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Safeguarding America Through 

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Cornerstone is U.S. Immigration

and Customs Enforcement’s

(ICE’s) comprehensive

investigative initiative for

fighting financial crime.

The Cornerstone Report is a 

quarterly bulletin highlighting

key issues related to ICE Homeland Security Investigations

(HSI) financial, narcotics and

special operations investigations.

Vol XII: No. 3 • Summer 2015

Financial Facilitators . . . . . 1

Case Study of Houston 

Corporate Identity Theft . . . 4 

Case Study of El Paso 

Attorney Laundering Money 

for the Cartel . . . . . . . . . . . 4

Financial 

Facilitators

Introduction

The most persistent challenges faced when investigating money 

laundering are the shifting tactics Transnational Criminal 

Organizations (TCOs) employ to place and move illicit funds 

through the financial system. As law enforcement and regulatory 

regimes grow more effective at neutralizing vulnerabilities, criminal 

organizations increase their level of sophistication and become more 

daring in seeking other avenues to exploit. Increasingly, U.S. Immigration 

and Customs Enforcement’s (ICE) Homeland Security Investigations 

(HSI) special agents are encountering money laundering schemes that 

employ professionals, generally with ties to the legitimate business 

world, which either wittingly or unwittingly, provide support and 

assistance to TCOs. These “facilitators” of money laundering provide an 

extensive range of services to both legitimate customers and criminals.

As such, facilitators exist outside the formal criminal structure of 

the TCO, but nevertheless play a critical role in the success of money 

laundering and other illicit activities.
The following article 

details the continuing 

and emerging challenges faced by law

enforcement targeting money laundering 

facilitators and highlights case studies of 

recent investigations that feature how TCOs 

are employing facilitators in their efforts to 

earn, move and store illicit proceeds. 

Criminal networks and money 

laundering facilitators: 

The nexus

The President’s Strategy to Combat Transnational Organized Crime emphasizes that 

a principal objective in the effort to reduce 

transnational organized crime is to “target 

[TCO’s] infrastructures, depriving them of 

their enabling means, and preventing the 

criminal facilitation of terrorist activities” 

(White House, July 25, 2011).

Beyond empowering TCOs with financial support for ongoing criminal activities, money laundering is a point of 

connection between traditional TCOs, 

which seek to profit from their criminal activities, and transnational terrorist 

organizations that have an ideological or 

political agenda. A 2003 report by the U.S. 

Government Accountability Office (GAO), 

the auditing arm of the U.S. Congress, 

revealed that many terrorist organizations 

employ “alternative financing mechanisms” to “earn, move and store” their 

illicit proceeds across borders and around 

the world. In some cases, criminal organizations and terrorist organizations 

have been known to employ the same 

strategies for placing, layering and integrating proceeds into the flow of legitimate commerce (GAO, November 2003). 

Facilitators rest at the nexus of these 

dense webs of illicit relationships. 

Identifying a broad range of licit-illicit relationships, the President’s Strategy notes that 

many facilitating entities serve as “convergence points” shared by different TCOs to 

launder illicit proceeds. These TCOs also 

“abuse some of the same financial intermediaries and front companies in regions 

Financial Facilitators Continued

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Summer 2015

where government or law enforcement 

corruption is prevalent, with officials receiving either revenues from the criminal businesses or ownership stakes in the legitimate 

appearing commercial entity.” 

