Twenty-One Defendants Charged In Manhattan Federal Court With Participating In Multimillion-Dollar Scheme To Extort Others By Posing As DEA Agents

The U.S. Attorney's Office for the Southern District of New York released the below information yesterday:

Preet Bharara, the United States Attorney for the Southern District of New York, and Michele M. Leonhart, the Administrator of the United States Drug Enforcement Administration (“DEA”), announced today that 21 citizens of the Dominican Republic have been charged with conspiring to impersonate United States law enforcement officers, extortion, and wire fraud. Beginning two weeks ago, authorities in the Dominican Republic, acting on requests from the United States, located and arrested 17 of the defendants in the Dominican Republic, who are now awaiting extradition proceedings in that country. Four defendants remain at-large.

The defendants are alleged to have engaged in a scheme to extort money from individuals located in the United States by posing as DEA Agents or other representatives of the United States Government. The defendants targeted individuals who they believed had illicitly purchased prescription pharmaceuticals through call centers located in the Dominican Republic. As part of the defendants’ scheme, a member of the conspiracy would call a victim located in the United States and identify him- or herself as a DEA agent or representative of another United States agency. The victim would then be told that he or she was under investigation for illegally purchasing prescription drugs, and that the only way to avoid arrest and jail would be to pay a “fine” or some other fee to the DEA. In total, the defendants and others who participated in this scheme and copy-cat schemes demanded at least $3.5 million, and received at least $880,000, in extortionate payments from victims in the United States.

United States Attorney Preet Bharara said: “These defendants generated untold millions of dollars in illicit profits by posing as DEA Agents or other U.S. law enforcement officers. They carried out the internet or telephone equivalent of displaying phony badges to rip off their victims. In the process, the defendants assaulted the good name of the DEA. We commend the DEA for putting a stop to this criminal charade.”

DEA Administrator Michele M. Leonhart said: “These alleged criminals not only bilked thousands of dollars from unsuspecting Americans but they also called into question the integrity and honor of the DEA and all law enforcement. The DEA, with the assistance of our Dominican Republic counterparts, have worked diligently to identify, target and, ultimately, dismantle this group of alleged scam artists. We urge anyone who receives a similar threatening phone call to hang up and contact local or federal law enforcement immediately.”

According to the Indictment, which was unsealed today in Manhattan federal court:

From at least 2008, up to and including March 2013, JULIO SANTANA JOSEPH, FRANCISCO RUBIO MONTALVO, ANGEL PEREZ AVILES, a/k/a “Mike,” DEIVY BURGOS FELIX, CHENGY PADILLA GARO, GEURY GUZMAN ROSA, DANTE CAMINERO VASQUEZ, SAUL HERNANDEZ BATISTA, MOISES DE LA CRUZ DECENA, CELSO MIGUEL SARITA, EDWARD CUEVAS ESCANO, SANTIAGO GUZMAN GONZALEZ, JOSE ARISMENDY CUESTA ABREU, CARLOS PERDOMO ROSARIO, a/k/a “El Depo,” ELINSON REYES ALMONTE, YEURY AMARANTE ROSARIO, MARIO ANTONIO PLACIDO, YGNACIO ESTEVEZ MESSON, BORIS GIL GUERRERO, VICTOR VELASQUEZ ROCHTTIS, a/k/a “Vitico,” and RAFAELA MEDINA, a/k/a “Carolina,” the defendants, and others known and unknown, engaged in a scheme to extort money from individuals located in the United States by posing as DEA Agents or other representatives of the United States Government (the “Impersonation and Extortion Scheme”). Each of the defendants made extortionate calls and/or received money from victims who had been extorted. The Impersonation and Extortion Scheme targeted individuals who the defendants believed had purchased prescription drugs unlawfully over the internet or through call centers. The illicit websites and call centers at issue sold pills to customers that would typically require a doctor’s prescription to purchase. The illicit websites and call centers did not require consumers to obtain the required prescriptions before purchase (hereinafter, the pills sold in this manner are referred to as the “Prescription Drugs”).

