A federal jury in Puerto Rico on Tuesday convicted Oluwasegun Baiyewu, 37, of Richmond, Texas, in a money-laundering conspiracy stemming from wide-ranging wire, mail and machine fraud schemes that funneled illicit funds to Nigerian transnational organized crime teams by way of automobile half auctions.
While the overall greenback worth of the schemes is comparatively small, prosecutors solely cited quantities below $1 million, the scheme offers useful insights for U.S. banks and credit score unions in search of to boost their fraud and money-laundering detection capabilities.
The inside workings reveal a number of factors the place monetary establishments might establish and disrupt illicit exercise, serving to to make oft-cited recommendation from regulators and danger officers actual.
The Department of Justice, in asserting the conviction, emphasised its dedication to concentrating on your complete cybercriminal ecosystem. Brett A. Shumate, assistant legal professional common, stated in a press launch that the division “will proceed to establish and prosecute the fraudsters who design advanced fraud schemes and the launderers that obtain sufferer proceeds and ensure the crimes are worthwhile.”
Understanding the scheme: A blueprint for detection
The convicted felons, together with Oluwaseun Adelekan, Temitope Omotayo, Ifeoluwa Dudubo, Temitope Suleiman and Baiyewu, conspired to launder funds derived from varied worldwide organized fraud schemes.
These included romance scams, pandemic reduction unemployment insurance coverage fraud, and enterprise e-mail compromise scams, which disproportionately impacted aged or in any other case weak Americans, in line with U.S. prosecutors.
Here’s how the scheme operated:
Fraud funds influx and cash mule networks
Criminal teams in Nigeria typically coordinate with U.S.-based cash mules, in line with the prosecutors. These mules open financial institution accounts particularly to obtain fraudulently obtained funds.
Scammers induced victims, equivalent to in romance scams, to mail bulk money and cashier’s checks or wire cash to accounts managed by these mules.
For instance, two victims had been directed to mail cash to Adelekan’s and Omotayo’s shared Staten Island tackle, and wire funds to an account at Investors Bank, managed by Adelekan below a shell firm, Olad Trading.
Unemployment insurance coverage fraud concerned fraudsters utilizing stolen figuring out data to falsely apply for unemployment insurance coverage advantages. These advantages had been loaded onto reloadable, pay as you go debit playing cards, which they then used to buy cash orders.
Conversion to anonymized devices
Upon receiving fraud funds, the preliminary recipients shortly withdrew the cash as money, cash orders or cashier’s checks. This step aimed to obscure the supply of the funds and evade detection by legislation enforcement or banks.
Kelsey Williams, Baiyewu’s ex-wife, testified that Baiyewu repeatedly had $5,000 to $20,000 in money on him. Williams stated she as soon as witnessed him deliver dwelling over $100,000 in money, elevating her suspicions.
Baiyewu would purchase cash orders in batches of two or three from a number of locations earlier than delivering them to on-line auto auctions.
Structuring transactions to evade reporting
In a notable incident, a Navy Federal Credit Union consultant noticed Baiyewu trying to deposit $12,735 in money. When knowledgeable {that a} forex transaction report can be filed, Baiyewu instantly cancelled the deposit and left the financial institution.
This habits, a transparent crimson flag of structuring, aimed to keep away from reporting necessities and detection. Financial establishments ought to flag such cases the place clients reverse transactions upon studying about reporting obligations.
Trade-based cash laundering by way of automobile export
The core cash laundering technique concerned buying salvaged automobiles from on-line public sale websites, typically automobile auctioneer Copart, utilizing fraud proceeds, after which transport these automobiles to Nigeria.
Baiyewu, by way of his corporations Shipopo Autos and Shipopo LLC, performed a central position as a cash dealer and exporter. He would obtain requests from Nigerian clients, typically in Nigerian naira (resulting from Nigeria’s restrictive dollarization insurance policies), convert the naira to U.S. {dollars}, after which make funds to Copart or prepare for others to take action.
Baiyewu hand-delivered not less than 31 cash orders, totaling $30,088, to Copart automobile yards on 5 separate events in 2020. These structured funds went to the Copart account titled Emperor Auto Advantage, managed by Blossom Eghaghe, a Nigerian particular person.
Concealment and deception
Baiyewu lied to his ex-wife about his employment, claiming to be an engineer. He later admitted he made cash shopping for and promoting automobiles from public sale websites, and data confirmed he didn’t report substantial earnings in 2019 regardless of supporting his household.
Conspirators typically used encrypted communication apps like WhatsApp to coordinate their efforts, making it tougher for legislation enforcement to entry message content material.
Transnational organized crime
The scheme concerned Nigerian transnational organized crime teams. These teams have a “robust and fixed want to maneuver funds generated by way of these schemes again to perpetrators in Nigeria,” in line with prosecutors.
They typically should transfer these funds in Nigerian naira moderately than U.S. {dollars}, and this demand for changing U.S. {dollars} into Nigerian naira created a black market for forex and monetary devices.
For monetary establishments, understanding these particular strategies — from the usage of cash mules and shell corporations to structured money deposits and trade-based cash laundering by way of automobile exports — is essential for creating simpler detection and prevention methods.
