Beverly Hills Man Pleads Guilty to Orchestrating Currency Scheme

A Beverly Hills man pleaded guilty today to “structuring” about $9 million in currency transactions to avoid federal reporting requirements.

Peter Kats, 33, also entered guilty pleas to fraud and conspiracy charges in two other cases.

Kats admitted helping orchestrate the scheme to structure cash withdrawals to evade the law requiring domestic banks to report any cash transaction of more than $10,000, according to court documents.

The indictment lists 251 instances of structured transactions totaling almost $9 million.

The funds were the proceeds of a drug diversion scheme run by Kats, one of two principals of Independent Wholesale Drug Inc., according to the U.S. Attorney’s Office.

Kats generated cash by using the Philadelphia company to purchase black market prescription drugs, which he then sold to other pharmaceutical wholesalers, who in turn sold the drugs to retailers, prosecutors said.

He also pleaded guilty to bank fraud in a scheme to defraud American Express.

According to court papers, Kats falsely told the company that he was an active duty member of the Air Force and qualified for benefits under the Servicemember Civil Relief Act. He also misrepresented that all charges incurred on two AMEX card accounts were the result of identity theft.

Believing Kats was an active duty member of the military and had been the victim of identity theft, the company waived more than $40,000 in fees and charges Kats had incurred, prosecutors said.

Kats also pleaded guilty to conspiracy to commit mail and wire fraud in connection with a third case.

He faces a possible maximum of 60 years in federal prison and more than $1.7 million in fines when sentenced next year, Assistant U.S. Attorney Gregory Lesser told the court.

--City News Service

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