Posts Tagged ‘forgery’

Pakistan Court Is Set to Rule on Political Fate of PM Sharif

July 28, 2017

ISLAMABAD — Pakistan’s Supreme Court is set to announce its much-awaited decision on the political fate of beleaguered Prime Minister Nawaz Sharif after weighing whether adequate evidence existed to dismiss him from office on allegations of corruption against his family.

Fawad Chaudhry, a lawyer for petitioner Imran Khan, said Friday they will accept any decision by the court.

Sharif has been under pressure to resign since 2016 when leaked documents from a Panama-based law firm disclosed his family’s offshore accounts. In April, the court acting on petitions from the opposition set up a six-member team to probe the allegations.

The investigation concluded a “significant disparity” existed between Sharif family’s declared wealth and its known sources of income.

Under Pakistani law, the Supreme Court has the authority to dismiss the prime minister.

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Opposition Hopes To Remove Pakistan Prime Minister Nawaz Sharif — Forensic experts close in

July 16, 2017

LAHORE, Pakistan — Prime Minister Nawaz Sharif is facing increasingly loud calls to resign as an official investigation into allegations of corruption by him and his family continues to unfold.

And now, the fate of the political dominance of the Sharif family may hinge on a Microsoft font: Calibri.

Pakistan’s Supreme Court set up a five-member Joint Investigation Team (JIT) in April to investigate allegations of financial corruption that surfaced following the release of the infamous Panama Papers.

Image: Pakistan's Prime Minister Nawaz Shari
Pakistan’s Prime Minister Nawaz Sharif speaks to media after appearing before an anti-corruption commission in Islamabad on June 15, 2017. Aamir Qureshi / AFP – Getty Images

Sharif was not named in the Panama Papers leak, but his three adult children were linked to numerous offshore accounts that also owned luxury apartments in London’s exclusive Mayfair area. In a months long trial, opposition leaders alleged that the money used to buy the real estate was earned through corruption.

The JIT finally presented their scathing 275-page report looking into the allegations to the Supreme Court on July 10. It charged that Sharif, his sons and daughter had engaged in irregular finances, forgery and perjury.

“There exists a significant disparity between the wealth declared by the respondents and the means through which the respondents had generated income from known or declared sources,” the report said, according to a partial copy released to reporters.

Related: Panama Papers: Offshore Assets of World Leaders Revealed by Leak

It also recommended to the court the Sharifs be tried for corruption through Pakistan’s anti-graft authority. The Supreme Court will take up the case on Monday.

As parts of the massive report slowly leaked to the press, the stock market tanked by more than 4 percent, the military declared its intention to stand by the country’s courts and Pakistan’s raucous media went into hyperdrive — predicting the end for Sharif, who is serving his third term as prime minister.

The opposition has seized on the allegations with Imran Khan, the cricket-legend-turned- opposition leader calling on Sharif to “immediately step down.” Other mainstream political parties have backed Khan’s demands for Sharif’s resignation and fresh elections.

Sharif explicitly dismissed the report for the first time on Thursday.

“The JIT report about our family businesses is the sum of hypotheses, accusations and slander,” Sharif said in a statement after meeting his cabinet meeting.

Image: Maryam Nawaz
Maryam Nawaz, daughter of the prime minister, arrives to appear before an anti-corruption commission in Islamabad on July 5, 2017. Aamir Qureshi / AFP – Getty Images

The extremely detailed report was drafted by five investigators, including representatives from the Inter-Services Intelligence Directorate (ISI) and the Corps of Military Intelligence (MI), with the support of foreign lawyers, forensic experts and international financial authorities.

Pakistan’s rowdy social media was particularly galvanized by the findings against Sharif’s daughter, Maryam, who is reportedly being groomed to take over Pakistan’s largest political party.

In an attempt to establish a complicated money trail to show that she is not real owner of the London real estate, but rather just a “trustee” of the properties, Maryam submitted a document dated 2006. The document was typed in Microsoft’s Calibri font.

