Organized Crime

  • To the merchants who line the rough-and-tumble streets of New York City's diamond district, he is known as Steve "Yorakim" -- Hebrew for green, the color of money. But to prosecutors in Manhattan, as well as Miami, Atlanta, Los Angeles and Providence, Stephen Anthony Saccoccia is known as one of the country's biggest, savviest and most wanted money launderers for Colombia's drug cartels. That is, until shortly before Thanksgiving weekend, when hundreds of government agents mounted a simultaneous five-state assault on Saccoccia's organization, arresting and indicting 50 people and seizing millions of dollars' worth of businesses, houses, cars and cash that had allegedly been used to wash as much as $750 million in narcotics proceeds.

    The smashing of Saccoccia's empire is actually the third major drug-money % laundering indictment in the precious-metals and diamond industry in as many years. The first phase of what the Federal Government calls Operation Polar Cap involved the 1988 breakup of a $1 billion money-laundering scheme for the Medellin cartel through a Los Angeles jewelry mart. "Saccoccia was in a position to step right in after we knocked out Polar Cap One," says U.S. Attorney Lincoln Almond of Rhode Island. "We were onto him from the git-go."

    The end came last week in Geneva, where Saccoccia, 35, was arrested with his wife (and reputed confederate) Donna, carrying $500,000 in cash. Yet that is mere pocket change for precious-metals traders, whose enormous cash transactions make them ideal fronts for laundering. "A precious-metals dealer may buy and sell hundreds of millions of dollars of gold in a year in numerous transactions, show a minimal profit, produce limited business records that appear legitimate and not raise suspicion," explains Dennis Fortune, a money- laundering expert and 24-year IRS veteran.

    In Saccoccia's operation, say prosecutors, hundreds of thousands of dollars flowed into dummy shops in Manhattan's jewelry district each day from nationwide drug couriers. The cash was bundled into duffel bags or gold- shipment crates and driven by Brink's or Loomis armored trucks to the Saccoccia Coin Co., an unobtrusive storefront in Cranston, R.I. (pop. 76,000), or to a second location in Los Angeles. Thereafter, most of the money was subdivided, deposited in U.S. banks -- ranging from Rhode Island's modest Fleet/Norstar to Bank of America -- and then converted into cashier's checks made out to dummy firms. Next the money was moved electronically to foreign banks and eventually to the Colombians. Saccoccia skimmed off up to 10% of the proceeds.

    The racket apparently grew with astonishing speed. Saccoccia started as a decent enough kid, collecting coins while in high school in Cranston until he dropped out in 1973 to open his coin shop. By 1980, with the price of gold soaring, the boy wonder enjoyed a statewide reputation. "He was fencing ((buying and reselling)) all the stolen gold in the area," recalls a local federal agent. "Kids were busting into houses left and right, stealing precious metals and lining up outside his store." By the time he pleaded guilty in 1985 to tax evasion, Saccoccia was reputedly a key moneymaking "associate" for New England's Patriarca Mafia family. After a brief stint in jail, say investigators, he started his laundering business in 1988. (

    As government agents dismantle Saccoccia's web, they marvel at his sophistication. "He was a tough micromanager who dictated every piece of the operation and castigated his subordinates regularly for not doing deals fast enough," says Charles Domroe, who heads the FBI's narcotics unit in New York. "He is also the first known launderer to serve both the Medellin and the Cali cartels." Among those indicted with Saccoccia is a man he allegedly answered to, a Miami-based trafficker for the Cali group named Duvan ("Uncle") Arboleda, who slipped quietly and safely back to Colombia two months ago.

    Saccoccia wasn't as lucky -- or as careful. When his cash deposits became suspiciously large, banks tipped off the IRS. Then, in a display of cooperation rarely seen in the financial industry, 10 banks agreed to continue taking the money as federal agents watched. Saccoccia's final mistake may have been his failure, quite literally, to wash the greenbacks before laundering them. In March 1990, Saccoccia and an aide delivered to a bank $53,000 packaged in 53 bundles. The currency was tested by a cocaine-sniffing German shepherd named Basko, which promptly went "bonkers," says an agent. A day later, another bank received a Saccoccia deposit. Basko went berserk again. And again and again, in bank after bank.

    One small bank allegedly used by the launderers, Heritage Loan and Investment Co., utterly refused to help the feds. But that shouldn't surprise Rhode Islanders. Heritage collapsed earlier this year, taking the state's system of 45 privately insured banks and credit unions with it. The bank's fugitive president, Joseph Mollicone Jr., who is accused of embezzling $13 million, was initially a target of the Polar Cap probe. On the same day last fall that state examiners were inside Heritage reviewing the books, one of Saccoccia's aides turned up at a teller's window with $52,600 in cash.

    Officials predict that the demise of this global ring will reverberate through the drug trade for years to come. The Saccoccias, who are rumored to be returning voluntarily to the U.S. from Switzerland this week to face charges, allegedly commanded as much as 10% of the U.S. drug-money laundering market. "Money is the fuel that feeds the drug lords," says Commissioner of Customs Carol Hallett. "And we just cut off one very big pipeline."