In Court: Cocaine, Caribbean, Conspiracy

Drugs:

Federal case against Texasborn man calls Dominican Republic pivotal for
narcotics trade.

By MARK FINEMAN, Times Staff Writer

MIAMIWhen Luis Cano was arrested outside his $561,000 home in suburban
Miami Lakes last year, the Texasborn businessman had been out of the
United States for more than a year, according to one of his lawyers.

Cano had divided that time between Mexico and the Dominican Republic, where
he was setting up a casino business, defense attorney Emilia DiazFox told
a federal judge here a month after Cano's arrest on drug charges.
"Apparently," DiazFox said then, "he liked the environment" in the
Caribbean nation, which is widely known for its freewheeling business
climate, beach resorts, limited government regulation and now, U.S. law
enforcement agencies say, a booming drugsmuggling and moneylaundering
trade that is helping to supply the United States' multibilliondollar
cocaine market. U.S. prosecutors, who began presenting their first
witnesses and evidence in their case against Cano to a federal jury in
Miami this week, will seek to prove he headed "a massive drug conspiracy,"
court documents show.

That organization, they allege, was responsible for importing tons of
Colombian cocaine into U.S. cities, from Los Angeles to New York, between
1987 and 1996. Before the trial ends, the documents indicate, prosecutors
will present scores of witnesses and official records in an effort to prove
that Cano's organization also "washed" tens of millions of dollars in drug
profitsthrough casinos, real estate, aircraft, racehorses and even a
professional baseball teamin the Dominican Republic and elsewhere.

The case potentially offers a picture of the tentaclelike reach of such
conspiracies: In addition to cocaineproducing Colombia and transit nations
Mexico and the Dominican Republic, it touches the Roman Catholic
Archdiocese of Miami, a suburban Detroit police department, a south Texas
town, a Miami defense attorney, a former U.S. prosecutor and drug figures
in New York and Chicago. Law enforcement agents say the case against Cano
and nine accused coconspirators, including two prominent Dominican
businessmen, illustrates the pivotal way traffickers have used the
Dominican Republic to help supply illegal drugs to the U.S. and to conceal
the huge profits they generate.

"We're not talking about a gardenvariety conspiracy here. We're talking
about a massive conspiracy," Asst. U.S. Atty. Randy Hummel, coprosecutor
in the case, declared at a federal court hearing earlier this year. Cano
has consistently pleaded not guilty since his arrest 16 months ago. His
attorneys have flatly denied the government's charges. They insist that
Cano, who is 37 and of Mexican descent, is a legitimate businessman, a
loving husband and father "who is as American as apple pie."

"The government only has snitch testimony," DiazFox told the federal judge
last year. "The government doesn't have anything that's concrete. . . .
This is government snitches at their worst." Since that hearing, however,
DEA investigators have used undercover agents, wiretaps, financial
documents and cooperating drug traffickers, leading to indictments in the
Midwest: Earlier this year, federal prosecutors charged the deputy chief
and several members of the Royal Oak Township Police Department in suburban
Detroit with protecting the organization's cocaine shipments.

Prosecutors also won an indictment of a relative in Chicago of Mexico's
late drug kingpin Amado Carrillo Fuentes on charges of running the group's
distribution network there.

Tracing the Assets

But it is the case against Cano himself that federal agents and prosecutors
assert will show how the Dominican Republic has been used by the Colombian
organizations that U.S. counternarcotics officials blame for supplying
most of the cocaine consumed in the United States. "This organization has
substantial assets in the Dominican Republic . . . which was the home base
for Mr. Luis Cano," prosecutor Hummel stated. "The [U.S.] government
already has seized in the Dominican Republic, and through the cooperation
of the Dominican Republic, three aircraft worth several million dollars
that were the assets of this conspiracy. . . . Mr. Cano holds substantial
assets down there."

Among those assets, U.S. law enforcement agents say, are properties held by
the two Dominicans who were indicted along with Cano: Casino owner Edmon
Elias and Ricardo Hernandez, who owns the Cibao Eagles, one of the nation's
most popular baseball teams, were accused along with Cano of laundering
millions of dollars in cocaine profits through their enterprises.

According to court records, prosecutors will try to show how Cano allegedly
funneled those drug proceeds through the Dominican companies to make them
appear as legitimate assets and income. For example, the prosecutors
stated, real estate in the Dominican capital, Santo Domingo, and the three
aircraft were all "purchased with or traceable to proceeds from Cano's
drugtrafficking organization."

