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News (Media Awareness Project) - US CA: Drug Case Involves DEA Money Laundering
Title:US CA: Drug Case Involves DEA Money Laundering
Published On:2011-12-10
Source:San Diego Union Tribune (CA)
Fetched On:2011-12-13 06:06:13
DRUG CASE INVOLVES DEA MONEY LAUNDERING

A two-year drug investigation that spanned five countries and involved
U.S. federal agents laundering millions of dollars in narcotics money
on behalf of a drug lord connected to the Sinaloa cartel has been
quietly working its way through San Diego federal court.

In May, a federal grand jury in San Diego handed up a 51-count
indictment naming 29 people on drug and money-laundering charges. The
lead defendant targeted in the case is Victor Manuel Felix Felix, a
principal money launderer for the Sinaloa cartel headed by Joaquin
"Chapo" Guzman.

The case also spotlights the U.S. Drug Enforcement Administration's
practice of laundering drug proceeds as part of sting investigations
into cartels. While U.S. Justice Department officials defend the
laundering as a closely monitored and necessary tactic against
cartels, some see it as aiding the traffickers.

Court records detailing the case show that U.S. officials want $13
million forfeited -- a sum that represents the amount of money
laundered by federal agents during the investigation. The total could
be half of that, however, because the same transaction is charged as
both money laundering and engaging in unlawful monetary transactions
of more than $10,000.

The money was deposited into a DEA-controlled bank account in San
Diego, then wire-transferred to bank accounts designated by the
cartels, including many to an account at Deutsche Bank in New York,
according to court filings.

The issue gained traction last week when Rep. Darrell Issa, chairman
of the House Oversight and Government Reform Committee, launched an
investigation into the practice. His action was prompted by a Dec. 4
story in The New York Times about the DEA laundering money.

Issa, a Republican from Vista, likened the money laundering to the
botched "Fast and Furious" operation, in which agents with the U.S.
Bureau of Alcohol, Tobacco, Firearms and Explosives intentionally let
guns bought in the United States go back to Mexico, hoping they would
lead to cartel kingpins. Instead, many of the weapons ended up at
crime scenes in Mexico's lethal drug war, including one involving the
killing of U.S. Border Patrol Agent Brian Terry in Arizona.

Frederick Hill, a spokesman for Issa, said Saturday that neither Issa
nor the committee has raised any concerns about the Felix-Sinaloa
case. He declined further comment.

Justice Department and DEA officials have defended the use of
undercover money-laundering operations, saying they have been a
valuable investigative tool for years.

In a Dec. 6 statement, the DEA said such tactics have been
undertaken with collaboration from the Mexican government and have
resulted in seizing "illicit transnational criminal organization money
all around the world."

John Fernandes, former special agent in charge of the DEA office in
San Diego until 2006, said investigations where the DEA would launder
money were standard. He said they were designed to give authorities
clues about the core workings of the drug networks.

"You get a chance to follow the money," Fernandes said. "What happens
when it goes into accounts? What are they using that money for? It's
critical to tie all that to the head of the organization and the network."

These investigations are closely monitored by prosecutors and DEA
officials who weigh the risks against the expected outcome -- cracking
a network or catching high-ranking drug lords, he said.

"It's bang for the buck," Fernandes said. "If you can launder $15
million but take down an organization, that's a good
investment."

Mexican authorities have identified Felix, also known as "El Senor,"
as a main money launderer for Guzman and a significant trafficker in
his own right. He is the father-in-law of one of Guzman's sons and the
godfather, or compadre, to one of Guzman's children -- a close
relationship in many Latin American cultures.

Guzman is one of the world's most wanted fugitives, with a $5 million
reward offered by the U.S. State Department for information leading to
his arrest. In recent years, the Sinaloa cartel that he heads has
grown into the dominant drug-trafficking group in Baja California.

Court filings in the San Diego case detail an investigation that
stretched from Ecuador to Canada. At its center was an undercover DEA
agent who posed as a manager of a criminal organization that could
move tons of drugs and launder money on behalf of the cartels.

Prosecutors said they confiscated about $6 million in drug proceeds
and seized more than 7 tons of drugs.

The U.S. Attorney's Office in San Diego declined to comment on the
Felix case because it is ongoing.

Federal authorities in Mexico arrested Felix in March, along with
several other high-ranking figures named in the indictment. That was
about two months before the San Diego grand jury handed up its
indictment in secret.

In September, U.S. authorities began the process of seeking Felix's
extradition from Mexico so he could face charges in San Diego. He is
being held in a prison in Mexico City.

So far, 10 people named in the indictment have been arrested and have
appeared in court since July, when the indictment was unsealed.
Defense lawyers for several defendants described them as essentially
couriers who shuttled money on behalf of the cartel. A protective
order in the case prohibited the lawyers from commenting extensively
on it.

The investigation began in 2009 and continued until March of this
year, just before Felix was arrested. The indictment details numerous
instances when arrangements were made to collect cash in U.S. and
often Canadian dollars.

The money was carted around in duffel bags or more unusual containers.
In one instance, $109,000 was dropped off to an undercover agent in a
detergent bucket. The money was deposited into the DEA-controlled bank
account and then wired to the drug-trafficking network's account in
New York.
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