David Saks: Defendant Used Nearly $1.7 Million of Fraudulent Proceeds to Buy Home

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Defendant Used Nearly $1.7 Million of Fraudulent Proceeds to Buy Home

Former CEO of London-Based Company Pleads Guilty to Federal Charge in $2.1 Million Fraud Scheme
Defendant Used Nearly $1.7 Million of Proceeds to Buy Home in Great Falls, Virginia

U.S. Attorney’s Office May 17, 2013
  • District of Columbia (202) 514-7566

WASHINGTON—Kevin Richard Halligen, 51, an Irish citizen, pled guilty today to wire fraud, a federal charge stemming from a scheme in which he defrauded $2.1 million from a Netherlands-based commodities trading company, announced U.S. Attorney Ronald C. Machen Jr. and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office.

Halligen pled guilty to one count of wire fraud, the first of two counts of an indictment that was returned against him in 2009 in the U.S. District Court for the District of Columbia. As part of the plea agreement, the government agreed to dismiss the second count of the indictment, which was a money laundering charge stemming from the same scheme. The charge of wire fraud carries a statutory maximum of 20 years in prison and a fine of up to $250,000. Under federal sentencing guidelines, the parties agreed that Halligen’s likely range would be a prison term of 33 to 41 months and a fine between $7,500 and $75,000.

Under the plea agreement, Halligen also must pay $2.1 million in restitution to the company that was the victim of his scheme.

The Honorable Colleen Kollar-Kotelly scheduled sentencing for June 27, 2013.

The wire fraud charge stems from actions taken by Halligen in 2006 and 2007, when he was the Chief Executive Officer of Red Defence International (RDI), a London-based security consulting and crisis management firm, which was hired by Trafigura Beheer BV (Trafigura), a Netherlands-based international commodities trading company, and its London-based law firm, Waterson Hicks. Trafigura hired RDI as a consultant in crisis management after two Trafigura executives were captured and imprisoned in the Ivory Coast while visiting there for the purpose of determining the company’s next steps to address an environmental issue caused by the leakage of toxic waste material from Trafigura vessels in an Ivory Coast port.

While employed by Trafigura, Halligen claimed to have incurred $2.1 million in expenses related to pursuing a strategy in the United States aimed at convincing the United States to assist in securing the release of the Trafigura executives; in reality, Halligen spent the money on a home in Great Falls, Virginia, which was to be his personal residence, as well as other personal expenses, according to the government’s evidence.

“This CEO exploited a company desperate to secure the release of its executives from a foreign prison,” said U.S. Attorney Machen. “He conned the company out of $2 million he claimed would be used to support his efforts to rescue them, but instead used the money to buy a six-bedroom mansion. The extradition and imprisonment of this CEO demonstrates the strength of our resolve to prosecute corporate fraud.”

“Instead of assisting in the release of two executives imprisoned in the Ivory Coast, Mr. Halligen utilized the money paid to him to support his own lavish lifestyle,” said Assistant Director in Charge Parlave. “Together with prosecutors, the FBI will continue to pursue individuals who devise schemes to defraud companies of money for services never provided to them.”

According to a statement of offense signed by the defendant as well as the government, at the request of Trafigura, Waterson Hicks hired RDI in October 2006 to help secure the release of two Trafigura executives who were arrested and detained in Abidjan, Ivory Coast. The arrests followed an environmental spill off the coast of Abidjan. Under a contract that took effect in October 2006, RDI was to provide security intelligence and public relations services related to Trafigura’s presence in the Ivory Coast and to assist with facilitating the release of the Trafigura executives. Under the contract with RDI, Waterson Hicks paid RDI and then, in turn, the law firm was reimbursed by Trafigura.

During November 2006, after other efforts to secure the executives’ release proved unsuccessful, Halligen suggested that the U.S. government should be involved with facilitating negotiations with the Ivory Coast. His stated strategy was to utilize his contacts in the United States to encourage Ivory Coast officials to release the executives. Halligen said the “American Strategy” would cost an additional $2.1 million, on top of the money RDI already was receiving.

The $2.1 million supposedly was to be used to pay expenses incurred by Halligen in the United States to hire consultants and lobbyists to influence officials in the United States on Trafigura’s behalf. In December 2006, Halligen was informed that the law firm had received the $2.1 million from Trafigura. Then, in January 2007, Halligen told the law firm to wire $2.1 million from their bank account in London to his personal bank account in the United States.

Between November 2006 and January 2007, Halligen traveled to the United States on numerous occasions, claiming to have met with U.S. officials in Washington, D.C., allegedly in furtherance of the “American Strategy.”

While in Washington, D.C., he began dating a woman who resided in the area and subsequently became engaged to her.

Halligen gave his fianceé a $2 million budget to find a suitable house in which they would live after their marriage.

Shortly thereafter, she found a six-bedroom, four-and-a-half-bathroom residence in Great Falls, Virginia.

On January 11, 2007—the day after $2.1 million was wired to Halligen’s personal bank account for the American strategy—Halligen wired nearly $1.7 million from his account to complete the purchase of the Great Falls residence.

None of the proceeds from the $2.1 million payment from Waterson Hicks to RDI were ever directed toward reimbursement of expenses related to the “American Strategy.”

In addition to spending nearly $1.7 million on the purchase of the Great Falls residence, the rest of the money was spent on other personal expenses.

The Trafigura executives ultimately were released in February 2007.

At the time of his indictment in November 2009, Halligen was no longer residing in the United States. On November 25, 2009, he was arrested at a hotel in Oxford, the United Kingdom, so that he could be extradited to the United States. At the time of his arrest, Halligen was using an alias. Subsequent to his arrest in the United Kingdom, Halligen litigated issues surrounding his extradition to the United States. He ultimately was extradited in December 2012.

Halligen was incarcerated in the United Kingdom from the date of his arrest in November 2009 until his extradition in December 2012. When he was presented for his initial appearance in the United States District Court for the District of Columbia, in December 2012, he was ordered to be held without bond and he has been incarcerated since that time. Halligen will continue to be incarcerated while he awaits his sentencing date.

In announcing the plea, U.S. Attorney Machen and Assistant Director in Charge Parlave commended the work of the special agents from the FBI’s Washington Field Office who handled the case. They also expressed appreciation to those who worked on the case for the U.S. Attorney’s Office, including paralegals Donna Galindo, Tasha Harris, and Krishawn Graham. Finally, they commended the efforts of Assistant U.S. Attorneys Maia L. Miller and Matt Graves, who are prosecuting the case, and former Assistant U.S. Attorney Vasu Muthyala who investigated the matter.

source: FBI

David Saks

Time&Temp Memphis

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