Posted on the Forum by Mica from a story in USA Today
In an undercover investigation in and around Doral, Fla., police were supposed to crack down on businesses taking in drug money, and helping the drug cartels convert it into Pesos. Here's how the money-laundering process worked. By Ramon Padilla, Frank Pompa, Shawn Sullivan and Michael Sallah, USA TODAY
DORAL, Fla. — In a leafy office park in the suburbs west of Miami, local undercover officers set up an elaborate sting inside the Sevilla Trading Corporation.
Beyond the neatly furnished front office, a courier working for drug dealers carted in a shoe box stuffed with thousands in drug cash collected on street corners in cities across the country.
A police informant counted the cash in a back room, divided it, then delivered it to computer stores down the street in the first step toward turning the dollars into pesos and sending them to drug kingpins in Colombia.
The investigation in Doral in 2002 was supposed to crack down on rampant laundering in the area and shut down the businesses taking in drug money. But in the following years, just the opposite happened.
Internal police records reviewed by USA TODAY Network show the drug groups quietly turned Florida’s fastest-growing suburb into a money laundering haven that has empowered the largest criminal organizations in the Americas to hide their illicit profits and dominate the narcotics trade in the United States.
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Twelve miles from the looming skyscrapers of downtown Miami, the criminal groups have moved millions of dollars though the little-known maze of office parks just blocks from the prestigious golf course that bears President Trump’s name.
With the nation steeped in a heroin epidemic — thousands of overdose deaths each year — the laundering has allowed the criminal groups smuggling the drug into the United States to get their money out of the country once the narcotics are sold.
“It’s absolutely critical to them,” said John Tobon, an agent for the Department of Homeland Security in Miami.
In a community known mostly as a getaway from the urban problems of Miami, the flood of drug money has confounded law enforcement agencies.
"We always thought we would get to it at some point,” said Charlie Blau, a former federal prosecutor who oversaw the first money laundering sting in Miami. "We knew it would be a bigger problem.”
Federal agents say the criminal organizations use many methods to launder their money, including overseas bank wires and cash smuggling over the border.
They also have turned to other laundering areas, like the garment district in Los Angeles and the jewelry centers in New York City, to clean millions in drug profits.
But the export shops west of Miami remain among the oldest conduits in the country to launder money — and the most difficult to infiltrate and shut down.
Twice, local law enforcement task forces targeted the area, but no business owners were arrested nor were their shops closed.
Internal records of the most recent sting operation, in 2012, show for the first time the stunning amount of money that moved through the businesses and their importance to powerful drug organizations.
Tens of thousands in cash bundles were dropped off at a cellphone outlet tucked inside an aging storage center on the edge of town. Hundreds of thousands were wired into the bank account of a computer store with a glitzy showroom on one of Doral's busiest thoroughfares.
In just three years, at least $25 million in drug money was funneled through 201 exporters by the police sting — just a fraction of the total number of businesses that were used to launder hundreds of millions in the past decade, according to records and former Drug Enforcement Administration (DEA) agents.
Suburb haven or money-laundering hub?
In a city that once hosted one of the PGA's famous tournaments, the activities have perplexed local leaders. "Obviously, it’s not good for Florida. It's not good for Doral,” said Mayor Juan Carlos Bermudez. “It’s not representative of the majority of the businesses we have here."
For decades, the vast area near Miami — a sprawling suburb of 52,000 people with gated communities and lakes — has been home to export shops that sprung up to meet a booming demand for laptops and cellphones in South America.
Because of the ample office and warehouse space near Miami International Airport — the largest cargo hub in the nation serving Latin America — the number of export shops mushroomed.
Not only was it an ideal place to do business, but in time, it also came to serve the purpose of the criminal groups.
Unlike traditional laundering that relied on the banks to hide ownership of the money, this was different.
Under a system known as the "black market peso exchange," the drug groups turned to the exporters to launder their cash and make it more difficult to track.
In deal after deal examined by USA TODAY Network, the officers picked up money in New York, Chicago and other cities — in duffel bags and suitcases — and flew it to South Florida, where they stashed it in a police trailer.
What followed was one of the largest undercover operations carried out in the country.
After getting orders, the police delivered the money to the Doral exporters to pay for goods ordered by retail stores in Colombia.
The retailers received the goods, and then paid back the cartel the equivalent amount — in pesos.
