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FCPA Blog Daily News

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Monday
Nov102014

Colorado Cash for Gift Cards stores investigated for money laundering

Police are investigating an alleged money laundering operation at Cash for Gift Card stores in Denver, Colorado Springs and Pueblo.

The stores pay cash for gift cards.

According to court documents, police think some of the cards were acquired by thieves who stole goods from Wal-Mart, Home Depot, Lowes, and other retailers, and then "returned" the goods in exchange for gift cards from the retailers.

The thieves then sold the gift cards at 50 to 75 percent of face value to Cash for Gift Cards, a report from 7News Denver said.

An affidavit filed by investigators said police in Colorado Springs "have a recording of store owner Justin Kruse bragging that he is the second largest gift card buyer in the nation, and that his stores exchange $15,000 to $20,000 worth of gift cards every day."

Police think Kruse and others then resell the gift cards or use them to buy other gift cards or merchandise at the retailers.

"A Wal-Mart internal investigator told police that Kruse has purchased more than $43,000 worth of goods from the retailer since October of 2012," the local news report said.

Police haven't made any arrests yet in the investigation.

Knowingly using money that comes from an illegal activity is a federal money laundering offense, punishable by up to 20 years in prison (18 U.S.C. §1956).

It's also a federal offense to try to "conceal or disguise the nature, location, source, ownership, or control of the proceeds of unlawful activity; or trying to avoid reporting a transaction that has to be reported under state or federal law."

Investigators said from September 2013 to June 2014, Kruse withdrew at least $1.7 million from two bank accounts.

Police executed a search warrant earlier this month at a Cash for Gift Card store in Denver.

"They removed computers and other business records and are now trying to determine what information is on the hard drive," 7News Denver said.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.

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