Cartel’s Money Laundering Halted : Indictments, Seizures End U.S. Processing of Drug Sale Profits

Federal agents Wednesday completed the shutdown of a major U.S. money-laundering operation for Colombia’s Medellin cocaine cartel, charging 29 more defendants with drug and currency violations and seizing tens of millions of dollars in bank accounts.

Wrapping up Operation Polar Cap, a federal grand jury in Atlanta unsealed indictments of a Colombian bank and its Panamanian subsidiary on charges of conspiring on the shipment of more than $1 billion in U.S. drug proceeds to bank accounts controlled by the cartel.

A key defendant, Eduardo Martinez, who led undercover agents to a Los Angeles laundering ring, managed to avoid arrest Wednesday in the Banco de Occidente of Panama, even though it had been surrounded by troops of the Panamanian defense forces, say Justice Department officials.

No Comment on Noriega

The officials declined comment on how Martinez evaded arrest or whether Panamanian strongman Manuel A. Noriega, indicted last year on federal drug charges in Florida, came to Martinez’s assistance. “I haven’t heard any evidence to that effect,” spokesman David Runkel said.

Atty. Gen. Dick Thornburgh hailed the operation as the “largest money-laundering crackdown ever carried out by the federal government” and singled out the four investigative agencies involved--the Drug Enforcement Administration, FBI, Customs Service and Internal Revenue Service--for unprecedented cooperation.

“One of the most effective weapons in our war on drugs is to take the profit out of the business of illegal drugs,” Thornburgh said. “We have succeeded in effectively shutting down this entire money-laundering enterprise which operated in nine cities across the country.”

In a separate major money-laundering case, the Justice Department on Wednesday announced the indictment of Kendal W. Nottage, a member of the Bahamas’ Parliament and a former Cabinet officer under Prime Minister Lynden O. Pindling.

Charged With Conspiracy

Nottage, his wife, Rubie, and Salvatore Michael Caruana, a reputed major drug trafficker and organized crime figure, and others were charged in an indictment unsealed in Boston with conspiring to defraud the United States by concealing drug profits from the IRS.

The charges also accuse the defendants of crimes related to laundering more than $5 million allegedly obtained by Caruana through unlawful drug operations.

The indictment is the second in a week to charge a Pindling associate with drug violations.

Operation Polar Cap--”a name so utterly unrelated (to the investigation) that we figured the bad guys would never figure it out,” as one Justice Department official put it--produced charges against at least 127 persons, the confiscation of more than half a ton of cocaine and seizure of more than $45 million in cash, jewelry and real estate, Thornburgh estimated.

He asserted that the crackdown has “forced restrictions” in the operations of the Medellin cartel, which is responsible for an estimated 80% of the cocaine being smuggled into the United States.

The first two phases of Polar Cap became public last month when federal agents arrested 35 members of alleged money-laundering organizations operating in California, Texas, Florida and New York. Chief among them were two wholesale jewelry companies, Ropex Corp. and Andonian Bros. Manufacturing Co. Inc., both located in the downtown Los Angeles jewelry district.

According to documents filed in federal court, these companies received hundreds of millions of dollars from purported gold and jewelry transactions that allegedly were “fronts” for illicit drug-generated cash.

Polar Cap evolved from intelligence gathered in several drug and money-laundering inquiries around the country that are thought to be unrelated, Justice Department officials explained. In one of those investigations, federal agents operated an undercover money-laundering operation for drug dealers in Atlanta.

DEA Administrator John C. Lawn said that the Atlanta operation, which began when federal undercover agents penetrated a Colombian drug trafficking operation in October, 1986, eventually led investigators to the Los Angeles organization.

Martinez, who allegedly was serving as a cartel broker to negotiate for laundering services, complained to undercover agents that their Atlanta money-laundering operation was not functioning nearly as efficiently as “La Mina,” or the mine, the name the traffickers used for the Los Angeles organization.

Agents Expand Focus

He outlined the Los Angeles laundering process for federal undercover agents who then expanded their focus to the much larger enterprise shut down by last month’s arrests, according to Lawn.

In the wake of that crackdown, the Colombian traffickers “came straight back to Atlanta” where “the phone was ringing off the hook,” Lawn said. The undercover operation there laundered $4 million in the first few days following the move against the Los Angeles organization, he noted.

In addition to Martinez, those indicted in Atlanta included Fabio Ochoa, his son Jorge and Pabol Emilio Escobar, all alleged to be Medellin cartel leaders; the Banco de Occidente of Colombia, and its subsidiary, Banco de Occidente of Panama.

Civil and criminal actions in federal courts in New York and Atlanta are seeking to freeze funds from the laundering operations now deposited in those banks and accounts.

Deposits of the Colombian and Panamanian banks in 14 U. S. banks also were frozen by the order.