Note: This is a guest editorial submitted electronically.
By Ursula S. Buenaventura
Beto O’Rourke, candidate for the Democratic Party nomination for the 16th Congressional District finds himself in a dilemma. He recently stated that he will not return $3,100 in campaign donations from his mother, Melissa O’Rourke, despite her having pleaded guilty on behalf of her company to violating federal anti-money laundering rules.
Specifically, in May, 2010, Ms. O’Rourke pleaded guilty on behalf of her company, Charlotte’s Inc., to federal charges of structuring cash transactions in order to avoid reporting them to the IRS as required by federal anti-money laundering laws. The company was fined $500,000 with $250,000 probated and the remaining $250,000 to be paid in annual installments of $50,000. In addition, the company was placed on probation for five years.
The plea agreement indicates that, “Charlotte’s employees structured approximately $630,745.28 in cash payments in excess of $10,000 received from the ‘particular customer’”. It also indicates that Ms. O’Rourke’s company also accepted additional cash payments totaling an additional $1,071,934.00.
The law that applies in these cases is known as the Bank Secrecy Act of 1970. It requires financial institutions and certain businesses and professionals to assist U.S. government agencies to detect and prevent money laundering. Recent amendments extended the requirements to certain businesses that the government and international anti-money laundering authorities deem to be high risk for money laundering, such as automobile dealerships, furniture and jewelry dealers, and other luxury retail establishments.
The law was also amended to include provisions of title III of the USA PATRIOT Act.
Effectively, the objective of the law and its implementing regulations and reporting requirements is to provide law enforcement authorities with data that can enable them to follow the money trail of crime activity like drug and human trafficking, terrorist financing, tax evasion and other financial crimes.
Many large financial institutions around the world, also subject to the same laws, have paid millions in penalties for alleged violations and have signed deferred prosecution agreements.
Candidate O’Rourke accurately asserted that his mother was not charged. He also refused to discuss the case specifically. He stated that he preferred to talk about issues that concerned people in the district.
Unfortunately, money laundering is a significant issue in the district he seeks to represent, and it poses a serious threat to the entire U.S. and it is a global problem. Thus, it is an issue that he needs to address and confront both as a candidate and as a potential representative in the U.S. Congress.
The issue become a greater topic of conversation given his public stance regarding legalizing the use of marijuana and the fact that he seeks to represent a congressional district that borders Cd. Juarez, a major center of drug trafficking and money laundering concern.
The U.S. Immigration and Customs Enforcement reports in its website that in 2010 alone “CBP officers and ICE HSI special agents encountered almost 3,500 individuals or [bulk cash] shipments at the border and were involved in investigations where smugglers tried to conceal more than $330 million in bulk currency or monetary instruments.
Further, legal or not, drugs also have a huge impact on our society and those of many other nations. The UN Office on Drugs and Crime (UNODC) estimated in an Oct 2011 report that total costs of drug abuse in 2002 in the U.S. from productivity losses and healthcare costs alone amounted to approximately $128.6 and $15.8 billion dollars, respectively. That was approximately 1.4% of the nation’s GDP. In addition to that, the U.S government spends another significant amount on foreign aid helping other countries combat not only drug production but enforcing money laundering and terrorist financing laws, the cost to our nation is higher.
In addition to the tangible costs of drug trafficking and money laundering there are other intangible costs to societies and economies worldwide from a breakdown in the rule of law, higher incidents of corruption and even economic destabilization as illicit funds flow into the economy, distorting prices and consumption and creating unfair market conditions.
As noted in the Money Laundering and Financial Crimes section of the State Department’s annual International Narcotics Control Strategy Report or INCSR (which is required by the Foreign Assistance Act of 1961) , “political stability, democracy and free markets depend on solvent, stable, and honest financial, commercial, and trade systems.”
It certainly has to be unpleasant for Mr. O’Rourke for his mother to become part of the discussion in the race for the Democratic nomination to represent the 16th Congressional District. After all, it is he who is a candidate and not his mother or any other member of his family.
Unfortunately, Mr. O’Rourke cannot erase this as a non-issue in this political race given his prior policy positions, the public record and a very real and significant problem that exists in the District he seeks to represent.
He must either demonstrate that he is truly attuned to all the problems afflicting this community and take responsibility for the impact that his public stances and related business interests have on the community, or put into question his personal sense of responsibility and potential effectiveness as a federal legislator.