U.S.,Mexico: Group charged in $100 million money laundering scheme

ICE.GOV – October 2016
6 charged for role in $100 million international money laundering scheme

NEWARK, N.J. – Six individuals were charged with international money laundering and wire fraud as well as conspiracies to commit these same offenses Monday, following a multi-agency investigation, which included U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations and other federal law enforcement agencies.

The defendants are charged with the transfer of funds through dozens of shell companies in the United States and Mexico as part of a scheme to fraudulently obtain tax refunds from the government in Mexico.
“Our special agents once again illustrated their skills and scope in analysis to develop, process and ultimately arrest these six individuals who exercised no regard for the letter of the law. The work these special agents, along with their law enforcement counterparts accomplished is to be commended and should send a direct warning to like-wise syndicates that we will find you, pursue you and ultimately charge you,” said HSI Special Agent in Charge in Terence S. Opiola.

Criminal complaints filed in Southern District of New York named the following individuals:

Carlos Djemal,
Isidoro Haiat,
Braulio Lopez,
Max Fraenkel,
Daniel Blitzer,
Robert Moreno

Manhattan U.S. Attorney Preet Bharara said: “As alleged, Carlos Djemal, Isidoro Haiat, and their co-defendants used the U.S. banking system to commit an international fraud scheme that deprived the Mexican government of substantial tax revenue and involved the laundering of over $100 million. Thanks to the outstanding investigative work of HSI and the IRS, these alleged criminals will now face charges in an American court.”

According to documents filed in this case and statements made in court:

Beginning in or about June 2011 through in or about at least May 2016, Carlos Djemal, Isidoro Haiat, Braulio Lopez, Max Fraenkel, Daniel Blitzer, and Robert Moreno were engaged in a scheme to defraud the Mexican government of tax revenue relating to Mexico’s value added tax (“VAT”) and then launder the proceeds of the scheme throughout the United States and Mexico. The Mexican government imposes VAT on goods sold from one Mexican company to another; however, when certain goods (such as cellular phones) are exported from Mexico, the previously-paid VAT is refunded to the exporter. Djemal, Haiat, Lopez, Moreno, Fraenkel, and Blitzer created and controlled dozens of companies (the “Front Companies”) purportedly doing business as importers and exporters of cellular phones in order to fraudulently obtain VAT refunds from the Mexican government.

In order to carry out the scheme, Djemal and Haiat caused Front Companies in Mexico to purchase outdated cellular phones from other companies seeking to sell outdated inventory. Djemal and Haiat then caused these phones to be exported to Front Companies in the United States owned and operated by others involved in the scheme. During the export process, Djemal and Haiat obtained fraudulent invoices and created export documents that each falsely inflated the value of the phones being exported, thereby enabling those to fraudulently seek inflated VAT refunds from the Mexican tax authority.

Once the phones were shipped to the United States, they were transferred to one or more Front Companies in the United States created by Lopez, Moreno, Fraenkel, or Blitzer, and then shipped back to a different Front Company in Mexico. Through this process, the phones were shipped repeatedly in a circular fashion between Front Companies controlled by the defendants and their co-conspirators in Mexico and the United States, enabling Djemal and Haiat, to obtain multiple fraudulent VAT refunds for the same phones.

In order to create the appearance of legitimate cell phone sales, each transfer of phones was generally accompanied by a transfer of funds to and from accounts held in the name of the relevant Front Companies and owned and controlled by the defendants or their co-conspirators. As part of the scheme, each defendant or co-conspirator who controlled a Front Company receiving funds as part of the scheme retained approximately 1% for his participation in the scheme.

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Between approximately June 2011 to approximately May 2016, Djemal, Haiat, Lopez, Moreno, Fraenkel, and Blitzer moved more than $100 million dollars through dozens of accounts maintained by Front Companies in this fashion, including through accounts maintained at a financial institution in the Southern District of New York.

The charges are merely accusations and the defendants are presumed innocent until proven guilty. If convicted, each defendant faces up to five years in prison and a $250,000 fine per count of animal fighting charges.