Los Angeles Fashion Executives Sentenced for Money Laundering Scheme

In a significant crackdown on financial crimes, two executives of a Los Angeles-based import-export company, Pacific Eurotex Corp., have been sentenced to federal prison for their involvement in a sophisticated money laundering scheme.

The Defendants and Their Roles

Morad “Ben” Neman, 58, the CEO of Pacific Eurotex, and his brother Hersel Neman, 59, the CFO, were at the center of the operation. The company, located in the Los Angeles Fashion District, was found to be laundering money for international drug cartels through a "Black Market Peso Exchange" scheme.

The Scheme and Investigation

The investigation, conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the IRS Criminal Investigation, revealed that Pacific Eurotex received and laundered bulk cash payments. Between 2013, the company accepted approximately $370,000 in cash on four separate occasions from an undercover agent posing as a money courier. Despite being warned by HSI agents that such bulk cash payments were often derived from illegal activities and required reporting, the company failed to comply.

Structuring Transactions to Avoid Detection

To evade detection, the Nemans instructed others to deposit the cash into the personal Wells Fargo bank account of Hersel Neman’s wife in increments of less than $10,000. This tactic, known as "structuring," was designed to prevent the bank from filing Currency Transaction Reports with the U.S. Treasury Department. In total, 384 such deposits were made, amounting to nearly $3.18 million.

Sentencing and Penalties

Morad Neman was sentenced to two years in federal prison, followed by six months of home confinement. He is also jointly liable with the company to forfeit $3,178,230 to the government. Hersel Neman received an 18-month prison sentence, followed by six months of home confinement, and is liable to forfeit approximately $370,000.

Pacific Eurotex itself was sentenced to three years of probation and ordered to pay a fine of $400,000 for conspiring to launder money and structure monetary transactions.

Additional Charges and Implications

Both Morad and Hersel Neman pleaded guilty to multiple federal charges, including conspiring to defraud the United States by obstructing the lawful functions of the Internal Revenue Service and filing false tax returns. The scheme involved maintaining two sets of business records to conceal income for tax purposes.

This case highlights the ongoing efforts of U.S. law enforcement agencies to combat money laundering and financial crimes, particularly those linked to international drug cartels. The sentences handed down serve as a strong deterrent against similar illicit activities in the future.