Insights: Article

A Smurf with a Law Degree

And how he laundered millions

By   Jason Olson

March 15, 2018

An attorney in Virginia was sentenced to seven years in prison for his role in laundering millions of dollars through multiple accounts. Financial institutions can prevent or detect schemes like this by recognizing red flags. 

Scheme Type: Money Laundering

Loss Amount: More than $2 million

Duration: March 2013 through February 2017

Red Flags: Millions of dollars moved through numerous bank accounts at various financial institutions

Industry: Legal and Financial Institution

Perpetrator’s Position: Attorney

Scheme Synopsis:

Raymond Juiwen Ho, a former intellectual property attorney in Virginia, was sentenced to seven years in prison for his role in laundering millions of dollars through multiple accounts, including attorney trust accounts held at various financial institutions. The former attorney believed the proceeds he was laundering were from the smuggling of illegal aliens into the U.S. and trafficking firearms in Africa. Co-conspirators used emails to compromise or imitate accounts that tricked victims into transferring funds to the former attorney and the co-conspirators.

The former attorney continued laundering money despite numerous financial institutions closing his accounts due to fraud and law enforcement inquiries. Ho was eventually further investigated through an undercover operation in which he was sought to assist with moving proceeds of human smuggling and firearms trafficking between U.S. and foreign bank accounts.

Ho was a practicing attorney while “smurfing” or placing these ill-gotten proceeds into various bank accounts. Smurfing is a common term to describe the activity of placing illegal monies into financial institutions. A “smurf” is one who engages in the activity of smurfing, or placement, of these illegal funds.

Tips to Prevent or Detect This Scheme from Occurring at Your Organization

In this particular case, it appears numerous financial institutions were able to detect red flags of money laundering by Ho through their Bank Secrecy Act of 1970 programs. The act requires financial institutions to assist U.S. government agencies in detecting and preventing money laundering. Through these programs, financial institutions have various queries setup to detect potential placement of ill-gotten funds by looking for suspicious activities such as:

  • Deposits at several branch locations or within several different accounts under the reporting threshold
  • Numerous purchases of prepaid cards for large amounts inconsistent with normal account activity
  • Use of ATMs to make deposits below the reporting threshold
  • Questionable customer identification responses to your “Know Your Customer” questionnaires.
  • Individual asks about your institutions reporting and/or record-keeping requirements

As mentioned, Ho, at times, used attorney trust accounts to launder money. Attorneys and law firms should be on the lookout for potential money laundering by clients by questioning the size of funds provided by the client to be deposited into the trust account, the origin/source of the funds and mode/method of payment. Performing due diligence on potential clients and involving more than one person to review attorney trust accounts will assist in preventing or detecting potential money laundering.

Learn more about this scheme here.

Latest Insights

July 13, 2018
Article
Here are some idea for giving your new hire a smooth start into your business and alleviating stress for you.
July 13, 2018
Article
The impact of the recent SCOTUS Wayfair decision will continue to have a ripple effect on businesses and state sales tax compliance.
July 9, 2018
Article
The revenue cycle is a complex system and we have historically given much attention to the front-end and back-end while oftentimes leaving the middle functions of the cycle neglected.
July 3, 2018
Article
FASB Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, provides a 5-step framework for determining revenue recognition.
July 2, 2018
Article
As part of the Tax Reform Act of 1986, the “Kiddie tax,” a taxing regime designed to make the transfer of income items by wealthy parents to lower tax paying children less attractive, was implemented.
July 2, 2018
Article
When it comes to your employees, you likely conducted interviews on them when you first hired them.
July 2, 2018
Article
Nearly ten years after the release of the initial exposure draft, FASB issued ASU 2016-02, Leases - The standard may have been issued, but the conversation about this re-write of legacy guidance has not slowed.
June 29, 2018
Article
Banks look at three broad categories when considering small business financing: business cash flow, personal financial strength, and collateral value.
June 28, 2018
Article
You need to be cautious when entering into a bartering relationship and remember to track everything and the key to accounting for bartering is making sure you still record the income earned and expenses incurred.