RESUME OF MICHAEL WENSINK:

Accounting - Bowling Green State University – BSBA

Finance – Bowling Green State University

Computer Science - Cleveland State University

Paralegal Studies – Cuyahoga County Community College

EMPLOYMENT:

Consultant, ARS GROUP ltd., Cleveland, Ohio –10/2008 to the present

        Private Investigations, Financial Services and Publishing

Criminal Investigator/Special Agent, IRS, Criminal Investigation – 07/1977 to 10/2008

        Criminal Tax, Money Laundering and Related Crimes

       Organized Crime Strike Force (Organized Crime and Political Corruption)

       Organized Crime Drug Enforcement Task Force (OCDETF)

       High Intensity Drug Trafficking Area (HIDTA)

SECURITY CLEARANCES HELD

Top Secret

Law Enforcement Sensitive

SPECIALIZED TRAINING:

Executive Protection

Domestic and International Money Laundering

Forensic Accounting

Computer Forensics

SUMMARY OF EXPERIENCE:

 July 25, 1977 through 1982

 1) I was commissioned as a Special Agent with the Internal Revenue Service Intelligence Division (IRS ID) later renamed Criminal Investigation (IRS CI) On July 25, 1977.  By the mid 1980s IRS CI’s manpower commitments in Cleveland were about 1/3 Organized Crime Strike Force, 1/3 counter narcotics and the rest to more conventional IRS functions.  A newly hired Special Agent was assigned to training and training cases for about the first 3 to 5 years of their career.  Training was and is conducted at the Federal Law Enforcement Training Academy in Glynn County Georgia on what had been a naval air station.  Training consisted of 3 sessions totaling approximately 6 months of formal training.  Treasury Enforcement School was first and teaches basic police skills including use of firearms, physical fitness, defensive tactics, surveillance and search techniques, constitutional law and was conducted with may other law enforcement agencies such as the Secret Service and Marshal Service.  Subsequent training was specialized and for IRS Special Agents it would now be considered forensic accounting and trial related matters.  After the training period, each Special Agent found their niche within the organization or they left.  At this time IRS CI management was well above average for federal government agencies.  The head of IRS CI, Richard Wassenaar who led the development of what became the Money Laundering Control Act in 1984, died of Leukemia about 2 years later.  The IRS was charged with enforcing it and developing the case law associated with it.

 2) An agent in the Cleveland Field office, Norm, advised me that he was in fact a CIA Officer and that his job at the CIA was to convert US currency to local currency and that he had been posted in Loas, Thailand and Cambodia by the CIA prior to the IRS job, he was about 50 years old at the time.  He told me that his children were in High School and that he had been given this post so he could spend more time with them.  Norm was very low key and likable.  Eventually, after his children got out of High School, he left IRS CI and became Private Investigator with international clients.  Norm did not share this information with other agents in the office.

 1982 through 1990

 3) I primarily worked Organized Crime Strike Force investigations.  I often worked jointly with the Federal Bureau of Investigation (FBI) on these matters.  On one occasion in the mid 1980’s I filed a complaint with the Department of Justice (DOJ) Office of Public Integrity alleging misconduct by the United States Attorney USA in Cleveland, Ohio relating to leaked grand jury information on an Organized Crime related investigation.

 4) The leaks appeared to have resulted in the murder of two individuals related to a witness in an investigation.  The house of a witness was burned under conditions strongly suggesting arson with the involvement of law enforcement.  The minor son and a relative of the witness died in the incident.  A witness placed the target at the scene of the arson and the timing of the event and removal of evidence suggested law enforcement involvement. 

 5) The US Attorney was eventually fired and was convicted of leaking grand jury information.  An FBI supervisor was fired and indicted for perjury, a second FBI supervisor claimed the fifth amendment privilege against self incrimination when subpoenaed to testify as did a retired FBI supervisor for matters related to this investigation which had national political ramifications.  The Organized Crime Strike Force had been created by Attorney General Robert Kennedy as an independent prosecutor to counter political influence in Organized Crime investigations.  In the late 1980s it lost its independence and was placed under the management of the various United States Attorneys who are political appointees.

 1990 through 1996

 6) I was assigned to work on Strike Force and Organized Crime Drug Enforcement Task Force (OCDETF) investigations.  Hardrick Crawford was an FBI supervisor of a narcotics squad in Cleveland during a portion of this time and was involved in OCDETF probably as an OCDETF board member.  The OCDETF board decides what investigations to support with OCDETF funding. The OCDETF investigation was dropped on orders from the US Attorney’s office.  Hardrick Crawford was an FBI supervisor attached to OCDETF at that time and had a great deal of influence in OCDETF in Cleveland and the US Attorney’s Office.  Since then he was convicted of lying about ‘gifts’ he received from a Major Mexican Narcotics Trafficker who Crawford alleged was an informant.  Crawford was the Special Agent in Charge (SAC) of the El Paso office of the FBI (2001 to 2003) when the relationship was discovered in 2003.  It is highly unlikely that a SAC would be running informants as a SAC is an executive level position at the FBI, field agents run informants.  I have had prior experience with corrupt FBI managers who used the informant excuse for their criminal misconduct, which revolved around a high profile criminal.  The OCDETF target was never prosecuted and continued in the illegal narcotics business. 

 7) Special Agents of IRS CI were considered the experts in investigating the money trail created in narcotics investigations and generating asset forfeitures.   At this time 20% to 25% of IRS CI investigative resources were committed to OCDEFT.  It generated a substantial portion of the funds used combat narcotics trafficking and did not impact other IRS CI commitments, as it was self-funding and effective.  Participating agencies are reimbursed for the time applied to OCDETF investigations so the commitment of time does not impact their other operations.  Asset forfeitures under the money laundering statutes were common and generated a great deal of the funding supporting OCDETF investigations.

 8) I was also assigned a Strike Force investigation during this period of time relating to an attorney who participated in the activities of organizations such as the Hells Angels and traditional La Cosa Nostra (LCN) families and formed his law practice around representing their members when they had legal troubles.  This attorney was educated at Yale and Harvard Law School.  He was from a prominent Boston family who were well known for backing Democratic politicians. 

 9) The investigation took about 18 months, involved Hells Angels, LCN members and associates and foreign bank accounts and assets.  The review by the Department of Justice, Criminal Tax Division headed by Mark Mathews took 3 years and extremely long period of time.  Prosecution was approved 5 times and rescinded 4 times by Mark Mathew’s DOJ Criminal Tax Division including rescinding approval for prosecution for criminal tax matters while I was summarizing the case in front of the grand jury. 

 11) I called DOJ Criminal Tax and advised them that ‘if they could not get this case moving perhaps the (DOJ) Office of Public Integrity could’.  The DOJ prosecutor from the Organized Crime and Racketeering Section (OCRS) telephoned DOJ Criminal Tax and advised them that we had good bank fraud and money laundering charges which she could pursue which (at that time) did not require DOJ Criminal Tax approval.  The final approval from DOJ Criminal Tax was received shortly thereafter and the defendant pleaded guilty and paid several hundred thousand dollars in tax due.  The defendant had not paid taxes for over 10 years and owed several hundred thousand dollars to the IRS.  He also owned over $1,000,000.00 in real estate in a nominee name as well as several hundred thousand dollars which had been in a bank in the Dominican Republic. These facts were not in question.  The only hold up was Mark Mathew’s DOJ Criminal Tax and his political friends in Boston.

  1996 through 1998

 12) I worked as an expert witness in computer forensics during this period for IRS CI often working jointly with the FBI.  These duties required that I become familiar with a large number of joint IRS CI and FBI investigations giving me a very broad view of both agencies operations.  I participated in high profile investigations from coast to coast during this period of time.  It gave me insight into both agencies methods and operations nationwide. 

 1999 through 2000

 14) While researching the Threat Assessment for the Ohio HIDTA (a detailed report of narcotics activity in Northern Ohio and Greater Cleveland), Sharon Parish, a paralegal assigned to OCDETF in Cleveland, died of leukemia.  Sharon was the mother of two elementary age school children and prior to becoming a paralegal had been an IRS CI Special Agent in Northern Ohio.  She was above reproach and well thought of in the law enforcement community and by me.

