JDG:CSK/CWP/MSH

F.#2012R00884
UNITED STATES OF AMERICA
- against -
BARGAIN ISLAND and
GEORGE GONCHAR,
Defendants.
- - - - - - - - - - - - - X
THE GRAND JURY CHARGES:
I N D I C T MEN T
ls2. ,- 371: 2 398
and 3551 et seg.; T. 21,
U.S.C., 853(p); T. 28,
U.S.C., 2461 (c); T. 31,
U.S.C., 5317(c),
5318 (h) (2), 5322 (a), 5322 (d),
5324 (a) (2) and 5324 (d) (2
MATSUMOTO, J
INTRODUCTION
-V"" I \(I.!{ M.J
At all times relevant to this Indictment, unless
otherwise indicated:
A. The Bank Secrecy Act
1. The Bank Secrecy Act ("BSA"), codified at Title
31, United States Code, Sections 5313-5326 was a set of laws and
regulations enacted by Congress to address an increase in
criminal money laundering through financial institutions.
2. Check cashers qualified as financial institutions
within the meaning of the BSA. A check casher was someone
engaged in the business of cashing checks for other people in
amounts greater than $1,000 in currency (such as cash) or other
monetary instruments, for any person, on any day, in one or more
transactions. A check casher would typically charge a fee for
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 1 of 14 PageID #: 1
this service. Check cashers enabled people to cash checks
without having to go to a bank or otherwise have a bank account.
3. One of the BSA mechanisms to uncover criminal
activity conducted through financial institutions was a
requirement that check cashers and other financial institutions
file a "Currency Transaction Report" ("CTR"), FinCEN Form 104,
with the Department of the Treasury, for any transaction
involving more than $10,000 in currency.
4. Title 31, United States Code, Section S313(a) and
related regulations, including Title 31, Code of Federal
Regulations, Section 103.22(c), require that financial
institutions such as check-cashers treat multiple currency
transactions as a single transaction and file a CTR if the
financial institution had knowledge that the multiple
transactions were by or on behalf of any person and result in
either cash in or cash out totaling more than $10,000 during any
one business day.
5. Each CTR consisted of three parts. Part I
required the financial institution to verify and accurately
record the name and address of the individual who conducted a
reportable currency transaction, as well as to accurately record
the identity, social security number, or taxpayer identification
number of any person or entity on whose behalf the currency
transaction was conducted. Part II required the financial
2
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 2 of 14 PageID #: 2
institution to record the date, the amount of the transaction and
the form of the transaction. Part III required the name of the
financial institution where the transaction occurred, the person
completing the CTR and the person approving the completion and
filing of the CTR.
6. CTRs were filed with the Financial Crimes
Enforcement Network ("FinCEN"), a bureau of the Department of the
Treasury.
7. In addition, the BSA required check cashers to
develop, implement and maintain an effective anti-money
laundering program reasonably designed to prevent the check
casher from being used to facilitate money laundering. Title 31,
Code of Federal Regulations ("C.F.R.") 1022.210, eff. Mar. 1,
2011, formerly Title 31, C.F.R. 103.125. The program was
required to have written policies, procedures and controls
governing the verification of customer identification, the filing
of reports such as CTRs, the creation and retention of records,
responses to law enforcement requests and other compliance with
BSA requirements. Such a program further required the check
casher to have a compliance officer, who would be responsible for
assuring that the check casher complied with all BSA
requirements.
8. Despite these regulations, check cashers were
still a common venue for individuals who wanted to cash large
3
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 3 of 14 PageID #: 3
numbers of checks anonymously to facilitate fraud and money
laundering schemes, particularly in the area of health care
fraud. Individuals engaged in such conduct commonly converted
the proceeds of their fraud into cash by presenting checks to
check cashers who they knew would not ask for proof of the
payee's identity and would either file CTRs with false
information or not file CTRs at all.
B. The Defendants
9. The defendant BARGAIN ISLAND was incorporated in
the Commonwealth of Pennsylvania on or about April 27, 1993, with
a principal place of business at 7915 Bustleton Avenue,
Philadelphia, Pennsylvania. BARGAIN ISLAND was issued a license
by the Pennsylvania Department of Banking to conduct check
cashing activities. BARGAIN ISLAND was registered with FinCEN as
a money service business and was a "financial institution," as
that term was defined in Title 31, United States Code, Section
5312(a) (2) (k) and accompanying regulations. As a result, BARGAIN
ISLAND was subject to the CTR reporting requirements of the BSA.
10. The defendant GEORGE GONCHAR was the owner of the
defendant BARGAIN ISLAND. As owner, GONCHAR oversaw BARGAIN
ISLAND's day-to-day operations, which included setting check
cashing fees, managing BARGAIN ISLAND's bank accounts and the
negotiation of customers' checks for currency, implementing BSA
policies and procedures and interacting with outside auditors and
4
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 4 of 14 PageID #: 4
accountants. In addition, GONCHAR monitored incoming fees and
reviewed and filed CTRs on behalf of BARGAIN ISLAND.
