In November 2004, U.S. Immigration and Customs Enforcement (ICE) initiated an investigation based on a Bank Secrecy Act report filed by a financial institution. The investigation identified South Florida companies whose corporate officers and directors were part of an international conspiracy to perpetrate a bid-rigging scheme against the government of Trinidad and Tobago. The scheme involved the awarding of a contract involving the construction of the Piarco International Airport in Trinidad. In one instance, the conspirators used a related company to intentionally submit a higher competitive bid to help them win a multi-million dollar contract to equip the airport in Trinidad with items such as x-ray machines, passenger boarding bridges, and elevators. This was done to give the appearance that the conspirators’ bid of $30 million was reasonable by comparison to the $35 million bid that they prepared and submitted on behalf of their supposed competition.
Upon award of the contract, the conspirators laundered the proceeds and paid kickbacks to co-conspirators through an elaborate series of financial transactions executed utilizing offshore shell companies and bank accounts established in the Bahamas and elsewhere. Ultimately, millions of dollars of fraud proceeds were repatriated to the United States and used to purchase items such as artwork, vacations, and jewelry. Additionally, the investigation revealed that some of the conspirators also engaged in a bank fraud scheme that resulted in a loss of approximately $23 million to South Florida financial institutions through default on unsecured loans.
The owner of one of the South Florida companies was recently sentenced to 72 months imprisonment for conspiracy to commit wire and bank fraud. The defendant also agreed to a $22 million restitution order. The Chief Financial Officer of this company was sentenced to four years probation for bank fraud, and was ordered to pay over $400,000 in restitution. Additionally, four co-conspirators were convicted of charges related to bank and/or wire fraud. Sentences ranged from probation to 37 months in prison.
Drug Trafficking Organization—Laundering via Bulk Cash Smuggling and the Purchase of Real Estate and Automobiles
The investigation into the George MARTINEZ Drug Trafficking Organization (DTO) began with a routine traffic stop on November 1, 2000, in West Memphis, Arkansas. A vehicle driven by Marco Gonzalez, a resident of Cudahy, California, was stopped by an officer of the West Memphis Police Department. Following a consent search of the vehicle, officers discovered approximately $854,000 in cash hidden in two false compartments beneath the vehicle. Subsequently, ICE’s SAC/Los Angeles office opened an investigation on the seizure based upon Gonzalez’s residency in the Los Angeles area and the fact he was driving the cash westbound towards California.
The multi-year wiretap investigation revealed an extensive DTO that laundered its proceeds through the purchase of real estate properties and luxury and vintage vehicles. The MARTINEZ DTO smuggled cocaine and marijuana from Mexico through various ports of entry in California in vehicles purchased from Los Angeles-area automobile auctions. Vehicles were selected for their ability to hold large false compartments beneath the floorboards. The automobiles were outfitted by MARTINEZ DTO drug associates once the vehicles were purchased. The drugs were distributed throughout California, Seattle, Baltimore, New York, Miami, and Canada.
Proceeds from the sale of the narcotics were sent directly to MARTINEZ at his base of operations in Downey, California. Cash was laundered predominantly by MARTINEZ through the purchase of real estate in California; however, MARTINEZ also personally bought numerous luxury and vintage vehicles in cash. The remainder of the cash was used to improve MARTINEZ’ properties and “flip” them for profit in a booming Southern California real estate market. The bulk cash that MARTINEZ did not launder in southern California was driven south into Mexico and laundered through various casas de cambios.
The head of the DTO, along with eight other associates, were arrested; one target is still a fugitive-at-large. The defendants pled to conspiracy to import and distribute controlled substances and received varied sentences. MARTINEZ was the only person who pled to a money laundering charge.
Trade-based Money Laundering/Black Market Exchange
An ICE investigation of an unlicensed money services business (MSB) in Atlanta resulted in the seizure of approximately $714,000 from six bank accounts. The investigation revealed that a black market currency exchanger in Brazil, called a “doleiro,” was transferring payments to U.S. bank accounts. The owner of the bank accounts in the U.S. would then facilitate third-party wire transfers to U.S. and Asian exporters for commercial goods that were shipped to the South American Tri-Border area of Argentina, Brazil, and Paraguay. In Brazil, this trade-based money laundering scheme, known as the “paralelo,” is designed to avoid high fees and taxes associated with legitimate international wire transactions conducted via the National Bank of Brazil. Criminal organizations utilize trade-based money laundering to transfer value across borders through trade-based transactions (e.g., imports and exports of commercial merchandise) and to disguise the illicit origins of criminal proceeds. ICE analysis and investigation documented the illegal transfer of more than $100 million from the Tri-Border area to the United States that resulted in the subsequent seizure.