The problem is, as the investigators noted in their lengthy report, forensic experts and even the creator of Calibri font say it was not commercially available as part of Microsoft Office until 2007.

http://www.nbcnews.com/news/world/pakistan-prime-minister-nawaz-sharif-s-fate-hangs-fontgate-n782966

Singapore Convicts Former Banker With Ties to Key Figure in 1MDB Probe

December 21, 2016

Conviction is third to result from city-state’s probe of alleged multibillion-dollar misappropriations at Malaysian state fund

Yeo Jiawei previously worked for the Singapore unit of Swiss bank BSI. Above, the bank’s headquarters in Lugano.

Yeo Jiawei previously worked for the Singapore unit of Swiss bank BSI. Above, the bank’s headquarters in Lugano. PHOTO: ASSOCIATED PRESS
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Dec. 21, 2016 4:06 a.m. ET

SINGAPORE—A Singapore court Wednesday convicted a former private banker with ties to a Malaysian financier described by global investigators as central to probes of alleged multibillion-dollar misappropriations at Malaysian state fund 1MDB.

Yeo Jiawei, 33, a onetime wealth manager at the local branch of Swiss Bank BSI SA, was convicted on four charges of attempting to pervert the course of justice. Mr. Yeo had fought all the charges against him.

The judge, while delivering the verdict, said that he found the accused “unreliable and not credible.”

Mr. Yeo’s sentencing hearing is set to take place on Thursday. Singapore law allows for a prison sentence of up to seven years per charge, a fine, or both. A Singapore prosecutor told reporters Wednesday that he would seek a sentence “beyond the norm.” A lawyer for Mr. Yeo declined to comment.

During a three-week trial, which began at the end of October, a key witness testified that Mr. Yeo, after leaving BSI, went to work with or for Malaysian financier Low Taek Jho, known as Jho Low. Singapore investigators have called Mr. Low a “key person of interest” in their investigation into the alleged 1MDB misappropriations.

Mr. Low couldn’t immediately be reached for comment Wednesday. Mr. Low has previously denied any wrongdoing in his dealings related to 1MDB. 1MDB also couldn’t be reached immediately. The fund has previously denied any wrongdoing and pledged cooperation with any lawful investigation.

Investigators in at least five countries are probing the finances of the Malaysian state-investment fund, 1Malaysia Development Bhd., in response to allegations that billions of dollars have gone missing. Swiss investigators say they believe that as much as US$4 billion was misappropriated from the fund through several banks, including BSI.

BSI declined to comment Wednesday but has said in the past it is cooperating with authorities and taking steps to improve compliance.

Mr. Yeo separately faces trial next year for seven other charges relating to cheating, money laundering and forgery, allegedly committed during his time at BSI. His lawyer has said his client will contest all those charges as well.

Mr. Yeo’s is the third conviction to result from Singapore’s probe of 1MDB’s finances. Earlier two former colleagues pleaded guilty to charges of forgery and failing to report suspicious transactions.

Write to P.R. Venkat at venkat.pr@wsj.com and Gaurav Raghuvanshi at gaurav.raghuvanshi@wsj.com

http://www.wsj.com/articles/singapore-convicts-former-banker-with-ties-to-key-figure-in-1mdb-probe-1482311165

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Singapore Ex-Banker Convicted in 1MDB Malaysia Fund Case — Singapore, Switzerland, Hong Kong and the U.S. continue to investigate Malaysian Prime Minister Najib Razak

December 21, 2016

TOKYO — A court in Singapore found a former private banker guilty Wednesday of trying to obstruct investigations linked to the indebted Malaysian State Fund 1MDB.

The State Court convicted Yeo Jiawei, a former wealth planner at Swiss private bank BSI, on four charges related to obstructing, preventing or perverting the course of justice.

Yeo denied involvement in the case.

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Yeo Jiawei

He was alleged to have asked three key witnesses to lie to the authorities, dispose of a laptop and avoid traveling to Singapore, according to charge sheets. Prosecutors alleged he pocketed $26 million Singapore dollars ($18 million) in relation to the case.

In announcing his ruling Judge Ng Peng Hong said he found Yeo “to be an unreliable and not a credible witness.”

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Investigators in Singapore, Switzerland, Hong Kong and the U.S. have been probing allegations that people close to Malaysian Prime Minister Najib Razak stole over $1 billion from 1MDB, or 1Malaysia Development Bhd.

In February, Singapore authorities said they had seized a large number of bank accounts in probe. Regulators are expected give a final update on their findings in early 2017.

