The ways that criminals hide illegal proceeds are very complex and often ingenious. Money laundering generally involves a series of multiple transactions used to disguise the source of financial assets. This is to allow the criminals to access the money without compromising themselves. One essential aspect of money laundering is that the illegal funds are mixed with legitimate funds. So to be successful as a money launderer, one must have ability to mix the illegal money with extensive assets from the legal market. Modern financial systems, which facilitate legitimate commerce, also permit criminals to transfer millions of dollars instantly. The choice of money laundering vehicles is only limited by the criminal's own creativity. Money can be laundered through currency exchange, stock brokers, gold dealers, casinos, insurance companies, and automobile sales. Real estate brokers who transfer real property and provide financing are an excellent vehicle for money laundering. Offshore banking, shell corporations, free trade zones, wire transfers and private banking facilities all have the ability to mask illegal activities.
The business structure of Veterinary Medicine is still dominated by small and independent firms or self-employed individuals, makes it more difficult for law enforcement to detect legal from illegal transactions. If the medical business can use its own business entity to hide the profits of that fraud through mortgage or contract fraud, then money laundering is easily hidden.
In the medical field, not just Veterinary Medicine, the main product is medical "service" rather than physical goods and the value of that "service" is very variable. One veterinarian will charge a different rate for his or her time and effort than another. There is often nothing but a medical record or a note in an appointment calendar to prove the "service" even occurred. Often when the only "service" is a medical consultation, it is difficult to prove whether it really happened or not. If the medical consultation is involved in deliberate medical fraud then it is very difficult to detect. The language and terminology of medicine makes expertise in medicine necessary to detect certain kinds of fraud. The laws that protect medical confidentiality of personal records also protect from detection those medical doctors who do medical fraud, as the very records necessary to prove the fraud are protected by privacy and confidentiality laws (such as HIPPA). This lack of effective law enforcement scrutiny and financial transparency is the reason that criminals prefer to do money laundering within the medical community.
Because the medical community uses primarily non-cash instruments such as checks and credit cards for effecting both legal and illegal financial transactions, it is more difficult to identify the placement phase of money laundering. Check smurfing is easily accomplished when the doctor owns his/her own business and handles all his/her own budgeting and accounting. Very few veterinarians employ certified public accountants to manage their books even though most veterinary practices are valued at ¼ to 2 million dollars in worth and may handle $100,000 - $500,000 of transactions per year. This lack of any regulatory oversight and poor financial regulation for legitimate transactions makes it more difficult to trace and neutralize criminal money. In addition it is easy in the veterinary community to imitate the patterns and behavior of legitimate transactions in order to prevent the money laundering apparatus from being exposed. Because it is easy to mix legitimate transactions with a low ratio of illegal money, using the veterinary clinic as a front, it is harder for law enforcement to distinguish criminally gained assets from legal money.
The movement of the veterinary community toward corporate practices such Veterinary Centers of America, Pet's Choice, VetSmart, Banfield and others means greater involvement in the financial services supermarket and opportunities for fraud at the level of the public securities (Sarbanes-Oxley). The melding of privately owned real estate into the sale of corporate practices which then offer shares of public stock allows for money laundering of the criminal proceeds of real estate fraud. The integration of multiple aspects of veterinary service, such as laboratory services, veterinary medical insurance, wholesale supplies, retail pharmacy, mortuary services, short term client financing, medical equipment leasing and even veterinary practice business financing makes it possible for a greater control of all financial services to be met within one integrated multi-divisional institution, thus making it more difficult to identify money laundering.
Because most veterinarians own their own clinics and homes, valuable commercial real estate is an essential part of their business and therefore the sale of a veterinarian's practice often entails the transfer of substantial real estate property. It is in this transfer of ownership of a veterinary or medical practice business from one doctor to another that the integration phase of the money laundering occurs. Predatory lenders readily offer hundreds of thousands or even millions of dollars of credit to medical and veterinary doctors so that that they can buy their new medical practice. It is extremely rare for a lawyer or an accountant to be hired by the purchasing young veterinarian as they are often credit challenged and therefore taking financing from the former practice owner and working directly with the seller's agent. The price of the practice becomes secondary to the financing terms and the real estate broker makes a very enticing financing package which includes the illegal funding.
