Operating out of a storefront in a gritty neighborhood of Santa Fe Springs, undercover agents from the U.S. Customs Service carried out a three-year sting that ended Monday with the indictment of three Mexican banks and 107 people on charges of laundering millions of dollars for Latin American drug-smuggling cartels.
The indictments returned by a Los Angeles federal grand jury represent "the culmination of the largest, most comprehensive drug money laundering case in U.S. law enforcement history," said Treasury Secretary Robert Rubin.
"Today," he added, "we have hurt the drug cartels where it hurts most--in their pocketbooks."
The announcement was a bombshell in Mexico, which has been buffeted in recent years by charges that drug traffickers have spread their influence into the top levels of government and business.
The news sent Mexican stock and bond markets lower and forced radio and television broadcasters to cut into regular programming. Banking stocks plunged as much as 8.5% on the Mexican stock exchange after the announcement, which came as the country's banking sector is just beginning to recover from a virtual collapse after the country's devastating 1995 recession.
In lightning raids that began over the weekend, federal and local law enforcement agents across the United States arrested 35 suspects, including 15 Mexican bank officials who were lured to meetings in Las Vegas and San Diego, and 16 members of the drug cartels of Cali, Colombia, and Juarez, Mexico.
Authorities also seized $35 million from the American assets of the Mexican banks named in the indictments: Bancomer S.A., Banca Serfin S.A. and Confia S.A.--among the largest and most prestigious banks in Mexico.
Forfeiture actions have been taken to seize an additional $81 million believed to be stashed in other U.S. accounts.
In addition to the three banks charged, the indictments named managers at 12 of Mexico's 19 largest banking institutions as participants in the money laundering scheme.
The Treasury Department said the case represents the first time Mexican banks and bank officials have been directly linked to laundering profits for the cartels.
Stunned by the sweeping indictment, Mexican bankers vigorously denied that their companies were engaged in money laundering and pledged full cooperation with the probe.
