Drug Agents Break Global Money-Laundering System


Federal drug agents, in a coordinated undercover operation involving narcotics police in Italy, Colombia, Spain, Canada and Britain, have broken up a major international money-laundering system, arresting at least 169 suspects and seizing $54 million.

The investigation, conceived in Southern California in 1989 and announced Monday at news conferences in Washington and in Rome, ensnared seven high-ranking money managers for the Cali cocaine cartel outside Colombia.

An eighth avoided arrest when he failed to keep a date in Caracas, Venezuela, where authorities were waiting, a Drug Enforcement Administration official said.


The arrested money managers included Rodrigo Carlos Polania, a former inspector of Colombia’s national bank who is suspected of being a “plant” for the cartel in the anti-narcotics financial task force in Bogota. He was arrested in San Diego on Friday.

Italian authorities said the crackdown, “Operation Green Ice,” revealed tight connections between Colombian drug barons and all three major branches of organized crime in Italy. “We have completely destroyed this network,” said Alessandro Pansa, a senior Italian police investigator.

U.S. Deputy Atty. Gen. George Terwilliger, contending that the operation had dealt a “crippling blow” to the Cali cartel, said at DEA headquarters: “Our aim is to drive a stake though the heart of the illegal drug business by attacking their financial operations.”

Terwilliger, in an interview, denied any connection between ending the investigation and criticism of the Bush Administration’s anti-drug efforts by Democrats during the presidential election campaign. Instead, he said the operation was called off for fear of crossing the point where money laundering by government undercover agents would benefit the cartels beyond the dividends to law enforcement.

The operation was conceived by Thomas J. Clifford, now assistant special agent in charge of DEA’s San Diego field office. He had planned earlier DEA money-laundering campaigns in Florida.

Undercover agents posed as money-laundering “facilitators” and used informants to identify several major drug-money brokers in Colombia, officials said. The Colombian brokers then acted as middlemen between the Cali cartel kingpins and the undercover launderers.

Following the Colombians’ instructions, the operation established leather goods shops in Houston, Ft. Lauderdale, Miami, Chicago and New York. Operated as subsidiaries of Trans Americas Ventures Associates, a DEA-established corporation in La Jolla, the shops were used to import merchandise from Colombia. This created a legitimate paper trail for sending U.S. currency to banks for the cartel in Colombia, Panama and elsewhere, a DEA official said.

Trans Americas was equipped with hidden video cameras and recording devices--typical trappings of law enforcement sting operations.

The stores’ paperwork would be falsified so one ton of leather was listed as 20 tons, justifying the export of greater amounts of currency. “They didn’t care about the leather,” one DEA official said. “All they wanted was the paperwork.” The official said the operation grew so large that undercover agents were beginning to ask: “How much leather can I handle?”

It was also feared that the operation had grown to the point that a leak could easily occur and the enterprise could come tumbling down “like a house of cards,” the DEA official said.

“Our undercover agents posed as (illicit) international money brokers,” said Ralph Lochridge, a Los Angeles-based agent. “The cartels’ big problem had been getting the cash (from drug sales) out of the country. They had to have some way of getting it into the international banking system.”

Lochridge said that, after undercover agents won the drug dealers’ confidence, the dealers--at parking lots, on street corners and in restaurants and hotels--handed over large sums in small-denomination bills, “sometimes in laundry bags, sometimes in suitcases, sometimes in cardboard boxes. . . . More than $12 million was laundered in the Los Angeles area.” He said the DEA transferred the money to secret bank accounts set up by the cartels in Switzerland and the Grand Cayman Islands.

While U.S. undercover fronts were limited to the leather goods business, their counterparts in Rome ran a company that laundered millions of dollars by posing as a pan-European animal protection society, Italian police said.

Among the three dozen or so arrested in Italy, police said, were important members of the Sicilian Mafia, the Neapolitan Camorra and the Calabrian ‘Ndrangheta. (DEA figures listed only 29 individuals arrested in Italy, and Italian authorities put the total worldwide arrest figure at 201, vs. DEA’s 169. Officials could not resolve the differences Monday.)

Besides the alleged mob members, those arrested included seemingly upright businessmen in Sicily and an 80-year-old woman in Mantua in northern Italy, who was described as the aunt of the head of a dummy money-laundering company in New York. She had more than $40 million in her bank account, police said.

A potentially top figure, arrested by the Italians, was Jose Duran, whose four aliases include Raul Grajales and who was billed by Italian authorities as “the most important distributor in the world for the Colombian drug cartels.”

Arrested with him at a bar near the Spanish Steps in Rome was Bettein Martens, a woman described by authorities as a major Dutch money launderer, and another Colombian, Pedro Felipe Villaquiran. Italian authorities said Duran brought Villaquiran to Europe to introduce him to organized crime contacts there.

DEA Administrator Robert C. Bonner said federal grand juries in Los Angeles and San Diego returned indictments last week against 107 defendants, who were charged with illegally laundering drug money for the cartels.

Besides the Italian operation, Bonner said overseas activity included:

* Britain, where three people were arrested on charges of laundering proceeds of Colombian cocaine sales; $6 million in cash was seized.

* Spain, where four individuals allegedly laundering funds for the Cali cartel were arrested; $330,000 in cash was seized.

* Canada, where the Royal Canadian Mounted Police seized $1.6 million in Colombian drug money allegedly generated by cocaine sales.

* Colombia, where the national police on Friday raided the financial offices of fugitive Cali cartel kingpin Rodriguez Orjuela. Financial books and records, as well as computer hard drives and discs that carried financial transactions and bank account information, were seized.

Ostrow reported from Washington and Montalbano from Rome. Staff writer Eric Malnic contributed to this story from Los Angeles.

Cocaine Crackdown: How the Pipeline Worked

Drugs to Europe: The organization used intricate methods, including bank accounts, couriers and ships, as well as both dummy and real companies in many countries, to smuggle cocaine from South America to Europe, officials say.

Money back to South America: Some of the money to pay for the drugs was then sent back to South America via bank accounts and companies in Austria, the United States and Switzerland. Some remained in Europe.

The fronts: Leather goods stores were a primary outlet for laundering money. The paperwork for merchandise was used to cover the return of money to Colombia or the cartel’s accounts worldwide. One dummy company used by the organization claimed to be an animal rights group. Another was a wine export company based in Corleone, the small Sicilian hill town which is home to the fictional “Godfather,” Don Vito Corleone. Some of the Italians arrested were members of the Corleone clan.

Arrests in U.S.: They included a former inspector of the Colombian national bank who had been assigned to an anti-cocaine task force in Bogota. He was arrested in San Diego last week after being lured to the United States.

Arrests in Italy: They included two kingpins of Colombia’s cocaine cartels and members of Italian organized crime families. Officials said the most significant arrest in Italy may be that of Jose (the Pope) Duran, 38. One Italian anti-Mafia official called him “the most important distributor in the world of cocaine for the Colombian drug cartels.”

The significance: The case reportedly shows a solid link between the Colombian cocaine cartels and the three top underworld organizations in Italy, including the Sicilian Mafia.

Source: Times staff and wire reports