IN JANUARY, 1988, an employee of Loomis Armored Transport Co. was checking a nightly shipment from a United Parcel Service aircraft when he noticed a tear in one box. The shipping manifest said the box contained "gold scrap" being sent from a New York jewelry store to a firm called Ropex, a Los Angeles gold dealer. But the box's contents seemed lighter than gold would be, and when the Loomis employee looked at the parcel more closely he could see neatly bundled stacks of currency through the torn cardboard.
The Loomis employee was puzzled, so he called the shipper, who explained that the currency was being moved from the East Coast to Los Angeles to take advantage of better short-term interest rates in a local bank.
Loomis is a sophisticated international corporation that handles many exotic shipments, usually without asking too many questions. But Ropex's answer didn't make sense, particularly since it is easier, safer and faster to move money around the world by electronic means than by shipping boxes of cash.
Like all armored courier companies, Loomis tries to maintain close relationships with law-enforcement officials as well as with its clients. So the Loomis employee delivered the shipment--but he also called the FBI.
At almost the same time, a new account was opened at a Wells Fargo Bank branch near downtown Los Angeles. It belonged to a gold brokerage firm called Andonian Brothers, which immediately began depositing large amounts of currency--millions of dollars a week.
In the past five years, both Congress and the Treasury Department have cracked down on currency transactions, making banks legally responsible for reporting large deposits to the Internal Revenue Service. The crackdown has been strict enough that Jack Kilhefner, the San Francisco-based senior vice president of Wells Fargo Bank, monitors currency deposits himself. Kilhefner says he spotted the activity in the new account within 45 days and ordered his security staff to investigate. When the deposits reached $25 million in the first three months the account was open--unusually high, even for an international gold brokerage--Kilhefner told his chief of security to call the IRS.
The Loomis and Wells Fargo tips involved different firms, but both of them pointed to one spot: the Los Angeles jewelry district downtown. During the next 13 months, the two bits of information led to an international investigation that uncovered a massive criminal conspiracy, a conspiracy that, ironically, had little to do with the diamonds and precious stones that fill the jewelry district. Its operation was so efficient, so lucrative, that it was called "La Mina"-- the gold mine --by the Colombian bosses who kept it working around the clock for three years, pulling out money by the millions. La Mina's "gold" was currency--tons of it.
According to federal officials, between 1986 and 1989, La Mina laundered more than $1.2 billion in cocaine profits for the leading members of the Medellin cocaine cartel, turning drug-tainted cash from the streets of New York, Miami, Houston, Phoenix and Los Angeles into pristine funds that they could draw from secret bank accounts. Richard Lind, chief of money-laundering investigations for the FBI, puts it simply. La Mina was, he says, "the biggest laundering operation we've ever seen."
At the center of the operation, according to investigators, were the unprepossessing offices of Ropex and Andonian Brothers. The two businesses received literally millions of dollars a week from all over the country. In their back rooms, pallet-loads of money were counted, stacked, banded and then deposited in local bank accounts. Bankers handling the deposits were always told that the currency represented profits from the sale of gold to investors and jewelry makers.
Once deposited, the currency turned into bits and bytes of electronic data that the launderers could transfer by wire all over the world, the money's illicit origins fading with each transaction. (The law doesn't require banks to report wire transfers of money.) According to investigative records, the hundreds of millions of dollars handled in the two Los Angeles offices were moved electronically to New York, then to Panama City and on to South America, where they were used to pay for coca paste, airplanes, political favors--all the things necessary to operate an international criminal conspiracy like the Medellin cartel.
"It was an amazing operation," said one federal investigator involved in the case. "It taught me a whole lot I never knew about how money moves, how the world really works. La Mina literally dragged me into the 20th Century."
HILL Street's jewelry district is postmodern, polyglot, multicultural, international--like "Blade Runner" without the acid rain. There is an air of intrigue and anonymity. People are discreet and wary. Armored cars make pickups and deliveries around the clock. Couriers hurry through the streets, clutching worn satchels and trundling catalogue cases that could contain anything from pot-metal pendants to priceless custom necklaces. People greet one another in many languages, but business transactions are conducted in soft English, deals are sealed with a handshake and million-dollar sales are made out of thin leather portfolios and scuffed shoulder bags.
An estimated 50,000 people make their living in the businesses that fill the 30 buildings on and near Hill Street that make up the jewelry district. It was a perfect cover for La Mina.
Ropex was housed in a high-security luxury suite at one of the district's best addresses, the International Jewelry Center at 550 S. Hill St. The 16-story, gray marble and glass 550 Building, as it is called, looks out on Pershing Square.
Ropex occupied Suite 970, a choice location amid a mix of retail and wholesale jewelry operations. Like most of the suites, Ropex's consisted of a display room and several workrooms behind blank walls. Its front doors were invariably locked.
The patriarch of Ropex was Wanis (Joseph) Koyomejian, 47, who oversaw the daily activities of a dozen employees, many of them members of his immediate family.
The Andonian Brothers operation consisted of a showroom and several workrooms that took up most of the third floor of a building at 220 W. 5th St. The 220 Building is one of the original centers of the downtown jewelry trade, and today its lobby opens onto the dirty sidewalks of Broadway. Street hustlers and the homeless abound. Nearby, vendors hawk everything from junk jewelry to plastic shoes.
The Andonian brothers were recent immigrants from the Middle East. Both Nazareth and Vahe were born in Beirut and had fled the fighting in Lebanon in the early 1980s to settle with their families in Southern California. Koyomejian was a well-to-do Syrian-born Armenian who had come to the United States in 1980, part of a worldwide diaspora of Middle Easterners. Thousands of the immigrants ended up in Los Angeles, and thousands more wound up in Europe and Latin America.
Although neither the Koyomejians nor the Andonian families were thought to have a background in the jewelry business, both gravitated toward Hill Street. Armenians have long been prominent in the gold and custom jewelry business, and Hill Street offered many opportunities for immigrants, mostly at the entry level of the jewelry trade, in the retail arcade booths that peddle gold chains, bracelets and rings. But finding acceptance in the trade is difficult: Newcomers face considerable resentment, even from old-line Armenians on Hill Street.
"They don't have the background in craftsmanship," says Gregory Mikaelian, president of the Wholesale Jewelers Assn. and a 36-year veteran of the jewelry district. "Their material is all mass-produced. Most of them are in it only to make a buck, not to make a contribution."
Mikaelian, himself an immigrant 40 years ago, says the "new Armenians" have a difficult time integrating with their new communities and tend to maintain strong ties among themselves. "They come from ghettos, in the Soviet Union, in Syria, in Lebanon, in Iran. They have lived, some of them, their whole lives without being able to speak Armenian in public. It is against the law in some countries. So it isn't a surprise these people distrust the police, the government, everybody."
This sense of distrust and insularity is nothing new among immigrants, but it seems to have been unusually strong among the new Armenians. Investigators say the individuals involved in La Mina maintained closer ties with some of their countrymen who'd emigrated to South America than they did with the Armenian community in Los Angeles. Those old-country ties are believed to have been the basis of the network that became La Mina. They are almost certainly the way in which the money launderers of the Los Angeles jewelry district first came in contact with Eduardo Martinez.
EDUARDO MARTINEZ ROMERO owns a ranch outside Medellin, Colombia, headquarters of the world cocaine trade. On the surface, he appears to be a polished international economist and businessman with an advanced degree in marketing, a pleasant smile and banking connections all over the world.
Court records present a different image. Federal officials say Martinez was the chief financial consultant to the Medellin cartel, the originator of schemes that laundered billions of coca dollars for Pablo Escobar Gaviria, Jorge Ochoa Vasquez, Jose Rodriguez Gacha and the rest of the cartel's upper echelon. Investigators believe that Martinez was the key contact between the cartels and La Mina.
Officials began hearing of the operation by name in October, 1987, when, according to federal court records filed in Atlanta, Martinez met on his ranch with an American dope smuggler and money launderer who wanted to renew his contacts--and business dealings--with the cartel. Martinez told the American that he already was using the services of a laundry. He called it "La Mina" and showed the American a ledger. La Mina had processed $12 million in drug money in a single month.
Several days later, the American, whose name has never been revealed, was summoned to a private compound in suburban Medellin to meet Martinez's superiors, the heads of the cartel. The compound was surrounded by high, white walls and guarded by a dozen heavily armed men. Supplicants were summoned into the inner offices by a loudspeaker.
