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«gka, P.C. Certified Public Accountants | Management Consultants Treasury Forfeiture Fund ACCOUNTABILITY REPORT Fiscal Year 2010 DEPARTMENT OF THE ...»

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Joint Investigative Case with the FBI

ABN AMRO Bank N.V. Agrees to Forfeit $500 Million Pursuant to a Deferred Prosecution Agreement

Information included in the following forfeiture article is attributed to:

Department of Justice Press Release: “Former ABN AMRO Bank N.V. Agrees to Forfeit $500 Million in Connection with Conspiracy to Defraud the United States and with Violation of the Bank Secrecy Act.” In May 2010, the former ABN AMRO Bank N.V., now named the Royal Bank of Scotland N.V., agreed to forfeit $500 million to the United States in connection with a conspiracy to defraud the United States, to violate the International Emergency Economic Powers Act (IEEPA) and to violate the Trading with the Enemy Act (TWEA), as well as a violation of the Bank Secrecy Act (BSA).

Fifty percent of the revenue will be shared with the Department of Justice Assets Forfeiture Fund representing the joint investigative efforts of the Federal Bureau of Investigation (FBI) that lead to forfeiture in this case.

A criminal information was filed in the District of Columbia charging the former ABN AMRO, a Dutch corporation that was headquartered in Amsterdam, with one count of violating the BSA and one count of conspiracy to defraud the United States and violate the IEEPA and TWEA. The bank waived indictment, agreed to the filing of the information, and has accepted and acknowledged responsibility for its conduct. ABN AMRO agreed to forfeit $500 million as part of a deferred prosecution agreement.

Under IEEPA, it is a crime to willfully violate, or attempt to violate sanctions administered by the Department of the Treasury’s Office of Foreign Assets Control (OFAC). TWEA makes it a crime to willfully engage in financial transactions by, at the direction of, or for the benefit of Cuba or Cuban nationals. Under the BSA, it is a crime to willfully fail to establish an adequate anti-money laundering program. The IEEPA and TWEA violations relate to ABN AMRO conspiring to facilitate illegal U.S. dollar transactions on behalf of financial institutions and customers from Iran, Libya, the Sudan, Cuba and other countries sanctioned by OFAC.

According to court documents, from approximately 1995 and continuing through December 2005, certain offices, branches, affiliates and subsidiaries of ABN AMRO removed or altered names and references to sanctioned countries from payment messages. ABN AMRO implemented procedures and a special manual queue to flag payments involving sanctioned countries so that ABN AMRO

4 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2010

could amend any problematic text and it added instructions to payment manuals on how to process transactions with these countries in order to circumvent the laws of the United States.

According to court documents, ABN AMRO used similar stripping procedures when processing U.S.

dollar checks, traveler’s checks, letters of credit and foreign exchange transactions related to sanctioned countries. ABN AMRO and the sanctioned entities knew and discussed the fact that, without such alterations, amendments and code words, the automated OFAC filters at banks in the United States would likely halt the payment messages and other transactions, and, in many cases, the banks would reject or block the sanctions-related transactions and report the activity to OFAC. By removing or altering material information, these payments and other transactions would pass undetected through filters at U.S. financial institutions. This scheme allowed U.S. sanctioned countries and entities to move hundreds of millions of dollars through the U.S. financial system.

–  –  –

Throughout the investigation, ABN AMRO provided prompt and substantial cooperation, including working with U.S. and foreign regulators. ABN AMRO also committed substantial resources to conducting an extensive internal investigation into their misconduct and agreed to enhance its sanctions compliance programs to be fully transparent in its international payment operations. In light of the bank’s remedial actions, previous penalty payments and consent agreements, and its willingness to acknowledge and accept responsibility for its actions, the Department of Justice has agreed to recommend the dismissal of the information in one year, provided ABN AMRRO fully cooperates with, and abides by, the terms of the deferred prosecution agreement.

