“Front” Seafood Businesses Allegedly Hid the Proceeds From Smuggled Shark Fins and Marijuana Distribution
Last week, the U.S. Attorney’s Office for the Southern District of Georgia unsealed an indictment returned in July, charging twelve defendants and two businesses with wire and mail fraud conspiracy, drug trafficking conspiracy, and money laundering conspiracy. The indictment describes a transnational criminal organization that allegedly began as early as 2010 and spanned multiple locations including, Georgia, District of Columbia, California, Florida, Michigan, Arizona, Hong Kong, Mexico, and Canada. The indictment accuses the defendants of submitting false applications for import/export licenses to the U.S. Fish and Wildlife Services, and using two seafood businesses and dozens of bank accounts to hide the proceeds of illegal activities.
According to the indictment, the criminal organization engaged in an international wildlife trafficking scheme involving shark finning—where a shark is caught at sea, its fins are removed, and the remainder of the living shark is discarded and left to die in the ocean. According to the indictment, shark finning supports the demand for shark fin soup, an Asian delicacy. Shark finning is among many illegal wildlife trade practices.
The indictment further explains that the criminal organization purportedly operated an illegal business dealing in shark fins in California (under the auspicious of a business in Florida where a licensed dealer can legally possess, sell, and ship shark fins, but only if the entire shark is landed and harvested and the dealer reports the landing), and ultimately exported the shark fins to Hong Kong. To further their scheme, the indictment alleges that the defendants wired money to third party business bank accounts, hiding millions of dollars in illegal proceeds. In executing multiple warrants, agents were able to recover more than six tons of shark fins.
In addition to wildlife trafficking, the defendants are accused of trafficking over 1,000 kilograms marijuana, an offense that involves a mandatory ten year minimum. Approximately 18,000 marijuana plants and 34.5 pounds of processed marijuana were confiscated.
The investigation and subsequent arrests involved multiple agencies— the U.S. Fish and Wildlife Service, the Drug Enforcement Administration (“DEA”), Homeland Security Investigations, and the U.S. Marshals Service—all under the umbrella of the Organized Crime Drug Enforcement Task Forces, or OCDETF. Agents were able to seize more than $3.9 million in bank accounts; about $3 million in gold, silver, and other precious metals; $1 million in diamonds; multiple firearms; and 18 totoaba fish bladders, a delicacy in Asia harvested illegally from an endangered species.
The indictment also makes clear that the investigation involved an undercover DEA agent who repeatedly met, phoned and texted with various defendants, many of whom wired substantial sums of money into a bank account controlled by the DEA while allegedly believing that they were laundering the funds.
We recently blogged on money laundering and illegal wildlife trade after the Financial Action Task Force (“FATF”) released a detailed report seeking to spread awareness of illegal wildlife trade. The FATF report urged governments to prosecute those engaged in the illegal wildlife trade using statutes, such as money laundering statutes, which involve penalties more severe than the underlying wildlife crime statutes.
Here, the government did not charge any underlying violations of the Lacey Act, a federal fish and wildlife trafficking law that makes it unlawful for a person to make or submit a false record, account or identification of wildlife that has been or is intended to be transported in interstate or foreign commerce. Rather, the indictment characterized the defendants’ alleged violations of federal and state wildlife law as wire and mail fraud, which served – along with drug distribution – as both independent charges and as the underlying offenses supporting the money laundering conspiracy charge.
Although the government rightly has trumpeted the illegal wildlife trade aspect of this case, as well as the fact that those alleged activities have resulted in very serious charges, the indictment raises the following question, which is impossible to answer: would the government have spent so much time and effort on this investigation if it had not involved illegal narcotics, in an amount which could lead to mandatory minimum sentences of ten years? Conversely, it is also possible that the (highly unusual) illegal wildlife trade aspect of the case motivated the prosecutors and special agents to invest significant investigative resources into what otherwise would have been “just” a marijuana case.
If you would like to remain updated on these issues, please click here to subscribe to Money Laundering Watch. To learn more about Ballard Spahr’s Anti-Money Laundering Team, please click here.