In emails between the undercover cops and middlemen, speed was crucial. "They need this transfer — urgent," read one email in 2011.
At Florida Trading Services, an exporter in a remote office park with few signs on the doors, the money was wired in a flurry: two dozen transfers totaling $724,834, records show.
At GSM City, a popular computer store about a mile away, hundreds of thousands of dollars were wired in more than two dozen transfers.
Across town, a similar scene unfolded at Cellular Next LLC.
At least twice in 2012, an officer posing as a money courier showed up at a storage bay to drop off tens of thousands in cash, large bills wrapped in stacks, and each time, no one at the company asked where the money came from, records show.
Several times, officers delivered the money in discreet locations: $10,000 to a man driving a gray Jaguar in the parking lot of a Miami Beach hospital; $50,000 to another man toting a young child in the lobby of a Miami condominium.
Some of the deliveries took place just blocks from the headquarters of the U.S. Southern Command.
Failed opportunity to shut down hub
Several export store owners reached by the USA TODAY Network said they were unaware they were targeted by the police and didn't know the cash dropped at their doors or wired to their accounts was from narcotics deals.
Robert Amsel, a Miami attorney for GSM City, said his client is one of the largest cellphone suppliers in the area. "How are they supposed to know where the money is coming from?" he asked.
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The owners of Florida Trading Services, which was closed in 2013 after the U.S. government seized money from its bank account, could not be reached for comment.
The owners of Cellular Next LLC did not respond to repeated interview requests.
Experts say there were clearly payments in suspicious patterns that should have prompted the police to carry out surveillance or even seek search warrants of the shops.
Dozens of exporters took in repeated bank transfers in large, round figures from dummy companies created by the undercover officers.
In every case, the exporters did not know the shell companies sending the money.
“These are not normal ways of carrying out business," said Ivan Garces, a Miami money laundering expert and forensic accountant. "These are red flags."
After nearly three years, nothing came of the investigation by the local task force. No criminal charges or civil penalties were imposed.
Instead of seeking wiretaps to capture evidence on the businesses, the police continued to launder and take cuts from the cash for their fees for the service.
Federal agents began a routine audit of the money and found the task force led by Bal Harbour police misspent hundreds of thousands to pay for officers’ salaries, according to Justice Department records, prompting a shutdown of the sting investigation in 2012.
The Miami Herald later reported that the task force members were flying across the country on dozens of first-class and premium flights and staying in luxury hotels.
It was the second time a local task force had infiltrated the hub, hauled in millions of dollars, and failed to make a single arrest. In 1998, the South Florida IMPACT launched a sting that lasted four years, setting up a front office in the Sevilla Trading Corporation.
Informants helped police carry in duffel bags of cash and deliver them to the export shops. But once again, the unit was harshly criticized by the Justice Department and found to be simply laundering money, records show.
The breakdowns would underscore troubling law enforcement practices that damaged efforts to crack down on the hub and allow the worst offenders to keep operating.
The inability to stem the tide took place while the criminal groups were bringing scores of kilos of heroin into the country each month in what was rapidly turning into an epidemic.
In states like Kentucky, New Hampshire and West Virginia, the rate of people overdosing on all opioids reached the highest levels in the country by 2015. “You follow the money and it leads to the drugs — and people dying,” said Michael Levine, a trial consultant and former DEA supervisor.
Levine said the local task forces had squandered rare chances to bring criminal charges against owners who had been insulated for years.
"In all my years of law enforcement, I've never heard anything like it," he said.
After years of allowing the local task forces to take the lead, the federal government stepped in with a series of civil suits in the first effort to slow down the brazen laundering taking place in every corner of the city.
In 2013, prosecutors in New York filed a lawsuit against a dozen exporters, seven of them in Doral, accusing them of taking in millions in drug dollars.
As part of the case, they identified a key suspect behind the deliveries: Javier Antonio Calle Serna, a leader of a violent gang in Colombia whose members had taken over the drug trade through kidnappings and executions. He has since been extradited to the U.S. and pleaded guilty to drug trafficking and murder.
In two other cases, prosecutors accused export shops of taking drug cash without reporting the money to the government.
The owners of GSM City pleaded guilty to the charges and were placed on probation in 2014. Cellular Next owners agreed to give up $871,000 to the government in a civil settlement last year.
