CHARLESTON, W.Va. -- West Virginia investigators and prosecutors played a key role in the prosecution of giant British bank HSBC, the U.S. Attorney for the state's Northern District said Wednesday.William J. Ihlenfeld II praised the efforts of four federal investigators based in the Mountain State who he said helped uncover the inadequacy of HSBC's anti-money laundering program."Their efforts played a key role in the resolution of this case and helped to bring an end to illegal activity that was occurring in the United States and around the world," Ihlenfeld said.The four people cited by Ihlenfeld were Bryant Moravek, a special agent for the U.S. Treasury Department's Financial Crimes Enforcement Network; Ryan Korner and Jason Gandee, special agents for the IRS Criminal Investigation Section; and Assistant U.S. Attorney Michael Stein, based in Charleston.
"Without the dedication and commitment of these men, HSBC's violations would have continued unabated long into the future," Ihlenfeld said.The West Virginia investigation was first triggered by the activities of Dr. Barton Adams, a physician who laundered more than $2 million through HSBC as part of a health-care fraud scheme.Last month, Adams was convicted on federal charges of health-care fraud and tax evasion in federal court in Wheeling.Adams faces up to 15 years in federal prison. His wife, convicted on similar charges last year, also faces a federal prison sentence.HSBC agreed Tuesday to pay $1.9 billion in fines, the largest penalty ever imposed on a bank. Authorities said the bank helped Iran, Libya, Mexican drug traffickers and others under U.S. sanctions to move money around the world.No bank executives were charged, and critics of the deal said it raised questions about how willing U.S. authorities are to hold huge financial institutions accountable for their misdeeds. Prosecutors said the damage that indicting the bank might cause, including thousands of people who could lose their jobs if the bank collapsed, was a factor in not indicting the bank.
For the government not to go a step further and prosecute was "beyond obscene," Bill Black, a former U.S. regulator for the Office of Thrift Supervision who now teaches at the University of Missouri-Kansas City, told The Associated Press."Regulators are telling us, 'Yes, they're felons, they're massive felons, they did it for years, they lied to us, and they made a lot of money ... and they got caught red-handed and they're gonna walk.'"Black disputed the government's concern that indicting HSBC could take down the financial system."That's the logic that we get stability by leaving felons in charge of our largest banks," he said. "This is insane."Under the settlement, the bank agreed to forfeit nearly $1.26 billion for violations of the federal laws, including the Bank Secrecy Act and Trading With the Enemy Act.
HSBC Bank also agreed to pay $665 million in civil fines as a result of its misconduct. Penalties that will be paid under the "deferred prosecution agreement."On Tuesday, HSBC was charged with a four-count felony in federal court in the Eastern District of New York by: Ihlenfeld; Loretta Lynch, a U.S. Attorney in Brooklyn; and Jaikumar Ramaswamy, head of the Justice Department's Asset Forfeiture and Money Laundering Section.According to the charges, HSBC Bank failed to maintain an effective money-laundering program at its U.S. operations.HSBC also conducted illegal financial transactions involving customers in Cuba, Iran, Libya, Sudan and Myanmar -- nations subject to sanctions under the federal Office of Foreign Assets Control.Reach Paul J. Nyden at email@example.com or 304-348-5164.