Singapore ordered BSI to stop operating in the city in May due to violations of anti-money laundering requirements, among other problems. Yeo still faces seven other charges related to alleged money laundering, cheating and forgery linked to 1MDB.

For attempting to obstruct, prevent or pervert the course of justice, Yeo faces a maximum sentence of 3.5 years in jail and possible fines on each charge.

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1MDB: First Trial Underway in Singapore Called “Most complex, sophisticated and largest money laundering case”

October 31, 2016

Money laundering, cheating, forgery and obstruction of justice — illicit schemes to defraud BSI.

By Grace Leong
The Straits Times

SINGAPORE – The prosecution will call nine witnesses in its case against former BSI banker Yeo Jiawei – the first person to be tried for the key role he allegedly played in a massive money laundering operation linked to scandal-hit 1Malaysia Development Bhd (1MDB) fund.

Deputy Public Prosecutor Tan Kiat Pheng, in his opening statement on Monday (Oct 31) to a packed court room, called the trial the “most complex, sophisticated and largest money laundering case handled by the CAD (Commercial Affairs Division)”, involving the movement of “staggering amounts of moneys across jurisdictions over the course of several years”.

Yeo, 33, is accused of facilitating illicit transactions involving 1MDB that led to the shutdown of Swiss private bank BSI’s operations here. He faces a total of 11 charges ranging from money laundering and cheating to forgery and obstruction of justice.

The prosecution said on Monday it will be proceeding on four charges relating to Yeo’s attempts to pervert the course of justice. It will apply for the remaining seven charges, which concern cheating, money laundering and forgery, to be stood down.

District Judge Ng Peng Hong is presiding over the trial, which is set to run until Nov 11, with a break on Nov 4. Mr Philip Fong of the law firm of Harry Elias is representing Yeo.

 

According to the prosecution’s opening statement, Yeo, who was employed as BSI’s wealth planner between December 2009 and July 2014, amassed wealth of about S$26 million from various sources, including illicit schemes to defraud BSI while he was a BSI employee and others whom he dealt with after he left BSI.

During and after his employment at BSI, Yeo played a central role in facilitating or concealing the laundering of large sums of money, according to DPP Tan.

Both Yeo and Kevin Swampillai, BSI’s head of wealth management services and Yeo’s supervisor, were involved in transactions in which certain fees would be shared between BSI, a fund manager and Samuel Goh Sze-Wei, who was an associate of Yeo’s.

Unknown to BSI, Yeo arranged for Bridgerock Investment and GTB Investment, which were beneficially owned by Yeo and Swampillai respectively, to receive a significant portion of the fees for their own benefit.

Bridgeock and GTB were the subject of investigations by CAD in March this year.

Yeo was first interviewed by CAD on Oct 6, 2015, and arrested as a suspect on March 17, 2016.

A day later, on March 18, Yeo was released on police bail. Under the terms of the release, Yeo was obliged to comply with conditions, including to not commit any offence while released on bail; and to not interfere with any witness.

According to DPP Tan, unknown to CAD in the days following his release, Yeo proceeded to take active steps to pervert the course of justice.

“In a display of complete and wanton disregard for the law and CAD’s investigations, he met and contacted key witnesses in the hope of suppressing incriminatory evidence pertaining to his own illicit schemes and activities,” DPP Tan said.

On March 27, 2016, after his release on police bail, Yeo arranged for Swampillai, Goh and himself to have a meeting at at the Pergola Cafe in the Swiss Club at 36 Swiss Club Road.

The prosecution will lead evidence that, at the cafe, Yeo, Goh and Swampillai discussed the CAD investigations, including that of Bridgerock and GTB, DPP Tan said. In the course of the meeting, Yeo told them to lie to the CAD that the funds transferred by Goh to Bridgerock and GTB were Goh’s investments.

After he left BSI, Yeo continued to be involved in illicit transactions and other transactions connected in the money laundering case. Some of these transactions were conducted through the Amicorp Group, which provides legal and corporate secretarial support services.

In March, Yeo was interviewed by CAD on transactions involving Amicorp. As Jose Renato Carvalho Pinto and Mun Enci Aloysius were Amicorp employees who received instructions from Yeo in relation to these transactions, Yeo was worried that CAD would interview them.

