Part 6: WERE PAPER LOSSES THE GOAL ALL ALONG?

Part 6

If your goal is to launder money through a brokerage account, paper losses are worth serious money. Buying imaginary shares of a stock guaranteed to lose value is an awesome way to do that. You just need someone to set it up.

SAY YOU’RE A Swiss bank and you want to launder some money for high-net-worth clients.

Here’s one way: Start by placing large quantities of the funds into a brokerage account at the bank under the name of a shell corporation.

Then, conduct multiple financial transactions with the funds, confusing the true source of the money. Once the transactions “wash” the money, it can be spent out of the brokerage account as simply as writing a check or using a credit card.

Wealthy clients will pay handsomely for this activity. Not only do they get access to funds laundered through the banking system, but by placing the money offshore in a shell corporation, they can avoid taxation in their host country. “Money laundering is tax evasion in process,” said John Cassara, a 26-year intelligence and law enforcement official and former special agent for the Treasury Department. “Shell companies make it more complicated to figure out who that money belongs to and where it’s going.”

UBS, the giant Swiss bank that self-appointed investigator Chris DiIorio suspected was part of the kind of penny-stock manipulation that wiped out his penny-stock investment in 2006, has a checkered history with these types of activities.

The bank entered into a deferred prosecution agreement with the Justice Department over cross-border activities for its clients in February 2009, paying a $780 million fine. UBS admitted that it established secret accounts for roughly 17,000 wealthy American clients “in the name of offshore companies, allowing United States taxpayers to evade reporting requirements and trade in securities as well as other financial transactions (including … using credit or debit cards linked to the offshore company accounts).”

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Department of Justice press release.

Source: U.S. Department of Justice.

Read on.

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