The Bank Secrecy Act (BSA) of 1970

introduced a number of monetary

transaction reporting requirements

designed to prevent criminal organizations

from exploiting the U.S. financial system by

moving and stockpiling their illicit funds.

These reporting requirements are invaluable

tools for law enforcement and are the backbone of the United States’ anti-money laundering program. Each reporting requirement provides a layer of defense, and the

Currency Transaction Report (CTR) is the

first line of that defense.

The August 2005 Cornerstone Report focused

specifically on Suspicious Activity Reports

(SARs). In this article, we will explore from

a law enforcement perspective the value of

CTRs and their role in preventing and

detecting illicit financial transactions. While

this article will only provide a snap shot of

how CTRs are used by ICE and benefit the

United States, we feel it is important.

Financial institutions are required to file 

a CTR for cash transactions of more than

$10,000.The placement of funds into 

the financial system is recognized by law

enforcement as the criminal’s most vulnerable stage of the money laundering

process, and CTR reporting requirements 

play a major role in combating the infusion of illicit proceeds into our legitimate

financial system. Drug dealers, arms traffickers, alien smugglers and countless other

criminal organizations know about CTR

reporting requirements—forcing them to

operate outside of legitimate business practices which raise “red flags” in the financial and law enforcement communities,

making them vulnerable to detection.

To avoid these red flags, criminal organizations sometimes establish cash-intensive

businesses in an attempt to legitimize the

filing of CTRs by financial institutions on

their illegitimate cash transactions. However,

once law enforcement becomes aware of

these criminal organizations through

sources of information or other investigative

leads, these CTRs become invaluable and

establish a trail that documents the movement of their illicit funds. Being able to follow the trail of illegal money helps law

enforcement discover criminals they might

not have otherwise known about. Required

financial reporting also unveils the wider

range of illegal activities in which known

criminals may be engaged, as well as others

who may also be criminally associated.

continued on page 2

Inside this Issue

Safeguarding America Through

Financial And Trade Investigations

www.ice.gov/cornerstone

Toll-Free Tip Line:

1-866-DHS-2-ICE

Cornerstone is U.S. Immigration and

Customs Enforcement’s (ICE)

comprehensive investigative initiative

for fighting financial crime, trade

fraud and intellectual property crime.

The Cornerstone Report is a

quarterly bulletin highlighting key

issues related to ICE financial and

trade investigations.

Drug Traffickers Launder Profits 

Through Casinos. . . . . . . . . . . . . . . . . . . . . 2

Two Americans Convicted In China 

For DVD Piracy . . . . . . . . . . . . . . . . . . . . . . 3

ICE Gets Its Message Out To The 

Gaming Industry At The G2E Expo . . . . . . 3

ICE Dismantles International 

Money Laundering And Check 

Fraud Organization . . . . . . . . . . . . . . . . . . 4

Cornerstone Calendar . . . . . . . . . . . . . . . . 4

Volume II: No. 3 • December 2005

The Currency Transaction Report: 

Controversial To Some—Essential To All

$4.7 million in seized smuggled currency—some still in their Federal Reserve wrappers. 

BSA reporting requirements force criminals to use risky and vulnerable methods to move 

and store their proceeds.
Nine members of

the Gabriel

Gomez drug trafficking organization were

exposed and convicted

largely through evidence collected pursuant to the Bank Secrecy Act (BSA) and

other financial records.

Charles Roybal was known as the “moneyman” of the Gomez drug trafficking

organization and was responsible for laundering the group’s illegal proceeds from

drug sales. He was a known gambler, but a

modest one.That is until Gomez hired him

to launder the group’s profits. Both the

money Gomez paid Roybal for his services,

and the large sums of money put into his

possession to be laundered, allowed him to

trade in his low-budget gambling style for

that of a high roller.

Roybal would recruit third parties at the

casino to purchase or cash in chips for

him, paying them a nominal fee to do so.

Presumably unbeknownst to them, the

chips were being purchased with illegal

drug profits. After spending some time

gambling, Roybal would cash some of the

chips back out again, claiming they were

his gambling winnings, and thereby fabricating a source for the Gomez group’s revenue other than drug trafficking, successfully “laundering” the money.

