Bank Fraud

“Embezzlement is the fraudulent appropriation of property by a person to whom such property has been entrusted, or into whose hands it has lawfully come. It differs from larceny in that the original taking was lawful, or with the consent of the owner, while in larceny the felonious intent must have existed at the time of the taking.” Moore v. United States, 160 U.S. 268, 269 (1895).

In plain English, embezzlement is a form of theft that involves abusing a position of trust in order to commit the theft.

According to the United States Department of the Treasury:

Money laundering is the process of making illegally-gained proceeds (i.e., “dirty money”) appear legal (i.e. “clean”).  Think Ozark.

Typically, it involves three steps: placement, layering and integration.

Step One – illegitimate funds are furtively introduced into the legitimate financial system.

Step Two – the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts.

Step Three – it is integrated into the financial system through additional transactions until the “dirty money” appears “clean.”

The federal government regularly conducts examinations of Suspicious Activity Reports (SARs), Currency Transaction Reports (CTRs), and CTR exemptions, in its attempts to stop money laundering.

After Bernie Madoff there were so many questions about Ponzi schemes that the SEC had created an FAQ, which explained what a Ponzi Scheme is and even answered the question “who is Bernie Madoff?”.

Now everyone knows Mr. Madoff, so the SEC no longer answers that question.  Their updated FAQ is here.

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.

In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.

Interestingly, the IRS has also provided tax guidance for people who have fallen victim to a Ponzi scheme.

The legal definition of structuring is if a person, acting alone, or in conjunction with, or on behalf of, other persons, conducts or attempts to conduct one or more transactions in currency in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading CTR (Currency Transaction Report) filing requirements.

This may mean the breaking down more than $10,000 into smaller amounts that may be conducted as a series of transactions at or less than $10,000.

The transactions need not exceed the $10,000 CTR filing threshold at any one bank on any single day in order to constitute structuring.

The government knows that money launderers and criminals have developed many ways to structure large amounts of currency to evade the CTR filing requirements.

Structuring remains one of the most commonly reported suspected crimes on SARs (Suspicious Activity Report).