Federal agents on Sept. 11 arrested 10 defendants who allegedly were involved in just under $9 million worth of “structured” currency transactions designed to avoid federal reporting requirements.
According to the indictment, from the beginning of 2009 through April 2011, a total of 17 people allegedly were involved in the scheme to structure cash withdrawals to avoid the federal currency transaction reporting requirement that requires domestic banks to report any currency transaction of more than $10,000. The indictment lists 251 instances of structured transactions totaling $8,980,900.
The scheme was allegedly orchestrated by two principals of a Philadelphia-based company called Independent Wholesale Drug, Inc. (IWD) — Peter Kats, 31, of Beverly Hills, and Aziz Nurhan, 30, of North Hollywood. Kats and nine other defendants were arrested.
The case was the result of an investigation by IRS-Criminal Investigation, the Federal Bureau of Investigation and the United States Postal Inspection Service.
Kats and Nurhan, along with the 15 other defendants, including Vitaly Khaytovich, 24, of West Hollywood, were allegedly part of a scheme to “structure” currency withdrawals of more than $10,000 in a scheme designed to evade a currency transaction reporting requirement.
The funds involved in the structuring scheme are the proceeds of a pharmaceutical diversion scheme run by Kats, according to prosecutors. In court, prosecutors told a U.S. Magistrate Judge that Kats is suspected of generating proceeds by using IWD to purchase pharmaceuticals from non-authorized sources — including the black market — which he then sold to other pharmaceutical wholesalers, who in turn sold the pharmaceuticals to retailers.
All 17 defendants named in the indictment have been charged with conspiracy, which carries a maximum statutory sentence of five years in federal prison. Kats and Nurhan additionally are charged with a felony structuring violation, which carries a maximum sentence of 10 years imprisonment.
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