Owner of check cashing companies Indicted

Manhattan District Attorney Robert M. Morgenthau announced today a 186- count indictment of a check bundler and the owner of check cashing companies for repeatedly falsifying business records to avoid New York State banking and anti-money laundering reporting requirements. The District Attorney also announced the guilty pleas of the owner’s business partner as well as those of four check cashing companies.

The defendants RIAD (a/k/a Steve) KHALIL, 46, the check bundler, and NEIL GOLDSTEIN, 53, an owner of two of the check cashing companies, were indicted for falsifying the business records of VEIL CHECK CASHING CORP. to aid and conceal their structuring of transactions and for failing to file currency transaction reports on those structured transactions. The crimes charged in the indictment occurred between October 27, 2006 and July 11, 2008. The defendant, CHARLES GOLDBERG, 46, who is GOLDSTEIN’s business partner, and corporate defendants, VALE CHECKING OF NEW YORK, Inc. (VALE), VEIL CHECK CASHING CORP. (VEIL), GEM CHECK CASHING, CORP. (GEM) and TOMPKINS EXPRESS CHECK CASHING, CORP. (TOMPKINS) (collectively, the Check Cashing Companies), each pleaded guilty on July 9, 2009, to a Superior Court Information charging them with falsifying business records.

District Attorney’s investigation into the financial affairs of The John Galt Corporation and related companies, Regional Scaffolding & Hoisting, Windham Enterprises Inc., Windham Construction Corporation, Eastern States Construction and Elm Suspension Systems, Inc.

The John Galt Corporation was the subcontractor hired by Bovis Lend Lease to abate and deconstruct the Deutsche Bank building in March 2006. Regional Scaffolding & Hoisting, in a joint venture with Safeway Environmental, contracted with the owner of the Deutsche Bank building – the Lower Manhattan Development Corporation – to erect the scaffolding that surrounds the building and to abate its exterior vestibules. Following the completion of that portion of the project, Regional remained connected to the site to maintain and deconstruct the scaffolding as the building was abated and deconstructed.

The investigation revealed that GOLDBERG owns all four corporate defendants and that GOLDSTEIN had an ownership interest in Vale and Veil. In the late summer of 2006 GOLDBERG, GOLDSTEIN and the Check Cashing Companies formed a business relationship with KHALIL. KHALIL, though unlicensed to do so, received checks made out to or by various companies and individuals, including The John Galt Corporation and Regional Scaffolding & Hoisting, which he then cashed at VALE in downtown Brooklyn. Soon after forming their business relationship, GOLDBERG, GOLDSTEIN and KHALIL reached an agreement pursuant to which GOLDBERG and GOLDSTEIN structured KHALIL’s check cashing transactions to avoid filing Currency Transaction Reports (CTRs). The New York State Banking Law, New York State Banking Department regulations, and related Federal Bank Secrecy Act and anti-money laundering laws require licensed check cashers, such as the Check Cashing Companies, to file CTRs with the government with respect to transactions that result in one person or company conducting a cash transaction in an amount over $10,000 within a single business day.

During the entire two-year period of KHALIL’s relationship with GOLDBERG, KHALIL bundled and cashed checks for dozens of construction related corporations and conducted hundreds of transactions with the Check Cashing Companies.

When KHALIL brought in multiple checks issued to the same payee that totaled more than $10,000 to the Brooklyn VALE location, GOLDBERG or GOLDSTEIN processed the checks either through their different check cashing companies, including those located in New York County, or on different days. In exchange for these services, KHALIL continued to use the Check Cashing Companies as his primary check cashers and to pay them a commission on each transaction. At the height of their relationship, KHALIL processed up to $800,000 per week in both structured and non-structured transactions through the Check Cashing Companies. The District Attorney’s Office estimates that during the two-year period of their scheme KHALIL cashed in excess of $40 million in checks through GOLDBERG’s companies.

In structuring the transactions at the urging of KHALIL, GOLDBERG and GOLDSTEIN falsified the Check Cashing Companies’ check registers, which the Check Cashing Companies were required to maintain pursuant to New York State Banking Law and related regulations. The check registers were false in several ways. First, the check registers indicated that the presenter of the check was the payee of the check when in fact the presenter was KHALIL. Second, because all of the checks that KHALIL brought to GOLDSTEIN and GOLDBERG were cashed at VALE in Brooklyn, all of the entries in the logs of the Manhattan stores relating to those checks were false. Lastly, GOLDBERG and GOLDSTEIN frequently falsified the dates of the transactions on these reports.

