In August 2015, the St. Paul Police Department launched the Criminal Proceeds Unit. The unit is dedicated to the investigation of money earned from criminal activity, be it the sale of narcotics, human trafficking, fraud or other felony level crimes. Money is the lifeblood of a criminal organization and criminals are often motivated by easy profit and do not fear incarceration. Valuable pieces of evidence can be found by examining the movement of money obtained from criminal activity. With this new direction, the Criminal Proceeds Unit has significantly impacted the St. Paul Police Department and the community it serves. Every day, investigators work on cases and “follow the money.”
Demand for the services of the Criminal Proceeds Unit has quickly grown beyond narcotics and human trafficking to include investigations in elder abuse, theft, fraud and tax evasion. The tools and techniques developed by the Criminal Proceeds Unit have enhanced the St. Paul Police Department’s ability to investigate crime along with taking a proactive approach to financial investigations. But our success does not happen alone. Like all organizations, the St. Paul Police Department depends and benefits from its many partnerships with both the private sector and other government agencies. Some of our success has come from being task force officers with the U.S. Secret Service, members of the Minnesota Financial Crimes Task Force and serving on the Minnesota Suspicious Activity Review (SAR) team. The St. Paul Police Department’s Criminal Proceeds Unit works extensively with the local banking community by conducting training and networking with bank investigators.
The Criminal Proceeds Unit is also active with the local ACAMS Greater Twin Cities (GTC) Chapter. The ACAMS GTC Chapter has greatly accepted the participation of law enforcement within their chapter and has even asked a member of the Criminal Proceeds Unit to serve on their board. This partnership has benefited the ACAMS GTC Chapter and the St. Paul Police Department by deepening our working relationship and educating one another. Shannon Bennett, GTC chair of the board, stated, “We feel very fortunate to have law enforcement serve as members on the board. We find their contributions and insight has been instrumental in our success, which includes providing ideas for topics and speakers that truly add value to the mission of the chapter to provide education related to financial crime to our community.”
The success of partnering with private and public sector institutions has resulted in a series of successful cases and prosecutions of criminals who typically might be too hard to catch at the local level and too elusive for overworked federal law enforcement agencies to catch. The first success was in the investigation of Papa Dmitri’s Pizza. For many years, law enforcement heard that Papa Dmitri’s was a front business for a criminal enterprise run by a longtime St. Paul gang member. By focusing on the financial activity of Papa Dmitri’s Pizza, investigators were able to arrest the owners of the pizza shop along with obtaining a conviction of federal weapons charges along with concealing criminal proceeds through a business. This was the first time this statute was successfully prosecuted in Ramsey County, St. Paul, Minnesota.
Next, the Criminal Proceeds Unit was brought in to assist on a large embezzlement scheme of a local business in St. Paul. An employee who worked in the payroll unit of a large company in St. Paul managed to embezzle $450,000 by masking payments to her in the names of other employees. To make matters worse, when confronted, the suspect tried to convince investigators that her boyfriend, who she claimed committed suicide, wrote a suicide note claiming responsibility for her crime. Not only was the boyfriend alive and well in western Wisconsin, but the suspect managed to use the embezzled funds to purchase many expensive assets, such as two new vehicles and a semi-truck. Working with private partners and the U.S. Secret Service, these assets were recovered, the suspect went to prison and money from the sale of the recovered assets was returned to the victimized company to lessen the total loss.
Perhaps the biggest case, and certainly the most interesting case the St. Paul Police Department’s Criminal Proceeds Unit investigated was the Seng Xiong, “Hmong Tebchaws,” affinity fraud scheme. This case was worked with the cooperation of the U.S. Secret Service and the Federal Bureau of Investigation (FBI). Tipped off by a private sector financial partner, St. Paul investigators began to track the financial activity of the suspect, Seng Xiong. What investigators quickly learned was that Xiong had not only manipulated people, but was also victimizing a vulnerable population. Xiong promised his victims a new country and financial security. His scheme was successful as it tapped into many deeply held dreams by the Hmong community of one day having a country of their own.
Xiong was a drifter; a man with no means of support other than the lies he spewed about his top secret work with the U.N. and the White House, which he said supported the establishment of a country for the Hmong people. The Hmong people are refugees from the northern highlands of Laos. A nomadic group who never had their own country, but fought alongside U.S. troops during the “Secret War” against communist soldiers in Vietnam. Fiercely loyal to the U.S. government, many Hmong people believed they were owed their own country and that secret deals and backroom meetings with intelligence officials is how a new country would come about. Xiong, “talked the talk” and convinced a population eager to hear a certain message that he was just the person to pull it off.
The Hmong were persecuted for their allegiance to the U.S. They fled Laos into camps in Thailand and hundreds of thousands of Hmong people started to migrate from Southeast Asia to the U.S., Australia and France. Assimilation was tough and many of the older generations longed to return to the hills of Laos and have their own piece of land. In this narrative, Xiong saw an opportunity. Orchestrated from Minnesota and California, through a network of conference call lines and YouTube videos, Xiong convinced the poor and disenfranchised that he was in the middle of holding high level meetings with the U.S. government and they had “authorized,” a new Hmong country. For a small investment, Xiong told his eager audience that their “dreams would become a reality.”
Xiong enticed “investors” with promises of 10 acres of land, a five-bedroom house, free education for your children, free healthcare and good paying government jobs. Depending on your investment level of $3,000, $4,000 or $5,000, you would see a yearly return on your investment based on the revenue the government collected. As a “founder” of the new country, your name would be etched in the halls of time. The scheme worked as Xiong managed to raise over a million dollars from victims in 17 states, Australia and France. Hmong people, eager to return home to reclaim the lands of their ancestors, lined up to wire him money or went to their local bank to make a direct deposit into Xiong’s personal checking account.
When Xiong realized the government was onto his scam, he tried to flee the country from Los Angeles International Airport. Investigators from the Criminal Proceeds Unit, along with the Los Angeles FBI and the U.S. Secret Service arrested Xiong as he tried to board an airline destined for Thailand. In the end, investigators seized $1.7 million in cash held in multiple accounts under Xiong’s name. At trial, Xiong pitched a far-fetched story to the jury about funding insurgencies and fighting the communists in Southeast Asia, but they did not buy it. Xiong was convicted in federal court for mail and wire fraud.
Successes like these are not built overnight and they are not the work of any one person. The success of the St. Paul Police Department’s Criminal Proceeds Unit depends largely on the partnerships established with our banking community and local and federal law enforcement. The Criminal Proceeds Unit actively participates in many ACAMS events, attends the annual conferences and continues to pursue strong working relationships with all our partners. Working with ACAMS has provided invaluable tools and networking opportunities for the unit. In fact, members of our team always leave each training session with an idea on how better to serve the citizens of St. Paul and the community that surrounds us.
At local ACAMS events, the Criminal Proceeds Unit meets and speaks with bankers and other professionals in the financial sector to discuss recent human trafficking cases, narcotics, terrorism and the latest trends in fraud. Although still a very new unit with much to learn, the Criminal Proceeds Unit is poised to help the St. Paul Police Department accomplish its mission of serving the citizens of our city by tackling those tough to catch criminals who exploit the financial system for their own selfish gain. This cannot be done alone. Members of the Criminal Proceeds Unit are eager to continue their participation with ACAMS. Through networking, partnerships, knowledge sharing and mutual assistance, the St. Paul Police Criminal Proceeds Unit, along with its many wonderful partnerships, is building a stronger police department and a safer community.