Miami-Dade County

Inside South Florida’s money-laundering hub

From a trailer just across from the Bal Harbour village hall, the police set up an elaborate undercover sting.

Posing as money launderers, they counted the $409,115 in drug cash that had just arrived. They bundled it. They took photos of it.

In the next few days, they delivered it: thousands of dollars to VA Cell, a company in an atrium office in Doral. Even more to GSM City, a popular computer store with a showroom just three miles away.

Armed with one of the toughest money-laundering laws in the country, the police infiltrated the drug cartels five years ago and zeroed on their money-laundering hub — setting up what should have been a sweeping crackdown on businesses used by the drug traffickers to conceal their cash.

But in the end, nothing happened.

No company owners were arrested by the Tri-County Task Force, nor were they targeted with civil actions to seize their assets. To this day, most of the exporters are open, some still suspected by federal agents of laundering money for the drug organizations, a Miami Herald investigation found.

“It was a sting operation, but there was no sting,” said Mark Overton, Bal Harbour police chief, who was hired after the task force ended. “It was a short-sighted attempt to investigate money laundering.”

The lack of enforcement represents everything that went wrong with a task force that funneled millions into the storefront businesses — gathering crucial evidence against some of the owners — yet took no enforcement actions against them.

The lapses took place at every level, from the lack of subpoenas to probe the businesses to the lack of investigative reports to take the cases to court. The breakdowns thwarted an operation that was supposed to take on one of the most thriving laundering hubs in the nation.

In its mission statement, the task force said its goal was “to significantly diminish the capacity of money-laundering organizations operating within targeted areas” and ultimately “apprehend the responsible offenders.” Yet not a single case was prosecuted.

While they delivered nearly $20 million to the storefronts — computer stores, cell phone outlets, game distributors — they charged the criminal groups tens of thousands each month in commissions to launder the money, using some of the earnings for first-class flights, luxury hotel stays and expensive purchases.

Toys R Us rendezvous

The export businesses have been used for years by the criminal groups to move drug cash out of the country and into countries like Colombia and Mexico, according to former DEA agents.

At the direction of middlemen, the undercover officers sent the money to at least 349 businesses, more than half in Miami-Dade, in a flurry of wire transfers and, in more blatant cases, dropping off the cash on the doorsteps of owners.

Two of the deliveries took place outside unlikely meeting spots: a Toys R Us, where undercover informants handed $25,000 to couriers in the parking lot, and outside a CVS store, where they dropped off $10,000, according to police emails.

With every deal, the list of exporters grew. The city with the most: Doral, the sprawling Miami suburb known for its storied PGA tournament, the Miss Universe pageant and hundreds of exporters scattered in every corner of the city.

The Herald found that at least 83 businesses in Doral — mostly computer and cell phone stores — were sent collectively nearly $7 million from the undercover cops.

Former task force members defend their investigation, saying they gave detailed intelligence to the Drug Enforcement Administration about the export businesses, leaving it up to the DEA and other federal agencies to break up the spiraling network in Miami-Dade and Broward. In most cases, they would have compromised their cover by arresting business owners or targeting them with civil lawsuits to seize their assets, they said.

“We did our jobs,” said Tommy O’Keefe, a retired Miami-Dade sergeant and commander of the Tri-County Task Force. “We gave them plenty of information.”

However, of the local businesses that took in money — 201 in Miami-Dade and Broward — only three owners were charged, and in each case, the evidence came from DEA sting investigations carried out by the agency’s own investigators, records and interviews show.

Investigation-turned-business

Three years after the task force disbanded, Bal Harbour leaders say they are left with the remnants of an investigation that identified dozens of exporters who took in numerous money wires, no questions asked.

“I look at these records, and it’s just mind-boggling,” said Overton, who once chaired the South Florida Money Laundering Strike Force oversight panel. “It’s such an aberration. The cases never culminated in any arrests.”

Hundreds of times, the cops flew outside Florida to pick up drug cash after striking deals with criminal groups, and then carted the money back to the trailer in Bal Harbour to await their orders on where to launder it.