From May to August 2007, the Check Cashing Companies cashed checks issued by Regional Scaffolding & Hoisting to various vendors and checks written to The John Galt Corporation. The 18 checks issued by Regional totaled $145,000 and the 43 checks written to The John Galt Corporation totaled $227,637. KHALIL brought these checks to GOLDBERG and GOLDSTEIN, and the records of the Check Cashing Companies reflect that more than half of these checks were structured illegally through the various check cashing stores.

Defendant CHARLES GOLDBERG and the corporate defendants pleaded guilty to Falsifying Business Records in the First Degree, a class E felony which is punishable by up to 1 1/3 to 4 years in prison. Pursuant to their guilty pleas, the Check Cashing Companies agreed to surrender all licenses to be or operate money service businesses. Additionally, GOLDBERG agreed to a lifetime ban from involvement, either direct or indirect, in the financial services industry.

Defendants RIAD KHALIL and NEIL GOLDSTEIN have been indicted on 122 counts of Falsifying Business Records in the First Degree, a class E felony which is punishable by up to 1 1/3 to 4 years in prison, and 64 counts of Failure to File a Currency Transaction Report to the New York State Banking Superintendent, a class A misdemeanor which is punishable by up to 1 year in jail.

KHALIL and GOLDSTEIN will be arraigned today in State Supreme Court, Part 1.

The District Attorney’s Office has brought a parallel civil asset forfeiture action against KHALIL for $1,355,238. The Check Cashing Companies have also collectively agreed to forfeit $250,000.

The New York State Banking Department joined in the investigation. Superintendent Richard H. Neiman has pledged to continue to work with the District Attorney’s Office to take every step necessary to ferret out those who attempt to avoid their reporting obligations under the law. As this case demonstrates, these joint efforts will ensure that the financial services industry will not be used for personal financial gain and will be operated in a fair and honest manner to promote the public interest.

Mr. Morgenthau thanked New York State Banking Department Superintendent Richard Neiman and his staff, including Deputy Superintendent Regina Stone, Director of the Criminal Investigation Bureau Ricardo Velez and Investigative Counsel Lore Wall, for their assistance in the investigation.

Mr. Morgenthau also thanked the New York City Department of Investigation Commissioner Rose Gill Hearn and her staff, and the Inspector General’s Office of the Port Authority of New York and New Jersey for their assistance in the investigation, particularly Special Inspector General Dennis Curran and Special Investigator Robert Joyce. Mr. Morgenthau also thanked the United States Department of Housing and Urban Development for their assistance in the investigation, including Special Agent in Charge Rene Febles, Assistant Special Agent in Charge Louis J. Mancini, Jr. and Special Agents Stephen Huvane, Michael Gross, and William Martinez.

Assistant District Attorneys Vanessa Richards and Michael Gates of the Rackets Bureau are handling the investigation and prosecution under the supervision of Patrick Dugan, Chief of the Investigation Division, Rackets Bureau Chief Eric Seidel and Deputy Bureau Chiefs Daniel G. Cort and Deborah Hickey. Financial Intelligence Director David Rosenzweig, and Senior Financial Investigators Matthew Paul and Robert Stahl assisted in the investigation. Assistant District Attorney Suzanne Herbert of the Asset Forfeiture Unit is handling the forfeiture proceeding under the supervision of Assistant District Attorney Tara Miner, Chief of the Asset Forfeiture Unit. Trial Preparation Assistants Hannah Edwards and Jona Mici also assisted.

Defendants’ Information:

RIAD KHALIL, 10/20/1962
139 86th Street
Brooklyn, New York

NEIL GOLDSTEIN, 10/13/1955
45 Girard Street
Marlboro, New Jersey

CHARLES GOLDBERG, 6/24/1963
14 Clover Street
Tenafly, New Jersey

VALE CHECKING OF NEW YORK, INC.
44 Hoyt Street
Brooklyn, NewYork

VEIL CHECK CASHING CORP.
518 W 145th Street
New York, New York
AND
319 Audubon Avenue
New York, NewYork

GEM CHECK CASHING, CORP.
523 Flushing Avenue
Brooklyn, NewYork
AND
9804 Queens Boulevard
Rego Park, NewYork

TOMPKINS EXPRESS CHECK CASHING, CORP.
112 Tompkins Avenue
Brooklyn, NewYork

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