U.S. Attorney Booth Goodwin Announces Charge Against Bank of Mingo
CHARLESTON, WV—United States Attorney Booth Goodwin announced today the filing of an information against the Bank of Mingo. The bank is charged with violating the Bank Secrecy Act from January 2009 through April 2012 by failing to develop, implement, and maintain an effective anti-money laundering program. The Bank Secrecy Act requires financial institutions like Bank of Mingo to develop and maintain programs for the detection and reporting of suspicious activity that might be a warning sign of money laundering. In this case, Bank of Mingo was charged with failing to implement internal controls that would have resulted in the bank obtaining “know-your-customer” information, failing to prevent customers from structuring cash transactions to avoid currency transaction reporting requirements, and failing to file “suspicious activity reports” about certain dubious conduct, such as the structuring of cash transactions.
The United States Attorney also filed a motion with the District Court requesting that all proceedings in the case, including trial, be deferred for a period of twelve months from the filing of the information. As stated in the motion, the United States Attorney and Bank of Mingo have signed an agreement, which includes a “Stipulation of Facts” wherein the bank admits the conduct with which it is charged. The deferment will allow the bank to demonstrate its acceptance of responsibility and to take remedial measures to correct its past, wrongful conduct. The bank agrees to cooperate with the United States and to forfeit $2.2 million, representing an amount that was involved in illegally-structured currency transactions.
In the Stipulation of Facts, the bank acknowledged that it failed to detect and report unusual and large cash transactions by employees and agents of Aracoma Contracting, LLC., which was in the business of providing contract labor to coal mining and coal-mining related operations in southern West Virginia. In a related criminal case against Aracoma Contracting, the company admitted, as part of a plea agreement, that it routinely paid wages to certain employees in cash, and withheld no money from those wages, all for the purpose of evading employment taxes. To generate sufficient cash to make the cash payroll in a manner that would not cause the bank to generate currency transaction reports, Aracoma Contracting’s principals, Jerome Russell and Frelin Workman, arranged for cash to be withdrawn from Bank of Mingo’s Williamson branch in amounts of less than $10,000. In this way, Aracoma Contracting structured at least $2.2 million out of Bank of Mingo from January 2009 through April 2012. As a result, Aracoma Contracting pled guilty to conspiring to structure currency transactions.
Bank of Mingo has admitted that its Williamson branch manager instructed Russell and Workman to get the cash for Aracoma Contracting’s cash payroll by requesting advances from a line of credit and by identifying a specific employee who would be picking up the cash. The branch manager or his assistant approved these requests, and Bank of Mingo would subsequently prepare a cashier’s check in the name of the identified employee, who would simply endorse the check in return for cash. The amounts typically were less than $10,000. In this fashion, Aracoma Contracting made multiple cash withdrawals on the same day. Furthermore, because the cash withdrawals were entered in records in the names of the employees and not Aracoma Contracting, there was nothing to indicate that more than $10,000 had been drawn from the line of credit on the same banking day. Consequently, Bank of Mingo did not file currency transaction reports and suspicious activity reports when it otherwise should have done so.
United States Attorney R. Booth Goodwin II emphasized the importance of compliance with the Bank Secrecy Act and why financial institutions must have effective anti-money laundering programs. “These are not just simply technical violations. Illegal structuring enables and helps to conceal larger criminal schemes. Had Bank of Mingo maintained an effective anti-money laundering program, other criminal activity might have been nipped in the bud,” United States Attorney Goodwin said.
The investigation of the case against Bank of Mingo was conducted by special agents and law enforcement officers of the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation Division, the Federal Deposit Insurance Corporation-Office of Inspector General, and the West Virginia State Police-Bureau of Criminal Investigation. Assistant United States Attorney Philip H. Wright and former AUSA Thomas C. Ryan handled the prosecution of Bank of Mingo.
The Federal Deposit Insurance Corporation (FDIC) and the Financial Crimes Enforcement Network (FinCEN), a bureau of the Department of Treasury, conducted parallel civil investigations of Bank of Mingo. FDIC and FinCEN have assessed civil money penalties against the bank.