Their new homes symbolize the political and economic influence that drug traffickers have bought throughout Colombia. In Medellin, a city of 1.2 million inhabitants that is known as the cocaine processing capital of the world, their power is particularly unb.dled. Traffickers have a piece of nearly everything here. from hotels to soccer teams to glraffes in a nearby zoo. Even the churches have been restored with drug money. Medellin's traffickers make their fortunes abroad. Most of their wealth comes from the United States: not only from recognized drug centers such as Miami, but also from a Rhode Island community only one square mile in size. Investigators believe that more than $50 million per year flows 4,000 miles from Central Falls, R... to the violent. sprawling metropolis of Medellin (pronounced Med-a-een). This unlikely tale of two cities. a case study in international money laundering, shows how drug dealers circumvent US cash reporting laws, customs searches, and pursuit by the Colombian and American police.. World cocaine capital thrives on Spotlight R.I. drug cash Money Laundering SPOTLIGHT Continued from Page 1 According to Robert M. Stutman. regional head of the US Drug Enforcement Administration, dealers as far away as Toronto and Chicago buy cocaine from Central Falls traffickers. Once paid, the traffickers move much of their profit through Rhode Island financial institutions to relatives and associates in Medellin. In the past year, at least 16 Colom- An trafficker rested, mainly in cases involving pounds of cocaine. According to local police, all of them also had Medellin connections. You see a lot of out-of-state cars in Central Falls and you wonder. What can they be coming here for besides drugs?" said one staff member of a local drug prevention agency. "There's nothing else here to visit." Among the most recent drug cases with Central Fails connections are: Erwin O. Monsalve, a Colombian national, was sentenced to seven years in prison last week for possessing cdcaine with intent to distribute. According to testimony, authorities found a ledger detailing more than $10 million in cocaine sales between 1982 and 1984 during an April 30 raid on Monsalve's home in Maiden, Mass. Monsalve is coowner of the Sportsman Club, a Central Falls bar. Omar Vanegas, 31, of Central Fails was among five Colombian nationals arrested on Aug. 8 for allegedly running a million-dollar drug oper ation. Three of the other four defendants had ties to the city. Louis Gomez had moved from Central Falls to Paw tucket, and Camillo and Mario Montoya had relatives in Central Falls. Police seized five pounds of cocaine in a Pawtucket parking lot. Depending on demand, a pound of cocaine has a street value of between $70,000 and $170,000. •Two Central Falls residents, Francisco Zuleta-Molina and Jose Calle Gonzalez, pleaded guilty in Maine on April 15 to charges of selling cocaine. ● Also on April 15. three Colombians pleaded guilty in a federal courtroom in Miami to charges of conspiracy stemming from a raid last November on a Hollywood, Fla., house. Agents confiecated more than 170 pounds of cocaine -worth tens of millions of dollars in street sales. Aymer Lopez, John Diosa and Edith Salinas had all recently lived -in Central Falls. Last Dec. 7. federal agents and police stopped a 1981 Porsche on Inter state 96 in Warwick. R.... and discov ered 11 pounds of cocaine hidden inside. The car was being driven by Juan Carlos Santamaria, who told authortties that he had brought $100,000 in cash to Florida on Dec. 5 to buy the -cocaine. Santamaria, who pleaded guilty to narcotics charges, had recent- •The Royal Canadian Mounted Po- The influx of cocaine earnings has not improved the chronically depressed economy of Central Falls, a blue-collar city with 37 bars and the state's third lowest per capita income. The traffickers who run their operations out of Central Fails spend little of their cash there. At most, law enforcement sources said, the dealers buy a house and a fancy car or invest in a small business. Despite their arrest record, federal agents have had only modest success in seizing the proceeds of Central Falls drug traffic. In the past 14 months, they have confiscated 14 cars, two houses and nearly $1 million in cash. in Santamaria's case, for example, they setzed his Warwick house, the Porsche, a jeep, and a 1985 Buick Skylark that be had just purchased in cash. Monsalve did forfeit $325,000 in cash that he kept in three safe deposit bases in two Boston banks. Still, inves tigators say he earned millions more in profits, but they don't know where the money is. "A lot of the money goes back to Colombia," says one prosecutor. "It's tough to live high off the hog in Central Fails without the police getting wind of It." A lack of government record-keeping hampers investigators who need to trace cocaine dollars from Central Falls to Medellin. The only way to show how much cash moves through bank branches in Central Fails is to measure surplus currency that they send to the Federal Reserve Bank in Boston. But the Federal Reserve does not keep tabs on cash from individual banks, or from geographic areas smaller than New England. US officials have designated three Central Fails police officers as federal marshals to give them authority to fol low drug dollars beyond the city limits. Two of them. Rudolph Legenza and Michael White, said that in one ongoing investigation they have traced hundreds of thousands of drug dollars from banks in Connecticut and Central Falls