FBI Director Again References ‘Shadow Banking System’ In Congressional Testimony; Warns About ‘Homegrown Violent Extremists’ And ‘Lone Actor’ Terrorists
EDITOR’S NOTE: Still selling autosurfs and HYIPs? Quick! Name your autosurfing neighbor, his or her neighbors, the source of their funding — and describe their intent. Do you even know the names of the program owners, the venues from which they operate and the sources of their funding? How many companies do they own? How many bank accounts do they control? How do they keep their books? Do they truly know their own customers? Has your need to believe you could not possibly be doing business with criminals affected your ability to think things through clearly?
Getting paid via a debit card or an offshore processor? Ever ask why? Has your “due diligence” ever gone beyond parroting what you’ve been told by others? Have you ever really peeled back layers of the onion, looked for connections to other schemes and performed anything other than cursory research? How many “bad apples” do you think you might find in a barrel of tens of thousands of members, especially if the barrel exists in a business universe already infamous for shadowy practices? Think that some of the participants may live in the dimmest corners of the nation and world and have secret agendas?
What if their agenda is to do the unthinkable in the United States or elsewhere? What if they’re a “lone wolf” — a lone actor waiting for the perfect time? And what if you’re helping them?
The FBI has been advising Congress about the nexus between white-collar crime and the potential for terrorism. Some very strange things have been happening in the United States as a result of what FBI Director Robert Mueller III described as the emergence of a “shadow banking system” and an increasing reliance on “shell corporations” to commit crimes and hide from investigators. Some of the crimes have been elaborate, using multiple companies, domestic and offshore venues and selling multiple “services” such as tax-avoidance schemes and “debt-elimination” services.
Although Mueller did not mention AdSurfDaily and other “autosurf” companies in Congressional testimony yesterday, the Justice Department did outline a separate case against several companies and individuals who offered “services” similar to the “services” offered by some ASD members.
Longtime PP readers know that ASD and a closely connected autosurf known as AdViewGlobal have been linked to racketeering allegations and tax-avoidance and debt-elimination schemes similar to the cases encapsulated below. Some members of ASD also associated themselves with militia and tax-denial movements, underground “associations” and credit-repair organizations. Some of them associated themselves with wild conspiracy theories — the kind that would cause you to lose friends and cause your family to distance itself from you if you ever associated yourself with the theories.
Find yourself attacking the messenger or spinning impossible yarns because the truth you fear is just downright uncomfortable and you are not ready to confront it yet? Have you generally supported law enforcement throughout your life — and yet now find yourself condemning the very agencies whose efforts have permitted you to rest comfortably at night since birth? Is it really you constructing a theory that the agents mysteriously somehow had become a sort of hybrid that mixes Nazism and Communism and that the hybrids have made it their business to destroy your entrepreneurial spirit?
Here, now, a story about a mysterious and perhaps increasingly dangerous world that largely exists outside of public view . . .
UPDATED 7:49 P.M. EDT (U.S.A.) Returning to a theme voiced last month, FBI Director Robert Mueller III appeared before another Congressional panel yesterday and warned lawmakers about a “shadow banking system” and a troubling increase in certain areas of U.S. white-collar crime, including mortgage fraud, securities fraud and money-laundering.
Meanwhile, cross-border crime also is producing a dangerous cocktail, Mueller said.
“[T]he potential for terrorism-related activities associated with criminal enterprises is increasing due to the following: alien smuggling across the southwest border by drug and gang criminal enterprises; Columbian based narco-terrorism groups influencing or associating with traditional drug trafficking organizations; prison gangs being recruited by religious, political, or social extremist groups; and major theft criminal enterprises conducting criminal activities in association with terrorist-related groups or to facilitate funding of terrorist-related groups,” Mueller said.
“There also remains the ever-present concern that criminal enterprises are, or can, facilitate the smuggling of chemical, biological, radioactive, or nuclear weapons and materials,” he said.
But Mueller said it would be a mistake to view terrorism as a uniquely international problem and look at it only through the narrow lens of traditional threats and the post-9/11 threat posed by al Qaeda.
“Homegrown violent extremists also pose a very serious threat,” Mueller toldÂ the Senate Committee on Appropriations, Subcommittee on Commerce, Justice, Science, and Related Agencies.