Multi-Departmental, Multi-Fund Case Treasury and Justice Forfeiture Fund Assets Forfeited Cash and Sales Proceeds will be Returned to Victims Scott W. Rothstein, Fort Lauderdale Attorney, Forfeits Approximately $60 Million in Assets re Billion Dollar Ponzi Scheme

Information included in the following forfeiture article is attributed to:

United States District Court, Southern District of Florida, United States v. Scott W. Rothstein, Information, Case No. 09United States District Court, Southern District of Florida, Plea Agreement, Case No. 09-60331-CR-COHN, signed January 25, 2010; Department of Justice Press Release, “Fort Lauderdale Attorney Charged in Billion-Dollar Ponzi Scheme,” dated December 1, 2009; Article in Business and Financial News.Reuters.com, “Florida lawyer pleads guilty to huge Ponzi scheme,” dated January 27, 2010; and Article by Paul Brinkmann, “Next Rothstein Sale Includes Bugatti,” published in The South Florida Business Journal, on May 10, 2010 (pictures embedded in the article of the Bugatti and Rolls Royce.) On December 1, 2009, the U.S. Attorney for the Southern District of Florida, and others, announced a five-count criminal information charging attorney Scott Rothstein (“Rothstein”), 47, of Fort Lauderdale, with one count of conspiracy to violate the Racketeering Influenced Corrupt Organization (RICO) statute; one count of conspiracy to commit money laundering; one count of conspiracy to commit mail fraud and wire fraud; and two counts of wire fraud. In addition, the

SECTION I - OVERVIEW





information sought to forfeit $1.2 billion, including 24 pieces of real property, numerous luxury cars, boats, and other vessels, jewelry, sports memorabilia, business interests, bank accounts and more.

According to the information, from around 2005 through November 2009, Rothstein engaged in a pattern of racketeering activity through his law firm, Rothstein, Rosenfeldt, and Adler, P.A. (“RRA”), located in Fort Lauderdale, Florida. Specifically, the information alleged that RRA was the criminal enterprise through which defendant Rothstein and others fraudulently obtained approximately $1.2 billion from investors through bogus investment and other schemes. The information alleged that defendant Rothstein and co-conspirators used RRA to fraudulently induce investors to: (1) loan money to non-existent borrowers based upon promissory notes and requests for short-term bridge loans for business financing; and (2) invest funds based upon anticipated pay-outs from purported confidential civil settlement agreements.

Figure 2 2009 White Bentley Convertible – Forfeited by Rothstein

Rothstein and other co-conspirators participated in an investment scheme commonly known as a “Ponzi” scheme. Specifically, the Ponzi scheme involved the sale of purported confidential settlement agreements in sexual harassment and/or whistle-blower cases. The potential investors were told by Rothstein and other co-conspirators that confidential settlement agreements were available for purchase in amounts ranging from hundreds of thousands of dollars to millions of dollars, and could be purchased at a discount and repaid to the investors at face value over time. To further the Ponzi scheme, Rothstein used the offices of RRA and the offices of other co-conspirators to convince potential investors of the legitimacy and success of the law firm, which enhanced the credibility of the purported investment opportunity.

Among the allegations in the information, Rothstein and others established numerous trust accounts in the name of RRA in order to convince potential and current investors of the legitimacy of the confidential settlement agreements and the security of such investments; prepared and used altered bank statements, purportedly issued from a well-established international financial institution, to fraudulently convince potential and current investors that funds had been received from the purported defendant companies and were maintained in trust accounts; and created false and fictitious

6 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2010

documents, including confidential settlement agreements, assignment of settlement agreements and proceeds, sale and transfer agreements, and personal guaranties by Rothstein among other documents.

Figure 3 2007 87’ Warren Yacht – Forfeited by Rothstein

The investigation disclosed that the investments purportedly underlying the investment scheme never existed and that the entire investment scheme was a fraud. The investigation further established that portions of criminally derived proceeds were used to pay past investors and were used to acquire millions of dollars worth of assets also to promote the carrying on of the Ponzi scheme and enable Rothstein to live a lavish lifestyle, which provided the appearance of success and, again, further promote the scheme.

Figure 4 2008 Bugatti Veyron - Likeness of the Vehicle Forfeited by Rothstein The Rothstein Vehicle Sold at Auction in June 2010 for $858,000.