The prosecution will lead evidence that, sometime in March 2016, Yeo contacted Mr Carvalho using the “Telegram” text message application, said DPP Tan. In his messages, Yeo told Mr Carvalho to dispose of his Amicorp laptop, which would likely contain evidence of Yeo’s dealings with Amicorp. Yeo also told Mr Carvalho not to travel to Singapore, to avoid being interviewed by CAD.

The prosecution will lead evidence that in March this year, Yeo also used the “Telegram” text message application to instruct Mr Carvalho to tell Mr Aloysius to inform CAD that he did not know of Yeo’s dealings with Amicorp if he was to be questioned by CAD.

Besides Yeo, two other former BSI employees are also facing charges. On Oct 10, Yak Yew Chee and Yvonne Seah, were charged with carrying out suspicious money transfers for their client and controversial Malaysian tycoon Low Taek Jho, better known as Jho Low.

Mr Kelvin Ang, said to be a broker with Maybank Kim Eng, has also been charged. He is alleged to have paid a research analyst to produce a favourable valuation report on certain 1MDB assets. Ang’s pre-trial conference will be held on Nov 17.

http://www.straitstimes.com/business/banking/trial-of-ex-bsi-banker-yeo-jiawei-on-4-charges-kicks-off-in-singapore-first-in

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AFP
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SINGAPORE (AFP) – A former private banker went on trial in Singapore on Monday in the first prosecution of suspects linked to a massive international money-laundering scandal centred on Malaysian state fund 1MDB.

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State prosecutors described the sums involved as “staggering”.

They said Singaporean Yeo Jiawei, 33, an ex-wealth manager at Swiss bank BSI, was “one of the main Singapore-based suspects” in the scandal, which is also being investigated by Switzerland and the United States.

Allegations that billions of dollars were misappropriated from 1MDB have triggered a scandal in neighbouring Malaysia that has embroiled Prime Minister Najib Razak.

Both Najib, who founded the fund, and 1MDB have strongly denied any wrongdoing.

Singapore, a regional financial hub, last year launched a probe into alleged illicit fund flows linked to 1MDB and closed down the local branches of two Swiss banks — BSI and Falcon Private Bank — involved in the scheme.

Singapore authorities also seized nearly $180 million in assets.

Half of the assets were linked to Low Taek Jho — known as Jho Low — a jet-setting Malaysian financier who helped set up 1MDB and played a key role in its decisions.

Low, who has also denied any wrongdoing, is a close Najib family friend.

Yeo, the former BSI banker, faces 11 charges including money-laundering, cheating, forgery and obstructing the course of justice.

The current trial, expected to last until November 14, will centre on four charges accusing Yeo of “intentionally” obstructing justice in relation to Singapore’s money-laundering probe.

Prosecutors said Yeo approached various individuals while under investigation and instructed them to lie to the authorities or destroy evidence.

In a written statement issued at the trial, prosecutors said the 1MDB-related probe “is by far the most complex, sophisticated and largest money-laundering case” ever handled by the Commercial Affairs Department, the city-state’s main white-collar crime investigation body.

They said it involves multiple companies, persons and financial institutions and the movement of “staggering amounts of money across jurisdictions over the course of several years”.

Yeo “played a central role in many activities connected with the money-laundering case”, the prosecutors said.

In July the US Justice Department filed lawsuits in the United States alleging a massive international conspiracy by Najib’s relatives and associates to steal billions from 1MDB.

US authorities moved to seize assets including real estate in Beverly Hills, New York and London, artworks by Monet and Van Gogh, a Bombardier jet, and corporate ownership stakes which they allege were purchased with stolen 1MDB money.

Swiss Financial Market Supervisory Authority FINMA said in October that during its investigation from 2012 to 2015, it found that “assets amounting to approximately $3.8 billion were transferred to accounts at Falcon and associated with the 1MDB Group”.

Criminal Charges Filed Against Two Ex-Bankers in 1MDB Malaysia Fund Case

October 10, 2016

Charges include forgery and failing to report a suspicious transaction

A branch of Swiss bank BSI in Geneva. The bank has been involved in investigations related to the Malaysian development fund 1MDB.
A branch of Swiss bank BSI in Geneva. The bank has been involved in investigations related to the Malaysian development fund 1MDB.PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
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Oct. 10, 2016 5:03 a.m. ET

SINGAPORE—Prosecutors charged two former private bankers Monday with forgery and other criminal charges in the latest legal salvo related to the alleged misappropriation of billions of dollars from Malaysian state development fund 1MDB.

