Former Defense Contractor and His Wife Indicted for Evading U.S. Taxes on Profits from Selling Jet Fuel to U.S. Military

Source: United States Department of Justice Criminal Division

An indictment was unsealed today charging Douglas Edelman, a former defense contractor, and Delphine Le Dain, his wife, with a decades-long scheme to defraud the United States and evade taxes on more than $350 million in income Edelman made as a defense contractor during the United States’ post-9/11 military efforts in Afghanistan and the Middle East. Edelman was arrested on July 3 in Spain based on the U.S. criminal charges. The United States will seek Edelman’s extradition to stand trial in the United States.

According to the indictment, between 2003 and 2020, Edelman allegedly was the 50% owner of Mina Corp. and Red Star Enterprises (Mina/Red Star), a defense contracting business that received more than $7 billion from contracts with the Department of Defense to provide jet fuel to U.S. troops in Afghanistan and the Middle East. Working with Le Dain and several other co-conspirators, Edelman allegedly engaged in a lengthy scheme to hide his profits from Mina/Red Star, including by concealing his income in undisclosed foreign bank accounts, creating false documents and making false statements that Le Dain — who, as a French citizen residing abroad, did not have U.S. tax obligations — founded and owned Mina/Red Star. Le Dain allegedly signed some of the false documents, including those that purported to “gift” Edelman money for certain personal expenses.   

The indictment further alleges that to carry out his scheme, Edelman conveyed this false story of Le Dain’s ownership to arms of the U.S. government, including to a Subcommittee of the House of Representatives during a 2010 Congressional investigation, to the Department of Defense during contract negotiations, to the Internal Revenue Service in a 2015 application to the Offshore Voluntary Disclosure Program, and to the Justice Department in a 2018 presentation. 

Until approximately 2015, Edelman allegedly did not file any U.S. individual tax returns and did not pay any tax on the tens of millions of dollars he was allegedly making each year from Mina/Red Star. In 2015, Edelman allegedly filed false returns for tax years 2007 to 2014, claiming that his business interests, income, and assets belonged to Le Dain. From 2015 to 2020, Edelman allegedly filed false tax returns reporting that his only income was as a consultant, and that he had no interests in any foreign businesses. 

The indictment further alleges that Edelman directed his profits from Mina/Red Star into banks known at the time to shield account holder identities from U.S. authorities, in countries such as Switzerland, the Bahamas, Singapore and United Arab Emirates. He allegedly held the accounts in the name of non-U.S. entities created in countries such as Panama, Belize and the British Virgin Islands. Edelman allegedly always controlled the money in these accounts and used it to fund his other business ventures around the world, including a business selling internet services to U.S. troops and contractors at Kandahar Air Base in Afghanistan, a Mexican fuel infrastructure project and a music television franchise in Eastern Europe. Edelman allegedly also used the money to buy a ski chalet in Austria, a house in Spain, a townhouse in London and multiple yachts — all of which were purchased in the name of nominees.

Edelman and Le Dain are charged with conspiring to defraud the United States and 15 counts of tax evasion. Edelman is also charged with two counts of making false statements to the United States, and 12 counts of willfully violating his foreign bank account reporting obligations, as part of a pattern of unlawful activity.

If convicted, Edelman and Le Dain face up to five years in prison for the conspiracy count, as well as up to five years in prison for each tax evasion count. Edelman also faces up to five years in prison for each false statement count and ten years in prison for each count of willfully violating foreign bank account reporting while engaged in a pattern of unlawful activity involving more than $100,000 per year. They each face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Matthew M. Graves for the District of Columbia made the announcement.

IRS Criminal Investigation and the Special Inspector General for Afghanistan Reconstruction are investigating the case, with assistance from His Majesty’s Revenue & Customs of the United Kingdom. Assistance was also provided by the Joint Chiefs of Global Tax Enforcement (J5), which brings together the taxing authorities of Australia, Canada, the Netherlands, United Kingdom and United States. Assistance with the arrest was provided by the U.S. Drug Enforcement Agency and Guardia Civil of Spain.