To better understand the breadth of facilitation, the Middle East and North African 

Financial Action Task Force (FATF) offers a 

useful classification in a report on “Designated Non-Financial Businesses and Professions (DNFBP)” that may be exploited, 

either wittingly or unwittingly, to facilitate 

money laundering and terrorist financing 

(MENA FATF, November 10, 2008). They 

identify the following DNFBPs as presenting 

significant risk for exploitation as part of a 

criminal conspiracy: 

• Lawyers and accountants (as well as 

notaries and other independent legal 

and accounting professionals)

• Real estate agents

• Dealers in precious stones and metals

• Casinos

• Dealers in automobiles and boats

• Horse races

• Trusts and company service providers

It is likely that in the years to come, this list 

will need to expand to encompass a wider 

range of potential businesses and professions that are vulnerable to exploitation by 

TCOs. By expanding our thinking to include 

DNFBPs as potential facilitators, we can 

broaden our understanding of what constitutes criminal conspiracy. Some nations have 

already begun to do so. The FATF recommends strengthening and extending international Anti-Money Laundering (AML) 

requirements to DNFBPs. Furthermore, the 

FATF suggests that DNFBPs should better 

understand their responsibility to report 

suspicious transactions and that the business and professional communities should 

strive to educate DNFBPs about the need to 

comply with AML guidelines. 

Criminal assistance 

vs. facilitation: 

A critical distinction

For law enforcement purposes, it is 

important to distinguish the role of facilitators from that of individuals providing 

“criminal assistance.” Under the heading of 

“criminal assistance,” one might include a 

cash courier who is recruited to smuggle 

illicit funds from one country to another 

for a modest payment. These couriers are 

basically pawns in the criminal enterprise, commanding no specialized professional expertise or skills. They are largely 

interchangeable, and easily recruited and 

replaced, often at a relatively low cost. If a 

criminal “assistant” (a cash courier in this 

example) is intercepted by law enforcement while providing assistance to the 

criminal organization, their weak ties to 

the TCO will not necessarily cause a serious 

threat to the organization’s overall cohesion. However, the intelligence that can 

be derived from an “assistant” through 

various law enforcement means can be 

invaluable in furthering an investigation. 

Due diligence should be adhered to when 

encountering these individuals to ascertain 

if they are indeed an “assistant” or serve a 

more integral part of the TCO. Contrarily, a 

facilitator is much more vital to the criminal enterprise. Since he or she enjoys ties 

to the legitimate business world, the facilitator can play an essential role in helping 

a criminal organization place, layer, and 

integrate funds into the financial system. 

The facilitator’s professional status often 

provides a veneer of respectability to their 

activities, making them highly valuable to 

the criminal enterprise. For this reason, the 

services of a facilitator has become a more 

widespread tactic in money laundering; 

and thereby, of higher value as the target of 

an investigation. 

Facilitator relationships are more subtle, 

indirect and opaque than traditional criminal relationships. This indirect relationship 

to, and removal from, the direct operations 

of a TCO is what makes the incorporation
of facilitators attractive to criminal organizations that want to 

disguise illicit actions. 

It also poses challenges for law enforcement and regulators who seek to identify 

and investigate facilitators’ activities.

The dilemma: Challenges 

in targeting facilitators

The following section discusses areas in 

which facilitation is presenting new challenges for law enforcement: 

Attorney-client privilege: In the U.S. and many 

other countries, an attorney’s communications with his or her client in the course 

of providing legal services are generally 

considered confidential. This long-established legal concept affords attorneys a 

broad degree of discretion in their relationships with clients. However, if an attorney 

is working in a facilitator relationship, 

privileged communications with his or her 

client may be exploited. In other words, 

attorney-client privilege may be invoked 

solely as a mechanism to prevent the 

discovery of criminal activities in which the 

attorney may or may not be complicit. 

Beneficial ownership: “Beneficial ownership” describes a business relationship 

in which one party holds ownership but 

the company or asset is nominally under 

the control of another party. As with 

many other practices that are exploited 

by money launderers, beneficial ownership is a recognized and legitimate legal 

strategy in many instances e.g., a parent 

or guardian who controls assets in trust 

on behalf of minor children, or an individual seeking to protect assets from 

potential litigation. However, like many 

other legitimate practices, beneficial 

owner relationships are vulnerable to 

exploitation. A clever facilitator might 

deploy this tactic to disguise the true 

owner’s relationship to criminal assets, 

making it difficult for investigators and 

regulators to penetrate and analyze. 

