Miami-Dade County

License To Launder: Police turned bank into laundering center

Just outside the Blue Bay Diner, an undercover officer for the Tri-County Task Force opened the trunk as a man clutching a cardboard box approached the car, tossed the container inside, then disappeared on foot in the neighborhood in Queens, N.Y. In the box: $296,375 in drug cash.

Within hours, the money was on a plane bound for Florida.

By the next day, the cache was delivered in the gleaming SunTrust lobby in the heart of Bal Harbour for what was the final and most important part of the money-laundering deal: depositing the cash and secretly wiring it to a money broker working for the drug cartels.

The place: Panama.

Despite a firm U.S. policy against police moving illegal money offshore — especially into countries on the State Department’s trouble list for laundering — the task force police officers did so anyway with the bank’s help.

The arrangement five years ago was just the beginning.

Over the next three years, SunTrust became a key ally in the task force’s ability to move millions into banks in more than a dozen countries, including China, while the officers broke all the rules to generate deals with criminal groups, the Miami Herald found.

Time and again, the bank helped the undercover unit consisting of Bal Harbour police and the Glades County Sheriff's Office move money through a pipeline of banks — some as far away as Singapore — in what was supposed to be a sting operation to infiltrate criminal organizations.

The officers turned SunTrust into an operations base, hauling duffel bags stuffed with drug cash into the facility, sorting the money with tellers and converging in the manager’s office for meetings.

To facilitate the operation, the task force enlisted the help of Ivan Morales, the 56-year-old branch manager and career banker who became an inside adviser, confidant, even a golf partner to task force members.

For years, he hobnobbed with the officers at golf outings and charity events while helping them launder at least $71.5 million in what became a troubled sting operation that ultimately did not lead to any arrests by the officers.

Details of the relationship, drawn from bank records, police reports and interviews, provide a look into how the officers from two small police agencies carried out what became the largest state money-laundering operation in a generation.

“There was a lot of cash pouring in,” said Neil Alter, a former Citigroup vice president and a current director of the Bal Harbour Citizens’ Coalition. “What would they have done without the bank?”

Just before an audit of the task force accounts late last year, Morales left his job and moved to Central Florida after spending eight years at the regional bank. He did not respond to repeated interview requests by the Herald.

Bal Harbour police sent a letter to SunTrust requesting information about the role Morales took with the task force, but the bank said it would not comply without a subpoena, said Mark Overton, Bal Harbour police chief. Hugh Suhr, a SunTrust spokesman, declined to comment.

Last week, Bal Harbour officials drafted a letter to the Florida Department of Law Enforcement asking the agency to investigate the bank’s relations to the task force, including the whereabouts of hundreds of thousands withdrawn by police officers with no records to show where the money went.

The Herald disclosed the withdrawals last month in a series that showed the task force laundered millions in drug proceeds through bank accounts — taking at least $2.4 million for themselves for brokering the deals — then returned the rest to the criminal groups that sold the drugs.

The inquiry to the FDLE has placed the focus on the banker, who spent years vouching for the task force, allowing the police to set up accounts under shell company names to protect their cover.

“They couldn’t have done a fraction of what they were able to do without him,” said Overton, who was hired after the task force disbanded in 2012.

To host the operation, the bank charged the task force thousands of dollars each month in transfer fees and other charges totaling $169,000. The police, in turn, paid the bills with the drug money.

Using fakes names and identities, the police set up accounts starting in 2009 — seven in all — in what would become the instruments to launder millions each month.

Under Florida law, police are allowed to break the law by laundering cash to infiltrate criminal groups, but they are supposed to use only domestic banks to conceal the money, according to two-decade-old federal policies.

In spite of those policies, the task force began picking up cash and moving it offshore in deals that soon turned the unit into one of the largest in the country in terms of money, records show.

In June 2010, the police picked up $152,740 from a woman pushing a baby stroller in Queens, then sent more than half to a correspondent bank, JP Morgan Chase. The instructions from SunTrust: Move the money into an account in Panama.

The next month, they did it again, this time after picking up cash outside the Blue Bay Diner, then moving the money into the same bank in Panama: Banesco. In many cases, the cops turned to the drug cash to pay their informants for arranging the deals.