Senior Litigation Counsel Nanette Davis, Assistant Chief Sarah Ranney and Trial Attorney Ezra Spiro of the Tax Division and Assistant U.S. Attorney Joshua Gold for the District of Columbia are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Sweepstakes Operators Plead Guilty to Bank Secrecy Act Violations

Source: United States Department of Justice Criminal Division

Two Missouri men pleaded guilty yesterday to conspiring with bankers to willfully fail to implement appropriate anti-money laundering (AML) controls at a Missouri bank, as required by the Bank Secrecy Act (BSA).

Kevin Brandes, 60, and William Graham, 56, both residents of Kansas City, Missouri, owned and operated multiple sweepstakes businesses and held accounts for those businesses at the Missouri bank. According to court documents, from 2013 to 2019, Brandes and Graham abetted bank officials in failing to implement key components of the bank’s AML program. 

Under the BSA and its implementing regulations, the bank was required to file currency transaction reports (CTR) with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) for any transaction in currency of more than $10,000. In 2017, at the request of bank officials, Brandes and Graham signed FinCEN CTR Exemption Review Forms that classified their companies as “direct mail advertising” businesses. After receiving the signed exemption forms, the bank failed to file CTRs with FinCEN on transactions involving Brandes’ and Graham’s businesses. Additionally, Brandes’ and Graham’s companies were deemed “high risk” and subject to heightened monitoring under the bank’s policies and procedures. Brandes and Graham understood that by signing the CTR exemption forms the bank would apply less scrutiny to their companies’ transactions.  

Additionally, on or about Oct. 11, 2016, at the direction of two bank officials, Brandes and Graham had an outside attorney sign a legal opinion letter, then sent it to the bank, knowing that it contained false information. Specifically, the letter indicated that one of Brandes’ companies “in over 3 years has not received negative or unwanted legal action by way of regulatory bodies or private suits.” Brandes and Graham knew at the time, however, that this information was false because a state regulatory agency had filed a legal action against the company in question. Brandes and Graham both believed this letter would help the bank circumvent its requirements under the BSA.

Brandes and Graham each pleaded guilty to one count of conspiracy to cause the willful failure to implement and maintain an appropriate anti-money laundering program. Brandes and Graham will be sentenced at a later date and face maximum penalties of five years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division, U.S. Attorney Teresa A. Moore for the Western District of Missouri, Special Agent in Charge Justin R. Bundy of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC-OIG) Kansas City Region, Special Agent in Charge Thomas F. Murdock of the IRS Criminal Investigation (IRS-CI) St. Louis Field Office, and Assistant Director Michael Nordwall of the FBI’s Criminal Investigative Division made the announcement.

FDIC-OIG, IRS-CI, and the FBI are investigating the case.

Trial Attorneys Chad M. Davis and Christopher Ting of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorneys Patrick D. Daly and Matthew N. Sparks for the Western District of Missouri are prosecuting the case.

MLARS’ Bank Integrity Unit investigates and prosecutes banks and other financial institutions, including their officers, managers, and employees, whose actions threaten the integrity of the individual institution or the wider financial system.

Defense News: CNO Delivers the Intrepid Salute to Freedom Gala Keynote Address

Source: United States Navy

Good evening, everyone! Distinguished guests, and to all of my Navy, Marine Corps, and Coast Guard teammates here, although I think I also need to recognize our Army, Coast Guard, Navy, Marine Corps teammates – maybe even Space Force and Air Force from the Color Guard. So, thank you very much Color Guard.

It really is a pleasure to be here with all of you tonight to celebrate New York’s Fleet Week, to celebrate our Sailors, Marines, and Coast Guardsmen, all of our Joint Force teammates here tonight, and celebrate the Navy’s long and proud relationship with the City of New York – one of the most important and historic cities in our great Nation.

Before I begin my remarks, I’d really like to take a moment to recognize Medal of Honor Recipient Jack Jacobs who I just had the privilege to meet for his “gallantry in action at the risk of his life above and beyond the call of duty” while serving in Vietnam in 1968. Thank you, Jack for all you have done.

I would also like to thank the Intrepid Museum Board of Trustees for preserving our Naval heritage by maintaining this historic ship as a living memorial to the tens of thousands of Sailors and Marines who served our Nation onboard. I’d also like to thank the incredible staff of this museum for telling our Navy story through the lens of this incredible warship that earned the name, as you already heard tonight, of “the Fighting I” – that survived five kamikaze attacks, an aerial torpedo, and served in multiple wars: World War II, the Vietnam War, and the Cold War.

Like the crew of the Intrepid who worked tirelessly to ensure the integrity of this ship, each of you on this team, have worked hard to tell the millions of American people that visit the “Fighting I” each year the story of her crew’s service with honor, courage, and commitment. For that, I am very grateful.  And I’d like everyone to join me in a round of applause to the team that does this every single day – that’s Al and the Representatives of the Intrepid Former Crewmembers Association, and for Mel and the USS Intrepid Board of Trustees, and again, to all the staff – thank you.

Ladies and Gentlemen, I am truly honored to be here, and I am very humbled to receive the Intrepid Freedom Award this evening. Forty-two years ago, as a freshman at Northwestern University, I signed up for the NROTC program with the allure of free textbooks, 100 dollars a month, and the chance to win a scholarship. At the time, I planned to serve my minimum four-year commitment, get out and then follow my dream, which was to be a journalist reporting all around the world, but especially in the Middle East. But as you can see my life took me on a slightly different path.  

And today I’m really honored to serve as the 33rd Chief of Naval Operations, leading an amazing team of over six-hundred thousand active and reserve Sailors and Navy Civilians. And I’m honored to receive an award that trailblazers before me, like Madeline Albright and Margaret Thatcher, have also received. But like them, I owe this award and really my every success, to the great Sailors I’ve had the opportunity to serve with over these many years.  

So, tonight I want to talk a little bit about those Sailors and the role they play in underwriting this city’s and our Nation’s security and prosperity. I could think of no better occasion to do that than tonight, during fleet week, and in this venue, and in this city.

So, you all know that New York City has a long history as a Navy town, even before the beginnings of our great Nation. In 1524, Portuguese explorer Giovanni Verrazano sailed westward in search of the new world. Following his first sighting of land off the coast of Carolina he sailed north and would eventually encounter a very large opening that he believed to be a lake but was in fact a river – the Hudson River.

Little did he know that the narrows he sailed past would end up bearing his name and be the sea-based-way to the world’s largest and most important port in the 20th Century. In the days of sail and steam, and up through the 1960s, ships coming into New York Harbor from the Narrows would steer north up to the mouth of the East River to the piers of Brooklyn and to the piers of the East and West sides of Manhattan, one of which we are moored to now.

And for those of you that don’t know, the Brooklyn Bridge – the world’s first steel-wire suspension bridge – was built not for looks, although beautiful she is, but to connect these Brooklyn piers with these Manhattan piers, for ease of trade and ease of movement. While I could go on about the commercial importance of New York’s harbors, let me instead talk about this city’s contributions to our Navy.

Not too far from here, the New York Navy Yard, or Brooklyn Navy Yard, as you New Yorkers called it, operated for 165 years, building 160 ships that included the Civil War era ironclad USS Monitor and the historic World War II battleships USS Arizona and USS Missouri.

During World War II the Brooklyn Navy Yard would be used as the staging point for people and equipment for the Allied war effort in Europe, earning the nickname the “Can-Do-Shipyard” for repairing 5,000 American and Allied battle-damaged warships.

Even after the war, this shipyard would become New York’s largest single industrial employer, employing 70,000 people at its peak until its closing in 1966.

And while this city’s commercial importance would wane, the city was born again as the global financial capital of the world and the heart of our Nation’s economy, but still reliant on the sea, albeit in a different way. And although bulk carriers are no longer transiting this city’s harbors, they’ve been replaced by billions of international communications and trillions of dollars in financial transactions that stem from this city and transit the vast expanse of our oceans each day, not on the surface, but below it though undersea cables.

