Cuban immigrant accused of conspiracy in Medicare fraud international money laundering scheme

Jul. 05, 2012
Cuban immigrant accused of conspiracy in Medicare fraud international money laundering scheme
By JAY WEAVER, MIMI WHITEFIELD AND JACQUELINE CHARLES | McClatchy Newspapers

MIAMI - Oscar L. Sanchez, a Cuban immigrant with little education, helped revolutionize Miami's Medicare rackets through a storefront check-cashing business that enabled various criminals to launder $63 million from the United States through a web of overseas accounts into Cuba's national bank, authorities say.

Sanchez allegedly plotted with Medicare fraud offenders and other criminals to divert the dirty money through more than a dozen shell companies' bank accounts in Canada and Trinidad. The laundered money was ultimately funneled in transfers of $100,000 or more from a Trinidad bank's Havana branch into the Banco Nacional de Cuba, according to federal authorities.

FBI agents and prosecutors are trying to figure out who received the money in Cuba - Medicare fraud fugitives, other criminals, government officials or all of the above? Or was the money moved offshore again to other countries? As authorities try to trace the money, they're putting the squeeze on Sanchez to flip on other possible co-conspirators who collaborated with him in South Florida, Canada, Trinidad and Cuba.

Sanchez was charged last month with conspiring to launder millions of Medicare funds for 70 South Florida health-care companies in an unprecedented indictment that shook Miami, Washington, D.C., and Havana. Sanchez, 46, a naturalized U.S. citizen who lived with his wife in Naples, Fla., pleaded not guilty and was ordered detained before trial.

Sanchez's defense attorney, Peter Raben, described his client as "a simple, hard-working guy."

"The likelihood that he revolutionized anything is less than zero," Raben told The Miami Herald.

The Sanchez case has revealed deep flaws in the Medicare program and the international banking system. The defendant is accused of conspiring with a "syndicate of international money launderers" that used fraudulent Medicare profits as collateral to pay South Florida health-care scammers cash and also move money into Cuba's banking system to hide it.

What drove this underground banking syndicate? Since the mid-1990s, waves of Cuban migrants have learned myriad ways to fleece the taxpayer-funded health-care program for the elderly and disabled. Meanwhile, about 150 suspects have fled back to the communist island and other parts of Latin America to evade prosecution, according to the FBI and court records.

A former Miami federal prosecutor who helped lead the crackdown on Medicare fraud in recent years said fugitives flee to Cuba because its government never turns over criminals to U.S. authorities. And because the fugitives can protect their Medicare millions.

"The money trail ends there," said Washington, D.C., attorney Ben Curtis.

Andy Gomez, a senior fellow at the University of Miami's Institute for Cuba and Cuban-American Studies, echoed that view, saying that "once the money gets to Cuba, it goes into a black hole."

Gomez, like many others, believes the Cuban government extorts the criminals who go back and forth between South Florida and the island. But he also now believes the Sanchez case shows that Cuba has been "directly involved" in the money laundering of Medicare millions.

"Sanchez didn't have the sophistication and knowledge to run this operation," said Gomez, who speculated that a Cuban intelligence handler must have met with him and given him instructions. "He couldn't do this on his own."

The U.S. attorney's office has said it has no evidence that the Cuban government of Fidel and Raul Castro played a role in the alleged scheme to launder fraudulent Medicare proceeds. Cuban officials bristled at the allegation, denying any involvement.

But The Miami Herald has learned that the laundered millions were automatically wired from the shell companies' dozen-plus accounts at Trinidad's Republic Bank branch in Havana into Cuba's state-controlled bank. Publicly, federal court documents have only said that "at least two of those accounts had standing instructions to the bank to wire all money immediately from the accounts to the Cuban banking system."

Cuba's national bank is broken down into several banks with different specialties, offering commercial, consumer, trade, tourism, foreign exchange and services.

Despite the variety of banks, "there really is just one owner, the government of Cuba," said Fernando Capablanca, a former Miami banking executive and now a banking consultant.

The Trinidad bank, which opened a Havana office in May 2002, has turned over records of the various shell companies' transactions to the FBI, but publicly the institution has only said that it had no relationship with Sanchez, the defendant.

Trinidad and Tobago Attorney General Anand Ramlogan declined to comment on the Sanchez case, saying he doesn't know all of the facts. However, he said, the country has taken a number of steps to combat money laundering.

"We do have 'Know Your Customer' laws," Ramlogan told The Miami Herald at his office in Port-of-Spain. "We do have source of funds declarations. There are things in place."

Sanchez was able to stay under the radar because he went to great lengths to disguise himself and the true source of the laundered funds by never putting his name on any corporate or bank documents, authorities say. He incorporated his Naples check-cashing company, Estates Business Center, in his wife's name, Ilens R. Sanchez.

