DRUG WARRIORS - DEA, FBI, Customs & U.S./Mexico Police

GREG PASSIC

How did you get into this business of being a narc?

I was working for the Salt Lake County sheriff's office, going to night
school. My dad was a sheriff in Utah, in a small community of 20,000
people. And there was a drug problem. He went to the Bureau of Narcotics
and Dangerous Drug School in Phoenix, Arizona, to learn more about how you
do undercover work, pay informants, how you do something about drugs. He
came back from that school, and he said, "I think you ought to go into the
Bureau of Narcotics." And I said, "Why? Why the Bureau of Narcotics? I
thought you wanted me to be an FBI agent." And he said, "Take it from me,
the drug problem's going to get a lot bigger, because we are seeing it grow
right here on a little local level. We can't get a handle on it. And the
federal government is going to have to jump into this problem big time. I
think you're going to see opportunities to work overseas." You see, he knew
my personality. He knew I was more fit to be a narcotics agent . . . And
two years later I'm sitting in a hotel in Istanbul doing an undercover deal
looking across at this Turkish trafficker--saying, "You know, Dad, you're
probably right." It wasn't the worst thing that happened to me. It opened
the doors to the overseas aspect of drug enforcement. I spent 15 years over
there. I had a chance to actually work on some of the biggest drug
trafficking organizations, in the world. The Turkish part of the French
Connection.

You were overseas in the French Connection and the Turks?

Yes. We were part of the Nixon drug war. We thought this was great. The
BNDD hired 1,600 agents in 1969 through 1971, and went from 400 to 2,000.
And in 1971, part of Nixon's drug war was to shut off the French
Connection. The source of supply for the opium and morphine base was
Turkey. So the game plan was pretty simple back in those days. The Bureau
of Narcotics and Dangerous Drugs sat down. Working with the administration,
they came up with a plan where we would give $55 million in foreign aid to
the Turkish government to stop the production of opium--the raw product.
Take the opium out of the conduit into the French laboratories that fed New
York's heroin problem. Part of that deal was that they would allow
undercover agents into Turkey to monitor the success of that program. So I
was one of five undercover guys that went to Istanbul to basically buy
morphine base, to see how much was available.

And it worked?

Yes, it sure did. It shut that system down. It changed the way the French
were involved in the business, the way the Turks were. It opened the door
for the Italians. They stepped in, and then round two was the "pizza
connection." But at least we pushed them around. Did we win the war? In my
opinion, I don't know. But I know we won the battles on many occasions. And
to the DEA agents that were out there, we didn't care if we won the war or
not--as long as we won the battle. We were personally challenged by a
trafficking group that would pop up someplace. The pizza connection--the
Italians. Colombian cartels. Cali. And we considered that battle to be the
battle of the day, the effort of the day. That was the most important thing
to us. We didn't really think long range down the road, as long as that
trafficking group wasn't operating after we were finished with it.

Thirty years ago, drug enforcement was pretty centralized. What happened,
and why?

When I came on the job, the only other federal agency that was involved was
Customs. Treasury guys. And we were pretty much like the same animal,
pretty aggressive. Therefore, there were a lot of arguments, disagreements,
overlap. In fact, the DEA was created in 1973 to end this
intra-US-government drug war. They figured the war of all wars was over.
Customs, BNDD, and the other peripheral intelligence agencies were brought
together, so now we would have a unified agency addressing the problem. . . .

Why is it so important to follow the money [in order to stop drug dealers]?

It's the lifeblood of the organization. It's why they do this. They don't
sell drugs because they enjoy selling cocaine or producing speed or growing
marijuana. They do it for the profit motive. So if you want to cause
disruption, if you want to remove their ability to conduct business--and
today's trafficking groups do resemble major multi-national businesses in
many ways--you got to go after the money. We learned that early on in 1989,
1990, when we first plugged into the Medellin cartel's bank accounts, and
to the Escobar and Gacha accounts. In the first instance, we seized over
$100 million of Gacha's money. He and Escobar had no idea how we were doing
it. They panicked. They assumed that we had informants inside the
organization. There was a cleansing.

There was in-fighting, distrust. In this atmosphere of not being able to
trust each other, the cash flow dried up almost immediately. Escobar was a
billionaire in assets and land holdings in Colombia--Gacha, too. These guys
were actually cash-poor for about a three-week period. Gacha was
participating in a load of 200 keys of coke--which was nothing for this
guy--on the north coast of Colombia. He was spotted by a Colombian police
informant who identified him, and let DEA and the Colombian police know
about it. He and six of his associates were killed in a shootout with the
police, trying to put a load of dope on a boat. The only reason he was out
of his safe haven was because of the financial stress that took place
during those seizures.

