Remember when Michael Avenatti shared Michael Cohen’s bank records on Twitter and no one had a clue how that came to pass? An IRS analyst identified as John C. Fry now faces the charge of unlawful disclosure of Suspicious Activity Reports (SARs).
In the complaint, it is alleged that Fry, a San Francisco resident, committed the major no-no of disclosing Cohen’s records to Avenatti. Fry was also identified as the anonymous “law enforcement official” who told the New Yorker he “immediately became concerned” when he discovered two of Cohen’s finance-related files were missing.
Avenatti was mentioned in the complaint.
“Immediately after downloading the five SARs, John Fry placed two outgoing calls from his personal cellphone to (***) ***-4118,” it said. “The first phone call at 3:11 p.m. lasted approximately four minutes. The second phone call at 3:15 p.m. lasted approximately seven and a half minutes. A records check revealed that the phone number was associated with Michael Avenatti.”
As you may recall, the Cohen SARs story drove the news cycle for some time, given that it was alleged Cohen received half a million dollars from a Russian oligarch in the wake of the 2016 presidential election. Cohen was said to have funneled various payments through his shell company Essential Consultants, LLC, the one used for the Stormy Daniels hush payment.
Essential Consultants, LLC received payments from the companies like Novartis, AT&T, airplane and satellite manufacturer Korea Aerospace Industries, sparking an awkward PR/apology tour.
Avenatti was quick to respond to the news on Twitter, pointing out that it is the person who disclosed the SARs, not third parties sharing them, who are on the hook legally.
Avenatti appears to be correct about this point. The bulk of guidance and law in this area focuses on what banks, employees, and government officials shall not do with SARs, specifically publicizing that they exist in the first place.
The U.S. Treasury Financial Crimes Enforcement Network (FinCEN) says that the unauthorized disclosure of SARs is both a violation of federal criminal law and undermines the purpose of requiring SARs. Here’s what FinCEN’s website has to say on the matter:
The unauthorized disclosure of Suspicious Activity Reports is not only a violation of federal criminal law, but it undermines the very purpose for which the suspicious activity reporting system was created – the protection of our financial system through the prevention, detection, and prosecution of financial crimes and terrorist financing. The unauthorized disclosure of Suspicious Activity Reports can compromise the national security of the United States as well as threaten the safety and security of those institutions and individuals who file such reports. The Bank Secrecy Act Advisory Group is committed to continuing to work with the Financial Crimes Enforcement Network, the federal functional regulatory agencies, law enforcement, and the financial services industry to ensure that the information contained in Suspicious Activity Reports is safeguarded, and that anyone who makes an intentional, unauthorized disclosure of a Suspicious Activity Report is brought to justice, whether that person is inside or outside of the Government.
The Code of Federal Regulations (CFR) has more to say in this area. 31 CFR 1020.320 covers reports by banks of suspicious transactions and stipulates what banks are required to do and what may not be done. Beginning with 31 CFR 1020.320(e)(1)(i), the general rules against disclosure by banks and employees:
No bank, and no director, officer, employee, or agent of any bank, shall disclose a SAR or any information that would reveal the existence of a SAR. Any bank, and any director, officer, employee, or agent of any bank that is subpoenaed or otherwise requested to disclose a SAR or any information that would reveal the existence of a SAR, shall decline to produce the SAR or such information, citing this section and 31 U.S.C. 5318(g)(2)(A)(i), and shall notify FinCEN of any such request and the response thereto.
Fry has been charged with violating 31 U.S.C. § 5322(a), which means he could be imprisoned for up to five years, fined no more than $250,000 or both.
Law&Crime reached out to Avenatti for further comment.
“I did nothing wrong just like reporters do nothing wrong when they receive information and report it,” he said.
John C. Fry complaint by on Scribd
[Images via Spencer Platt/Getty Images, Eduardo Munoz Alvarez/Getty Images]
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