But every time he cashed-out more than

$10,000 in chips, his activities were being

recorded on Currency Transaction ReportsCasinos (CTRCs). According to those CTRCs,

Roybal’s total chips purchased equaled

approximately $117,000, and total chips

redeemed, $430,000, a difference of

$313,000.When this amount was compared

to the recorded winnings in the pit area, the

numbers did not add up.

The reports provided other evidence in

support of money laundering charges

against Roybal and his group.Twenty-four

of the CTRCs recording his activities

revealed the use of aliases and multiple

social security numbers. On numerous

other CTRCs, he had refused to provide a

social security number.

In addition to money laundering, he was

charged with Structuring Transactions to

Avoid Reporting Requirements.

In the face of the evidence against them,

eight of the nine defendants in this case

pleaded guilty to a 68 count superseding

indictment charging distribution of marijuana, money laundering and structuring

transactions to avoid reporting requirements. Criminal forfeitures in the case

included $15 million in bank accounts,

multiple properties and automobiles. $

Page 2 of 4

Volume II: No. 3

December 2005 • Unknown casino customer purchasing/

redeeming large amount of chips.

• High-dollar casino customer refusing to provide

identification at tables (refusal of comps).

• Customer’s sudden/unexplained change in

gambling habits (traditionally low or moderate

gambler placing high-stakes bets).

3 Red Flag Indicators

Drug Traffickers Launder Profits Through Casinos

Bank Secrecy Act Of 1970, continued

The CTR As Evidence

CTR queries have long been a routine

investigative tool utilized by ICE.They help

investigators detect illegal activity, develop

leads and expand existing investigations.

CTR databases are readily accessible to law

enforcement and provide a wealth of identifying information related to a subject,

including full name, address, date-of-birth,

social security number, passport number,

driver’s license information, alien registration number, primary and secondary bank

account information, and related businesses

and business addresses—information investigators can use to help identify subjects.

ICE special agents utilize CTRs to establish

links between individuals and businesses,

and to identify co-conspirators and potential witnesses.This information is often utilized to meet the “probable cause” requirement necessary to obtain search, arrest and

seizure warrants. CTRs also provide critical 

information relating to asset identification.

The identification and seizure of a criminal

organization’s assets can be devastating to

the organization and is an important tool

for law enforcement.

ICE conducts approximately 1 million record

checks of BSA data each year; CTRs are routinely queried at the initiation and throughout an investigation.With current data mining technology and techniques, law enforcement agencies can now utilize CTRs in powerful ways to identify trends and patterns,

and to identify individuals operating outside

of these legitimate business practices. For

example, ICE utilizes CTRs to identify tradebased money laundering schemes that can be

used to launder millions in illicit proceeds,

which can adversely impact the United States

economic security, and devastate the economy of our international trading partners.

SARs and CTRs

The CTR requirement is part of a process

which limits the criminal’s options to 

move and store their illicit funds.

Individuals and businesses conducting

legitimate transactions have no reason 

to avoid the filing of CTRs. However,

criminals are forced to make a choice

between appearing to be a legitimate

customer, thereby exposing their assets 

and money movements through BSA

reporting requirements, or engaging 

in risky, illegal actions to conceal the

movement of their funds. Suspicious

attempts to avoid the filing of a CTR 

by structuring cash deposits (making a

series of deposits just under the $10,000

reporting threshold over a number of 

days) is a significant red-flag indicator 

of criminal activity and one of the most

frequent triggers for the filing of a SAR.

With the development of a world economy

and the move to a cashless 

society, the importance of the CTR will

continue and grow, not just for the banking community but for ICE and their law

enforcement partners. $
AChinese court

convicted

Randolph Hobson

Guthrie III, 38, and

Abram Cody Thrush,

30, on criminal charges of illegally selling

and distributing more than $840,000

worth of pirated motion picture DVDs via

the Internet to buyers in more than 20

nations, including the United States.Two

Chinese accomplices were also recently

convicted and sentenced in the case.

Chinese authorities also located and

destroyed three warehouses that were

being used to store those DVDs.

Guthrie and Thrush were arrested in

Shanghai in July 2004. Chinese prosecutors

maintained that, since October 2002,

Guthrie had illegally sold some 180,000

pirated DVDs around the globe via the

Internet.The Motion Picture Association of

America believes that Guthrie was the largest

distributor of pirated DVDs in the world.

