Ex-MoneyGram Official Faces $1M Civil Penalty

(CN) - A former MoneyGram officer didn't convince a federal judge that a $1 million penalty for accusations that he failed to prevent money laundering should apply only to the company.

As chief compliance officer for MoneyGram International Inc., Thomas Haider had to ensure the firm had an effective anti-money laundering program and filed timely suspicious activity reports with the U.S. Department of Treasury's Financial Crimes Enforcement Network (FinCEN) from 2003 to 2008.

But after Haider left MoneyGram, the government had a Pennsylvania grand jury investigate whether the firm had violated the Bank Secrecy Act.

The court later gave certain personnel of FinCEN and Southern New York's U.S. Attorney's Office access to the grand jury information between 2010 and 2013.

MoneyGram meanwhile admitted that it violated the Act's anti-laundering provision, in a deferred prosecution agreement with the U.S. Department of Justice in 2012, the Treasury says.

While the company agreed to forfeit $100 million and get an independent, government-approved compliance monitor, FinCEN assessed a $1 million penalty against Haider.

Haider is reportedly subject to a $25,000-per-day penalty for the alleged laundering program violations, and $25,000 per violation for his 40-plus alleged failures to timely report suspicious activity. The agency based its decision on Haider's conduct from Nov. 15, 2007, to May 23, 2008.

FinCEN says the $1 million penalty is "substantially less" than it could have been, though it has not specifically identified Haider's violations.

The Treasury, in turn, filed an enforcement action in Southern New York Federal Court, seeking an order reducing FinCEN's assessment to a judgment and enjoining Haider from working for any "financial institution," as defined in the Bank Secrecy Act.

After the case was transferred to Minneapolis, Haider moved to dismiss.

U.S. District Judge David Doty denied the motion Friday, finding that "the plain language of the statute provides that a civil penalty may be imposed on corporate officers and employees like Haider."

Failing to identify each violation does not amount to failure to state a claim, the ruling states.

"As the government argues, the $1 million penalty is amply supported by the allegations underlying the [suspicious activity report] violations alone," Doty wrote. "Furthermore, analysis of the penalty amount is premature. Haider will have the opportunity to engage in discovery, during which he may fully explore the basis for the penalty."

The judge declined to decide whether the request for injunctive relief is time-barred.

"The court must consider, among other things, the likelihood that Haider will engage in similar misconduct in the future and the collateral consequences of the proposed injunction," Doty wrote. "The court cannot do so absent a well-developed factual record."

The investigation and assessment did not rely on improperly obtained grand jury materials, Doty ruled.

"As noted, the Middle District of Pennsylvania granted FinCEN access to that information in three separate orders," the judge wrote. "In the last order, the court specifically authorized FinCEN to use the information in collateral civil litigation."

The court declined to decide whether the Treasury violated Haider's due process rights, allowing the parties to engage in discovery on that issue.

James Margolin, a spokesman for the Southern New York U.S. Attorney's Office, declined to comment on the ruling.

Haider did not immediately return requests for comment emailed Tuesday.

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