Drug and Money Laundering Ring Shattered
WASHINGTON, DC – DEA Administrator Karen P. Tandy today announced the successful results of Operation Mallorca, a 27-month investigation that targeted the alleged money laundering activities of four Colombian-based money brokers who funneled drug proceeds through the Colombian Black Market Peso Exchange (BMPE). Operation Mallorca resulted in the arrests of 36 individuals in two countries. In addition, during the operation, $7.2 million, as well as 947 kilograms of cocaine, 7 kilograms of heroin, and 21,650 pounds of marijuana were seized.
“DEA is targeting the financial networks of drug cartels like never before to bankrupt traffickers and money launderers,” Administrator Tandy said. “In Operation Mallorca, we followed the money around the globe and into the hands of major Colombian drug traffickers. We’ve shown the Black Market Peso Exchange for what it is – the largest known drug money laundering mechanism in the Western Hemisphere.”
The BMPE is a system where drug traffickers sell U.S. drug proceeds to brokers for pesos. Brokers then sell the drug proceeds to Colombian importers who purchase goods in the United States and elsewhere. By purchasing the U.S. dollars on the BMPE and not through Colombia’s regulated exchange system, the importers avoid Colombian taxes and tariffs, gaining significant profit, and a competitive advantage over those who import legally.
“DEA showed today that traffickers can move their money around the world, but we will track it down,” said Tandy, who added that DEA denied drug trafficking organizations over $500 million of their profits last year alone. These seizures represent an increase of 40 percent over the previous year and severely impact the ability of drug traffickers to produce, transport, and distribute drugs into the United States. “We know that major drug traffickers have insulated themselves from their drug distribution networks, but remain closely linked to the proceeds of their trade. Operation Mallorca is a testament to our focus on the financial side of the drug business.”
Operation Mallorca targeted alleged Colombian-based money brokers Gabriel Martinez, Farid Chain, and Edgar De Castro. Chain and other targets in the investigation were arrested in Barranquilla, Colombia. Arrests of other targets also took place in New York, Miami, Puerto Rico, and California. To date, there are 13 Colombian drug traffickers in custody who were part of this operation. Indictments were returned against four businesses in the Southern District of New York: Fabrica Colchitex in Barranquilla, Colombia; Mavex Corporation in Miami; Daybreak Corporation in Miami; and Inversiones Nolett in Miami.
Two of the 13 significant traffickers in custody, Mario Montoya and his associate Miguel Manotas, were arrested in March, 2004 by French authorities in St. Maarten, French Netherlands Antilles. Operation Mallorca identified the Montoya organization, which was allegedly responsible for trafficking multi-kilo shipments of cocaine from Colombia through the Caribbean corridor. Both Montoya and Manotas are pending extradition to the United States.
To date, the investigation has documented 68 separate transfers of drug money totaling over $12 million organized and directed by Martinez, Chain, and De Castro in San Juan, Puerto Rico; New York; and Miami. Monies were laundered through approximately 300 wire transfers to 200 bank accounts, involving 170 separate account holders, in 16 U.S. cities and 13 foreign countries. In addition, investigative efforts revealed 13 different trafficking groups in Colombia.
The first prosecutorial action occurred in June 2004, when a federal grand jury in the District of Puerto Rico indicted money broker Carlos Medina and six of his associates, all of whom have been arrested. On April 8, 2005, a federal grand jury in the District of Puerto Rico indicted Martinez, De Castro, and 16 of their criminal associates for violations of Title 18 USC 1956 - laundering of monetary instruments; Title 21 USC 952 and 963 - conspiracy to import controlled substances; Title 18 USC 982 - criminal forfeiture; and Title 21 USC 853 – criminal forfeiture and 881 – civil forfeiture.
On April 13, 2005, a federal grand jury in the District of Puerto Rico indicted Chain and 21 of his criminal associates for violations of Title 18 USC 1956 - laundering of monetary instruments; Title 21 USC 952 and 963 - conspiracy to import controlled substances; Title 18 USC 982 - criminal forfeiture; and Title 21 USC 853 – criminal forfeiture and 881 – civil forfeiture.
On April 14, 2005, a federal grand jury in the Southern District of New York superceded a previous indictment dated February 10, 2005 in which Martinez, De Castro, 30 criminal associates, and four businesses were indicted for violation of Title 18 USC 1956 – laundering of monetary instruments, Title 18 USC 1960 – unlicensed money transmitting business, and Title 21 USC 959 and 960 – possession and distribution for importation.
81 defendants and four businesses were indicted in the District of Puerto Rico and the Southern District of New York.
The following offices are responsible for the success of Operation Mallorca: