THE DIRTY BUSINESS OF MONEY LAUNDERING
U.S. Treasury records show how funds from criminal groups are laundered with ease by big banks like HSBC, Deutsche Bank, Chase and Barclays. South Florida has a key role.
Emily Spell heard the screams from outside her parents’ red brick home.
She found her brother, Joseph Williams, 31, splayed on a mattress in the basement. His eyes, half open, were yellow. His lips were blue.
“Joe, wake up! Joe, wake up!” his wife, Kristina, hollered, while pounding on his chest.
Spell, a nursing student, started CPR. Joe’s mother, who’d raced home from work at the Piggly Wiggly grocery in Garland, North Carolina, tore into the room.
“It’s OK, baby, you can go ahead and sleep,” Susan Williams said. “Do you want a cigarette? Are you cold?”
“I thought my mama had lost her mind,” Emily remembers. “Of course he was cold. Because he was dead.”
Joe’s family had no idea that he was one of the first of thousands of Americans who would die from fentanyl, the most dangerous narcotic in the world. And even after they saw the autopsy report, it wasn’t until much later that they learned of the global forces responsible for Joe’s death, including a Fort Lauderdale man who would ultimately be
sent to prison.
It took a network of traffickers stretching back to China, relying on the easy movement of dirty money through brandname financial institutions, to deliver lab-designed opioids to rural North Carolina and across the United States.
New details about how money that powered the fentanyl drug ring and more than $2 trillion in other suspect funds flowing around the globe are contained in a cache of secret financial records obtained by BuzzFeed News and shared with the International Consortium of Investigative Journalists. ICIJ assembled a global team of news organizations to analyze the documents, including, in the United States, the Miami Herald, el Nuevo Herald and their parent, McClatchy.
The records, known as Suspicious Activity Reports, or SARs, provide a worldwide tour of crime, corruption and inequality, with crucial roles played by politicians, oligarchs and swindlers, as well as the bankers who serve them all. The SARs, which are collected and analyzed by an agency called the Financial Crimes Enforcement Network, or FinCEN, show how the failure of banks and other financial institutions to thwart the flow of illicit money promotes criminality and suffering on a grand scale.
South Florida individuals, to be profiled in upcoming stories, are important players in the realm of global money movement, including:
● A Venezuelan money broker-turned-Miamibased-snitch who is suspected of laundering hundreds of millions in dirty money from his homeland. He’s now helping the feds build cases against his former associates.
● A Venezuelan construction tycoon who has earned a fortune in his socialist homeland while maintaining a lavish estate in Davie, Florida, worthy of a committed capitalist.
● A corrupt Coral Gables lawyer convicted of facilitating a global cryptocurrency business run by a Bulgarian mystery woman. The feds called it a Ponzi scheme.
● A Palm Beach County company with a bank account in the name of a now-deceased Realtor that funneled substantial sums to allies of Syrian strongman Bashar al-Assad.
In a world beset by headline-grabbing crises, including the coronavirus pandemic, the unchecked movement of dirty money may not register as an immediate threat. But the consequences are profound: Narco-traffickers and Ponzi schemers shift profits beyond the reach of authorities. Despots and corrupt captains of industry increase ill-gotten fortunes and consolidate power. Governments, starved of revenue, can’t afford medicine to treat the sick.
At the heart of these stories are real people hurt in real ways, including Joe, the son and brother felled by fentanyl.
“People may not be aware of issues like money laundering and offshore companies, but they feel the effects every day because these are what make large-scale crime pay — from opioids to arms trafficking to stealing COVID-19-related unemployment benefits,” said Jodi Vittori, a corruption expert at the Carnegie Endowment for International Peace.
But criminal networks and the law enforcement officials trying to stop them understand that an untamed tide of dirty cash is the single most important requirement of a successful criminal enterprise.
Brandon Hubbard, in prison for life for importing fentanyl in the scheme that ultimately led to the death of Joe, remembers that the police who arrested him seemed more interested in where the cash went than the powder known as China White. “That’s the first thing they asked me when they came in the door,” Hubbard said in an interview from prison. “‘Where’s the money?’ ” Hubbard denied that he knew or distributed drugs to Joe Williams.
The leaked documents include more than 2,100 Suspicious Activity Reports written by banks and other financial players and submitted to FinCEN.