From the first pickup in 2010 — a suitcase stuffed with cash from Houston — the officers were told to funnel the money into the bank accounts of Miami-Dade storefronts. Among the early recipients: Florida Appliances and Electronics in southwest Miami-Dade and Microbol, an electronics exporter in a strip center in Doral.

Month after month, the task force members sent money to those exporters and others after getting directions from the money brokers working with the criminal groups, records show. For the cops, the investigation turned into a business.

By funneling money to the storefronts, they were tapping into one of the oldest methods of laundering in the country.

Instead of simply moving the money through a chain of bank accounts until there is no link to the drug dealers, the system in Miami is different.

On one end are the Miami export shops that sell laptops and other goods. On the other: the retail stores in Colombia and other countries that buy the laptops from the Miami shops.

This is the way it works: After selling their drugs in U.S. cities, the cartels need to get their money out of the country. The dollars are picked up by the money launderer — in this case, the undercover cop — who then uses the dollars to pay the Miami storefronts for the laptops they ship to retail stores in Colombia.

The retail stores in Colombia then reimburse the drug cartels — in pesos — through a money broker. The Black Market Peso Exchange is complete.

In the first three months of 2010, the officers sent money to at least 40 businesses in Miami-Dade, the money wired from a bank account at SunTrust under a dummy company name created by the police.

Money from strangers

Powerful new evidence began to emerge about some of the exporters: They were getting numerous wires in large dollars amounts, sometimes three a day. “That’s what we call in our business a clue,” said Gregory D. Lee, a former DEA group supervisor who once lived in Doral.

Under Florida law, police could have pushed deeper with wiretaps on the exporters to listen to their conversations, or subpoenaed their bank records to find out if they were failing to report cash deposits of more than $10,000, a federal crime. “You go after them,” he said.

But there are no records to show the task force did either.

By 2011, the task force was pouring millions into more than 200 shops, each one becoming an important part of the deals coming in. As long as the undercover officers could meet the demands of the criminal groups by sending drug money to the exporters, the business kept coming.

The Herald found at least 10 exporters who took in a dozen or more bank wires from the undercover police. In one deal for $1.2 million on Valentine’s Day in 2011, the cops sent 40 wires — half to the export shops in Miami-Dade.

Twenty-two payments were sent to Microbol in what experts call a pattern that should have brought police scrutiny simply because of the number of wires sent from a shell company. The total amount of money: $367,251.

Even more were delivered to Florida Appliances and Electronics, which was wired two dozen payments totaling $293,041.

Nora Jimenez, CEO of Microbol, said she believed she was getting money for the goods her company shipped to buyers overseas and didn’t know she was taking in drug money. “If I sell something, I should be able to get paid for it,” she said.

Shelley Henderson, the president of Florida Appliances, said she didn’t know any money sent to her business belonged to drug organizations. “We don’t know where the money came from,” she said. Neither company has ever been charged.

In the shadow of the Fed

Former DEA agents said exporters who are sent hundreds of thousands from shell companies have a responsibility to know if the money is from a customer.

“It defies logic and credibility,” said Donald Semesky, a former IRS criminal agent who served on task forces. “They don’t want to know where the money came from. What they are saying is, ‘I didn't see the drugs. Why should I not be able to sell my wares.’”

Ironically, some of the exporters getting payments from the cops were within a short distance of the South Florida branch of the Federal Reserve, the institution that monitors the integrity of the nation’s money supply.

One of the firms was VA Cell, a busy phone exporter with gleaming white tile floors and tinted glass in Doral, and another was GSM City, a major exporter of cell phones in a strip center on one of Doral’s busiest corridors.

Again and again, the task force wired payments to the exporters, as the task force continued to launder enormous amounts of money and take in commissions. In all, the officers sent VA Cell nearly three dozen payments, including three in one day. The total: $891,499.

GSM City was sent 32 payments that topped $778,965, records show.