 15) Mark Mathews was appointed Assistant Commissioner of the IRS in charge IRS CI.  He was the first outside appointment to that position.  Mathews previously held political positions at the FBI, CIA and the Department of Justice.  He was an operative of the Democratic Party.  Under Mathews IRS CI’s OCDETF commitment shrunk to 5% or less and IRS CI’s manpower shrunk, through attrition, by about the same proportions.   Thus, self-supporting  resources were taken away from OCDETF counter narcotics and no actual change in resources applied to other commitments at IRS CI occurred as the workforce was simply shrunk to absorb the reduced commitment to OCDETF (which was self funded through Money Laundering seizures).

 2000 through 2001

 16) I worked as an expert witness in computer forensics during this period for IRS CI often working jointly with the FBI.  These duties required that I become familiar with a large number of joint IRS CI and FBI investigations giving me a very broad view of both agencies operations.  I participated in high profile investigations from coast to coast during this period of time.  It gave me insight into both agencies methods and operations nationwide.  I was required to have a Top Secret security clearance and some of the information I was exposed to cannot be discussed.  Most of the classified materials I saw were classified only to avoid the availability for public disclosure of potentially embarrassing facts.  Some documents were classified for legitimate reasons.

 17) In 2000 I was assigned to work at the Ohio High Density Drug Trafficking Area (HIDTA).  I was assigned to a committee relating to information technology, I set up the administrative network and the MLTF network. I also set up a computer forensics lab specializing in narcotics investigations. 

 2002 through 2004 (general)

 18) I was assigned to work at the Ohio High Intensity Drug Trafficking Area (HIDTA) running a computer forensics lab, analyzing Suspicious Activity Reports (SARs).  SARs are filed with the IRS and were first used to identify money laundering from narcotics operations and later for all money laundering and other suspicious financial activities.

 19) I was also assigned to a Money Laundering Task Force (MLTF) with the Federal Bureau of Investigations (FBI), U S Customs Service (USCS) and the Drug Enforcement Administration (DEA) and local police officers, which was housed at the Ohio HIDTA.  The purpose of the MLTF was to identify potential narcotics trafficking organizations and develop them for referral to  OCDETF.  The FBI had assigned one supervisor, one field agent and one analyst, IRS had assigned three field agents and one analyst, DEA 1 field agent and one analyst, USCS one field agent and the Ohio Bureau of Criminal Investigation and Identification (BCI&I) one analyst.  We also often worked with the Ohio State Highway Patrol who would take down drug suspects without revealing the involvement of the MLTF.

20) I visited the Eldorado Money Laundering Task Force (EMLT) in 2002.  EMLT was a large-scale counter money laundering task force headed by the US Customs Service.  It was located in New York City, had hundreds of Federal, State and Local law enforcement agents, officers and analysts assigned to it.  IRS CI had a full branch including an ASAC assigned to it.  Prior to September 11, 2001 it was housed in the World Trade Center (WTC) as was the IRS CI office, which was housed in Building 7 of the WTC.  All of the Agents and Officers assigned to the EMLTF escaped the 911 attacks.  Their computers and case files did not.

 21) The Ohio HIDTA MLTF also had a squad of local police officers who developed targets for narcotics investigations and conducted some investigations themselves.  The police officers on the MLTF were mostly young suburban patrol officers eager to learn and willing to work long hard days nights.  The Cuyahoga County Sheriff also assigned a veteran sergeant and two veteran detectives to the squad.  The Cuyahoga County Sheriff withdrew from the MLTF after unacceptable restrictions were imposed on their officers’ activities.  One veteran Cleveland Police Department (CPD) Lieutenant, one veteran CPD Sergeant and one experienced Police detective were assigned to the MLTF.  They worked with the patrol officers adding their experience to the squad.  I had significant prior experience with OCDEFT investigations as had the DEA agent, the Customs agent and the FBI supervisor and one of the other two IRS CI agents assigned.

 22) I was also assigned to work at the Joint Terrorism Task Force (JTTF) housed at the FBI office in Cleveland for the purpose of identifying money laundering organizations with a terrorism nexus and conducting criminal investigations of individuals with suspected terrorism connections.  I received training in terrorism and terrorism financing and did a great deal of my own research.  I discovered that most FBI field agents avoided the JTTF if possible and many of the FBI agents on it were trying to get off.

