Offshore companies offer nearly impenetrable anonymity for their true owners .
It is little surprise, then, that scattered among the harmless-sounding companies registered in places like the Seychelles, the British Virgin Islands and Panama are entities used by drug traffickers, their relatives and their intermediaries.
Narcotics gangs need to turn their drug money into assets like real estate or into the financial system. The drug sellers assemble teams of accountants and lawyers to buy businesses that generate a lot of cash – say, supermarkets – where dirty money can be mixed with clean, then attempt to move it far away.
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“Most of them do not have a lot of formal education. They use attorneys who go create fictitious corporations to funnel the money to the offshore banks,” said Michael S. Vigil, former chief of international operations for the U.S. Drug Enforcement Administration. “Once it is in the banks, they can wire it just about anyplace.”
A massive data leak from international law firm Mossack Fonseca & Co. exposed four companies, all registered in Panama, all connected to suspected or convicted drug traffickers, all registered through the Panamanian law firm.
The leak, with its 11.5 million documents, provides the paper trail to the true owners.
The companies have anodyne names: Brodway Commerce Inc., Montella Global S.A., Lindley Services Inc., and Compañia Monte Carlo S.A.
Brodway Commerce Inc. came to life in 2008 and passed from Mossack Fonseca to a law firm in Guatemala City. Months later, it would be in the hands of Marllory Chacón Rossell, a woman born into poverty who climbed into Guatemala’s high society.
At the time, Chacón owned a modest women’s clothing boutique and perhaps a small construction company. Yet she went shopping for a shell corporation , saying she wanted to spend $3 million a year on real estate in Panama.
According to a U.S. indictment filed in 2011, Chacón was a cocaine trafficker. Her crime ring moved cocaine from the Andes to Central America and on as far as Mexico. The U.S. Treasury Department said a year later that her connections included Los Zetas, a brutal Mexican cartel centered on the border with Texas near Laredo, according to the indictment.
The 43-year-old Guatemalan has pleaded guilty to U.S. charges that she conspired to smuggle cocaine into the United States, and was recently known to be in a Florida prison.
In her passport photo, contained in documents in the Mossack Fonseca archive, Chacón has flowing dark hair brushed back behind her ears and long, dangling earrings. Her makeup is impeccable.
After the U.S. indictment, the Guatemalan press dubbed Chacón the “Queen of the South” after a sexy Mexican drug-trafficking character whose life was portrayed in a television soap opera of the same name.
“She came from a very poor family. … Her father drove a truck,” said Corina Sáenz Lehnhoff, an interior decorator who helped Chacón set up Brodway Commerce after she was hired to decorate two of Chacón’s homes.
Sáenz described Chacón as “simple, very down to earth,” but said “one noticed that she had a lot of money.” Sáenz said she didn’t know of Chacón’s drug trafficking.
Sáenz and an Argentine, José María Armesto, who Sáenz said was her then-boyfriend, signed the original offshore papers on behalf of Chacón. Sáenz said it was a simple favor, a you-scratch-my-back token of goodwill among the moneyed class in Guatemala, where setting up foreign partnerships and corporations is common to outpace the taxman, to keep wealth out of sight of criminal gangs or to invest abroad, or any combination of the three.
Indeed, Guatemala has been fertile ground for Mossack Fonseca. The word “Guatemala” appears in 351,535 emails and documents in the firm’s digital archives as provided by the International Consortium of Investigative Journalists. That is far more than any other country in Latin America, except Panama and Brazil. The next highest country after Guatemala is Peru, which appears 334,521 times in the archives. Mexico ranks low with only 33,123 mentions.
“It’s not even weird to be on one of those papers,” Sáenz said, referring to incorporation documents.
As Chacón sought to move money out of her country, the greatest impediment was a bank, not Mossack Fonseca. A bank in Panama, a branch of the Colombia-based Davivienda, asked for copies of identity documents and certified copies of bank records indicating the source of the funds to be transferred, if it were to open an account in the name of Brodway Commerce Inc. Those requests were contained in emails to the law firm.
The bank was following the U.S. Patriot Act, the post-Sept. 11 legislation that ordered banks to “know your customer.” That means verifying identities and sometimes probing into the nature and source of assets. Banks worldwide have fallen into line, fearful of running afoul of U.S. authorities who might accuse them of abetting terrorists.
Compared to accountability standards for banks, rules for accounting and law firms across the developing world are lax, set down in largely toothless international conventions against drug trafficking and money laundering.