Real Estate firms that deal in commercial properties are in an excellent position to do the layering process of money laundering. Staging the veterinary practice sale into several parts 1) Equipment, 2) Business Records and Client List, and 3) Real Estate, makes it easier to hide related transactions. Only the Real Estate Title Transfer is a regulated process, the rest are private confidential contracts with paperwork only shared between the parties to the transaction. The seller's broker encourages the buyer to borrow heavily from commercial credit companies such as local banks, credit unions, MasterCard, VISA, and Discover to keep paying the increasing interest charges or balloon payment on the business loan.
Layering can be accomplished through secondary leans against the new buyer's real property and are often obtained by the broker when the new business owner becomes so overburdened with debt that he/she is unable to secure independent credit from other sources. At this point the new business owner borrows money from the seller's broker or goes bankrupt. Under such financial hardship the new business owner is in no position to question the source of funds that secured his ownership of the business this is part of the placement of illegitimate money. If he/she refuses such illegal funds, all real property of the practice will be seized by the seller and the Credit Card companies as unsecured creditors lose everything they lent the buyer.
Perhaps the most disturbing aspect of the money laundering apparatus in the medical community is how it has now been melded with Mortgage Fraud in the Real Estate profession and then protected by corruption at the level of the Veterinary or Medical Board and the "Impaired Physicians" monitoring program run by the Physicians Health Program. When the doctor blows the whistle, there are phony 'inquiries' into the whistleblower's allegations by people appointed by the employing hospital who are themselves dependent on the hospital for further employment or even a private detective hired by the hospital to "dig up dirt." An immediate allegation of "Impaired Physician" against the medical whistleblower and the threat of the loss of a medical license causes whistle blowing doctors to drop their allegations or suffer a Bad Faith Peer Review for being a "Disruptive Doctor." This almost always involves a long term "monitoring contract" with the Physicians Health Program to watch the whistleblower's future behavior. Lack of compliance means immediate removal of the right to practice medicine by the Medical Licensing Board.
The overwhelming authority of these governmental agencies or quasi-governmental agencies is such that no doctor can continue to practice medicine or have employment in the medical field without submitting to their power. The Bad Faith Peer Review is protected by its quasi-governmental or actual governmental immunity. Such a melding of corruption and governmental power has made money laundering within the veterinary and medical community so widespread and so untouchable by law enforcement that doctors are forced to give up their professional careers or give in to the ruinous power and authority of the criminal apparatus.
The strength of the retaliatory response to the medical whistleblower tells us the size of the criminal problem. Usually most whistleblowers are aware only of corruption at their level in the organization, and their initial complaints may be about relatively minor matters. But after months or years of victimization, the whistleblower discovers that the corruption and the protection of those involved are far greater in extent and seriousness than they had ever suspected. The more violent the response is, the more likely the criminal activity is endemic and tacitly accepted within the organization.
A criminal money laundering network will go to great lengths to protect themselves and their investments and assets. Money launderers are professional criminals who provide their services on a continuing basis. Because collaboration is crucial to serious and organized criminals, they form groups and networks and therefore can respond to a whistleblowers threat by crushing organized retaliation. In order to avoid detection and prosecution by law enforcement organized criminal operations use coercion, corruption or deception. The use of threats and actual violence are used to silence potential witnesses and victims are pressed to keep silent or retract statements. Individuals are forced to act against their will to protect the secrets of the criminal enterprise. The criminally involved will use their power and influence to discover information about the status and direction of law enforcement, to identity surveillance vehicles, informants or witnesses, and to discover general information concerning law enforcement capabilities, procedures, operational priorities and resource deployments. This provides the criminals with an insurance policy in the event of an arrest and creates the possibility for evidence to be tampered with or destroyed. Organized criminals use basic evasion techniques and more sophisticated deception methods to hide their activities. Legitimate or quasi-legitimate businesses are used most obviously to launder the proceeds of crimes, but they are also used to facilitate illicit diversion of drugs and regulated precursor chemicals. Front companies are essential for certain kinds of fraud.
Like an undetected parasite this money laundering criminal enterprise sucks all the viable profit out the veterinary and medical practices and leaves doctors with little to show for years of hard work but their financially compromised practices. When he/she retires, the older veterinarian or doctor is forced by financial necessity to convince another naive young doctor to purchase the business (with the money laundering apparatus in place). Thus, like a child infected in utero prior to his birth, medical practices pass their infection with the criminal money laundering enterprise down through generations.