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Financial Crime

Check Cashing Owner Indicted on Eight-Counts of Financial Crime

Posted on: August 14th, 2018 by Julie

The Owner and Compliance Officer of Kayla Companies, John Drago has been charged with eight indictments by the federal court in Central Islip of Long Island, NY for financial crime. Drago faces a maximum sentence of up to 10 years’ imprisonment.

The majority of the charges were direct violations of the Bank Secrecy Act (BSA) that included failure to file Currency Transaction Reports (CTRs) for customers exceeding $10,000. Additionally, he is also charged with failure to collect and pay taxes.

“As alleged in the indictment, Drago flagrantly violated his obligations as the owner of check cashing businesses to follow federal regulations designed to prevent such businesses from being used to facilitate money laundering; he also failed to fulfill his responsibility as an employer to pay the proper taxes,” stated United States Attorney Richard P. Donoghue.  “This Office and our law enforcement partners are committed to ensuring the integrity of financial institutions, including check cashing businesses.”

Drago is accused of BSA violations that include:

  • Employees were instructed to cash multiple checks in excess of $10,000 in a single day for certain customers without filing a CTR.
  • Directed employees to deposit and cash, over the course of several days, checks that had been submitted together on a single day in amounts in excess of $10,000.
  • Employees were trained to tell customers who presented individual checks in amounts exceeding $10,000 to return with multiple checks in amounts that were less than $10,000 to avoid the reporting requirements.

As part of the BSA, financial institutions are required to file a CTR with the Financial Crimes Enforcement Network (FinCEN) for each deposit, withdrawal, exchange of currency or other payment or transfer of $10,000  or more conducted by or on behalf of the same individual on the same business day. Such filings allow the law enforcement to track untaxed dollars or money laundering.

The government’s case is being handled by the U S Attorney’s Office Long Island Criminal Division and Drago is currently out on a $500,000 bail. No court date has yet been scheduled.

If you would like help with your compliance program policies and procedures, contact us.

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