Fresno men indicted in money laundering and drug trafficking case

A federal grand jury returned an indictment against 41-year-old Joseph Edwin Gable, aka Mike Jones; 41-year-old Elgeron Graves; 52-year-old Vincent Graves; 45-year-old Herman Graves; 43-year-old Damone Kelley; 45-year-old Catatea James; all of Fresno, and 27-year-old Kevin Eugene Spencer Jr. of Roseville.
The indictment charges Gable, Elgeron Graves, Vincent Graves, and Kelley with conspiring to cultivate, distribute and possess with intent to distribute marijuana, distributing marijuana, and possessing marijuana with intent to distribute. Elgeron and Herman Graves are also charged with cultivating marijuana in Fresno County. Gable is charged with structuring cash derived from marijuana trafficking in order to evade currency transaction reporting requirements. Gable, Kelley, James and Spencer are charged with conspiring to launder the proceeds of marijuana trafficking and with several counts of money laundering.
According to court documents, Gable allegedly was in charge of a long-term interstate marijuana-trafficking conspiracy. Some of the marijuana was grown by Elgeron Graves and his brother, Herman Graves, on property leased by Elgeron Graves in Fresno County. The Graves brothers recruited people to obtain California medical recommendations from a local physician for the purpose of growing marijuana, which was in fact being shipped to Alabama, Michigan, Ohio, Georgia, Louisiana, Mississippi, Tennessee, and North Carolina. The Graves brothers also allegedly used a now defunct marijuana dispensary in Fresno as a front business for the interstate shipment of marijuana.
Kelley and Vincent Graves, who is unrelated to the Graves brothers, are alleged to have transported or assisted in the transportation of marijuana to Birmingham, Alabama for distribution through DK Transport, a trucking business owned by Kelley. DEA has already seized a DK Transport semi-tractor trailer valued at $25,000 and equipped with a hidden compartment used to conceal marijuana that was shipped outside of California.
During the course of the conspiracy, Gable allegedly obtained over $600,000 from the sale of marijuana in Alabama and directed the deposit of those funds into bank accounts of friends and relatives in California and Oregon in amounts less than $10,000 in order to avoid IRS reporting requirements. He directed his friends and relatives to withdraw the cash in amounts less than $10,000 and give the money back to him. According to court documents, most of the drug proceeds went through bank accounts maintained by James, an IRS employee and Gable’s half-sister, and Spencer, formerly of Fresno.
“The defendants in this case are alleged to have used California medical marijuana recommendations to camouflage a profitable interstate trafficking network,” said U.S. Attorney Wagner. “Unfortunately, the misuse of California laws on medical marijuana by those who seek to profit from the interstate sale of marijuana for non-medical purposes has become all too common.”
This case is the product of an investigation by the DEA and IRS Criminal Investigation with assistance from the Treasury Inspector General of Tax Administration (TIGTA), U.S. Postal Inspection Service in Birmingham, Ala., the California Highway Patrol, the Fresno County Sheriff’s Office, the Fresno Police Department, and the Madera County Narcotics Enforcement Team (MADNET). If convicted, each drug offense carries a statutory mandatory minimum prison term of five years and a maximum prison term of 40 years, along with a fine of up to $5 million. The money laundering charges carry a maximum prison term of 20 years and a fine of more than $1 million. The structuring charge carries a maximum prison term of 10 years and a fine of up to $250,000. The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt. The defendants are scheduled to appear in federal court in Fresno for arraignment on Tuesday, February 21, 2012 before U.S. Magistrate Judge Gary S. Austin.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Mexican drug kingpin Benjamin Arellano Felix pleads guilty to US charges in San Diego