Moreover, it is conceivable that the beneficial ownership “relationship” might be 

established so that the party of nominal 

ownership is unknowingly a party to 

disguising criminal activity. 

Complexity of financial instruments: Another 

significant challenge to AML investigators 

and regulators is the sheer complexity 

of many of today’s advanced financial 

systems and mechanisms. Even experts can 

struggle to keep up with some of the more 

sophisticated and exotic financial vehicles 

that have developed in today’s markets. 

One remarkable lesson of the 2008 financial crisis was that, in many leading financial institutions, banking professionals 

didn’t fully grasp how the financial mechanisms worked i.e., as derivatives, credit 

default swaps and collateralized debt obligations—or their implications as a part of 

the larger financial system. One concern 

is that this creates a “complexity gap” that 

will be a challenge for law enforcement 

investigators or regulators, should these 

vehicles be exploited for money laundering purposes. 

Unconventional facilitation avenues: As AML 

regimes have grown more effective at 

detecting and preventing money laundering in the banking system and other 

traditional financial avenues, criminal 

organizations are growing equally creative 

in exploiting unconventional avenues for 

money laundering and illicit finance. Of 

particular interest are retail and cash businesses, nonprofit organizations and other 

entities that may receive lesser scrutiny 

from law enforcement and regulators. In 

some cases, this may entail taking advantage of economies where legal and regulatory checks are lacking. One study has 

revealed how churches and private educational institutions in Nigeria have been 

exploited by criminal organizations seeking 

to conceal and transfer illicit proceeds 

(Kingston 2011). As AML regimes continue 

to strengthen, a process of “capital flight” 

of illicit assets through these unconventional avenues is anticipated. 

Case Studies

The following case studies are helpful 

in showing how money laundering is 

growing more complex and sophisticated 

as criminal elements employ professionals and legitimate business entities in 

money laundering conspiracies. All cases 

are derived from HSI investigative reports 

and observations from HSI special agents 

in the field.

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Financial Facilitators Continued
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Volume XII: No.3

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Follow the Money Trails to Combat Crime Continued

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The following case was 

referred to HSI by the 

City of London Police: 

The scheme: Beginning February 2005 

through July 2006, a pair of lawyers in 

Houston, Texas, were hired as part of a 

larger investment fraud conspiracy to 

establish the infrastructure used in the 

promotion and sale of fraudulent stock 

to victim-investors located in the United 

Kingdom (U.K.). These attorneys conspired 

to steal the identities of dormant, publicly-traded companies. They subsequently 

used the stolen corporate identities to 

create fraudulent, empty-shell companies that had the appearance of being 

publicly traded. The attorneys and their 

co-conspirators subsequently sold the 

fraudulent empty-shell company stock to 

victim-investors for millions of dollars in 

profit. The loss to the victims exceeded 

$126 million. 

The results: The scheme generated no less than 

$126 million in fraudulent proceeds. In 

May 2012, both attorneys were convicted 

in U.S. federal court for their roles in the 

scheme. In August, one of the attorneys was 

sentenced to 18 months in federal prison 

and ordered to pay $800,000 in restitution. 

The second attorney was sentenced to 12 

months in federal prison and ordered to pay 

her portion of the $800,000 in restitution. 

If not for the victim-investors contacting the 

City of London Police and the interagency 

cooperation between law enforcement in 

Spain, the U.K., and the U.S., this scheme 

may have continued. Additional individuals 

in Florida, New York, and the U.K. were 

convicted in relation to this conspiracy. One 

of the leaders of the organization received 

a sentence of 25 years in prison following 

a jury trial. 

Lessons learned/Vulnerabilities and red flags: This is a 

classic example of a “facilitator” relationship. 

One of the most important lessons learned as 

the result of this investigation is that regulators should not assume business transactions 

details are valid without conducting proper 

vetting and due diligence. In the Houston 

scheme, there were several unrecognized flags 

that could have alerted regulators and investors to the fraudulent nature of the scheme. 