Yak Yew Chee, 57 years old, and Yvonne Seah, 45, were charged in Singapore’s state courts with three counts each of forgery and four counts each of failing to report suspicious transactions between 2012 and 2014, during their employment by the Singapore branch of Swiss private bank BSI SA.

Mr. Yak was the relationship manager for accounts held at BSI by subsidiaries of 1MDB, according to investigators and people familiar with the bank’s operations. Ms. Seah, whose full Chinese name is Seah Yew Foong Yvonne, was a senior private banker at the firm.

No pleas were entered. Both defendants were released on bail after the hearing and couldn’t immediately be reached for comment.

Lawyers for the two declined to comment on the charges outside the courthouse, saying they needed to review them first.

The forgery charge carries a maximum jail term of up to four years. Failing to report a suspicious transaction is punishable upon conviction by a fine of not more than S$20,000 (about $14,500).

Authorities in Singapore, Switzerland and at least four other countries are investigating 1Malaysia Development Bhd., or 1MDB, which was founded in 2009 by Prime Minister Najib Razak.

Swiss investigators say they believe as much as $6 billion has gone missing from 1MDB. The Wall Street Journal has reported that investigators believe a large chunk of it passed through BSI in Singapore, starting around 2011.

The prime minister has denied any wrongdoing, a position backed by his attorney general. The fund has also denied any wrongdoing and said it would cooperate with any lawful investigation.

In July, the U.S. Justice Department filed civil lawsuits to seize assets, including property in Los Angeles and New York, that it said was purchased with some of the missing funds.

Write to Saurabh Chaturvedi at Saurabh.Chaturvedi@wsj.com and Jake Maxwell Watts at jake.watts@wsj.com

http://www.wsj.com/articles/criminal-charges-filed-against-two-ex-bankers-in-1mdb-malaysia-fund-case-1476090211

Thailand Police breaking up major fake passport ring led by an Iranian known as “The Doctor” — Sent fake passports to migrants to get into Europe

February 10, 2016

AFP

Thai police broke up a major fake passport ring led by an Iranian known as “The Doctor” AFP photo

BANGKOK (AFP) – Thai police have broken up a major fake passport ring led by an Iranian known as “The Doctor” which sent thousands of passports to Middle Eastern customers trying to enter Europe, officers said Wednesday.The kingdom has long been a hub for a forged document industry serving human traffickers and other criminals.

Five years of investigation culminated in Monday’s arrest of the alleged Iranian mastermind Hamid Reza Jafary, police said.

The 48-year-old had for many years been crafting sophisticated forgeries from his home in Chachoengsao province east of Bangkok, they said.

“He (Jafary) produced passports for people from countries including Iran, Syria and Afghanistan who were escaping wars and wanted to enter Europe,” said immigration police commander Lieutenant General Nathathorn Prousoontorn.

Clients emailed “The Doctor” their photos and specified the country for which they wanted a passport, the commander said, adding he guaranteed customers they would not be detected by border officials.

The forged documents were then sent via private courier companies.

It was not immediately clear if “The Doctor” provided passports to people fleeing to Europe during the current migrant crisis.

After questioning, the passport "doctor" admitted his own  passport was fake and his real name was Hamid Reza Jafary, of ...After questioning, the passport “doctor” admitted his own passport was fake and his real name was Hamid Reza Jafary, of Iran. Here he is presented at a press conference in Bangkok on Wednesday, fake passports displayed in the background. Photo: Bangkok Post

Read more: http://www.smh.com.au/world/police-crack-thai-fake-passport-racket-and-arrest-the-doctor-20160210-gmq7kl.html#ixzz3zkvtKYhK
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“He himself used six different passports — three from Brazil, and one from each of Peru, Portugal and New Zealand. He was wanted by security agencies in many countries, especially the EU and Japan,” Nathathorn added.

Jafary’s fake passports were the “best quality in the market”, an immigration officer who asked not to be named told AFP.

But he could not fake the latest microchipped travel documents, police added.

Five Pakistani middlemen were also arrested in raids in and around Bangkok for assisting the forgery ring, which allegedly shipped passports to overseas clients for up to 80,000 baht ($2,300).

Some of the nearly 200 travel documents found in a Monday raid on Jafary’s home were completely forged, while others had been stolen from tourists and doctored, police said.

The raid also uncovered a laser engraving machine, rolls of thin leather for passport covers and metal stamps from various countries.

Thousands of passports are reported missing annually in Thailand, where forged documents of every variety can be purchased on the streets.

The flourishing market has helped establish Thailand as a hub for human traffickers and smugglers.

Two Uighur men awaiting trial for planting a deadly bomb in Bangkok last August have also been accused by police of running a crime group that helped illegal migrants obtain counterfeit documents.

The pair are currently being held in a military prison.

In 2014 the spotlight also swung onto the Thai-based trade when two mystery passengers boarded the doomed Malaysia Airlines flight MH370 using European passports stolen in Thailand.

In 2010 Thai authorities took part in an international police sting that saw two Pakistanis and a Thai woman arrested in Thailand for providing fake passports to groups behind global terror attacks.

by Sally Mairs
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Bangkok: Police have disrupted a major fake passport syndicate supplying travel documents to people wanting to reach Australia.

Australian investigators worked closely with authorities in Thailand to identify six key members of the syndicate, including a master forger known as “The Doctor”.

Authorities have suspected for years that Thailand has been a booming market for fake travel documents, some of which they believe have ended up in the hands of criminal and terror networks.

Two passengers on the missing Malaysian airliner MH370 bought fake passports in the Thai seaside resort of Pattaya in 2014, prompting police to express concern at the time about what they said was a “massive problem” in Thailand.

Police seized 173 counterfeit passports that had been prepared for international clients during a raid on a house in Chachoengsao​ province east of Bangkok late on Monday.

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The passports bore seals of approval from Thai and foreign immigration bureaus, police said.
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Police seized sophisticated devices and equipment used to make fake passports, including stamping machines, screen-printing devices, sewing, punching and engraving machinery and paper.
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They also found fake stamps of approval from Thai immigration checkpoints and visa stickers.
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Police said a 48-year-old Iranian man they identified as Hamid Reza Jafary who was arrested at the house was wanted by authorities in Australia, Thailand, Britain, France and New Zealand.
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Police said Jafary had confessed during interrogation that he was the forger known as “The Doctor” who had sold fake passports to clients around the world but mostly to people from Iran, Syria, Iraq, and Afghanistan who wanted to travel to Australia and Europe.
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They said he also admitted selling fake passports to human trafficking rings in Pakistan, India and Bangladesh for between $2000 and $3200.
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After customers transferred payment to Jafary’s bank account the fake passports would be sent via a courier service to both individual clients and traffickers.
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Police said Jafary, who has been living in Thailand for 25 years after arriving on a fake passport, imported forgery tools from China and used sophisticated techniques to produce “mirror” passports, mostly from European countries.
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Police said they had known about a forger known as “The Doctor” for years but had been unable to capture him as he only ever made contact with a small group of fake document agents.
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Police have also arrested five Pakistani men who they alleged were working with Jafary.
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Thai immigration police chief Nathorn Phrosunthorn said the arrests would help authorities suppress international human trafficking rings.

Read more: http://www.smh.com.au/world/police-crack-thai-fake-passport-racket-and-arrest-the-doctor-20160210-gmq7kl.html#ixzz3zkwAZzMo
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Vietnam jails former banker to life for $200m fraud

January 28, 2014
File photo: Vietinbank .
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Nhu worked at the risk management department of Vietinbank

The BBC

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A court in Vietnam has sentenced a former bank official to life in prison, in what is thought to be the country’s largest ever fraud trial.

Huynh Thi Huyen Nhu was convicted of illegally appropriating assets, forgery and defrauding investors and banks of about $200m (£121m).

Twenty-two others convicted alongside her got jail terms of up to 20 years.

Nhu, who worked at Vietinbank, admitted to faking documents to borrow money that was invested unsuccessfully.

She was formerly deputy chief of the risk management department of the bank, also known as the Vietnam Joint Stock Commercial Bank for Industry and Trade.

Nhu, 36, started borrowing millions of dollars in 2007 from financial institutions and individuals to finance real estate deals, according to court papers cited by state media.

