Lawyers, Guns, and Money
How big banks, sneaky attorneys, lobbyists, and a host of businessmen funnel dirty cash into the US.
Among Bank of America’s 50 million customers, Pierre Falcone was far from ordinary. An infamous global arms dealer who unlawfully sold weapons to Angola for its civil war and an international fugitive, Falcone was convicted of tax fraud and illegal arms dealing in 2007 and 2009 and is currently serving six years behind bars. Yet for nearly two decades, Falcone and his relatives freely used 29 different bank accounts to funnel at least $60 million into the US from secretive havens like the Cayman Islands, Luxembourg, and Singapore, and from shell corporations and secret clients. Despite his criminal record and worldwide notoriety, Bank of America essentially treated him like any other depositor.
The story of how a criminal like Falcone used Bank of America—which later received billions in a taxpayer-funded bailout—and the US financial system to advance his criminal activities appears in a new report by the Senate investigations subcommittee, led by Sen. Carl Levin (D-Mich.). In revealing the operations of Falcone and others—in most cases for the first time—the report offers a lurid primer explaining how big banks, powerful attorneys, influential lobbyists, and a host of other businessmen in this country help launder dirty foreign money.
The report highlights several gaping holes in American money laundering and corruption laws, including an exemption made by the Treasury Department in 2002 to the Patriot Act. "Foreign officials still get access to our financial system at times because US officials aid and abet their actions," Levin told reporters on Tuesday. The 325-page report sets the stage for a hearing Thursday featuring US enforcement officials as well as some of the main players who abetted secretive individuals like Falcone and the corrupt former president of Gabon, the late Omar Bongo.
Although Congress has passed significant anti-money laundering provisions in the past decade, the law still contains major gaps through which corrupt foreign individuals like Falcone and Obiang can move their cash. For instance, due to the Treasury’s Patriot Act loopholes, US realtors and escrow agents aren’t required to ask who is sending funds to them or to scrutinize or disclose whether the sender is on an international list of "politically exposed persons" (PEP) who have been red-flagged for dubious activities. That exemption, the report shows, allowed Teodoro Obiang, the high-flying son of the despotic president of Equatorial Guinea, to use realtors and escrow agents as conduits to dodge US law—ultimately enabling Obiang to buy a $38.5 million jet and a $30 million house in Malibu.
Obiang also secretly laundered millions via two Beverly Hills-based attorneys, Michael Berger and George Nagler. Because attorney-client and law office accounts lie outside the scrutiny of dirty-money laws, the two attorneys were able to move his money by creating multiple shell corporations with names like Beautiful Vision, Unlimited Horizon, and Sweetwater Malibu. Nagler devised one such corporation called Sweet Pink Inc., and Obiang’s then-girlfriend, hip-hop star Eve Jeffers, was named president and CFO. In total, Obiang brought $110 million into the US using these under-the-radar practices, the report says. In turn, he feted his US associates with access to exclusive events, like the Playboy Mansion's 2007 "Kandy Halloween Bash," after which Berger emailed Obiang to gush, "I met many beautiful women, and I have the photos, e-mail addresses and phone numbers to prove it."
In some cases, corrupt officials didn’t need shell corporations or sneaky lawyers: big American banks proved helpful enough. Peppered throughout the subcommittee's report are stories of banks like Wachovia, Bank of America, and Citibank turning a blind eye—or failing to notice—the shadowy sources of money pouring into their accounts. There was arms dealer Pierre Falcone's decades-long funneling of millions through Bank of America. The New York office of HSBC, the report says, handled funds for a private Angolan bank yet failed to investigate the bank's officers and clientele, a number of whom appeared on the PEP list. The most glaring gaffe, however, belongs to Citibank—another major bailout recipient—and its response to investigators' concerns about its management of Obiang's accounts.
Between 2002 and 2006, Obiang wired more than $37 million into the US through Citibank. Some of those funds landed in Obiang-related accounts at other banks, while others went directly to places like a Beverly Hills Audi and Porsche dealership, a US yacht company, a luxury vacation company, and a private jet service. Obiang even used wired funds to pay off his American Express bills of around $2.5 million. But here's the kicker: Although Citibank was aware that Obiang was on the PEP list and that he was using Citi to wire dirty money into the US, the bank informed the investigation’s subcommittee that it has no plans to beef up its safeguards against money laundering. Why not? "Identifying, freezing, and investigating these wire transfers," Citibank told the subcommittee, "would generate too much work for its anti-money laundering staff."
