Asset Forfeiture and

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					           Asset Forfeiture and
           Money Laundering

                           Asset Forfeiture                                    ◆ Between November 2000 and
                                                                         June 2001, Postal Inspectors in St.

                           he Postal Inspection Service uses asset       Louis, MO, seized approximately
                           forfeiture laws to combat financial           $927,650 in assets as the result of a
                           crimes, as well as drug trafficking and       mail fraud investigation. Inspectors
                           child exploitation conducted through          found that several suspects had acted as
                           the mail. FY 2001 marked the Inspec-          third parties in personal injury settle-
                           tion Service’s first full year of operation   ments, dealing with attorneys from
                           under the Civil Asset Forfeiture Reform       both sides. Instead of depositing plain-
                           Act of 2000 (CAFRA). Like other law           tiffs’ funds into a U.S. government
                           enforcement agencies with forfeiture          security, they diverted the money to
                           authority, the Postal Inspection Service      other, unauthorized uses, including the
                           has adjusted its legal processes and pro-     purchase and operation of a supermar-
                           cedures to ensure full compliance with        ket chain that eventually went bankrupt.
The U.S. Postal Service    the new law. Extra training for Forfei-       Victims lost approximately $60 million.
issues one-third of all    ture Specialists, Inspector-Attorneys and           ◆ Postal Inspectors served seizure
                           field Inspectors has enabled them to          warrants in October 2000 on bank
domestic money orders      incorporate the new provisions in their       accounts in New York, collecting
                           investigations.                               $587,300. The warrants related to an
sold in the United              CAFRA gives law enforcement offi-        ongoing investigation of the structured
                           cers a more direct means of seizing the       purchases of postal money orders at sev-
States, valued at $30
                           financial proceeds of a crime and             eral New York post offices. A judicial
billion a year. In FY      returning it to the victims. This provi-      forfeiture action is pending in the East-
                           sion has been especially helpful in cases     ern District of New York.
2001, this translated      of mail fraud: When there are no known              ◆ On May 15, 2001, the operators
                           victims of a crime to reimburse via for-      of a group of Massachusetts-based com-
into the sale of more      feited criminal assets, the ill-gotten        panies pled guilty to mail fraud and
than 228 million postal    gains may instead be used to offset law       related charges in an advance-fee
                           enforcement costs and thwart ongoing          scheme that defrauded novice inventors.
money orders nation-       criminal ventures.                            The operators provided the inventors
                                Postal Inspectors seized 421 assets      with false and misleading information
wide. The U.S. Postal      and secured 485 forfeitures in FY 2001.       on their patenting and marketing ser-
                           Forfeiture activity by Inspectors this fis-   vices, which were not only ineffective
Inspection Service is
                           cal year netted $9.8 million. The Postal      but completely useless. One defendant
charged with safeguard-    Inspection Service equitably shared $3.7      agreed to forfeit all of his assets, includ-
                           million with other federal, state and local   ing his residence, a ski chalet and a
ing the integrity of all   law enforcement agencies. Additionally,       walk-in mausoleum. Another agreed to
                           Postal Inspectors are sometimes able to       forfeit 50 percent of his ownership in
postal money orders and    return seized property to victims of          his residence. The value of the forfeited
protecting them from       fraud using the asset forfeiture process.     assets is estimated at $700,000 to $1
                           The new legislation is likely to increase     million. Three remaining defendants are
criminal misuse.           victim restitution.                           scheduled to stand trial in late 2001.

                           32        2001 Annual Report of Investigations
Money Laundering                             parcels with fictitious return addresses           Crimes Area (HIFCA) Task Force in
                                             to businesses and individuals in Miami,            San Juan, PR, arrested a man on March
     Because the Postal Service is con-      FL. At the time of the arrests, Postal             29, 2001, for money laundering viola-
sidered a non-bank financial institution,    Inspectors seized $55,390 in U.S. cur-             tions. He purchased postal money
it must comply with the reporting            rency and $38,300 in money orders. A               orders at various postal stations from
requirements of the Bank Secrecy Act         subsequent consent search of the sub-              January 2000 through March 2001,
(BSA). The Postal Inspection Service is      jects’ residence uncovered $154,500 in             with each purchase totaling less than
responsible for supporting the Postal        money orders, $13,500 of which were                $3,000. Postal Inspectors and agents
Service’s BSA compliance by analyzing        postal money orders, in 17 Express Mail            seized $133,356.
postal money order transactions and          parcels. The investigation is continuing.               ◆ A man agreed to forfeit
investigating criminals who use them              ◆ Postal Inspectors in Southern               $100,000 to the government in May
and other postal financial products to       California seized $345,492 from two                2001 as a result of a money laundering
launder illicit proceeds and avoid federal   bank accounts in January 2001 after                investigation by Postal Inspectors and
reporting requirements.                      finding evidence they were being used              Internal Revenue Service agents. He
     Illicit proceeds may include money      for structured financial transactions via          bought 184 postal money orders on at
gained through narcotic sales, the           the purchase of postal money orders.               least 15 dates at 12 post offices in New
smuggling of illegal aliens, tax evasion     On February 2, Inspectors seized                   Jersey. His purchases evaded the report-
or the selling of counterfeit merchan-       $148,000 from two accounts at another              ing requirements of Title 31 of the U.S.
dise. Following are examples of money        California bank that were also being               Code.
laundering cases investigated by Postal      used for deposits of structured postal                  ◆ U.S. Marshals in Massachusetts
Inspectors during the past fiscal year.      money orders. The investigation is con-            served a warrant and motion for forfei-
     ◆ Postal Inspectors and agents          tinuing.                                           ture in April 2001 on an insurance com-
from the New York El Dorado Money                 ◆ Postal Inspectors and agents                pany and a bank, resulting in the seizure
Laundering Task Force arrested a man         from the High Intensity Financial                  of $251,603 from the defendant’s
in November 2000 on charges of                                                                  account. The forfeiture resulted from a
money laundering.                                                                               Postal Inspection Service investigation of
Their investigation                                                                             postal money orders purchased in trans-
revealed he was                                                                                 actions calculated to avoid federal report-
operating as an                                                                                 ing requirements. Postal Inspectors
unlicensed money                                                                                determined that, on 19 occasions, the
remitter who wired                                                                              defendant had purchased 198 postal
narcotics proceeds                                                                              money orders from 26 postal facilities in
overseas and illegally                                                                          central Massachusetts.
structured financial
transactions. Under-                            The Inspector in Charge of the New York
cover meetings with the defendant               Metro Division was presented with this $3
caught him laundering approximately             million forfeiture check as a result of an
$400,000 in U.S. currency through a
                                                Inspection Service investigation of rebate
bank account in London, for which he
                                                fraud through the mail. Postal Inspectors
charged a five percent commission.
About $175,000 of the laundered
                                                determined that four men who operated a
money was converted to postal money             chain of supermarkets in New York had ille-
orders and deposited in the defendant’s         gally redeemed manufacturers’ coupons for
bank account for personal use.                  items not purchased at their stores, bringing
     ◆ Postal Inspectors in New York            them a profit of more than $5 million. The
arrested two men on December 13,                $3 million check represents the Inspection
2000, for conspiracy to launder money.          Service’s equitable share of the net proceeds
The men were involved in the struc-
                                                of the forfeiture.
tured purchase of money orders and
had mailed nine suspect Express Mail

                         United States Postal Inspection Service                          33

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