This global network of undersea cables provides the high-bandwidth connections needed for a wide range of activities that are vital for our modern society. And like the rest of our Nation, this city must have the uninterrupted flow of these communications and financial transactions for our stability and economic prosperity.

Ladies and gentlemen, it’s your Navy-Marine Corps team ensures the safety and security of this city’s financial system and all of its services. It also ensures that the goods that flow to our other ports like Newark, Baltimore, and Los Angeles get there safely, so they can reach this city’s stores and provide us the goods we need.

It’s clear, the United States is and always has been a maritime nation. Our security and prosperity rely on access to the sea. Your United States Navy preserves this access, which not only provides 90 percent of global trade, but generates 5.4 trillion dollars in annual commerce and supports 31 million American jobs. This has been your Navy-Marine Corp team’s mission since our Nation’s creation, and it continues to be so, even as our Nation finds itself at an inflection point in history – competing with the People’s Republic of China, Russia, Iran, North Korea, and Violent Extremist Organizations all of which have the potential to negatively impact our Nation’s security.

There’s not a day that goes by that doesn’t show the great work of our Navy on the world stage. Our Nation is a beacon of hope and democracy all around the world and our Navy shines that light brightly. From the Western Pacific to the Eastern Mediterranean and from the Red Sea to the Artic, our Sailors are operating forward to preserve the peace, respond in crisis, and are standing ready to win decisively in war, if called to do so.

A few weeks ago, I visited Sailors onboard the ship that Mel just talked about, the USS Carney, and I got to welcome her crew home from their historic deployment to the Middle East. In their seven months at sea, the Carney destroyed Houthi-launched weapons, including land attack cruise missiles, anti-ship ballistic missiles, and unmanned systems under the banner of the US-led Operation Prosperity Guardian, a defensive coalition of more than 20 nations that is upholding the rules-based international order and providing maritime security in the Red Sea and the Gulf of Aden.

They also launched two defensive strikes against Houthi targets in Yemen degrading and diminishing Houthi capability to continue these attacks. They also rendered assistance to a merchant ship, the Swan Atlantic, that was struck by one of those Houthi missiles. And then, when they were sort of on their way home from the Eastern Mediterranean, they intercepted Iranian drones and Iranian-launched medium-range ballistic missile that were launched towards Israel – demonstrating our long-standing security cooperation relationship not only with Israel, but with other Allies and partners across the region.

And this is pretty amazing, in total, they conducted 51 engagements, saved countless lives, ensured the free flow of commerce, and stood up for that rules-based international order and the values that we hold dear. And that’s just one ship in one area of the world.

With an average of 110 ships and 70,000 Sailors and Marines deployed at sea on any given day the Navy-Marine Corps team is delivering power for peace, deterring potential adversaries, and again standing ready to fight and win our Nation’s wars. No other Navy in the world operates at this scale, no other Navy in the world could build, train, deploy, and sustain such a lethal, globally deployed, combat-credible force at the scale, tempo, and pace that we do.

Ladies and gentlemen, just as the “Fighting I” serves to tell the Navy story, I ask that you too go out and share the stories of the USS Intrepid, the USS Carney, the Brooklyn Shipyard, and perhaps even, the USS Bataan that’s right across the pier from us, in your own spheres of influence.

Help me tell the American people about the value proposition of your Navy, about all we do and how your Navy plays an outsized role in ensuring America’s economic prosperity and our Nation’s security. Help me connect the people to our maritime heritage, so we can honor, recognize, and celebrate those generations of Sailors, Marines, and Coast Guardsmen who have gone before us, onboard this ship, and others like her. And finally, help me inspire our next generation of Sailors, Marines, and Coast Guardsmen to pursue a career in our Nation’s Sea services – either in uniform, or as a civilian, or as a shipbuilder, or in research, or in policy. 

So, I really thank you for all the support that you provide to our Sea Services every single day. It really makes a difference. Thank you for this award and the opportunity to recognize our Sailors, and for my opportunity to be here with you tonight. I hope you all enjoy Fleet Week and the chance to meet our amazing Sailors, Marines, and Coast Guardsmen. Thank you very much, and I hope you have a good night.

