A Seattle company and 12 people around the country as well as in Iraq, Jordan and the United Arab Emirates have been indicted for using an underground money-wiring network to dispatch more than $12 million in cash and goods to Iraq, federal officials announced yesterday.
Transferring the funds and the goods violates U.S. laws passed in the early 1990s banning financial dealings with Iraq without a federal license, government officials said. U.S. officials said they are also investigating whether the cash sent to Iraq by the unlicensed money service business, AlShafei Family Connect Inc. of Seattle, was somehow used to buttress the regime of Iraqi President Saddam Hussein.
Company officials did not return phone calls to their offices and homes yesterday. But the firm's executives have said that its hundreds of U.S. customers wire cash in $50 and $100 allotments to assist impoverished family members in Iraq suffering from an economy crippled by United Nations sanctions.
Government officials said yesterday that while some of the money might have gone to family members, such cash exports to Iraq are still illegal. Investigators said they also found large sums dispatched by the company to Europe and the Middle East that were used to pay for commodities of various kinds to be delivered to Iraq.
Yesterday, agents assigned to a financial crimes task force, Operation Green Quest, arrested the six defendants who live in the United States and executed search warrants in four cities.
The crackdown was the third this week by the Customs Service-led task force resulting in arrests for the allegedly illegal dispatching of funds to the Middle East without a license. On Tuesday and Wednesday, nine people were arrested in Michigan and New York for allegedly transferring millions of dollars to Yemen through informal cash networks or paperless money-transfer operations called "hawalas.''
"This week's law enforcement actions have taken us closer to our goal of bringing all international money transfers . . . into the legitimate world of the regulated financial community," Treasury Undersecretary Jimmy Gurule said at a news conference yesterday. "Those who hide in the shadows of the financial world are learning they cannot hide from the rule of law."
AlShafei Family Connect has operated for years from its offices in Seattle, using agents around the country and overseas, including two in Iraq. But a few months after the Sept. 11, 2001, attacks, the firm's bank froze its accounts because of suspicions about its activities. The firm's owner, Hussain AlShafei, filed suit against the bank, alleging ethnic discrimination. Apparently without understanding the legal implications of his statements, he described some of the firm's operations in legal documents -- which authorities used to begin their investigation.
In that lawsuit and in later interviews with federal agents, AlShafei explained that he didn't think he needed a federal license to send funds to Iraq because he believed his business arrangement was legal -- he wired his deliveries of cash to Iraq via Jordan and other nations.
"We're still investigating who received the funds in Iraq, as well as which commodities were shipped there and to whom," said Customs spokesman Dean Boyd.