SMURF CITY: Epstein Money Laundering — Marty Follows the Money In this Guest Post
Retired IRS criminal investigator Martin Sheil explains ‘smurfing’ and how this evasion technique relates to Donald Trump’s erstwhile bestie Jeffrey Epstein
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Today’s guest post comes from retired IRS criminal investigator Martin Sheil, a Chicago resident, and a frequent contributor to Bette Dangerous. Sheil supervised the largest successful law enforcement undercover money laundering investigation ever undertaken against organized prostitution, called Operation Outcall.—hsc
Guest Post: Epstein Money Laundering - Smurf City
by Martin Sheil
How did Epstein pay his girls?
According to this linked Business Insider article, Jeffry Epstein sent his accountants to make large cash withdrawals from Epstein-related bank accounts held at JPMorgan Chase HQ on Park Ave in Midtown, New York City (Smurf City).
Accountants such as Harry Beller made multiple cash withdrawals just under the reporting threshold of $10K to evade the mandatory issuance of a CTR (Currency Transaction Report) by JPMorgan to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
Such evasion of the Bank Secrecy Statutes is called smurfing by those law enforcement agents who are compelled to grapple with it when attempting to “follow the money.” The technical legal term for smurfing is called “Structuring.”
Per DOJ, Title 31 U.S.C. Section 5324 makes it a crime to engage in certain conduct with respect to four different Bank Secrecy Act reporting requirements.
It is a crime to break up cash transactions at a financial institution in order to avoid reporting requirements under:
Section 5313 (greater than $10,000) (CTR)
Section 5316 (greater than $10,000) (CMIR)
Section 5325 (equal to or greater than $3,000) (Customer ID)
Section 5331 (greater than $10,000) (Form 8300)
The penalty for a violation of Section 5324 is imprisonment for not more than 5 years and/or a fine of $250,000. If the structuring involves more than $100,000 in a 12-month period or is performed while violating another law of the United States, the penalty is increased to imprisonment not to exceed 10 years and/or a fine of $500,000.
Structuring is best known to Narcotics Traffickers, and adopted by Human Traffickers, in order to evade detection of unlawful activities by law enforcement. This, essentially, makes it harder to follow the money involved in Specified Unlawful Activities (SUA).
Again, per DOJ, besides violating Bank Secrecy statutes, Structuring/Smurfing can be prosecuted under Money Laundering Statutes:
Basic Money Laundering Provision
Title 18 U.S.C. Section 1956(a)(1) makes it a crime to knowingly conduct, or attempt to conduct, a “financial transaction” with proceeds from “specified unlawful activity” (SUA) with specific intent to:
Promote SUA.
OR
Conceal or disguise the source, origin, nature, ownership, or control of SUA proceeds.
OR
Evade reporting requirements (CTRS)
OR
Evade taxes.
Did Epstein direct his accountants in their smurfing activities?
Is evidence/testimony available to corroborate such an allegation?
We have not talked about conspiracy here yet.
Per DOJ, Title 18 U.S.C. Section 1956(h) makes it a crime to conspire to commit any of the offenses set forth in U.S.C. Section 1956 or Section 1957.
Accountants such as Harry Beller who structured, or smurfed, large cash withdrawals from JPMorgan Chase could have, or should have, been investigated and prosecuted for the above delineated statutes.
What about Epstein?
Did he conspire with Harry Beller or any other Epstein accountants, lawyers or Epstein employees in directing them to engage in financial transactions with JPMorgan Chase or any other financial institution with the proceeds of an SUA to promote or conceal the SUA?
Money Laundering Conspiracy
To charge a money laundering conspiracy there must be at least two conspirators not including any undercover government agents or informants.
The government needs to prove that each Defendant joined the conspiracy at some point with knowledge of at least some of its purposes or objectives and with the intent to accomplish them.
The traditional prosecutorial approach has been to indict, or threaten to indict, minor role players in a conspiracy, e.g., accountants here like Harry Beller with the intent to “flip the conspirators and obtain their direct testimony to indict others higher up in the food chain.”
Can other Epstein conspirators be investigated/prosecuted/fined/sanctioned?
Even now? By the U.S. Government?
Note - the above narrative did not discuss “the International Money Laundering Prong.”
