Special Agent

By Ryan Corrigan

For 27 years, U.S. Treasury Special Agent Ryan Corrigan investigated suspicious and criminal financial activity flagged by the IRS. In Special Agent, Corrigan revisits many of his most interesting cases, offering a unique perspective and a fascinating spin on the catchphrase "follow the money." Tasked with several high profile

• Language: English
• Publisher: Palmetto Publishing
• Release date: Jul 12, 2022
• ISBN: 9798885909891

Ryan Corrigan

Ryan Corrigan began his career as an auditor for the Internal Revenue Service before moving into the Criminal Investigation Division. He would spend the next twenty-seven years investigating cases on behalf of the United States Treasury Department. During this time, he completed an MBA program and after retiring from civil service, he enrolled in accounting classes and passed the CPA exam. For the next thirty years, he was a self-employed forensic accountant frequently testifying in federal courts. Now officially retired, he spends his time writing. His current projects are a textbook of money laundering and currency violation case studies and a compilation of stories of his uncle-in-law's days growing up on the Monterey peninsula in the early 1900's.

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THE FIRST CASE

THE FIRST CASE

O

ne of the most frequent questions I was asked was, How do you determine whom to investigate? Referrals from the civil auditors, informants, raw intelligence gathering, and other law enforcement agencies, are all sources. The source of my first tax investigation was a Currency Transaction Report, or CTR.

While many people are unaware of the law, certain financial institutions, such as banks, stock brokers, check cashing companies, casinos, and more, are all subject to currency reporting requirements. In 1961, any currency transactions conducted for $2,500, or more, by a financial institution were required to be reported to the IRS on a special form, the CTR.

Some form of a CTR requirement has been in effect for years, first enacted as part of the Trading with the Enemy Act of 1917. Until 1945, filing was discretionary on the part of the financial institutions. At the close of World War II, regulations were issued requiring reports to be filed, first for all transactions of $1,000 or more in denominations of $50 or higher, and all currency transactions involving $10,000 or more in any denomination, but only if the financial institution judged the transaction to be unusual for the customer. This last exception was a practical exemption for businesses normally receiving cash, such as grocery stores and movie theaters.

Reporting became mandatory by regulations issued in 1952. The more modern version came in 1970 with the enactment of the Currency and Foreign Transaction Reporting Act, more commonly known as the Bank Secrecy Act. The Statute amended Title 31, the Banking Code, and provided for regulations now requiring a CTR for any cash transaction of more than $10,000.

In the case assigned to me, a stock broker filed CTR’s reporting currency deposits exceeding $2,500 into an account held by a Frank Scott, who had only a P. O. Box for an address. The total amount of currency deposited to the account over two years was almost $80,000.

My first step was to look for tax returns for Mr. Frank Scott. At that time, tax returns filed in Arizona were kept in storage files in the IRS office in Phoenix. Service Centers did not yet exist. My request for Mr. Scott’s tax returns for the past couple of years was returned with a No filing located notation. Since it was possible Mr. Scott was a winter resident in Arizona, and may have filed in another state, I decided to take a direct approach, and write a letter to him asking where he filed tax returns.

I also visited the stock broker firm to let them know we opened an investigation of their customer, and to see what else they might know. What they knew was next to nothing, and they could not even provide a physical description. The only identifying information was a P. O. Box and what would turn out to be a phony Social Security Number.

The P. O. Box used by Mr. Scott at a Tucson Post Office had a small window in the box door through which I could see the edge of the mail placed in the box. After mailing the letter to him, I checked the box daily until a letter showed up, then watched each day to see if it had been picked up. It took about two weeks for the letter to disappear from the mail box. The day I saw the letter was missing from the box, I had barely returned to my office when I received a telephone call from the broker. He told me that Mr. Scott had closed his account by telephone and had requested the settlement check be sent to his P. O. Box.

