Manhattan U.S. Attorney Announces Criminal Charges Against U.S. Bancorp For Violations

[nitpicker]

https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-criminal-charges-against-us-bancorp-violations-bank

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

FOR IMMEDIATE RELEASE
Thursday, February 15, 2018

Manhattan U.S. Attorney Announces Criminal Charges Against U.S. Bancorp For Violations Of The Bank Secrecy Act

Charges to Be Deferred For Two Years Under an Agreement Requiring U.S. Bancorp to Admit Its Conduct and Pay Penalty of $528 Million

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced criminal charges against U.S. Bancorp (“USB”) consisting of two felony violations of the Bank Secrecy Act (“BSA”) by its subsidiary, U.S. Bank National Association (the “Bank”), the fifth largest bank in the United States, for willfully failing to have an adequate anti-money laundering program (“AML”) and willfully failing to file a suspicious activity report (“SAR”). The case is assigned to United States District Judge Lewis A. Kaplan.

Mr. Berman also announced an agreement (the “Agreement”) under which USB agreed to accept responsibility for its conduct by stipulating to the accuracy of an extensive Statement of Facts, pay a $528 million penalty, and continue reforms of its BSA/AML compliance program. Assuming USB’s continued compliance with the Agreement, the Government has agreed to defer prosecution for a period of two years, after which time the Government will seek to dismiss the charges. The Agreement is pending review by the Court. The penalty shall be collected through the Bank’s forfeiture to the United States of $453 million in a civil forfeiture action also filed today, with the remaining $75 million satisfied by the Bank’s payment of a civil money penalty assessed by the Office of the Comptroller of the Currency (the “OCC”).
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From 2009 and continuing until 2014, USB willfully failed to establish, implement, and maintain an adequate AML program. Among other things, USB capped the number of alerts generated by its transaction monitoring systems, basing the number of such alerts on staffing levels and resources, rather than setting thresholds for such alerts that corresponded to a transaction’s level of risk. The Bank deliberately concealed this from the OCC, the Bank’s primary regulator.
(snip)

From October 2011 through November 2013, the Bank willfully failed to timely report suspicious banking activities of Scott Tucker, its longtime customer, despite being on notice that Tucker had been using the Bank to launder proceeds from an illegal and fraudulent payday lending scheme using a series of sham bank accounts opened under the name of companies nominally owned by various Native American tribes (the “Tribal Companies”). From 2008 through 2012, Tucker’s companies extended approximately five million loans to customers across the country, while generating more than $2 billion in revenues and hundreds of millions of dollars in profits. Most of this money flowed through accounts that Tucker maintained at the Bank.

USB employees responsible for servicing Tucker’s ongoing account activity disregarded numerous red flags that Tucker was using the tribes to conceal his ownership of the accounts. For example, Tucker spent large sums of monies from accounts in the names of Tribal Companies on personal items, including tens of millions of dollars on a vacation home in Aspen and on Tucker’s professional Ferrari racing team. USB also received subpoenas from regulators investigating Tucker’s businesses. In September 2011, after news organizations published reports examining Tucker’s history and questionable business practices, the Bank reviewed Tucker’s accounts, and an AML investigator reported to supervisors, among other things, that “it looks as though Mr. Tucker is quite the slippery individual” who “really does hide behind a bunch of shell companies.” Based on its findings, the Bank closed the accounts in the names of the Tribal Companies but failed to file a SAR.
(snip)

On October 13, 2017, Tucker was convicted in the United States District Court for the Southern District of New York of various offenses arising from his payday lending scheme. The Government intends to recommend that the amounts forfeited by USB be distributed to victims of Tucker’s scheme, consistent with the applicable Department of Justice regulations, through the ongoing remission process.
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[safeinOhio]

1. How much jail time?

"The Bank deliberately concealed this from the OCC, the Bank’s primary regulator."

Will never stop unless the penalties are greater than the risk.