Retired Fraud Investigator Confesses His Involvement in Money Laundering Scheme
A retired fraud investigator previously associated with the South Dakota Department of Revenue has confessed to being involved in bank fraud and money laundering. Quite common throughout the United States, money laundering adversely impacts a significant portion of the population, with over $300 billion laundered through the country each year.
The United States Attorney Alison J. Ramsdell announced that a South Dakota resident named Steven Arthur Knigge has been charged by a federal grand jury with five counts of bank fraud, eight counts of money laundering, and one count of wire fraud. The accused appeared before the U.S. Magistrate Judge Veronica L. Duffy on August 3, 2022, and pleaded not guilty to the crimes.
The charges posed on Knigge included the formulation of a deceptive scheme to swindle Rapid City Bank for his personal motives and financial gains. He was also accused of submitting five fake checks worth of $142,000 and a misleading Paycheck Protection program loan application, which amounted to $21,000.
The Internal Revenue Service's Criminal Investigations team is further investigating the case along with Assistant U.S. Attorney Benjamin Patterson, who is handling the prosecution. Knigge, however, later pleaded guilty to his involvement in the scheme, including participating in money laundering activities.
Moreover, this is not the first time Knigge has faced legal consequences. Back in 2018, he pleaded guilty to money laundering and bank fraud charges, wherein he utilized fraudulent email accounts to deceive banking institutions into transferring funds to him. What's particularly alarming is that these criminal activities occurred while he was employed by the state of South Dakota.
In the previous case, Knigge was sentenced to a two-year imprisonment. However, the current case reveals that he could face a maximum sentence of 150 years in federal prison.
Knigge's case is not one of its kind. In another case of money laundering seen in the country, cryptocurrency exchange Binance confessed to its involvement and agreed to pay a $4.3 billion fine. The founder and CEO of Binance, Changpeng Zhao later resigned from his position and paid a fine of $50 million. He has pleaded guilty to the charge of failing to maintain an effective Anti-Money Laundering (AML) program, which now puts him at risk of facing a potential jail sentence.
According to prosecutors, Binance exhibited such lax controls that it allowed terrorists, cybercriminals, sanctions violators, and individuals involved in child exploitation to conduct transactions through its platform for an extended period. The crypto exchange neglected to implement essential know-your-customer (KYC) protocols or to monitor transactions, and it never filed any suspicious activity reports (SARs) with the Financial Crimes Enforcement Network (FinCEN).
Moreover, Binance permitted users to open accounts and engage in trading without providing any information beyond an email address. It wasn't until August 2021 that the exchange started requesting more information from users, and even then, existing users were allowed to continue trading until May 2022 without undergoing proper checks.
With $800 million to $2 trillion laundered globally each year, a multi-faceted approach that combines regulatory reforms, technological advancements, international cooperation, and public engagement, from both the government and individuals can effectively combat the issue. Furthermore, regularly reviewing and updating anti-money laundering policies and measures to adapt to evolving threats and vulnerabilities can help fight against the cause.
