A sting operation by the FBI has delivered indictments in a massive fraud and money-laundering operation with connections to the U.S., the Bahamas, Canada and Belize, CBC News reported last week. Charges against six individuals and six corporate defendants include conspiracy to commit securities fraud, tax fraud, and money laundering.
Corporate defendants include IPC Management Services, LLC; IPC Corporate Services Inc.; IPC Corporate Services LLC (collectively, IPC Corp); Titan International Securities, Inc. (Titan); Legacy Global Markets S.A. (Legacy); and Unicorn International Securities LLC (Unicorn), according to the FBI.
The FBI in its press release described the operation as “a $500 million offshore asset-protection, securities-fraud, and money-laundering scheme” in which “defendants created three brokerage firms in Belize to assist U.S. citizens in fraudulent manipulation schemes of publicly traded companies.”
According the NY Field Office of the U.S. Attorney, the indictment alleges that between January 2009 and September 2014, “this group of conspirators, masquerading as financial professionals, concocted three interrelated schemes to: (a) defraud new investors in various U.S. publicly traded companies through, among other things, fraudulent concealment of the defendants’ corrupt clients’ ownership interests in the U.S. publicly traded companies and their fraudulent manipulation of artificial price movements and trading volume in the stocks of those companies; (b) aid the corrupt clients to circumvent the IRS’s reporting requirements under, among other statutes, the Foreign Account Tax Compliance Act (FATCA); and (c) launder money for the corrupt clients through financial transactions to and from the United States involving proceeds of fraud in the sale of securities. As part of this fraudulent offshore scheme, the defendants laundered approximately $500 million for the corrupt clients—who included more than 100 U.S. citizens and residents.”
The U.S. Attorney’s Office further alleges that to facilitate these interrelated criminal schemes, the defendants “created shell companies in Belize and Nevis, West Indies, for the corrupt clients and placed nominees at the helm of these companies. This structure was designed to conceal the corrupt clients’ ownership interest in the stock of U.S. public companies, in violation of U.S. securities laws, and enable the corrupt investors to engage in trading under the nominee’s names through brokerage firms also set up in Belize.”
The scheme also allegedly enabled the U.S. corrupt clients to evade reporting requirements to the IRS by concealing the proceeds generated by the manipulated stock transactions through the shell companies and their nominees. The defendants then allegedly “enabled U.S. corrupt clients to launder the proceeds from their fraudulent trading in U.S. public companies with the production of unidentifiable debit cards for the clients allowing them to freely transfer their proceeds back into the United States,” according to the U.S. Attorney’s Office.
“Today’s arrests and charges disrupt an illicit offshore operation that was allegedly laundering money for corrupt clients and cheating the U.S. government out of half a billion dollars in tax revenue,” said HSI New York Special Agent-in-Charge Hayes. “The collaboration between HSI and its federal law enforcement partners serves as an example of law enforcement’s global reach to dismantle criminal organizations.”
