Drug Money Launderer Tells Tale of Intrigue

The government’s chief informant in Operation Casablanca testified Friday that he became a money launderer for the Cali drug cartel because he made the mistake of swindling one of their members in a gems sale.

On the witness stand in the trial of six Mexican nationals accused of drug money laundering, Fred Mendoza said he was selling precious stones from an office in Los Angeles’ jewelry district in the late 1980s when he was visited by a customer named Lucho.

Lucho, a Colombian, said he was looking to buy $150,000 worth of emeralds that he could resell for that amount when he returned home, according to Mendoza.

Thinking he never again would see or hear from Lucho, Mendoza took the stranger’s $150,000 and gave him emeralds worth only $50,000.

That was a big mistake.

Lucho, a drug cartel member, was furious when he discovered that he had been cheated.

“I never expected a call from him,” Mendoza related Friday. “He was very upset with me. . . . He said that I cheated him and that nobody had done it in his life before. He threatened to kill me and my family.”

Lucho wanted his money back, the Colombian-born Mendoza said. The only problem was that Mendoza had only $20,000 left. So, he said, Lucho made him an offer he couldn’t refuse: work off his debt by becoming a bagman for the Cali cartel.

Mendoza said he agreed. He said he made several money pickups and deliveries for the cartel and over the passage of time earned Lucho’s trust. Mendoza’s relationship with Lucho and his associates would later prove to be a lifesaver, he said.

Unbeknown to him, he said, his brother had become an informant for the U.S. Customs Service and was working with an undercover officer in a sting targeting a group of Colombian marijuana distributors in the Los Angeles area.

He said the sting was blown when the suspects discovered the undercover officer wearing a transmitter. The suspects fled and reported the news to their superiors in Colombia.

Unfortunately, Mendoza was in Colombia at that time. In reprisal, he said, he was kidnapped “because they said my brother was a cop. They were going to kill me.”

Mendoza said he persuaded the kidnappers to call someone who would vouch for him. That person was one of Lucho’s drug trafficking associates in Cali to whom he had sold diamonds and emeralds.

“He came in and he vouched for me,” Mendoza said. “They released me in his custody” until they could find out for certain whether his brother was an informant.

Meanwhile, the Customs Service staged a phony arrest of Mendoza’s brother and arranged for the arrest to be reported in a newspaper, Mendoza said. The story made its way back to Colombia and Mendoza was freed after 18 days in captivity.

Afterward, Mendoza said, he decided to join his brother as an undercover Customs Service informant.

That was in 1995, and over the next three years Mendoza assumed the role of a Cali cartel money launderer, using the name of Javier Ramirez, operating out of a warehouse office suite in Sante Fe Springs.

In what has been described as the biggest drug money laundering probe ever, more than 100 people were indicted by a Los Angeles federal grand jury last May along with three of Mexico’s most prominent banks.

Testifying in the first of four scheduled trials, Mendoza is expected to complete his direct testimony when the proceedings resume Tuesday. He is expected to face rigorous defense cross-examination.