Judge Rejects Defense Bid to Block Drug Money Case

A federal judge Wednesday rejected a raft of defense complaints that government investigators engaged in outrageous misconduct during Operation Casablanca, the Customs Service’s probe of international drug money laundering.

U.S. District Judge Lourdes G. Baird’s action clears the way for the start of the first of four trials in the mammoth case that resulted in the indictment last year of more than 100 people and three prominent Mexican banks.

In written opinions made public Wednesday, Baird refused to dismiss money laundering charges pending against Bancomer, Banco Serfin and Confia bank and 13 Mexican bankers, businessmen and lawyers.

They are scheduled to go on trial at the end of March in a case the government says will demonstrate a link between drug cartels and numerous Mexican banks.

In her rulings, Baird dismissed defense charges that:

* The three indicted banks were unfairly targeted for prosecution because they are Mexican-owned. Not only is there no evidence of discrimination, the judge said, but evidence before the court indicates the banks were never targeted.

* The Customs Service violated the U.S.-Mexico Mutual Legal Assistance Treaty by keeping Mexican officials in the dark about the money laundering investigation. The judge said the Mexican government never claimed a treaty violation occurred, and besides, any treaty infraction would not exempt an individual from being prosecuted.

* U.S. agents manipulated the money laundering sting from start to finish over an unreasonably long 2 1/2 years for the sole purpose of securing a large number of criminal indictments. The judge said the record shows that the Mexican bankers were recruited by fellow defendants, and that they willingly agreed to take part.

* The government made veiled threats of violence to ensure that the bankers remained in the money laundering operation. The judge said there was no evidence of that from her review of transcripts of secretly recorded meetings between the bankers and government undercover agents. She said the defense could not cite a single instance in which a banker tried to back out of the deal.

* A compensation agreement that gave the government’s chief undercover operative a percentage of all the laundered money constituted outrageous misconduct. All told, the informant received more than $2 million over the duration of Operation Casablanca. The judge said the informant’s pay was not excessive, given the fact that he devoted several years to the case, exposing himself to high-ranking members of the Cali and Juarez drug cartels known for their violence.

In rejecting the defendants’ charges, Baird noted that dismissals for outrageous government conduct are rare and that higher courts have taken a highly restrictive view of what constitutes such behavior.

She also rejected a defense bid to dismiss the charges by exercising judicial discretion, another rarely used power.

The U.S. attorney’s office said it was pleased with Baird’s rulings.

One defense lawyer said he was disappointed but praised the judge for issuing “a very thorough and carefully considered” opinion.

What remains to be seen is whether Baird’s rulings will spark a new round of plea negotiations between defense lawyers and prosecutors. Some defense lawyers have said privately that they might consider plea bargains depending on how the judge ruled.

Four of the original defendants in the upcoming case have already entered guilty pleas. Three agreed to testify for the government.

The other trials tentatively scheduled for later this year involve an alleged money laundering operation in Venezuela, one involving suspected members of the Juarez cartel and another that focuses on the Cali cartel.

Of the more than 100 people indicted in Operation Casablanca, only about 40 were actually arrested, having been lured into returning to the United States under a variety of ruses, including a bash at a Las Vegas casino where many were apprehended.

Although Bancomer, Banco Serfin and Confia were the only Mexican banks indicted, those arrested include 22 officials from 12 Mexican banks. U.S. authorities seized more than $60 million in assets belonging to the 12 Mexican banks and two banks in Venezuela. They also confiscated millions of dollars and large amounts of cocaine belonging to the drug cartels.

Although law enforcement officials in the United States hailed Casablanca as a phenomenal success, Mexico reacted with anger when the indictments were announced last year. At one point, Mexican authorities said they wanted to try the undercover U.S. Customs Service agents for violating Mexican law.

Earlier this month, Mexico backed down from that threat. At the same time, however, it refused to turn over five Casablanca fugitives wanted by the United States. The Mexican government said the five suspects would be tried there.