Manhattan U.S. Attorney Announces Charges Against Two Florida Men For Operating Business That Illegally Transferred More Than $100 Million Into And Through The United States

Preet Bharara, the United States Attorney for the Southern District of New York, and Angel M. Melendez, Special Agent In Charge of the New York Field Office of the Department of Homeland Security, Homeland Security Investigations (“HSI”) announced today the unsealing of a complaint charging LUIS DIAZ JR. and LUIS JAVIER DIAZ with operating an unlicensed money transmission business and international money laundering in connection with their transfer of over $100 million from foreign businesses into and through the United States financial system.  In addition to netting the defendants millions of dollars in profits, this illegal scheme allowed foreign businesses to send money into and around the United States while avoiding anti-money laundering safeguards and obligations imposed upon legal money service businesses.  LUIS DIAZ JR. and LUIS JAVIER DIAZ were arrested this morning in Miami, Florida, and will be presented before Magistrate Judge Jonathan Goodman this afternoon in the United States District Court for the Southern District of Florida.

Manhattan U.S. Attorney Preet Bharara said: “Luis Diaz Jr. and Luis Javier Diaz allegedly operated a shadow bank outside the normal financial system to move more than $100 million into and through the United States.  The use of unlicensed money transmission businesses, ones that do not maintain the anti-money laundering safeguards required of licensed institutions, provides a dangerous and unregulated channel for money laundering and other financial crime.  Prosecutions like this one seek to close that underground network that helps move criminal money around the world.”

HSI Special Agent in Charge Angel M. Melendez said:  “This criminal team gives new meaning to ‘family business’ with their alleged role in laundering more than $100 million through U.S. borders.  Their scheme allowed off-shore businesses to move cash into and around the U.S. while sidestepping regulations placed on legitimate businesses.  Moving money for corporations with zero regard for safeguards hurts our financial infrastructure and threatens our national security.  As part of these joint investigations, HSI continues to search out those leaching profits at the risk of the American economy.”

According to the allegations contained in the Complaint unsealed today in Manhattan federal court[1]:

THE ILLEGAL MONEY TRANSMITTING SCHEME

Between 2010 and 2016, LUIS DIAZ JR. and LUIS JAVIER DIAZ used a company they owned in Doral, Florida, (the “Company”) to effect the transmission of at least $100 million from entities outside the United States, mostly located in Venezuela, to bank accounts in the United States and elsewhere, in exchange for a fee.  During this time, the Company was not registered with the state of Florida or the Financial Crimes Enforcement Network (FinCEN), a component of the United States Department of the Treasury, as required by both state and federal laws applicable to money transmitting businesses like the Company. 

Unlicensed money transmitting businesses like the Company enables entities and individuals to move money into and through the U.S. financial system while avoiding licensed U.S. financial institutions that monitor for suspicious activity and report it to U.S. authorities, including through suspicious activity reports, or SARs.  Instead, by going through unlicensed entities like the Company, foreign businesses ensure that suspicious patterns of transmissions will not be detected and reported as potential money laundering activity or other financial crime.

THE DEFENDANTS ILLEGALY TRANSMITTED MONEY

ON BEHALF OF NUMEROUS FOREIGN ENTITIES

Through their unlicensed money transmitting business, LUIS DIAZ JR. and LUIS JAVIER DIAZ enabled a number of foreign businesses to move money into and around the United States.  For instance, the defendants used the Company to transmit over $100 million into the United States on behalf of a large Venezuelan consortium of construction companies (the “Venezuelan Company”).  After they received this money from the Venezuelan Company, the defendants received instructions about where to send the money.  In this manner, the defendants sent money on behalf of the Venezuelan Company to U.S. and foreign bank accounts of Venezuelan government officials, employees of the Venezuelan Company, and other beneficiaries that had no relationship with the Company.  Tens of millions of dollars of these payments were made to shell companies located in banking safe havens such as the British Virgin Islands.  For all of these transmitting activities, the Company received a fee of approximately 2 percent of the funds they transmitted.  In addition to the Venezuelan Company, LUIS DIAZ JR. and LUIS JAVIER DIAZ used the Company to effect transfers into and around the United States on behalf of other companies, mainly located in Venezuela and other South American countries.

In connection with these transfers, LUIS DIAZ JR. and LUIS JAVIER DIAZ were often provided with false invoices purporting to be from the recipients of the funds to make it appear as if the payments were for actual goods or services rendered to the Company when, in truth, the money was intended for beneficiaries in the United States and abroad with no business relationship to the Company.  The invoices had the effect of insulating the transmissions from scrutiny by providing an explanation for the many millions of dollars’ worth of payments.   Through this conduct, the defendants and the Company have functioned as an unregulated financial institution allowing foreign entities to move funds into and through the U.S. without any scrutiny, including being subject to the filing of SARs that licensed transmitting businesses are required to file.

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LUIS DIAZ JR., 74, of Miami, Florida, and LUIS JAVIER DIAZ, 49, of Miami, Florida, are each charged with one count of conspiracy to operate an unlicensed money transmitting business, which carries a maximum sentence of five years in prison; one count of operating an unlicensed money transmitting business, which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit money laundering, which carries a maximum sentence of five years in prison; and one count of international money laundering, which carries a maximum sentence of 20 years in prison.  The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. Bharara praised the work of HSI, DEA, the Englewood, New Jersey, Police Department, and the Border Enforcement Security Task Force.

The prosecution of this case is being overseen by the Office’s Money Laundering and Asset Forfeiture Unit.  Assistant U.S. Attorneys Edward B. Diskant, Daniel M. Tracer, and Jennifer L. Gachiri are in charge of the prosecution. 

The charges contained in the Complaint are merely accusations, and the defendants are presumed innocent unless and until proven guilty.