Mexican drug kingpin Benjamin Arellano Felix pleaded guilty Wednesday to racketeering and conspiracy to launder money, avoiding the spectacle of a trial for the leader of a cartel that once smuggled hundreds of tons of cocaine and marijuana into the United States and dissolved bodies of its rivals in vats of lye.
Under an agreement with federal prosecutors, Arellano Felix, 58, can be sentenced to no more than 25 years in prison — a lighter punishment than ordered for lower-ranking members of his once-mighty, Tijuana-based cartel.
Prosecutors agreed to dismiss other charges that could have brought 140 years in prison if he was convicted.
The half-hour hearing was an anticlimactic finish to the U.S. government’s pursuit of one of the world’s most powerful drug bosses during the 1990s. His cartel, with its iron-tight grip on the drug trade along California’s border with Mexico, was portrayed in the Steven Soderbergh film “Traffic” but has struggled in recent years as other cartels have become more ruthless than ever.
Laura Duffy, the U.S. attorney in San Diego who built much of her career on the case, said Arellano Felix will likely spend the rest of his life in U.S. prison but did not elaborate on the reasoning for the plea deal.
“Today’s guilty plea marks the end of his reign of murder, mayhem and corruption, and his historic admission of guilt sends a clear message to the Mexican cartel leaders operating today: The United States will spare no effort to investigate, extradite and prosecute you for your criminal activities,” Duffy said.
Arellano Felix stood attentively in court, acknowledging his guilt as U.S. District Judge Larry Burns recited parts of a 17-page plea agreement. He told the judge that he has been suffering migraine headaches almost daily but that the problem didn’t impair his judgment to accept the plea agreement.
Anthony Colombo Jr., Arellano Felix’s attorney, said his client could be released from U.S. prison in 20 years if credited for time served in this country and good behavior, assuming he gets the maximum 25-year sentence. As a Mexican citizen, he would then be deported to Mexico, where he still has nine years left on a sentence for related crimes.
Colombo said the government may have agreed to the deal to avoid having to bargain with 21 potential government witnesses for reduced sentences in exchange for their testimony. They also may have wanted to avoid a lengthy trial.
“They have to consider years and years of litigation, plus the expense, is avoided by this resolution,” Colombo told reporters.
John Kirby, a former federal prosecutor who co-wrote the 2003 indictment against Arellano Felix, said the case rested entirely on cooperating witnesses, instead of wiretaps or physical evidence. He said those cases weaken over time as witnesses die, get into more trouble or change their minds about testifying.
“This kind of case is based solely on witness testimony, and it slowly disintegrates,” Kirby said. “Maybe from the time when we put it together and now, it’s not such a great case anymore.”
The cost of a trial was unlikely to have influenced prosecutors, Kirby said.
“The government doesn’t care about the expense, the government cares about winning,” he said.
Francisco Javier Arellano Felix, a younger brother who led the cartel after Benjamin was arrested in Mexico in 2002, was sentenced in San Diego to life in prison in 2007, a year after he was captured by U.S. authorities in international waters off Mexico’s Baja California coast. Jesus Labra Aviles, a lieutenant under Benjamin Arellano Felix, was sentenced in San Diego to 40 years in prison in 2010.
Benjamin Arellano Felix was extradited from Mexico in April 2011 to face drug, money-laundering and racketeering charges, one of the highest-profile kingpins to face prosecution in the United States.
The U.S. indictment said Arellano Felix was the top leader of a cartel he led with his brothers, going back to 1986. It says the cartel tortured and killed rivals in the United States and Mexico as it smuggled Mexican marijuana and Colombian cocaine.
“He was the top of the chain,” Kirby said. “The brothers were at the top, and he was at the very top. He had the final say ... He was like the CEO of the operation.”
The cartel began to lose influence along California’s border with Mexico after Arellano Felix was arrested in 2002. A month earlier, his brother, Ramon, called the cartel’s top enforcer, died in a shootout with Mexican authorities.
Benjamin Arellano Felix was incarcerated in Mexico after his 2002 arrest and was later sentenced to 22 years in prison on drug trafficking and organized crime charges.
Arellano Felix also agreed to forfeit $100 million, a figure that will be difficult for the government to collect.
“Whether there is anything out there that (the government) can seize, I don’t know,” Colombo said.
Sentencing was set for April 2.


Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Feds: Tampa car dealer received more than $3 million in Hezbollah-related money-laundering scheme

By Danny Valentine
Times Staff WriterTampa Bay Times

A Tampa used car dealer received more than $3 million from Hezbollah-related organizations as part of a large money-laundering scheme designed to funnel cash to the terrorist group, the U.S. government claims.
Mansour Brothers Auto Trading Inc., which specializes in exporting vehicles, is one of 30 used car dealers that were wired at least $329 million over a four-year period, according to the complaint.
The case, filed late last week by the U.S. Attorney's office for the Southern District of New York, is seeking the seizure of those proceeds — including the $3 million sent to Mansour Brothers, located on Kennedy Boulevard. It follows an investigation led by the U.S. Drug Enforcement Agency.
Mansour Brothers received 40 wire transfers totalling about $3.25 million between 2007 and 2011, according to the complaint. It does not allege that any of the used car dealerships, including Mansour Brothers, knew about the money laundering, and they are not being charged criminally.
Tim Shusta, a Tampa attorney who represents Sammy Mansour of Mansour Bros., said Saturday that his client had no knowledge of the scheme.
He also said the money was wired to buy cars and ship them to Africa. They didn't make a profit of $3 million from the transactions.
"It's not clear to me that they have the right to recover the $3 million," Shusta said.
Federal authorities described the operation this way: Lebanese financial institutions, including a bank and two exchange houses linked to Hezbollah, wired funds to the United States, where the money was used to buy cars. The cars were then shipped to West Africa and sold for cash.
The cash from those car sales was then taken, along with money from drug trafficking and other crimes, to Lebanon. Hezbollah members and supporters were involved at various points, including financing and facilitating the purchase of some of the used cars.
"The intricate scheme laid out in (the) complaint reveals the deviously creative ways that terrorist organizations are funding themselves and moving their money," said Preet Bharara, U.S. Attorney for the Southern District of New York.
Hezbollah is a radical Islamic group that aims to create an Iranian-style Islamic republic in Lebanon. It is strongly anti-Israel and has been linked to bombings at a U.S. embassy and Marine barracks in the 1980s. Hezbollah, which holds about 10 percent of the seats in the Lebanese Parliament, receives weapons, money and organizational support from Iran, according to the U.S. Department of State.
Shusta said his client had no way of knowing that money was being passed to him by anyone who had anything to do with terrorism.
"They are an innocent party in the whole thing," Shusta said. "There are no allegations that allege that our client did anything wrong."
Shusta said Mansour Bros. is a very small company that's been open since 2005.
His client has been living in Tampa for about 30 years, he said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

Hezbollah Money Laundering Probe Focuses On Tulsa Car Dealership

Havonnah Johnson,

News 9

The DEA launches an investigation into a multi-million dollar money laundering scheme which starts in Oklahoma and involves Americans helping terrorists.

The scheme begins at used cars lots which are used as a cover for drugs and illegal activity.

Federal agents say it is a complicated scheme to cover the funding of terrorists. It involves 20 states and least 30 used car lots. The investigation is just beginning.

Undercover agents closed in on one used car dealership in Tulsa Friday. It is but one of dozens officials say are involved in a multi-layered money laundering scheme

Fifty-six terrorists groups all over the world are looking for new sources of funding. One of the ways they can find it is through drug sourcing activities.

Here is how it works. Used cars are shipped from the U.S. to several West African countries. After they are sold at a 15- to 20-percent mark-up, the profit goes to Hezbollah. Some money then gets returned to the United States to buy more cars.

In all, 30 domestic companies are being investigated. The red flag for the deal? A small call dealership in Tulsa. Authorities say Ace Auto in Tulsa received more than $20 million in wire transfers.

A joint terrorism task force is looking for more than $480 million dollars from Lebanese institutions.