"The government's evidence in this case establishes the Dominican Republic
as the location used by this organization to secrete millions of dollars of
narcoticsderived proceeds," Hummel concluded in a court filing Aug. 29.
Neither Elias nor Hernandez has responded to the allegations in court
documents here. The two businessmenfor whom arrest warrants were issued
April 2 and who are considered fugitives by the United Stateshave taken
out advertising in the Dominican Republic asserting their innocence. U.S.
officials say it has been difficult, at best, to extradite fugitives from
the Dominican Republic.

A 1969 Dominican law prohibits extradition of its citizens, although
Dominican President Leonel Fernandez waived the law for the first time in
August, personally ordering the extradition of two accused Dominican
druggang leaders to face charges in New York. "Because of this legal
prohibition, hundreds of Dominicans who commit criminal offenses in the
United States find safe haven in the Dominican Republic," a State
Department report concluded in March. The court documents describing the
Dominican Republic's role in the drug trade are bolstered by recent State
Department drugthreat assessments and testimony by DEA administrators in
Washington.

"With a coastline of more than 1,000 miles, a 193mile border
with Haiti and its location in the Caribbean, the Dominican Republic
is a convenient staging area for the outward movement of drug
shipments from South America," said the State Department's most
recent annual International Narcotics Control Strategy Report,
which was issued in March.

Although the report praised the Dominican armed forces for
"excellent cooperation" with the United States in the drug fight and
noted recent Dominican efforts to implement a 1995 law against
money laundering, it stated that a lack of resources has left most of
the coastline and border areas "open to trafficking."

"The effectiveness of the law [against money laundering] remains
to be seen," it added.

The report went on: "There is endemic corruption among judges,
prosecutors and law enforcement officers. Convictions and assets
seizures were undermined by long delays and poorly trained
prosecutors and judges, as well as faulty case work by law
enforcement officials. . . . There are some 20,000 cases in which
the [Dominican] courts have yet to render definitive judgments."

Indictments Limited

The report stressed, however, that the State Department has "no
evidence that senior [Dominican] government officials are involved in
drug distribution or money laundering. No senior government officials
were indicted for drugrelated corruption in 1996." A spokesman for
the Dominican Republic's embassy in Washington said in a written
statement Tuesday that his government "has taken a number of measures
to avoid money laundering in the country."

He cited the 1995 law and additional Central Bank controls imposed a year
ago on companies that remit money for Dominicans living abroad. The
spokesman added that Fernandez joined President Clinton and the presidents
of Central America in May to form a working group to address security and
drug issues. And Fernandez's decision in August to extradite the two
alleged gang leaders demonstrated the government's resolve to end the
country's reputation as a drug haven, the spokesman said.

The U.S. government's case against Cano is not confined to the Dominican
Republic. Prosecutors assert they have evidence to prove that a large
portion of his organization's alleged moneylaundering activities was much
closer to homeincluding even the Roman Catholic Archdiocese of Miami.

The mortgage on the posh Miami Lakes property where Cano was arrested,
which he bought in 1993, was held by the archdiocese, which has large land
holdings. According to documents filed in the case, Cano paid off nearly
$200,000 of that mortgage to the church's financialholdings company. To do
so, he used a series of wire transfers and money orders that, according to
DEA agent Mark Minelli's October 1996 affidavit, were "suspect."

"Instead of using [his] available checking accounts, Cano paid the majority
of the payments with cash used to purchase money orders and cashier's
checks," stated Minelli, who headed the twoyear investigation into Cano's
activities and is expected to testify toward the end of the trial.

Prosecutors assert that additional drug profits were laundered through
Cano's purchase of homes in the Texas border town of McAllen, where they
allege he helped direct Colombian cocaine shipments through Mexico and into
the United States.

Underscoring the reach of the Cano case is the fact that a prominent Miami
defense attorney and one of his clients, whom authorities call a major New
Yorkbased cocainedistribution chief, were among the accused in the
conspiracy.

Attorney Michael Burnbaum, a former assistant U.S. attorney who pleaded
guilty to cocaine conspiracy charges in the case earlier this month,
testified against Cano on Tuesday, asserting that Cano had confided in him
and provided details of his drug trade in the past.

Copyright Los Angeles Times