But the government’s efforts touched only on a small portion of the exporters who were taking in money from the cartels.
Records from the last police sting show 49 owners received multiple bank wires in large amounts — sometimes three a day — from dummy companies created by the undercover cops.
Nearly all of the exporters are still in business, some suspected by federal agents of laundering money for the cartels.
After years of drug couriers dropping off bags of cash to businesses, the federal government took a rare step toward shutting down the flow of money in 2015.
For the first time, hundreds of storefronts were ordered to reveal all cash deals of more than $3,000 and identify the people who turned over the money. The sweeping order went to at least 700 businesses in Doral and surrounding communities.
But there was a serious deficiency: It didn’t track the most popular means of moving money — bank wires. Criminal groups could still send millions of dollars into the bank accounts of the exporters.
Tobon, the U.S. Homeland Security agent in Miami, acknowledged that the order missed a critical detail but said the information that was turned over by the companies did help agents gain a deeper understanding of the role of the exporters in the movement of money.
Some of the evidence was used to help Miami-Dade prosecutors build a laundering case last year against numerous people tied to the Mexican Sinaloa cartel, but none of the export shop owners were arrested.
Tobon said he believes the government will be in a better position to take on the problem with the businesses in the coming years.
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Money laundering is a difficult charge to bring against the owners because in most cases, they’re not part of the drug deals, he said. But there are a host of other charges that can be used, including criminal fraud.
Levine agreed, but he said the government could have waged a crackdown years ago that would have kept the area from turning into a major center for drug money.
By responding to the problem when it was first detected with criminal sanctions, federal agents would have sent a clear warning to the cartels in Colombia and Mexico.
The government's order two years ago to report all cash deals was “comically inane and useless” and in the end, did not rein in the relentless cleaning of drug cash in the area, he said.
Charlie Blau, the former prosecutor in Miami who wrote a textbook on money laundering in America, said he was always concerned about the growth of the export shops.
In the early years, the primary targets were the big banks taking in drug dollars. But it was clear the exporters “would be a potential avenue for a large amount of money” in the future, he said.
“It was one of those things that we said we needed to look at." But it took years before that happened.
Dennis Fitzgerald, a retired DEA agent who authored a book on undercover stings, said that unless the federal government presses for a more sustained, targeted investigation — including tracking bank transfers — the laundering hub will continue.
"The object of the [drug] trade is to make money," he said. "The only way you can use [the money] is to clean it. The way you clean it is through the businesses. It's the hub of everything.
DORAL, Fla. — In a leafy office park in the suburbs west of Miami, local undercover officers set up an elaborate sting inside the Sevilla Trading Corporation.
Beyond the neatly furnished front office, a courier working for drug dealers carted in a shoe box stuffed with thousands in drug cash collected on street corners in cities across the country.
A police informant counted the cash in a back room, divided it, then delivered it to computer stores down the street in the first step toward turning the dollars into pesos and sending them to drug kingpins in Colombia.
The investigation in Doral in 2002 was supposed to crack down on rampant laundering in the area and shut down the businesses taking in drug money. But in the following years, just the opposite happened.
Internal police records reviewed by USA TODAY Network show the drug groups quietly turned Florida’s fastest-growing suburb into a money laundering haven that has empowered the largest criminal organizations in the Americas to hide their illicit profits and dominate the narcotics trade in the United States.
With the nation steeped in a heroin epidemic — thousands of overdose deaths each year — the laundering has allowed the criminal groups smuggling the drug into the United States to get their money out of the country once the narcotics are sold.
“It’s absolutely critical to them,” said John Tobon, an agent for the Department of Homeland Security in Miami.
In a community known mostly as a getaway from the urban problems of Miami, the flood of drug money has confounded law enforcement agencies.
"We always thought we would get to it at some point,” said Charlie Blau, a former federal prosecutor who oversaw the first money laundering sting in Miami. "We knew it would be a bigger problem.”
Federal agents say the criminal organizations use many methods to launder their money, including overseas bank wires and cash smuggling over the border.
They also have turned to other laundering areas, like the garment district in Los Angeles and the jewelry centers in New York City, to clean millions in drug profits.
But the export shops west of Miami remain among the oldest conduits in the country to launder money — and the most difficult to infiltrate and shut down.