Bulk Cash Smuggling, Casas de Cambio, and the Black Market Peso Exchange
In March 2006, in a joint action between the Colombian National Police and the U.S. Drug Enforcement Agency, Ricardo Mauricio Bernal-Palacios, his brother Juan Bernal-Palacios, and Camillo Ortiz-Echeverri were arrested in Bogotá, Colombia. The investigation of the Bernal organization documented amounts in excess of $300 million laundered through the U.S.-based correspondent accounts of Casa de Cambio Ribadeo and another Mexican-based casa de cambio. The international investigation also included the related seizure by the Spanish Guardia Civil of approximately 17 million euros (approximately $20 million), and the seizure of 2,000 kilograms of cocaine.
The investigation specifically targeted Mauricio Bernal’s concealed ownership interest in Casa de Cambio Ribadeo in Mexico City, which he used to receive and launder “bulk currency” narcotics proceeds generated in the United States and Europe. Bernal used U.S.-based bank accounts maintained in the name of Casa de Cambio Ribadeo to transfer these proceeds to Colombia or to free trade zones for the purchase of commodities destined for Colombia using the Black Market Peso Exchange.
Recent Terrorist Financing Prosecutions
Terrorist financing prosecutions continue to be a particular focus of the Department of Justice National Security Division’s (NSD) Counterterrorism Section. Terrorists cannot carry out their acts without money to buy weapons, explosives and equipment. The NSD’s Counterterrorism Section has taken steps to identify and eliminate terrorist financing disguised as charitable giving. Such activity is not protected by the First Amendment; rather, it seeks to pervert and undermine it.
What is at issue here is not anything close to pure speech. It is, rather, material support to foreign organizations that the United States has deemed, through a process defined by federal statute and including judicial review by the D.C. Circuit, a threat to our national security. The fact that the support takes the form of money does not make the support the equivalent of speech. In this context, the donation of money could properly be viewed by the government as more like the donation of bombs and ammunition than speech.
Terrorists exploit the charitable efforts of others to divert money meant for the poor and disenfranchised. NSD utilizes the traditional investigative tools and techniques used in white collar crime cases to further terrorist financing investigations. These are often difficult cases with unique issues, which frequently involve classified Foreign Intelligence Surveillance Act (FISA) electronic surveillance which extended over a period of years, providing additional challenges in presenting the evidence to the jury.
Holy Land Foundation
Holy Land Foundation. On October 22, 2007, in the Northern District of Texas a mistrial was declared after the jury was unable to reach a verdict in the trial of the leaders of the Holy Land Foundation for Relief & Development (HLF) for providing material support to Hamas, a foreign terrorist organization, and related charges. One of the defendants, Mohammed El-Mezain, was found not guilty on all counts with which he was charged except Count 1, the material support conspiracy count. All other defendants at trial—Shukri Abu Baker, Ghassan Elashi, Mufid Abdulqader, and Abdulraham Odeh—and all counts resulted in a mistrial. The case has been re-assigned for retrial in 2008. HLF received start-up assistance from Mousa Abu Marzook, a leader of Hamas. It was the largest Muslim charity in the United States until it was declared a Specially Designated Terrorist Organization in 2001 and shut down. HLF raised millions of dollars for Hamas over a 13-year period.
Chiquita Brands Pays Terrorist Group AUC
Chiquita Brands International. On March 19, 2007, Chiquita Brands International Inc., a multinational corporation incorporated in New Jersey and headquartered in Cincinnati, Ohio, pled guilty in the District of Columbia to one count of engaging in transactions with a Specially Designated Global Terrorist. Under the terms of the plea agreement, Chiquita was sentenced to a $25 million criminal fine, required to implement and maintain an effective compliance and ethics program, and five years of probation. The plea agreement arose from significant payments that Chiquita made for years to the violent, right-wing terrorist organization United Self-Defense Forces of Colombia (AUC). From 1997 through February 4, 2004, Chiquita paid money to the AUC in two regions of Colombia where Chiquita had fruit operations: Urabá and Santa Marta. Chiquita made these payments through its wholly-owned Colombian subsidiary known as “Banadex.” By 2003, Banadex was Chiquita’s most profitable operation. Chiquita, through Banadex, paid the AUC nearly every month. In total, Chiquita made over 100 payments to the AUC amounting to over $1.7 million. The U.S. government designated the AUC as a Foreign Terrorist Organization (FTO) on Sept. 10, 2001, and that designation was well-publicized in the American public media. The AUC’s designation was even more widely reported in the public media in Colombia, where Chiquita had its substantial banana-producing operations. Chiquita also had specific information about the AUC’s designation as an FTO through an Internet-based, password-protected subscription service that Chiquita paid money to receive. Nevertheless, from Sept. 10, 2001, through Feb. 4, 2004, Chiquita made 50 payments to the AUC totaling over $825,000.