She continued to borrow money at high interest rates, increasing debts even as she suffered losses for her investments, and forged documents from Vietinbank and other companies, the Thanh Nien newspaper said in a previous report.

The People’s Court in Ho Chi Minh city has ordered Ms Nhu to repay the money, but this is unlikely to happen, says BBC correspondent Nga Pham.

While the scale of the fraud has stunned the nation, what has angered people is the decision of prosecutors to clear Ms Nhu’s bank, Vietinbank, of any liability, our correspondent adds.

North Korea uses cash couriers, false names to outwit sanctions

February 16, 2013

North Korean people visit in front of bronze statues of North Korea founder Kim Il-sung (L) and late leader Kim Jong-il at Mansudae in Pyongyang, in this photo taken by Kyodo February 15, 2013, a day before the birthday of their late leader, Kim Jong-il. REUTERS/Kyodo

North Korean people visit in front of bronze statues of North Korea founder Kim Il-sung (L) and late leader Kim Jong-il at Mansudae in Pyongyang, in this photo taken by Kyodo February 15, 2013, a day before the birthday of their late leader, Kim Jong-il.  Credit: Reuters/Kyodo

By Jack Kim and Louis Charbonneau

SEOUL/UNITED NATIONS (Reuters) – Kim Kwang-jin says that when he worked for North Korea’s state insurance company in Singapore in 2003, he stuffed $20 million into two suitcases one day and sent it to Pyongyang as a special gift for then leader Kim Jong-il.

He received a medal for that, Kim Kwang-jin said.

North Korea, sanctioned by the United States since the 1950s and later by the United Nations after its nuclear tests, has been shuffling money for decades from illicit drugs, arms and financial scams and is now more expert at hiding it to fund its weapons programs and its leaders’ opulent lifestyles.

“There is tremendous difficulty identifying bank accounts,” said a South Korean government source who is directly involved in yet another sanctions push in the U.N. Security Council after the North conducted a third nuclear test this week.

A source who has access to the top levels of government in both North Korea and China, its only major ally, told Reuters that Pyongyang was not afraid of sanctions and was considering two more nuclear tests and a rocket launch this year.

“It is confident agricultural and economic reforms will boost grain harvests this year, reducing its food reliance on China,” said the source.

With limited trade and natural resources, Pyongyang’s revenues are heavily reliant on money-making scams ranging from fake $100 bills to arms sales and drugs money, according to reports by the U.S. government. Some diplomats and officials call it “The Soprano State” after the U.S. television series.

In 2005, $25 million of the regime’s cash was frozen at Macau-based Banco Delta Asia, which was designated a “primary money laundering concern” by the U.S. Treasury.

That case stands as practically the only public success in seizing funds from the isolated country that is now led by 30-year-old Kim Jong-un, the third of the Kim dynasty to rule.

The $25 million was released after protracted negotiations led by Kim Kye-gwan, the North’s long-standing negotiator with the United States, and U.S. envoy Christopher Hill, officials present at the talks said.

Pyongyang has learned from that episode and buried its funds even deeper, said the South Korean official, who spoke on condition of anonymity.

“The bank accounts are split up a lot,” the official said, meaning the money is divided into small amounts so that a freeze on one account would not greatly affect the total.

The official has tried to identify North Korean funds for years and was involved in previous sanctions pushes, although he said that identifying accounts and transactions was near impossible because of the use of fake names.

THE INSURANCE SCAM

Kim Kwang-jin, now living as a defector in South Korea, said the $20 million sent to Kim Jong-il in 2003 came from insurance scams by Pyongyang’s Korea National Insurance Corp (KNIC), which exaggerated claims from re-insurers and underwriters for events such as weather damage, ship and aircraft losses.

When contacted by Reuters by telephone and email, KNIC was not immediately available for comment.

Kim Kwang-jin said the money from the scams he participated in was funneled into what he termed North Korea’s “royal court fund” – money for Kim Jong-il and his inner circle.

“Kim Jong-il sent a letter of thanks to the people in my company (KNIC). And some of us received presents like DVD players and blankets. I later got a medal too,” said the 46-year-old.

Unlike oil-exporting Iran, which is heavily sanctioned by the United States and United Nations as well as others, North Korea’s puny $50 billion economy produces few goods other than minerals and seafood sold to China. Its trade with China was put by Beijing at $5.7 billion in 2011.

