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BoNY suspects plead guilty
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February 16, 2000: 12:21 p.m. ET
Former Bank of New York executive and husband admit to money laundering
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NEW YORK (CNNfn) - Two key defendants in a wire-transfer scandal involving the Bank of New York and more than $7 billion in Russian funds pleaded guilty to money laundering and other charges Wednesday.
Former Bank of New York (BK: Research, Estimates) executive Lucy Edwards and her husband, businessman Peter Berlin, entered guilty pleas in Manhattan federal court a day after arriving in New York from London to surrender to authorities. The charges include money laundering through wire transfers, making corrupt payments to bank employees and unauthorized banking activities.
The couple admitted to accepting $1.8 million in a scheme linked to the Russian mob, conceding that they allowed Russian bankers to set up unlicensed banking operations in Queens, N.Y., and Jersey City, N.J., so the Russian mob could launder large amounts of money and evade taxes.
The pleas were the first major admissions in the multibillion-dollar scandal.
Authorities said the investigation, which began in 1998, would continue.
"This investigation has followed a long, winding road throughout the United States and abroad," Lewis D. Schiliro, the assistant director in charge of the FBI's New York office, said in a statement. "Although these pleas are a significant development, much remains to be done."
Edwards, 41, who served as head of the bank's Eastern European operations in London, was fired last August after the international probe of the illegal wire transfers became public.
Authorities turned their attention to her husband after it was suspected that most of the money was moved through a company he controlled, Benex International Co.
Edwards and Berlin, and an alleged accomplice, Aleskey Volkov, were indicted in October. Volkov remains a fugitive.
Edwards told the court that Russian bankers approached her in late 1995, and they then agreed that her husband would open an account at the Bank of New York to obtain software that would enable them to bank illegally. In exchange, she and her husband received a percentage of the money being transferred through the accounts, she said.
She said she knew that authorizations were required for the transactions, but "I closed my eyes to that fact," she said. She also said she "suspected the accounts were being used by many people for illicit purposes."
Assistant U.S Attorney Gary Stein said the money funneled illegally through the bank included a $300,000 payment in June 1998 to secure the release of a businessman kidnapped in Russia.
Edwards and Berlin pleaded guilty to conspiracy relating to the money laundering allegations, and also admitted they failed to pay U.S. taxes. Edwards also said she helped prepare documents for Russians who wanted to enter the United States illegally.
The couple also admitted paying $500 a month to a Bank of New York employee in New York to make sure the accounts continued operating smoothly after the couple moved to London in 1996.
Under sentencing guidelines, Edwards faces a maximum of five years in prison and a $250,000 fine. Sentencing is scheduled for May 3.
Berlin, 45, and Volkov face additional charges of conducting an illegal money-transferring business and engaging in an illegal banking operation; crimes carrying up to 15 years in prison and a $175,000 fine.
A lawyer for the couple, T. Barry Kingham, issued a statement Wednesday emphasizing that his clients had come to New York voluntarily.
"They have made the courageous decision to come here to resolve the charges against them in order to complete this chapter in their lives and move forward," the statement said. "They have cooperated fully with the investigation being conducted by the FBI and U.S. attorney's office and they will continue to do so."
Bail for the couple was set at $500,000 each. They offered a house and property in upstate New York as security and surrendered their passports.
The Bank of New York was not accused of wrongdoing, although the bank has previously acknowledged that it needs to improve its money-handling procedures. When contacted Wednesday, the bank declined comment on the case. 
-- from staff and wire reports
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