 24) Mathews had been appointed to political positions at the CIA and FBI previous occasions and had been in the Justice Department in the Criminal Tax Division, which is where I had previously encountered him.  It appeared that he attempted to fix and investigation on a politically prominent attorney from a Boston family who had financial and other ties to the Democratic Party.  Mathews was run out of the IRS by the Undersecretary for Enforcement at the Treasury Department for his refusal to commit all but token agency resources to counter-terrorism and counter-narcotics after September 11, 2001.  Jardini replaced him as Chief of IRS CI.  Eventually the position of Undersecretary for Enforcement at the US Treasury Department was eliminated and he was appointed the position of Assistant Commissioner for Enforcement at IRS and line management of IRS CI was redirected from the Commissioner to the Assistant Commissioner for Enforcement.

 2005 through 2006 (general)

 26) For example, Tony Whitledge received such an appointment and later misused his position to obstruct an investigation of a middle eastern money laundering operation, ordering employees under his management stop critical work on the investigation (inputting transaction into a database) and not to advise the investigation agent of that fact.  When the agent discovered the deception Whitledge was advised that the Assistant US Attorney assigned to the investigation was considering charging him with obstruction of justice.  Whitledge retired shortly thereafter.

 27) Eventually I discovered that I was being electronically and physically monitored and my wife and I began receiving harassing phone calls at home and occasionally at my office.  The calls were made from a phone with caller ID blocked.  The caller would not answer or hang up.  On one occasion I received such a call from a cell phone that was not blocked.  I made a series of pretext calls to the phone and learned that it was from a law enforcement source, which I was unable to further identify.  I began accumulating records in a filing cabinet in my home relating to drug trafficking and the September 11, 2001 tragedy, which included records documenting FBI corruption.

 Late May 2005

 28) I sent letters via US Mail and Fax to several US Senators including Senators seated on the Justice and Finance committees relating my suspicions about corruption at the FBI and IRS.

 June of 2005

 29) I was offered a position as a financial advisor with Morgan Stanley and applied for retirement effective in August of 2005.  I was received a telephone call about a week later while on leave at my home from the Special Agent in Charge (SAC) of the Cleveland Field office.  He advised me that he was ordering me to take a fitness for duty exam in Washington DC.  I advised him that I was retiring and that it was a waste of money as I had no intention of reporting for duty before my retirement, he advised me that he understood and not to worry about it. 

 31) When I returned to duty I was called into the SAC’s office and shown a copy of the letter I had sent to the US Senators, which included allegations of corruption, by IRS and FBI managers.  The SAC advised me that he had been provided a copy of the letters by the head of another federal law enforcement agency, which he declined to identify.  I was advised by the SAC that all such correspondence must be approved by IRS management before it is sent.  The letters were not on agency letterhead and did not represent themselves as official agency correspondence and were in fact my personal correspondence with the US Senators. 

 September 2005

 32) I began to develop information relating to a corrupt Republican Political figure and a chain of Mexican restaurants in northern Ohio, which had been alleged by a reliable source to be a front for Mexican narcotics traffickers.  

 January 2006

 33) In January of 2006 I was diagnosed with lymphoma, a cancer of the lymph system, and thyroid cancer and began chemotherapy, which lasted until July 2006.  I also learned that an FBI agent Bill T’Kindt and an FBI Analyst Nancy Fritch from the same JTTF I had been assigned to had recently died of leukemia and liver cancer respectively.  They were both above reproach, highly talented professionals, respected by their peers and by me.  Funding of terrorism through drug trafficking was a hot topic at the JTTF at the time.

 September 2006

 34) I recovered from the chemotherapy by September 2006 and submitted a recommendation to open a Subject Criminal Investigation (SCI) on the Republican Party official.  IRS Management refused to open a SCI and assigned me an investigation which was already over a year old and overdue.  It had had very little work done on it including failing to order the target’s federal income tax returns from the IRS Service Center.  The investigation was for tax evasion and money laundering and proving the source of the funds was critical for both charges. 

2006 THROUGH 2008

Over a 6-year period from 2002 to 2008 I discovered some disturbing facts relating to narcotics trafficking, money, and politics.  In 2005 I sent a letter expressing my concerns to several US Senators, filed my application for retirement, and accepted a position with Morgan Stanley as a Financial Advisor. I took leave for the remainder of my career, about a month, and prepared for a new career as a Financial Advisor.  The Special Agent in Charge (SAIC) of the Cleveland Field Office of the IRS called me at home and advised me that I was to report for a Fitness for Duty Evaluation (FDE).  I advised him that, as he knew, I was retiring from the IRS and that it was an unusual order and a waste of money.  He stated that he agreed and advised me not to worry about it.  Approximately one week later I was called at home by the SAIC and a woman who identified herself as the head of Human Resources for the IRS.  She stated that I was the subject of an adverse action, blocking my retirement, and I had been ordered to report for a Fitness for Duty Evaluation.

I was given no explanation for the adverse action, even why it had been made, which is in violation of the Internal Revenue Manual (IRM).  The IRM is the final authority on the matter.  After the FDE I was recommended for return to full duty, including arming, by the Doctors and Psychologist who were retained by the IRS to perform the evaluation.  I withdrew my retirement for several reasons including the concern that this would never stop and that I could defend myself better from inside the IRS.  When I returned to duty at the IRS the SAIC showed me a copy of the letter I sent to several US Senators and advised me that I needed management approval to send such letters.  They were not on agency letterhead and expressed my concerns about corruption in IRS senior management.

I had recommended opening a criminal investigation on a political VIP relating to criminal tax violations and money laundering.  The tax violations were indisputable and may have led to disturbing facts about political fund raising and narcotics trafficking.  The political VIP was a successful fund raiser for his political party.  IRS management refused to open the investigation.  Within 3 months of filing the complaint I was placed on Temporary Restricted Duty (TRD) by IRS management, which resulted in a Fitness for Duty Evaluation (FDE) of me.  I was given no explanation at the time for the TRD even though I asked several times for it.  An immediate explanation is mandatory under the Internal Revenue Manual (IRM) and the IRM is the final authority on the matter.  The deciding official on these matters is the Special Agent in Charge (SAIC).  I learned later, through an EEO investigation of the matter, that the SAIC declined to place me on TRD and was immediately removed from his position, as was his supervisor, the Director of Field Operations (DFO) for the area.  The SAIC was replaced by his assistant who immediately placed me on TRD.  Eventually, I learned that the basis for the TDR was “unusual behavior”.

I was declared fit for duty as a an armed law enforcement officer, in writing, 14 times by both the Doctors and Psychologists contracted by the IRS and private Doctors, Psychiatrists, and Psychiatrists who evaluated me at my request.  The Merit System Protection Board (MSPB) refused to admit my evidence and relied only on evidence submitted by the IRS and ruled in favor of the IRS (which they almost always do).  I appealed the MSPB decision to the Federal Circuit Court of Appeals, which ruled that the IRS and MSPB acted unlawfully and reversed them.  The Court of Appeals also stated that no explanation was given to them for placing me on TRD in the first place.

2008 THROUGH 2016

 

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IRS CI INVOLVEMENT INVESTIGATING NARCOTICS CRIMES

 

(from the IRS web site)    http://www.irs.gov/compliance/enforcement/article/0,,id=107488,00.html

Narcotics Related Financial Crimes Program Strategy

 

Criminal Investigation Mission

Criminal Investigation serves the American public by:

Investigating potential criminal violations of the Internal Revenue Code and related financial crimes in a manner that fosters confidence in the tax system and compliance with the law. 

 

Reduce the profit & financial gains of narcotics trafficking and money laundering organizations. 

 

Unravel the complex financial transactions leading from the crime to the criminal. 

 

Seek to identify, investigate and assist in the prosecution of the most significant narcotics related tax and money laundering offenders

 

Why is IRS Criminal Investigation involved in narcotics investigations?

