Federal agents swept through Los Angeles' downtown jewelry district Wednesday, breaking up what they described as an international scheme in which more than $1 billion from cocaine sales was laundered for Latin American drug traffickers.
At least 24 people, many of them jewelers, were charged here. Seven others were charged in New York and Florida. Authorities said the money-laundering scheme was the largest and one of the most elaborate of its kind ever uncovered in the United States.
Complaints filed in U.S. District Court in Los Angeles contend that for the last three years, jewelers allegedly involved in the ring quietly collected carton after carton of drug money packed like bricks and shipped by armored car from a web of contacts in Los Angeles, New York City and Houston.
Counted on Machines
In several back rooms of Los Angeles' downtown jewelry district, authorities said, the flow of drug money was so overwhelming that the cash--which the merchants falsely reported as legitimate jewelry profits--had to be counted on sophisticated high-speed machines. The money was then transported by couriers to various Los Angeles banks.
Then, according to agents, the illicit money was wired to contacts in Montevideo, Uruguay, and Panama City, Panama, and used to export even greater quantities of cocaine to the United States.
A prosecutor said he spent months surreptitiously watching some of the suspects spend all day counting cash from drug sales.
U.S. Atty. Gen. Dick Thornburgh, meanwhile, hailed the investigation as a major blow to international drug trafficking. "This Administration is committed to tracking down those who profit from all aspects of illegal drug trade," he said in a statement issued in Washington after the raids. "One way to do this is to deny the profits of the business to those who import drugs into our nation."
More than 640 pounds of cocaine was seized in the raids.
Hundreds of personnel from half a dozen federal agencies and local police departments began making arrests in the 13-month investigation, code-named "Operation Polar Cap," just as most merchants in the jewelry district began opening for business Wednesday.
Investigators simultaneously raided at least six locations in the district, causing traffic jams and moving with what stunned workers in the area described as SWAT-like precision. Scores of workers poured onto the sidewalks to watch as jewelers were led away in handcuffs.
In all, authorities obtained arrest warrants for 28 people in Los Angeles--many of them Lebanese and Syrian nationals--five in New York and two in Miami. Eight of the suspects were still being sought late Wednesday. The suspects were expected to be prosecuted on charges of conspiracy to sell and possess cocaine and defraud the Internal Revenue Service.
Agents identified one of the masterminds of the scheme as Nazareth Andonian, 33, of La Crescenta, who, along with his brother, Vahe, operates Andonian Brothers Inc., doing business as Nazareth Jewelers, at 220 W. 5th St.
The other alleged ring leader was identified as Northridge resident Wanis (Joseph) Koyomejian, 47, the owner of Ropex Corp., which has two ninth-floor suites in the Jewelry Mart Building. Ropex also has maintained offices in New York and Houston.
Assistant U.S. Atty. Russell Hayman, who is prosecuting the case, argued in court Wednesday that those accused in the case, especially Koyomejian, should be held without bail.
Hayman said the government had conducted "intensive electronics surveillance" on Koyomejian and the others, including court-authorized room bugs, telephone wiretaps and hidden video cameras.
"Your honor," he told U.S. Magistrate Ralph Geffen, "I have watched this defendant on almost a daily basis since September of 1988 counting money. . . . They spend their day counting money. That may be hard to believe, but in a billion-dollar money-laundering operation, that takes a lot of time."
Hayman argued that Koyomejian is a flight risk because he is not a U.S. citizen, holds a Syrian passport, travels abroad extensively, has been overheard discussing plans to flee the country and has Swiss bank accounts.
Federal Public Defender Peter Horstman pointed out that Koyomejian has no prior criminal record and has "substantial" family and community ties.
Called Center of Scheme
Geffen nonetheless ordered him detained without bail, calling him a "major factor in this alleged conspiracy of monumental proportions. . . . It appears it would take more than money to keep him in this country, given his importance to the scheme."
A man answering the phone Wednesday at Koyomejian's home in Northridge said, "We have no comment about anything" and hung up.
While several others arrested in the investigation also were ordered held without bail, Geffen released jeweler Hamyak Atayan, 54, of Encino, on $500,000 bail. Atayan operates Atayan & Sons Jewelers at 650 S. Hill St.
