Former CUSO Owner Admits to $1 Billion Scheme Targeting a New York CU

A New York man admitted in federal court Tuesday he was part of a scheme that channeled $1 billion in high-risk transactions, including millions of dollars of bulk cash transactions from a Mexican bank, to New York State Employees Federal Credit Union.

Hanan Ofer, 69, pleaded guilty to failing to maintain an effective anti-money laundering program in violation of the Bank Secrecy Act, according to a prepared statement from the U.S. Attorney’s office for the Eastern District in Brooklyn, N.Y.

From 2014 to 2016, Ofer and Gyanendra Asre of Greenwich, Conn., devised and carried out a scheme after they opened and operated a CUSO to bring lucrative and high-risk international financial business to what prosecutors called “a small, unsophisticated credit union.” The NYSEFCU-CUSO was a money services business registered with FinCEN.

Nevertheless, the U.S. Attorney also said in its prepared statement that Ofer was experienced in international banking, trained in anti-money laundering compliance and procedures, and represented to NYSEFCU that he and the CUSO would conduct appropriate anti-money laundering oversight mandated by the Bank Secrecy Act.

Asre, whose criminal case is pending, pleaded not guilty to eight counts of failing to maintain an anti-money laundering program at the credit union, failing to maintain an effective AML program at the credit union’s CUSO, failing to file suspicious activity reports and operating an unlicensed money transmitting business.

Asre was NYSEFCU’s compliance officer from March 2015 to June 2016 and also was a member of the credit union’s supervisory committee from November 2014 to April 2016. He was a 25% owner of the NYSEFCU-CUSO. Ofer was employed as a manager of logistics at an unidentified U.S. financial institution and owned 25% of the NYSEFCU-CUSO.

In their prepared statement, prosecutors said Ofer failed to implement an effective anti-money laundering program at the NYSEFCU-CUSO and other entities, which caused the credit union to process high-risk transactions, including from Mexican banks, without appropriate oversight and without ever filing a single suspicious activity report required by law. Asre and Ofer also owned and operated DDH Group LLC, an unlicensed money transmitting and money services business that conducted some of these high-risk transactions, federal prosecutors said.

According to the indictment, from November 2014 to June 2016, the CUSO received more than $100 million in bulk cash deposits of U.S. currency into a federal reserve account that originated from an unidentified Mexican bank. Those funds were then wired to the Mexican bank’s accounts at an unidentified U.S. financial institution, according to the indictment that was unsealed in April 2021 in U.S. District Court for the Eastern District of New York in Brooklyn.

Ofer faces up to 10 years in prison, prosecutors said. His sentencing hearing has not been scheduled.

In October 2017, the $1.8 million, 1,183-member NYSEFCU was liquidated by the NCUA, which declined to comment on whether the alleged $1 billion in high-risk transactions contributed to its decision to close the credit union.

NYSEFCU’s financial performance reports showed that in the three years before Asre and Ofer were providing their services (2012-2014), the credit union was making $11,000 to $13,000 in fee income. In 2015 and 2016, the credit union’s fee income substantially increased to $87,000 and $79,000, respectively.