SECTION I - OVERVIEW

Rothstein faced a total maximum statutory term of imprisonment of 100 years (20 years on each count) if convicted. On January 25, 2010, Rothstein signed a Plea Agreement in which he pled guilty to the five-count information, agreed to pay restitution and agreed to the forfeiture of the assets identified in the information. On June 9, 2010 Scott Rothstein was sentenced to 50 years in federal prison.

–  –  –

Credit Suisse Forfeits $268 Million, of which $130 Million is Equitably Shared with the Treasury Forfeiture Fund; Deferred Prosecution Agreement re Unlawful Transactions

Information included in the following forfeiture article is attributed to:

United States District Court for the District of Columbia, Joint Motion for Approval of Deferred Prosecution Agreement and Exclusion of Time Under the Speedy Trial Act, Criminal No. 09-352, dated December 16, 2009; and Article by Joanna Chung, “Credit Suisse steered $2bn through US,” published in the Financial Times, on December 17, 2009.

In a Deferred Prosecution Agreement, filed on December 16, 2009, Credit Suisse AG (“Credit Suisse”), entered into a Deferred Prosecution Agreement (DPA) in which it waived indictment and agreed to the filing of a one count criminal information charging that Credit Suisse knowingly and willfully violated and attempted to violate regulations issued under the International Emergency Economic Power Act (IEEPA) in violation of Title 50 U.S.C. §1705. Pursuant to the signed DPA, Credit Suisse agreed to forfeit $268 million to the U.S. Government and pursuant to a separate DPA, forfeited another $268 million to the District Attorney of the County of New York, for total Pursuant to 31 U.S.C. 9703(d)(2)(C), the Treasury Forfeiture Fund is authorized to deposit into the Fund all amounts representing the equitable share of a Department of the Treasury law enforcement organization or the United States Coast Guard from the forfeiture of property under any Federal, State, local or foreign law.

8 TREASURY FORFEITURE FUND ACCOUNTABILITY REPORT – FISCAL YEAR 2010

forfeitures for the violation of $536 million. The Treasury Forfeiture Fund’s equitable share from the Department of Justice, the lead agency in this case, was $134 million.

Credit Suisse moved almost $2 billion through the U.S. financial system for up to 20 years on behalf of customers from Iran, Sudan and Libya, violating U.S. sanctions. The bank used elaborate procedures to hide the origins of the money including stripping out the names of sanctioned parties from payment instructions so that wire transfers would pass undetected through filters at U.S.

financial institutions. Also during this time, Credit Suisse provided its Iranian clients with a pamphlet entitled “how to transfer USD payments,” which detailed payment instructions on how to get around filters.

Credit Suisse said in a statement that it was committed to the highest standards of integrity and took “this matter extremely seriously.” It said it had carried out an investigation and ended business with the sanctioned countries by 2007. The Office of Foreign Assets Control (OFAC), of the Department of the Treasury, was also involved in the investigation.

Immigration and Customs Enforcement (ICE)Department of Homeland Security

Pilgrim’s Pride Forfeits $4.5 Million, Non-Prosecution Agreement re Hiring and Employment of Unauthorized Workers

Information included in the following forfeiture article is attributed to:

Newsletter update by McGuireWoods.com dated January 6, 2010, “Pilgrim’s Pride to Pay $4.5 Million as Result of Immigration Investigation.” In December 2009, the Federal Government reached a Non Prosecution Agreement with Pilgrim’s Pride Corporation, one of the country’s largest chicken producers, to resolve an investigation involving the hiring and employment of unauthorized workers. Under the terms of the agreement, Pilgrim’s Pride agreed to pay $4.5 million and to adopt more stringent immigration compliance practices. As part of the government's investigation, 25 unauthorized workers were arrested in December 2007 at plants in Texas, and approximately 338 more were arrested in plants in Texas, Florida, West Virginia, Arkansas and Tennessee in early 2008.

The Pilgrim’s Pride investigation is not unique. Over the last few years, a number of companies throughout the country have felt the impact of worksite enforcement actions and government investigations related to their compliance with immigration laws. In addition to the possible criminal penalties including jail time, forfeiture, and debarment, there are the possible fines: companies penalized as a result of an I-9 inspection can pay $375 to $16,000 for each unauthorized worker.



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