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UK ex-lawyer jailed for laundering defrauded funds in offshore investment scam

An ex-lawyer caught for fraud and laundering via his investment fund; Portugal’s banks purge crypto exchanges; and 3 charged with defrauding US Covid-19 relief funds.

Napier AI
August 12, 2022

This week, a London court handed a custodial sentence to a UK ex-lawyer for fraud and money laundering via his Cayman Islands-based investment fund; Portuguese banks clamped down on crypto asset exchanges in an effort to reduce financial crime risks; and three Chicago residents were indicted on charges of Covid-19 relief fund fraud and money laundering.

Find out more on these stories below.

Former investment manager faces 14 years for $121m Cayman Islands fund fraud and money laundering

The Southwark Crown Court ruled on 10 August 2022 that Timothy Schools, a former lawyer turned investment manager, will spend 14 years behind bars for defrauding hundreds of investors through his Cayman Islands-based fund. Earlier in the week, Schools was convicted by a jury on five fraudulent trading charges, fraud by abusing his position, and money laundering.

The UK Serious Fraud Office (SFO) found that Schools set up his fund in 2009, and sought investment for loans to legal firms pursuing so-called ‘no win, no fee’ cases. He argued that these had a good probability of being won, from which investors would accrue profit from favourable financial settlements. Schools acquired some £100million from about 500 investors in this way.

However, funds were in fact paid to just three law firms associated with Schools, while over£19.6m was diverted to offshore accounts that he used to finance his luxury lifestyle. Many of the cases he endorsed as likely wins were also often lost without recompense. Schools then hid the losses from investors by paying off old loans with new ones.

Commenting on the matter, SFO Director Lisa Osofsky said that Schools “deliberately abused his position of trust to enrich himself. Through a complex web of lies, he attempted to hide his fraudulent activity, while spending other people’s hard-earned money.”

Read more on this story at Yahoo Sports.

Portuguese banks  refuse accounts for cryptocurrency platforms over financial crime risks

Several big banks in Portugal have either closed accounts for crypto asset trading platforms or refused to open accounts for industry role-players.

This growing trend follows the closure of Lisbon-based Criptoloja’s accounts by two smaller banks and includes the state-owned Caixa Geral de Depositos, and and other major institutions including Banco de Investimento Global, Banco Comercial Português, and Santander.

The decision by Portuguese financial institutions could signal a tightening of the legislative framework governing cryptocurrency trading platforms in the country, which earlier in 2022 was regarded by some as a crypto asset refuge of sorts.

Elsewhere it was reported that “anti-money laundering and know-your-customer rules” are often the main reasons cited by lenders who refuse to work with crypto companies.

Banco Comercial explained that it’s obliged to report suspicious transactions which may lead to termination of banking services for some entities. Banco Santander acts “in accordance with its perception of risk,” a representative said.

Read more on this story at Portugal Resident.

Three Chicago residents charged with money laundering and defrauding of Covid-19 relief

The US Justice Department announced the indictment of the three on 10 August 2022. The federal charges allege that Samuel Jackson, David Sullivan, and Elizabeth Chervinko illegally acquired over $2.75m by defrauding the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a relief package intended to help Americans address the challenges due to the economic pressures of the pandemic.

The indictment alleged that in 2020 the defendants falsified documents, both in their names and the names of affiliated companies, which they submitted to loan companies and the US Small Business Administration (SBA) to access debt relief and secure loans which they were not entitled to. They are accused of fraudulently acquiring $2.49m from the SBA’s Paycheck Protection Program, and $256,500 from its Economic Injury Disaster Loan Program and using much of the funds for personal gain.

Jackson faces three money laundering charges, each one of which carries a custodial sentence of up to ten years in federal prison. He also faces five wire fraud charges, while Sullivan and Chervinko face one wire fraud charge apiece. Each wire fraud charge can result in a sentence of up to 20 years of direct incarceration.

Read more on this story at CBS News.

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Photo by Marc Babin on Unsplash

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