Oscar Sanchez, who came to the United States in the 1980 Mariel boatlift, struggled as a new immigrant and developed a record as a petty criminal in Florida. He finally prospered in the mid-2000s when he allegedly joined the Medicare rackets as an unofficial banker and later began investing in real estate in the Naples and Fort Myers area.

Despite attempts to cloak himself in secrecy, authorities say, Sanchez made at least one fatal mistake that they consider a "smoking gun." In February 2007, he transferred $38,357 from his personal Florida bank account into the account of a Canadian company called Magnus Aviation Logistics. The Montreal company was at the center of the alleged cash-to-Cuba laundering network, according to at least one health-care fraud case related to the Sanchez indictment.

Sanchez was described by federal prosecutor Ron Davidson as a "financier for fraudsters and a capitalist for Cuban banks," who had made 78 overseas trips during the past decade, according to a motion to detain him before trial. Of those, 61 trips were made to Cancun, Mexico, a jumping off point for Cuba. His fellow passenger on one Cancun flight: the owner of several "fraudulent" Miami-Dade health-care companies that wired money to Cuba, through Canada and Trinidad, court records show.

Days after Sanchez's arrest in Naples last month, Magistrate Judge Jonathan Goodman ordered his detention in Miami, saying the prosecution's case was "very strong" and that he was a "flight risk" who faces up to 20 years in prison if convicted.

Both prosecutors and FBI agents started to zero in on Sanchez in recent years after convicted Medicare fraud offenders began cutting plea deals and pointing the finger at him as their money man. Also, authorities began to notice millions of dollars being transferred from medical equipment businesses and HIV-therapy clinics in Florida to shell companies' accounts at the Royal Bank of Canada in Montreal.

According to court records, this is how Sanchez's alleged money-laundering scheme worked between 2005 and 2009:

South Florida's health-care scammers routinely put their Medicare-licensed businesses in the names of "straw" owners - often recently arrived Cuban migrants - to conceal from authorities their own identities as the real owners of the accounts.

In the Sanchez case, prosecutors said 70 South Florida medical companies billed Medicare for $374.4 million and were paid $70.7 million - money that was directly deposited into their corporate bank accounts. But the challenge for the "Medicare fraud masterminds" was withdrawing that money from their accounts because they would have to reveal their identities at the banks, according to court records.

So, many of them turned to Sanchez and his check-cashing business to launder at least $31 million of those Medicare reimbursements, according to court records.

Among those who used Sanchez's services: Michel De Jesus Huarte, who is serving a 22-year prison sentence for running a $100 million HIV-clinic scam in Miami-Dade and other parts of the southeastern United States.

At the same time, Sanchez came to know a "group of individuals" who controlled shell companies with 15 bank accounts in Canada and Trinidad that wanted to move millions of dollars derived from criminal activity into Cuba's banking system. They had purchased more than 20 boxes of money orders, moving money in amounts less than $10,000 at a time to avoid having to declare the source of the funds under U.S. laws. They used aliases, including the name "Bill Clinton," according to court records.

But the process was "costly and time consuming." Enter Sanchez, who helped them transfer larger amounts of money to Cuba, totaling $63 million, prosecutors allege.

For a 10 percent fee, Sanchez matched up the two sides: One group of criminals supplied millions in ready cash to the Medicare fraud ringleaders. Those leaders, in turn, sent checks or wired money drawn from their South Florida corporate bank accounts to the other criminals' shell companies in Canada, records show.

The laundered money was deposited in accounts at the Royal Bank of Canada in Montreal, with the proceeds later wired to numerous shell companies in Trinidad - then deposited into unknown accounts in Cuba's national bank.

In one example, "Sanchez benefitted both sides by wiring $468,985 from a South Florida company engaging in fraud to a Canadian bank account," Davidson, the prosecutor, alleged in the motion to detain Sanchez before trial.

According to court and public records, one of the alleged Canadian shell companies that received the laundered checks was Magnus Aviation Logistics. Corporate papers say Magnus was headed by Anthony Caristo and dissolved last year.

Canadian records also show that Caristo was a director of two other Montreal companies, Arxe Capital and Monetaria Card Solutions, which were also dissolved. Monetaria became inactive just days after Sanchez's arrest last month, records show. Neither Caristo nor his listed businesses could be reached for comment.

Like the United States, Canada has a federal agency - Financial Transactions Reports Analysis Centre (FINTRAC) - that collects intelligence on suspected money laundering and terrorist financing activities.

Under Canadian law, financial institutions that receive or send foreign wire transfers of $10,000 or more are required to file a report with FINTRAC. That means checks or wires sent to and from the Magnus account should have generated reports.

The Canadian agency did not return calls from The Miami Herald.