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GOLD, DRUGS AND CLEAN CASH : Colombians Sent Tons of Dirty Cocaine Money to the Los Angeles Jewelry District. $1.2 Billion Came Out Spotless

February 18, 1990|EVAN LOWELL MAXWELL | Novelist and journalist Evan Lowell Maxwell has written about crime in Southern California for 20 years.

IN JANUARY, 1988, an employee of Loomis Armored Transport Co. was checking a nightly shipment from a United Parcel Service aircraft when he noticed a tear in one box. The shipping manifest said the box contained "gold scrap" being sent from a New York jewelry store to a firm called Ropex, a Los Angeles gold dealer. But the box's contents seemed lighter than gold would be, and when the Loomis employee looked at the parcel more closely he could see neatly bundled stacks of currency through the torn cardboard.

The Loomis employee was puzzled, so he called the shipper, who explained that the currency was being moved from the East Coast to Los Angeles to take advantage of better short-term interest rates in a local bank.

Loomis is a sophisticated international corporation that handles many exotic shipments, usually without asking too many questions. But Ropex's answer didn't make sense, particularly since it is easier, safer and faster to move money around the world by electronic means than by shipping boxes of cash.

Like all armored courier companies, Loomis tries to maintain close relationships with law-enforcement officials as well as with its clients. So the Loomis employee delivered the shipment--but he also called the FBI.

At almost the same time, a new account was opened at a Wells Fargo Bank branch near downtown Los Angeles. It belonged to a gold brokerage firm called Andonian Brothers, which immediately began depositing large amounts of currency--millions of dollars a week.

In the past five years, both Congress and the Treasury Department have cracked down on currency transactions, making banks legally responsible for reporting large deposits to the Internal Revenue Service. The crackdown has been strict enough that Jack Kilhefner, the San Francisco-based senior vice president of Wells Fargo Bank, monitors currency deposits himself. Kilhefner says he spotted the activity in the new account within 45 days and ordered his security staff to investigate. When the deposits reached $25 million in the first three months the account was open--unusually high, even for an international gold brokerage--Kilhefner told his chief of security to call the IRS.

The Loomis and Wells Fargo tips involved different firms, but both of them pointed to one spot: the Los Angeles jewelry district downtown. During the next 13 months, the two bits of information led to an international investigation that uncovered a massive criminal conspiracy, a conspiracy that, ironically, had little to do with the diamonds and precious stones that fill the jewelry district. Its operation was so efficient, so lucrative, that it was called "La Mina"-- the gold mine --by the Colombian bosses who kept it working around the clock for three years, pulling out money by the millions. La Mina's "gold" was currency--tons of it.

According to federal officials, between 1986 and 1989, La Mina laundered more than $1.2 billion in cocaine profits for the leading members of the Medellin cocaine cartel, turning drug-tainted cash from the streets of New York, Miami, Houston, Phoenix and Los Angeles into pristine funds that they could draw from secret bank accounts. Richard Lind, chief of money-laundering investigations for the FBI, puts it simply. La Mina was, he says, "the biggest laundering operation we've ever seen."

At the center of the operation, according to investigators, were the unprepossessing offices of Ropex and Andonian Brothers. The two businesses received literally millions of dollars a week from all over the country. In their back rooms, pallet-loads of money were counted, stacked, banded and then deposited in local bank accounts. Bankers handling the deposits were always told that the currency represented profits from the sale of gold to investors and jewelry makers.

Once deposited, the currency turned into bits and bytes of electronic data that the launderers could transfer by wire all over the world, the money's illicit origins fading with each transaction. (The law doesn't require banks to report wire transfers of money.) According to investigative records, the hundreds of millions of dollars handled in the two Los Angeles offices were moved electronically to New York, then to Panama City and on to South America, where they were used to pay for coca paste, airplanes, political favors--all the things necessary to operate an international criminal conspiracy like the Medellin cartel.

"It was an amazing operation," said one federal investigator involved in the case. "It taught me a whole lot I never knew about how money moves, how the world really works. La Mina literally dragged me into the 20th Century."

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