For instance, the Houston attorneys would 

forge the signatures of the defunct company’s board members to affect their takeover 

of the company. State, federal and independent regulators received paperwork 

submitted by the attorneys requesting 

certain actions be taken (name change, 

board minutes, etc.). The regulators would 

accept the paperwork as valid without 

verifying that the signatures were genuine 

and without determining if the requested 

transaction was unusual or made practical 

business sense. As a result of this investigation, the Secretaries of State for both 

Nevada and Delaware, the Security and 

Exchange Commission (SEC) and Financial 

Industry Regulation Authority (FINRA) 

changed their processes and procedures 

related to company formations, instituting 

independent and higher levels of scrutiny 

with regard to due diligence. These are 

salutary developments; however, regulators, auditors, corporate officers, investors 

and others should be keenly aware of the 

need for thorough due diligence. 

Case 1: Houston corporate identity theft

Case 2: El Paso attorney launders money for the Cartel 

The scheme: An El Paso attorney conspired with 

multiple Mexican nationals, including the 

ex-wife of a former Mexican President, to 

launder approximately $600 million in drug 

proceeds for the Millennial/Valencia Cartel. 

The attorney, who was a philanthropist and 

former Carnegie Mellon Trustee, utilized his 

legal experience to generate false legal settlements for millions of dollars and created 

Limited Liability Companies (LLCs) in Nevada 

to launder the proceeds. The attorney also 

utilized lawyers in the Turks and Caicos Islands 

to aid him in creating additional false international LLCs and bank accounts to launder the 

drug proceeds. The attorney and willing associates furthered the conspiracy by hiring an 

independent cell of Mexican Nationals to 

exchange the bulk U.S. cash smuggled into 

Mexico for Pesos via Casa De Cambios. 

The results: In September 2007, state and local 

officers conducting freeway interdiction 

outside of Atlanta, Georgia stopped a vehicle 

heading to El Paso, Texas, being driven 

by a former associate of the attorney. The 

vehicle contained over one million dollars 

in drug proceeds. HSI Atlanta special agents 

responded to assist with the interdiction and 

interviewed the driver. The driver admitted 

he was a money courier for the organization 

and was delivering the illicit funds to his 

co-conspirator, the attorney in El Paso. HSI 

special agents also learned from the driver 

that the organization used coded language 

to conceal identities of three cells associated 

with the cartel. The coded language included 

references to Girl Scout cookies and to 

alleged legitimate businesses. HSI special 

agents made arrangements for the money 

courier to deliver the money to the attorney 

in El Paso where he was subsequently 

arrested. The attorney admitted his role in 

the money laundering conspiracy and stated 

the drug money was destined for the cartel 

in Colima, Mexico. The attorney agreed to 

cooperate with HSI special agents in furtherance of the investigation. HSI special agents 

later learned that the attorney had continued 

his unlawful activity and again attempted to 

launder money for the cartel. The attorney 

was also allegedly involved in a separate and 

independent scheme to defraud the Mexican 

government, the Mitsubishi Corporation 

and FGG Enterprises.
Case 2: El Paso attorney launders money for the Cartel Continued

On Nov. 2, 2012, the

attorney and main suspect of the investigation was arrested 

pursuant to an indictment for conspiracy 

to launder approximately $600 million 

dollars in drug proceeds. 

On Oct. 28th, 2013, the El Paso attorney 

was convicted by a federal jury in the 

Western District of Texas for conspiracy 

to launder monetary instruments. Shortly 

thereafter, he was sentenced to 20 years in 

federal prison for additional money laundering charges and wire fraud stemming 

from the case linked to Mexico’s stateowned electric utility-the Comision Federal 

de Electricidad. 

