Michael J. Scaglione, an attorney in Coral Gables, Florida, has been sentenced in federal court in Brooklyn, New York, to six months in prison, to be followed by four months of home detention with electric monitoring to be served during a two-year term of supervised release. As part of the sentence, Scaglione was ordered to perform 200 hours of community service and to forfeit approximately $31,950 to the government.
Scaglione previously had pleaded guilty to a money laundering charge for laundering over $750,000, which he believed were the proceeds of a penny stock fraud scheme. Scaglione had been arrested after taking possession of $500,000 in cash from an undercover federal agent posing as a criminal stock promoter in connection with a government sting operation.
“Abusing his position as an attorney by laundering money, Scaglione not only violated the code of ethics by which he was bound – he also broke the law. Those attorneys who seek to misuse the trust that is instilled in them by the public to perpetrate crime are on notice that they will be held accountable for their crimes,” stated Loretta E. Lynch, United States Attorney for the Eastern District of New York.
According to prosecutors, from approximately February to July 2013, Scaglione exploited his position as an attorney to launder money through an escrow account for an undercover law enforcement agent who posed as a corrupt stock promoter. The government said that Scaglione believed that the undercover agent was a middleman for a network of corrupt stock brokers who fraudulently inflated prices of worthless stock in exchange for high commissions. Scaglione agreed to launder what he believed were proceeds of this stock fraud through his attorney escrow account to hide that money from the Securities and Exchange Commission and the IRS, the government said.
In total, according to prosecutors, Scaglione funneled over $750,000, including $88,000 in cash given to him in a Federal Express box in the lobby of a Miami Beach hotel, through the escrow account into the undercover agent’s bank account in Long Island, New York. The government said that Scaglione carefully structured the movement of these funds to avoid triggering financial reporting requirements and, in exchange, collected more than $25,000 in fees.
In recorded conversations, Scaglione assured the undercover agent that their conversations were “completely privileged” and that his money was “safe” with Scaglione, according to prosecutors. The government said that when the undercover agent explained to Scaglione that he did not “want to go to jail,” Scaglione stated to the undercover agent that the escrow account was “tight as can be.”
On the day of his arrest, Scaglione accepted an additional $500,000 in cash from the undercover agent, which Scaglione believed to be proceeds from the stock fraud, at a hotel in Miami Beach, Florida, according to prosecutors.
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