This investigation represents the first joint

Intellectual Property Rights (IPR) investigation by ICE agents and Chinese authorities.

On April 18, that case reached its conclusion when Guthrie and Thrush—both 

U.S. citizens—were convicted and sentenced in a Shanghai court. Guthrie was

sentenced to a jail term of two years and

six months in China, and a fine equivalent 

to approximately $60,000.Thrush was

sentenced to a jail term of one year in

China, and a fine equivalent to approximately $1,200. Both Guthrie and Thrush

were expelled from China upon the completion of their sentences. Guthrie was rearrested upon arrival in the United States,

and currently faces an 18-count indictment 

for various U.S. charges, including criminal

copyright infringement and moneylaundering violations.

Launched in Sept. 2003 by the ICE resident

agent-in-charge office in Gulfport, Miss.,

the investigation grew to include the ICE

offices in Beijing, China and Houston, as

well as the National IPR Center in

Washington, D.C.The case illustrates the

truly global nature of IPR crime, which

requires, in turn, a global response on the

part of U.S. law enforcement agencies and

their foreign counterparts. $

Randolph H. Guthrie taken into custody by

ICE agents following his extradition to the U.S.

Page 3 of 4

Volume II: No. 3

December 2005

Two Americans Convicted In China For DVD Piracy

First Joint Undercover Investigation Between ICE And Chinese Law Enforcement

For IPR Industry

• Subject selling products not sanctioned by

copyright holder.

• Subject selling products not presently authorized

for sale (DVD movies still in theatres).

For Consumers

• Prices significantly below market value.

• Seller making disclaimers on product seized by

law enforcement.

3 Red Flag Indicators

This September, the American GamingAssociation held its 5th annual Global

Gaming Expo (G2E) at the Las Vegas

Convention Center. As in the four previous

years, it was well attended by thousands of

industry vendors, casino executives, gaming

enforcement officials and the public at large.

In all there were over 26,000 attendees from

99 countries. On display was everything one

might expect at a gaming convention, from

the latest slot machines and robotic carddealers to high-tech security and cash vending systems.This year, however, there was a

new exhibitor—U.S. Immigration and

Customs Enforcement (ICE).

The G2E was attended by agents from the

ICE Office of Investigations’ Financial and

Trade Investigations Division’s Cornerstone

Unit, as well as the ICE Office of

Investigations’ Las Vegas field office. ICE’s

goal was to educate the international

casino and gaming industry on the

vulnerabilities of money laundering

through casinos and the importance

of strong anti-money laundering

programs. Agents ran an information

booth and interacted with the public.

ICE agents also participated in panel

discussions and lectures, where they

addressed ICE’s mission in combating international financial and trade

crimes, the effectiveness of Bank

Secrecy Act reporting requirements in

helping to identify criminal activity, and

the Cornerstone initiative, a major privatesector outreach program of ICE.

By the conclusion of the Expo, ICE had

made many new contacts with security and

compliance personnel from the gaming

industry and gaming enforcement officials.

Overall, ICE succeeded in getting its

desired message out to the gaming community: Like other cash-based industries,

casinos need to remain vigilant in the fight

against exploitation by criminal organizations. And, since 2003, they have a dedicated ally in that fight—ICE. $

ICE Gets Its Message Out To The Gaming Industry At The G2E Expo

Opening day at 5th annual Global Gaming Expo
Recent events include:

• September 28, 2005—OI Director Marcy 

M. Forman made two presentations at the 

Annual Institute for International Research 

(IIR) Money Laundering Compliance Forum

concerning the investigation of Politically 

Exposed Persons (PEPs) and anti-money

laundering investigative issues.

• September 30, 2005—Representatives from the

Cornerstone Unit attended a conference of the

International Association of Financial Crime

Investigators (IAFCI) in Orlando, Fla., where they

made presentations and ran an information

booth, at which they interacted with financial

investigators from various countries, presented

literature and answered questions concerning the

Cornerstone Initiative.

• October 18, 2005—Representatives from the

Cornerstone Unit and Special Agent in Charge,

New York representatives attended a round table

discussion with JP Morgan Chase, Wachovia, Bank

of America, Citi Group, Inc, Merrill Lynch, First

Citizens, Royal Bank of Canada, Commerce Bank,

Deutsche Bank, Corporate Risk International and

other federal agencies. During the meeting, hosted

by JP Morgan in New York, N.Y., senior

representatives from law enforcement and the

private sector discussed best practices and ways

to collaborate to combat money laundering and

other financial crimes.

