Valley Firm Accused of Money Laundering
One of the largest check-cashing services in the West, its top executives and several associates were accused Wednesday of laundering millions of dollars in cash given to them by undercover law enforcement officers who posed as drug traffickers.
The federal indictment of Supermail International, a publicly traded corporation, and 10 individuals grew out of an investigation launched by the Los Angeles Police Department in 1992 to crack down on drug dealers in the San Fernando Valley.
About two years ago, surveillance teams noticed that drug traffickers were frequenting a Supermail outlet in Reseda, one of 20 that the company operates in low-income neighborhoods.
An LAPD detective and an undercover informant, passing themselves off as drug dealers, managed to win the confidence of the store manager who agreed to launder “drug money” in exchange for a 5% fee, according to a government affidavit.
As larger amounts of money were presented by the undercover operatives, the affidavit said, employees at other Supermail outlets were brought in to help launder the cash, usually by issuing money orders.
The probe, joined by FBI agents, led to the company’s top executives who personally accepted what they were told was drug money and then arranged for it to be wired through Supermail’s corporate account to a covert FBI bank account in Miami, the government charged.
All told, $3.2 million in cash was allegedly funneled through Supermail’s officers and their associates.
Nine of the 10 defendants were arrested Wednesday, including the company’s chief executive, Christine Umbertino, 42, and her brother, Albert Umbertino, 39, company president. Both are from Sacramento, where the company is based. One defendant was already in custody in Mexico.
The 67-count indictment charges them with money laundering, conspiracy and violating federal laws that require the reporting of transactions involving more than $10,000 or any other suspicious money transfers.
Deputy LAPD Chief Martin H. Pomeroy said the federal-local law enforcement investigation disrupted a major money laundering operation and he indicated that other suspects are being sought.
“It is truly outrageous when we have the executive leadership of the company accepting and authorizing employees of Supermail to knowingly launder drug money,” said Timothy P. McNally, head of the FBI’s Los Angeles field office.
The Umbertinos allegedly accepted large amounts of cash and talked about how to avoid detection during several meetings with undercover agents at the corporation’s headquarters in Sacramento and in Marina del Rey, Burbank and Las Vegas. Some of those conversations were apparently recorded.
During one conversation, Albert Umbertino reportedly said he and his sister needed money to keep Supermail’s operations going. Besides their fees for laundering the money, the FBI affidavit said the Umbertinos were able to use the large amounts of cash they received from the undercover agents to float store operations, thereby reducing their need to borrow money at prevailing interest rates.
In her meetings with the agents, Christine Umbertino “demonstrated her knowledge of other sophisticated money laundering methods that were not employed during the course of the undercover operation, including the preparation of false loan and accounting records to avoid suspicion by Supermail’s auditors,” the affidavit said.
“In fact,” it added, “she boasted of Supermail’s ability in previous years to avoid detection by the Internal Revenue Service.”
She also revealed that other unidentified people were using Supermail to launder money, the affidavit said.
Supermail is a leading U.S. money transfer agent, providing services to Mexico and the rest of Latin America. It has a long-term contract with MoneyGram, formerly part of American Express.
On any given month, the company cashes about $13 million in checks, according to its most recent report to the Securities and Exchange Commission. Supermail is traded on the NASDAQ over-the-counter bulletin board where speculative penny stocks are listed.
The company went public in 1985 and has not had a profitable year since 1988. In 1995, it lost $1.4 million; in 1996 it lost $1.3 million, and last year it reported a $2 million loss. It has an accumulated deficit of $17.9 million.
Supermail failed to file a financial report to the SEC for the quarter ending March 31 of this year. It asked for a postponement, saying that the company’s controller had resigned at the end of November and has not been replaced, causing a hardship.
The FBI affidavit gave a distinctly different version. It said the Umbertinos got rid of the controller “whose suspicions were aroused by the substantial cash drops.”
Supermail’s Reseda outlet, where the investigation started, was closed Wednesday after federal and local authorities raided the store and seized records.
Several residents of the mostly Latino neighborhood walked up to the store in a mini-mall at Reseda Boulevard and Vanowen Street, only to be turned away by a law enforcement officer.
Authorities also seized records at the company’s Sacramento headquarters, at Supermail stores in Hollywood, North Hollywood and Huntington Park, and at three homes used by the Umbertinos.
In addition to the sister and brother, those arrested were Mercedes Veiga, 45, Supermail’s senior vice president; Rogelio Merlose Jordan, 34, former manager of the Reseda store; Guillermo Jordan, 36, former manager of the Supermail store in Santa Ana; Salvador Jose Sanchez, 34, manager of the Reseda store until May; Marco Antonio Soto, 34, Supermail’s Southern California regional manager; and Alberto and Adelino Acosta, owners of Environment Flooring Services of Van Nuys, who were accused of participating in the money laundering scheme.
The 10th defendant, Fernando Malagon, 26, is in custody in Mexico.
The indictments were the second large-scale money laundering case filed in Los Angeles federal court in the past two months. In May, about 50 people were charged with laundering proceeds from the Cali and Juarez drug cartels. Many were employees of banks in Mexico and Venezuela.