And when lawyers and big banks won't do, a well-connected lobbyist will suffice. As the report describes, the late Omar Bongo, former president of Gabon and another PEP-listed figure, used an American lobbyist named Jeffrey Birrell as an agent to funnel money into the US and attempt to buy military vehicles for his regime. Bongo, who granted himself indefinite term limits and squandered Gabon's oil revenues, used Birrell’s bank accounts to move nearly $18 million, with which Birrell tried to buy three US-made armored cars, three more US automobiles, and six C-130 military transport planes (he even got US government authorization to purchase the planes). Birrell also helped Bongo launder millions of dollars by funneling them through US accounts and then sending those same funds to banks in Malta and Belgium linked to Bongo.
Lawmakers hope the investigation subcommittee's meticulous report and Thursday's hearing will prompt new crackdowns on money laundering exploits like those carried out by Obiang and Bongo. The report lays out a series of proposed reforms, from tougher oversight of lobbyists to improved disclosure rules, aimed at staunching the flow of money in to the US from corrupt foreign figures. The impetus for the investigation, Levin told reporters, came in part from concerns that terrorists could use the same loopholes to move their money into the US. Levin added that he hopes the committee's revelations will also pressure the Treasury to revoke the Patriot Act exemption for realtors and escrow agents.
With financial regulatory reform currently moving through Congress, Levin may consider adding anti-money laundering provisions to the Senate’s reform bill. He told reporters that banks "are doing a lot better" combating corrupt foreign funds, but said plenty of work remains to be done to prevent the kinds of cases his subcommittee unearthed. "We’ve got to lead," he said, "on the issue of corrupt money and money laundering." And the report's account of big Wall Street players like Bank of America and Citibank and their failure—or refusal—to block the flow of dirty cash from abroad certainly won't ease the public's distrust.
Comments
cornyn r tx
John Cornyn has many local offices in the state of Texas...
in San Antiono tx its a legal building
Lubbock TX- Wells Fargo building
Tyler, TX Regions bank Building
Austin TX, Chase Tower
Harlingen TX, Bank of America
So what changes because of your report?
Nothing. The ugly truth is really regarding human nature--the greed of the corrupt and those who launder their money--and that will never change. The Medieval Popes did the same thing and look how rich the Vatican is today. Was "justice" ever served on them. Never. Now their wealth had been cleansed over the centuries and is legitimate. The children of these criminals attend Ivy League schools who are all to eager to accept their money. They buy real estate all over the US with impunity. The truth is crime does indeed pay--especially in America. Your "report" says more about the ubiquitous and despicable greed and selfishness of man than it does about any one corrupt person or corporation. And all your whining won't change a thing because our government and our corporations are involved to ensure they get their share of it. It never has and it never will.
Lawyers, Guns, Money
It's an ugly and dirty job but somebody has to do it.
I read it.
People are beginning to see the corruption and change is coming. And it is my hope that it will be a blood bath.
Baby, this is only the TIP of
Baby, this is only the TIP of the iceburg!
Our elected and corrupt representatives will try to bury this story as quickly as possible because it will expose too many of their own and the lobbyists and outsiders that actually control our government. Rep Robert Hurt (R) of Chatham, Virginia is just a political pip-sqweet-squirt, but his family is heavily invested in the Coles' Hill Uranium Mine of Virginia (now Canadian owned!) and he is poised to vote for lifting the ban against deadly uranium mining here in our beautiful recreational and agricultural Commonwealth of Virginia! "Good 'ol Boy" corruption is rife here in Southwest Virginia (our current Gov, Bob McDonnell, was in bed with Abramoff through his "religious" money laundering organizations) and he and Hurt are VERY good buddies: Do you REALLY believe that Washington, D.C. will allow the Big Fish to hang on the end of a hook for all and sundry to see when the little fish like Hurt and McDonnell get away with this stuff?! I don't think so! It will be business as usual after they smack down the folks who are expendable.
Watch the movie "The
Watch the movie "The International" It is quite predictable after the first half, but the premise is great and is exactly what real world "banking" is.
To the editor: Someone once
To the editor:
Someone once said that you do not need a gun to rob a bank, you need a suite and tie. It’s obvious that after the first year of President Obama’s administration that that someone was correct; in fact you could throw in elected office into the prerequisite. I have watched in abject horror and fear as our economic situation has deteriorated over the past year. The good news is that we are no where we have not been before, and if we begin to do the right thing soon we will put ourselves on a path to fiscal sanity and prosperity. The bad news is that unless we begin we will soon pass a point of fiscal no return, in much the same way that England did earlier in this century, that did not end well for them, and it will not end well for us.
The first goal of improving ones financial circumstance is defining the problem. Our problem on the national level is spending, debt and decreasing tax receipts. Like most problems in life, the longer one waits to solve them, the tougher they are to solve. To spend wisely one must set priorities that match objectives. For example if we continue to borrow money from communist China to buy missiles that cost millions to blow up a tent in Yemen; with every missile we fire we may be winning the battle, but we will lose the war. This lesson was readily apparent to my Grandfathers generation, but it has been lost to time, we must relearn it quickly. To borrow wisely one must consider very carefully the purpose of the incurred debt; are we borrowing to build a nuclear power plant that will provide decades of secure power or pay for a party? Every time you see a politician having a good time, please remember, he or she is having a good time on your children's borrowed dime. To increase tax receipts government must reduce the penalty to create capital, and thus grow the economic pie; last year if you made $100,000.00 are married and have two children and live in one of highest tax states a minimum of 44% of your capital created went to the taxing authorities local, state, and federal. Next year our tax burden will be hire as the tax cuts that were passed in the last decade will expire and localities raise taxes in the face of a falling tax base, this will only lead to less capital formation and less tax receipts.
Setting spending priorities must meet our national and strategic goals. We must continue our advances in space exploration and technology. We must maintain a military that can prevail in any fight. We must provide help to those who cannot help themselves by reason of birth, infirmity, or age. To accomplish this we need a federal budget whose spending expresses those priorities. I cannot imagine how a $4 Trillion budget can’t be brought down to a $3 Trillion budget and accomplish these goals and begin to reduce the debt and the deficit. To not do this is a form of fiscal and national suicide.
I have been individually where we are nationally. It was not easy setting priorities and goals and living up to them. Sometimes I made mistakes; other times I made bigger mistakes. Each time I learned. I learned not to marry a stock and borrow to buy more of it thinking that it will one day go back to where I paid for it. I learned that diversification in investing is vital and cannot be based on debt. I learned that borrowing money to buy a home is good, and borrowing money to pay for a party is bad. I learned that hitting the bottle is not a solution to a problem, and it is not even a bandaid. We must take all of those common sense behaviors we engage in as individuals with our money and our lives, and get the state and national governments to reflect what we know as individuals. Make no mistake, that unless we make changes as to how we spend, and how we tax we will end up not as the powerful nation we once were, but one that exists at the benevolence of other nations.
Haiti is a nightmare, but it was one long in the making, the road to hell is paved with good intentions, had we exported them a free market instead of bandaids over the decades the souls lost their would have been in the hundreds. But we saw mouths to feed, we saw mothers who needed help, we saw children who needed an education and we helped. In the grand scheme of things we did not help the Haitian people - we hurt them. We hurt them because we gave them the fish and we failed to teach them how to fish, we hurt them because instead of exporting the one philosophy that could save them, the free market, individual liberty and a respect for private property, we exported bandaids. Next time you are watching the images of the desperate Haitian people I want you to think of what makes this country the wealthiest and, even in the dark depths of the last depression the highest standard of living on the face of the earth, it was freedom that did that, and it will be freedom that does it again. On this I would bet my life.
stick it to the little guy
A few years ago I was downsized. It took a while to find a new job and in the interm I used funds from a 401K to pay the essentials and living while I searched for a job. The IRS made no bones about taxing the money I withdrew and then charging a whopping 10% fee on top of that, and of course I paid taxes on my unemployment. But I was able to keep my house and my car and my family in tact... So I paid the bill and went on living. THen I read stories like this and my stomach kind of knots up. Makes me want to cheat like crazy next tax year, but I'd probably get caught and thrown in jail...
And, yes, I write, write, write my elected leaders all the time. It's more than a life aint fair story. I never minded working hard and paying my fair share, helping my kids, my neighbors and my community. But I didn't sign up for this.
Global Asset Forfeiture
Recipe for Globl Financial Security.........
Arrest the Bankers/Corrupt Officials
Track and Seize the Money
Repatriate the Stolen Assets
Repeat until Economies are Stabilized.
I believe that corruption is
I believe that corruption is rampant in our government. Why then would we think that another law written by lobbyists would be a good idea.
There is also something very frightening about this kind of legislation. If the activity that was engaged in to make the money is illegal, why do we need another layer of law. That would only make our financial system more cumbersome and costly for everyone who has not broken the law.
The rest of the world lets their citizens move their money in a much more liberal way. Our money laundering laws have basically made it easy for law enforcement to confiscate citizens property civilly. In other words, your money is guilty till proven innocent.
Lastly how can it be to our benefit to have more laws to impact people who are suspected of illegal activity. Shouldn't we convict them of the crime they are suspected of, rather than assume guilt, withour conviction.
Beth
I'm not sure which is worse
I'm not sure which is worse the absolute cynicism, or the naivete. But, in combination they don't merely prevent progress they are profoundly destructive.