The DEA Impersonation and Extortion Scheme typically operated as follows: First, certain of the defendants and other individuals not named as defendants who engaged in the Impersonation and Extortion Scheme (the “Extorters”) purchased, or otherwise obtained, lists of individuals who the Extorters believed had previously purchased Prescription Drugs over the internet on illicit websites or through illicit call centers located in the Dominican Republic (“Customer Lists”). The Customer Lists generally contained the names, addresses, credit card numbers and other information for individuals located in the United States.

Second, an Extorter contacted a customer from the Customer Lists (the “victim”) and identified him- or herself as a DEA agent or representative of another United States agency. Often, the Extorter provided the name of an actual DEA supervisor from a DEA office located in the United States. The Extorters attempted to extort money from victims throughout the United States, including victims in Manhattan and the Bronx, New York.

During a call with a victim, an Extorter falsely informed the victim that authorities in the Dominican Republic or elsewhere were investigating or criminally charging the victim as a result of his or her illegal purchase of Prescription Drugs that were sent to the victim from the Dominican Republic. In a single call or series of calls and emails, the Extorter detailed the purported criminal charges and potential penalties facing the victim, including imprisonment, and the likelihood that the victim would be arrested and extradited to a foreign country for prosecution.

During a call with the victim, an Extorter also generally informed the victim that he or she could dispose of, or avoid, the criminal charges by making a cash payment. In order to do so, the Extorter had the victim transfer between several hundred and several thousand dollars either (i) through a money remitting service to a particular individual in the Dominican Republic, or (ii) via wire transfer to a particular bank account located in the Dominican Republic.

Following receipt of a payment from a victim, an Extorter typically contacted the victim again. During the follow-up conversations, the Extorter demanded additional payments and threatened to have criminal charges re-filed against the victim. If the victim refused to make, or to continue to make, extortion payments to the Extorter, the Extorter threatened the victim with his or her imminent arrest, with searches of the victim’s home in the United States by federal law enforcement officers, or with public disclosure of the victim’s prior purchases of Prescription Drugs.

The Extorters typically made extortion calls from illicit call centers located in the Dominican Republic (the “Call Centers”). In these Call Centers, the Extorters gathered together and used multiple computers equipped with Voice Over Internet Protocol (“VOIP”) technology to make extortion calls to victims listed on a Customer List. VOIP is a means of transmitting digital voice communications over the internet via a high-speed internet connection. The VOIP technology allowed the Extorters to contact their victims by using VOIP lines that made it appear as though the Extorters were calling from telephone numbers with area codes from within the United States. For example, the Extorters used VOIP lines that made it appear as though the Extorters were calling from, among other places, Washington, D.C., and New York, New York, when, in truth, the Extorters were located in the Dominican Republic. The Extorters often made hundreds of extortion calls a day from these Call Centers to victims in the United States.

Once a particular victim made an extortion payment to one of the Extorters, the Extorter who received that payment often shared that victim’s contact information with other Extorters, who then besieged the victim with additional, repeated extortion attempts via telephone. While using these lines to further the Impersonation and Extortion Scheme, the Extorters often traded tips with other Extorters in the same Call Center on the best techniques to use to extort victims.

Beginning in June 2010, the DEA established a telephone hotline (the “Hotline”), to allow victims to report extortion attempts and other contacts with the defendants and other individuals who engaged in the Impersonation and Extortion Scheme and who posed as DEA and other federal agents. Since the Hotline was established in June 2010, through January 2013, the DEA received approximately 6,500 reports from victims of extortion attempts, nearly all of which followed substantially the same pattern described above. In sum, through the Hotline, the DEA has learned of the Extorters’ efforts to obtain over $3.5 million in extortion payments from victims, and of actual extortion payments from victims to the Extorters of over $880,000. These attempted extortions and actual extortion payment amounts reflect only what was reported to the DEA through the Hotline, and thus represent only a portion of the extortion payments that the Extorters have attempted to obtain, or actually obtained, from their victims.

