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Mason City auto dealer pleads guilty to federal crime of laundering drug money

Wheelman Auto, 1201 South Federal in Mason City
beacon.schneidercorp.com

MASON CITY – A Mason City auto dealership owner has entered a guilty plea to the federal crime of laundering drug money and now faces massive fines and decades behind bars.

According to documents obtained by NIT from the United States Attorney’s Office in the Northern District of Iowa, on or about April 6, 2014, in the Northern District of Iowa, defendant Jerry T. Flaherty, with the intent to conceal and disguise the nature, location, source, ownership, and control of property defendant believed to be the proceeds of specified unlawful activity, did knowingly conduct and attempt to conduct a financial transaction affecting interstate or foreign commerce involving property represented by a law enforcement officer, to be proceeds of specified unlawful activity, to wit: the distribution of controlled substances, including cocaine and marijuana, in violation of Title 21, United States Code, Section 841(a)(1). This was in violation of Title 18, United States Code, Section 1956(a)(3)(B).

According to documentation forwarded to NIT:

Between at least 2010 and September 2015, defendant Jerry T. Flaherty owned Wheel Man Auto, LLC (hereafter “Wheel Man”), a car dealership located in Mason City, Iowa. On March 6, 2014, an undercover law enforcement officer (hereafter “UC1”) went to Wheel Man and met with defendant to discuss UC1 purchasing cars. The conversation between UC1 and defendant was recorded. During the conversation between defendant and UC1, the following exchange occurred:

UC1: Now this ain’t no credit card. I just, you know, I just sell weed and cocaine and I’m back and forth doing some things. And I just don’t want to cause no problem. You said them credit card things?

Defendant: Cash-cash deal is fine with me, that’s.

UC1: Yeah. I may just get, I might look at that 300 but I just don’t want the government forms to file. I just don’t want anything in my name so.

UC1 left Wheel Man without purchasing a car on March 6, 2014.

On April 8, 2014, UC1 and a second undercover law enforcement officer (hereafter “UC2”) returned to Wheel Man and met with defendant. After talking for a time at Wheel Man, defendant, UC1, and UC2 went to defendant’s house in Mason City. While at defendant’s house, UC1 and defendant agreed that UC1 would purchase a car for $20,500 cash, money which defendant believed was proceeds from the sales of illegal narcotics, a specified unlawful activity under 18 U.S.C. § 1956(c)(7). UC1 and defendant also agreed to put the car in UC2’s name so that it would not be in UC l’s name. Defendant also agreed to record the sale as a $15,000 credit card sale instead of a $20,500 cash sale.

The conversation between UC 1, UC2, and defendant at defendant’s house included the following exchange:

UC1: So how much I owe you now?

Defendant: 20,500

UC1: You know my deal. You know I sell cocaine and my thing is I just don’t need no, them government forms. So how did, how did you even pay for it anyway? I just want to make sure.

Defendant: 15,000 on a credit card.

UC1: Oh, perfect. We’re good. I’m just going to let you count. I know.

Defendant: I’d actually like to make that fucking paper disappear because I’m getting fucking, I show I made 200,000 this year already on paper. But it’s all on the computer. I can’t, you can’t hide it, it’s all everything I fucking do.

UCI then paid defendant $20,500 in cash for the purchase of the car. Defendant did not fill out the required Form 8300 government reporting form pursuant to 31 U.S.C. § 5331 and 31 C.F.R. 103.30(a)(1).

An Assistant United States Attorney tells NIT that “Mr. Flaherty was charged in federal court in Cedar Rapids on October 17 with one count of Money Laundering.  He pled guilty to that charge on October 25.  The next step in the case is a sentencing hearing, but that has not been scheduled yet.”

Flaherty will waive Indictment and plead guilty to one count of money laundering, in violation of 18 U.S.C. § 1956(a)(3)(B), punishable by the following maximum penalties:

(1) not more than 20 years’ imprisonment without the possibility of parole;

(2) a fine of not more than $250,000;

(3) a mandatory special assessment of $100; and

(4) a term of supervised release of no more than 3 years.

Federal courthouse, Northern District of Iowa in Cedar Rapids
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