Hand washing
It would appear that the banks and their felonious clients use each other as opposed to this article's statement that Falcone, Bongo and Obiang are using them. Obviously, the loopholes are mutually beneficial. As for PEP, it seems the feds turn a blind eye to those on the list of "politically exposed persons." After 9/11, if this is to believed as true, CBS reported that bin-Laden's relatives were allegedly "evacuated" from D.C., Boston, LA and Houston by the private jet. They may not have been on the PEP list but surely bin-Laden must have been!
Obiang's Idi Amin wannabe dad, in 2003, felt compelled to take full control of the national treasury in order to" prevent civil servants from being tempted to engage in corrupt practices!" To avoid this corruption, Obiang deposited more than half a billion dollars into accounts controlled by Obiang and his family at Riggs Bank in Washington, D.C., leading a U.S. federal court to fine the bank $16 million. That fine's chicken feed. PEP is a joke.
Corporate America
Gotta laugh. Yesterday I posted on the Huff Post to imagine the dog and pony show if corporate America isn't stopped from contributing to campaigns where all will be coated in oil, rolled in coal dust, drugged with punch, and handed a gun to yayhoo down to the polls, might even bag a wolf on the way.
God help us.
Few people have seen more
Few people have seen more filth in the court system and in particular, on behalf of big banks then the head Troll, who's data-base makes this story seem positively mild. I can show you a federal district judge who, one week prior to a civil trial involving Bank of America was promoted to the single highest position in the nations District Court system. Needless to say, BofA's adversary was fed slowly into the dog-food grinder. I can show you another federal case where the litigant adversary to Bank of America was enjoined from filing any papers with any court. His civil rights were summarily reduced to the level of a Gitmo detainee. Moreover, the judge who issued the injunction was a 'magistrate' and by statute, magistrates are administrative judges, not appointed by congress and they have no authority to issue any injunctions whatsoever. This magistrate judge was also on the payroll of BofA's law firm as a "keynote speaker" for their annual convention. Believe it or not, this sort of side employment is generally legal. There are so many stories like this one that the lawyers involved often compare recounts, jokingly, like Robert DeNero and Joe Peshi in G/Fellas. Watching them function in court it is very apparent that they not only make big money but enjoy the terror they inflict on the small individual. As if they are pulling the wings off flies.
Interesting Article. Hoping
Interesting Article. Hoping that you will continue posting an article having useful information. Thanks a lot!
This is the same Mother Jones
This is the same Mother Jones that had advertisements for "The Economist", and Carly Fiorina showing up as "the expert on Congress and Washington DC". Truly amazing how Americans get so carried away with all this ranting and raving they forget who is sponsoring these so-called Left leaning magazines. You guys have already been bought - look at your advertisements. The Far Right or Right of Center "The Economist". Please!
I wonder how long before you turn into another media that will sell its pages for money, any sponsorship and fund journalists who love to travel by first class and eat caviar - while talking about justice and fairness.
This is scary, and much of
This is scary, and much of the facts make sense. There was lot of hue and cry when a similar article was published around 2002 or 2003 in another progressive magazine - people complained that it was exaggerated, and too dramatic to be true. Now many feel it is "something they already know and believe - and it is far worse" that what is reported! We have come a long way in our awareness and acceptance of the ulgy truth. become. Very sad...and scary! A strong smart determined grassroots movement is necessary to beat this. It is too big, too bold and too bad. Hope all of this gets published in international newspapers so other countries, especially emerging economies, don't make the same mistakes and commit the same oversight for too long.
Money laundering
Obiang is probably just a drop in the bucket. Imagine just how much of this is going on right now!
Evil money
To say this is incredible, is not credible. If you read Chalmers Johnson's book Nemesis, there is more than enough that goes on in the American military establishment to raise our hackles, including feeding millions (and even billions to dictators around the world for the privilege of placing military assets in their countries (many of these are former Soviet Bloc countries). How do you think we get the money to them? Well, of course it comes through our banking system, and guaranteed to be the largest banks. Where do drug lords keep their millions? They are laundered mostly through our largest banks, after starting in countries that don't ask questions. The global scope of banking corruption is appalling. I'm glad that Senator Levin and his committee are at least going to begin shining a little light into the massive dark corners of the commercial establishment.
Interesting Article. Hoping
Interesting Article. Hoping that you will continue posting an article having useful information. Thanks a lot!
lawyers
I have had great outcomes with hiring lawyers in the past. We use a great Chapel Hill Law Firm at http://www.attorneysnc.com
NHL Jerseys
there are so many knowledge for me to learn.
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