Atayan's attorney, Erroll Stambler, denied that his client participated in any illegal activity.
According to court affidavits filed in the case, FBI agents first got wind of the scheme early last year, when informants in New York City tipped agents that money from cocaine sales in uptown Manhattan was being laundered through Andonian's business interests in New York.
At about the same time, suspicious Wells Fargo Bank officials in Los Angeles notified federal authorities that the Andonian brothers had deposited $25 million in cash over a three-month period, documents show.
Agents found that both the Andonians and Koyomejian had allegedly doctored invoices to show that their cash flow was coming from jewelry sales to wholesalers. However, when investigators tried to contact those buyers, they discovered that many of them did not exist.
Merchants operating near the Andonian brothers' Los Angeles shop said they had marveled over the past few years at how fast the business appeared to grow, but no one interviewed said they suspected illegal activities at the firm.
Koyomejian's business neighbors, meanwhile, said they were unfamiliar with the company and rarely saw people at the offices, where curtains were generally drawn.
Several jewelers expressed little surprise to see a major police action in the district, but said they were surprised at the reason.
Most thought that the arrests had to do with a continuing investigation by the Los Angeles district attorney into "short weighting," or mismarking of gold jewelry.
Earlier this month, investigators with the district attorney's consumer fraud unit served search warrants on several jewelry business in the downtown district. They seized some gold jewelry to be tested for its purity, according to district attorney's spokesman Al Albergate.
Cause for Concern
The district attorney launched the investigation after allegations that some businesses were advertising gold products as 14 karat in weight, when in fact they were 10 karat or less, Albergate said.
The investigation, coupled with the money-laundering case, concerns many in the business who fear that upscale customers who frequent the market for its lower prices will become disillusioned and stop shopping downtown.
Ralph Shapiro, president of the Diamond Club of the West Coast and a member of the board of the Wholesale Jewelers Assn., said most dealers in the district are responsible, law abiding and adhere to the jewelers' credo: "Responsibility, reliability and integrity."
The Los Angeles jewelry mart has grown rapidly in the last 12 years to become second only to New York in terms of annual sales--estimated at more than $1 billion.
Jewelry dealers occupied just a few aging buildings in the mid-1970s, but now an estimated 2,000 dealers fill more than a dozen major buildings along Hill, 6th and 7th streets.
In any one of these buildings, shoppers hear a cacophony of languages--including Japanese, Chinese, Indian, Armenian, Persian and Eastern European--in a business dominated by immigrants.
Times staff writers Kim Murphy in Los Angeles and Ronald J. Ostrow in Washington contributed to this story.
SUSPECTS IN ALLEGED MONEY SCHEME
Among those charged and arrested in Wednesday's federal money laundering complaint were:
Dalida Avakian, Burbank; Hamyak Atayan, Encino; Bedros Akpolat, Monterey Park; Nazareth Andonian, La Crescenta; Vasken Andonian, La Crescenta; Vehe Andonian, La Crescenta; Harout Beshlian, city not available; Krikor Chahinian, Tujunga; Salim A. Chaloub, Glendora; Manouk Demirjian, Northridge; Carlos Desoriez, Florida; Garbis Eimekjian, Los Angeles; Richard Ferris, Miami; Sergio Hochman, Miami; Chanes Khawalouian, Glendale; Agop Koyomejian, Northridge; Wanis Koyomejian, Northridge; Peniamin Masheredjian, Montrose; Joyce Momdjian, city not available; Zepur Moroyan, La Crescenta; Eduardo Ortiz, city not available; Rita Sorfazian, city not available; Vagran Mario Tankazyan, city not available, and Raul Vivas, Uruguay.
Also charged but fugitives as of 3 p.m. Wednesday were:
Kevork Chakarian, Hermosa Beach; Hagop Eimekjian, Los Angeles; Pedro Fuentes; Avedis Khawaloujian; Raffi Kouyoumejian; Simon Seropian, Glendale, and two unnamed defendants.
The status of two additional suspects, Jimmy Contreras and Juan Carlos Seresi, could not be determined Wednesday.