So we at the DEA headquarters at the time took a step back and said, "Maybe
if we want to go after the Colombian big boys, the approach would be the
money side of the house." Twenty tons of coke in California or fifteen tons
in Mexico--it didn't seem to cause a panic. They didn't seem to care. They
seemed to be able to produce more than we could seize obviously. But when
we would make a seizure on the money side, there was
retribution--bloodletting, mistrust. They were knocked off balance. I think
this was the first time DEA really decided to come up with an approach that
went outside of DEA and included FBI customs, IRS, and the intelligence
community to launch an attack on the financial side. It kind of encouraged
us to open the doors or build those bridges to those agencies and pull them
in.

How important is this drug money, say, to the economy of Colombia?

Ironically, right now it hurts, I think, more than it helps. Initially, I
think the infusion of capital from any source is great. It creates jobs,
buys products. From a pure economic sense, an infusion of capital is good
for any country. But after a while, if it's on the dark side, what you
create are systems that are outside of the formal channel. You can't be
taxed. You destroy jobs. If it's cheaper to buy washing machines in Miami,
or Aruba, or Panama, by buying black market drug dollars, why do you want
to by an appliance produced in Colombia? You don't want to. The Colombian
tobacco industry is belly up. Five thousand jobs gone. Nobody buys
Colombian cigarettes anymore. They can buy black market American cigarettes
a lot cheaper. There was the realization that our drug money actually was
hurting Colombia's economy, that it was funding the extremist groups, the
purchases of weapons and the other bad things that go along with it.
Colombia and the United States finally came to the agreement two years ago
to really do something about the drug money. It was something that, five
years ago, you really couldn't talk about without really angering someone.

It's like the evolution of trafficking organizations that you've seen. Take
a look at Escobar. He starts out as a Robin Hood. Steals cars. Robs people.
All of a sudden, he gets a little bit of wealth. He becomes respectable,
runs for political office in Colombia. Builds soccer stadiums. All of a
sudden, now he's a respected person in this community. And then he wants to
expand his authority outside of Medellin. He tries to get involved in
Colombian politics in Bogota. There's resistance. The next thing, he's in
an all-out war with the government. And then you have the implosion. That's
the last step of the trafficking group, if you let it go long enough. Under
the old system, we had a boss who doesn't mind being a kingpin. People
honored him and his stature in trafficking. The last stage of that is
implosion. They tend to kill themselves--the competitiveness of it.

Isn't it helping US companies?

Indirectly, yes. We're selling more to Colombia. It's just reversed. The
trade figures have reversed over the last ten years. There used to be a
surplus in our favor with Colombia. We bought more coffee, flowers and
petroleum products than we sold them. But now it's just the opposite. We
sell them about $4 billion more in products than they sell us. This isn't
just directly, but through their conduits in Panama, and Aruba and
Venezuela. So, in some ways, we're getting some of our drug money at least
back into our economy. But that's a dilemma. We've got the Fortune 500
involved in our drug money-laundering process.

What do you mean?

There was a hearing, about a year and a half ago, into Colombian drug money
laundering. An IRS Customs agent and myself were asked to be witnesses
during that hearing, and described the Colombian black market. Customs
provided a hooded witness who was a money launderer in New York. She
described how she laundered money and how the banks had provided her with
the ability to do it over the Internet in an e-mail system. She could just
do it at home--transfer money. They asked her, "Where did you send your
drug money?" And she rattled off basically the Fortune 500. It started from
A and went through Z. "You sent it to all of these American companies?"
"Yes. That's where they told me to send it." It was kind of a tough pill
for them to swallow at the time, because they didn't understand it. It was
like, "How could she make these allegations that we're laundering drug
money?" And it was, "You're not laundering drug money, guys. Your companies
are selling products to people--to distributors, to wholesalers--that
accept drug money. In other words, you got washers and dryers. You sell to
Bob's Washer and Dryer in Miami. If you noticed last year, his sales went
up from 50 to 5,000 units. Well, those washers and dryers didn't stay in
Miami. They were smuggled into Colombia. And Bob--if you go take a look at
his books--Bob was paid in $10 million in cash, and third-party checks from
a lot of transfers from people who weren't his customers. I hate to tell
you this, but you do have a responsibility to help. You can't just say,
"Hey, we're not laundering the money. We're selling the products. And we're
getting paid in dollars. What's bad about that?"" Nothing's bad about that
unless it facilitates drug money laundering.

So when I say "Fortune 500," I just use that term loosely. But in essence,
any company that sells large amounts of their product into the Latin
American market and receives payment from third-party instruments is
receiving drug money.

