In a significant case highlighting the critical importance of compliance with anti-money laundering (AML) regulations, two Missouri men, Kevin Brandes and William Graham, who operated multiple sweepstakes businesses, pleaded guilty to conspiring with bankers to willfully fail to implement appropriate AML controls at a Missouri bank. Their actions, spanning several years, contravened the requirements of the Bank Secrecy Act (BSA), which mandates strict financial oversight to prevent money laundering and other financial crimes.
Sweepstakes Operators and Their Businesses
Kevin Brandes, 60, and William Graham, 56, both Kansas City, Missouri residents, owned and operated several sweepstakes businesses. These sweepstakes operators held accounts at a Missouri bank, through which Brandes and Graham conducted numerous transactions. Their involvement in the sweepstakes industry placed their businesses in a high-risk category, necessitating heightened scrutiny under the bank’s AML policies and procedures.
Sweepstakes Operators’ Conspiracy and Violations
According to court documents, between 2013 and 2019, Brandes and Graham conspired with bank officials to bypass key components of the bank’s AML program. Under the BSA and its implementing regulations, banks are required to file currency transaction reports (CTRs) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) for any transaction in currency exceeding $10,000. These reports are essential for monitoring large cash transactions and detecting potential money laundering activities.
In 2017, at the behest of bank officials, the sweepstakes operators signed FinCEN CTR Exemption Review Forms, which erroneously classified their companies as “direct mail advertising” businesses. This misclassification exempted their transactions from CTR filing requirements. Consequently, the bank did not file CTRs on transactions involving Brandes’ and Graham’s businesses, significantly reducing the level of scrutiny applied to their financial activities.
Sweepstakes Operators and False Legal Opinions
The conspiracy extended beyond mere misclassification. On or about October 11, 2016, at the direction of two bank officials, the sweepstakes operators procured a legal opinion letter from an outside attorney. This letter falsely asserted that one of Brandes’ companies had not faced any negative or unwanted legal actions from regulatory bodies or private lawsuits for over three years. In reality, Brandes and Graham were fully aware that a state regulatory agency had initiated legal action against the company.
This false legal opinion was submitted to the bank to help it circumvent its obligations under the BSA. By providing misleading information, Brandes and Graham furthered their scheme to evade proper financial oversight and continue their high-risk business operations with minimal interference.
Legal Proceedings and Consequences for Sweepstakes Operators
The guilty pleas of the sweepstakes operators highlight the severity of their actions. Each admitted guilt to one count of conspiracy for willfully failing to implement and maintain an appropriate anti-money laundering (AML) program. The penalties for their crimes are significant; both face maximum sentences of up to five years in prison. Their sentences will be determined by a federal district court judge, who will take into account the U.S. Sentencing Guidelines and other statutory factors.
Investigation and Prosecution of Sweepstakes Operators
The case against the sweepstakes operators was a collaborative effort involving multiple federal agencies. The investigation into the conspiracy was significantly aided by the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Kansas City Region, the IRS Criminal Investigation (IRS-CI) St. Louis Field Office, and the FBI’s Criminal Investigative Division.
The prosecution team included Trial Attorneys Chad M. Davis and Christopher Ting from the Criminal Division’s (MLARS) Money Laundering and Asset Recovery Section, alongside Assistant U.S. Attorneys Patrick D. Daly and Matthew N. Sparks from the Western District of Missouri. The MLARS’ Bank Integrity Unit, which focuses on investigating and prosecuting financial institutions and their personnel for actions that compromise the integrity of the financial system, led the prosecution efforts.
This case serves as a reminder of the critical role that AML controls play in maintaining the integrity of the financial system. The guilty pleas of sweepstakes operators Kevin Brandes and William Graham highlight the consequences of attempting to bypass these regulations. As the financial industry continues to evolve, robust compliance with AML regulations remains essential to prevent financial crimes and ensure the stability of the financial system.
To read the original order please visit: https://www.justice.gov/opa/pr/sweepstakes-operators-plead-guilty-bank-secrecy-act-violations
