(Archived Content)
Treasury Secretary Robert E. Rubin and Attorney General Janet Reno announced today the culmination of the largest, most comprehensive drug money-laundering case in the history of U.S. law enforcement, representing the first time in which Mexican banks and bank officials have been directly linked to laundering the Cali and Juarez cartels' U.S. drug profits.
The nearly three-year undercover operation, known as Operation Casablanca, was led by the U.S. Customs Service in cooperation with federal, state and local agencies. The investigation spans 6 countries and prior to this weekend's arrests resulted in 112 arrests and seizures of $35 million dollars in illegal proceeds from drug money laundering and more than two tons of cocaine and four tons of marijuana.
By infiltrating the highest levels of this international drug trafficking financial infrastructure, Customs was able to crack the elaborate financial schemes the drug traffickers developed to launder the tremendous volumes of cash acquired as proceeds from their deadly trade, said Secretary Rubin. Today, we have hurt the drug cartels where it hurts the most -- in their pocket books.
Indictments were unsealed today in U.S. District Court in Los Angeles. One indictment charges 26 Mexican bank officials and three Mexican banks: CONFIA, BANCOMER, and BANCA SERFIN. Both BANCOMER and BANCA SERFIN have branches in the U.S.
The indictment alleges that officials from 12 of Mexico's 19 largest banking institutions were involved in money-laundering activities. Bank employees were implicated in meetings with implicated in meetings with undercover law enforcement officials. The second and third indictments cover money launderers from the Juarez and Cali cartels.
Since Saturday, May 16, Customs Service agents and other assisting law enforcement officers have arrested 14 Mexican banking officials as well as 14 members of the Juarez cartel of Mexico and 2 members of the Cali cartel.
We set out to disrupt the money laundering networks that fuel the international drug trafficking trade, and we succeeded, said Attorney General Janet Reno. Operation Casablanca built a road map that tracked the structure of the international drug cartels from the kingpins to the couriers and the bankers in between.
Operation Casablanca was initiated in November 1995, when the Customs Los Angeles Office learned that drug cartel members were laundering proceeds of U.S. drug sales through branches of Mexican banks along the border. The investigation expanded to include the financial infrastructure of the Juarez Cartel, including its money manager Victor Alcala Navarro and a principal in the Juarez Cartel, Jose Alvarez Tostado.
During the course of this investigation, undercover agents posed as middlemen for cartel brokers and bankers who agreed to launder their funds. The bankers would establish bogus accounts and use bank drafts to dodge money laundering regulations.
The investigation found that nearly 100 U.S. bank accounts were used in the money laundering activities by the drug traffickers and their corrupt banking partners. No evidence to date has been found that officials from those U.S. banks were aware of the source of the money that was transferred from Mexican to U.S. banks. At the conclusion of Operation Casablanca, U.S. customs agents reasonably expect to seize $110 million from Mexican investment accounts and other accounts at U.S. banks used by the traffickers.
These bank accounts can be forfeited under federal law as proceeds and means of facilitation of the drug trafficking and money laundering and as assets of the criminal enterprise.
The Federal Reserve has provided crucial assistance to federal agents and prosecutors throughout this lengthy investigation. Today, the Federal Reserve has initiated enforcement actions against those foreign banks under the Federal Reserve's supervision involved in this investigation. These actions will require the banks to ensure that there is no recurrence of money laundering in their banks.
The case is being prosecuted by the U.S. Attorney's Office for the Central District of California. The efforts of the Drug Enforcement Administration and the U.S. Attorney's offices in Chicago, New York and Miami have also been integral to the case.