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.
