Owners Of Miami Export Business Guilty Of Operating An Unlicensed Money Transmitting Business (etc)

[nitpicker]

https://www.justice.gov/usao-sdny/pr/owners-miami-export-business-found-guilty-operating-unlicensed-money-transmitting

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Thursday, November 16, 2017

Owners Of Miami Export Business Found Guilty Of Operating An Unlicensed Money Transmitting Business And International Money Laundering

Father and Son Used Their Export Business to Illegally Transmit over $100 Million Into and Through the United States Financial System

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that LUIS DIAZ JR. and LUIS JAVIER DIAZ were found guilty yesterday in Manhattan federal court of operating an unlicensed money transmitting business and international money laundering in connection with their transmission of over $100 million from foreign businesses into and through the United States financial system. DIAZ JR. was additionally convicted of conspiracies to operate an unlicensed money transmitting business and engage in international money laundering. DIAZ JR. and JAVIER DIAZ were convicted following a two-week trial before U.S. District Judge William H. Pauley III.
(snip)

Between at least 2010 and 2016, LUIS DIAZ JR. and LUIS JAVIER DIAZ used Miami Equipment and Export Company (“Miami Equipment”), a company they owned in Doral, Florida, to effect the transmission of at least $100 million from entities outside the United States, mostly located in Venezuela, to bank accounts in the United States and elsewhere, in exchange for a fee. During this time, the Company was not registered with the state of Florida or the Financial Crimes Enforcement Network (FinCEN), a component of the United States Department of the Treasury, as required by both state and federal laws applicable to money transmitting businesses.

Utilizing unlicensed money transmitting businesses like Miami Equipment enables entities and individuals to move money into and through the U.S. financial system while avoiding licensed U.S. financial institutions, which monitor for suspicious activity and report it to U.S. authorities, including through suspicious activity reports, or SARs. Instead, by going through unlicensed entities like Miami Equipment, foreign businesses ensure that suspicious patterns of transmissions will not be detected and reported as potential money laundering activity or other financial crime.

Through their unlicensed money transmitting business, LUIS DIAZ JR. and LUIS JAVIER DIAZ enabled a number of foreign businesses to move money into and around the United States. For instance, the defendants used Miami Equipment to transmit over $100 million into the United States on behalf of KCT, a large Venezuelan consortium of construction companies. After they received this money from the Venezuelan Company, the defendants received instructions about where to send the money as well as fake invoices and contracts purporting to set forth a valid business reason for these payments. In this manner, the defendants sent money on behalf of KCT to U.S. and foreign bank accounts of shell companies located around the world, Venezuelan government officials, KCT employees in Venezuela, and others who had no relationship with Miami Equipment. For all of these transmitting activities, the Company received over $1 million in fees from KCT. In addition to KCT, DIAZ JR. and JAVIER DIAZ used Miami Equipment to effect transfers into and around the United States on behalf of other companies, mainly located in Venezuela and other South American countries.

In connection with these transfers, LUIS DIAZ JR. and LUIS JAVIER DIAZ often maintained false invoices purporting to be from the recipients of the funds to make it appear as if the payments were for actual goods or services rendered to Miami Equipment when, in truth, the money was intended for beneficiaries in the United States and abroad with no business relationship to Miami Equipment. The invoices had the effect of insulating the transmissions from scrutiny by providing a pretextual explanation for the many millions of dollars’ worth of payments. Through this conduct, the defendants and Miami Equipment functioned as an unregulated financial institution allowing foreign entities to move funds into and through the U.S. without any scrutiny, including being subject to the filing of SARs that licensed transmitting businesses are required to file.
(snip)