Defense News: Military Sealift Command Supporting Biennial Rim of the Pacific Exercise

Source: United States Navy

MSC fleet replenishment oilers USNS Pecos (T-AO 197) and the MSC dry cargo/ammunition ship USNS Washington Chambers (T-AKE 11) will provide logistics services including aviation fuel, diesel ship fuel, dry, fresh and frozen food equipment and supplies to the ships participating in the exercise.

MSC chartered tanker ships MT Overseas Mykonos and MT Allied Pacific will provide fuel to the MSC combat logistics ships during replenishment-at-sea events. With the closing of the Navy’s The Red Hill Bulk Fuel Storage Facility, the tanker replenishment events will allow the CLF ships to receive fuel at sea, enabling them to provide logistic services to exercise participants as needed, without delay.

MSC rescue and salvage ship USNS Grasp (T-ARS 51) will deliver two decommissioned Navy ships to the designated target area in preparation for sinking exercises (SINKEX); amphibious transport dock Ex-Dubuque (LPD 8) and amphibious assault ship Ex-Tarawa (LHA 1).

Five members of Military Sealift Command Pacific’s (MSCPAC) Headquarters Unit are serving as watch standers, providing maritime logistics support to Commander, Task Group 173. These reservists, alongside will providing comprehensive planning and coordination for each replenishment-at-sea conducted during the exercise, including arranging and coordinating rendezvous locations and times for MSCs CLF ships and MSC chartered tankers. In addition, the Reservists will coordinate towing operations Grasp.

At sea, 24 members of MSC Cargo Afloat Rig Team (CART) will support at-sea logistics operations in support of the exercise, training and working hand-in-hand with the civil service mariner crews in order to meet the huge underway replenishment demands of keeping the ships of the 29 participating nations supplied and moving.

“MSC and our crews of highly professional civilian mariners are proud to be a part of RIMPAC 2024,” said Leonard Bell, Deputy to the Commodore, Military Sealift Command Pacific. “This is a great opportunity for us to not only demonstrate our logistics capabilities, but to work and learn from our foreign Navy partners in an at-sea environment. In today’s challenging environments, exercises such as RIMPAC allow us to foster goodwill and relationships with like-minded partners, ensuring safe seas for military and commercial sailing.”

Hosted biennially by Commander, U.S. Pacific Fleet (PACFLT), and executed by Commander, U.S. 3rd Fleet (C3F), RIMPAC is a multinational maritime exercise that takes place in and around the Hawaiian Islands. This year marks the 29th iteration of RIMPAC, a series that began in 1971 and is scheduled to take place from June 26 to August 2. Approximately 29 nations, 40 surface ships, three submarines, 14 national land forces, over 150 aircraft and more than 25,000 personnel are scheduled to participate. This year’s exercise will include units or personnel from Australia, Belgium, Brazil, Brunei, Canada, Chile, Colombia, Denmark, Ecuador, France, Germany, India, Indonesia, Israel, Italy, Japan, Malaysia, Mexico, Netherlands, New Zealand, Peru, the Republic of Korea, the Republic of the Philippines, Singapore, Sri Lanka, Thailand, Tonga, the United Kingdom and the United States. RIMPAC is a unique training opportunity designed to foster and sustain the cooperative relationships that are critical to ensuring the safety of sea lanes and security on the world’s oceans.

Defense News: CNO Delivers Remarks at Concert on the Avenue

Source: United States Navy

Below is a transcript of the remarks as delivered:

John, thank you so much for that warm introduction. It was an honor to serve with you my whole career. And I’m really happy to see you here at the helm of the Navy Memorial. And I want to offer and echo your thanks to everyone that had a part in putting together this evening and our great celebration of veterans in our Navy team, and also to the team here at the Navy Memorial that really brings to life our Navy story, every single day, and for always making our summer Tuesday nights for our Concerts on the Avenue so much fun and so exciting.