No one was arrested in Tulsa, but authorities should reveal more in the coming weeks

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at http://www.launderingmoney.com/ and on twitter at : http://twitter.com/#!/LaunderingMoney http://moneylaunderingworld.blogspot.com/   and http://launderingmoney.com/

New Mexico possibly new front line for drug trafficking and money laundering

By Leigh Irvin

Daily Times

Mexican drug cartels are operating at increased levels within San Juan County, and they steadily are becoming more violent, according to Region II Narcotics Task Force Director Neil Haws. Speaking to the Bloomfield City Council on Tuesday, Haws outlined recent trends within the cartels and warned that unless aggressive measures such as securing a federal magistrate in the area are taken, the picture looks bleak for stemming drug-related crime and violence. "Drugs and Mexican cartel activities are a real issue in Bloomfield," Haws said. "The cells are already here, and all of the problems that U.S. cities bordering Mexico are now dealing with are going to come this way. It's only a matter of time."

Cartel operations

Haws said that for the past two years the major Mexican drug cartel operating in San Juan County has been the Juarez cartel, but recently the Sinaloa and Michoacan cartels have gained ground.

"What's happening here is reflective of what's occurring in Mexico," said Haws, adding that Region II is concentrating its investigative efforts on individuals three or four levels above the drug addicts, or those who are directly connected to the cartels.Going deeper into how the cartels operate in Bloomfield, Haws said that four to five males are usually sent by the Mexican cartel to Bloomfield to live, and they spend 80 percent of their time in and around the city.The cartel members bring their families with them to try to fit into the community and to be less noticeable, and do not deal directly with drug addicts, which makes them difficult to detect. "These cartel members recruit local gang members to sell drugs to lower-level dealers, who then sell the drugs to the addicts," said Haws. Region II agents rely on background checks and surveillance to identify cartel members, and watch for signs like tattoos and the collection of religious artifacts like shrines.

Recently, the Sinaloa cartel has added Albuquerque as a stepping stone for its drug distribution in New Mexico, and much of the drugs coming into San Juan County are coming from Phoenix, passing through Albuquerque and then being transported into San Juan County via Highway 550. Drugs continue to be transported to the area from Mexico after going through California. Albuquerque is seeing more "enforcers," or cartel members who resort to kidnappings and violence on order of the cartel leaders in Mexico, Haws said. While some of the drugs reaching the county stay in the area and are sold to local drug addicts, much of the drugs are further distributed to other states such as Colorado, Utah, Missouri and the Dakotas. "We are definitely a distribution hub here," said Haws. Addressing why our area makes a good distribution hub, Haws said that the cartel members find it easy to import the drugs via wide-open New Mexico roads and reservation lands, and storage of drugs is also relatively easy here. Obtaining fake documentation is also easy to obtain in this area, despite Bloomfield taking away the ability of illegal aliens to obtain driver's licenses. "One of the best forgers in the area lives in Shiprock and works by the side of the road. For $30, it's possible for someone to get a whole new identity from this person," said Haws.

Drug trends

While Region II has seen a slight increase in the use and distribution of heroin, Haws says methamphetamine remains the drug of choice in San Juan County, and that 98 percent of the drug cases Region II works on involve meth.

What is changing, he said, is the purity of the meth coming into the county. "The purity here in San Juan County amazes the rest of the state," he said. "We're seeing 94-98 percent purity here, and one recent sample sent to the DEA lab was 100 percent pure. The DEA didn't even know this level of purity was possible." One of the challenges for local cartel members is getting the drug money back to Mexico. Bulk cash smuggling is one way to do this, but a relatively recent trend is to utilize money remitters such as Western Union and local businesses. "The cartels know how to stay under the radar, and they'll repeatedly wire $999 back to Mexico to avoid reporting requirements. Since no reporting is required for this amount, the transfers are hard to detect."

Drug-related crimes

Drug-related crimes such as kidnapping, homicide and money laundering are picking up in the county, says Haws.

One local family consisting of a father, an uncle and a cousin, were all recently kidnapped and taken to Mexico, according to Region II sources. The family members were never seen again, and are believed to have been killed.

