Drug Witness Says Agents Never Asked About Criminal Record

A paid government informant testified Wednesday that U.S. Customs Service agents never inquired about his criminal past when they recruited him to become chief undercover operative in their massive probe of international drug money laundering.

Fred Mendoza said he did not reveal to the agents that he had helped the Cali cartel airlift cocaine into Mexico in the early 1990s because they told him, “We already know everything about you.”

But if Mendoza’s handlers knew all, prosecutors assigned to the case, code named Operation Casablanca, did not.

Learning only a month ago of Mendoza’s alleged drug trafficking, they ordered the Customs Service to interrogate him again, four years after be became a highly paid informant.

Until that March 30 interview, prosecutors said, they knew only that Mendoza had been implicated but never indicted in another money-laundering case centered in Los Angeles’ jewelry district.

After he became a paid informant, Mendoza posed as a Cali cartel money launderer for four years, helping customs agents develop evidence that resulted in the indictments of more than 100 people and three of Mexico’s largest banks.

During two days of cross-examination that ended Wednesday, lawyers in the Los Angeles federal court trial of six Mexican defendants grilled Mendoza about his ties to the Cali cartel.

They suggested that he became a government informant to avoid prosecution for his activities on behalf of the cartel and because the pay was good.

Under his contract with the agency, Mendoza has received more than $2.2 million, most of which consisted of commissions on money he helped to launder as an undercover operative. He also stands to get up to $7.5 million under a discretionary award program.

In a preemptive strike by prosecutors, Mendoza testified earlier this week that he helped the Cali cartel with logistics during an abortive effort to smuggle several hundred kilos of cocaine in Mexico by airplane in 1992.

But a defense lawyer said Wednesday that the government’s own documents showed that Mendoza was involved in more than one smuggling operation.

Mendoza’s narcotics trafficking apparently was the subject of an FBI investigation in the early 1990s. It was sparked by an informant who told of seeing him at a meeting at the Mexico City home of Amado Carillo Fuentes, the late head of Mexico’s most notorious drug cartel, where a plan was discussed to smuggle 80 tons of cocaine into the United States.

On the witness stand, Mendoza denied meeting with Carillo, although he admitted having talked to him on the telephone.

The defense also accused Mendoza of engaging in illegal entrapment and coercion to lure their clients into joining the money-laundering conspiracy.

Under questioning by defense attorney Michael Pancer, Mendoza conceded that he intended to persuade prospective recruits to believe that they and their families could be killed if they crossed him or his bosses in Colombia.

Mendoza later changed his testimony, insisting at one point he was only “joking” about death threats. He also said that he only meant to suggest that the cartel would murder him and his family.

The game plan in Operation Casablanca called for Mexican bankers to be invited to meetings at a Santa Fe Springs warehouse that served as a front for Mendoza’s money-laundering operation. In a conference room equipped with concealed video cameras, Mendoza was instructed to deliver what became known as the “Cali speech.”

Mendoza was to tell the recruits that they were being asked to launder drug proceeds from the Cali cartel, thereby providing irrefutable courtroom evidence of their knowing participation in the operation.

During cross-examination, however, Mendoza acknowledged telling two defendants that the money came from businesses in Cali, omitting any mention of drugs.

Lyons sought later to rehabilitate Mendoza’s testimony, eliciting testimony from him that he also talked about “dangerous people” and “Mafioso.”

Building a case for a claim of illegal entrapment, defense attorney Terry J. Amdur pressed Mendoza about a secretly recorded meeting he had in January 1997 with a Mexican banker who balked when he was asked to help transfer large sums of money through accounts at his financial institution.

“We are not criminals,” Amdur quoted Mendoza as telling the banker about his business front, Emerald Empire Corp. “We are accepted by the Chamber of Commerce.”

Amdur pressed Mendoza to explain why he did not give the “Cali speech.” Mendoza said he could not recall the interview.

Testimony in the government’s case resumes today and is expected to conclude next week.