“They wanted to pump as much money as possible,” said Michael McDonald, a trial consultant and former Internal Revenue Service special agent who supervised money-laundering stings. “It was off the wall.”

In each case, SunTrust sent the money to correspondent banks, with directives to move the funds overseas. The practice of sending the money offshore was particularly troubling, because it was done without alerting federal agents who may have been infiltrating the same criminal groups, said a Justice Department report in 2012.

Since 1994, the DOJ has demanded that local task forces not move drug cash overseas, partly for the safety of federal agents, and also because the United States has treaties with foreign countries that require the government to contact those nations when illegal money is placed in their banks.

“It was completely reckless,” said Michael Levine, a trial consultant and former DEA agent who authored the book Deep Cover. “You’re moving trafficker-directed funds into foreign countries. It was outrageous.”

Within two years, the task force was cutting more deals than any Florida sting operation in decades, with one in every four involving money to foreign banks — including Bank of China, HSBC in Hong Kong and Banco Territorial in Ecuador. In all, 180 payments were sent overseas, topping $9.7 million.

In some cases, the money went directly to money brokers working with the cartels; in other instances, overseas exporters in China and Mexico that were being used to launder the money.

While they were wiring money offshore, Morales struck close ties to the task force, joining them for lunches in Surfside, golf outings at Miami-Dade police chief events and police holiday parties at the Balmoral condominiums, said police officers.

When officers organized DUI checkpoints in 2010 and 2012, they set up camp at SunTrust, where barbecue and paella were served in the parking lot to the police.

“He would be at every police function — golfing, dinners,” said Brian Mulheren, director of the Bal Harbour Citizens’ Coalition and a former New York police detective. “He was one of the guys.”

Morales was also helping the officers with other transactions that would catch the attention of auditors now trying to track the money through the bank.

While officers were running the operation, they were routinely withdrawing cash from the bank — thousands at a time — with no records to show where the money was spent, the Herald found. In more than two dozen instances, the commanders took out $547,000 from SunTrust.

Auditors have now discovered in bank records that many of the withdrawals by the officers were authorized by Morales, including some of the largest, according to a confidential source. Auditors have found $800,000 in additional withdrawals by the police with no supporting records.

Overton said he requested information from SunTrust to find out if required currency reports were filed by the bank for any cash transactions exceeding $10,000, to help auditors trace the money, but he is still waiting.

“We can only go so far without getting some of these questions answered,” he said, adding he was disappointed the bank was not complying with his request. “You would think they would even want to know what happened,” he said. “Just the magnitude of the transactions.” The Federal Reserve, which regulates the branch office, declined to comment.

Former Police Chief Tom Hunker, who has not been interviewed by police, told the Herald in June that withdrawals by his officers were for legitimate expenses, including payments to informants. Overton said auditors were able to reconcile some of the payments, but most of them remain outstanding.

“We still have more questions than we have answers,” said Overton, who declined to discuss specifics of the audit. He said any interest in Morales is to help answer questions about task force spending.

Beyond the audit findings, Bal Harbour officials say they are perplexed because they have not been able to find an agreement with the bank to host the undercover sting, even though such pacts are standard, according to federal agents who have supervised stings.

Councilwoman Patricia Cohen said she did not know the officers were using the branch until she pulled up to the drive-through window and spotted a police captain hunched over a pile of cash. “They were counting it right there where anyone could have seen them,” she said.

She said some of the responsibility of the task force rests with her and the village council, which was constantly told by the police the unit was “taking bad guys off the streets.”

“I wish to this day I had listened to some of the citizens who were really asking questions at the time, and had concerns,” she said. “I was told this was bringing a lot of money to Bal Harbour. It was lucrative. But you know, it’s not supposed to be for money. Law enforcement isn’t about the money.”

Overton said he called Morales at the bank in October when the village decided to pursue an audit after officials found just $245,000 left in the accounts. “He told me that they would fully cooperate, whatever we needed,” Overton said.

Overton sent a letter on November 5 requesting critical information, including copies of monthly statements, deposit slips, wire transfers and canceled checks.

But when the chief said he walked to the bank three weeks later to talk to the manager, he learned that Morales had stepped down. Overton said a bank officer went into the former manager’s office and found the letter, still unopened.

Herald interactive news developer Chris Alcantara and Joanna Zuckerman Bernstein contributed to this report.

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