to Miami and then Panama. The cash had been exchanged for cashier's checks at the New England banks. The checks were mailed to a Miami account, from which funds were withdrawn and taken to Panama. Although Panama's bank secrecy laws prevented any further pursuit, the officers believe the money wound up in Colombia. In another investigation, they said. a Central Falls trafficker was found to have invested in hotels and condominlums in Medellin. The trafficker, who has not yet been arrested, is considered a millionnaire in Medellin. White said. In addition, he owns large amounts of real estate in San Francisco, which authorities consider a new hot spot for money laundering. Central Falls traffickers who want to move money to Colombia often start by converting their cash to checks at a local bank. Typically, they send their children to the bank to buy money orders to mail to Colombia. The teen-agers usually carry thousands of dollars at a time, and visit the bank as often as four or five times a week. They never buy a money order for more than $10,000, because such a ,purchase must be reported to the inter Globe Boston Make 9/27 274 nal Revenue Service. "The teen-agers come in with $5,000 in cash," said one local banker. who asked not to be identified. "That's what makes it so conspicuous. How would a teen-ager get that kind of money?" Traffickers who plan to carry cash to Colombia frequently exchange $20 bills for $100s, so their load will be less bulky. They exchange less than $10,000 at a time, to avoid the reporting law. According to police, one local bank trades so much currency that it often needs extra shipments of $100 bills. Customers seeking this service are asked to make an appointment, so the bank can order more money if needed. In one probe, White and Legenza found a bundle of $47.000 in cash neatly wrapped in silver tape. Because it is illegal to carry more than $10.000 in cash out of the United States without reporting it, traffickers smuggle cash on international flights in such bundles taped to their bodies or hidden in the clothing of their children. US customs officials lack authority to search outbound passengers for cash without probable cause. Customs agents at Colombia's commercial airports rarely confiscate cash: if there is any risk, traffickers can fly instead into dozens of private airstrips within easy reach of Medellin. Medellin, like Central Falls, has a tottering economy. Its unemployment rate is 16 percent officially, nearer 30 percent in reality. Drug money from the United States is its life support system. Traffickers employ many people in proceasing labs downtown: the large num ber of labs is suggested by the daily accounts in the local newspapers of people burned in explosions of ether, an essential ingredient of cocaine processing Indirectly, the drug trade provides employment for chauffeurs and ser vants, fares for taxi drivers, guests for hotels, and jobs in a range of other businesses owned as fronts by the traffickers. "Drug traffickers own all of the best businesses in Medellin,” said one restdent. Added a local journalist: "They have too much money, they are too well-armed, they have too many bodyguards." Some traffickers have become he roes by spending drug money on the poor. Pablo Escobar, a fugitive authorides call one of the largest cocaine suppliers to the United States, built 1.000 one-room brick units for homeless people who had been sleeping at the city dump and scavenging its garbage for food. "Medellin Without Slums" also boasts a paved road, electricity, water and a school, courtesy of Escobar. Like Medellin's exclusive neighborhood: the housing project is covered with graffiti protesting the government's policy of extraditing drug traffickers to the United States. A prominent sign makes sure that residents remember who to thank. It says. "Me dellin Without Slums constructed in this sector 1,000 homes that will be given without any cost to the families that inhabit the municipal garbage dump. Pablo Escobar." Escobar also established what has been called Latin America's finest zoo in a village halfway between Medellin and Bogota, the capital. Residents of both cities delight in driving to view the collection of hippopotamuses, giraffes and other imported animals. Admis sion is free. Escobar has been known to fly special guests into a nearby private airstrip for personal zoo tours. Capitalizing on his reputation as a philanthropist. Escobar was once elected to the Colombian Congress. In the past year, since the government began its crackdown on drug traffickers, his popularity has protected him from ar rest and extradition. According to one Colombian official, Escobar has evaded the police because he has been tipped off about their whereabouts in advance. Personally, I prefer Escobar to [Colombian President Belisario) Betancur," said one Medellin resident. "He's done a lot more for the people." One law enforcement official said. "The popular image is that he's Robin Hood, and we're the sheriffs of Notting ham." Unaided by a hostile populace, the Colombian police have only captured and extradited one Medellin criminal. Hernan Botero was convicted in June of laundering $55 million through Landmark Bank in Ft. Lauderdale and faces a possible 35-year prison term. He is to be sentenced Nov. 15.His brother Roberto received a seven-year sentence in the same case. in Medellin, the Botero brothers are considered upstanding businessmen. They own the city's best-known hotel, the Nutibara, as well as one of Medellin's two professional soccer teams. When they cannot rely on good will, traffickers turn to violence. They kill an average of 20 Colombian police offlcers per month. In recent years, one columnist and three reporters working for a Medellin newspaper have been murdered while investigating the drug trade. Because of the danger. US Embassy officers in Bogota are not allowed to visit Medellin. Law-abiding Colombians who move to Central Falls carry the fear of drug traffickers with them. While police off!cers have encouraged them to come forward, and community leaders plan to establish a "Drop-a-Dime" hotline for anonymous tips, many Colombians remain reluctant to tip off authorities about drug traffic. Said Legenza. "The word is. 