Bank With Ties to Greece Charged in Laundering Case

U.S. prosecutors Wednesday charged the National Mortgage Bank of Greece, which is partly owned by the Greek government, with laundering at least $700 million for its customers over the last six years.

After a nine-month investigation dubbed “Operation Zorba,” 13 of the bank’s employees were arrested, prosecutors said, and a 14th employee is wanted.

Andrew Maloney, U.S. attorney for the Eastern District of New York, told reporters that the bank’s prime purpose was to “assist Greek-Americans in evading federal income taxes.”

Maloney said the bank was so bold that it advertised in local Greek-language newspapers that it would transfer to Greece “tax-free, high-interest, secret guaranteed deposits in dollars.”

The National Mortgage Bank of Greece operated as a branch of a foreign bank in violation of state and federal laws, Maloney said. It accepted large cash deposits from Greek-Americans who wished to send their money out of the country without alerting the Internal Revenue Service or customs.

The bank, which has offices in Boston, Chicago, Pennsylvania and New York, 77either converted the cash deposits into checks drawn on other banks or helped its customers do so in a manner designed to evade Bank Secrecy Act reporting requirements, he added.

One bank employee bragged to an undercover agent pretending to be a prospective customer that such deposits were “tax-free, not reported,” according to the complaint filed in Brooklyn Federal Court.

Maloney said the bank’s accounts at other U.S. banks were frozen.

The National Bank of Greece, in which the Greek government has a substantial financial interest, owns 47% of the National Mortgage Bank of Greece.

One prosecutor summed up the bank’s alleged activities as “like having a Swiss bank account in Astoria (Greek-American neighborhood of Queens).”