*                      *                      *

Each of the defendants has been charged with one count of conspiracy to commit wire fraud, and one count of conspiracy to commit extortion, each of which carries a maximum potential penalty of 20 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. Each of the defendants has also been charged with one count of conspiracy to impersonate a United States law enforcement officer, which carries a maximum potential penalty of 5 years in prison and a fine of $250,000 or twice the gross gain or loss from the offense. The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencings of the defendants will be determined by the judge.

Mr. Bharara praised the outstanding investigative work of the DEA’s Special Operations Division, the New York Field Office of the DEA, the DEA’s Dominican Republic Country Office, the U.S. Department of Justice's Office of International Affairs, the Department of Homeland Security’s Homeland Security Investigations, and the Dominican National Directorate for Drug Control for their work in this investigation.

This prosecution is being handled by the Office’s Narcotics Unit. Assistant United States Attorneys Ian McGinley and Adam Fee are in charge of the prosecution.

The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.

DEA Announces Huge Synthetic Drug Takedown

The DEA released the below information yesterday:

MAY 07 (WASHINGTON) – The Drug Enforcement Administration (DEA), Customs and Border Protection (CBP), Immigration and Customs Enforcement Homeland Security Investigations (HSI), Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS) and other federal, state, and local partners announced the culmination of Project Synergy Phase II, an ongoing effort targeting every level of the dangerous global synthetic designer drug market. Since January and leading up to early this morning, nationwide enforcement operations have taken place targeting these drug trafficking organizations that have operated in communities across the country.

The second phase of the Project Synergy, which began January 2014, culminated this morning in 29 states, involves more than 45 DEA offices serving nearly 200 search warrants.  As of today, more than 150 individuals have been arrested and federal, state and local law enforcement authorities have seized hundreds of thousands of individually packaged, ready-to-sell synthetic drugs as well as hundreds of kilograms of raw synthetic products to make thousands more.  Additionally, more than $20 million in cash and assets were seized.  These numbers are expected to grow as investigations continue.

The Special Operations Division-coordinated Project Synergy initiative is aimed at bringing together federal, state, local, and international law enforcement resources to target the dangerous global synthetic designer drug industry through coordinated, united strategies.

In addition to targeting retailers, wholesalers, and manufacturers, many of these investigations continued to uncover the massive flow of drug-related proceeds to countries in the Middle East, including Yemen, Jordan, Syria, and Lebanon, and as well as other countries.  Investigations also targeted many trade implements such as organic leaves and packaging material used in preparation for drug re-sale and distribution. These facilitators are key players in this ever-changing designer drug industry.  

Communities, families, and individuals across the United States have experienced the scourge of designer synthetic drugs, which are often marketed as herbal incense, bath salts, jewelry cleaner, or plant food. These dangerous drugs have caused significant abuse, addiction, overdoses, and emergency room visits. Those who have abused synthetic drugs have suffered vomiting, anxiety, agitation, irritability, seizures, hallucinations, tachycardia, elevated blood pressure, and loss of consciousness. They have caused significant organ damage as well as overdose deaths. Over the past five years, DEA has identified between 200 and 300 new designers drugs from eight different structural classes, the vast majority of which are manufactured in China.

“Many who manufacture, distribute and sell these dangerous synthetic drugs found out first hand today that DEA will target, find and prosecute those who have committed these crimes,” said DEA Administrator Michele M. Leonhart. “The success of Project Synergy II could not have been possible without the assistance of our state, local and foreign law enforcement partners.  We stand united in our commitment to aggressively pursue criminals who are all too willing to experiment on our children and young adults.”

“Tragically, people die every day at the hands of illegal designer drugs," said ICE Deputy Director Daniel Ragsdale, “Through operations like this, we strike a blow to drug dealers and continue an important national conversation about the dangers associated with drug use.”

