Tigard Man Pleads Guilty to Operating Illegal Money Transmitting Business Shell Corporations Created by Defendant Moved Millions of Dollars In and Out of United States
|U.S. Attorney’s Office March 01, 2011|
PORTLAND, OR—Dwight C. Holton, U.S. Attorney for the District of Oregon, announces that Victor Kaganov, 69, pleaded guilty today to operating an illegal money transmitting business. Kaganov, a naturalized citizen living in Tigard, Oregon, emigrated from Russia and set up on behalf of Russian clients, numerous shell corporations in Oregon. Through these shell corporations, Kaganov moved more than $172 million in and out of the United States to more than 50 countries worldwide in approximately 4,200 wire transactions.
Sentencing has been set for April 19, 2011. At sentencing, Kaganov faces a maximum penalty of five years in prison, a $250,000 fine, and three years of supervised release. However, as part of Kaganov's plea agreement, the government has agreed to recommend a sentence of not more than 18 months.
Kaganov emigrated from Russia to the United States in 1998. In order to move money in and out of the country, Kaganov created various shell corporations under Oregon law, and then opened bank accounts, including accounts at various banks in Oregon, which he used to deposit money he received from his Russian clients. Kaganov would then wire the money out of the accounts based on wire instructions he received from his clients.
In so doing, Kaganov did not comply with Oregon statutes requiring him to obtain a license to operate the money transmitting business. Kaganov also failed to register his money transmitting operation with the United States Department of Treasury, as required by federal statutes and regulations. "When shell corporations are illegally manipulated in the shadows to hide the flow of tens of millions dollars overseas, it threatens the integrity of our financial system. Sunshine kills the stink of corruption—our laws aim to bring the sunshine in, and we will enforce these laws vigorously," said U.S. Attorney Dwight C. Holton.
"Using shell corporations to hide his illegal activities, Mr. Kaganov funneled more than $170 million into the United States and then back out to more than 50 countries around the world," said Assistant Attorney General Breuer. "Following the money trail is a hallmark of good law enforcement, but those efforts depend on transparency in financial transactions. Now more than ever, we are determined to bring to justice those who attempt to hide funds in U.S. financial institutions."
This case was investigated by the Federal Bureau of Investigation (FBI) as part of a larger investigation into the use of Oregon shell corporations by foreign businesses and individuals to facilitate the movement of illicit funds. This case included significant assistance received from FBI field offices located throughout the United States, as well as various FBI legal attaché offices in both Europe and in Asia.
The FBI has allocated additional resources to its Portland office to address Eurasian Organized Crime. Investigators assigned to this effort are focusing on matters involving money laundering, mortgage fraud, and other federal criminal violations.
"We will not allow Oregon to be used like the corner ATM for people in foreign countries," said Arthur Balizan, Special Agent in Charge of the FBI in Oregon. "Crimes like these eat away at the stability and prosperity of the American financial system."
The case was prosecuted by Assistant U.S. Attorney and Senior Litigation Counsel Allan M. Garten; Robert Livermore, Trial Attorney in the Organized Crime and Racketeering Section of the Department of Justice; and Michael Mosier, Trial Attorney in the Asset Forfeiture and Money Laundering Section.