"Crimes like these are usually perpetrated by the cartels against undocumented Mexican nationals, so it makes it hard to positively identify a lot of the victims," said Haws. The FBI has been involved in some of the Mexican-on-Mexican investigations, but without a U.S. citizen nexus, their hands are somewhat tied. "We're also seeing a lot of extortion cases," he said. "The cartel members might get a small local business to illegally transfer too much money on one occasion, then will extort them to continue the transfers, using the company's fear of getting into legal trouble." Other strong-arm methods of local cartels is to kick gang members out of their homes and move their own families in. "The gang family may be having some debt issues, and the cartel member will just say, get out, we're moving in,'" he said. Fear of cartel violence prevents others from fighting back or reporting these activities, making it difficult for Region II to secure witnesses and informants. Haws said money laundering is also "huge" in Bloomfield, and that the cartels are using small businesses like clothing shops to launder their drug money. Investigating and apprehending cartel-related individuals is an extremely dangerous business for Region II and other law enforcement officials. "We have to always be extremely careful, as each and every one of these guys has multiple guns, and they don't care about anything or anybody. Even though many of them have families here, they don't care as much about their wives or their kids as their money. They'll do anything for the money and to stay alive," said Haws.

Federal presence

"What we don't have in this county and what is desperately needed is a stronger federal presence," said Haws. While there is an effective FBI office in Farmington, much of the agents' responsibilities are devoted to investigating crimes on the Indian Reservation and they lack the manpower to fully tackle the cartel issues in the county. What is most needed, said Haws, is a federal magistrate. "We've been trying to get a federal magistrate here for years, and have shown through cases and sheer numbers that we have a serious drug problem here. A federal magistrate is warranted, but we're still fighting this battle." Despite the presence of a federal magistrate's office located in Durango, it can only be utilized only for Colorado cases unless an interstate nexus can be demonstrated. Some temporary help has come in the form of five Homeland Security investigators who have arrived to work with Region II for the next month, and they are reviewing many of Region's open drug cases.

A serious warning

Haws made an ominous prediction that Bloomfield will continue to see an increase in Mexican cartel presence and drug-related violence. "These people are already here in Bloomfield and in nearby towns, and although most of the violence has involved non-U.S. citizens, I believe it's just a matter of time before what's happening in the U.S. towns bordering Mexico will start to happen here, and our citizens will start to be affected more and more. The problem is here. It's real. And it's what we're dealing with every day," he said.

What can be done

At the conclusion of Haws' presentation, Bloomfield City Manager David Fuqua asked what the council can do to help, and asked if a resolution which could be taken to other officials, senators and pertinent groups would assist with efforts to secure a federal magistrate for the area.

"That would definitely help," said Haws. "Without a federal hammer' to help us with our efforts, we don't have the manpower or resources to keep going after the cartel once some are taken down. They just keep springing up and replacing each other." Mayor Scott Eckstein agreed that it would be productive to draft a resolution expressing the importance of a local federal magistrate, and Haws stated that he would provide the Council with additional statistical information needed to bolster the resolution's statement about the need for a federal magistrate. Haws has also been coordinating with Farmington officials and with the San Juan County Sheriff's Office to lobby for a federal magistrate, but stated that it would be a tremendous help if everyone could come together to try to work toward this goal. "Everyone has been doing what they can, but this is a huge problem. We just need to be aware of what we may be facing in the future." he said. Mayor Eckstein found Haws' presentation to be eye-opening. "I frankly found it a little alarming, as the activities Neil was describing are not things we see on a day-to-day basis," he said."If it's true, and I believe it is, the situation is worse than I thought it was. I think a resolution which we could get other elected officials to sign would be very effective, and if there's something else we can do to help, we'll do it." Police Chief Mike Kovacs agreed. "These cartel members are hiding in plain sight, and if we don't figure out a way to stiffen our laws within New Mexico, these cartel activities will start to affect all of us. Law enforcement is understaffed, and we're going to have to find a way to get ahead of the issue. I'm glad the city is taking a stance on this, and I look forward to working with the city to combat the problem," he said.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at www.launderingmoney.com and on twitter at : http://twitter.com/#!/LaunderingMoney

U.S. Tightens Rules on Prepaid Cards to Stop Money Laundering

By Geoffrey Ramsey

The U.S. Treasury aims to crack down on the use of prepaid cards to launder money, a tactic which officials fear could be gaining popularity among criminal groups.