“Lawyers and accountants are what we call the enablers of money laundering, or illicit financial flows. They’ve gotten completely off the hook to this point,” said Clark Gascoigne, interim director of the Financial Accountability and Corporate Transparency (FACT) Coalition, a Washington D.C.-based group of more than 100 civil society groups seeking to curtail the use of offshore havens.
To satisfy the Panama bank, Chacón and the Argentine sent to Mossack Fonseca a stamped statement by Guatemalan certified public accountant Ana Beatriz Rosales Aguirre, saying that a Guatemala branch with the same name, Brodway Commerce, held assets worth $12,019,501.52. The document, which is in the law firm’s records, has no letterhead but provides a seal and a registry number for Rosales Aguirre.
But Ana Beatriz Rosales Aguirre is unknown to the state.
“She doesn’t appear as a registered person on any list,” said Juliana Mazariegos, of the tax superintendency, insisting that no such person has ever served as a public accountant in Guatemala.
The murky paper trail illustrates the challenges for enforcement and the ease of creating a pipeline for dirty money.
“I haven’t seen the DOJ going after lawyers facilitating this anywhere,” Gascoigne said. “If I were a lawyer abroad, I would not be afraid of being investigated by the U.S. Department of Justice.”
Chacón’s luck ran out in 2012. That was when the the U.S. Treasury Department publicly described her as “one of the most prolific narcotics traffickers in Central America,” and said her crime gang moved tons of cocaine and laundered tens of millions of dollars of drug proceeds every month.
Whether Chacón succeeded in using the offshore corporation for any illicit activity is unknown. Despite publicity about U.S. charges against Chacón, Mossack Fonseca continued as the registered agent of Brodway Commerce Inc. until it lapsed in 2013.
Sometime in the latter half of 2014, Chacón turned up in U.S. custody in Florida. She entered into a plea agreement with federal prosecutors that year, admitting to being a prominent cocaine trafficker in Honduras, Guatemala and Mexico and offering to cooperate.
A federal judge in Miami sentenced Chacón on May 5, 2015, but the sentence was sealed for five years, a sign of what court documents say is her ongoing cooperation with U.S. prosecutors. The U.S. Attorney’s Office in South Florida declined to say where Chacón is being held.
Falling under the ‘Kingpin Act’
Wendy Amaral Arévalo managed the Desconocido Hotel on Mexico’s Pacific Coast, one of the five best eco-resorts in the world. Its luxury $1,000-a-night bungalows are on isolated beachfront and are said to attract Hollywood stars like Julia Roberts and Sandra Bullock.
Several years ago, Amaral took control of Montella Global S.A. and a second Panama-registered company, Deltodo Enterprises S.A., through an Uruguayan broker dealing with Mossack Fonseca. In documents filed with the law firm, Amaral said the aim of the companies was to buy international real estate.
None of the leaked documents from the law firm suggests any concern over the source of the money.
Last August, the U.S. Treasury Department’s Office of Foreign Assets Control listed Amaral and her husband under the “Kingpin Act” as integral parts of a narcotics gang, Los Cuinis, that appears to operate in the shadow of the Jalisco New Generation Cartel, one of Mexico’s fastest growing and most violent crime groups. On Monday, Treasury slapped sanctions on seven companies it said were linked to Los Cuinis, including one that handled credit card transactions for the Desconocido Hotel.
The founders of Los Cuinis are involved in methamphetamine and cocaine smuggling.
Wendy Amaral’s husband, Gerardo Gonzalez Valencia, is the brother of the founder of Los Cuinis, Abigael Gonzalez Valencia.
Internal files from Mossack Fonseca through late 2015 suggest that the Panama firm continued its business with Wendy Amaral and her husband, even following the public accusation by the Treasury Department.
‘Everything is in order’
On the night of Sept. 24, 2011, Mexican Federal Police burst into a house in Mexico City’s elegant Jardines del Pedregal district. They found three Colombians, three Mexicans, some weapons, 105 cell phones and a safe containing $1 million in cash.
Among them was Colombian Janeth Perilla Ramirez and her Mexican boyfriend, a lawyer who prosecutors said was a key lieutenant to Sinaloa Cartel leader Joaquin “El Chapo” Guzman, considered at one time the world’s No. 1 drug lord.
