Defendant laundered more than $1.1 Million through a shell company.
Henning Schwarzkopf, a citizen of Germany and an attorney licensed to practice in Germany, pleaded guilty in a US federal court this week, to money laundering charges.
In line with the DOJ’s commitment to go after corrupt lawyers that affect the integrity of the financial markets, Schwarzkopf was arrested on a criminal complaint in October 2020. According to the DOJ’s press release, Schwarzkopf plotted to launder over $1 million in funds that he believed had been stolen from investors trading in the securities markets. Schwarzkopf knowingly transferred the proceeds of a securities fraud scheme from the bank account of a Hong Kong shell company controlled by him to bank accounts in New York.
Schwarzkopf was introduced to an Undercover Agent in October 2019 as someone who would launder money for the Agent. In subsequent encrypted communications and in two face-to-face meetings in Monaco and Germany, the Agent told Schwarzkopf that he was a stock promoter who operated “pump-and-dump schemes” in which he manipulated the price and trading volume of shares of publicly-traded companies.
The Agent also explained that as part of those schemes, he paid illegal kickbacks to stockbrokers who purchased the shares. The Agent instructed Schwarzkopf that he wanted him to “create a fog” around those illegal kickbacks in order to disguise the source of the funds before they reached the brokers. Schwarzkopf agreed to transfer the funds and to falsely characterize the payments as “invoices” or “loan agreements.” Schwarzkopf retained a five percent fee from each transfer, even though he provided no services except to receive funds from the Agent in the bank account of a Hong Kong-based shell company that he controlled, and then forward those funds to bank accounts in New York.
Between December 29, 2019 and August 2020, Schwarzkopf sent 30 transfers totaling approximately $1,100,784 that he believed were the proceeds of securities fraud from the Hong Kong bank account of his shell company to bank accounts in the United States, earning approximately $57,936 in fees.
The DOJ was assisted in its investigation by the Hamburg, Germany State Bureau of Criminal Investigation, the Hamburg, Germany Prosecution Service, and the Monaco Police Department Criminal Division for their assistance during the investigation.
When sentenced, Schwarzkopf faces up to 20 years in prison, as well as forfeiture and a fine of up to $250,000.
That’s quite a sentence that awaits Mr. Schwarzkopf, compared to the rather “small” kickbacks ($57k) he received in exchange for organizing this money laundering scheme. White collar crimes like tax evasion, bribery, and corruption are often obscured through complex legal structures (such as this Hong Kong shell company). The focus on the role “professional enablers” play in white collar crime has only intensified in recent months. The OECD’s latest report “End the Shell Game” , followed by this week’s OECD Global Anti-Corruption & Integrity Forum (pictured here), only confirm the heightened appetite US Authorities in particular have in going after corrupt intermediaries (lawyers, accountants, financial institutions and other professional enablers).
There’s no doubt that these intermediaries can consciously or unconsciously play a damaging role on government revenue, public confidence, and economic growth. One thing is for sure there’s an intensified call to action for countries to deter, disrupt, investigate, and prosecute professional intermediaries who enable financial crimes on behalf of criminal clients. It will be interesting to see where this trend goes.
Support the Blog ❤︎
Donations help keep the website running, in addition to the unpaid time spent by contributors to keep the site free of spam and adverts. With your generous support, we can keep improvements coming, and make life easier for everyone who wants to continue reading compliance content. Click here if you wish to make a donation.
You must log in to post a comment.