STATEMENT OF UNDER SECRETARY FOR ENFORCEMENT RAYMOND KELLY

TREASURY NEWS
FROM THE OFFICE OF PUBLIC AFFAIRS
FOR IMMEDIATE RELEASE
May 18, 1998
RR-2453

STATEMENT OF UNDER SECRETARY FOR ENFORCEMENT RAYMOND KELLY

I am pleased to be here to share with you the results of Operation Casablanca. I want to thank the Department of Justice, the Federal Reserve, the Drug Enforcement Administration, and the many state and local law enforcement agencies for their invaluable assistance. I also commend the great work of the men and women of the United States Customs Service in this case.
I particularly want to recognize the leadership of Acting Customs Commissioner Sam Banks, Customs Assistant Commissioner for Investigations Bonni Tishcler; from the Justice Department, Deputy Assistant Attorney General Mary Lee Warren, and in Los Angeles, First Assistant US Attorney Rick Drooyan and his staff.
This past Saturday and Sunday, 22 Mexican banking officials from 12 commercial Mexican banks were arrested in California and Las Vegas on charges of money laundering. The bankers had been lured there as part of an elaborate US Customs undercover operation that began almost three years ago.
This case is extremely significant because of the sheer volume of the amounts of money involved. Second, it has uncovered a systemic scheme to launder money via a large number of Mexican financial institutions and third, because it exposes a link between the Cali and Juarez cartels and their relationship with Mexican banks.
Over the past 3 years up until this weekend, this investigation has resulted in the seizure of 35 million dollars from money launderer and two tons of cocaine, four tons of marijuana and the arrest of 112 individuals.
Today, seizure warrants will be served on more than 100 bank accounts throughout the united states and in Europe controlled by the cartels. We estimate that this will result in the seizure of an additional 122 million dollars from those accounts.
Today, approximately 70 more individuals have been or will be arrested for various money laundering and drug violations. Three Mexican financial institutions, Bancomer, Banco Serfin and Confia, were indicted for participating in the drug money laundering scheme. The Federal Reserve will take enforcement action against these and all other Mexican banks under their supervision involved in this case.
The case was made possible because the Cali and Juarez cartels were infiltrated by informants and undercover agents of the us customs service.
The money laundering scheme worked like this:
Undercover agents picked up drug proceeds on the streets of major US cities and deposited those funds into undercover bank accounts controlled by the US Customs service.
The funds were transferred electronically to Mexican banks that employed the arrested individuals.
Banks drafts drawn on the us accounts of Mexican banks were delivered back to undercover agents in the US.
The funds were then disbursed at the direction of the launderers.

According to the indictment, the Mexican bankers arrested over the weekend knew that this money was the proceeds of drug trafficking and collected a commission for their services.
Cartel operatives are being taken into custody in Chicago, New York, El Paso and Los Angeles. Moreover, two Colombian money launderers have been arrested in Aruba. In Mexico, arrest warrants are being issued for Jose Alvarez Tostado, the financial manager of the Juarez cartel. In Colombia, warrants are also being issued for two major drug suppliers to the Juarez cartel in Colombia indicted in this case.
Today, we tapped into the lifeblood of the drug lords and though we did not destroy the cartels, we left them significantly weaker and much less secure. Thank you.