“This is another example of the partnership between CBP, HSI, and DEA to share information and participate in joint efforts to keep synthetic drugs out of the country, off the streets, and out of our communities,” said CBP Commissioner R. Gil Kerlikowske. “The specialized expertise of our CBP officers as well as the unique capabilities of CBP scientists play a vital role in contributing to the seizure and identification of these potentially deadly substances at the border.”

The first phase of Project Synergy began in December of 2012, and resulted in more than 227 arrests and 416 search warrants served in 35 states, 49 cities and five countries, along with more than $60 million in cash and assets seized.   Altogether, 9,445 kilograms of individually packaged, ready-to-sell synthetic drugs, 299 kilograms of cathinone drugs (the falsely labeled “bath salts”), 1,252 kilograms of synthetic cannabinoid drugs (used to make the so-called “fake pot” or herbal incense products), and 783 kilograms of treated plant material were seized.

As was the case in the June 2013 culmination of the first phase of Project Synergy, CBP’s National Targeting Center played a significant role in the continued success of this initiative. As part of this effort, CBP was responsible for identifying and targeting high-risk express consignment shipments suspected of containing synthetic drugs. One of the keys to the success of Project Synergy is the cooperation between CBP and DEA, who routinely share information and intelligence with each other and other partners such as DHS-HSI to strengthen and further these investigations. (see B-roll video link below)

Chemists and other scientists from DEA’s Office of Forensic Science, as well as CBP scientists across the country, were instrumental in identifying synthetic drugs and compounds designed to circumvent U.S. controlled substance classifications.  The identifying of these compounds allowed investigators and prosecutors to quickly act during the course of these investigations. As a result of these cooperative efforts between DEA and CBP through the Special Operations Division, CBP has seized over 3,000 kilograms of illicit designer drugs.  Intelligence has also been shared with other nations such as Australia and other international partners, who have in turn seized hundreds of kilograms of illicit designer substances such as cannabinoids, cathinones and GHB.

Background on designer synthetic drugs

Smokable herbal blends marketed as being “legal” and providing a marijuana-like high have become increasingly popular, particularly among teens and young adults, because they are easily available and they are more potent and dangerous than marijuana.  These products can take a variety of forms, including as plant material that has been treated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana. Synthetic cannabinoids are sold at a variety of retail outlets, in head shops and over the Internet.   Brands such as “Spice,” “K2,” “Blaze,” and “Red X Dawn” are labeled as incense to mask their intended purpose. In 2012, the Substance Abuse and Mental Health Services Administration (SAMHSA) reported 11,406 emergency department visits involving a synthetic cannabinoid product during 2010. In a 2013 report, SAMHSA reported the number of emergency department visits in 2011 involving a synthetic cannabinoid product had increased 2.5 times to 28,531.

For the past several years, there has also been a growing use of, and interest in, a variety of synthetic substances, including synthetic cathinones (stimulants/hallucinogens) sold under the guise of “bath salts” or “plant food.” Marketed under names such as “Ivory Wave,” “Purple Wave,” “Vanilla Sky,” or “Bliss,” these products are comprised of a class of dangerous substances perceived to mimic cocaine, LSD, MDMA, and/or methamphetamine. Users have reported impaired perception, reduced motor control, disorientation, extreme paranoia, and violent episodes. The long-term physical and psychological effects of use are unknown but potentially severe. The American Association of Poison Control Centers reported 2,656 calls related to synthetic cathinone (“bath salts”) exposures in 2012 and overdose deaths have been reported as well.

These products have become increasingly popular, particularly among teens and young adults and those who mistakenly believe they can bypass the drug testing protocols of employers and government agencies to protect public safety.  They are sold at a variety of retail outlets, in head shops, and over the Internet. However, they have not been approved by the Food and Drug Administration (FDA) for human consumption or for medical use, and there is no oversight of the manufacturing process.

