Limited Survey of State and Local Law Enforcement

Case Summary Example

SARs Lead to Structuring and Tax Convictions
While investigating a subject of interest because of previous criminal activity, Federal
agents found multiple SARs indicating repeated cash-out transactions designed to
avoid reporting requirements. Investigators found SARs filed over several years on an
owner and operator of a business, and his wife, detailing a pattern of structuring. One
SAR noted that over 30 cash withdrawals were made in a 90-day period, all for just
under $10,000.
In addition, another SAR noted that over a period of more than 6 months, there were
nearly 250 debits totaling over $1,700,000, and of these debits there were more than 50
totaling over $1,500, which appeared unusual to the filer. Banks filed almost 200
Currency Transaction Reports (CTRs) on the defendants' business, indicating possible
knowledge by the defendants of the reporting requirement. Moreover, the majority of
the CTRs indicated cash-out activity which continued for several years.
Each of the defendants admitted that they moved large amounts of money, totaling
millions of dollars, from the business' bank accounts into their personal bank accounts,
ultimately withdrawing cash from the personal accounts in a series of withdrawals,
each just under $10,000, over consecutive days. The defendants used the money for
personal expenditures by (1) using cash to purchase money orders and bank checks that
were then used for personal expenditures and (2) by paying third parties to purchase
bank checks and money orders on behalf of the defendants.
The defendants designed the scheme in order to conceal the actual profits of the
business and evade Federal income tax. One defendant's banking activity was designed
to further this evasion by avoiding the requirement that financial institutions file a CTR
with FinCEN for any cash transactions exceeding $10,000. Similarly, the defendants
conspired to avoid U.S. Postal Service reporting requirements for purchase of $3,000 or
more in money orders from any one location in a single day by conducting a series of
transactions over consecutive business days and in various locations. The defendants
eventually pleaded guilty to structuring and tax charges.
[Published in The SAR Activity Review - Trends, Tips & Issues, Issue 20, October 2011]