Earlier this month, two former Bank of China managers were sentenced in a Nevada court in the US to over 20 years in jail for defrauding the Bank of China and laundering the funds through US bank accounts and casinos in Las Vegas. The two men are accused of sending millions of dollars in illegal wire transfers from ‘their’ Bank of China to a dozen or so sham companies they controlled all over the globe. The total fraud amounted to around $485 million and was detected in 2001 by auditors of the Bank of China. Authorities say that after the Bank of China suffered more than $170 million in losses by speculating on foreign currency, one of the managers began to siphon corporate assets to mask some of the losses and to enrich himself. It probably started as a Nick Leeson, but when it seemed almost too easy to wire the money out of the bank, it (really) got out of control. During a 3 year period the bank was systematically leaking funds to shelf companies without detection.
According to the FBI, the discovery of the fraud led to a run on the bank which had the potential to destabilize the financial sector in South China. The managers fled China after the heat became too much for them to take. Using fake identities they received visas and entered the US. There -in a coffeeshop to be more specific- they married US born Chinese women to secure their legal status in the US.
At the time of his arrest in 2004, one of the managers was working as a cook in a Chinese restaurant while his -original- wife was waiting tables. What happened? Out of money? Were there more people involved in the scheme and were these guys just a part of it? Keeping of low profile? Where all the money went is still not clear. After the arrests some houses in British Colombia were confiscated but hundreds of millions seem to be still floating around. Was the booty laundered in Las Vegas? From a legal point of view it was. The business men visited casinos on a regular basis and placed bets up to $80k. And doing so with stolen money technically makes it money laundering. Was it really an attempt to provide a fake legitimate explanation for their wealth? Probably not… more like spending the treasure. And not a wise thing to do if you don’t want to draw any attention to you (being a cook in a Chinese restaurant would better do that trick).
More on laundering and gambling in this blog: click ‘gambling’ in the ‘tag cloud’.
http://financialcrimeonline.com/archives/164
http://financialcrimeonline.com/archives/12
http://www.mefeedia.com/entry/video-xu-chaofan-and-xu-guojin-going-to-jail/17802309
http://www.fbi.gov/page2/april04/042904china.htm