Controlled Substance Analogue Enforcement Act

While many of the designer drugs being marketed today that were seized as part of Project Synergy are not specifically prohibited in the Controlled Substances Act (CSA), the Controlled Substance Analogue Enforcement Act of 1986 (CSAEA) allows many of these drugs to be treated as controlled substances if they are proven to be chemically and/or pharmacologically similar to a Schedule I or Schedule II controlled substance.  Synthetic drug cases prosecuted under this analogue provision have grown steadily in recent years as this problem has evolved. It has proven to be an effective tool to combat these new and emerging designer drugs.

DEA has used its emergency scheduling authority to combat both synthetic cathinones (the so-called “bath salts” with names like Ivory Wave, etc.) and synthetic cannabinoids (the so-called incense products like K2, Spice, etc.), temporarily placing several of these dangerous chemicals into Schedule I of the CSA. Congress has also acted, permanently placing 26 substances into Schedule I of the CSA in 2012.

More information about synthetic designer drugs can be found on the Drug Fact Sheets at http://www.deadiversion.usdoj.gov/drug_chem_info/index.html 

Former Guatemalan President Extradited To U.S. To Face Money Laundering Charges

The Drug Enforcement Administration (DEA) released the below information this week:

DEA Administrator Michele M. Leonhart and other federal officials today announced the extradition of ALFONSO PORTILLO, the former President of Guatemala, who is charged with conspiring to launder millions of dollars he embezzled from the Government of Guatemala through bank accounts located in the United States. Portillo arrived in the Southern District of New York last Friday and will be presented today before U.S. District Judge Robert P. Patterson.

Joining Administrator Leonhart in making the announcement were Preet Bharara, the United States Attorney for the Southern District of New York, and Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”).

DEA Administrator Michele M. Leonhart said: “Former President Portillo has been extradited to the United States for violations of money laundering. In his role as President, Mr. Portillo used our banking system to launder illegal proceeds, which is a violation of law that DEA will always aggressively investigate. Thanks to the work of many in law enforcement and DEA’s strong and cooperative relationships with the Guatemalan government, Mr. Portillo will now face justice in a U.S. courtroom.”

United States Attorney Preet Bharara said: “After three years of fighting his extradition, Alfonso Portillo has finally arrived in the United States to answer for his alleged misappropriation of millions of dollars intended for the benefit of the people of Guatemala and which he laundered through United States banks. Our ability to hold him to account for his alleged criminality and corruption is the result of the unrelenting commitment and dedication of our prosecutors and our law enforcement partners in both the United States and Guatemala.”

IRS-CI Special Agent-in-Charge Toni Weirauch said: “IRS-Criminal Investigation is dedicated to working with our law enforcement partners and sharing our financial investigative expertise to combat and disrupt criminal organizations and individuals that commit crimes against our society and the world economy, including international money laundering. To that end, we are a proud participant in the DEA’s New York Organized Crime Drug Enforcement Strike Force. These money laundering allegations are truly international in nature, as the American financial system was misused and harmed in the concealment of money embezzled from the government of Guatemala and ultimately, its people.”

According to the Indictment previously unsealed in Manhattan federal court:

PORTILLO served as the President of Guatemala from January 14, 2000, to January 14, 2004. In that capacity, he embezzled tens of millions of dollars in public funds, a substantial portion of which he laundered through American and European bank accounts.

PORTILLO misappropriated public money in at least three different ways:

First, in 2000 and 2002, PORTILLO embezzled approximately $2.5 million dollars provided by the Government of Taiwan's Embassy in Guatemala. In 2000, the Taiwanese Embassy issued three checks totaling $1.5 million, drawn upon a New York bank account created for the purpose of funding a Guatemalan program designed to purchase books for school libraries, Bibliotecas Para La Paz ("Libraries for Peace"). PORTILLO endorsed these checks and caused them to be deposited in a bank account in Miami, Florida. None of the money from the Government of Taiwan was applied towards the Libraries for Peace program; almost $1 million of the donation was ultimately diverted, through a series of transactions and transfers intended to conceal the source and origin of the funds, to bank accounts in the name of PORTILLO's former wife and daughter at Banco Bilbao Vizcaya Argentaria ("BBVA") in Paris, France. The money transferred into the BBVA Accounts was further laundered through financial institutions in Luxembourg and Switzerland, among other places.

