Three men who thought they were laundering $2.6 million from a penny stock fraud have pleaded guilty in federal court in Brooklyn, New York.
Michael J. Dodd, 65, and James Robert Shipman, Jr., 64, pleaded guilty Tuesday to conspiracy to launder money.
A third defendant, Kenneth Landgaard, 46, pleaded guilty to the same charge on January 15.
The three defendants were business partners. Dodd, a U.S. citizen who lived in Panama City and also used the name Michael Stanley, set up offshore foundations in Panama for clients and coordinated with Landgaard to move cash on private jets.
Landgaard, a U.S. citizen living in Alexandria, Minnesota, owns and operates Magjets Group, an aviation company based in Panama City.
Shipman lives in Hollywood, Florida.
Landgaard and Shipman were arrested after flying to an airport in New York on a private jet, where they took $2.2 million in cash from an undercover agent. They had agreed to launder the money through banks in Panama and Belize.
Dodd was arrested a few hours later at a Manhattan restaurant where he expected to meet with the undercover agent.
The undercover agent posed as a criminal stock promoter as part of an FBI sting operation, the DOJ said.
Before their arrests, the defendants had already laundered $400,000 in cash from the undercover agent.
The agent said he was a middleman “working with corrupt stock brokers who artificially inflated prices for worthless stocks in exchange for high commissions,” the DOJ said.
Despite the backstory about dirty money from the penny stock fraud, Shipman, Langaard, and Dodd agreed to launder $2.6 million in exchange for a fee of 13 percent to 15 percent.
The FBI recorded them explaining in detail how to hide the money laundering operation from law enforcement authorities.
Dodd insisted that the undercover agent download and use encryption software for online chats and voice communications.
Landgaard required the undercover agent to deliver the money in expensive Louis Vuitton duffel bags. Shipman explained that “cops can’t get the authority to buy a Louis Vuitton bag, it’s too expensive ….”
Landgaard and Shipman also insisted that the undercover agent buy and use burner phones for all calls to them.
The investigation was a joint operation by the FBI and IRS. U.S. Immigration and Customs Enforcement’s (ICE) and Homeland Security Investigations also had a role.
The defendants pleaded guilty before Judge John Gleeson at the United States Courthouse in Brooklyn.
The all face up to 20 years in prison. Sentencing dates haven’t been set.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.