12 Indicted On Iraq Money Laundering Charges

12 Indicted On Iraq Money Laundering Charges
SEATTLE - A federal grand jury has indicted 12 people in an alleged international money-laundering scheme to funnel more than $12 million to Iraq.

The indictment, handed up Wednesday and unsealed Thursday, alleges that between April 2000 and January 2002, a ring of agents throughout the United States collected money domestically and sent it to a company called Alshafei Family Connect in suburban Edmonds. Six people named in the indictment have been arrested, the government said.

The company's owner, Hussein Alshafei, has acknowledged in unrelated court papers that he sent money from Iraqi refugees in the United States to their friends and relatives in the Middle East, including Iraq.

Federal authorities claim those transfers broke the U.S. embargo of Iraq. They say some of the $12.1 million apparently didn't go to poverty-stricken relatives, but to foreign banks and companies before winding up with Al-Nour Trading, an Iraqi entity they know little about.

According to the indictment, the money was collected by Alshafei Family Connect's agents in Dallas; Phoenix; Nashville, Tenn.; St. Louis; and Roanoke, Va. Those agents, all arrested Thursday, are accused of forwarding the money to Alshafei, who sent it to Iraq via England, India, Canada, Brazil, Taiwan, Egypt, Jordan and the United Arab Emirates.

The U.S. Customs Service investigation was handled by a task force designed to root out financial backers of terrorism, but authorities said they have found no links to terrorism thus far.

However, Leigh H. Winchell, special agent in charge of the Customs office in Seattle, added: "It is not humanitarian aid."

He declined to say what investigators believe the money was used for.

Alshafei was arrested at his home early Thursday. He appeared haggard at an afternoon hearing before U.S. Magistrate John L. Weinberg, who said he would decide Tuesday when to hold a detention hearing. Until then, Alshafei, who listened to the proceedings through an interpreter, is to remain in federal custody.

The indictment includes one count of conspiracy to launder money and 34 counts of money laundering, the latter supported by a list of 34 transactions from Seattle-area banks to companies in London and other cities, totaling just over $1 million. That $1 million eventually reached Al-Nour Trading, run by a man whose last name is Fakher and whose alias is Abu Haider, prosecutors said.

In one of the transactions listed, authorities said $11,000 was transferred from a City Bank branch in suburban Lynnwood to City Bank of Brazil in November 2000. The money then went to a Brazilian auto-parts exporter, Twins International, before it - or goods purchased therewith - reached Iraq.

Contacted by telephone Thursday in Sao Paulo, Brazil, Twins International owner Sarwad Wahab said he knew nothing about the allegations.

"You are joking. You are playing a joke on me," he said. "I do not do anything or support anything or donate anything. I just get money, and when I get the money I sell Volkswagen and Audi spare parts."

It isn't clear how the rest of the $12 million allegedly got to Iraq.

The indictment charges people in London, Jordan, the United Arab Emirates and Iraq, in addition to the six people arrested in the United States. Each count carries up to 20 years in prison.

Federal officials said they would try to have those living abroad arrested and extradited to the United States. The United States has extradition treaties with Jordan and the United Kingdom, but not with the UAE. As for those suspects living in Iraq, "I believe Saddam Hussein is preoccupied," Winchell said.

Alshafei left Iraq during the Gulf War and spent time in a Saudi refugee camp before coming to the United States in the early 1990s, said his lawyer, David Bukey.

Now a U.S. citizen, he prompted the investigation himself. Customs officials began looking into him in January 2002 shortly after he filed a civil lawsuit against Bank of America, saying it had improperly closed his account. In that lawsuit, Alshafei openly acknowledged transferring funds to Iraq through Jordan to evade the embargo, the U.S. Attorney's Office said.

Bukey said his client had long known of the allegations and had tried to cooperate with the government.

"I've been in this business long enough to know that the government sometimes chooses the hardball path," Bukey told the judge. "That is what has happened here."

Prosecutors said the amount of money changing hands and its destinations made it appear suspect.

"These transactions where the funds went to corporate entities seemed inconsistent with what Mr. Alshafei was saying publicly about his intentions," said Assistant U.S. Attorney Francis J. Diskin. "We have not chosen to charge him for each of the $500 or $1,000 transactions."

Customs agents executed search warrants at Alshafei's business and home in January, seizing 71 boxes of documents and five computers. No arrests were made at the time.

Also, in late February, customs agents served 29 federal search warrants on people in 14 states who were suspected of conspiring with the company. Diskin said Thursday authorities believe Alshafei continued to operate illegally even after the search warrants were served.

In addition to Alshafei, Fakher and Alshafei Family Connect, the indictment names: Ali Mohammud Ali Abbas of Jordan; Haider Amer Fakher of Iraq; Hashim Mohsin Almosawi of Everett, Wash.; Abdulilah Hamid Daoud of London; Ahmed Fayadh Kathe of Dubai, United Arab Emirates; Salam Said Alkhursan of Dallas; Khalid Amen of St. Louis; Ali Noor Alsutani of Nashville, Tenn.; Ali Almarhoun of Phoenix; and Malik Almaliki of Roanoke, Va.