With its specialized financial investigative expertise, IRS-CI plays a unique role in the federal law enforcement counter-drug effort. Narcotics-related financial investigations fulfill a dual purpose. To foster compliance and confidence in the tax system, IRS-CI conducts tax investigations ofI will be filing a Civil R.I.C.O. Later this year against several federal officials as individual acting outside of their authority. Any information you may have relating to the Sinaloa Cartel may be useful. unreported drug proceeds involving a wide range of professionals and occupations. Secondly, IRS-CI, through the tracing of illicit drug proceeds, contributes to the prosecution of criminal organizations that undermine our national economy and pose a serious threat to our national interests.  Without IRS-CI’s financial investigative expertise, many of the organizations would continue to flourish even though some key members are incarcerated.

 

Use of Tax & Money Laundering Statutes

People who commit crimes for financial gain need to disguise their illicit proceeds so they can benefit from their criminal activity without detection. According to the Internal Revenue Code, income derived from any source, including illegally earned income, is subject to income tax. Thus, criminal organizations often go to great lengths to conceal and disguise not only the amount of illegal income earned, but also the source that generated that income. The schemes utilized by these criminal organizations can corrupt the voluntary tax compliance system, undermine the financial system, and disrupt the economy. Some of the schemes include the manipulation of currency reporting requirements, and the layering of financial transactions that are frequently international in scope. For these reasons, money laundering activity involving illicit proceeds is “tax evasion in progress”.

 

OFFICE OF NARCOTICS

The Office of Narcotics at IRS Headquarters provides policy, direction, oversight and support to the 35 IRS-CI field offices relating to issues that fall within the narcotics program.

 

STRUCTURE

The Office of Narcotics maintains liaison positions at the Money Laundering Section at the Department of Justice’s Special Operations Division; Office of National Drug Control Policy; and the El Paso Intelligence Center. The Senior Program Analysts at IRS Headquarters and the Organized Crime Drug Enforcement Task Force Regional Coordinators provide direction and support to field operations while monitoring program goals and accomplishments. The Director of Narcotics is responsible for the operational, administrative and budget functions of the national Narcotics-Related Financial Crimes Program.

 

STRATEGY

IRS Criminal Investigation has been involved in combating drug-related crimes since 1919, and will continue to investigate drug traffickers by pursuing sophisticated, high profile, income tax, currency, and money laundering charges against these criminals and their confederates.  IRS-CI’s Narcotics-Related Financial Crimes Strategy supports the goals of the National Drug Control Strategy and the National Money Laundering Strategy, seeking to reduce or eliminate the profit and financial gains of narcotics trafficking and money laundering organizations. This is accomplished through vigorous enforcement of all Federal statutes within IRS-CI’s jurisdiction including income tax, Bank Secrecy Act, and money laundering violations, and asset forfeiture legislation.

 

PARTICIPATION IN JOINT AGENCY TASK FORCES

IRS Criminal Investigation has been a participating member of the Organized Crime Drug Enforcement Task Force (OCDETF) Program since its inception in 1982. IRS-CI narcotics-related investigations focus on those sophisticated cases that meet the high OCDETF designation standards, and where our contributions add significant value to the overall investigative effort.

The High Intensity Drug Trafficking Areas (HIDTA) Program was established to provide assistance to federal, state and local agencies operating in areas most adversely affected by drug trafficking. IRS-CI continues to support the HIDTA Program with staffing and other resource commitments. As new HIDTA locations are established, IRS-CI will provide the financial investigative perspective necessary to meet the goals of the National Drug Control Strategy.

UNDERCOVER OPERATIONS

IRS Criminal Investigation utilizes the undercover technique in significant financial criminal investigations, and only when it is not possible to obtain the desired evidence through less intrusive investigative techniques. The primary purpose in using this technique is to detect and expose the criminal activity by acquiring relevant evidence for criminal prosecution.

 

ASSET FORFEITURE

As one of the most effective tools in the Federal government’s anti-crime strategy, IRS-CI uses asset forfeiture statutes to disrupt and dismantle criminal enterprises.
(from the IRS web site)    http://www.irs.gov/compliance/enforcement/article/0,,id=107488,00.html

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IRS CI INVOVEMENT INVESTIGATING MONEY LAUNDERING

IRS CI INVOVEMENT INVESTIGATING MONEY LAUNDERING

FROM THE OFFICIAL IRS WEBSITE www.irs.gov/compliance/enforcement/article/0,,id=112999,00.html

What is Money Laundering?

