JUDGE THROWS OUT LAUNDERING VERDICT

Court: He Says That Venezuelan Banker Was Entrapped And That Jurors Lacked
Grounds To Convict Her In A Case Based On A Government Narcotics Sting.

In a rare move, a federal trial judge has nullified a jury's guilty verdict
and acquitted a Venezuelan banker convicted last year of laundering $4
million in narcotics proceeds.

U.S. District Judge Bernard Friedman said in a 25-page opinion that the Los
Angeles federal jury had no rational grounds for convicting Esperanza de
Saad, who ran the Miami branch of government-owned Banco Industrial de
Venezuela.

De Saad was among 100 foreigners and three major Mexican banks indicted in
1998 in connection with Operation Casablanca, a U.S. Customs Service sting
targeting drug money launderers.

In his ruling, Friedman said that, even after treating the government's
evidence in the most favorable light, it was clear that De Saad had been
illegally entrapped and that prosecutors had failed to show that she had
known she was handling illicit funds.

De Saad, 56, has been free on bail since her arrest. She had been facing a
possible prison sentence of eight to 10 years on her conviction. She is a
member of a politically prominent Venezuelan family. Her brother is the
country's former finance minister and served in the national legislature,
as did her father.

"Mrs. De Saad and her family are relieved and grateful for the judge's
decision," her Miami lawyer, Joseph E. Beeler, said Wednesday.

Assistant U.S. Atty. Duane R. Lyons, who led the Casablanca prosecution
team, said his office is considering an appeal.

"We believe the evidence at trial showed that the defendant knowingly
laundered drug proceeds," Lyons said. "We also argued, and the jury agreed
beyond a reasonable doubt, that she was not illegally entrapped."

Friedman, who is based in Detroit, presided over the five-week trial in Los
Angeles on special assignment. He mailed his ruling to lawyers this week.

Under federal court rules, a trial judge may overturn a jury's guilty
verdict if he finds that the evidence did not support a conviction. Laurie
Levenson, a former federal prosecutor who now teaches at Loyola Law School,
said such actions are rare but not extraordinary.

Central in the trial, and in Friedman's ruling, was the conduct of Fred
Mendoza, a Colombian-born U.S. citizen who worked as a money launderer and
drug trafficker for the Cali cartel before becoming a paid informant for
the Customs Service.

Mendoza, who received more than $2.1 million for his services, posed as the
leader of a ring of Los Angeles-based money launderers. Using him as a
front man, undercover customs agents were able to win the confidence of
Mexican and Colombian drug syndicates.

The agents traveled across the country, picking up millions of dollars in
cash from illegal drug deals, then laundering the money in the banking
system with the help of the Bank of America.

Once established, the Operation Casablanca team embarked on a sting to
attract corrupt bankers in Mexico and Venezuela.

In Caracas, Mendoza enlisted the help of Carmen Salima Yrigoyen, an
attorney and former judge, who offered to introduce him to cooperative bankers.

But Mendoza admitted during the trial that Salima had made him promise
never to mention drug trafficking in any conversations with local bankers,
lest they be scared off. Instead, he and Salima agreed on the term, "hot
money."

In his opinion, Friedman said the jury could only speculate that "hot
money" referred to narcotics proceeds. "Such speculation cannot be the
basis for creation of logical inferences," he wrote.

Lyons, in a legal brief opposing De Saad's acquittal, argued that the
reference to "hot money" was only one of several strong hints that Mendoza
had given to indicate that the money came from drug trafficking.

They included a comment that the money came from "financially uneducated
Colombians" and that Mendoza wanted De Saad to let him know if the FBI, the
IRS or the Drug Enforcement Administration made any inquiries about his
account.

Friedman said Mendoza's reference to financially uneducated Colombians
"relies on prejudices that have no place in the law."

While Mendoza's mention of the FBI, the IRS and the DEA "suggests that some
form of criminal activity may have been afoot," the judge said, it was not
enough to lead a rational jury to conclude that De Saad knew the money was
drug-tainted.

Friedman also discounted the significance of De Saad's receipt of four
checks totaling $20,000 from Salima, which De Saad directed her employees
to cash for her.

He said there was some credible evidence that De Saad was willing to help
Mendoza avoid taxes on income earned outside the United States.

"However," he added, "that is not the crime for which De Saad was charged."

Lyons argued unsuccessfully that De Saad's own remarks betrayed her
knowledge of the crime.

Friedman also ruled that De Saad was the victim of illegal government
entrapment, finding that she had not been predisposed to launder drug money
and that the government had gone to great lengths to induce her to do so.

Moreover, he said, Mendoza had a "tremendous financial incentive" to lure
her into the scheme. The informant's contract with the Customs Service
called for him to receive a percentage of all money laundered.

Friedman's ruling does not affect De Saad's two co-defendants who were
convicted in the same trial--Salima, 45, the Caracas lawyer, and Carlos
Izurieta Valery, 54, an investment broker. They are in custody and awaiting
sentencing.

An associate of Salima, Jose Perez, pleaded guilty on the eve of the trial.
He was sentenced to time served and allowed to return to Venezuela. Two
others indicted--Marco Tullio Henriquez, a vice president at Banco del
Caribe in Caracas, and Roberto Vivas, a representative of International
Finance Bank--are fugitives.

Of the entire cast of 100 people charged in Operation Casablanca, 60 remain
fugitives. Thirty-one defendants pleaded guilty before their trials. An
earlier trial of Mexican bankers and their associates ended with three
convictions and three acquittals.

Two leading Mexican banks, Bancomer and Banca Serfin, also pleaded guilty
on criminal money laundering charges and paid a total of $14.6 million in
fines and forfeitures. A third Mexican bank, Confia, reached a civil
settlement, forfeiting $12.2 million in exchange for dismissal of criminal
charges.