Beware The ‘Lone Actor’
“Homegrown violent extremists are not clustered in one geographic area, nor are they confined to any one type of setting â€” they can appear in cities, smaller towns, and rural parts of the country,” Mueller said. “This diffuse and dynamic threat â€” which can take the form of a lone actor â€” is of particular concern.
“While much of the national attention is focused on the substantial threat posed by international terrorists to the homeland, the United States must also contend with an ongoing threat posed by domestic terrorists based and operating strictly within the United States,” he said. “Domestic terrorists, motivated by a number of political or social issues, continue to use violence and criminal activity to further their agendas.”
Mueller’s testimony took place against the backdrop of a order by a federal judge in Arkansas that effectively banned a “private banking system” from operating.
Judge Shutters ‘Private Banking System’
Wayne Hicks and his company, My Icis Inc., gathered about $100 million between 2003 and 2006 and helped customers avoid taxes by shielding their identities and other financial transactions from the Internal Revenue Service (IRS), the Justice Department said yesterday. Hicks and My Icis consented to an injunction that barred the system from operating.
Hicks already is serving five years in federal prison after pleading guilty to conspiracy to defraud the United States in a related criminal case. Although the agency did not raise the issue of terrorism yesterday, the case underscores the sensitivity of the United States to banking practices that are hard to monitor and may involve thousands of people whose identities are murky or unknown.
My Icis “helped customers set up purportedly anonymous bank accounts to hide their identities, income and other financial transactions, including deposits, wire transfers and bill payments,” the Justice Department said. “Hicks admitted in his criminal case that My Icis helped customers ‘get out’ of the traditional banking system and successfully shield their financial transactions from the government, more specifically the IRS, and thereby avoid paying federal income taxes.”
The scheme was promoted through websites, seminars in Mexico and online newsletters, the Justice Department said.
To recruit customers, Hicks promoted his banking system at Pinnacle Quest International (PQI) seminars in 2005 in the Mexican resorts of Cancun and Ixtapa, the Justice Department said.
Eight people associated with PQI were convicted in Florida last month of wire-fraud, money-laundering and tax charges by a federal jury following a weeks-long trial in Pensacola.
Investigators said PQI, which also was known as Quest International, was operating a “fraudulent tax and debt elimination scheme.” My Icis was one of its vendors, and the PQI scheme crossed U.S. borders and ventured into Panama, a hotbed for financial fraud.
“PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams,” the Justice Department said. “Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion.
“For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama,” the Justice Department said. “Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a purported ‘reliance defense’ that consisted of a paper trail of frivolous correspondence [that] a client could allegedly use as evidence of good faith if the client were prosecuted.”
My Icis “operated as a sophisticated, computerized ‘warehouse bank,'” the Justice Department said. “[It] was a single bank account in which customers pooled their money. [My Icis] was promoted to PQIâ€™s clients as a method to hide their assets from the IRS as a result of the pooled nature of the account.”
The company had 3,000 clients, the Justice Department said of My Icis. PQI, meanwhile, had more than 11,000 members “throughout the United States.”
Prosecutors established that Arthur Merino, who operated a company known as Financial Solutions and sold a scheme to eliminate credit-card debt, “charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt.
“The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy,” the Justice Department said.
Convicted in the PQI case were Claudia Constance Hirmer and Mark Steven Hirmer of Niceville, Fla. They were found guilty of conspiracy to defraud the United States, conspiracy to commit wire fraud, conspiracy to commit money laundering and tax evasion.
Eugene â€œGinoâ€ Joseph Casternovia of Ashland, Ore., Arnold Ray Manansala of Renton, Wash., Dover Eugene Perry of Renton, Wash., and Michael Guy Leonard of Troy, N.Y., were convicted of conspiracy to defraud the United States, conspiracy to commit wire fraud and conspiracy to commit money laundering.
Meanwhile, Mark Daniel Leitner of Fairport, N.Y., and Merino, who lives in Renton, Wash., were convicted of conspiracy to defraud the United States and conspiracy to commit wire fraud.
â€œThe use of abusive trust schemes and fraudulent debt elimination tactics intended to conceal income from the IRS isn’t tax planning; itâ€™s criminal activity,” said Victor S.O. Song, chief of the IRS Criminal Investigation division. “There is no secret formula that can eliminate a person’s tax obligations.â€