FEDERAL AGENTS BREAK UP COLOMBIAN DRUG MONEY LAUNDERING RING

WASHINGTON - Law enforcement agents broke up a Colombian
money-laundering ring Wednesday, arresting 26 people in three
countries and seizing more than $16.5 million in cash and drugs, drug
enforcement officials said.

Arrests were made in Bogota and Cali, Colombia; New York, New Jersey,
Florida and London, England, according to Drug Enforcement
Administration officials. They requested anonymity because they were
speaking in advance of the formal announcement later in New York.

More than $10 million in alleged drug profits and more than $6.5
million in cocaine, heroin and marijuana were seized in the operation
conducted by DEA, the FBI, Immigration and Customs Enforcement, the
Internal Revenue Service, New York city and state police and Suffolk
County, N.Y., police.

The officials said the investigation targeted Colombian criminal
organizations that laundered millions of dollars worth of illegal
drug-smuggling profits through the sophisticated black market peso
exchange, an illegal currency exchange system.

All transactions in this exchange are verbal, with no paper trail. It
uses peso transactions in Colombia and dollar transactions in the
United States with no visible connection between them. These
attributes make this black market very hard for agents to detect and
for that reason has become one of the primary methods that Colombian
drug traffickers use to launder their illegal profits.

In the exchange, one or more "peso brokers" serve as middlemen between
narcotics traffickers who control huge amounts of illegal drug profits
in the United States and Colombian business people seeking to purchase
cheap U.S. dollars outside the highly regulated Colombian banking system.

The process involves three steps:

First, the drug smugglers sell their U.S. drug profits to peso brokers
in Colombia in exchange for Colombian pesos. Second, the peso brokers
use criminals in the United States to collect the drug money and
deposit the illicit funds in U.S. banks. Finally, the peso brokers
sell the drug dollars at less than the official exchange rate to
executives of Colombian businesses who want to purchase goods abroad
for import to Colombia.

In one scheme, the officials said, a peso broker in Colombia arranged
to launder illegal drug money located in New York. He arranged for
other defendants to collect the cash and turn it over to another
defendant who used it to buy used truck parts from a scrap yard he
controlled in Lindenhurst, N.J. The parts were shipped to Venezuela
and Colombia and resold for pesos, the officials said.

U.S. agents obtained seizure warrants for bank accounts throughout the
United States that they said had been used to aid the laundering.
Colombian agents conducted 24 searches in Bogota and Cali.

The defendants include people from every level of the operations -
peso brokers in Colombia, their criminal confederates in the United
States and Colombian business people who knowingly acquired the cheap
drug dollars to buy imports, the officials said.