Prepaid cards, a popular gift choice during the holiday season, are increasingly being used to launder illicit funds. The cards, which are available at drug stores and retail outlets across the United States, can be used almost anywhere in the world, and in some cases allow their holders to withdraw cash from ATMs.
In most cases, authorities have to obtain warrants before they can gain access to prepaid card information, making it difficult to launch investigations into the accounts. As the Drug Enforcement Administration’s 2010 National Drug Threat Assessment notes, this results in a situation where “law enforcement agents cannot efficiently determine whether the total value associated with a card is suspicious.”
This also means that the extent of the use of prepaid cards to launder money is unknown. As a U.S. Government Accountability Office report  noted in 2010, “The nature and extent of the use of stored value for cross-border currency smuggling and other illegal activities remains unknown, but federal law enforcement agencies are concerned about its use."
To make matters worse, U.S. Customs guidelines do not currently require travelers to include the value of these cards when declaring the total amount of money they bring in to the country. Because of this, and because of the relative ease with which they are obtained, prepaid cards have become a popular alternative to smuggling bulk cash for Mexico-based money launderers in recent years.
This was recently confirmed by an anonymous U.S. drug enforcement official, who told Reuters last month that he was familiar with instances where drug traffickers bought prepaid cards with their profits in the U.S. and then moved overseas, where they were then  exchanged for money that was not linked to the drug trade.
One known instance of this, as reported by the Associated Press, occurred in 2006 when a Dallas-based firm known as Virtual Money Inc. provided stored value cards to individuals who then assisted a  Colombian drug trafficking organization in moving more than $7 million to Medellin over a period of three months. According to a defense attorney in the case, the accused used about 400-500 cards with maximum load limits of $1,000, which they emptied and refilled repeatedly.
John Tobon, a senior U.S. Immigration and Customs Enforcement agent, told the AP in May of this year that prepaid cards have become the “the preferred means of paying couriers who transport illicit drugs across the U.S.,” adding that "Law enforcement loses lives all over the world trying to keep [major criminals] unbanked, and these prepaid cards are offering them a great alternative to sneak into our financial system.”
All of this is set to change in the near future, however, in response to a new regulation proposed by the U.S. Treasury Department. Under the new rules, travelers would have to include prepaid cards, gift cards, and potentially even cell phones to the list of “monetary instruments” whose value must be declared upon entering or leaving the country. When the total exceeds $10,000, the individual would have to file a special report with customs officialsl.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at www.launderingmoney.com and on twitter at : http://twitter.com/#!/LaunderingMoney

Five tons of Gold and Silver to be auctioned in Money Laundering settlement

Five tons of gold and silver jewelry, seized as a result of a money-laundering investigation by the Drug Enforcement Administration, is being sold by sealed bid by the U.S. Marshals Service.

The service announced today that the gold and silver jewelry can be reviewed at an undisclosed site in Texas - by appointment only - to registered bidders. Registration for the auction is open until Friday and requires a $100,000 refundable deposit.

The bulk lot consists of more than 40,000 troy ounces of mixed-karat gold jewelry and more than 100,000 troy ounces of silver jewelry, according to the U.S. Marshals Service.

The money-laundering investigation involved two Panama companies that were laundering narcotics proceeds from the United States, according to investigators.

Yardena Hebroni and Eliahu Mizrani were charged with laundering millions of dollars in narcotics proceeds through a wholesale jewelry business, Speed Joyeros S.A., and a related company, Argento Vivo, S.A., which together did more than $100 million annually.

Hebroni and Mizrahi, and both companies, pleaded guilty to money laundering.

Michael Hearns an Anti Money Laundering specialist with over 24 years of AML experience can also be found at www.launderingmoney.com and on twitter at : http://twitter.com/#!/LaunderingMoney