AML/CFT: USA - Virginia state law used in money laundering conviction
Stories from the USA relating to money laundering almost invariably arise from federal investigations. But the states have their own laws, which do not exactly match federal law. In the case of 49 year old Edilo A. Barahon, his offences took place in and were prosecuted in Virginia and his conviction at the hands of the Sheriff of Loudoun County is worthy of mention.
Barahon ran a business called E&M Sportswear in Washington, D.C. but he lived in Ashburn in Loudoun County, Virginia. When he diverted money from his business and used it to fund the purchase of 11 properties, he fraudulently mistated his income and asset position to obtain the loans. Each of the properties was valued, at the time of purchase, at approximately USD500,000.
Barahon thought this was both a good way of laundering the undeclared income and a sure-fire way of making a profit for he did the deeds over a period of some 18 months in 2005 - 2006 when the US property market was in a crazy uptick.
It didn't last. In October 2006, the Sheriff's deputies executed a search warrant at a house in Riverpoint Drive in Landsdowne and, in doing so, came across evidence of Barahon's large scale fraud. It was also established that Barahon's shop sold counterfeit branded product, the source of at least some of the money siphoned off from the business.
The plan in relation to the houses fell apart when Barahon failed to turn the properties around at a profit and several fell into arrears and, ultimately, were repossessed.
In March this year, Barahon pleaded guilty to four charges of making false statements to obtain credit and to one count of money laundering. On 12 July 2011 he was sentenced to a remarkably complex set of penalties: 15 years jail of which 60 days is suspended, three years probation and 300 hours of community service.
Much of the focus on the US is in relation to federal law and the position of individual states is often overlooked. The case of Tom DeLay was prosecuted under Texas law, for example, despite the underlying conduct being based on inter-state conduct.
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