The chief rabbi of Congregation Sharee Zion in Brooklyn, N.Y., was sentenced on June 1, 2011 to two years of probation for operating an illegal money remitting business, after admitting he accepted bank checks in exchange for checks in lesser amounts from a charity he operated and controlled, U.S. Attorney Paul J. Fishman announced. As part of the sentence imposed, Judge Pisano also ordered Kassin to forfeit $367,500 and pay an additional fine of $36,750.

Saul Kassin, 89, of Brooklyn, N.Y., and Deal, N.J., previously pleaded guilty before U.S. District Judge Joel A. Pisano to an information charging him with operating the illegal business in conjunction with the bank account of the Magen Israel Society charitable organization, which transmitted money to individuals and organizations in the United States and Israel.

Kassin admitted that from June 2007 through December 2008, he operated an unlicensed money transmitting business, transferring thousands of dollars in checks to Solomon Dwek—an individual he later learned was a cooperating witness. Kassin admitted that he accepted bank checks made payable to Magen Israel Society and issued checks from the account to other organizations in exchange. He also admitted that he charged a 10 percent commission for this money transmitting service, and knew that the checks he issued from Magen Israel Society account would not be used for charitable purposes

The defendant was originally charged by criminal complaint on July 23, 2009, as part of a takedown of 44 individuals for alleged public corruption and international money laundering offenses. The complaint alleges that Dwek was originally referred to Kassin by Rabbi Edmond Nahum, 57, of Deal, who informed Dwek that Kassin would be able to move large amounts of money. Initially, Nahum accepted checks from Dwek made payable to Magen Israel Society, which Nahum passed on to Kassin. Kassin would then issue checks from Magen Israel Society, minus commission, which Nahum would provide to Dwek. After several such transactions, Kassin met directly with Dwek on a number of occasions to exchange checks in larger amounts. On each occasion, Dwek told Kassin the checks were either proceeds of a counterfeit handbag business or a way to hide assets from Dwek’s bankruptcy court proceedings.

Similarly, Mahmoud Reza Banki was found guilty on June 4, 2010 for almost the same conduct. He was found to have operated a somewhat common variety of an unlicensed money transmitting business known as “Hawala.” Banki is one of the first people, if not the very first person, to be sentenced to federal prison for operating a hawala. Accordingly, over-eager prosecutors and FBI agents have been subjecting people involved in informal money transmitting businesses to lengthy and expensive investigations now that they know that such people can be imprisoned for operating such businesses. The technical violation is found in 18 U.S.C. 1960 and enforcement has recently become more agressive because of both the USAPATRIOT Act and the Banki case. Federal agents, however, have not been limiting their investigations to operators. Even though the U.S. Department of Treasury Financial Crimes Enforcement Network has unequivocally stated that the law is intended to target operators, not customers, federal agents often subject the innocent beneficiaries of such transactions to the scrutiny and stress of a federal investigation in order to force them into cooperating with the investigation. Much like Solomon Dwek in this case or the testimony of nearly a dozen government witnesses who stated that they sent funds to Iran by wiring them to Mr. Banki, the federal government is focusing its investigative attention to non-criminals in order to prosecute operators of unlicensed money transmitting businesses. Unlike drug cases where minor users or dealers are utilized to catch bigger drug lords, beneficiaries of informal value transfer systems are not committing a crime. One thing is clear however, now that federal agents are aware of the potential for substantial prison sentences in such cases they will more aggresively enforce the laws against informal value transfer systems.

The author of this blog is Erich Ferrari, an attorney specializing in Federal Criminal Defense matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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