BIG NIGHT OUT ENDED DRUG STING

The dozen men appeared to be just another gathering of high-rolling,
wellheeled business executives who had traveled by private jet to discuss a
major deal over dinner and drinks at a casino designed to look like a set
from a classic Bogart movie.

After dinner, a convoy of limousines arrived to whisk the men from the
Casablanca Casino Resort in Mesquite, Nevada, 75 miles (120 kilometers)
across the desert for a night on the town in Las Vegas.

But the limos roared right past the neon lights of downtown and back onto
the open-highway, where policemen in patrol cars with lights blazing waved
them to the side of the road.

Victor Manuel Alcala Navarro's chauffeur lowered the glass partition
separating him from the passenger seats and apologized, saying, "Sorry, I
guess I was speeding."

Mr. Alcala Navarro, allegedly a top money launderer for Mexico's most
powerful drug cartel, peered out the window at a flock of plainclothes
agents heading toward the car and responded, "I think this is more than
just a speeding ticket."

The Saturday night limousine roundup on the outskirts of Las Vegas ---as
described Tuesday by U.S. Customs authorities familiar with the
operation---was part of what law enforcement officials describe as the
largest drug-money laundering case in U.S. history, note that for the first
time tied Mexico's banking system directly to the wholesale cleansing of
illicit drug profits.

The three-year sting operation, which was directed by the U.S. Customs
Service, implicated some of Mexico's largest and most prestigious banks and
penetrated Mexico's Juarez drug cartel.

Details of the investigation, in which more arrests were made Tuesday, have
stunned Mexico's law enforcement, political and financial establishments --
none of which was informed of the operation until the formal announcement
in Washington on Tuesday.

While both Mexican and U.S. authorities have attempted in the past to
prosecute individuals involved in specific cases of money laundering and
have documented widespread corruption in Mexican law enforcement and
political circles, never before has either government cast an investigative
net that attempted to document systematic drug-based corruption in Mexico's
financial institutions.

U.S. officials said the investigation could involve as much as $152 million
in more than 100 bank accounts in the United States, Europe and the Caribbean.

The sting operation, codenamed "Casablanca," began with a smallscale
investigation three years ago in an attempt to "target and penetrate those
people that were invisible to us" -- busmessmen who routed millions of
dollars in drug proceeds through complex financial paths that transformed
the cash into apparently legitimate business proceeds, according to a
senior U.S. Customs Service supervisor who directed the operation.

The sting was set in motion when undercover agents established a front
company, which they called Emerald Empire Corporation, with offices in the
Los Angeles suburb of Santa Fe Springs according to indictments unsealed in
Los Angeles federal court Monday.

Agents posing as company executives then went in search of Mexican banks
willing to accept their "dirty money." That the money was always presented
as drug proceeds was never a factor with the Mexican bankers; the only
debate was over the size of the commission the bank would receive for
handling the money. Their cut was usually about 4 percent of the amount of
the transaction.

The purported drug money was then deposited in Mexican bank accounts under
fictitious names and companies. Once deposited, a corrupt banking
official---sometimes a branch vice president or a division chief---would
call an unsuspecting counterpart at a U.S. branch of the same bank and tell
him to approve a transfer of money involving the fictitious company or
individual.

Mr. Alcala Navarrto, who quickly realized he had been trapped on the
highway outside Las Vegas on Saturday night, was one of the undercover
agents' best contacts, according to the indictment.

"Alcala Navarro would locate bankers who worked for banks based in Mexico
and request their assistance in laundering money which was represented to
be the proceeds of the sale of illegal narcotics," and he played a key role
in recruiting other bankers, the indictment said.

It described a series of meetings between Mr. Alcala Navarro and law
enforcement informers and undercover agents in which he allegedly arranged
for the laundering of tens of millions of dollars on behalf of the Juarez
cartel in Mexico and the Cali cocaine and heroin syndicate in Colombia.

Checked-by: Mike Gogulski