FinCEN told BuzzFeed News and ICIJ that it does not comment on “the existence or non-existence of specific SARs.” It released a statement about unnamed “media outlets” that said “the unauthorized disclosure of SARs is a crime that can impact the national security of the United States.” Days before ICIJ and its partners released the investigation, the agency announced it was seeking public comments on ways to improve the U.S. anti-money laundering system.
The reports — dense, technical information bulletins — are the most detailed U.S. Treasury records ever leaked. They disclose payments processed by major banks, including HSBC, Deutsche Bank, JPMorgan Chase and Barclays. They describe journeys of dirty money that zigzag inexplicably around the world.
SARs are not evidence of wrongdoing. They reflect views by watchdogs, known as compliance officers, within banks who are reporting transactions that bear hallmarks of financial crime, or that involve clients with high-risk profiles or past run-ins with the law.
Four hundred journalists from almost 90 countries burrowed into the leaked records involving transactions that took place between 1999 and 2017. Their stories, published today and over the next several days, are called the FinCEN Files.
The political figures who are featured in the documents include Paul Manafort, the former Donald Trump campaign manager who was convicted of fraud and tax evasion. JPMorgan reported that it moved money between Manafort and his associates’ shell companies as recently as September 2017, long after his ties to Russian-connected Ukrainian officials and suspected money laundering had been widely reported.
Dozens of stories across the FinCEN Files investigation trace money transfers, from foreign capitals to companies that exist only on paper, handled by global banks that have long catered to oligarchs and despots and have felt little real pressure to stop. This system has had lasting consequences that ravage the lives of people like those you may know.
A Texas retiree thought that he had found true love with an Austin college student he met online and paid into a Bank of America account owned by a failed Nigerian politician. Russian parents who needed to ferry their sick child to a hospital in St. Petersburg, Russia, wired $15,000 to a used-car salesman in New Jersey who promised — but never delivered — a second-hand Honda.
And a North Carolina man nursing a secret addiction paid a few dollars for a white powder that traversed three countries and ended his life.
CHEATED OUT OF DREAMS
“Emily, what the hell is fentanyl?”
Joe Williams’ mother was standing in her daughter’s kitchen holding the toxicology report that had arrived in the mail that day in 2014.
Emily Spell had heard of the opioid in nursing school. “Like, a pain medication they give to cancer patients,” she responded.
Williams, a father of four, lived on the eastern border of Garland, home to just over 600 people, blueberry fields and hog farms. “Greatness Grows in Garland” is a town slogan, but evidence of that greatness has been harder for some people of Joe’s generation to find. No new homes have been built in years, and local leaders recently disbanded the police force due to budget constraints. The town has been hit hard by COVID-19.
On a recent summer day, locals, some wearing face masks, refilled propane canisters outside the bustling grocery and ordered sandwiches from Subway. The grocery is where Williams’ mom works. A lot of the shops and businesses in the center of town were closed. Weeds shot up out of cracks in the empty asphalt parking lot outside the shuttered Brooks Brothers shirt factory.
Emily suspected that her brother used drugs; he was arrested in 10th grade for bringing marijuana to school and, more recently, had pawned his father’s work tools to buy cocaine. But the family didn’t realize how much and how often the healthy-looking Joe Williams used.
As an adult, Williams bounced between jobs, played “Call of Duty” and kept his drug addiction a secret to most. Days before his death, Williams received a package mailed from Canada with five painkillers and fentanyl powder.
In 2017, U.S. prosecutors named Williams — referred to only by his initials, “J.W.” — as the first American victim of a global plot to distribute deadly drugs.
Next year, a federal judge will sentence Anthony Gomes, who pleaded guilty to conspiring to launder money generated by the distribution of drugs that killed Joe Williams and other Americans.
Authorities arrested Gomes near Fort Lauderdale in 2017, not far from his $850,000, six-bedroom Tudor cottage, bought, prosecutors alleged, with drug money. Investigators seized $150,000, Gomes’ Maserati sports car and an allterrain vehicle.
For years, Gomes and his girlfriend, Elizabeth Ton, sent bank transfers and money wires to China and Canada, the latter where the group’s ringleader operated from his jail cell.
