Two Missouri men pleaded guilty yesterday to conspiring with bankers to willfully fail to implement appropriate anti-money laundering (AML) controls at a Missouri bank, as required by the Bank Secrecy Act (BSA).
Kevin Brandes, 60, and William Graham, 56, both residents of Kansas City, Missouri, owned and operated multiple sweepstakes businesses and held accounts for those businesses at the Missouri bank. According to court documents, from 2013 to 2019, Brandes and Graham abetted bank officials in failing to implement key components of the bank’s AML program.
Under the BSA and its implementing regulations, the bank was required to file currency transaction reports (CTR) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) for any transaction in currency of more than $10,000. In 2017, at the request of bank officials, Brandes and Graham signed FinCEN CTR Exemption Review Forms that classified their companies as “direct mail advertising” businesses. After receiving the signed exemption forms, the bank failed to file CTRs with FinCEN on transactions involving Brandes’ and Graham’s businesses. Additionally, Brandes’ and Graham’s companies were deemed “high risk” and subject to heightened monitoring under the bank’s policies and procedures. Brandes and Graham understood that by signing the CTR exemption forms the bank would apply less scrutiny to their companies’ transactions.
Additionally, on or about Oct. 11, 2016, at the direction of two bank officials, Brandes and Graham had an outside attorney sign a legal opinion letter then sent it to the bank knowing that it contained false information. Specifically, the letter indicated that one of Brandes’ companies “in over 3 years has not received negative or unwanted legal action by way of regulatory bodies or private suits.” Brandes and Graham knew at the time that this information was false because a state regulatory agency had filed a legal action against the company in question. Brandes and Graham both believed this letter would help the bank circumvent its requirements under the BSA.
Brandes and Graham each pleaded guilty to one count of conspiracy to cause willful failure to implement and maintain an appropriate anti-money laundering program. They will be sentenced later and face maximum penalties of five years in prison. A federal district court judge will determine any sentence after considering U.S. Sentencing Guidelines and other statutory factors.
Principal Deputy Assistant Attorney General Nicole M. Argentieri; U.S. Attorney Teresa A. Moore for the Western District of Missouri; Special Agent in Charge Justin R. Bundy of FDIC-OIG Kansas City Region; Special Agent in Charge Thomas F. Murdock of IRS-CI St. Louis Field Office; and Assistant Director Michael Nordwall of FBI's Criminal Investigative Division made this announcement.
FDIC-OIG, IRS-CI, and FBI are investigating this case.
Trial Attorneys Chad M. Davis and Christopher Ting from MLARS' Money Laundering & Asset Recovery Section along with Assistant U.S. Attorneys Patrick D. Daly & Matthew N. Sparks for Western District Missouri are prosecuting.
MLARS' Bank Integrity Unit investigates banks/financial institutions whose actions threaten institutional/wider financial system integrity.