Miami money-laundering case spotlights link between Medicare fraud and Cuba’s national bank

Posted on Saturday, 06.30.12

Medicare fraud

Miami money-laundering case spotlights link between Medicare fraud and
Cuba's national bank
By Jay Weaver, Mimi Whitefield and Jacqueline Charles
jweaver@MiamiHerald.com

Oscar L. Sánchez, a Cuban immigrant with little education, helped
revolutionize Miami's Medicare rackets through a storefront
check-cashing business that enabled various criminals to launder $63
million from the United States through a web of overseas accounts into
Cuba's national bank, authorities say.

Sánchez allegedly plotted with Medicare fraud offenders and other
criminals to divert the dirty money through more than a dozen shell
companies' bank accounts in Canada and Trinidad. The laundered money was
ultimately funneled in transfers of $100,000 or more from a Trinidad
bank's Havana branch into the Banco Nacional de Cuba, according to
federal authorities.

FBI agents and prosecutors are trying to figure out who received the
money in Cuba — Medicare fraud fugitives, other criminals, government
officials or all of the above? Or was the money moved offshore again to
other countries? As authorities try to trace the money, they're putting
the squeeze on Sánchez to flip on other possible co-conspirators who
collaborated with him in South Florida, Canada, Trinidad and Cuba.

Sánchez was charged last month with conspiring to launder millions of
Medicare funds for 70 South Florida healthcare companies in an
unprecedented indictment that shook Miami, Washington, D.C. and Havana.
Sánchez, 46, a naturalized U.S. citizen who lived with his wife in
Naples, pleaded not guilty and was ordered detained before trial.

Sánchez's defense attorney, Peter Raben, described his client as "a
simple, hard-working guy."

"The likelihood that he revolutionized anything is less than zero,"
Raben told The Miami Herald.

The Sánchez case has revealed deep flaws in the Medicare program and the
international banking system. The defendant is accused of conspiring
with a "syndicate of international money launderers" that used
fraudulent Medicare profits as collateral to pay South Florida
healthcare scammers cash and also move money into Cuba's banking system
to hide it.

What drove this underground banking syndicate? Since the mid-1990s,
waves of Cuban migrants have learned myriad ways to fleece the
taxpayer-funded healthcare program for the elderly and disabled.
Meanwhile, about 150 suspects have fled back to the communist island and
other parts of Latin America to evade prosecution, according to the FBI
and court records.

A former Miami federal prosecutor who helped lead the crackdown on
Medicare fraud in recent years said fugitives flee to Cuba because its
government never turns over criminals to U.S. authorities. And because
the fugitives can protect their Medicare millions.

"The money trail ends there," said Washington, D.C., attorney Ben Curtis.

Andy Gomez, a senior fellow at the University of Miami's Institute for
Cuba and Cuban-American Studies, echoed that view, saying that "once the
money gets to Cuba, it goes into a black hole."

Gomez, like many others, believes the Cuban government extorts the
criminals who go back and forth between South Florida and the island.
But he also now believes the Sánchez case shows that Cuba has been
"directly involved" in the money laundering of Medicare millions.

"Sánchez didn't have the sophistication and knowledge to run this
operation," said Gomez, who speculated that a Cuban intelligence handler
must have met with him and given him instructions. "He couldn't do this
on his own."

The U.S. attorney's office has said it has no evidence that the Cuban
government of Fidel and Raul Castro played a role in the alleged scheme
to launder fraudulent Medicare proceeds. Cuban officials bristled at the
allegation, denying any involvement.

But The Miami Herald has learned that the laundered millions were
automatically wired from the shell companies' dozen-plus accounts at
Trinidad's Republic Bank branch in Havana into Cuba's state-controlled
bank. Publicly, federal court documents have only said that "at least
two of those accounts had standing instructions to the bank to wire all
money immediately from the accounts to the Cuban banking system."

Cuba's national bank is broken down into several banks with different
specialties, offering commercial, consumer, trade, tourism, foreign
exchange and services.

Despite the variety of banks, "there really is just one owner, the
government of Cuba," said Fernando Capablanca, a former Miami banking
executive and now a banking consultant.

The Trinidad bank, which opened a Havana office in May 2002, has turned
over records of the various shell companies' transactions to the FBI,
but publicly the institution has only said that it had no relationship
with Sánchez, the defendant.

Trinidad and Tobago Attorney General Anand Ramlogan declined to comment
on the Sánchez case, saying he doesn't know all of the facts. However,
he said, the country has taken a number of steps to combat money laundering.

"We do have 'Know Your Customer' laws," Ramlogan told The Miami Herald
at his office in Port-of-Spain. "We do have source of funds
declarations. There are things in place."

Sánchez was able to stay under the radar because he went to great
lengths to disguise himself and the true source of the laundered funds
by never putting his name on any corporate or bank documents,
authorities say. He incorporated his Naples check-cashing company,
Estates Business Center, in his wife's name, Ilens R. Sánchez.