Twice, local law enforcement task forces targeted the area, but no business owners were arrested nor were their shops closed.
Internal records of the most recent sting operation, in 2012, show for the first time the stunning amount of money that moved through the businesses and their importance to powerful drug organizations.
Tens of thousands in cash bundles were dropped off at a cellphone outlet tucked inside an aging storage center on the edge of town. Hundreds of thousands were wired into the bank account of a computer store with a glitzy showroom on one of Doral's busiest thoroughfares.
In just three years, at least $25 million in drug money was funneled through 201 exporters by the police sting — just a fraction of the total number of businesses that were used to launder hundreds of millions in the past decade, according to records and former Drug Enforcement Administration (DEA) agents.
Suburb haven or money-laundering hub?
In a city that once hosted one of the PGA's famous tournaments, the activities have perplexed local leaders. "Obviously, it’s not good for Florida. It's not good for Doral,” said Mayor Juan Carlos Bermudez. “It’s not representative of the majority of the businesses we have here."
For decades, the vast area near Miami — a sprawling suburb of 52,000 people with gated communities and lakes — has been home to export shops that sprung up to meet a booming demand for laptops and cellphones in South America.
Because of the ample office and warehouse space near Miami International Airport — the largest cargo hub in the nation serving Latin America — the number of export shops mushroomed.
Not only was it an ideal place to do business, but in time, it also came to serve the purpose of the criminal groups.
Unlike traditional laundering that relied on the banks to hide ownership of the money, this was different.
Under a system known as the "black market peso exchange," the drug groups turned to the exporters to launder their cash and make it more difficult to track.
In deal after deal examined by USA TODAY Network, the officers picked up money in New York, Chicago and other cities — in duffel bags and suitcases — and flew it to South Florida, where they stashed it in a police trailer.
What followed was one of the largest undercover operations carried out in the country.
After getting orders, the police delivered the money to the Doral exporters to pay for goods ordered by retail stores in Colombia.
The retailers received the goods, and then paid back the cartel the equivalent amount — in pesos.
In emails between the undercover cops and middlemen, speed was crucial. "They need this transfer — urgent," read one email in 2011.
At Florida Trading Services, an exporter in a remote office park with few signs on the doors, the money was wired in a flurry: two dozen transfers totaling $724,834, records show.
At GSM City, a popular computer store about a mile away, hundreds of thousands of dollars were wired in more than two dozen transfers.
Across town, a similar scene unfolded at Cellular Next LLC.
At least twice in 2012, an officer posing as a money courier showed up at a storage bay to drop off tens of thousands in cash, large bills wrapped in stacks, and each time, no one at the company asked where the money came from, records show.
Several times, officers delivered the money in discreet locations: $10,000 to a man driving a gray Jaguar in the parking lot of a Miami Beach hospital; $50,000 to another man toting a young child in the lobby of a Miami condominium.
Some of the deliveries took place just blocks from the headquarters of the U.S. Southern Command.
Failed opportunity to shut down hub
Several export store owners reached by the USA TODAY Network said they were unaware they were targeted by the police and didn't know the cash dropped at their doors or wired to their accounts was from narcotics deals.
Robert Amsel, a Miami attorney for GSM City, said his client is one of the largest cellphone suppliers in the area. "How are they supposed to know where the money is coming from?" he asked.
The owners of Cellular Next LLC did not respond to repeated interview requests.
Experts say there were clearly payments in suspicious patterns that should have prompted the police to carry out surveillance or even seek search warrants of the shops.
Dozens of exporters took in repeated bank transfers in large, round figures from dummy companies created by the undercover officers.
In every case, the exporters did not know the shell companies sending the money.
“These are not normal ways of carrying out business," said Ivan Garces, a Miami money laundering expert and forensic accountant. "These are red flags."
After nearly three years, nothing came of the investigation by the local task force. No criminal charges or civil penalties were imposed.
Instead of seeking wiretaps to capture evidence on the businesses, the police continued to launder and take cuts from the cash for their fees for the service.
Federal agents began a routine audit of the money and found the task force led by Bal Harbour police misspent hundreds of thousands to pay for officers’ salaries, according to Justice Department records, prompting a shutdown of the sting investigation in 2012.
The Miami Herald later reported that the task force members were flying across the country on dozens of first-class and premium flights and staying in luxury hotels.