After waiting for an hour, the American was ushered into the presence of Gustavo Gaviria Rivero, the cartel leader whose approval was required for all smuggling operations. A few minutes later, Escobar, the godfather of the cartel, joined them. The American described a plan to smuggle cocaine through north Georgia and also offered the services of his Atlanta-based money-laundering operation.
As the American was leaving, another cartel leader became suspicious and started asking questions. The experience must have been unnerving because the American was what the man thought he might be--an informant for the U.S. Drug Enforcement Administration. But the smuggler brazened the moment out and returned to the United States.
Within 30 days of the Medellin meetings, the Colombians began using the American's laundering operation in Atlanta. In early 1988, according to court records, the American laundered more than $12 million through Atlanta bank accounts and wire-transferred the money to Panama. So, at the moment that Los Angeles federal investigators were following up on their tips from Wells Fargo and Loomis, the Atlanta undercover DEA operation was already in place and operating. What no one realized then was that the two investigations would meet on Hill Street in Los Angeles.
ON JAN. 17, 1988, the American from Atlanta met Martinez, the Colombian money-mover, in Panama City, the hub of the Central American banking system. This time, the smuggler brought his partner, a personable young hustler he called Alex Carrera. In reality, Carrera was a DEA undercover agent named Cesar Diaz.
Martinez didn't come alone, either. He introduced the two Americans to his Panamanian bankers, who worked for Banco de Occidente S. A., a Panama City bank that was owned by Colombian banking interests.
Martinez was irritated with the Americans. Their operation had had the misfortune of "losing" a major shipment--$1 million that was seized by law-enforcement officers when it arrived in Los Angeles. The Colombian was also upset because the operation seemed slow, compared to La Mina. He wanted an explanation of how the Atlanta laundry worked. Carrera (Diaz) begged off on the details, saying that he would introduce Martinez to another American who actually handled the transactions. Several weeks later, a meeting was scheduled for Aruba, West Indies.
On March 8, 1988, the Aruba meeting convened in a $500-a-night hotel suite on the Caribbean island. As the proceedings were being surrepetitiously recorded, Diaz and another DEA undercover agent gathered a huge amount of information from Martinez, who was still upset about the lost $1 million shipment--but not too upset to brag about Colombian money-laundering prowess in general and La Mina in particular. Banco de Occidente, he said, was a keystone of the cartel's money-export operation. And La Mina, he explained, operated from the cover of a precious-metals and jewelry business, importing gold from Uruguay and Chile and shipping huge amounts of drug money there as ostensible payments through the Banco de Occidente in Panama.
La Mina had managed to export $28 million in the past 45 days, and the operation was capable of delivering laundered cash to Panama in 48 hours, more than twice as fast as the Atlanta undercover laundry. Martinez warned that if the Atlanta laundry didn't lower its "commission" from 7% to 6% and speed up, he would give Atlanta's share of the business to La Mina. The DEA agents complied--and managed to continue their undercover contact with Martinez and the Medellin drug lords, in laundering or smuggling, for the next 10 months.
The DEA was just one of many agencies interested in La Mina. Confiscated cocaine money has become a significant source of income for a number of police agencies, which get to keep 90% of the cash they seize. "Asset-forfeiture is the name of the game," says one high-ranking U.S. Customs official. "Everybody in law enforcement is chasing money. On any day in Southern California, there may be 10 surveillance teams--federal, state or local police--working money-laundering cases.
"All of a sudden these teams started bumping into one another downtown in the jewelry district. That's when everybody backed off and tried to figure out what the hell was going on down there."
By the spring of 1988, a multi-agency task force had begun to search for La Mina in Los Angeles. That task force included the FBI, DEA, the U.S. Customs Service and IRS, plus agents and officers--some of them Armenian speakers--from state and local police organizations. A team of senior officials of each of the federal agencies, plus representatives of the Justice and the Treasury departments, was formed in Washington to coordinate the Los Angeles and Atlanta investigations. Important intelligence information was passed back and forth between the investigators, but the cases were worked separately to avoid security breaches.
Each of the two principal leads--the tip from the Loomis guard and the Wells Fargo Bank information--was worked independently, a tactic that minimized the usual interagency friction in such collaborations. "Big cases, big problems," one federal agent said, "but in this one, there was more than enough to go around."
CONDUCTING A DISCREET investigation was a daunting assignment. Security is tight on Hill Street. The sidewalk is the enemy, so gold brokers, gem dealers, jewelry designers, casters, polishers and retailers try to cluster together in the same building. Armed guards and closed-circuit television cameras blankly monitor the public hallways. There are hold-up alarms in every office. When an alarm is triggered, elevators rise to the top floor and lock, becoming traps for the unwary stickup man.
That security-consciousness made street surveillances in the La Mina case a nightmare. "The jewelry district is a very tight place," one federal agent says. "Everybody knows everybody else. A stranger can walk through the place once, just shopping, and not attract any attention. But if the same seven or eight gringos show up day after day, they'll be noticed, if not by the merchants then by the security guards."
The surveillance teams used every trick they could think of to blend into the crowds on Hill Street and West 5th. They rented suites in the 220 and 550 buildings to give them an excuse to come and go. Asian, Latino and black investigators were drafted for the job. Agents disguised themselves as homeless people, deliverymen, construction workers--anyone who would blend in. Sometimes they were quite successful. For instance, one day the lobby guard in the 220 building, an off-duty LAPD officer, mistook a black DEA agent for a street narcotics dealer and chased him out with a nightstick.
"There's another little irony in the cocaine traffic," the investigator says. "By day, the jewelry district is a very respectable business area, but at night it turns into 'Crack Alley.' We weren't welcome in either setting."
Ropex and the Andonian Brothers were not among the leading firms in the jewelry district, but both seemed to be quite busy. Both received frequent shipments of "gold" or "gold scrap" from other jewelers around the country. And both of the firms were quite prosperous, judging from the banking activity they conducted. Messengers from the offices were followed to local banks numerous times and observed making large currency deposits. What intrigued investigators was that the insured value of the "gold" shipments often matched the value of the currency deposits that were made the same day. They began to establish that the Brink's or Loomis shipments contained currency that was then being deposited directly into banks.
In April, FBI Special Agent Nellie Magdaloyo, posing as a cleaning woman, provided further confirmation of that thesis. Acting under a court warrant, Magdaloyo stole the office trash from the ninth floor of the 550 Building at the end of each business day. The refuse from Suite 970 yielded some remarkable findings.
The trash contained adding-machine tapes that broke down the currency shipments by denomination and further tallied with the shipping labels. Slowly, a picture of activities inside the suites was emerging, but there was still a major gap in it. The investigators had not established all the elements of a crime. Any crime.
There is nothing illegal about conducting business in cash, particularly when a business files proper Treasury Department currency-transaction reports, as the Ropex and Andonian operations usually did. In these reports, the currency was described as the proceeds of the sale of gold.
There is some controversy among members of the jewelry trade about that explanation. Ralph Shapiro, president of the Diamond Club and a longtime Los Angeles and international diamond broker, says that virtually every legitimate wholesale transaction on Hill Street is conducted through bank checks rather than cash and that bankers should have suspected something was amiss when the two gold firms deposited such large amounts of currency.
"What kind of baloney is it to say that the jewelry business is done in cash?" Shapiro says.
But the two suspect jewelry firms had a plausible explanation of their activity. They told bankers that they conducted their business in cash to avoid being hurt by sudden swings in spot-market precious-metals prices. A few banks, such as Wells Fargo, became suspicious and refused to handle the cash, but others accepted the explanation--and short-term deposits of hundreds of millions of dollars.
On April 11, the FBI began closed-circuit television surveillance in the public hallways outside Ropex. Within a few weeks, DEA agents began similar surveillance against Andonian Brothers, which had deposited the $25 million in cash in Wells Fargo earlier in the year.
Justice Department prosecutors working with the 40-agent task force believed the spot-market explanation was acceptable enough on the surface to raise "reasonable doubt" in a courtroom and destroy their case against the firms. So agents began tracking the money in all directions, trying to figure out where it was coming from and where it was going by checking bank records of electronic wire transfers. They are still chasing some of these transactions.
Others led straight back to the Banco de Occidente, Eduardo Martinez's favorite Panama City bank.
DURING THE SUMMER of 1988, the Atlanta DEA undercover operation continued its contacts directly with the men at the top of the Medellin cartel. Because La Mina was working so well in Los Angeles, the Colombians stopped using the money-laundering arm of the Atlanta DEA undercover operation. But Pablo Escobar and his colleagues were still interested in using the DEA informant's cocaine smuggling route through Georgia--and the Atlanta investigation continued to amass information about La Mina's connection to the drug trade. A deal was concluded to smuggle 14,000 kilos of cocaine through Mexico into the United States.
At one of the negotiations for that deal in Los Angeles, the Colombian intermediary casually pointed out a downtown business building and identified it as the location of the fabled La Mina.
The address of that building was 550 S. Hill St.
The smuggling venture was a disaster for the Colombians. On Aug. 10, Mexican authorities intercepted a 700-kilo shipment of cocaine at a remote landing strip on El Kino Island in the Gulf of California west of Hermosillo. A few days later, another 700-kilo cache of cocaine was found on the same beach. Papers filed in Atlanta federal court indicate that the Mexican authorities had been tipped about the shipment by the Atlanta DEA agents.
On the day the first cocaine shipment was seized, Aug. 10, 1988, a member of the Los Angeles La Mina task force met with an unidentified South American businessman in Montevideo, Uruguay, who provided a detailed description of the internal workings of La Mina.
According to a document filed in the Atlanta case, La Mina was set up in June, 1985, by a money launderer named Raul Vivas, a Uruguayan precious-metals dealer named Sergio Hochman and another South American. The three men owned a corporation called Letra S. A. and a Uruguayan currency-exchange firm called Cambio Italia.
Initially, the conspiracy had involved shipping gold-coated lead bars to front businesses posing as American refineries, then wire-transferring cocaine money to Uruguay as "payment" for the gold. But the informant described several variations on the scheme that involved manipulating seemingly legitimate gold transactions in trading centers such as New York and London. At last the Los Angeles task force had a picture of how Ropex and Andonian Brothers would explain the cash that arrived at their offices.
The information came as other parts of the investigation were entering a new phase. At some point, the suspects clearly had become aware that they were being watched. The DEA's case agent in charge of the Andonian investigation reported that Andonian employees began shredding their trash and painting out shipping labels. (Later, couriers calling Ropex to arrange for delivery of cash often were told to use the private parking structure at 550 S. Hill, because police surveillance teams couldn't follow them without arousing the suspicions of parking attendants.)
But the evasive tactics came too late. Investigators had enough information to obtain court permission to use more sophisticated techniques to explore La Mina.
On Aug. 23, a federal judge in New York authorized wire taps on the headquarters of New York firms that had been shipping currency disguised as gold scrap to Los Angeles. On Sept. 8, a Los Angeles judge approved a similar FBI request for monitoring inside the offices in the 550 Building. During the next several months, additional warrants were issued to permit closed-circuit television surveillance inside the Ropex and Andonian suites and monitoring of the suspects' telephone pagers.
High-tech surveillance is increasingly common in complex investigations. Often, the intrusions involve "black-bag jobs," court-authorized police break-ins and installation of electronic gear that ranges from fiber-optic television cameras to state-of-the-art miniaturized room microphones and telephone bugs.
But in this case, the agents may have found their surveillance gear already in place. Investigators refuse to discuss the technology they used to penetrate La Mina, but an outside source familiar with the case said the agents simply tapped into the existing closed-circuit security systems in each of the target businesses. In effect, the launderers' security system was used to bug them.
FIVE MONTHS OF surveillance yielded 3,000 reels of video and audio tape (in five languages and two Armenian dialects), which gave the investigators an intimate knowledge of the daily routine inside a money laundry. Brink's or Loomis shipments usually would arrive in the morning. Employees would spend the rest of the day counting currency with high-speed machines, bundling it and preparing it for deposit in local banks. Miscounts were frequent and arguments almost constant. Amounts as small as $20 were disputed. At one point, Wanis Koyomejian demanded that the traffickers send a representative to watch the count or quit complaining.
The surveillance revealed that the launderers were using a bewildering array of guises to cover their activities. Besides the two primary targets of the investigation, other jewelry firms in downtown Los Angeles were involved in the sham gold transactions. Apparently, these other jewelers were paying for nonexistent gold with currency provided to them by Ropex and Andonian. Court records also suggest that the laundering activity had become so extensive that the legitimate gold-bullion market could no longer absorb the transactions. Indeed, one of the principal suspects was overheard complaining that his purchases had caused a $3-per-ounce increase in the wholesale price being charged elsewhere in the Los Angeles area.
The investigators weren't the only ones using high-tech communications gear. When Wanis Koyomejian needed to talk to a South American confederate named "Pepe," he called a number in Uruguay and was given the number of Pepe's international satellite telephone pager. Koyomejian called the pager number, punched in his own return number and hung up. Twenty minutes later, Pepe returned the phone call.
From Houston, Tex.
La Mina was laundering not only currency from New York and Texas but also huge sums from Southern California. Much of the foot traffic through the two suites consisted of men and women delivering sales cases or handbags full of currency. Teams of FBI and DEA agents followed numerous couriers away from the jewelry district during the next several months, gathering valuable intelligence information about previously unknown trafficking organizations that were using the jewelry district launderers. (For example, the money-laundering operation was linked directly to a Southern California narcotics case: A regular client of Ropex from southern Orange County was arrested with a 641-pound load of cocaine.)
The wire taps and cameras turned up more evidence than the investigators could easily handle. Some of the schemes involved "paper gold"--gold that was traded among conspirators without ever leaving the custody of banks in New York, London and elsewhere. The launderers had created a 300-kilo pool of gold bars that were traded among several participants, each trade generating a phony transaction that could be used to cover the movement of drug money.
According to affidavits filed in the case, the Ropex and Andonian Brothers laundry operations were overseen by a well-known and outwardly respectable gold merchant called Ronel Refining Co., of Hollywood, Fla. Ronel, which also had New York offices and a gold holding account with a major London bullion dealer, was the putative middleman for the nonexistent South American gold and was a regular trading partner with both Ropex and Andonian Brothers. There were almost daily conversations between both Los Angeles firms and Richard Ferris, Ronel's president.
Many of these conversations had to do with the ring's efforts to conceal its activities not from police but from legitimate gold traders. In early December, a professional gold-trader from Cargill, Inc.--a giant, Minneapolis-based grain and commodities merchant--called Nazareth Andonian and asked how Andonian intended to use a large shipment of gold he had just purchased. Andonian said that some of the gold would be shipped to the Andonian jewelry factory in Italy. The rest would be traded with Ronel.
The next day, the Cargill broker apparently made a similar call to Ferris and received a different explanation for the gold purchase. Ferris then called Andonian to compare notes.
"I obviously didn't give him the same answers as you did," Ferris told Nazareth Andonian.
"Oh, my God," replied Andonian.
Not long thereafter, Cargill quit doing business with Andonian and Ronel. Eventually, Cargill got out of the gold business entirely, although not because of the Andonian-Ronel matter, according to Cargill spokesmen. "We just felt gold was a business we didn't want to be involved in," a senior company official said.
Federal court records in Los Angeles reveal a similar exchange between Vahe Andonian, Nazareth's brother, and a Los Angeles banker. The banker demanded to know why Andonian Brothers' tax returns showed total annual sales of $18 million while its Dun & Bradstreet report showed sales of $44 million. Vahe's answer:
"I have no idea why."
BY JANUARY, 1989, it was time to begin the end game. The Andonian wiretap provided investigators with the perfect excuse. On Jan. 24, DEA agents intercepted a cryptic phone conversation: A huge currency shipment was about to leave the East Coast. A New York confederate told Nazareth Andonian the value of the shipment was "four kilos eight six nine," presumably a code meaning $4,869,000 was on its way.
That night, a U.S. Customs Service dog being trained to check for narcotics shipments was turned loose aboard a United Parcel Service cargo aircraft at a New York airport. In a cargo space consigned to Loomis, the dog "alerted" and tore into a 30-box shipment headed from a New York jewelry store to Los Angeles. The customs dog-handler broke into the shipment and found that it contained currency--$4,869,000.
When the packages failed to arrive on Jan. 25, the Los Angeles phone taps recorded Nazareth Andonian making several panicky phone calls to Loomis, trying to locate his shipment. Then there were calls to the New York jewelers who had made the shipment. But the boys in New York weren't able to talk freely. They were being interrogated by customs agents.
And finally, there were several calls "with important news" for South America. But Andonian's contact was on vacation and couldn't be notified.
In the days following the $4.8-million loss, the room bugs in the Andonian Brothers office recorded a glumly philosophical discussion to the effect that the loss of the New York shipment ought to be regarded as a "good lesson."
And an expensive one.
But the collapse of La Mina in Los Angeles had other repercussions as well. On Feb. 22, raiding parties of federal agents swept down on the jewelry district, arresting more than 35 people and seizing $30 million in currency, real estate and gold. Suite 970 and the Andonian Brothers showrooms in Los Angeles were closed down. Two days later, Atlanta DEA undercover agent Cesar Diaz received a call from Eduardo Martinez. Martinez told Diaz that he would be laundering a lot more cash in the future.
During the next several weeks, the Atlanta laundry handled more than $6.2 million for the cartel, picking up cash in New York and Los Angeles and shipping them to a new account in Panama. On March 29, the agents lured Martinez to a meeting in a Panama City bank. But because the Americans lacked the power to make arrests in Panama, they were forced to rely on Panamanian police.
Not surprisingly, Martinez escaped.
"La Mina 30," as Martinez was called, was finally arrested in Colombia late last summer. He is regarded by investigators as the most important Medellin cartel launderer ever extradited to the United States. He has pleaded not guilty to money laundering charges and will go on trial in June in Atlanta. Federal agents from Los Angeles are expected to testify and to play videotapes of the La Mina surveillance as part of the prosecution's case.
Of the 35 persons charged in the two Los Angeles cases, eight have already pleaded guilty, including Sergio Hochman, Florida gold refiner Richard Ferris and the Ronel Corp. itself. Koyomejian, the Andonian brothers and Raul Vivas face charges of money laundering, conspiracy, and aiding and abetting others in the possession and sale of cocaine. They, like the remaining Los Angeles defendants, have pleaded innocent and are to be tried later this year. Sergio Hochman, the Uruguayan thought to be second in command of the La Mina network, is expected to be a prosecution witness in both trials.
Federal officials say that although a number of Los Angeles banks accepted deposits from the defendants, no local bank is currently suspected of criminal activity in the case. In most instances, the banks required the defendants to file federal currency transaction reports and may thereby have relieved themselves of further legal responsibility in the matter. The same cannot be said for foreign banks involved in the case. Banco de Occidente, the Panamanian firm, pleaded guilty last summer to money-laundering charges and agreed to a $5 million fine.
The Luxembourg-based Bank of Credit and Commerce International, agreed to a similar resolution this year in a case related to La Mina. BCCI, rumored to be the repository of at least six of ex-Panamanian leader Manuel Antonio Noriega's personal accounts, was fined $15 million and placed under federal supervision for five years as the result of a Tampa, Fla., laundering case. U.S. Customs Service undercover agents uncovered several references to La Mina in the investigation that led to the indictment of BCCI and 11 of its international officers.
Investigators say that they have no illusions about having wiped out money-laundering with the La Mina investigation. Miami, long thought to be the major U.S. center for laundering, continues to experience significant problems, and in recent months, investigators have uncovered some evidence of unusual currency surpluses in the federal reserve banks that serve south Texas.
Such surpluses are often regarded as a rough indicator of the amount of money-laundering going on in an area. That supposition is buttressed by 1989 figures for the Federal Reserve branch bank in Los Angeles. For the four previous years, it had posted sharp increases in the currency surplus, but in 1989, the surplus declined by almost $500 million.
"A half-billion dollars. That's an interesting figure," said one of the federal investigators involved in the Los Angeles jewelry district investigation. "It's interesting because a half-billion dollars is just about what we estimated La Mina was laundering every year."
WASHING DIRTY MONEY
Los Angeles' jewelry mart was at the center of a massive international conspiracy that laundered more than $1 billion in cocaine profits.
1. Drug dealers delivered cash from cocaine sales to sham jewelry companies in New York City.
2. To make their businesses look real, the jewelry firms accepted regular shipments of fake gold bars from Latin America.
3. They shipped out boxes of cash, marked "gold scrap," to two businesses in the L.A. jewelry district that were controlled
by the cartel.
4. The cash was counted, bundled and then deposited in L.A. banks, which were told it was from the sale of the supposed gold.
5. Money from the L.A. accounts was transferred to the cartel's Manhattan bank accounts, then wired through Panama to South America to pay for coca and operating expenses.
6. Remaining profits were wired to secret accounts in European banks.