FEDERAL STING TARGETS DRUG MONEY LAUNDERING

U.S. officials claim indictments prove link between cartels and major banks
in Mexico

WASHINGTON -- Undercover U.S. agents invited Mexican bankers to a weekend
party at a Nevada casino and turned the tables on them, arresting 21 people
and rolling up a three-year drug money laundering probe that seized $157
million in Colombian cocaine profits, the Clinton administration announced
Monday.

Officials from the Customs, Treasury and Justice departments declared the
sting operation, which resulted in the indictments of three Mexican banks
- -- Bancomer, Banco Serfin and Confia -- the largest and most comprehensive
drug money laundering case in U.S. history.

Treasury Secretary Robert Rubin and Attorney General Janet Reno said the
indictments, which were unsealed in U.S. District Court in Los Angeles,
represented ``the first time Mexican banks and bank officials have been
directly linked to laundering . . . U.S. drug profits.''

The indictments, according to Treasury investigators, allege that officials
from 12 of Mexico's 19 largest banking institutions were involved in
money-laundering activities.

Investigators said they established a clear money-laundering link between
the Cali and Juarez cocaine cartels and several Mexican banks, which used
U.S. soil and five Federal Reserve-supervised foreign banking organizations
to move money between Mexico and Colombia via the United States.

The crackdown, labeled ``Operation Casablanca,'' also netted 2 tons of
cocaine, 4 tons of marijuana and $35 million in cash, plus $110 million
seized in U.S. bank accounts and $12 million in overseas bank accounts,
said Raymond Kelly, the Treasury Department's undersecretary for
enforcement.

``Today, we have hurt the drug cartels where it hurts the most, in their
pocketbooks,'' said Rubin.

``Today is a very bad day for drug dealers in the hemisphere,'' added Reno.

Rubin said: ``By infiltrating the highest levels of this international
drug-trafficking financial infrastructure, Customs was able to crack the
elaborate financial schemes the drug traffickers developed to launder the
tremendous volumes of cash acquired as proceeds from their deadly trade.''

Treasury officials said they also seized more than 100 U.S. bank accounts
through which drug money was laundered.

In all, more than 112 people were arrested over the course of the
three-year operation, although only 21 were arrested Saturday and Sunday in
California and Nevada. None of those arrested was a U.S. citizen, said
Kelly, who described the Mexican bankers as mostly ``midlevel people.''

To keep a veil of secrecy around the operation, Kelly said, no government
officials in either Mexico or Colombia were told about the probe until
after the arrests. Reno said she and Rubin spoke to their Mexican
government counterparts Monday morning and received assurances that they
would cooperate fully.

Miguel Garc(acu)a, a lawyer for Bancomer, Mexico's second-largest bank,
said Monday that Bancomer has no evidence that any of its executives were
involved in money laundering. However, he said the bank will cooperate
fully with authorities in both countries. Garc(acu)a said the magnitude of
the charges will require an investigation by Mexico's National Banking and
Securities Commission.

Carlos Gsmez y Gsmez, president of the Mexican Bankers' Association, said
Monday evening that the indictments came as a ``total surprise'' and said
his group will cooperate fully with U.S. and Mexican investigators.

``I applaud this action,'' Gsmez said. ``We should not permit
narcotrafficking and money laundering to destroy our society.''

Ricardo Sandoval of the Mercury News Mexico City Bureau contributed to this
report.

Checked-by: jwjohnson@netmagic.net (Joel W. Johnson)