There was a time, 30 years ago, when they didn't need to launder their
money. How have things changed? When did they start having to go through
this kind of process?

In my first coke case in Colorado, we were buying ounces in Denver. Then we
bought our way up the chain source of supply to Los Angeles. We got a kilo.
Then we rolled him, and one of the guys ended up going down to Peru to buy
five kilos. Colombia wasn't even involved in the cocaine business--the
north Colombians were your marijuana traffickers back in the mid-1970s. . .
. Then they began to see how much cocaine was worth, how valuable it was,
and what Americans were willing to pay for it. Then Colombia started
sending up a kilo or two within their marijuana loads. In fact, they were
forcing cocaine down the throats of their distributors. In Miami, if you
picked up 100 keys of marijuana, you had to take a key of coke. And they
said, "Move the coke or you can't come back and buy more marijuana."

So this distribution system that was set up to distribute marijuana was
using an economic principle back in the late 1970s, early 1980s. They've
got the distribution system. Throw the new product line in there. And then
force the buyer--your customer--to buy the new product, or you can't come
back and get more marijuana. And it worked. It spread cocaine. And finally,
it was interesting because the Cali cartel actually had the connections to
Bolivia and Peru. Medellin was buying their cocaine from Cali to begin
with, because they were closer to the source. It was only after Medellin
decided that there's so much money to be made in the coke side of the
business that Escobar, Gacha , and the Ochoas decided to move into coke.
The problem they had was that Cali, at that time, actually controlled the
main conduit into New York, and that was what Medellin needed. They needed
to have the smuggling vehicle.

Then crack comes in. In the end, who made money from crack?

The Colombians made the most money. There were organizations in New York
and Washington where you saw local traffickers become very wealthy. But
they were vulnerable. They didn't stay around for a long time--maybe a
couple of years. . . . The Colombians learned that, with our crack
epidemic, the proceeds went up. With the proceeds going up, the interest in
the wholesale market became stronger.

But was crack developed as part of that strategy of retraction in
developing this other market?

No. I think crack was just market-driven. It was easy to ingest. A lot of
the yuppies were having problems with their noses falling off. And it was
like, maybe this is something that isn't quite as dangerous. But it sure
was just as addictive, if not more addictive. All of a sudden, boom, the
market spiked. The profits spiked, and it grew. We saw the organizations
grow. We saw their wealth grow as a result of it.

So the Colombians made more money because a lot more powdered cocaine was
being sold in the States?

Yes. In some ways, it was actually easier for them. On their airdrops, a
brick of cocaine lost value if it was broken up. If it was in any way
fractured, instead of bringing $20,000 in New York, you could only get
$15,000. Crack is basically cocaine base. It was a powder. So you could
actually throw kilos of powder in the gunnysack out the back of airplane.
It didn't matter if it got tossed around or broken up. So as far as being
able to smuggle, it was easier for them, and the profits were still just as
high, if not higher.

How important has forfeiture been as a tool in this war?

It's getting bad. When I first started in 1971, we had the only forfeiture
laws on the books. If a local police officer had a drug case and wanted to
seize and forfeit a car--back then basically, that's all it was. Cars. To
get money, we had to take it through the federal system, and then we would
give it back to them. What we gained through that was a summary of the
case. Who was the bad guy? How did he work? Who'd he buy from? In the
mid-1980s, when asset forfeiture really took off, it became competitive.
Then you had law enforcement groups that were basically focusing on the
asset more than the trafficker or the dope. The asset was something that
they could roll back into their efforts, and they didn't need to use the
federal government. We didn't have to--DEA wasn't the repository or magnet
that it had been back in 1973.

So, in one way, it was good, because more people were brought on line to
fight cocaine trafficking. They were self-funded. The taxpayer didn't have
to pay for the effort. The downside was that we lost that ability to get
that intelligence in the one system, to where we could have a strategic
overview of how the bad guy was operating outside the country. You had to
go out and you had to re-establish lines that, before, were natural. They
would come into your office and share that with you.

How dependent have some of the law enforcement groups become on the money
and assets from those forfeitures?

Some are self-funded--they're totally dependent on the assets. That's not
necessarily bad. Once again, the taxpayers aren't paying for it, but the
bad guy's paying for it. But that shouldn't be the primary reason that
you're involved in the process. In some ways, we developed an approach to
the Colombians that was almost like a system of taxation, as a
multi-billion-dollar industry that was thriving. And we were able to tax it
by taking assets away from it, which we would roll back into the law
enforcement effort. But the system still survived.

I think that caused the US government to look at, "Well, what are we doing
about the system? We're having successes. We're winning battles left and
right. We're making record seizures. We're having disruptions. We're
filling the jails. But the system's still intact. Why don't we come up with
a systematic approach to take that down and stop it? To totally
incapacitate its ability to transfer funds out of the US, instead of just
taking what we can from it. Let's see if we can find the neck and strangle
it."

And that's what I think you've seen evolve just in the last couple of
years. You've seen Treasury and Justice actually sit down and say, "We want
to take on the system. We want the agencies to recognize that the system of
money laundering itself in Colombia. The integration of the drug monies
with US commerce needs to be tackled. We need to stop it. We need to shut
it down. What we called success in the past--grabbing a billion dollars
from it--they were great battles, and they were successful battles. And
sometimes they were fought at great costs by DEA guys that gave their lives
for that. But we owe them more--we need to stop the system. We need to find
out what makes it operate." . . . I'm not saying we need to shut down
international commerce. I'm just saying people who trade in commerce and
accept drug money have got to stop doing it, flat out.

In the last few weeks, we talked to a few traffickers in prison in
Colombia. They said that money laundering was not something they even
thought about in the early days.

No. They didn't even know what the laws were. In the late 1970s and early
1980s, when the Colombians actually started moving in the coke market, we
started seeing larger deposits of cash by individual Colombians at the
bank. There were more frequent reports of Colombians just marching into
banks. In fact, south Florida real estate spiked, I think they estimated
about five percent, because Colombians were buying property in south
Florida, villas, racehorses--anything of value. The money was just flying
into south Florida. And there were no laws regulating how much they could
deposit and what they could buy. But then the Treasury laws kicked in. The
Bank Secrecy Act and other restrictions on how much cash you could put into
banks, and the reporting requirements kicked in. Then we started the
evolution of no more marching down to the corner bank and dumping a
million, two million dollars in the system. That stopped. You don't have
that anymore. Cash deposits are just about non-existent... . .

How much better off are we in the overall war on drugs, now that we have
more accurate investigations with money?

Major organizations are not as big as they used to be. You don't have a
group in Colombia that actually can rewrite a constitution or influence a
presidential election--or basically hold hostage an entire government
process. You had that back in 1990, 1991, 1992. But now the money flow into
the political system was exposed, the dangers of it were exposed. Not just
what DEA did but what the other agencies did, and what the Colombians
did--bringing that out into the sunlight and exposing it. And the news
media played a tremendous role in throwing some sunlight on what impact
drug money has on a democracy, on the way a government works. We've all
played a role in it. I think we've all realized that there needs to be a
continued focus on the money side of a dope business if you want to take on
the big guys.

A US taxpayer could ask, "Why spend all this money if all we're winning is
battles, and not the war?"

I agree with them. A DEA agent's job was pretty simple. The taxpayer paid
me to do my job in taking out the criminal. The bigger the criminal, the
more challenging it was, the harder it was, but the more gratifying in the
end. But I think that we all kind of mature in the process of that. At the
end of it, we ask ourselves those questions. We still have a system intact
today. We have a problem that's grown in many ways. Maybe we should use
some of our energies and resources, like some of the retired guys out of
the law enforcement agencies. Maybe we need to sit down and brainstorm,
kick this around, and come up with some new ideas. The law enforcement guys
were always looked at as the knuckle-draggers who go out and lock up the
guy in jail, and take his dope and money away. But some of the more
creative ideas I think that I've seen in my career in the government come
from just the rank-and-file agents who came up with an idea. The bad guy is
a challenge. But I think I'm better than he is, right? If I put my best
creative ideas to task, I can take him down.

Who won the drug war?

I don't think the war is over yet. But if we back off of it and say, "We
lost. We got our butts kicked," . . . that affects our chances of success
down the road. That's why I don't like to measure it as won or lost. I like
to measure it as, "Am I still engaged? Are we still engaged? Have we still
got the resolve to do something about it?" And that's why I say we're
winning, because we haven't thrown up the flag yet. When the flag goes up,
then I guess you can decide who wins or loses. . . .

PBS Frontline Series Follow Up by Tom O'Connell, Kevin Zeese, Doug McVay,
and Eric Sterling:
http://www.drugsense.org/dsw/2000/ds00.n170.html#sec1

Campaign for the Restoration & Regulation of Hemp's HempTV website has the
full, two part, total of almost 4 hours of video of the PBS Frontline "Drug
Wars" available on the web for free video streaming using the Real Player 8.

To watch Part one of Drug Wars, go here:

http://www.crrh.org/hemptv/docs_drugwars1.html

To see part 2, go here:

http://www.crrh.org/hemptv/docs_drugwars2.html

Click this link for an index to this series:
http://www.mapinc.org/drugnews/v00.n1551.a01.html