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Court reinstates $12M forfeiture in money-laundering case

Joseph Castello and wife Dana arrive at U.S.

Joseph Castello and wife Dana arrive at U.S. District Court in Central Islip during his trial in 2007. Photo Credit: Newsday / Michael E. Ach

A federal appeals court has reinstated a $12-million forfeiture order against convicted money-launderer Joseph  Castello.

The order by the U.S. Court of Appeals for the Second Circuit came Wednesday.
It requires Castello, 46, known as Joey Checks,  to pay the federal government an amount fixed at $12,012,924.31 “plus his equity in certain real property.” 

Castello was convicted in 2007 in a scheme that fueled an illegal, underground economy on Long Island and in the metropolitan area by cashing $660 million in checks for businesses. He was sentenced to the maximum 5 years in prison and is currently in the U.S. Penitentiary at Lewisburg, Pa. His release date is  Nov. 29, 2011, federal court records show.

Castello, of Greenwich, Conn., was convicted on one count of failure to report cash transactions. He then appealed a court forfeiture order, and after a series of reversals the order was upheld in the Manhattan court’s Wednesday decision “to reinstate the initial forfeiture order.”

The $12 million included $9.3 million in Castello’s profit from the check-cashing enterprise, as well as income taxes, interest and penalties from 1999 to 2007.

The original forfeiture order was made in federal court in Central Islip by U.S. District Judge Leonard Wexler. Castello appealed on the basis of the Eighth Amendment’s ban on excessive fines. The federal Second Circuit sent the case back to Wexler to reconsider, and Wexler, after analysis, reversed himself and said no forfeiture was required. The government then took the case to the Court of Appeals, resulting in the Wednesday decision.

Castello's attorney, Murray Singer of Great Neck, could not be reached for comment Thursday. Singer argued at the 2007 trial that his client was unaware he was doing anything illegal and had no idea that the cash he was dispensing was being used for illegal activities, such as paying people off the books.

During the trial, prosecutors said Castello worked out of his automobile, his trunk filled with bags of money, driving around and  cashing checks for businessmen who wanted unreported cash.

The checks were often falsely written as if they were payments to companies such as subcontractors, and Castello charged a fee of 3 to 5 percent to cash them, Ryan said. The checks never actually went to subcontractors.

The businessmen then had cash and a possible tax deduction for expenses. Castello recouped most of the money by cashing the checks at check-cashing services.

Above, Castello and wife, Dana, arrive at U.S. District Court in Central Islip during his trial in 2007.

Robert Kessler contributed to this story.

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