I resumed my daily observations through the mail box window and saw the check arrive, then disappear. When the settlement check was picked up, I asked the broker what bank the check was drawn on, and luckily, it was a local bank in Tucson. I visited the operations officer at the bank and asked if they could locate a copy of the broker’s check that had been issued to Frank Scott. They found a microfilm copy of the check. It had just cleared a day ago, and I was able to determine from the endorsement stamps on the back of the check that it had been deposited in another bank, also in Tucson.

I went to Bank Number Two and asked if they had an account for Mr. Frank Scott. They located the checking account, and told me that the account had just been closed that morning, and that the customer requested currency, close to $80,000. I had a flash of disappointment, thinking, Rats, I just missed him, until the bank officer said Scott also had a savings account at another branch of the bank, and it was still open with a balance of about $2,000.

Back at my office, I called the manager of the branch with the savings account, Bank Number Three, and asked if the account was still open. He told me Mr. Scott was at the bank that very moment in the process of closing the savings account. At my request, the manager said he would try to stall him. I hopped into my car and headed to Bank Three, which was on the other side of town from Bank Two.

By the time I got there, Mr. Scott was gone with his $2,000 in cash. The manager said he just could not stall him any longer, that Scott was real nervous acting, but he did manage to get his license plate number. YEAH! I asked the manager and two other employees who had dealt with Scott for a description of him. The results varied from five foot six inches tall to over six feet, from age 30 to age 60, wearing a blue sweater, wearing no sweater, a denim shirt, wearing tan pants, grey pants, dark hair, light brown hair. It was a lesson to me to always doubt the accuracy of eye witness descriptions.

When I ran the plate through DMV (Department of Motor Vehicles) it came back to an Elmer M. in Benson, Arizona. The address was on the main street and was the address for Benson Hardware. Benson is a small town about 50 miles east of Tucson.

Back to my car, I made the drive to Benson in less than an hour. Parked in front of Benson Hardware was the car with Elmer’s license plate. When I walked into the hardware store, I saw a middle-age man, about 45 years old, five foot eight inches tall, medium build, sandy hair, blue denim shirt, and tan pants, a composite of the descriptions I had received from the bank employees.

I approached him, identified myself as a Special Agent, confirmed he was Elmer M., then said, Mr. M., I believe I have been looking for you. Are you also Mr. Frank Scott? He was stunned, a picture of someone totally terrified. He did not immediately reply, then, gathering his wits, said he wanted to see an attorney. End of the interview. I told him I understood, and asked if he would have his attorney call me.

It was a relatively easy case to prove. I matched the deposits made to the hardware store bank account to the gross sales reported on Mr. M.’s tax returns, and found no cash was deposited. It is a fair assumption that some cash was received in the retail hardware business. No currency was withdrawn from any bank accounts owned by Mr. M, so it was an obvious conclusion that the cash deposits with the broker in Tucson were skimmed business receipts. Mr. M.’s use of the alias, Frank Scott, to conceal the brokerage account, the use of currency, the lack of currency deposits to the business bank account, and his hasty withdrawal of the money in currency when Frank Scott received a letter from the IRS, provided more than sufficient evidence of an intent to defraud the government, an essential element of the crime.

Mr. M. was indicted on two felony counts of filing a false return in violation of Section 7206(1), of Title 26, U.S. Code. Elmer M. was represented by a former Arizona Supreme Court Judge. As an accommodation to his attorney, a summons for Mr. M. to appear for arraignment was issued in place of an arrest warrant. At the hearing Mr. M. entered a plea of guilty to both counts, and in due course was sentenced to serve one year in federal prison and three years on probation.

Since I began this story about how investigations are begun I would like to relate something that happened years later. My family doctor in Boise, ID, where I was the Chief, CID in the late 1970’s, asked me if it was true that doctors were investigated more than anyone else. Believing he had a good since of humor, I told him that when my agents ran out of work I opened the telephone yellow pages to the physicians listing, closed my eyes and ran my finger down the page, blindly stopping on the name of the next assignment. The doc hollered, I knew it, I knew it! I told him I was only joking, but I’m not sure he was convinced.