It was the second time a local task force had infiltrated the hub, hauled in millions of dollars, and failed to make a single arrest. In 1998, the South Florida IMPACT launched a sting that lasted four years, setting up a front office in the Sevilla Trading Corporation.
Informants helped police carry in duffel bags of cash and deliver them to the export shops. But once again, the unit was harshly criticized by the Justice Department and found to be simply laundering money, records show.
The breakdowns would underscore troubling law enforcement practices that damaged efforts to crack down on the hub and allow the worst offenders to keep operating.
The inability to stem the tide took place while the criminal groups were bringing scores of kilos of heroin into the country each month in what was rapidly turning into an epidemic.
In states like Kentucky, New Hampshire and West Virginia, the rate of people overdosing on all opioids reached the highest levels in the country by 2015. “You follow the money and it leads to the drugs — and people dying,” said Michael Levine, a trial consultant and former DEA supervisor.
Levine said the local task forces had squandered rare chances to bring criminal charges against owners who had been insulated for years.
"In all my years of law enforcement, I've never heard anything like it," he said.
After years of allowing the local task forces to take the lead, the federal government stepped in with a series of civil suits in the first effort to slow down the brazen laundering taking place in every corner of the city.
In 2013, prosecutors in New York filed a lawsuit against a dozen exporters, seven of them in Doral, accusing them of taking in millions in drug dollars.
As part of the case, they identified a key suspect behind the deliveries: Javier Antonio Calle Serna, a leader of a violent gang in Colombia whose members had taken over the drug trade through kidnappings and executions. He has since been extradited to the U.S. and pleaded guilty to drug trafficking and murder.
In two other cases, prosecutors accused export shops of taking drug cash without reporting the money to the government.
The owners of GSM City pleaded guilty to the charges and were placed on probation in 2014. Cellular Next owners agreed to give up $871,000 to the government in a civil settlement last year.
But the government’s efforts touched only on a small portion of the exporters who were taking in money from the cartels.
Records from the last police sting show 49 owners received multiple bank wires in large amounts — sometimes three a day — from dummy companies created by the undercover cops.
Nearly all of the exporters are still in business, some suspected by federal agents of laundering money for the cartels.
After years of drug couriers dropping off bags of cash to businesses, the federal government took a rare step toward shutting down the flow of money in 2015.
For the first time, hundreds of storefronts were ordered to reveal all cash deals of more than $3,000 and identify the people who turned over the money. The sweeping order went to at least 700 businesses in Doral and surrounding communities.
But there was a serious deficiency: It didn’t track the most popular means of moving money — bank wires. Criminal groups could still send millions of dollars into the bank accounts of the exporters.
Tobon, the U.S. Homeland Security agent in Miami, acknowledged that the order missed a critical detail but said the information that was turned over by the companies did help agents gain a deeper understanding of the role of the exporters in the movement of money.
Some of the evidence was used to help Miami-Dade prosecutors build a laundering case last year against numerous people tied to the Mexican Sinaloa cartel, but none of the export shop owners were arrested.
Tobon said he believes the government will be in a better position to take on the problem with the businesses in the coming years.
Money laundering is a difficult charge to bring against the owners because in most cases, they’re not part of the drug deals, he said. But there are a host of other charges that can be used, including criminal fraud.
Levine agreed, but he said the government could have waged a crackdown years ago that would have kept the area from turning into a major center for drug money.
By responding to the problem when it was first detected with criminal sanctions, federal agents would have sent a clear warning to the cartels in Colombia and Mexico.
The government's order two years ago to report all cash deals was “comically inane and useless” and in the end, did not rein in the relentless cleaning of drug cash in the area, he said.
Charlie Blau, the former prosecutor in Miami who wrote a textbook on money laundering in America, said he was always concerned about the growth of the export shops.
In the early years, the primary targets were the big banks taking in drug dollars. But it was clear the exporters “would be a potential avenue for a large amount of money” in the future, he said.
“It was one of those things that we said we needed to look at." But it took years before that happened.
Dennis Fitzgerald, a retired DEA agent who authored a book on undercover stings, said that unless the federal government presses for a more sustained, targeted investigation — including tracking bank transfers — the laundering hub will continue.
"The object of the [drug] trade is to make money," he said. "The only way you can use [the money] is to clean it. The way you clean it is through the businesses. It's the hub of everything.