Second, in 2001, PORTILLO embezzled approximately 30 million Quetzales (equivalent at that time to approximately $3.9 million) from the Guatemalan Ministry of Defense. PORTILLO arranged for this money to be delivered to one of Guatemala's national banks, Credito Hipocaterio Nacional ("CHN"), to which PORTILLO had previously appointed a co-conspirator ("CC-1") as the bank’s president. With the assistance of CC-1, PORTILLO directed the disbursement of the military funds to, among other things, finance a private land deal, disguise a loan to an associate, and issue checks to a company controlled by another co-conspirator. That co-conspirator then transferred a portion of that money to the BBVA accounts controlled by PORTILLO's former wife and daughter through a Miami bank account.

Finally, from approximately 2000 through 2003, PORTILLO misappropriated funds from the publicly financed reserves of CHN. PORTILLO and his co-conspirators created overdrafts in CHN accounts belonging to companies established by CC-1 and other co-conspirators. Through the use of these overdrafts, PORTILLO and his co-conspirators withdrew and transferred money from CHN accounts in excess of the accounts' otherwise existing balances. PORTILLO used these overdraft withdrawals and transfers to purchase, among other things, various personal items –- including expensive watches and cars –- for himself and his associates. On other occasions, PORTILLO and his co-conspirators used the overdrafts on CHN accounts to transfer and launder funds into business and personal accounts, maintained in the United States and elsewhere, belonging to co-conspirators. Relying on the CHN overdrafts, PORTILLO also 

transferred money to help prop up two failing banks that were principally owned by a close associate and political supporter of PORTILLO's, Banco Promotor and Banco Metropolitano.

* * *

If convicted of the money laundering conspiracy count with which he is charged, PORTILLO, 61, faces a maximum term of 20 years in prison and a maximum fine of the greater of $500,000, or twice the value of the monetary instruments or funds involved in the money laundering transactions.

Mr. Bharara specifically thanked the DEA’s New York Organized Crime Drug Enforcement Strike Force – which is comprised of agents and officers of the DEA, the New York City Police Department, Immigration and Customs Enforcement’s Homeland Security Investigations, the New York State Police, IRS-CI, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, U.S. Secret Service and the U.S. Marshals Service – the Department of State, and the U.S. Department of Justice's Office of International Affairs for their work in this investigation. Mr. Bharara also recognized and thanked the United Nations Commission Against Impunity in Guatemala ("CICIG"), the Guatemalan Special Prosecutor's Office for the CICIG, and the Ministerio Público in Guatemala for their assistance in this investigation. 

Leader Of Notorious Tijuana Cartel/Arellano-Felix Drug Trafficking Organization Sentenced To 25 Years In Prison

The below information was released by the DEA today:

*

DEA Administrator Michele M. Leonhart today announced that Benjamin Arellano-Felix (seen in the above photo), nearly 60, the former leader of the Tijuana Cartel/Arellano-Felix Organization (AFO) was sentenced today in U.S. District Court in San Diego by the Honorable Larry A. Burns to serve 25 years in federal prison. Judge Burns also ordered Arellano- Felix to forfeit $100 million in criminal proceeds. The sentence followed Arellano-Felix’s conviction for racketeering and money laundering.

*

“The Tijuana Cartel was one of the world’s most brutal drug trafficking networks, but has now met its demise with leader Benjamin Arellano-Felix’s sentencing today,” said DEA Administrator Michele M. Leonhart. “It is a major victory for DEA and Mexico’s Calderon Administration. Together, we will continue our pressure on the Mexican cartels whose leaders, members, and facilitators will be prosecuted and face the justice they fear.”