The term “money laundering” refers to the activities and financial transactions that are undertaken specifically to hide the true source of the money. In most cases, the money involved is earned from an illegal enterprise and the goal is to give that money the appearance of coming from a legitimate source.

Why is IRS Involved in Money Laundering Investigations? 

 

One look at the daily news is proof that the crimes dealing with or motivated by money make up the majority of criminal activity in the nation. Tax evasion, public corruption, health care fraud, money laundering and drug trafficking are all examples of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction. For this reason, IRS is one of the key agencies involved in money laundering investigations.

Money laundering is a very complex crime involving intricate details, often involving numerous financial transactions and financial outlets throughout the world. Criminal Investigation has the financial investigators and expertise that is critical to “follow the money trail.”

Criminal Investigation focuses on money laundering where the underlying conduct is a violation of the income tax laws or violations of the Bank Secrecy Act. According to the IRS, money laundering is the means by which criminals evade paying taxes on illegal income by concealing the source and the amount of profit. Money laundering is in effect tax evasion in progress.

When no other crimes could be pinned to Al Capone, the Internal Revenue Service obtained a conviction for tax evasion. As the astonished Capone left the courthouse he said, "This is preposterous. You can't tax illegal income!" But the fact is income from whatever source derived (legal or illegal) is taxable income. 

Had the money laundering statutes been on the books in the 1930's, Capone would also have been charged with money laundering. However, since October 1986, with the passage of the Money Laundering Control Act, organized crime members and many others have been charged and convicted of both tax evasion and money laundering.

When a criminal has a large amount of illegal income, they have to do something with it in order to hide it from the IRS. They attempt to launder it to make it appear as if it was from a legitimate source, allowing them to spend it or invest it in assets without having to worry about the IRS and tax consequences.

One of the ways to launder illegal proceeds is to move the money out of the United States and then bring it back in a clean form, often disguised as loan proceeds. Another method is to channel or co-mingle the money through various business activities to give the appearance that the money was derived from a legal source. 

Why a Financial Investigation?

Financial investigations are by their nature very document intensive. They involve records, such as bank account information or real estate files, which point to the movement of money. Any record that pertains to or shows the sequence of events involving money movement is important. The major goal in a financial investigation is to identify and document the movement of money during the course of a crime. The link between where the money comes from, who gets it, when it is received and where it is stored or deposited, can provide proof of criminal activity.

IRS investigations of illegal income cases involving money laundering are critical components of the nations National Money Laundering Strategy. The long hours of tracking and documenting financial leads allows an investigation to go right to the door of the money launderers and eventually to the leader of the illegal enterprise. A complete financial analysis and reconstruction of the illegal activity (i.e. a drug organization or an abusive trust scheme) will document the financial activities related to unreported income on tax returns and money laundering which is usually key to securing a conviction.

Money laundering creates an underground, untaxed economy that harms our country’s overall economic strength. It is a global threat that erodes our financial systems.

 

History - Money Laundering

Criminal Investigation was established in 1919 and commenced its first narcotics investigation of an opium trafficker in Hawaii in the early 1920's, bringing the only charge we could; tax evasion. At that time, millions of dollars were being laundered through financial institutions, going untaxed and being used to purchase assets. There was no paper trail at the financial institution other than bank account records, if the money was deposited. There was no requirement for banks to report the large amounts of currency transactions.

In 1970, Congress passed the Bank Secrecy Act (BSA). With the enactment of the BSA came the introduction of the Currency Transaction Report (CTR, Form 4789), Report of International Transportation of Currency or Monetary Instruments (CMIR, Form 4790) and Report of Foreign Bank and Financial Accounts (FBAR, Form TD F 90-22.1).

The BSA created the paper trail needed by law enforcement to track untaxed dollars and the millions of dollars being laundered through financial institutoins. IRS has been able to follow this paper trail to disrupt and dismantle, through investigation, prosecution and forfeiture of assets, the country's major drug and money laundering organizations.

While tax evasion are IRS Criminal Investigation's number one enforcement priority, violations of currency reporting requirements and money laundering laws are continue to be areas of emphasis.

FROM THE OFFICIAL IRS WEBSITE  www.irs.gov/compliance/enforcement/article/0,,id=112999,00.html