For reasons that have never been made public, Mexican authorities freed Perilla less than two months later, and she made her way back to Medellin, Colombia, even as her boyfriend, Christian Guillermo Lucenilla Salazar, was charged with moving $5 million worth of cocaine a week for the Sinaloa Cartel.
Less than two years later, Perilla approached the Bogota office of Mossack Fonseca, seeking an off-the-shelf corporation. She was offered Lindley Services Inc.
In the registration filing for the company, its purpose was listed as “buying-selling of real estate and wealth protection.” Mossack Fonseca did a background check on Perilla later that year, according to a record in its archive. The check included a search of U.S. Justice Department and FBI records and a Google search.
“Everything is in order,” a Mossack Fonseca representative in Colombia, Mirzella Tuñón, wrote to the head office in Panama in a Sept. 30, 2013, email, more than two years after Perilla’s encounter with the law in Mexico, which was covered in the local media.
In 2015, a compliance division employee queried the Colombia branch over why a woman with the same name had been arrested for money laundering in 2011.
The firm’s Bogota representative contacted Perilla’s lawyer, Mauricio Marín Elizalde, who told the representative that “he can attest that she was not involved in any of these acts and unfortunately was linked” because she was a girlfriend.
The Colombia employee of Mossack Fonseca, Juan Esteban Arellano, then added a note:
“I can tell you that I know Mauricio, as you can see he is a great client, a prestigious tax lawyer in Bogota, linked to all major national and international tax guilds (and) a university professor. I believe that he would never provide services to a person linked to illegal acts.”
‘A drug trafficker by the name of Rafael Caro Quintero’
Even a top lawyer at the Mossack Fonseca firm was surprised when he heard about the real owner of the shell entity known as Compañía Monte Carlo, S.A.
The story begins in March 2005 when the head of the Costa Rican Olympic Committee arrived at the Mossack Fonseca law offices in Panama to ask for help. It turned out that a shell corporation owned property that was being used by the Olympic Committee.
Since one of the founders of Mossack Fonseca set up the shell corporation, Compañía Monte Carlo, S.A., the Olympic Committee chief wanted to know if the law firm could persuade the owner to hand over the property permanently.
Sounds easy enough. But it got more complicated. On paper, the owner of the Monte Carlo S.A. was Jose Maria Pla Horrit, a Costa Rican attorney. But he was only a frontman.
“It seems the real owner of the property and the corporation is a drug trafficker by the name of Rafael Caro Quintero,” a lower-level lawyer wrote to the three partners of Mossack Fonseca, including Jurgen Mossack, who helped set up Monte Carlo S.A.
Caro Quintero started out as a marijuana dealer in the 1970s in Mexico but grew into the founder of what once was known as the Guadalajara Cartel. He was convicted of ordering the kidnap, torture and murder of U.S. Drug Enforcement Administration agent Enrique Camarena in February 1985.
The Camarena killing roiled U.S.-Mexican relations for years.
Caro Quintero fled Mexico in a private jet for Costa Rica but was eventually arrested there and returned to Mexico, where he was sentenced to 40 years in prison.
When Jurgen Mossack found out that Caro Quintero was the real owner of the shell corporation, he whipped back an email to the underling lawyer, comparing Caro Quintero to another feared drug lord.
“Pablo Escobar was a suckling baby next to R. Caro Quintero! I would not like to be among those he would visit after leaving prison!” Mossack wrote in a March 21, 2005, email.
The Olympic chief was told that he should contact Pla Horrit, the Costa Rican attorney.
The silver-haired Caro Quintero walked out of a maximum security jail in 2013 after serving 28 years of his sentence, freed by a sympathetic judge. He’s not been seen in public since.
Tim Johnson: 202-383-6028; @timjohnson4
This story is part of a larger series, involving McClatchy and other news organizations, working under the umbrella of the nonprofit International Consortium for Investigative Journalists.
An unprecedented look at offshores
A database leak at the Mossack Fonseca law firm in Panama exposes how it hides money for its clients.
THE LEAK: Munich’s Suddeutsche Zeitung newspaper was given the files, which were shared with the International Consortium of Investigative Journalists.
ITS SIZE: 11.5 million emails and client records. It would take 24 hours to download the 2.6 terabytes at normal internet speeds.
THE MEDIA PARTNERS: More than 350 journalists, including a U.S. McClatchy reporting team, in 77 countries examined the data.
WHO WAS FOUND: 12 current and former heads of state and government, 61 relatives and associates of leaders, and 128 other public officials.