Car buyer loses USD55,000 in structured transactions fraud

A story on MSNBC.Com published 24 January 2002 highlights the extent of ignorance amongst people generally when money laundering related issues are concerned.

We do not allege that Bruce Lachot was setting out to commit a crime when he made payments to buy a BMW over the internet. There are three clear lessons to be learned from his story, set out in an interview with the on-line news service. The facts are simple: starting 31 October, Lachot scoured the internet for a bargain and found a BMW 5 series of just the specification he wanted. The only snag was that he was in California and the car was, apparently, in Germany. The seller told him to use money transfer service e-gold and then, according to Lachot, asked him to send the money in six separate transactions to six separate e-gold accounts because, in doing so "breaking up the transfers kept the payment amounts under $10,000, which helped both seller and buyer evade some taxes."

Assisting a person to evade taxes, or doing it oneself is likely to be a criminal offence. That's the first lesson.

It also would have kept the transactions below the Bank Secrecy Act's USD10,000 reporting requirements (although the seller seems to have not known that international cash transfers via money transmitters are subject to a limit of USD3,000). Structuring transactions to avoid reporting is an offence under US law. That's the second lesson.

He paid the money to e-gold but was unhappy about the fact that the destination accounts were in six different names. The plan was to move the money from e-gold to accounts with escrow-deals.com, where the money would be held until the car was shipped.

Whilst he was checking the position with the seller, e-gold closed the accounts "for possible fraud."

Persisting with the deal, Lachot accepted the recommendation of the seller to deal with another escrow company, Premier-Escrow.Com. The article details the steps taken to make the site look safe.

That's the third lesson. Don't believe internet hype. Just because you read it on a computer screen does not mean it's true.

And Lachot has a USD55,000 space in his garage to prove it.

MSNBC story

The premier-escrow.com website was not responding on 24th January 2003. The domain was registered, according to ALLWHOIS.Com, on 15 October 2002.

Although there is a record at ALLWHOIS.Com for escrow-deals.com, the website was not responding on 24th January 2003. That website was registered on 22 December 2002, after the attempt had been made to move the money and so may not be the correct site.

Both websites are registered to individuals who gave untraceable e-mail addresses as their contact e-mail addresses.