Lessons Learned/Vulnerabilities and red flags: The 

utilization of attorneys to commit money 

laundering and other criminal activity 

represents a unique challenge to law 

enforcement. The Department of Justice 

has a strict policy and oversight when it 

comes to the investigation of an attorney, 

which can make normal investigative 

steps such as search warrants, subpoenas 

and wire taps exponentially more difficult to obtain. Attorney-client privilege 

can also cause additional roadblocks 

when attempting to conduct surveillance 

or intercept communications. A potential issue that may arise is the familiarity 

among attorneys practicing in the same 

district. In this investigation, the convicted 

El Paso attorney worked at a law firm that 

previously employed several attorneys that 

became Assistant United States Attorneys 

(AUSAs) and defense attorneys. He was 

also involved in many philanthropic activities and charities. The charities and schools 

were unaware that they were receiving 

“illicit” funds from this attorney. Lastly an 

overlooked source of information in these 

investigations is the State Bar Association. 

These associations receive complaints 

and information state wide and may have 

information that will reveal a pattern of 

abuse by a particular lawyer which may 

warrant an investigation.

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Financial Facilitators Continued

Conclusion: Strategies 

for targeting facilitators

These challenges do not suggest that facilitators are “untouchable.” In fact, one key 

vulnerability in pursuing many facilitators 

is that they typically have a position and 

reputation to uphold within the legitimate 

business world. They are not formally part 

of a criminal enterprise. In some instances, 

facilitators are unaware of the true nature of 

the proceeds with which they are working. 

This means that if law enforcement can 

identify facilitators and target them in an 

investigation, they may be more amenable 

to working with law enforcement, simply 

because as public service business professionals, they “have something to lose,” 

whether that be reputation, professional 

standing or even their livelihood. The 

threat of exposure, combined with the 

potential for prosecution and forfeiture of 

ill-gotten assets, can serve as a powerful 

incentive for would-be professionals to 

weigh the risk and /or cooperate with 

law enforcement before considering 

involvement as a facilitator in a criminal 

conspiracy. A 2012 article by Melvin R. J. 

Soudijn argues that facilitators might be 

most effectively targeted through a process 

of “removing excuses”: 

“In the canon of situational crime prevention, 

this technique is mentioned separately as a way to 

engage the moral conscience of potential perpetrators. By calling up feelings of shame and guilt, one 

can steer people back to the straight and narrow 

using minor, not too far-reaching adjustments. 

In addition, moral thresholds are emphasized to 

remind potential facilitators of their responsibilities.” (Soudjin, 2012)

While the “removing excuses” approach 

has been employed to address minor criminal activity and public nuisances, Soudjin 

suggests that the technique has implications for targeting facilitators in money 

laundering conspiracies. 

Those who do take the plunge, however, 

may opt to cooperate with law enforcement, if and when they become the target 

of an investigation. In fact, the ability to 

tie facilitators to criminal activities has a 

potential cascade effect for investigators, 

these “weak links” can open up opportunities to strike at TCOs financial activities 

more effectively, causing serious disruption to the criminal enterprise. 

Notably, the FATF calls for a “risk-based 

approach” to combat money laundering 

facilitation among DNFBPs, with the goal 

of ensuring the appropriate allocation of 

resources, “so that the higher risks receive 

the greatest care:”

“An efficient risk-based approach must include 

identifying and classifying [money laundering/

terrorist financing] risks and establishing reasonable monitoring systems according to the risks 

identified. The implementation of the risk-based 

approach requires DNFBPs to have a good understanding of the risks and to be able to reach the 

right judgment. Trying to apply the risk-based 

approach without sufficient experience could lead 

to wrong judgments. For example, DNFBPs might 

overestimate the risks, which might lead to the 

waste of resources, or underestimate these risks, 

which would result in weaknesses.” (2008)

These recommendations recognize that 

effective AML regimes are based upon cooperation and mutual understanding between 

the law enforcement/regulatory community and the business/professional community. Law enforcement and regulatory 

agencies can nurture constructive cooperation and understanding by providing 

regular communication regarding new 

typologies and emerging threats in money 

laundering. These measures will allow 

DNFBPs and the larger business community to be better positioned to recognize 

unusual and suspicious transactions.