*

“Today’s prison sentence virtually ensures that Arellano-Felix will spend the remainder of his life in custody. Following this sentence, he will be deported to Mexico to finish a 22-year sentence. This is a fitting end for a person who has caused so much suffering and destruction,” commented United States Attorney Duffy. Duffy heralded the sentence as a landmark achievement in the United States and Mexico’s joint effort to dismantle drug cartels operating on both sides of the border and stated that “Attorney General Eric Holder and Mexican Attorney General Marisela Morales are pleased with today’s result and that this defendant has finally been held accountable for his crimes. Today’s sentence, together with what remains of his sentence in Mexico, will go a long way in ensuring that Arellano Felix spends his remaining years in prison.”

*

Long-reputed to be one of the most notorious multi-national drug trafficking organizations to ever exist, the AFO controlled the flow of cocaine, marijuana and other drugs through the Mexican border cities of Tijuana and Mexicali into the United States. Its operations also extended into southern Mexico and Colombia. Arellano-Felix was taken into custody by Mexican authorities on March 9, 2002. A final order of extradition to the United States was granted in 2007 and after years of unsuccessful appeals, Arellano-Felix arrived in the U.S. on April 29, 2011, to face charges in the Southern District of California for narcotics trafficking, money laundering and organized crime-related offenses. On January 4, 2012, he entered his guilty pleas before Judge Burns.

*

San Diego FBI Acting Special Agent in Charge Eric Birnbaum commented, “Today's sentencing marks the end of Mr. Arellano-Felix's reign as the leader of one of the most dangerous drug and organized crime organizations our agencies have ever investigated. While there is still much work to do, it is particularly noteworthy that this culmination would not have been possible without the cumulative efforts of law enforcement on both sides of the border. We are pleased to stand united against the violence brought forth by the AFO and see this individual brought to justice.”

*

“The money laundering investigation conducted by IRS Special Agents contributed to the dismantling of one of the most notorious and violent drug cartels in Mexico,” commented Leslie P. DeMarco, Special Agent in Charge of IRS Criminal Investigation Los Angeles Field Office. "Today’s sentencing is further evidence of the successful partnership that IRS Criminal Investigation has with other law enforcement agencies by using our financial expertise to unravel the money laundering component of this multi-national drug-trafficking organization.”

*

According to court records and the defendant’s admissions, Arellano-Felix was the leader of the AFO from approximately 1986 to until his arrest on March 9, 2002. During that time, Arellano-Felix served as the ultimate decision-maker for the AFO. Arellano-Felix issued directives to other members of the AFO, including his brothers, Ramon, Eduardo, and Francisco Javier Arellano-Felix, as well as his top lieutenants and drug-trafficking partners.

*

Arellano-Felix and other AFO members conspired to import and distribute within the United States hundreds of tons of cocaine and marijuana, for which the AFO obtained hundreds of millions in U.S. dollars in profits. At Arellano-Felix’s direction, members of the AFO kidnaped, physically restrained and murdered numerous persons in furtherance of the AFO's illegal activities. Also at Arellano-Felix’s direction, members of the AFO bribed law enforcement and military personnel, and murdered informants and potential witnesses in order to obstruct or impede the official investigation of their activities. Arellano-Felix conspired with other members of the AFO to launder proceeds of the above drug trafficking activities by directing other members to transport, transmit, and transfer hundreds of millions in U.S. dollars from the United States to Mexico.

*

This case was investigated by agents from the Drug Enforcement Administration, the Federal Bureau of Investigation, and the Internal Revenue Service-Criminal Investigation and prosecuted in the Southern District of California by Assistant United States Attorneys Joseph Green, James Melendres, and Daniel Zipp. The Criminal Division’s Office of International Affairs provided significant assistance in the extradition. The investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers. 

