The Justice Department has launched a criminal investigation into possible wrongdoing at Riggs Bank, which has already paid a $25 million civil penalty for its failures to abide by laws designed to prevent money laundering.
The investigation was detailed in a letter earlier this month from the U.S. attorney for the District to federal bank regulators, asking them to put on hold their own investigation into the bank and its directors and senior management "to avoid any potential adverse impact" on the Justice Department probe. A copy of the letter was obtained by The Washington Post.
The U.S. attorney's office is examining the role of current and former executives and directors of Riggs Bank and its parent company, sources familiar with the probe confirmed yesterday.
The goal is to determine which people, if any, should be held accountable for the bank company's years-long failure to comply with federal laws designed to deter money laundering and other questionable activities that have surfaced in ongoing Senate and federal probes, said sources who spoke only on the condition that they not be identified because the investigation is continuing.
Among the people whose actions at the bank are under review are the company's largest shareholder, Joe L. Allbritton, 79, and his wife, Barbara, and son Robert, who is chairman of the bank and holding company, according to the sources.
Joe L. Allbritton bought the bank company in 1981 and ran it for two decades before handing control to his son three years ago. But he remained on the board of the holding company, and his wife remained on the board of the bank, until the end of May, when they resigned under pressure from bank regulators.
The Allbritton family said through a spokesman, "We've received no notice from any agency of a criminal investigation. We're confident we've done nothing wrong."
U.S. Attorney for the District Kenneth L. Wainstein asked federal bank regulators at the Office of the Comptroller of the Currency (OCC) -- the division of the U.S. Treasury that regulates banks -- to suspend its probe of the role current and former "directors and senior management of the bank and its holding company may have played in soliciting certain accounts, authorizing transactions in them, and overseeing compliance with law, regulation and safe and sound banking practices; and the personal use of bank assets by certain individuals." According to sources, a similar letter was sent to the Federal Reserve Board.
Wainstein said the OCC investigations would likely overlap with the probe his office is conducting in conjunction with the Justice Department's divisions that handle cases involving money laundering and fraud.
He said the Justice Department probe is looking into "a variety of matters relating to Riggs Bank, including the adequacy of Riggs Bank's anti-money-laundering compliance program," as well as potential conflict of interest violations by R. Ashley Lee, who was Riggs's chief federal examiner until taking a job as vice president of the bank two years ago. Lee has been placed on paid leave pending the outcome of the investigation.
Bank regulators and enforcement officials fined Riggs earlier this year for failure to have controls in place to ensure customers' money did not come from or fund illicit activities. Of particular interest were accounts connected to former Chilean dictator Augusto Pinochet, to the dictator of Equatorial Guinea and his family, and to officials from the Embassy of Saudi Arabia. A Senate report last month detailed widespread compliance failures at Riggs, including a description of how Riggs helped Pinochet hide millions of dollars from international prosecutors.
The probe into Riggs top management reveals a widening of an ongoing Justice Department investigation into Riggs that initially centered on accounts related to Equatorial Guinea and former Riggs employee Simon P. Kareri, who was in charge of those accounts. Kareri was fired earlier this year on suspicion of embezzlement.
Riggs spokesman Mark N. Hendrix had no comment yesterday. Officials from the Justice Department also declined to comment.