3 Convicted of Laundering Drug Money

A Los Angeles federal jury convicted three Venezuelans--a banker, a lawyer and a businessman--on Monday after a trial climaxing the biggest narcotics money laundering case in U.S. history.

The five-week trial was an outgrowth of Operation Casablanca, a lengthy undercover probe that targeted Mexican and Venezuelan banks along with money launderers for the Juarez and Cali drug cartels.

Those convicted Monday were among 100 foreign citizens and three Mexican banks indicted last year on money laundering charges. Sixty people remain fugitives. Prosecutors also seized about $60 million from the U.S. assets of 14 foreign-based banks whose employees were implicated in the case.

The investigation, conducted by the U.S. Customs Service with the help of a Colombian-born drug dealer turned informer, also sparked a major diplomatic flap with Mexico. Officials there complained that they were kept in the dark about a probe on their own soil.

After deliberating two days, the Los Angeles jury returned guilty verdicts Monday on all counts against Carmen Salima Yrigoyen, 45, an attorney and former judge from Caracas; Carlos Izurieta Valery, 54, an investment broker, and Esperanza de Saad, 56, who operated the Miami office of the government-owned Banco Industrial De Venezuela.

Salima and Izurieta were accused of directing the undercover agents to supposedly crooked bankers through whom the agents laundered $9.5 million in drug money.

De Saad, accused of helping to launder $4 million of those funds, protested that she was illegally entrapped. She is a member of a politically prominent Venezuelan family. Her brother, Luis Raul Matos Azocar, is a former Venezuelan finance minister who served in the national legislature, as did her father.

Judge Bernard Friedman allowed de Saad to remain free on $1-million bond while he considers a previous motion for acquittal on grounds of insufficient evidence and illegal entrapment. Prosecutors had asked that she be jailed immediately.

Salima and Izurieta were taken back to the federal Metropolitan Detention Center, where they have been held without bail since their arrest in May 1998.

Assistant U.S. Attys. Duane R. Lyons, Robert E. Dugdale and Diana L. Pauli, who prosecuted the case, expressed satisfaction with the jury’s verdict convicting Salima on 23 criminal counts and Izurieta and de Saad on 11 each.

Lyons, the lead prosecutor, said in response to a question that he is “concerned” that the trial judge is still considering de Saad’s motion for an acquittal. “We see no reason to disregard the jury’s verdict,” Lyons said. Friedman promised to issue a written ruling soon.

The three defendants are scheduled to be sentenced in April. Under federal sentencing guidelines, Salima faces a term of about 10 years in prison, and de Saad and Izurieta could each receive terms of eight to 10 years.

After her conviction, an angry de Saad complained to a reporter of being deceived by Salima as well as the undercover agents.

In secretly recorded video and audio tapes played for the jury, Salima told the undercover agents that de Saad and Izurieta knew that the money came from illicit sources, though she cautioned the agents not to specifically mention drug money when talking to the pair.

Izurieta’s lawyer, William S. Harris, told the jury that Salima’s remarks incriminating his client were “a lot of malarkey,” and de Saad’s attorney, Joseph C. Beeler, said Salima was given to wild statements that “cannot be trusted.” They also accused the government’s undercover operative, Fred Mendoza, of dropping only vague, unintelligible hints that the money belonged to Colombian drug dealers, a claim denied by prosecutors.

Last month, an associate of Salima, Jose Perez, pleaded guilty to a conspiracy count in a deal with prosecutors on the eve of trial. He was sentenced to time already served and was allowed to return to Venezuela.

Two others indicted in the Venezuelans’ case--Marco Tulio Henriquez, a vice president of Banco del Caribe in Caracas, and Roberto Vivas, described in court documents as a representative of International Finance Bank--are fugitives.

All six were accused of laundering drug proceeds in 1997 and 1998 through Banco Industriale de Venezuela, Banco del Caribe, International Finance Bank and Banco Consolidado.

Central to the prosecution’s case were the secretly recorded video and audio tapes in which Mendoza sought the defendants’ help in moving millions of dollars from the United States to Colombia.

Mendoza, who was paid $2.1 million by the Customs Service, posed as the leader of a ring of Los Angeles-based money launderers. Using Mendoza as a front man, undercover customs agents were able to win the confidence of Mexican and Colombian drug syndicates. The agents traveled across the country picking up $50 million to $60 million in cash from illegal drug sales, then laundered the money into the banking system with the help of Bank of America’s Los Angeles office.

Ninety percent of the money eventually was funneled back to the drug cartels, usually in the form of difficult-to-trace cashier’s checks issued by banks in Mexico and Venezuela. The Customs Service kept the remaining 10% as a commission, with a fifth of that amount going to Mendoza.

Defense lawyers directed much of their fire at Mendoza’s compensation and the fact that he stands to get several million dollars more as a bonus.

Although Mendoza was not on trial, prosecutors were forced to defend him and his handling by the Customs Service.

Steve Lovett, a customs agent, said he conducted a background check on Mendoza in 1995, finding only that Mendoza had laundered money while running an emerald business in Los Angeles’ downtown jewelry district during the 1980s. But during cross-examination, the agent acknowledged having written a recruitment memo describing Mendoza as someone familiar with trafficking narcotics as well as money laundering. Lovett said he could not explain the discrepancy.

Federal prosecutors did not learn until March 1999 that Mendoza had also helped the Cali drug cartel airlift tons of cocaine into Mexico in the early 1990s.

The belated discovery caused considerable embarrassment to the prosecution in the related trial earlier this year of six Mexican bankers and businessmen. Mendoza’s credibility was a big issue in that case, which ended with the jury convicting three defendants and acquitting three others.

Of the 100 individuals indicted last year, 60 remain fugitives. Most of the others were lured to the United States and arrested under various ruses, including a gala at a Las Vegas gambling casino. As some of the male guests were getting ready to cap off the night with a trip to a Nevada bordello, agents swooped down and arrested them.

All told, 40 suspects were taken into custody. Thirty-one people, including money launderers for the Juarez and Cali drug cartels, pleaded guilty before their trials.

Also pleading guilty to money laundering charges were two of Mexico’s largest banks, Bancomer and Banca Serfin. The banks agreed to pay a combined $14.6 million in fines and forfeitures. A third Mexican bank indicted, Banco Confia, agreed to a civil settlement and forfeited $12.2 million in exchange for dismissal of the criminal charges.

Of the 11 other Mexican, Venezuelan and Spanish banks whose U.S. assets were seized, one has successfully fought the confiscation. Last summer, Banco Mercantil del Norte, one of Mexico’s largest banking institutions, forced the U.S. government to back down from its $7.3-million forfeiture action.