Last Friday, the Financial Crimes Enforcement Network (FinCEN) announced the imposition of a $25,000 civil penalty against Mohamed Sheikh for alleged violations of the Bank Secrecy Act. Specifically, the assessment alleges that Sheikh willfully violated the structuring requirements of the Act and further, that Sheikh was acting as an unregistered money transmitter.

Sheikh was the manager of Abbas Phone Card and Grocery store, located in eastern Michigan. The FinCEN civil penalty assessment comes two years after federal criminal charges were imposed against Sheikh, the store owner (Sheikh’s brother), and Sheikh’s two sons. Beginning in 2009, the individuals were investigated and subsequently arraigned in federal court for allegedly engaging in fraudulent transactions relating to the federal food stamps and WIC programs. Following their guilty pleas, Sheikh and his brother were sentenced to a period of incarceration, followed by a probationary period, and each were ordered to pay a restitution amount of $718,743 to the United States Department of Agriculture (USDA). The sons received probation and were ordered to pay a restitution of $439,809 to the USDA. Restitution is the government’s method of imposing criminal fines.

The execution of the civil penalty assessment against Sheikh relies on enforcement regulations in the Bank Secrecy Act. The Bank Secrecy Act requires those engaging in money services to register with FinCEN every two years, and further, financial institutions must also report monetary transactions of $10,000 or more. It is a violation of the Act if transactions are “structured” to avoid the reporting requirement, such as making multiple transactions under $10,000 rather than engaging in a single transaction over $10,000. The civil penalty assessments directly benefit the U.S. government, and in this situation, will be paid to the U.S. Treasury Department.

What is interesting is the fact that FinCEN has chosen to impose the civil fine on Sheikh, the manager of the store, rather than the store owner and Sheikh’s brother, Aidarus Abbas Mohamed. This means that either the evidence against Sheikh was stronger than the evidence against Mohamed, or that FinCEN will be assessing Mohamed with a civil penalty in the near future. Either way, Sheikh must unfortunately deal with the staggering amounts of restitution for his criminal case and the newly imposed civil fine from FinCEN.

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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