An unprecedented number of unemployment claims have been made throughout the nation in the last few months as a result of the COVID-19 virus. Investigators have found evidence of a sophisticated international conspiracy that has already siphoned millions of dollars in payments that were intended to avert an economic collapse, according to federal authorities.
The attackers are using U.S. citizens' information they have obtained from previous cyber hacks in order to file claims on behalf of people who were not eligible for Unemployment benefits. The attack has affected unemployment systems at a time when they are trying to process a vast number of claims, the degree of which has not been seen since the Great Depression.
In attempts to pay these claims quickly, states have direct deposited money into accounts. States began realizing the magnitude of the problem in recent days when still employed individuals were calling in to question why they have received confirmation paperwork in the mail.
The U.S. Secret Service believes that the scheme was coming from a well-organized Nigerian fraud ring and could result in losses in the hundreds of millions of dollars. Investigators are still working to pinpoint who was involved and exactly where they were. There appears to be several “mules”—people who are in the United States who were used as intermediaries for money laundering after making connections with fraudsters online. The government warned people to be wary of quick-money job offers or other suspicious financial arrangements.
In addition to the money laundering schemes and unemployment fraud cases, there are also several health care fraud cases coming to surface. In one complaint, the government alleges that these claims billed for services that were not medically necessary and included false claims for services provided by physicians that were not involved any services rendered. Under Section 1347 , the applicable law for these types of offenses, the maximum possible penalty is up to 10 years in prison and up to $250,000 in fines.
Additionally, there is also a money laundering charge. With no additional information, the prosecutors can allege a violation of the money laundering laws as follows: The health care fraud is the predicate offense (specified unlawful activity) to establish money laundering. By alleging that the accused knowingly engaged or attempted to engage in a transaction of more than $10,000 derived from a specified unlawful activity, the government can charge this additional crime of money laundering. The government often files these additional subsidiary charges in order to give it leverage in plea negotiations, as they believe that the defendant will likely be anxious to shed one charge and cap his liability. It is these situations where a criminal defendant or suspect needs a highly experienced and skilled Fraud Crimes and Money Laundering defense lawyer.
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It is useful to understand how money laundering charges may be used by prosecutors to enhance their prosecutions in COVID-19, money laundering and fraud cases.
There are two key statutory provisions governing money laundering: U.S. Code Title 18 Sections 1956 and 1957 . Under the provisions of Section 1956(a), a person can face criminal liability for domestic money laundering if:
- The person conducted or attempted to conduct a financial transaction;
- Knowing that the property involved in the transaction represents proceeds of unlawful activity;
- And that they had the specific intent to either: (1) promote the carrying on of the specified unlawful activity; (2) engage in tax evasion or tax fraud;
- knowing that the transaction was designed to conceal or disguise the nature, location, source, ownership or control of the proceeds or that the transaction was designed in whole or part to avoid a federal or state reporting requirement; and
- The property in question was derived from specified unlawful activity.
Under Section 1957, a person can face criminal liability if the person knowingly engages in or attempts to engage in monetary transactions of greater than $10,000 with proceeds derived from specified unlawful activity.
The specified unlawful activity (outlined in Section 1956 paragraph 7 and in Section 1961) covers a broad range of illicit conduct, and includes various types of fraud.
Put more simply, under Section 1956, a prosecutor may charge money laundering anytime there is a crime that generates monetary proceeds from a specified unlawful activity with the intent to (1) promote the criminal activity; (2) engage in tax fraud; (3) conceal the details of the proceeds; or (4) avoid a reporting requirement.
Or under Section 1957 https://www.law.cornell.edu/uscode/text/18/1957, all that needs to be shown is a transaction of $10,000 — or attempted transaction — with proceeds of a specified unlawful activity. It is the breadth of available intents, coupled with the long list of applicable specified unlawful activities that permit prosecutors to charge money laundering in a wide variety of white collar cases.
Why would a prosecutor add money laundering counts to wire fraud or mail fraud case?
Because there are significant criminal penalties for a violation of Section 1956 violations — imprisonment up to 20 years and a $500,000 fine or twice the amount involved in the transaction, whichever is greater.
For Section 1957 violations, the penalty is up to 10 years imprisonment and monetary fines, or both.
These penalties are more severe than those for other financial crimes, many of which, like conspiracy, have five-year maximum sentences. This allows a prosecutor to convert a case which would otherwise have a defendant facing a five- or 10-year sentence maximum to one in which he or she is now facing 10 or 20 years — for the same criminal conduct.
Regardless of your charges or situation, if you are facing an investigation or are charged in court, it is essential that you immediately contact and obtain the services of a highly experienced and skilled criminal defense attorney, such as the Law Offices of Seth P. Chazin, to protect your rights and your freedom.