Securities Industry Commentator by Bill Singer Esq

Raymond James Stuck With Unappealing FINRA Arbitration (BrokeAndBroker.com Blog)

Owner of Currency Exchange House Pleads Guilty to Intentionally Violating Anti-Money Laundering Laws (DOJ Release)

Financial Advisor Sentenced to More Than 13 Years in Prison for Swindling Investors Out of $5.1 Million (DOJ Release)

Fugitive Guatemalan Man Indicted for Wire Fraud (DOJ Release)

The Elderly Customer, The Will, The Stockbroker, The Complaining Brother, And The Post-Mortem Wires and Checks (BrokeAndBroker.com Blog)

Gonzalez knew of, and intentionally failed to adhere to, the anti-money laundering ("AML") laws and regulations imposed on currency exchange businesses like MRK Casa de Cambio. As with any U.S. financial institution, casas de cambio, currency exchanges houses, and other "money services businesses" must comply with the United States Bank Secrecy Act, found at Title 31, United States Code and Title 31, Code of Federal Regulations, which requires these businesses to assist U.S. government agencies in detecting and preventing money laundering and other financial crimes.

Chief among the violations to which Gonzalez admitted in his plea agreement were: failing to disclose MRK Casa de Cambio's Mexico-based offices and branches with the Secretary of the Treasury; reporting false and materially incomplete information in connection with the registration of MRK Casa de Cambio; filing false or materially misleading (if filed at all) reports of currency transactions exceeding $10,000 and reports of suspicious activity.

. . .

As a result of these intentional failures, among others, Gonzalez admitted in his plea agreement that he caused MRK Casa de Cambio to engage in cash transactions without applying adequate scrutiny to the source, purpose, ownership, or destination of the funds, or otherwise whether they were relevant to a possible violation of law or regulation. In doing so, Gonzalez acknowledged that he failed to adhere to best practices for all financial institutions; but, more specifically for a money services business like MRK Casa De Cambio, Gonzalez failed to develop and maintain an AML program that was commensurate with the risks posed by the location, size, nature, and volume of the financial services provided by his money services business.

falsely represented to clients that they would receive fixed annual interest payments and guaranteed protection against losses if they invested with his firms - Washington, D.C.-based Financial Assurance Corp. and Los Angeles, Calif.-based Affluent Advisory Group LLC.  Davis claimed that some of the investments would be backed by a well-known multinational life insurance company.  In reality, Davis did not invest the funds as promised, and none of the purported investments had any affiliation with the life insurance company. 

Davis instead spent the money for his own personal benefit, including rent for an eight-bedroom mansion in Los Angeles, airline tickets, luxury hotels, car rentals, a club membership, theater tickets, and other items.  Davis often attempted to conceal the scam by using funds from some investors to make Ponzi-type payments to other investors.

The alleged fraud scheme lasted from at least 2003 to 2018.  In all, Davis defrauded more than 25 victims out of more than $5.1 million.  Many of the victims were retirees who gave Davis all of their savings.

According to the Indictment, Montano is a Guatemalan citizen who managed two forestry projects in Guatemala for investment funds managed by a New Hampshire-based investment adviser between 2007 and 2014.  Beginning in approximately late 2009, Montano, whose management company was called Green Millennium, embezzled the projects' funds by (1) diverting cash and concealing the diversions using altered bank and financial statements; (2) mortgaging the Projects' properties without authorization and investing the proceeds in unsuccessful business ventures; and (3) stealing teak forestry subsidies paid by the Guatemalan government.  A criminal complaint previously was filed against Montano in 2015 and a warrant was issued for his arrest.  Montano has been a fugitive from justice since that time. 

• Securities Industry Commentator
• Bill Singer