• October 27, 2005—Cornerstone Unit Chief 

Jim Dinkins and Section Chief Joe Gallion

presented at a conference sponsored by JP

Morgan Chase in Columbus, Ohio, concerning

international money laundering and bulk cash

smuggling prevention.

• November 1, 2005—OI Director Marcy M. Forman

presented at the annual American Bankers

Association (ABA) conference held in Arlington, Va.

Director Forman discussed ICE’s financial

investigations program, the Cornerstone Initiative

and high-lighted successful ICE investigations

relevant to the banking and financial communities.

Cornerstone Program Managers also ran an

information booth and interacted with members of

the banking community.

• November 9, 2005—Deputy Assistant Director

for Financial and Trade Investigations Kevin DelliColli presented at the International Association

of Financial Crimes Investigators in Melbourne,

Australia. He discussed bulk cash smuggling,

money laundering and the Cornerstone program.

• November 29, 2005—OI Director Marcy M.

Forman presented the keynote address at a human

trafficking seminar in Washington, D.C., sponsored

by Women in Federal Law Enforcement. Director

Forman discussed ICE’s use of financial and

immigration authorities to dismantle criminal

organizations.

Cornerstone Calendar

I

CE Special Agent 

in Charge, New York

(ICE SAC/NY) recently

finished an 18-month

investigation, entitled “Operation Cheque

Mate”, that identified and dismantled 

a network of individuals in London,

England and the United States who were

partly responsible for the production 

of more than $15,000,000 worth of counterfeit/forged and stolen bank checks

seized by ICE SAC/NY, and the defrauding

of securities firms of $250,000. Operation

Cheque Mate was successfully conducted

in partnership and cooperation with the

financial trading community, United

Kingdom and Spanish law enforcement,

INTERPOL, U.S. regulatory agencies and

other industry organizations—including

the Securities and Exchange Commission

(SEC), the Commodity Futures Trading

Commission (CFTC), Securities Industry

Association (SIA), New York Stock

Exchange (NYSE) and the National Futures

Association (NFA).

Over 50 private sector companies assisted

ICE SAC/NY during this investigation.This

information exchange led to the indictment of the two foreign-based principals,

11 arrest warrants; the conviction of two

individuals for bank fraud; and the seizure

of banks checks, along with stolen identities from both U.S. and U.K. citizens.

The Scheme

The U.K.-based organization managed by

the aforementioned two principals, profited hundreds of thousand of dollars by

establishing online trading accounts with

numerous brokerage firms with either

stolen, fictitious or their own identities.

After establishing the online relationship,

they mailed bulk packages containing

fraudulent or forged checks ranging from

$61,000 to $600,000 along with applications in pre-addressed envelopes to a U.S.-

based operative, who would then forwarded the envelope from a domestic address,

to attract less scrutiny than foreign correspondence. Soon after, the subjects requested wire transfers of trading profits to a foreign bank account. As a result, the firms

were exposed to millions in losses after the

checks returned as counterfeit.

The Partnership

As part of the combined and coordinated

effort, ICE worked with several organizations, associations, and brokerage firms to

place alerts on their Web sites, warning

potential investors and other firms about

the fraudulent scheme.The alerts also

included the name and contact number of

the ICE case agent for the investigation.

These postings resulted in numerous leads

and significantly reduced the potential loss

to the securities industry. Based on the

alerts and industry cooperation, 14 financial Suspicious Activity Reports (SARs)

were filed by affected brokerage firms that

assisted in the investigation.

Fortunately, the losses sustained by the victim firms totaled just over $250,000.

Without the early detection and combined

and coordinated efforts of law enforcement

and the private sector, losses could have

exceeded $15 million. $

Page 4 of 4

Volume II: No. 3

December 2005 • Customer providing identification that is

unreadable, altered, poor quality copies or

facsimiles.

• Customer requesting trading privileges prior to

standard 10-day check verification period.

• Customer opening and closing investment

account(s) in short period of time.

3 Red Flag Indicators

ICE Dismantles International Money Laundering 

And Check Fraud Organization