Thursday, December 15, 2016

Alaska Man Charged With Conspiring to Provide Unlawful Services to Iran and International Money Laundering Conspiracy

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.

No comments: