Jewelry District Suffers From Tarnished Image : Stores: Shop owners say most recent money-laundering raid is ruining an already-slow Christmas shopping season.

For those who seek it, the Los Angeles jewelry district provides the perfect cover for money laundering.

The warren-filled high rises near Pershing Square are layered with floor after floor of private showrooms, some with shades perpetually drawn and video cameras always rolling. Outside, armored trucks roll up, and armed guards whisk in and out with packages whose contents no one sees, making deliveries no one questions.

“We don’t like money laundering, but how can we control transactions that are secret?” asked Mike Youssefian, general manager of St. Vincent’s Jewelry Center, where a gold exchange was raided on Monday in connection with a federal crackdown on a purported $500-million Colombian cocaine money-laundering ring.

“We have 450 tenants in the building, and only one of them was raided, but this will be very devastating for all the merchants in the area. The whole jewelry district waits for Christmas to keep themselves going the rest of the year. The timing was very, very bad.”

As merchants were beginning to put up red-flocked Santa Clauses and hang fake gold festoons over rivers of real gold chains, they expressed feelings about the crackdown ranging from anger to nonchalance.

Three jewelry district precious metals firms and the gold exchange were among 30 locations raided nationwide Monday as part of the federal sweep. More than 35 people were arrested, including two with jewelry district ties. The action is part of the fourth set of major indictments to hit the district since 1989.

On Tuesday, one of the raided firms, Real Gold Enterprises on the second floor of the L.A. Jewelry Mart, was closed. Others in the building said they had no reason to suspect wrongdoing of its proprietor, Vahan Khachatrian, who authorities arrested on charges of setting up five bank accounts in the small office to help launder Colombian cocaine proceeds.

Occupants of the building tend to know little more about each other than would tenants in a high-rise security apartment building. Occupants said each small business is run separately, often by immigrants who speak different languages and see each other as competitors. Moreover, the security needs of legitimate businesses are similar to those of illegitimate operations.

“Who’s to know the difference?” said one woman who works there. “There are people who make money here doing nothing but calling on the phone to New York all day. How are you to tell who’s doing what?”

Still, Steve Cowdery, a jewelry designer whose small office was once part of the one now rented by Real Gold Enterprises, was not surprised.

“Not really,” he said, carving a small wax mold at his workbench. Though he had not met Khachatrian and had no reason to suspect him personally, Cowdery said he had noticed an increase in operations that raised his suspicions.

“Some have people going in and out all day and never sell anything,” he said. “Others are closed up all the time. You see big amounts of money and people carrying tremendous amounts of inventory and have thousands and thousands of dollars’ worth of gold just sitting there. And no customers.”

An estimated 7,000 to 10,000 merchants have offices in the jewelry district, making Los Angeles the largest such center in the country outside New York’s diamond district. “There are obviously . . . honest, hard working people there,” an FBI agent said, “but there is a group of people who are susceptible to getting involved in the movement of cash like this.”

While second in sales, Los Angeles is nonetheless first in money laundering, federal agents say.

“The tremendous amount of cash business generated down there in buying and trading of precious metals . . . lends itself to this laundering process,” said the FBI source.

“It’s just an excellent cover for someone covering up gold receipts, buying gold back and forth. By generating sales like that, who would raise an eyebrow . . . if someone said they bought $50 million of gold bars last year?”

Coinex, the wholesale gold exchange raided on Monday, boasts not one security door, but two. Visitors are buzzed inside a tiny gated anteroom before entering the private showroom. An office behind the showroom is sealed with heavy glass. On its back wall is a Las Vegas-style mirror.

No one was arrested at Coinex, but the four men in the small office declined to speak to a reporter.

For Christmas shopping in seasons past, shoppers used to come to St. Vincent’s when it was the landmark old Bullock’s building. Now, the customers are few. Worried faces of merchants hover above row after row of glass counters that lure shoppers looking for a deal on gold jewelry. Last year at this time, the plaza was crowded.

One merchant, looking up from his newspaper, said he has no customers--although he didn’t specify whether the problem started Monday. He doesn’t blame the recession. He blames the feds.

“I’m mad,” he said. “Tell me why, why they needed to do this before Christmas rather than after Christmas. Eleven months we are waiting for this. And now, zero sales. Zero.”

Sol Dunst, owner of Sol Jewelry Designs, said the district has changed since wealthy immigrants began coming into the district in the 1970s. However, some of those most victimized by the crackdown are the honest immigrant dealers who say they are now suspect.

“We’re the innocents, the ones who are losing business over this,” said one Armenian retailer. “I had very wealthy customers, but after the (indictments) two years ago, I lost them all because of a few crooks. “

Times staff writer Henry Weinstein contributed to this story.