Money Laundering to Support Terrorism
Yassin Aref. On October 10, 2006, a jury in the Northern District of New York found Yassin Aref guilty of conspiracy to commit money laundering, conspiracy to provide material support to terrorists, and conspiracy to provide material support to a designated foreign terrorist organization, as well as two counts of money laundering. He was also found guilty of one count of making false statements. His co-defendant, Mohammed Hossain, was also found guilty, and both defendants were sentenced to 15 years in prison. Aref was initially identified when his name and telephone number were discovered in documents found in 2003 at three separate Ansar-al-Islam locations in Iraq. In addition, investigation disclosed that numerous telephone calls were placed from his home telephone to a telephone number in Damascus, Syria, connected to al Qaeda. The case involved a sting operation in which an FBI informant represented to the defendants that the informant needed to conceal the proceeds of the importation of a surface-to-air missile (SAM). The informant further represented that the SAM was to be used by terrorists in New York City in an operation targeting a Pakistani government official. Hossain agreed to launder the money through his business, and Aref, the imam of a local mosque, agreed to witness and guarantee the transactions to ensure that they were conducted according to the laws of Allah.
Material Support to Hamas
Mohamed Shorbagi. On August 28, 2006, Mohamed Shorbagi pled guilty in the Northern District of Georgia to providing material support to Hamas, a designated foreign terrorist organization. Shorbagi provided financial support to Hamas through donations to the Holy Land Foundation for Relief and Development, and conspired with others to provide such material support, knowing that Hamas had been designated as a foreign terrorist organization and that Hamas engaged in terrorist activity. Shorbagi also hosted high-level Hamas officials at a Georgia mosque, where he served as the imam. He was sentenced to 92 months in prison. Shorbagi also testified in the trial of Abdelhaleem Ashqar and Muhammad Salah in the Northern District of Illinois, who were charged along with others with participation in a 15-year racketeering conspiracy in the U.S. and abroad, using bank accounts in the United States to launder millions of dollars to illegally finance Hamas’ terrorist activities in Israel, the West Bank, and Gaza Strip. On February 1, 2007, Salah and Ashqar were convicted on obstruction and contempt charges but acquitted of racketeering conspiracy charges. Salah was sentenced on July 11, 2007, to 21 months imprisonment. Ashqar was sentenced on November 21, 2007, to 135 months imprisonment.
Rendering Assistance to a Khalistan Commando Force
Khalistan Commando Force. On December 20, 2006, a jury in the Eastern District of New York returned a verdict convicting Khalid Awan of providing money and financial services to the Khalistan Commando Force (KCF), a terrorist organization (although not on a UN Security Council Resolution or U.S. Government list) responsible for thousands of deaths in India since its founding in 1986. Awan was sentenced to 14 years in prison on September 12, 2007. KCF was formed in 1986 and is comprised of Sikh militants who seek to establish a separate Sikh state in the Punjab region of India. The organization has engaged in numerous assassinations of prominent Indian government officials—including the murder of Chief Minister Beant Singh of Punjab in 1995—and hundreds of bombings, acts of sabotage and kidnappings. The government’s evidence at trial included recordings of Awan’s prison telephone calls to Panjwar in Pakistan, in which Awan introduced the inmate as a potential recruit for the KCF; statements by Awan admitting that he sent hundreds of thousands of dollars to KCF; testimony by two New York-area fund raisers for the KCF who stated that they delivered money to Awan’s residence in Garden City; and testimony by the Assistant Inspector General of the Punjab Police Intelligence Division that the KCF was responsible for the deaths of thousands of innocent victims in India.