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IRS agent reports: exporters loan corporate jets to South American customers "no questions asked."

At a recent NACM Loss Prevention Department meeting, attendees were told by Agent Bill Bruton of the Internal Revenue Service that large corporations in the U.S. have, on several occasions, loaned their corporate jets to customers for unspecified trips. Bruton conceived of, and was operations manager for the recent "Operation Dinero," an undercover bank operated by the U.S. government in the British West Indies.

Astonished attendees, most of whom were experienced security personnel, could barely believe it. Said Bruton to the audience, "we've documented it on more than one occasion, and the companies that went along with this (the loaning of their corporate jets) are well known."

How can this be? The scenario develops like this: A large corporation with U.S. offices is approached by a South American customer, and a relationship begins. The customer begins buying in very large quantities, and eventually becomes one of the largest and most valued of the large company's customers.

One day, the supplier is approached by a representative of their growing customer, and is told: "We'd like to borrow your corporate jet for a trip."

The supplier's representative is stunned by the request. "Absolutely out of the question! You can't borrow our jet. That's impossible!"

"You don't understand," the South American representative replies. "This Friday, we are buying your brand. If you don't comply, on Monday, we will switch to your competitor."

"It's still out of the question," declares the supplier company. "We just can't give you our jet sight unseen!"

"Fine, we will switch immediately if you don't like our request," counters the customer.

At this point, the corporation officials begin to look at the consequences, which can include idling plant capacity and laying workers off. Eventually, they cave in and loan their jet to the customer, rather than turn away millions of dollars in business.

Why would a South American company borrow the corporate jet of a company with offices in the U.S.? The answer is simple: money laundering. Organized crime cartels have a need to get the billions of dollars in cash earned in the U.S. out of the country and convert it into usuable funds. Jets from large corporations routinely fly in and out of the U.S. What better way to launder funds!

"What this means is that those exporters are unwittingly assisting cartel front-businesses in the laundering of their drug profits," said Bruton. "The actual purchasing of products from U.S.-based finns is a method of laundering money as well."

This frightening scenario is but one of the many risks which will be explained in detail at NACM's Business Credit Fraud Symposium in Miami Beach, March 21 & 22, 1996.

One of the guest speakers at the conference will be Assistant U.S. Attorney Buddy Parker, the prosecutor in the Operation Dinero case. Parker has lectured about international money laundering to British officials at Cambridge, to Polish officials, Italian officials, and at many places around the U.S.

Parker and Art Lloyd, whose extensive experience includes heading up Citicorp's international investigations, will spearhead the new international fraud roundtable.

RELATED ARTICLE: Symposium To Cover Fraudulent Practices

Credit and financial executives, loan officers, law enforcement and legal professionals, bankruptcy trustees and others with an interest in detecting and preventing commercial fraud will soon converge upon Miami for a two-day symposium on business-credit fraud.

The conference, to be held at the Fontainebleau Hilton in Miami Beach, March 21-22, 1996, will address fraudulent practices in today's business environment and how to stay ahead of the game.

Guest speakers range from a bankruptcy judge who will discuss ways of recouping losses from bankruptcy filings and other creditor dilemmas to a notorious business-scam artist who managed to obtain tens of millions of dollars in financing by fooling high-powered investment bankers and auditors.

A former con artist and an "underworld informant" - both speaking under cover of anonymity - will add to the event's intrigue by discussing their illicit antics tricks in detail, offering tips so that others won't fall prey to similar meanderings from unscrupulous and shady characters.

Todd Sheffer, Certified Fraud Examiner with NACM, will show symposium participants the "light at the end of the tunnel" when he sums up the conference with a troubleshooting seminar designed to help spot fraud.

For more information or to register, call the Loss Prevention Department at (410) 740-5560.

Rob Lawson is Director of NACM's Loss Prevention Department.
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Author:Lawson, Robert J.
Publication:Business Credit
Date:Feb 1, 1996
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