Title 18 USC Section 1956(a)(2) makes it a crime to transport, transmit, or transfer, or attempt to transport, transmit, or transfer, monetary instruments or funds from the United States to or through a place outside the United States, or to the United States from or through a place outside the United States. It can be violated by:
Moving any money internationally (including money that is not criminal proceeds) with the intent to promote SUA;
OR
Moving “dirty” money internationally, knowing that it represents the proceeds of some form of unlawful activity, and knowing that the movement is designed to conceal or disguise the nature, location, source, ownership, or control of the proceeds of a specified unlawful activity, or to avoid a transaction reporting requirement.
What about JPMorgan Chase?
The Conspiracy.
Jeffrey Epstein was at the top of the food chain/conspiracy here and could have been easily charged, in my opinion, with money laundering charges as well as Human Trafficking charges.
The Statute of Limitations (5 years) has passed on the main potential Money Laundering charges against folks like Harry Beller. But what about other potential conspirators in the Epstein Money Laundering Conspiracy?
What about Smurf City - JPMorgan Chase itself?
Well, JPMorgan Chase has clearly facilitated Jeffrey Epstein human trafficking financial transactions.
What about JPMorgan Chase executives?
E.g., Jamie Dimon, Jes Staley, Mary Erdoes - all of whom reportedly had knowledge of Epstein’s Human Trafficking activities as well as voluminous financial activities taking place in a multitude of Epstein-related accounts of JPMorgan Chase.
JP Morgan Chase profited substantially on the numerous Epstein financial transactions occurring at the bank from which the bank could charge transaction fees. So, too, did the bank executives whose annual bonuses are based on bank profits.
Jeffrey Epstein reportedly steered numerous clients of his to JPMorgan Chase making Epstein a “whale” of a client to JPMorgan Chase and too important in the minds of many to cut ties with in spite of his scurrilous activities.
If JPMorgan Chase was laundering the proceeds of Narcotics Trafficking, would there be any hesitation for the DOJ and SDNY to prosecute JPMorgan Chase for money laundering?
What is the difference?
What is the holdup?
Note: Several European banks, in addition to Russian banks, have been referenced in various media reports as having involvement with Epstein - Epstein clients and/or Epstein “girls.”
Note: Documentation and time stamping of any Overt Acts by any of the participants in the Money Laundering Conspiracy can and will extend the five-year money laundering criminal statutes referenced above.
Should the executive management team at JPMorgan Chase have been prosecuted on Money Laundering charges? YES.
Can they still be prosecuted. Maybe.
Encourage SDNY to investigate, and let the chips fall where they may.
What about European and Russian banks (Sberbank and Alfa-Bank)?
Should they, could they, be investigated? Prosecuted? Fined? Sanctioned?
Congress has now passed legislation REQUIRING the release of all Epstein files in the possession of the U.S.Government.
President Trump signed this legislation and compelled the DOJ and SDNY to open up a new investigation with regard to the “Epstein files.”
Let us all see where that takes us.
Following the money will take us to the accountants who will take us to the banks.
Sure, we all want to see the clients identified and prosecuted.
Start with the Smurfs and then move on to Smurf City and then to all the other banks and bankers involved!
Sounds like a plan.
Donald Trump – make it so!—Martin Sheil, Supervisory Special Agent, IRS, Criminal Investigations, retired; originally published at Marty’s substack.
Author’s note: Deutsche Bank, that paragon of virtue, was fined $150 million by New York state regulators in July 2020 for “significant compliance failures” in its dealings with Jeffrey Epstein. An investigation found the bank failed to properly monitor Epstein’s accounts and transactions, despite being aware of his criminal history as a convicted sex offender. The bank admitted it was a “critical mistake” to accept Epstein as a client in 2013, and was found to have processed hundreds of transactions totaling millions of dollars in payments to women with Eastern European surnames and “Russian models,” women’s tuition, rent, and other expenses; and more than $800,000 in suspicious cash withdrawals, often structured — as Marty defined it — to avoid reporting requirements. This is the same Deutsche Bank that paid $630 million in fines after laundering $10 billion dollars of Russian money.
Lastly, one of my favorite memories of interviewing Marty was when he explained the difference between a mob criminal defense lawyer and a government prosecutor. The criminal defense lawyer has a thousand dollar haircut and sports a handmade Italian suit, while the prosecuting attorney has a $7 dollar haircut and got his suit at a two-for one sale.—hsc
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