COUNT ONE
(Conspiracy to File False CTRs)
11. The allegations contained in paragraphs 1 through
10 are realleged and incorporated as if fully set forth in this
paragraph.
A. Object of the Conspiracy
12. In or about and between October 2009 and October
2010, both dates being approximate and inclusive, within the
Eastern District of New York and elsewhere, the defendants
BARGAIN ISLAND and GEORGE GONCHAR, together with others, for the
purpose of evading the reporting requirements of Title 31, United
States Code, Section 5313(a), and regulations prescribed
thereunder, caused and attempted to cause BARGAIN ISLAND, a
domestic financial institution, to file CTRs containing material
omissions and misstatements of fact, contrary to Title 31, United
States Code, Sections 5324 (a) (2) and 5324 (d) (2)
B. Manner and Means of The Conspiracy
13. The object of the conspiracy was carried out as
follows:
a. Individuals acting as check couriers ("check
couriers") brought multiple checks to the defendant BARGAIN
ISLAND to be cashed for a fee.
5
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 5 of 14 PageID #: 5
b. The check couriers received checks made
payable to various medical services companies, including medical
clinics and medical supply companies (the "Medical Services
Companies") and presented them for cashing at the defendant
BARGAIN ISLAND. BARGAIN ISLAND, through the defendant GEORGE
GONCHAR, would cash these checks. The check couriers would
receive the cash and, either directly or through other check
couriers, would deliver the cash to the individual or individuals
from whom the check courier had received the checks. BARGAIN
ISLAND and the check couriers would each take a fee for cashing
the checks.
c. On almost all occasions, the checks cashed at
the defendant BARGAIN ISLAND exceeded, in the aggregate, $10,000
in a single day. The checks appeared, on their face, to be
related to the Medical Services Companies to which the checks
were made payable.
d. The defendant GEORGE GONCHAR knew that the
check couriers presenting the checks to BARGAIN ISLAND had no
connection to the checks other than delivering the checks to
BARGAIN ISLAND to be cashed.
e. The defendant BARGAIN ISLAND, through the
defendant GEORGE GONCHAR, would file CTRs with the United States
Department of the Treasury reflecting the cash provided to the
check couriers, and would indicate in the CTRs that the checks
6
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 6 of 14 PageID #: 6
were being cashed on behalf of the check couriers or companies
associated with the check couriers when BARGAIN ISLAND and
GONCHAR well knew and believed that the checks were being cashed
on behalf of an individual or entity other than those actually
presenting the checks to be cashed. The total amount of check
transactions at BARGAIN ISLAND reflected on the CTRs exceeded
$5.8 million.
C. Overt Acts
14. In furtherance of the conspiracy and to accomplish
its objects, within the Eastern District of New York and
elsewhere, the defendants BARGAIN ISLAND and GEORGE GONCHAR,
together with others, committed and caused to be committed, among
others, the following:
a. On or about May 4, 2010, the defendants
BARGAIN ISLAND and GEORGE GONCHAR caused BARGAIN ISLAND to file a
CTR falsely stating that checks were cashed at BARGAIN ISLAND in
the amount of $103,800 by a check courier, an individual whose
identity is known to the Grand Jury ("Check Courier #1"), on
behalf of a corporation, the identity of which is known to the
Grand Jury ("Corporation #1") when, in fact, they were cashed on
behalf of others.
b. On or about August 6, 2010, the defendants
BARGAIN ISLAND and GEORGE GONCHAR caused BARGAIN ISLAND to file a
CTR falsely stating that checks were cashed at BARGAIN ISLAND in
7
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 7 of 14 PageID #: 7
the amount of $15,866 by Check Courier #1 on behalf of
Corporation #1, when, in fact, they were cashed on behalf of
others.
c. On or about October 20, 2010, the defendants
BARGAIN ISLAND and GEORGE GONCHAR caused BARGAIN ISLAND to file a
CTR falsely stating that checks were cashed at BARGAIN ISLAND in
the amount of $17,309.88 by Check Courier #1 on behalf of
Corporation #1, when, in fact, they were cashed on behalf of
others.
(Title 18, United States Code, Sections 371 and
3551 et seq.)
COUNTS TWO THROUGH SEVEN
(Filing False CTR)
15. The allegations contained in paragraphs 1 through
10 and 13 through 14 are realleged and incorporated as if fully
set forth in this paragraph.
16. On or about the dates set forth below, within the
Eastern District of New York and elsewhere, the defendant GEORGE
GONCHAR, together with others, did knowingly and for the purpose
of evading the reporting requirements of Title 31, United States
Code, Section 5313(a) and the regulations promulgated thereunder,
cause and attempt to cause BARGAIN ISLAND, a domestic financial
institution, to file CTRs that contained material omissions and
misstatements of fact in violation of Title 31, United States
Code, Sections 5324(a) (2) and 5324(d) (2) and as part of a pattern
8
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 8 of 14 PageID #: 8
of illegal activity involving more than $100,000 in a twelve-
month period, as specified below:
Count Date False Information Amount CTR No.
