NEWARK, N.J. — Two Miami business owners were found guilty Wednesday following an investigation led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Newark’s Border Enforcement Security Taskforce with assistance from the Drug Enforcement Administration (DEA) in New York and the Englewood, NJ Police Department. The duo were found guilty of laundering charges related to the transmission of over $100 million from foreign businesses into and through the United States financial system.
Luis Diaz Jr., 75, and Luis Javier Diaz, 50 were each convicted in the U.S. Attorney’s Office for the Southern District of New York (SDNY) of one count of operation of an unlicensed money transmitting business and one count of international money laundering. Diaz Jr. was also convicted of conspiracy to operate an unlicensed money transmitting business and conspiracy to commit international money laundering.
According to the indictment, other filings in Manhattan federal court, and the evidence presented at trial, for the illegal money transmitting scheme portion of the case, between at least 2010 and 2016, Luis Diaz Jr.., and Luis Javier Diaz used Miami Equipment and Export Company, a company they owned in Doral, Florida, to effect the transmission of at least $100 million and entities outside the United States, mostly located in Venezuela, to bank accounts in the United States and elsewhere, in exchange for a fee. During this time, the Company was not registered with the state of Florida or the Financial Crimes Enforcement Network (FinCEN), a component of the United States Department of the Treasury, as required by both state and Federal laws applicable to money transmitting businesses.
Utilizing unlicensed money transmitting businesses like Miami Equipment enables entities and individuals to move money into and through the U.S. financial system while avoiding licensed U.S. financial institutions which monitor for suspicious activity and report it to U.S. authorities, including through suspicious activity reports, or SARs. Instead, by going through unlicensed entities like the Company, foreign businesses ensure that suspicious patterns of transmissions will not be detected and reported as potential money laundering activity or other financial crime.
The defendants illegaly transmitted money on behalf of numerous foreign entities. Through their unlicensed money transmitting business, Diaz Jr.., and Javier Diaz, enabled a number of foreign businesses to move money into and around the United States. For instance, the defendants used Miami Equipment to transmit over $100 million into the United States on behalf of KCT, a large Venezuelan consortium of construction companies. After they received this money from the Venezuelan Company, the defendants received instructions about where to send the money as well as fake invoices and contracts purporting to set forth a valid business reason for these payments. In this manner, the defendants sent money on behalf of KCT to U.S. and foreign bank accounts of shell companies located around the world, Venezuelan government officials, KCT employees in Venezuela, and others who had no relationship with Miami Equipment. For all of these transmitting activities, the Company received over a million dollars in fees from KCT. In addition to KCT, Diaz, Jr., and Javier Diaz used Miami Equipment to effect transfers into and around the United States on behalf of other companies, mainly located in Venezuela and other South American countries.
In connection with these transfers, Diaz, Jr., and Javier Diaz often maintained false invoices purporting to be from the recipients of the funds to make it appear as if the payments were for actual goods or services rendered to Miami Equipment when, in truth, the money was intended for beneficiaries in the United States and abroad with no business relationship to Miami Equipment. The invoices had the effect of insulating the transmissions from scrutiny by providing a pretextual explanation for the many millions of dollars’ worth of payments. Through this conduct, the defendants and Miami Equipment functioned as an unregulated financial institution allowing foreign entities to move funds into and through the U.S. without any scrutiny, including being subject to the filing of SARs that licensed transmitting businesses are required to file.
Diaz Jr. and Javier Diaz are scheduled to be sentenced on March 3, 2018. The unlicensed money transmitting business charge carries a maximum 5 years sentence and the money laundering charge carry a maximum 20 years sentence. The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.