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Married Couple From Washington Charged for Bankruptcy Fraud and Money Laundering

(Source: FBI) – SEATTLE—A federal grand jury in Seattle today retuned a 43-count indictment charging MICHAEL MASTRO, 87, and his wife LINDA MASTRO, 62, with a variety of bankruptcy fraud crimes and multiple counts of money laundering, announced First Assistant United States Attorney Annette L. Hayes. The couple was arrested yesterday in France on a warrant based on a criminal complaint. The indictment now replaces that charging document as the Justice Department Office of International Affairs works to have the MASTROs returned to the United States to face these criminal charges.

“Those who flaunt the law and ignore our legal process will be held to account,” said First Assistant United States Attorney Annette L. Hayes. “Thanks to the unrelenting efforts of law enforcement both here and abroad, the Mastros have been arrested and will face the charges that the grand jury returned in their indictment today.”

The indictment describes a series of frauds, false statements, and acts of money laundering allegedly committed by the MASTROS. In particular it details how, in the course of their marriage, the MASTROs acquired assets ranging from expensive diamond rings to valuable art and furnishings to a $15 million home in Medina, Washington. The indictment states that between August 2008 and May 2009, as the real estate market plummeted, the MASTROs sought to protect their assets from creditors. In October 2008, the couple set up an offshore trust in Belize and a series of limited liability corporations that were “owned” by the offshore trust. The couple transferred assets such as the diamond rings, and their Rolls Royce automobile and Medina home to the limited liability companies owned by the off shore trust.

When the MASTROS were forced into bankruptcy in 2009, they failed to disclose to the bankruptcy court a bank account associated with the limited liability corporations. Between July 2009, and July 2010, the couple used more than $761,000 from this hidden account for payments on an American Express credit card; car loans for a 2006 Range Rover, a 2007 Bentley Continental, and a 2008 Rolls Royce Phantom Coupe; household expenses; legal expenses; department stores purchases; and a bulk gold coin purchase. The 16 counts of money laundering describe the movement of funds to and from the MASTROs’ hidden bank account that they utilized as part of the bankruptcy fraud.

The individual bankruptcy fraud counts in the indictment detail false statements, oaths and declarations made by MICHAEL or LINDA MASTRO. The indictment describes the concealment of assets such as a wine collection, Steinway piano, and Chihuly glass artwork which the MASTROs stored in Palm Desert, California, without informing the bankruptcy trustee. The indictment further describes how LINDA MASTRO and MICHAEL MASTRO lied about the purchase and whereabouts of a 15.93 carat diamond ring, in an effort to claim it was LINDA MASTRO’s separate property from before their marriage. The indictment charges that LINDA MASTRO lied and said she had left both the 15.93 carat ring and a 27.80 carat ring with a person “outside the United States,” when in fact she had possession of the rings.

“The allegations against the Mastros are serious and the FBI is committed to ensuring that they face those charges,” said Assistant Special Agent in Charge Steven M. Dean of the FBI Seattle Division. “We value our strong law enforcement partnerships around the world and are very grateful for the crucial role of the French Police Judiciare in both the fugitive investigation and the arrests.”

The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the FBI and the Internal Revenue Service Criminal Investigation (IRS-CI). The arrest of the MASTROs was accomplished by the U.S. Marshals Service, FBI Legal Attaché Paris, DOJ Office of International Affairs in Paris, and the French National Police.

The case is being prosecuted by Assistant United States Attorneys Lawrence Lincoln and Susan Loitz. U.S. Attorney Jenny A. Durkan has been recused on this case, and thus First Assistant U.S. Attorney Annette L. Hayes has been assigned pursuant to 28 USC § 515.

Press contact for the U.S. Attorney’s Office is Emily Langlie (206) 553-4110 or Emily.Langlie@usdoj.gov.

Source: FBI

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