The U.S. Treasury Department’s Financial Crimes Enforcement Center estimated in 2005 that North Korea may earn as much as $500 million annually from counterfeiting, and another $100 million to $200 million annually from narcotics trafficking.

In just one known example of its role as a “narco-state”, a North Korean ship was raided by the Australian navy in 2003 and found to be carrying $50 million worth of heroin, according to the government in Canberra.

Kim Kwang-jin, who defected in 2003 with his family in Singapore, estimated the Pyongyang “royal court” fund at $4.5 billion, of which $2 billion was inside North Korea, $2 billion overseas and a further $500 million in the underground economy of various countries. He said he derived the estimates from his experience as a senior officer handling funds for North Korea.

It was not possible to verify Kim’s estimate, although other estimates made by defectors and academics are roughly similar.

The South Korean government source said that part of the new sanctions regime would include trying to intercept shipments of suitcases stuffed with cash to Pyongyang which enable North Korea to evade sanctions on banks.

‘BULK CASH’ METHOD

North Korea often uses its diplomats and other officials to ferry cash, according to Kim and other defectors and diplomats. This method, called “bulk cash”, is largely untraceable.

U.S. diplomats said new sanctions against North Korea that the Security Council might consider could be to add more names to a U.N. blacklist and measures similar to those in place for Iran, which include a U.N. arms embargo, a variety of asset freezes and a ban on some banking relations.

In addition, “you can strengthen the provisions to do with enforcing embargoes, inspecting ships”, said a senior U.N. diplomat, speaking on condition of anonymity.

Ship inspections have been a feature of the North Korean sanctions regime for a long time. Under a Security Council resolution, U.N. member states can inspect North Korean sea, air and land cargo, and seize and destroy any goods transported in violation of sanctions imposed for its nuclear tests.

North Korean ships have been inspected in India, Thailand, and the United Arab Emirates as well as on the high seas.

Another area where U.N. sanctions could be strengthened is enforcement, especially in China, diplomats say. U.N. experts who monitor sanctions violations have said Pyongyang regularly flouts the sanctions, sometimes by shipping banned goods such as weapons via China.

“If the Chinese would be willing to inspect half of what goes through Dalian harbor, that would be big,” said George Lopez, a former U.N. North Korea sanctions monitor, now at the University of Notre Dame.

China’s central bank and foreign ministry did not respond to requests for comment as it was the Lunar New Year holiday.

But the source with access to top officials in both countries said China would again support U.N. sanctions, although he declined to comment on what level of sanctions it would be willing to endorse.

“There will be new sanctions which will be harsh. China is likely to agree to it,” he said, without elaborating.

He said however that Beijing would not cut food and fuel supplies to North Korea, a measure that it reportedly took after a previous nuclear test.

THE HONG KONG LINK

In January, the Security Council added a raft of companies to a list of sanctioned entities in response to North Korea’s long-range rocket launch late last year, which violated a ban on Pyongyang from developing missile or nuclear technology.

These included a company called Leader (Hong Kong) International, listed with a Hong Kong address that was named as a subsidiary of Korea Mining Development Corp., the country’s main arms dealer and exporter of ballistic missile technology, according to the U.S. Treasury.

Checks by Reuters journalists at multiple addresses associated with the company in China and Hong Kong turned up no direct trace of the company or its managers.

Corporate records show the Hong Kong address for a similarly named company, Leader (Hong Kong) International Trading Ltd, as the same as that listed in the U.N. report, although the office moved in 2007.

A Chinese public security branch office is situated at an address listed for that company’s director in Dalian, about 300 km (185 miles) from the North Korean border.

“Companies and individuals are using different names. China may know, but wink at it,” Kim, the defector, said.

(Additional reporting by Ju-min Park and Narae Kim in SEOUL; James Pomfret in GUANGDONG; Grace Li and Anne Marie Roantree in HONG KONG; Michael Martina in DALIAN; Paul Eckert in WASHINGTON; Michelle Nichols at the UNITED NATIONS and Benjamin Kang Lim in BEIJING; Writing by David Chance; Editing by Raju Gopalakrishnan, Claudia Parsons and Mark Bendeich)