Stockbroker Linked to Laundering of Drug Cash

A Rancho Santa Fe stockbroker helped a Tijuana karate champion turned boxing promoter use the San Diego office of giant Prudential Bache Securities to launder nearly $180,000 in illicit proceeds garnered from an international marijuana smuggling operation, a federal prosecutor alleged in court Friday.

The broker, Randy Schroeder, has not been charged with any crimes, according to Assistant U.S. Atty. Phillip L.B. Halpern. His current employer, the brokerage firm of Smith Barney Harris Upham & Co., said he is cooperating fully with government investigators.

But Halpern said Friday in U.S. District Court that Schroeder, during three days in January, helped a Mexican firm linked to the smuggling operation obtain and deposit 18 cashier’s checks--each for just under $10,000--in a Prudential Bache brokerage account that had grown to nearly $500,000 before it was seized by Internal Revenue Service agents last month.

Bypass Regulations

Transactions for less than $10,000 bypass federal currency regulations and thus are a favored practice of money launderers. Halpern said the suspicious transactions stopped after an area bank alerted Schroeder’s supervisor at Prudential Bache to his activities.

Schroeder could not be reached for comment Friday. His wife, Debbie, declined to answer questions about the allegations.

The disclosure of Prudential Bache’s role in the federal drug investigation came during a bail reduction hearing for Angel Gutierrez-Garcia of Tijuana, a former North American full-contact karate champion charged by U.S. prosecutors with being the kingpin of a major marijuana smuggling ring.

Gutierrez-Garcia--who now promotes boxing and karate matches in Tijuana and is the manager of Julio Cesar Chavez, the World Boxing Council super-featherweight champion--controlled between $500,000 and $800,000 that he, his sister and others sought to deposit with Prudential Bache early this year, Halpern said during the hearing before U.S. Magistrate Barry Ted Moskowitz.

Federal agents last month seized an additional $650,000 linked to the alleged smuggling operation from Jose Angel Barron, a veteran San Diego city parks manager accused of using his part-time job as a U.S. Customs inspector at San Ysidro to help the drug ring smuggle thousands of pounds of marijuana into the United States.

Government agents last month seized records from Prudential Bache’s San Diego office of an account Schroeder opened on behalf of a Rosarito Beach firm identified as “The House of Marble.” Though Gutierrez-Garcia’s defense attorney, Eugene Iredale, insisted his client had been mistaken for another Angel Garcia, Halpern said Prudential-Bache employees had identified the wiry ex-karate champion as one of those who had opened the brokerage account.

Gutierrez-Garcia; his sister, Leticia Lareaga of San Diego; Mexican attorney Gabriel Valdez and others early this year carried between $500,000 and $800,000 in cash into Prudential Bache’s downtown office in briefcases and knapsacks, Halpern said. But they were told that the firm, in line with industry practices, would not accept cash deposits, he said.

It was afterward, from Jan. 13-15, that Schroeder and Valdez visited six banks in San Diego and Rancho Santa Fe to purchase the cashier’s checks, according to an IRS affidavit unsealed Friday by Moskowitz. The checks were drawn in the names of Schroeder, Schroeder’s wife, Valdez and others, the affidavit says.

Balked at Signing

On Jan. 16, according to the affidavit, Schroeder and Valdez visited the Rancho Santa Fe branch of the Torrey Pines Bank. The affidavit says Schroeder told a bank employee that Valdez had brought $1 million in cash across the border and that the money had been earned legitimately from Valdez’s business near Rosarito Beach, “The House of Marble and Tile.”

The affidavit says Valdez intended to deposit the money in an account at the bank, but balked when he was asked to sign a signature card.

According to the affidavit, an empty building stands at the address given for the marble business.

Prudential Bache officials could not be reached Friday for comment.

Russ Smith, first vice president and resident manager of Smith Barney’s San Diego office, said Schroeder left Prudential Bache voluntarily. The competing firm assured Smith Barney that it knew of no wrongdoing by Schroeder, Smith said.

“The industry is very concerned about any attempt to launder money, and we have safeguards in place,” he said. “That holds true at Prudential Bache as well as the rest of the brokerage industry in San Diego.”

Smith said Schroeder had met voluntarily with federal prosecutors and cooperated fully with the investigation into drug smuggling and money laundering.

“We feel very comfortable at Smith Barney, based on the information we had at the time of his employment and questions we asked of his previous employer, that Randy Schroeder has represented the industry well and cooperated with the government,” Smith said.

Halpern would not comment on whether Schroeder either was cooperating with the investigation or was a target of the probe.

During the bail hearing Friday, Halpern argued that the existence of the Prudential Bache brokerage account--which Gutierrez-Garcia did not disclose during a hearing last month--justified an increase in the jailed Tijuana man’s bail, which now is set at $1 million.

Iredale, disputing the government’s contention that the former karate champion had anything to do with the account or Valdez’s alleged $1 million, sought a reduction in Gutierrez-Garcia’s bail to $700,000.

The bail hearing is scheduled to continue early Monday.

Gutierrez-Garcia, Barron and several co-defendants were indicted by a federal grand jury May 13 on charges of smuggling thousands of pounds of marijuana into the United States from Mexico. Barron--a $7-per-hour part-time border inspector--was charged with official corruption, while Gutierrez-Garcia was charged with bribing Barron.