Kenneth Zong, 77, of Anchorage Alaska, was named as the sole
defendant in the 47-count indictment charging him with conspiracy to violate
the International Emergency Economic Powers Act (IEEPA), unlawful provision of
services to Iran, money laundering conspiracy and money laundering.
The announcement was made by U.S. Attorney Karen L. Loeffler
for the District of Alaska.
The indictment alleges that at an undetermined time, Zong
left Alaska for Seoul, South Korea, and operated businesses there. From January
2011 through at least April 2014, Zong and four co-conspirators – three Iranian
nationals and one U.S. citizen – allegedly conspired to evade the prohibitions
of IEEPA and Iranian Transactions and Sanctions Regulations (ITSR) by engaging
in false, fictitious and fraudulent transactions which were designed to
unlawfully convert and remove Iranian owned funds, equivalent to approximately
$1 billion United States dollars (USD). These funds were held in controlled
Korean bank accounts and converted into more easily tradeable currencies, such
as dollars and/or euros, by defrauding the Korean regulators into thinking the
transactions were legitimate.
Zong is charged with transferring those currencies to more
than 10 countries around the world, including the U.S., United Arab Emirates,
Switzerland, Germany, Austria and Italy. Zong received payment for these acts
from the Iranian nationals in an amount from $10 million to $17 million USD.
The indictment alleges that the scheme began in 2011, when
Zong changed the name of his Korean company, “KSI Ejder, Inc.” (KSI) to
“Anchore.” Zong used KSI/Anchore as a conduit to convert and distribute Iranian
funds into USD and/or euros, by fictitiously selling marble tiles and other
construction supplies to an Iranian shell company in Kish Island, Iran.
KSI/Anchore fictitiously purchased Italian marble tiles and other construction
supplies from “MSL & Co Investment Trading” (MSL Investment Dubai), an
Iranian-controlled shell company in Dubai, which were then fictitiously shipped
directly to another fictitious company in Iran.
Zong and his co-conspirators created false and fictitious
contracts, bills of lading and invoices to show Korean government banking
regulators that the Iranian company owed KSI/Anchore for the false marble
purchases. This resulted in the transfer of Iranian funds, at the direction of
Zong’s co-conspirators, from the restricted Iranian bank account to Zong’s
KSI/Anchore account. Zong then transferred the funds to entities and
individuals throughout the world.
Zong is also charged with 43 counts of money laundering and
one count of money laundering conspiracy for his actions in connection with the
$10 million dollar fee paid to him by his Iranian associates. In furtherance of
the scheme, Zong transferred $10 million of his fees from Korea to a
co-conspirator who resided in Anchorage. This individual also created and
operated various companies to be used as front companies to purchase real
estate, automobiles, an interest in a yacht and other purchases or transfers of
the Iranian funds.
The U.S. embargo on Iran, which is enforced through IEEPA
and the ITSR, prohibits the export of goods, technology, and services to Iran
with very limited exceptions.
An arraignment date has not been set.
U.S. Attorney Loeffler commended the IRS-Criminal
Investigation and the FBI for the investigation of this case.
An indictment is only a charge and is not evidence of guilt.
A defendant is presumed innocent and is entitled to a fair trial at which the
government must prove guilt beyond a reasonable doubt.
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