FIRST ARREST

FIRST ARREST

T

he best that I can remember, I made my first arrest sometime in late 1963 or early 1964 in Phoenix. I might not remember the date, but I sure remember the details. Big Bill Duncan and a partner, Kyle, ran a bookmaking operation, along with high stakes poker games, and along with a few working girls to entertain the players.

The actual investigation was assigned to my office partner. My participation began after search warrants for Duncan’s house were obtained. I was given the task of being the first one through the door, and if necessary, to kick in the door to gain entry.

I approached the residence with other Special Agents and a Phoenix PD Vice Squad cop right behind me. I rang the doorbell, and in a semi-loud voice, announced, Federal agents with a search warrant. I heard someone approaching the door, so decided to wait. The door was opened by a somewhat tired-looking 30ish young woman, who was one of the entertainers. I re-announced the Federal Agent, search warrant bit, then charged past her. The goal on any raid is to first secure the premises to be searched and determine that none of the occupants are armed or have access to weapons.

I entered the living room area, saw no one else there, glanced at the kitchen to my right and motioned for a back-up agent to go in that direction, I turned to my left, down a hallway, throwing open bedroom doors. None of the bedrooms were occupied except for the last bedroom on my right. As I opened the door, there was a couple sexually engaged. I was not sure what to say, so out came, Federal Agents with a search warrant. Stay right there. Then I backed up and started laughing, thinking how ridiculous that sounded. Talk about caught in the act!

The amorous couple were not so amused, as the vice cop following me down the hall arrested the woman on prostitution charges, and the man for soliciting. I would like to be kind, but the woman was not exactly attractive. Truthfully, she was just plain ugly. The vice cop searched a woman’s coat in the room finding ten one-dollar bills in a pocket. He, tongue in cheek, speculated as to whether the ten ones represented one trick, or ten tricks.

Neither Bill nor his partner, Kyle, were at the house. We seized bookmaking records, then went looking for Bill and Kyle with arrest warrants. Other agents located Bill at a local bar the same afternoon, but we did not find Kyle.

We knew where Kyle lived, so I waited outside and down the street from his residence. It was about 11:00 p.m. when I saw him enter his house. I rang his door bell, and when he answered the door, I grabbed him by the arm like I was trained to do in Treasury school, and told him he was under arrest. I cuffed him, frisked him for weapons, and placed him in the back seat of my government car. Kyle was a sharp dresser and was wearing an expensive tailor-made brown suit, and a white dress shirt, but no tie.

Since it was late at night, and was also a Friday, he could not make a Court appearance for arraignment until Monday. This meant he would be held in custody until Monday morning. For some reason the government had a contract to temporarily house Federal detainees in the Mesa, Arizona city jail instead of the more convenient Phoenix jail. On the way to Mesa, I told Kyle he should not have been trying to dodge us all day, as now he would have to wait until Monday for a hearing and would be spending the weekend in the lockup.

I heard him say, Oh no! but when I asked him what was the matter, he was not concerned about the weekend in jail, but was in a panic that he did not have any cigarettes with him, and couldn’t make it until Monday without a smoke. Risking the reputation of Federal Agents being ruthless and heartless, I pulled into a drive-through liquor store and bought three packs of cigarettes for him.

I had never seen the inside of the Mesa jail before. When I entered with Kyle in tow, I was met by a gruff desk officer who looked like he wished he was anywhere other than at that desk. He asked, not so kindly, What do you want? I explained I was a Federal Agent with a prisoner who needed to be held until Monday morning. He looked me up and down for a few seconds, probably wondering if I was really an agent, but knowing for sure I was a rookie.

The grizzled, veteran desk Officer told Kyle to empty his pockets, let him keep the cigarettes, and told me to bring Kyle and follow him. We headed through a series of locked doors and barred hallways. It was about midnight, so the cell block lights were dim. The Mesa cop, Officer Gruff, led us to an empty cell and motioned for Kyle to enter, then slammed the door shut behind him. The cell did not have the traditional round vertical bars. Instead, the cell was constructed with metal straps, about a quarter of an inch thick, and about an inch and a half wide. The straps were both vertical and horizontal in a basket-weave