The Cash Cleaners

  • For two days, the seven bankers and financiers had been pampered and toasted at a posh country club near Tampa. Invited to celebrate the wedding of two business associates named Kathleen Erickson and Robert Musella, the men were in especially high spirits by the eve of the ceremony. Rolling into Tampa in a fleet of Lincolns, headed for a stag party, they anticipated a night to remember -- and that is what they got. Arriving at the party site, they were greeted by armed U.S. Customs agents. "Welcome to Tampa," said one. "You're under arrest."

    The supposed wedding on Oct. 9, in which both bride and groom were undercover Customs agents, was an elaborate ruse designed to lure the jet- setting bankers back into U.S. jurisdiction from other countries. Within 72 hours after the Tampa trap was sprung, American and British customs agents arrested 40 bankers and narcotics traffickers in London and several U.S. cities on money laundering and other charges.

    The investigation, the largest and most complex yet into money laundering, was called Operation C-Chase for the $100 bills (C-notes) that are the denomination of choice in major drug deals. While previous probes had netted mostly low-level operatives, C-Chase bagged far bigger suspects. The arrests were based on indictments handed up by federal grand juries in Tampa and other cities. The indictments named some 80 defendants and the first banking company ever charged in the U.S. with money laundering: the Luxembourg-based Bank of Credit and Commerce International, the seventh largest privately held financial institution in the world (assets: $20 billion). Under a tough 1986 U.S. law, bank officials who knowingly conceal the source of illicit money can be fined up to $500,000 or twice the amount of the money they launder, and imprisoned for up to 20 years.

    BCCI denies any pervasive corruption. U.S. Customs officials, though, say the bank laundered $14 million in narcotics funds for its undercover agents and considerably more for real criminals. They allege that BCCI was a greenback laundry for the Medellin cartel, the ruthless Colombian mob controlled in part by Pablo Escobar Gaviria and Jorge Luis Ochoa Vasquez that supplies most of the cocaine entering the U.S.

    The accused launderers knew their business well, authorities say. By rapidly shuffling ill-gotten cash through a kaleidoscopic array of banks and shell corporations around the world, BCCI allegedly obscured the source of the money, then returned untraceable, "clean" funds to narcotics kingpins. Said a senior U.S. Customs official: "It has given us a window into the world of international money laundering like nothing we've had before."

    Besides the alleged laundering services described in the indictments, BCCI has been accused of handling secret accounts for such clients as Panama's allegedly drug-dealing dictator General Manuel Noriega and Saudi financier Adnan Khashoggi. According to congressional testimony made public last week, Amjad Awan, a former BCCI officer arrested at the phony stag party, told a Senate subcommittee last month that he had made political payoffs for Noriega out of a BCCI account. In 1986 Khashoggi transferred $12 million from a BCCI account in Monte Carlo to an arms dealer to help purchase weapons used in the Iran-contra deal.

    Founded in 1973 by Agha Hasan Abedi, a native of Pakistan, BCCI operates 400 branches in 73 countries. The bank is owned by just 51 shareholders, including members of the Saudi royal family. Among the BCCI officers arrested last week were top managers of the bank's Panamanian, Latin American and French divisions.

    Customs officials say the initial C-Chase probe of narcotics "greenwashing" in Florida, which started in 1986, led them to BCCI's drug-money network. Posing as money launderers, "Musella," "Erickson" and other agents gradually infiltrated drug-trafficking circles. In May 1986 Gonzalo Moro Jr., reputed to be the chief launderer for the Medellin cartel, approached one of the agents with a proposition. If the agent were to open some Florida bank accounts and help Moro launder cash, Moro would pay a commission on each transaction.

    Moro instructed the agent to limit the size of his deposits to amounts smaller than $10,000. This laundering ploy enables criminals to evade laws that require banks to report cash deposits of $10,000 or more to the Federal Government. Checks drawn against those funds were deposited in banks around the world by Moro's staff.

    By late 1987 Moro had introduced the agents to a Panamanian branch of BCCI for their laundering operation. The agents collected cash from Medellin dealers in the U.S. and deposited it at domestic banks, then wired the money to the account of a newly created shell corporation in the BCCI branch in Panama. The agents then provided the Colombian traffickers with signed blank checks that could be cashed at most banks.

    Soon a more complex laundering method was introduced. BCCI allegedly began to wire drug money deposited in its branches to accounts in foreign banks, using major New York City institutions as unwitting intermediaries. Once the funds were overseas, BCCI allegedly used them to buy certificates of deposit at banks in France, Britain, Luxembourg, Uruguay, Panama and the Bahamas. Using the CDs as collateral, BCCI then issued phony loans for slightly smaller amounts to the agents' Panamanian account. Once again, the agents gave the Colombians signed blank checks drawn against the account. BCCI collected the CDs as "payment" for the loans, pocketing the difference in the amounts as a commission.

    Having extensively documented the laundering of funds through BCCI, U.S. Customs decided to close the net. In April, Erickson and Musella announced * their engagement and sent wedding invitations to top BCCI officers and Medellin hoods. The two then played out their romantic charade, making preparations for their nuptials.

    Confronted by the Customs agents in Tampa last week, one of the financiers could not believe at first that the agents were serious. Taking the arrest routine for a stag-party prank, he began to laugh as the cuffs snapped closed, and he shouted, "All right! Let's party!"

    BCCI officials in London expressed astonishment at the arrests. Said BCCI in a statement: "The bank wishes to state categorically that at no time whatsoever has it knowingly been involved in drug traffic-related money laundering." While the arrests had no immediate impact on the bank's substantial legitimate operations, BCCI faces potentially severe penalties under the U.S. antilaundering law. Besides providing for as much as $28 million in possible fines, the U.S. law authorizes the seizure of narcotics- tainted money or assets, including businesses involved in trafficking and money laundering. Thus the bank's U.S. assets could be vulnerable.

    Customs officials said last week that Operation C-Chase signals a more aggressive and cooperative international approach to uncovering money- laundering activities and prosecuting banks that, wittingly or not, play the game. Said U.S. Customs commissioner William Von Raab: "The bottom line is that whatever kind of financial institution you are, if you have crooks for customers, then you are a crook." Considering the billions of dollars in narcotics cash deposited every year in banks, that statement undoubtedly put honest bankers everywhere in a heightened state of alertness.