Oscar Sánchez, who came to the United States in the 1980 Mariel
boatlift, struggled as a new immigrant and developed a record as a petty
criminal in Florida. He finally prospered in the mid 2000s when he
allegedly joined the Medicare rackets as an unofficial banker and later
began investing in real estate in the Naples and Fort Myers area.

Despite attempts to cloak himself in secrecy, authorities say, Sánchez
made at least one fatal mistake that they consider a "smoking gun." In
February 2007, he transferred $38,357 from his personal Florida bank
account into the account of a Canadian company called Magnus Aviation
Logistics. The Montreal company was at the center of the alleged
cash-to-Cuba laundering network, according to at least one healthcare
fraud case related to the Sánchez indictment.

Sánchez was described by federal prosecutor Ron Davidson as a "financier
for fraudsters and a capitalist for Cuban banks," who had made 78
overseas trips during the past decade, according to a motion to detain
him before trial. Of those, 61 trips were made to Cancun, Mexico, a
jumping off point for Cuba. His fellow passenger on one Cancun flight:
the owner of several "fraudulent" Miami-Dade healthcare companies that
wired money to Cuba, through Canada and Trinidad, court records show.

Days after Sánchez's arrest in Naples last month, Magistrate Judge
Jonathan Goodman ordered his detention in Miami, saying the
prosecution's case was "very strong" and that he was a "flight risk" who
faces up to 20 years in prison if convicted.

Both prosecutors and FBI agents started to zero in on Sánchez in recent
years after convicted Medicare fraud offenders began cutting plea deals
and pointing the finger at him as their money man. Also, authorities
began to notice millions of dollars being transferred from medical
equipment businesses and HIV-therapy clinics in Florida to shell
companies' accounts at the Royal Bank of Canada in Montreal.

According to court records, this is how Sánchez's alleged
money-laundering scheme worked between 2005 and 2009:

South Florida's healthcare scammers routinely put their
Medicare-licensed businesses in the names of "straw" owners — often
recently arrived Cuban migrants — to conceal from authorities their own
identities as the real owners of the accounts.

In the Sánchez case, prosecutors said 70 South Florida medical companies
billed Medicare for $374.4 million and were paid $70.7 million — money
that was directly deposited into their corporate bank accounts. But the
challenge for the "Medicare fraud masterminds" was withdrawing that
money from their accounts because they would have to reveal their
identities at the banks, according to court records.

So, many of them turned to Sánchez and his check-cashing business to
launder at least $31 million of those Medicare reimbursements, according
to court records.

Among those who used Sánchez's services: Michel De Jesus Huarte, who is
serving a 22-year prison sentence for running a $100 million HIV-clinic
scam in Miami-Dade and other parts of the southeastern United States.

At the same time, Sánchez came to know a "group of individuals" who
controlled shell companies with 15 bank accounts in Canada and Trinidad
that wanted to move millions of dollars derived from criminal activity
into Cuba's banking system. They had purchased more than 20 boxes of
money orders, moving money in amounts less than $10,000 at a time to
avoid having to declare the source of the funds under U.S. laws. They
used aliases, including the name "Bill Clinton," according to court records.

But the process was "costly and time consuming." Enter Sánchez, who
helped them transfer larger amounts of money to Cuba, totaling $63
million, prosecutors allege.

For a 10 percent fee, Sánchez matched up the two sides: One group of
criminals supplied millions in ready cash to the Medicare fraud
ringleaders. Those leaders, in turn, sent checks or wired money drawn
from their South Florida corporate bank accounts to the other criminals'
shell companies in Canada, records show.

The laundered money was deposited in accounts at the Royal Bank of
Canada in Montreal, with the proceeds later wired to numerous shell
companies in Trinidad — then deposited into unknown accounts in Cuba's
national bank.

In one example, "Sánchez benefitted both sides by wiring $468,985 from a
South Florida company engaging in fraud to a Canadian bank account,"
Davidson, the prosecutor, alleged in the motion to detain Sánchez before
trial.

According to court and public records, one of the alleged Canadian shell
companies that received the laundered checks was Magnus Aviation
Logistics. Corporate papers say Magnus was headed by Anthony Caristo and
dissolved last year.

Canadian records also show that Caristo was a director of two other
Montreal companies, Arxe Capital and Monetaria Card Solutions, which
were also dissolved. Monetaria became inactive just days after Sánchez's
arrest last month, records show. Neither Caristo nor his listed
businesses could be reached for comment.

Like the United States, Canada has a federal agency — Financial
Transactions Reports Analysis Centre (FINTRAC) — that collects
intelligence on suspected money laundering and terrorist financing
activities.

Under Canadian law, financial institutions that receive or send foreign
wire transfers of $10,000 or more are required to file a report with
FINTRAC. That means checks or wires sent to and from the Magnus account
should have generated reports.

The Canadian agency did not return calls from The Miami Herald.

http://www.miamiherald.com/2012/06/30/v-fullstory/2875863/case-highlights-money-laundering.html