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Feds say Colombian druglords launder euros through Miami

Saturday, February 16, 2008

MIAMI -- Every day, American Airlines Flight 914 takes off from Bogota, Colombia, at 8:~ no business or person has been charged with a crime

20 a.m. and touches down at the Miami airport at noon. In the jet's cargo hold are usually bags and bags of euros that investigators say are part of a huge $1.4 billion cocaine money-laundering scheme.

Crime is happening right on schedule in Miami, almost every day, federal prosecutors say. But so far, despite nearly four years of investigation, they have apparently been unable to build a strong enough case to stop it.

Instead, they are attacking the problem piecemeal. The U.S. Justice Department this week went to federal court in Miami seeking forfeiture of nearly $11 million seized last June and July by federal agents, who used drug-sniffing dogs to find cocaine residue on some of the cash.

The money represents only a tiny fraction of a huge scheme to launder euros from the sale of Colombian cocaine in Europe, Justice Department attorney Lea Carlisle said in the document. She said the total coming through U.S. airports could reach 1 billion euros a year, or about $1.4 billion at current exchange rates.

"This seizure represents a small but telling snapshot," Carlisle said. She declined to comment beyond the court document filed Tuesday.

The complex arrangement involves money exchange businesses in Colombia, commercial jetliners from the U.S. and Britain and financial firms in Miami and London. When the circle is complete, Colombian drug cartels cloak the true source of millions of dollars.

Vast quantities of cocaine are smuggled each year from Colombia to Spain and then sold throughout Europe, where use is growing dramatically. The U.S. Drug Enforcement Administration says cocaine sells in Europe for twice what it brings in this country, generating large amounts of cash.

"All of this means they have a new problem -- laundering their euros," said Bruce Bagley, an expert on drug trafficking and chairman of international studies at the University of Miami. "This new problem has led them to these complex daisy chain money laundering activities."

Huge amounts of cash are moved around the globe all the time, most of it legitimate. But the DEA, Justice Department and U.S. Immigration and Customs Enforcement began investigating in 2004 after agents noticed astronomical amounts of euro notes coming into Miami from Bogota.

Still, no business or person has been charged with a crime. Convicting someone requires proof beyond a reasonable doubt, a tougher legal standard than the one for confiscating suspected drug money.

Moreover, to search a bulk cash shipment, U.S. investigators need a warrant. And they cannot get one unless they can show probable cause to believe it's dirty money.

Bagley said the lack of criminal charges is a sign that investigators have yet to build enough evidence against any conspirators, something that often depends on inside informants or drug defendants looking to make deals for lighter sentences.

"The U.S. government is behind the curve on this," Bagley said. "This is a test case to see how far they can get."

According to the U.S. government, here is how the laundering scheme works:

Euro notes generated by cocaine sales in Europe are first smuggled illegally into Colombia. Then, low-level couriers known as "smurfs" bring the cash in small amounts at various times to a number of different Colombian money exchanges known as "casas de cambio," or "houses of exchange."

The Colombian exchanges then fly the euros to the U.S., often after falsifying the paperwork. A good chunk of the money arrives aboard American Flight 914 each day under an arrangement with a Miami-based exchange business, InterTransfers Inc.

Once in Miami, the euros are transferred by armored car, counted, repackaged and put on a flight to London, where they are converted into dollars and eventually transferred back through Miami and on to Colombia. Ultimately, they become "clean" pesos for the cocaine traffickers, according to the court filing.

The Colombian Embassy in Washington did not return a phone call seeking comment.

Neither InterTransfers nor American, nor any of their employees, have been accused of any wrongdoing. American spokesman Tim Smith said the airline has "distinct security procedures" for currency shipments but declined to discuss them.

"American Airlines assists law enforcement authorities in any way possible any time we are asked to in cases such as this," Smith said.

Ramiro Miqueli, InterTransfers president and chief executive, said his company has been assured in writing by the Justice Department that it is not a target of the investigation. He said about $1.5 million of the firm's money seized last summer is being returned without fine or penalty.

"InterTransfers has been found not to have violated any U.S. law," Miqueli said.

A major red flag is the frequent appearance of the 500-euro note, which allows a lot of money to be shipped without taking up a lot of space. The 500-euro note -- equal to about $700 -- is rare in legitimate transactions and often turns up in suspicious real estate and financial deals in Spain.

Colombian regulators recently concluded that 90 percent of the 500-euro notes in circulation outside Europe are being smuggled into Colombia.

As the U.S. investigation progressed, federal agents last year used their dogs Frankie and Sox to detect cocaine residue on euro shipments seized at the Miami airport. One seizure alone involved seven bags. One of the shipments contained 12,224 of the telltale 500-euro notes. The money is shipped in sealed, tamper-resistant plastic bags the size of duffel bags.

Those seizures are now the subject of the U.S. forfeiture action, a civil action that requires the government only show that it's more likely than not that the money is ill-gotten.

The Justice Department has received claims for the cash from casas de cambio in Colombia that say the money is legitimate. A judge will sort out those claims.


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