When so-called experts become the money launderers


News

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Professor and DEA agent take hard falls for financial crimes

Two news stories from last month caught our eye here at AML Partners, and both of them illustrate the dangers of feeling like expert insiders with know-how to commit financial crime.

In one example, a retired professor who specializes in corruption in Latin America got involved with money laundering and bribery related to corruption in Venezuela. And in the other example, a U.S. DEA agent siphoned off seized drug money and entered into business dealings with a Colombian drug lord.

Jose Ismael Irizarry pleaded guilty last month to conspiracy and money-laundering-related charges and received a 12-year prison sentence. A former DEA agent, Irizarry and his wife worked over seven years to siphon off over $9 million seized during undercover drug operations. One of their co-conspirators in the scheme–and a godfather to one of their children–was a Colombian drug lord.

Irizarry and co-conspirators bought real estate, jewelry, and luxury cars that included a Land Rover and a Lamborghini. Irizarry’s scheme included filing false reports that had a ripple effect at the DEA that helped conceal the money transfers. He and his wife also operated a shell company out of their Florida home.

While Irizarry himself took responsibility for his crimes, his lawyer argued that the culture of the DEA and the nature of the undercover work and the appeal of easy money are the real culprits.

In the other example, a former University of Miami professor renowned as an expert on corruption in Latin America, used that expertise to profit from bribery and corruption in Venezuela. Until his lack of expertise in money laundering resulted in his conviction for financial crimes.

Dr. Bruce Bagley, retired and in ill-health, was sentenced to six months in prison for money laundering.

According to prosecutors, Bagley opened bank accounts that were idle for months initially but then started receiving big deposits from banks in the United Arab Emirates and Switzerland. His cover story was that the deposits came from businesses there but the depositor was actually a Colombian national committing financial crimes in Venezuela and using Bagley to launder the funds in Florida.

When the big deposits would arrive, Bagley would get cashier’s checks for 90 percent of the deposit and pass that along to the depositor. And he would keep a portion as his fee for money laundering. His bank recognized quickly the suspicious nature of the transactions and closed the account. But Bagley opened a new account and continued until he was stopped again.

Interestingly, his expert knowledge of corruption did not appear to extend to an expert knowledge of money laundering methods.

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