'If you get caught informing, you're going to die.' NEXT: The legal dilemma This report was prepared by The Globe Spotlight Team, which consists of editor Stephen A. Kurkjian, reporter Daniel Golden, economics reporter Peter G. Gosselin, and researcher M.E. Malone. Baston Globe 9/27 374 Court decisions have also stymied Investigators seeking to stop smug gling of cash to foreign countries. ALthough the Bank Secrecy Act requires people to report whenever they take more than $10.000 in cash out of the country, federal courts were split until 1984 on whether customs officers could randomly search outbound travelers for large amounts of currency. Last year's Comprehensive Crime Act required agents to have "reasonable cause" for such searches. But courts have yet to decide what constitutes reasonable cause. Without a guarantee of legal protection, many customs officers have taken the safe route and waved the passengers through. Their hesitancy has permitted the movement of untold millions of dollars to Caribbean secrecy havens. A Senate report on offshore laundering released last month concluded that agents and inspectors have been reluctant to make searches. "...This reluctance is predicated, in part, upon a fear of incurring personal liability." In addition, the reporting law does not define when a passenger can be said to be leaving the country. Cus toms officers who setze unreported cash when the plane is still on the ground can be sued by passengers claiming they intended to report the money before take-off. Once the plane takes off, of course, the passengers are beyond the reach of US Customs. To strengthen their legal grounds for seizures. State Police at Logan Air port have developed a profile of travelers most likely to be carrying drug money. If the passenger fits the profile and the X-ray machine detects cash in his or her belongings, the money will be confiscated on suspicions that it comes from drug trafficking - even if the person is booked on a domestic flight and is. therefore, not violating the reporting law. Relieved of the cash. the passenger is allowed to continue traveling. The typical passenger whose money is seized at Logan has these character istics: He or she holds a one-way ticket purchased in cash on the day of the flight, arrives at the gate moments be fore the plane is scheduled to depart and has no check-in baggage. More likely than not, the destination is elther Miami or Ft. Lauderdale, which are both centers for drug money and departure points for the secrecy havens of the Caribbean. The cash also fits a profile: it is usually in $20 and $50 denominations and worn from use. Rubber bands are used to separate it into $5,000 piles. Instead of the brown wrappers a bank would provide. Since 1982, state troopers at Logan have seized more than $3 million in cash from 36 persons, including nearly a dozen men who have been identifled as major drug dealers either in New England or in foreign countries. Richard J. Cacciola of Northborough was about to fly to Ft. Lauder dale in July 1984 when the X-ray machine discovered $189.790 in cash in a gray vinyl bag. He told a state trooper that he was a commercial fisherman who had worked all his life to accumulate the money. When the trooper checked Cacciola's background and · learned of two prior drug arrests-including one where $54.000 was confiscated his cash was seized. Jimmy Thompson, who has been accused by federal authorities of running a major heroin and cocaine distribution ring in Roxbury, was grabbed In 1982 with $20.985 in cash as be tried to board a plane to New York. Thompson is serving time on a drug conviction, as well as a perjury convic tion stemming from his testimony about trafficking on Sonoma Street. However, these seizures are temporary measures. For the money to be forfeited to the government, prosecutors must show at a Suffolk County Superior Court hearing that the cash "more likely than not" was earned from drug deals. To avoid lengthy litigation, the Suffolk County District Attorney's office routinely negotiates a settlement with the owner of the money. For example. Cacciola recouped all but $30.000 of his money, and Thompson only forfeit ed $6,000. Overall, the government returns more than half of the cash confiscated at Logan-leading many defense lawyers to suggest that the seizures were not only groundless but unconstitutional. Thompson's lawyer. Paul M. Buckley of Milton, said about the Logan seizures. "I think they're going too far over there, and if the right case came along the [Supreme Court] would rule the whole thing illegal." This report was prepared by The Globe Spotlight Team, which consists of editor Stephen A. Kurkjian, report. er Daniel Golden, economics reporter Peter G. Gosselin, and researcher M.E. Malone. 9/29 (Pg1/20) |