Prosecutors said Gomes, Ton and other members of the drug and money-laundering “conspiracy” used offshore accounts, money transfers, a Bank of America account and encrypted communications to conceal their operations.
In an undated spreadsheet from the FinCEN Files, Gomes and eight others are linked to payments totaling more than $403,000 made between 2012 and 2017 via MoneyGram International, a Dallas-based money-transfer firm that in 2018 paid $125 million in penalties for violating a settlement with federal authorities intended to stop money laundering and fraud.
The FinCEN Files spreadsheet, a list of more than 1,500 SARs, was titled “VTB Bank Export,” referring to a state-owned Russian institution known as Russian President Vladimir Putin’s “piggy bank.”
VTB Bank said that it “operates strictly according to local and international laws and complies fully with all local and global regulatory standards.”
Three of the eight people named with Gomes in the spreadsheet have been charged with or convicted of drug trafficking. One, Xiaobing Yan, is the first manufacturer of fentanyl to be indicted in U.S. history. Yan, 43, operated out of Wuhan, China, and is still wanted by U.S. authorities. He has denied breaking Chinese laws or knowingly selling substances banned in the United States.
The other two were Ton, Gomes’ girlfriend, and Darius Ghahary. Both were charged with fentanylrelated crimes in 2017.
Ton would plead guilty to money laundering and is due to leave federal prison next month. Ghahary, a New Jersey man, would die in custody at 48, three days after he was indicted on charges related to a drug ring linked to China.
It is unclear exactly who paid whom and the exact route the fentanyl took to reach Garland. U.S. prosecutors trying Gomes’ case declined to answer ICIJ’s questions, citing ongoing litigation.
‘ANYONE CAN BE A TRAFFICKER’
Brandon Hubbard, the drug trafficker now in a North Dakota prison, didn’t see himself as a financial crook.
“I think of money launderers as people who invest in car washes or restaurants” to make dirty money legitimate, Hubbard told ICIJ, or who do “what Russian oligarchs do in getting their money out of Russia into American real estate.”
Then he became one himself. Hubbard, a former high school wrestler who grew up in Portland, Oregon, said he was shocked when the police told him that he was charged not only with distributing deadly drugs but with financial crime, too.
“I never considered anything I did as money laundering,” Hubbard said. “But, you know, I was sentenced to eight years for it.“
The Treasury Department last year issued an advisory to financial institutions to raise their awareness of schemes that enable the flood of opioids. Financial and court data show that fentanyl traffickers range from hardened criminals with networks of intermediaries to a Pittsburgh resident who paid via MoneyGram to have 100 grams of fentanyl delivered to an address under the name Avon Barksdale, a fictional character from the HBO series “The Wire.”
“Anyone can be a trafficker now because of smartphones,” said Donald Im, an assistant special agent in charge with the U.S. Drug Enforcement Administration. “If anyone can be an Uber driver, anyone can be a drug trafficker.”
Traffickers use “all methods of the economy and the financial system,” said Im, who worked on Operation Denial, an ongoing investigation into the trafficking of fentanyl and other drugs. Hubbard’s and Anthony Gomes’ convictions were the results of the operation.
A few months ago, police called Emily Spell’s home with an update. They’re having trouble nabbing the “main drug lord” from China, Emily remembers from the call.
“As small as this town is and as rural as this town is,” she said, “for my brother to have gotten drugs that ended up coming from all over the world, it’s really mind-blowing.”
In 2018, the most recent total available, more than 31,000 Americans died from synthetic opioids, including fentanyl. Fentanyl and other laboratorymade drugs, some 10,000 times more potent than morphine, now kill more Americans than any other opioid. The U.S. Treasury Department says that financial crime makes it all possible.
Contributors: Agustin Armendariz, Simon Bowers, Wahyu Dhyatmika, Emilia Diaz-Struck, Momar Dieng, Abdelhak El-Idrissi, Azeen Ghorayshi, Adebayo Hassan, Karrie Kehoe, Mohammed Komani, Tanya Kozyreva, Malek Khadhraoui, Vlad Lavrov, Andrew W. Lehren, Anna Myroniuk, Toshi Okuyama, Delphine Reuter, Mago Torres, Tom Warren, Amy Wilson-Chapman and Farruh Yusupov.
Also contributing: Miami Herald staff.