FBI Arrests 7 in Crackdown on Drug Funds

Undercover FBI agents arrested three reputed leaders of a Colombian drug-money laundering ring aboard a sailboat in the Caribbean on Friday, culminating a three-year operation aimed at the laundering of hundreds of millions of dollars in illicit funds.

The three, lured to the boat to work out “problems” with FBI agents posing as money launderers, were among seven Colombian nationals captured Friday by the FBI and described by Atty. Gen. Edwin Meese III as leaders of rings handling massive amounts of cash for four Colombian cocaine trafficking cartels.

“These cases are somber news for the drug kingpins,” Meese said at a press conference at FBI headquarters. “There is no longer anyone they can trust to launder their money. They will never be certain that they are not handing over their cash to undercover federal agents.”

Arrest warrants for 91 people were issued in the crackdown, which extended to eight U.S. cities, including Los Angeles and San Francisco, and 40 had been taken into custody by Friday afternoon as the roundup continued.

The seven leaders were charged with conspiring to aid and abet the possession and distribution of controlled substances, a crime that carries a maximum penalty of 20 years in prison and a $250,000 fine.

FBI undercover agents, seeking to gain credibility with alleged leaders of the financial underground that services the Colombian cocaine cartels, laundered about $175 million in drug money, Meese said.

He described the sum as “a modest price” for the results achieved in the operation, which included seizures of $20 million in cash, $1.5 million in other assets and 2,100 pounds of cocaine with a wholesale value of $28.9 million.

Meese said the laundered funds were deposited in many accounts maintained by the alleged drug rings in Panamanian banks, where he said authorities have moved to seize the accounts.

In Los Angeles, where 12 people were named in criminal complaints in the crackdown, U.S. Atty. Robert C. Bonner said: “These arrests and seizures highlight once again that the Southern California area is awash with dirty money generated from illegal cocaine sales. Regrettably, we have become the country’s cocaine consumption and distribution center.”

Similar to DEA Case

Meese noted that the FBI effort, dubbed Cashweb/Expressway, came five weeks after arrests in a similar money-laundering case, Operation Pisces, run by the Drug Enforcement Administration.

Oliver B. (Buck) Revell, the FBI’s executive assistant director for investigations, said that the FBI undercover agents had become “so well ensconced inside the rings” that, after Pisces, “the launderers came to us, saying: ‘This is the only ballgame in town’ and asking us to launder more money.”

The scheme worked so well, Revell said, that some suspects contacted the undercover agents Friday to warn them about the arrests and seek their advice.

The investigation began in 1984 when an FBI undercover agent posing as a money launderer was introduced in Miami to a leader of a laundering ring, according to affidavits filed by the government and unsealed Friday.

Seven Cities Involved

Building on initial leads for months, the agents developed ties with other money laundering operations in New York; Los Angeles; San Francisco; New Haven, Conn.; Newark, N.J.; Chicago, and Detroit, the affidavits said.

Undercover agents set up fictitious companies as fronts for the laundering. Traffickers and launderers carried as much as $2.5 million to the front companies in boxes, suitcases and shopping and duffel bags. Many of the transactions were secretly recorded on videotape, the FBI said.

An affidavit filed by FBI agent William F. Hutton III in U.S. District Court in New Haven noted that federal banking regulations require full identification of all individuals who make a single cash deposit exceeding $10,000. Illegal drug deals produce “many millions of dollars in cash each day,” he said, requiring the traffickers to develop a means of protecting their identity and concealing the source of the cash.

Funds Commingle

The first step, Hutton explained, is to move the cash in such forms as cashier checks and wire transfers out of the United States. Then the narcotics money is commingled with other funds, becoming unidentifiable as illicit proceeds.

Finally, the dollars must be converted to pesos or other currency so that the narcotics producers and traffickers in Colombia may obtain the proceeds to pay their expenses, finance additional shipments and otherwise profit.

Arrested aboard the sailboat, which was stopped at sea by the Coast Guard, were Carlos Gaviria, Juan Guillermo Restrepo and Rudolfo Ariano Jr.

Others of the top defendants arrested Friday included Rudolfo Ariano Sr., who was picked up in Los Angeles, Juan Esteban Gaviria, Jose Ignacio Restrepo and Carlos Restrepo.

Ronald J. Ostrow reported from Washington and Kim Murphy from Los Angeles.