obtained through the FinCEN Gateway Program demonstrate state and local governments? use of Suspicious Activity Report data.

Bank Secrecy Act Reports Instrumental in Investigation and Conviction of Attorney and Three Accomplices in Multi-Million Dollar Real Estate Fraud

In 2003, four individuals, previously convicted of charges related to a multi-million dollar real estate scheme, were ordered to pay over $1 million in restitution to reimburse victims of their crimes. According to court documents, a real estate investor and an attorney arranged for the proceeds of fraudulent real estate transactions to be deposited into the attorney?s trust account. The attorney subsequently withdrew funds from this trust account for personal use and the use of the coconspirators.

This complex real estate fraud investigation was enhanced through the state law enforcement agency?s pro-active review using FinCEN?s Gateway Program to search the Currency and Banking Retrieval System database for Bank Secrecy Act reports relating to the four subjects. This search identified 100 Currency Transaction Reports, 11 Currency Transaction Reports by Casinos, 2 Reports of International Transportation of Currency or Monetary Instruments, and 5 Suspicious Activity Reports. According to the investigator, this pro-active review resulted in the initiation of the investigation. The search also identified reports of additional transactions conducted at a local check cashing company. One of the Suspicious Activity Reports provided information that one subject was cashing checks at the check cashing company for an attorney. The investigator found all of the Bank Secrecy Act documents very useful in this investigation.

Suspicious Activity Reports Aid Conviction of Drug Dealers

In 2003, two defendants plead guilty to multiple drug-related and money laundering charges. A third subject pled guilty to an additional charge of Dealing in Unlawful Proceeds.

Narcotics agents with a State Attorney General?s Office initiated the investigation as an interdiction case. The agents stopped one subject at a bus station in a city, en route between two other large, metropolitan cities. This subject told agents he was to meet two men in a vehicle parked near the bus station that same day to sell the drug Ecstasy for approximately $100,000. State agents and city police narcotics detectives set up surveillance and observed two men sitting in a vehicle parked at the location described by the first subject. These men were detained, a search warrant was obtained, and a large sum of cash was found in the vehicle. The men told agents they were going to use the money to buy the Ecstasy pills. Those men were arrested and charged.

The agents used FinCEN?s Gateway Program to conduct a review of the Currency and Banking Retrieval System database for Bank Secrecy Act reports relating to the three subjects. The search located six Currency Transaction Reports and one Suspicious Activity Report. The case agent said the Suspicious Activity Report information, coupled with statements at the time of arrests, ultimately led to the money laundering convictions, as well as identified bank accounts. The agent executed a search warrant at one financial institution and obtained bank documents that enabled him to construct a net worth analysis. The second count of money laundering was based on information from files at an automobile dealership where another search warrant was executed. That file contained an Internal Revenue Service Form 8300 (Report of Cash Payments over $10,000 Received in a Trade or Business) showing one of the subjects paid cash for the vehicle he used to pick up the Ecstasy pills.

Suspicious Activity Reports Assist in Investigation of Insurance Executive for Embezzling from Local Government?s Self-Insured Health Care Fund

In 2003, an insurance executive pled no contest and was found guilty on a single count of aggravated theft. The defendant admitted misappropriating money that was intended to pay medical claims for the local government?s self-insured health benefits plan. Acting as the health insurance agent for the local government, the executive failed to fully credit the government?s account for payment of the health insurance premiums after receiving two large checks.

The state law enforcement agency initiated this investigation and provided their findings to the State?s Department of Insurance. Research was conducted using FinCEN?s Gateway program to access the Currency and Banking Retrieval database for Bank Secrecy Act reports relating to the insurance executive. An analyst reported that Suspicious Activity Report documentation was beneficial to the investigation since it identified two accounts held at two banks and reported check kiting from the subject?s business account to a personal account.

The executive received a prison sentence, agreed to a permanent revocation of his license to sell insurance in the State and repaid most of the funds embezzled from the local government.

Excerpted from SAR Activity Review Issue 7, page 35