Afghan With Ties To The Taliban Convicted On Drug Trafficking And Narco-Terrorism Charges

The U.S. Justice Department released the below information yesterday:

WASHINGTON – An Afghan national with ties to the Taliban was convicted today by a jury in U.S. District Court for the District of Columbia of conspiracy, distribution of heroin for importation into the United States and narco-terrorism, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and Administrator Michele M. Leonhart of the Drug Enforcement Administration (DEA).

Haji Bagcho, from Nangarhar Province, Afghanistan, was investigated by the DEA for narcotics offenses. The investigation revealed that Bagcho was one of the largest heroin traffickers in the world and manufactured the drug in clandestine laboratories along Afghanistan’s border region with Pakistan. Bagcho sent heroin to more than 20 countries, including the United States. Proceeds from his heroin trafficking were then used to support high-level members of the Taliban to further their insurgency in Afghanistan.

 

Beginning in 2005 and continuing for the next five years, the DEA, in cooperation with Afghan authorities, conducted an investigation of Bagcho’s organization. With the help of cooperating witnesses, the DEA purchased heroin directly from the organization on two occasions, which Bagcho understood was destined for the United States. They also conducted several searches of residences belonging to Bagcho and his associates, recovering evidence consistent with drug trafficking. During one search, ledgers belonging to the defendant were found. One ledger, cataloguing Bagcho’s activities during 2006, reflected heroin transactions of more than 123,000 kilograms, worth more than $250 million, according to Bagcho’s ledger. Based on heroin production statistics compiled by the United Nations Office of Drugs and Crime for 2006, the defendant’s trafficking accounted for approximately 20% of the world’s total production for that year.

The investigation also obtained evidence that over several years, Bagcho used a portion of his drug proceeds to provide the former Taliban governor of Nangarhar Province and two Taliban commanders responsible for insurgent activity in eastern Afghanistan with cash, weapons and other supplies so that they could continue their “jihad” against western troops and the Afghan government.

“Haji Bagcho was a prolific and dangerous heroin manufacturer, trafficking in over 123,000 kilograms of the drug in 2006 alone,” said Assistant Attorney General Breuer. “Moreover, he used proceeds from his crimes to fund Taliban insurgents and fuel their ongoing ‘jihad’ against the United States and others. The effects of Bagcho’s criminal activity were felt all over the world, and today’s guilty verdict ensures that he will serve a lengthy prison term.”

“One of the world’s most prolific drug trafficker’s reign has come to an end,” said DEA Administrator Leonhart. “Now Haji Bagcho will serve time behind bars on the same soil he sought to destroy with his drugs, and whose troops he sought to kill through his support to the Taliban. DEA stands committed to stopping narco-traffickers, like Bagcho, and their funding of terror.”

A grand jury returned an indictment against Bagcho on Nov. 8, 2006, charging him with distributing heroin, knowing that it would be imported into the United States. A superseding indictment returned on Jan. 28, 2010, added additional charges of conspiracy to distribute and distribution of heroin, knowing or intending that it would be imported in the United States, as well as engaging in drug trafficking knowing or intending to provide something of pecuniary value to a terrorist or terrorist organization. Bagcho was brought to the United States on June 24, 2009. He faces a mandatory minimum sentence of 20 years and a maximum of life in prison. A sentencing hearing is scheduled before the Honorable Ellen S. Huvelle on June 12, 2012.

The case was prosecuted by Trial Attorneys Matthew Stiglitz and Marlon Cobar of the Criminal Division’s Narcotic and Dangerous Drug Section. The case was investigated by the DEA Special Operations Division in the United States, with assistance from the DEA’s Foreign Deployed Advisory Support Team and Kabul Country Office in Afghanistan, the U.S. Embassy in Kabul, and in close cooperation with Afghan law enforcement. The Criminal Division’s Office of International Affairs provided invaluable support.