Good evening, everyone. Welcome. And as John said, I’m Admiral Lisa Franchetti. I’m the Chief of Naval Operations I took over back in November, and I could not be more proud of our incredible Navy and Marine Corps teams, as I look out, and I see them serving all around the world, Adm. Foggo, fellow flag and general officers, congressional staff, members, distinguished guests, family, friends, and most importantly, tonight, our veterans community. Those who are veterans, and those who work tirelessly every day to support and serve our veterans, welcome to the Concert on the Avenue.

I want to say thanks in advance to our Navy Band, and its brand-new director you’re gonna get to see up there tonight, Commander Robert “Seph” Coates. And if you haven’t heard of the Navy band before you are in for a real treat. Our Navy Band is made up of our nation’s finest musicians, the most talented musicians that come from all across the rich fabric of America. And every single one of them has chosen to serve our Navy, our nation, all around the world, by connecting people through their gift of music.

And every single one of them could be in the most premier orchestras and bands that our nation or really the world has to offer. But they’ve chosen to be part of our Navy team and take on the mission of music with a purpose. I couldn’t be more proud of them. And I know we’re all going to enjoy a really wonderful time with them tonight. And I hope you’re all up for dancing because I heard that there’s been dancing in every concert so far. I look forward to everybody getting up there and really enjoying themselves. So again, welcome. And it is wonderful to have you all here tonight.

You know one of the things that you get to do when you get to host a concert is choose a theme. And I decided to choose a theme to make tonight all about veterans to pay tribute to our veterans and those who support them. Let me recognize tonight, a few organizations and a few special guests that are here with us tonight.

I first want to recognize our veterans who are here from the Armed Forces retirement home, veterans … who have served in World War II and the Korea, Vietnam, and Iraq Wars.

It is really an honor to have you as my special guests here. And I hope if y’all haven’t gotten a chance to meet them, get over there and chat them up and listen to all of their great stories. I heard you have a five star here in the house. All right, I also want to thank the Armed Forces Home leadership for facilitating the visit today. We have with us the American Legion. We have Military Officers Association of America, the Navy League of the United States, the Navy League National Capital Chapter, Navy Marine Corps Relief Society. And it again is a pleasure to be here with all of you this evening. We are taking this night to honor you, our veterans, and the many Americans both past and present, who have taken up the profession of arms to defend our great nation. Tonight, as we honor our veterans service organizations, I want to thank you for all that you do tirelessly to support our veterans, no matter when they served or their circumstance, because you really make a difference for them and for their families every single day.

The other great part of this week, we’re going to celebrate the Fourth of July. Let us all take a moment to pause and recognize all that our Navy and Marine Corps service members have done for us over these past 249 years, ensuring our independence, protecting our Constitution, and guaranteeing our nation’s security and prosperity by keeping the seas free and open for all.

All right, in a few minutes we’re going to head up to the plaza where we like to call that the big “Granite Sea.” As you look out there, and when you get up there, I do want you to take a minute and look up at the 26 bronze sculptures that depict Navy history, the most iconic being the Lone Sailor statue. It is the symbol of the Navy Memorial’s mission to honor, recognize and celebrate the men and women of the sea services past, present, and future. I see some future ones out there in the audience without a doubt.

And although the Navy spends a lot of time, and we spend a lot of money, working on having the best equipment, the best platforms that any nation could ever have, from ships, submarines, to jet aircraft, and everything else we do, it really is our Sailors, both active and reserve, our Navy civilians, and all their families who are our true strategic advantage. As we celebrate tonight, please take a minute to think a little bit about all of our Navy and Marine Corps teammates who are standing the watch so that we can be here tonight. They’re standing that watch around the clock, around the world, everywhere from the seabed, all the way up to space, in cyberspace in the information environment, so they can preserve the peace, they can be ready to respond in a crisis. And if called, they’ll be ready to win decisively in war.

So, thank you very much tonight for being here. Thank you again to all of our veterans, for your service for paving the way and making a difference for all of us who serve today and making a difference for our great nation. And thank you to all of our veterans service organizations here tonight. Your service makes a difference every day and I could not be more proud to be here with you this evening. Enjoy the rest of the reception, and I look forward to seeing you up there on the great Granite Sea. Thank you very much.