Miami Judge orders US company at the center of Gold Scheme to pay $15 million fine
Pursuant to a recent ruling handed down by a federal judge, the precious metals company, Elemetal LLC, dba “Elemetal” and “NTR”, must pay a criminal fine of $15 million dollars to the U.S. government. The company will also be on probation for five years. Three Miami gold dealers, who worked for Elemetal subsidiary NTR, were convicted of a massive money laundering scheme.
Elemetal, which is based in Dallas, Texas, was sentenced on March 16, 2018, after admitting they failed to maintain a compliance program put into place under the Bank Secrecy Act (“BSA”) to stop its gold dealers from carrying out a $3.6 billion dollar money laundering scheme. The scheme had to do with U.S. imports of gold that was illegally mined and smuggled into the United States from South America. The immense conspiracy included deals with drug traffickers through Elemetal’s NTR Metals. According to the stipulated facts that were filed with the court, and to elucidate some of the BSA regulations, Elemetal:
- “Accepted gold from persons and entities without requesting or obtaining adequate identification and information regarding those persons or the source of their gold, including from: third-parties in foreign countries directly providing gold to the defendant on consignment to the defendant’s approved customers; third-parties in foreign countries who the defendant knew to be supplying gold to the defendant’s approved domestic customers; and third-parties in foreign countries who appeared as the manufacturer or shipper of the gold on U.S. customs declarations;
- Accepted gold from foreign gold suppliers who represented themselves to be “gold collectors,” a vague business that involves nothing more specific than someone who buys gold from others without requesting or obtaining adequate, or in some instances any, information as to the source and origin of gold;
- Accepted gold from countries and customers where the defendant’s country-by-country and customer-by-customer sales volume records indicated that gold was likely being smuggled across borders in response to law-enforcement crackdowns and that customers were using rotating front companies, without requesting or obtaining adequate, or in some instances any, follow-up information as to the source and origin of gold;
- Accepted gold from specific customers and suppliers where open-source and publicly available information indicated that those specific customers and suppliers were supplying criminally derived gold, without requesting or obtaining adequate, or in some instances any, follow-up information as to the source and origin of gold;
- Failed to request or obtain adequate, or in some instances any, follow-up information as to the source and origin of gold where open-source and publicly available information indicated that the defendant or the defendant’s agents were purchasing criminally derived gold; and,
- Failed to request, obtain, preserve adequately, or in some instances any information regarding the content of communications between gold suppliers and the defendant’s agents occurring on encrypted, peer-to-peer chat services, such as WhatsApp or Skype.” – United States Department of Justice
Recently, the Miami Herald did an investigative series called “Dirty Gold, Clean Cash”. It uncovered the connections between South Florida’s gold industry and the devastation of large portions of South American rainforests where illegal gold mining thrives under the control of drug traffickers and other criminal enterprises. Elemetal was one of the focal points of the Herald’s piece.
Crime and Punishment
The company plans to satisfy $10 million of the forfeiture imposed by the U.S. Attorney’s Office, Southern District of Florida, by letting the Peruvian government keep a portion of its gold seized by authorities there in 2013, according to Elemetal’s attorneys. U.S. District Judge, Federico Moreno, approved a credit towards the company’s substantial fine if Elemetal releases a legal claim on the Peruvian gold. Separately, Elemetal must pay $5 million to the U.S. government to satisfy the balance of the forfeiture approved by Moreno as part of the probationary sentence. Elemetal lawyers have indicated that the company has already paid $1 million toward that total.
According to the plea agreement, if Elemetal fails to pay the total $15 million, the company could be found in violation of its probation and might face more serious criminal charges, including participating in the money laundering conspiracy itself. Elemetal was forced to close its main precious metals refinery in Ohio and is barred from trading gold on bullion markets. If it somehow manages to stay in business, the company must show that it can maintain a strong anti-money-laundering program that would meet BSA requirements while it is on probation. Elemetal has since shut down NTR Metals, which was located in Doral, Florida.
The federal prosecutor, Francisco Maderal, citing a BSA law broken by Elemetal, said that the company “willfully failed to develop, implement and maintain an anti-money-laundering program reasonably designed to prevent Elemetal from being used to facilitate money laundering and the financing of terrorist activities.” Elemetal’s guilty plea follows the convictions of three of Elemetal’s gold dealers who bought billions in illegally mined and smuggled gold from drug-trafficking organizations based in Peru, Ecuador, Bolivia, and Colombia. The employees, who worked for NTR, were Samer Barrage, 40, Juan Granda, 36, and Renato Rodriguez, 44. They were sentenced to six-seven years in prison after pleading guilty to a $3.6 billion money laundering conspiracy last year.
This case is the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (“OCDETF”) Operation Arch Stanton, which is a partnership between federal, state and local law enforcement agencies. The OCDETF mission is to identify, investigate, and prosecute high-level members of drug trafficking enterprises, bringing together the combined expertise and abilities of federal, state and local law enforcement.
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