2 03/18/10 Checks cashed by Check $37,100.35 20100886231230
Courier #1 on behalf of
Corporation #1
3 03/26/10 Checks cashed by Check $28,701.65 20100916328530
Courier #1 on behalf of
Corporation #1
4 04/13/10 Checks cashed by Check $24,463.00 20101106380230
Courier #1 on behalf of
Corporation #1
5 05/4/10 Checks cashed by Check $103,800.00 20101306744130
Courier #1 on behalf of
Corporation #1
6 08/24/10 Checks cashed by Check $24,545.86 20102426669030
Courier #1 on behalf of
Corporation #1
7 10/20/10 Checks cashed by Check $17,309.88 20103006132530
Courier #1 on behalf of
Corporation #1
(Title 31, United States Code, Sections 5324(a) (2) and
5324(d) (2); Title 18, United States Code, Sections 2 and 3551 et
seq. )
COUNT EIGHT
(Failure to Maintain an Effective
Anti-Money Laundering Program)
17. The allegations contained in paragraphs 1 through
10 and 13 through 14 are realleged and incorporated as if fully
set forth in this paragraph.
9
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 9 of 14 PageID #: 9
18. In or about and between October 2009 and October
2010, both dates being approximate and inclusive, within the
Eastern District of New York and elsewhere, the defendants,
BARGAIN ISLAND and GEORGE GONCHAR, together with others, did
willfully violate the Bank Secrecy Act, Title 31, united States
Code, Sections 5318(h) (2) and 5322, and regulations issued
thereunder, specifically, Title 31, Code of Federal Regulations,
Section 1022.210(a) (formerly Section 103.125(a)), by failing to
develop, implement and maintain an effective anti-money
laundering program at BARGAIN ISLAND, a domestic financial
institution and money services business.
19. Specifically, the defendants BARGAIN ISLAND and
GEORGE GONCHAR knowingly and wilfully failed to implement and
maintain effective policies, procedures and internal controls
for (1) verifying customer identification, in particular as to
those customers receiving in excess of $10,000 in currency in a
single day as required by the BSA; (2) filing accurate and
truthful CTRs for currency transactions in excess of $10,000,
conducted by or on behalf of the same person on the same day;
and (3) assuring that CTRs were properly filed.
20. The defendants BARGAIN ISLAND and GEORGE GONCHAR
took actions designed to prevent the implementation and
maintenance of an effective anti-money laundering program, in
that they:
10
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 10 of 14 PageID #: 10
a. Failed to obtain adequate, or any,
identification of check couriers cashing checks and the
individuals on whose behalf such checks were being cashed;
b. Instructed Check Courier #1 to falsely
represent that Check Courier #1 was conducting transactions on
behalf of Corporation #1 when in fact they knew that Corporation
#1 had nothing to do with the transactions;
c. Failed to have designated a compliance
officer; and
d. Filed false CTRs.
(Title 31, United States Code, Sections 5318(h) (2),
5322(a) and 5322(d); Title 18, United States Code, Sections 2
and 3551 et .)
CRIMINAL FORFEITURE ALLEGATION
AS TO COUNTS ONE THROUGH SEVEN
21. The United States hereby gives notice to the
defendants charged in Counts One through Seven that, upon their
conviction of any such offense, the government will seek
forfeiture in accordance with Title 31, United States Code,
Section 5317 and Title 28, United States Code, Section 2461(c),
which require any person convicted of such offenses to forfeit
any property, real or personal, involved in such offenses, and
any property traceable to such property, including but not
limited to the following: a sum of money equal to five million
11
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 11 of 14 PageID #: 11
and eight hundred thousand dollars in United States currency
($5,800, 000) .
22. If any of the above-described forfeitable
property, as a result of any act or omission of the defendants:
a. cannot be located upon the exercise of due
diligence;
b. has been transferred or sold to, or
deposited with, a third party;
c. has been placed beyond the jurisdiction of
the court;
d. has been substantially diminished in value;
or
e. has been commingled with other property
which cannot be divided without difficulty;
it is the intent of the United States, pursuant to Title 21,
United States Code, Section 853(p), to seek forfeiture of any
12
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 12 of 14 PageID #: 12
property of such defendants up to the value of the forfeitable
property describged in this forfeiture allegation.
(Title 28, United States Code, Section 2461(c); Title
31, United States Code, Section 5317(c); Title 21, United States
Code, Section 853(p))

LORETTA E. LYNCH
UNITED STATES ATTORNEY
EASTERN DISTRICT OF NEW YORK
A TRUE BILL
FORE PERSON
w. Gv/\W\y
JENNIFER SHASKY CALVERY
CHIEF, ASSET FORFEITURE AND
MONEY LAUNDERING SECTION
UNITED STATES DEPARTMENT OF JUSTICE
13
Case 1:12-cr-00396-KAM Document 1 Filed 06/12/12 Page 13 of 14 PageID #: 13