Federal prosecutors recently announced the settlement of a civil claim against a former money transfer company executive, which related to acts allegedly performed by the defendant in his executive capacity. U.S. Treas. Dept. v. Haider, No. 1:14-cv-09987, complaint (S.D.N.Y., Dec. 18, 2014), transferred to No. 0:15-cv-01518 (D. Minn., Mar. 17, 2015). For certain “white collar” offenses, prosecutors and regulators may bring a civil lawsuit to recover penalties and damages, rather than a criminal case. One reason is that the burden of proof is usually lower in civil cases. Instead of proving guilt beyond a reasonable doubt, the state must prove liability by either a preponderance of evidence or clear and convincing evidence. The government filed suit against the defendant for alleged violations of the Currency and Foreign Transactions Reporting Act, more commonly known as the Bank Secrecy Act (BSA) of 1970.
The BSA requires financial institutions in the U.S. to take certain actions to assist government investigations of alleged financial crimes, such as money laundering, as well as “intelligence or counterintelligence activities” intended “to protect against international terrorism.” 31 U.S.C. § 5311. For example, financial institutions must establish anti-money laundering programs (AMLs) according to guidelines established by the government. 31 U.S.C. § 5318(h), 31 C.F.R. § 1020.210. They are also required to keep records of various transactions and to report “suspicious” transactions in a “suspicious activity report” (SAR). 31 U.S.C. § 5318(g), 31 C.F.R. § 1020.320.
The Financial Crimes Enforcement Network (FinCEN), part of the U.S. Department of the Treasury, is responsible for investigating and prosecuting alleged BSA violations. Civil liability for violations may extend not only to the financial institution itself but also to “a partner, director, officer, or employee.” 31 U.S.C. § 5321. Criminal penalties may apply to any “person,” defined by federal law to include both individuals and business entities. Id. at § 5322, 1 U.S.C. § 1.
The defendant’s former employer is a money transfer company based in Dallas, Texas, although its headquarters were in Minnesota during the time period relevant to the case. The defendant was employed as the company’s Chief Compliance Officer (CCO) from 2003 to 2008. FinCEN’s allegations against the defendant included failure to establish an adequate AML program and failure to file SARs as required by law.
The agency assessed a civil penalty against the defendant in December 2014, in the total amount of $1 million, for “willfully violating the BSA and its implementing regulations.” Haider, complaint at 1. It filed suit, seeking a judgment for the penalty amount and an injunction against future violations.
While the case was pending, the defendant filed a complaint with the Treasury Department, alleging that FinCEN disclosed information about him to the media in violation of the Privacy Act of 1974. 5 U.S.C. § 522a. The parties resolved both FinCEN’s claims and the defendant’s counterclaim in a settlement agreement in May 2017. The defendant admitted to some of the alleged conduct, agreed to pay a fine of $250,000, and agreed to a three-year injunction against doing similar work to his job as CCO.
These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.
For over 20 years, board-certified white collar crime attorney Michael J. Brown has advocated for the rights of defendants in West Texas facing white collar charges and related matters. Contact us online or at (432) 687-5157 today to schedule a confidential consultation to see how we can help you.
More Blog Posts:
Securities Fraud Charges Against Texas Official Headed to Trial, Texas Criminal Lawyer Blog, March 1, 2017
Commodities Trader Settles Federal Government’s Insider Trading Allegations, Texas Criminal Lawyer Blog, January 25, 2017
U.S. Department of Justice Issues New Policies for Prosecution of White-Collar Criminal Offenses, Texas Criminal Lawyer Blog, January 22, 2016