Ivan Garces, a forensic accountant and laundering expert who advises exporters, said firms that take in one or two wires can be excused. They may have thought the dollars were coming from a customer.

But when shops start to receive multiple wires in large amounts, and in many cases, round numbers from shell companies, “those are red flags. That’s when you ask questions.”

Under Florida law, the task force could have tried to slap civil sanctions on some exporters under a statute that gives police sweeping powers to disrupt the flow of money, including the ability to seize cash from bank accounts and impose fines.

The only law enforcement agency to take action was the Justice Department.

After a major investigation, federal agents accused VA Cell and other companies across the country of taking in thousands belonging to money brokers working for the Norte del Valle cartel, according to a federal suit in New York in 2013. VA Cell denied the allegations and settled its case, the terms kept confidential.

Lilly Ann Sanchez, an attorney for VA Cell, said her client runs a legitimate business and did not know he was getting drug cash.

GSM City ran into trouble in a federal criminal probe.

After repeatedly delivering cash to a salesman — some of it stuffed in paper bags — federal agents arrested the owners, Shamin and Amjad Azad, for failing to report the money to the government, court papers state. The men pleaded guilty last year, were sentenced to three years of probation and 200 hours of community service and agreed to forfeit $232,131. Both owners said they did not know the money had anything to do with drugs.

In 2012, the task force was reeling in major deals in New York for hundreds of thousands when the operation came to a close.

Department of Justice agents, during an inquiry into task force spending, found Bal Harbour misspent hundreds of thousands seized in drug investigations on police salaries.

By the time Bal Harbour officials shut down the unit, the officers had laundered $55.6 million — more than a third through the exporters in South Florida, the Herald found.

During the DOJ inquiry, then-Police Chief Tom Hunker told agents the task force passed tips on to federal agents around the country that sparked crackdowns on criminal groups. In just New York and Atlanta, the task force said the tips led to 110 arrests — a number that cannot be verified by the DEA.

But no enforcement took place in the hub just miles from the police trailer.

To this day, the area is dotted with export shops still suspected of taking in money for the cartels, federal agents say. Just two months ago, the Treasury Department took a rare step to stop the flow of drug dollars into the area by ordering hundreds of export shops in Miami-Dade to report any cash transactions of $3,000 or more.

One former task force member who spoke on the condition of anonymity said his fellow officers had already identified key suspects in Doral and had planned to take action before the undercover investigation was shut down.

However, even if the task force had clamped down on some export shops, it would have been hard-pressed to come up with evidence that prosecutors require in such cases: investigative reports.

Of the 235 money-laundering deals struck by the task force, the officers kept documentation in just 39.

Lee, the former DEA supervisor who worked on major undercover stings, said without detailed reports — identifying targets, money wires, cash drops — police derailed their own investigation. In addition, task force members didn’t detail the thousands of dollars they simply dropped off to to store owners to launder.

Besides wiring money, informants carried cash to export shops and individuals totaling $1.1 million. In some instances, the people and exporters are named in reports, but in many others, there are no records to show who took the bundles.

Hunker said the task force did not create reports because the officers were trying to make sure their informants were not identified. “You have to build a Chinese wall. You don’t want anything that can come back on the CI,” he said. “You could get someone killed.”

Lee said the police did not have to reveal their sources in reports. As police officers carrying out investigations, they had a duty to document their actions. “That’s no excuse for not keeping a report,” he said. “If you don’t have a report, it just raises all sorts of questions of why.”

The lack of enforcement took place at a time the export hub was booming with dollars from the Colombian cartels and drug gangs from Mexico using the area to launder large amounts of drug money, federal court documents state.

Lee said the task force was too busy striking laundering deals and picking up cash to spend the time required for laundering and fraud cases. Such a probe would have required the task force to pressure the very businesses that were serving its money-laundering purpose. Then, said Lee, “they would have killed the golden goose.”

El Nuevo Herald staff writer Enrique Flor and Joanna Zuckerman Bernstein contributed to this report.

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