MIAMI -- Drug traffickers have laundered hundreds of millions of dollars in cocaine profits through several city institutions, despite the efforts of federal, state and local investigators.
A federal grand jury is investigating Republic National Bank in one of the most intensive money-laundering cases in U.S. history, and at least five other banks are under scrutiny, The Miami Herald reported Sunday.
The Herald's six-month investigation found that Miami leads the nation with a $5.1 billion cash surplus in its banking system, a tell-tale sign of the drug trade.
Drug agent Al Coward said: 'I suspect the skyline of this town would change dramatically if there were no cocaine.'
Another indication of the volume of drug money is that car dealers in Miami transact six times as much business in cash as do dealers in the slightly larger Tampa-St. Petersburg area, the state comptroller's office said. In the past four years, $433.6 million in cash was spent on cars in the area.
The U.S. Drug Enforcement Administration seized $210 million in cash and property in Miami in 1989, compared with Los Angeles' $159 million and $95 million in New York.
Federal agents, using sophisticated computers and stringent new laws, have been concentrating on the drug money trail as never before. But money launderers have become more sophisticted, too, increasingly hiding money in bogus loans, offshore bank accounts, shell corporations and electronic wire transfers that can move cash around the world in moments.
Federal agents cracked the most sophisticated money-laundering network in the nation's history last spring, a ring that allegedly used a south Florida gold refiner and Los Angeles jewelers to hide $1.2 billion in 18 months for the Columbian drug syndicate known as the Medellin Cartel.
'You can seize drugs all day long and never get past the middle level,' said David Wilson, the DEA's top money-laundering expert. 'By going after the money, you strike at the highest point in the drug trade.'
The success of this strategy depends upon the success of the cocaine trade to generate cash at a rate faster than traffickers can find ways to hide it. Estimates of the size of trade range from $25 billion to $110 billion, or 2 percent of the nation's gross national product.
Max Mermelstein, who flew about $300 million in cash from south Florida to the Medellin Cartel in the early 1980s, told The Herald that the money got so heavy that smugglers often tore the handles off their suitcases trying to carry it.
'We used to have phenomenal problems with storing it, counting it, maintaining it and delivering it,' said Mermelstein, now the most important government witness against the cartel. 'You're talking about more volume in cash than you have in cocaine. You have a kilo of cocaine, and it weighs 2.2 pounds. And you get $25,000 for it, and it weighs more. Paper is heavy. It takes up more space than cocaine.'
To use their money, high-level smugglers must find ways to get it into the international banking system.
About 10 years ago, The Herald reported, Columbian couriers brazenly hauled millions in cash to Miami banks. Laws were weak, investigative forces were small and money laundering was not yet a federal crime.
A federal campaign, Operation Greenback, began enforcing a law that requires banks to report deposits of more than $10,000 in cash. Still, said former federal prosecutor Mark Schnapp, 'All you need is a few bad bankers to get drug money into the system. You have one bad banker, he could poison all the banks' in the city.
The south Florida banks now under investigation are suspected of transferring large amounts of cash among themselves in a sophisticated scheme to hide drug money. Such transactions don't require federal reports.
'Banks continue to be involved in a major way in south Florida with the laundering of drug money,' said Daniel Dockum, IRS criminal investigations chief in the region. 'My own personal commitment is to make banks a No. 1 priority.'
