'BLOOD WIRES' OVER THE MEXICAN BORDER

Wire transfers keep crime cartels and human smugglers in the money,
officials say. Arizona's attorney general wants Western Union to
cooperate more fully with investigations.

The bleeding body of Mexican immigrant Javier Resendiz Martinez was
the first thing police noticed when they raided the bungalow on North
63rd Avenue here four years ago after reports of gunshots.

Soon afterward, however, they found payment logs of more than 100
wire transfers to Western Unions in the border town of Caborca,
Mexico -- which state and federal officials cite as evidence that the
financial services company and other money transmittersare used by
Mexican crime syndicates to help facilitate the smuggling of people
into the United States.

Arizona Atty. Gen. Terry Goddard said human smuggling has become a
$2-billion-a-year business in his state alone, thanks in large part
to what he calls "blood wires," the payments from family members,
friends and employers to smugglers via Western Union and other companies.

Goddard and other Arizona officials have not accused Western Union of
a crime. But in interviews and court documents they say the company
consistently has rejected requests for cooperation, undermining
efforts in Arizona to go after the crime cartels that control much of
the increasingly violent trade in humans, drugs, weapons and
laundered cash from their havens in Mexico.

Western Union spokesman Daniel Diaz called Goddard's accusations
"erroneous and inflammatory."

The Colorado-based company works cooperatively with law enforcement
agencies around the world to identify and prosecute illegal activity,
said Peter Ziverts, its vice president for anti-money laundering. He
said Western Union had instituted numerous reforms to detect illegal
wire transfers, including far more aggressive oversight of its
thousands of independent money-store operators.

Near the U.S. border, he said, the company caps the total amount that
someone can transfer, but keeps the cap and the time frame secret to
avoid tipping off smugglers. The company has filed more than 30,000
suspicious activity reports from Arizona, Texas and Mexico in the
last year, he said.

"We cooperate . . . and we go over and above what we're required to
do," Ziverts said.

Marcy M. Forman, who heads the investigative arm of the Department of
Homeland Security's Immigration and Customs Enforcement division,
said Western Union had cooperated on specific criminal
investigations. "When we need information, we generally don't have a
problem getting it," Forman said. "But ours is case specific. So that
may be the difference."

Homeland Security Secretary Janet Napolitano, until recently
Arizona's governor and its attorney general before Goddard, had no
comment on Goddard's ongoing battles with Western Union.

"The general strategy of targeting drug cartels and [drug and human]
smugglers by breaking their financial backbone was an approach
Napolitano originated as state [attorney general] and has proved
immensely successful at the state level," said a senior Homeland
Security official, who spoke on condition of anonymity when
discussing department thinking.

Goddard said that since he took office in 2003, Western Union had
denied many of his formal demands for information on money transfers
and refused to comply with warrants ordering the seizure of large
volumes of suspicious payments -- especially those to Caborca and
other smuggler strongholds in Mexico's Sonora state, just south of Arizona.

Western Union has argued in court that many of Goddard's demands are
unconstitutionally broad and violate the privacy of its customers,
many of whom are immigrants sending money home to Mexico. Some
customers won't want to use Western Union if their money could be
seized, it says, although it acknowledges that no transfers have been
seized in Arizona in several years. The company also opposes the
state's efforts to get access to the wire transfer data, calling that
unconstitutional.

Some judges have agreed.

Last week, the Arizona Supreme Court ruled that Goddard had
overstepped his authority in trying to seize records of wire
transfers exceeding $500 from 29 other U.S. states to Sonora.

Western Union hailed the ruling. But Goddard, a likely candidate for
governor, said the decision was narrowly focused and still would
allow him to seize some of the payments if they were linked to human
smuggling into those other states via Arizona.

He likens his request for the data to getting approval for a wiretap:
The information helps authorities find suspicious patterns of
activity, which they can use for further investigation and possible
prosecution.

Goddard said that he was focusing on money transfers because, without
them, the human smugglers would be out of business.

According to law enforcement officials, Mexican smugglers almost
always do business in cash. But migrants pay most of the $2,000 or so
fee when the trip is completed.

To ensure they get paid, smugglers hold their human cargo -- usually
half dressed and under armed guard -- in a vast network of "stash
houses" until the transfers come through. Then they whisk the
migrants by van to their destinations around the nation.

Authorities say there are about 300 stash houses around Phoenix at
any given time, each filled with dozens of immigrants. Hundreds more
hideaways are scattered throughout the Southwest and in dozens of
"corridor" states where the migrants end up.

After they reach the United States, many migrants are forced to pay
two or three times the negotiated fee -- and may be assaulted, raped
or killed if they object.

When Resendiz protested at the house on 63rd Avenue, he was given a
phone and told to call his brother in Philadelphia. Officials said
that, as his brother listened in, Resendiz, 36, argued with his
captors and was executed.

Authorities contend that tracing the flurry of electronic payments
that Western Union, MoneyGram and other firms process is vital to
finding the smugglers and their stash houses.

Between 1999 to 2001, according to a sworn declaration from Daniel
Kelly of the Arizona Financial Crimes Task Force, one group of
smugglers laundered more than $10 million through Western Union.

Since 2003, the U.S. Treasury Department and Arizona have fined
Western Union $6 million for willful failure to file suspicious
activity reports and other violations. Authorities call that a
significant disciplinary action.

"Our system wasn't nearly as robust as it is now," Ziverts said recently.

By 2005, Arizona officials said, their money seizures and enforcement
efforts had reduced the flow of smuggling proceeds into the state by
$600 million a year. The smugglers began having the money wired from
other states directly to associates in Mexico.

That year, Western Union complied with an Arizona state subpoena to
provide data for two months of wire transfers to Sonora.

Authorities found that in that short window, three suspected
smugglers linked to the stash house where Resendiz was killed had
picked up 161 wire transfers at a single Western Union in Caborca.

Only one of those payments had originated from Arizona, Kelly said --
further proof that state authorities needed broader seizure powers.

In all, $28 million flowed during that short period from other states
into Western Unions in Caborca and other Sonora smuggling hubs.

So Goddard obtained a warrant to seize those suspicious payments too.
Western Union refused to comply, and the impasse took three years to
work its way through state courts.

Goddard and other state officials say the firm has not done enough to
monitor questionable payments, institute safeguards, discipline
incompetent and unscrupulous employees.

"Western Union has made every effort to prevent data disclosure and
identification of criminal activity which we could be able to make
from that disclosure," he said during a March Senate hearing.

Western Union disagrees. The company recently agreed to provide some
of the data from other states.

But Goddard -- who has pressed for tougher federal laws and
regulations to crack down on the smugglers -- said the firm had not
done enough.

No other states, he said, systematically analyze and target suspected
smugglers' wire transfers for prosecution, and neither does the U.S.
or Mexican government. As a result, Arizona authorities said, their
hunt for the smugglers will remain largely futile.