South Florida

Firm behind gold-fueled, Miami-based money-laundering racket fined $15 million

A Dallas-based company pleaded guilty Friday to failing to maintain an anti-money-laundering program to stop billions of dollars in illegally mined and smuggled gold from being exported from South America to Miami for refining in the United States.

In a plea deal, Elemetal LLC now faces a five-year probationary sentence in which it cannot buy precious metals from outside the United States and must pay a fine of $15 million in cash and gold in the agreement with federal prosecutors.

The company was a central focus of the recent Miami Herald investigative series Dirty Gold, Clean Cash, which exposed the links between South Florida’s gold industry and the ruination of wide swaths of South American rainforest where illegal gold mining flourishes under the control of drug traffickers and other criminal groups.

Elemetal’s fine in the plea agreement still has to be approved by a federal judge at a May 24 sentencing hearing.

“No matter what I do, Elemetal cannot withdraw its guilty plea,” U.S. District Judge Federico Moreno told Elemetal’s lawyers in Miami federal court. “Do you understand?”

Elemetal’s defense attorney, Christopher Pace, who was joined by the company’s general counsel, Trey Gum, acknowledged that the judge will have final say on the joint agreement. They said Elemetal has already paid $1 million toward the fine, and the firm will no longer contest a claim of $10 million worth of gold seized in Peru so that authorities there can keep it. That would leave a balance of $4 million to be paid to the U.S. government.

If it remains in business — Elemetal was forced to close its main precious-metals refinery in Ohio and was barred from trading gold on bullion markets — the company must show that it can maintain a robust anti-money-laundering program while it is on probation.

At Friday’s hearing, Assistant U.S. Attorney Francisco Maderal cited a Bank Secrecy Act law broken by Elemetal, saying the company “willfully failed to develop, implement and maintain an [anti-money-laundering program] reasonably designed to prevent Elemetal from being used to facilitate money laundering and the financing of terrorist activities.”

Elemetal’s guilty plea follows the convictions of a trio of Elemetal’s precious-metals dealers who bought billions in illegally mined and smuggled gold from drug-trafficking organizations based in Peru, Ecuador, Bolivia and Colombia. The three employees — Samer Barrage, 40, Juan Granda, 36, and Renato Rodriguez, 44 — worked for Elemetal’s Miami subsidiary, NTR Metals, and they were sentenced to between six and seven years in prison after pleading guilty to a $3.6 billion money laundering conspiracy last year.

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At their January sentencings, another federal judge, Robert Scola, pointed out that the money-laundering offense was an “extremely serious crime.” Scola emphasized the “harm” of the crime itself, saying their wrongdoing contributed to the deforestation of the Amazonian rainforest and the poisoning of workers and the environment. Miners who work in the gold mines of remote jungles regularly use toxic mercury to extract gold from rock, a process that pollutes waterways and fish and poisons humans.

Scola declared that their wrongdoing caused “societal damage in South America.”

Maderal, along with fellow prosecutor Tony Gonzalez, stopped short of charging Elemetal with the money-laundering conspiracy.

Instead, the prosecutors were able to compel Elemetal’s lawyers and executives to agree to violating an anti-money-laundering law that was adopted after the Sept. 11, 2001, terrorist attacks. It requires precious-metals dealers to establish an effective compliance program to prevent the washing of “dirty” gold sold by drug traffickers and other criminals.

Between August 2012 through November 2016, prosecutors said Elemetal purchased and refined billions of dollars of gold from countries around the world, including from Central America, South America, the Caribbean and Europe, and that its trading activities involved laundering illegally mined gold, narcotics and other criminal proceeds.

In a statement filed with the company’s plea agreement, Elemetal said it bought gold from hundreds of traders and businesses in Peru, Ecuador and Bolivia “without requesting” identification or the source of their gold. Elemetal also purchased gold from “collectors” who tapped into a variety of small, artisanal suppliers whose precious metals could not be traced. Elemetal also purchased gold that was smuggled from Peru into Ecuador and Bolivia without knowing or disclosing the sources, including using the owner of an upscale home decor store in Coral Gables to consign dirty gold deals.

Internal company emails showed that an Elemetal compliance officer warned the company’s executives and its three NTR Metals dealers early on about buying gold from certain foreign traders, especially a suspected Peruvian drug trafficker who went by the name “Peter Ferrari.” He was linked to a seizure of gold shipments by Peruvian authorities in 2013 and has now been indicted in Miami’s massive money-laundering case.

In a news release, Elemetal blamed its former NTR employees while admitting its own failures to maintain an effective anti-money-laundering program.

“Elemetal wholeheartedly condemns the shocking behavior of these former NTR Miami employees in South America,” said the release, issued by Elemetal CEO Bill LeRoy. “Elemetal, however, also accepts full responsibility for its employees, the employees of its subsidiaries, and the failure of its international anti-money-laundering program to prevent the misdeeds of the employees operating in South America.”