Reporting on the Mexican Cartel Drug War

Too Big to Do Time?: Fed Wrist-slap for Wachovia Bank Makes a Farce of the Drug War

Friday, May 27, 2011 |

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The U.S. government won convictions against 23,506 drug traffickers nationwide during 2010, sending 96 percent of the offenders to prison, according to U.S. Sentencing Commission statistics.

Yet one of the biggest entities busted by the feds for involvement in drug trafficking last year received just a wrist-slap deal from federal prosecutors with nobody getting prison time.

During 2010, the U.S. government also won convictions against 806 persons involved in smaller-time drug-related money laundering, sending nearly 77 percent of those offenders to prison.

Yet when it came to a case involving billions of dollars in illegal drug profits, the federal government gave the same unusual wrist-slap to the same entity caught giving greed-blinded assistance to Mexican drug cartels by laundering billions of dollars in illegal profits for them.

So, what is this entity that federal prosecutors found worthy of big breaks for its laundering of billions of dollars, and for its blatant facilitating or tons of smuggled cocaine?

Meet Wachovia – once the nation’s sixth largest bank by assets and now a part of Wells Fargo Bank… a too-big-to-fail bank that for the feds is apparently too-big-to jail.

Wachovia recently completed what amounted to a year-long probation arising from a March 2010 settlement deal with federal prosecutors who were pursuing criminal proceedings against Wachovia for its facilitating of illegal money transfers from Mexico totaling $378-billion…a staggering sum greater than half of the Pentagon's annual budget, which included billions of dollars traced directly to violent Mexican drug cartels.

The record $160-million fine slapped on Wachovia under terms of that settlement deal included a $50-million assessment for failing to monitor cash used to ship into the US 22 tons of cocaine. (That fine amounted to less than two percent of Wachovia's profits during the prior year.)

Wells Fargo now owns Wachovia. Wells Fargo, federal prosecutors stress, was not involvement in the misdeeds that landed Wachovia in court, where it received a deferred prosecution deal.

Wells Fargo purchased Wachovia in early 2009 for $12.7-billion, shortly after Wells Fargo had received $25-billion in federal bail-out funds from the TARP program. That purchase helped make Wells Fargo America’s second-largest bank.

Many condemn the federal government settlement with Wachovia as a farce.

Criticism has come from persons in law enforcement frustrated by big-bank involvement in laundering drug money and from those who claim federal drug enforcement practices provide bigger breaks to drug kingpins than to low-level operators.

“All the law enforcement people wanted to see this come to trial. But no one goes to jail,” said Martin Woods, an English expert on anti-money laundering, whose work while with Wachovia’s London office helped unravel the drug connections. Woods says Wachovia officials bashed him for his investigative diligence and whistle-blowing as an employee.

“It’s simple: it you don’t see the correlation between the money laundering by banks and people killed in Mexico, you’re missing the point,” Woods said in an April 3, 2011 article published in The Observer, a British newspaper published on Sundays.

Wachovia’s involvement in big-time money laundering paralleled the period of a murderous escalation in violence in Mexico’s Drug War that has claimed the lives of over 40,000 Mexicans since 2006 alone, with the dead including politicians, prosecutors, police, soldiers, drug gang members and innocent bystanders.

During the same month last year when federal prosecutors gave Wachovia a break, finding no need to imprison any bank personnel for their involvement in massive drug-tainted money laundering, other federal prosecutors were pounding domestic drug dealers with long prison sentences.

For example, an Anchorage, Alaska man received a ten-year term for selling four ounces of crack cocaine, while an East St. Louis, Ill. businessman received a life sentence plus a $2.25-million fine for distributing three thousand pounds of cocaine between 2004 and his arrest in April 2008.

The amount of cocaine trafficking that sent the Illinois man to prison for life – one and a half tons - was much smaller than that single 22 ton cocaine shipment referenced in the Wachovia settlement document.

The settlement agreement Wachovia officials signed with federal prosecutors in Miami last year clearly stated that the bank knew that many of the transactions with Mexican financial institutions from 2004 to 2007 carried the stench of drugs.

That settlement agreement stated in part that as early as “2005 Wachovia was aware that other large US banks were exiting the [Mexican] business based on [anti-money laundering] concerns…Despite these warnings, Wachovia remained in business” according to news media reports.

One reason Wachovia stayed in the business as others pulled out is that the bank reaped hefty fees from that money-laundering "business," in which billions of dollars in wire transfers, traveler’s checks and bulk cash shipments went into Wachovia accounts from Mexican exchange facilities called casa de cambios (CDCs).

Jeffery Solman, the federal prosecutor who handled the Wachovia case, stated last year that “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.”

Last year Bloomberg News, in an article on the Wachovia money laundering scandal, reported how the federal government cited other mega-financial institutions in the U.S. like American Express Bank International and Bank of America for their complicity in laundering drug money.

Making a farce out of the nation's supposed War on Drugs, none of the mega-financial institutions identified by federal authorities as having been involved with laundering drug money and none of the well-paid individuals at those institutions which were facilitating that laundering has faced go-to-jail federal criminal prosecutions like those targeting small fry in the drug trade.

Days after Wachovia received its wrist-slap deal for laundering billions of dollars in drug money, federal prosecutors secured a five-year sentence for a 26-year-old Johnstown, Pa. man involved with a drug ring it claimed was responsible for $10,000 in drug sales per month.

Imprisoning that Johnstown street dealer for five years will cost taxpayers $113,115, based on the average cost of $22,623 annually to house a federal prisoner. He was one of six people netted during a drug crackdown in that small former steel town located in the mountains 66 miles east of Pittsburgh.

Alarming evidence of the Drug War farce – the prosecutorial pounding of small fry while major players get a pass – is evident in statistics from the U.S. Sentencing Commission, the federal agency that advises Congress on criminal sentencing matters.

During 2009, in the Southern Florida district where Miami is located, 96.1 percent of the 669 persons convicted in federal courts for drug trafficking received prison time. Twenty-percent of the persons convicted in Southern Florida federal courts for simply possessing drugs received prison time.

Of the 67 persons convicted of money laundering during 2009 in those same Southern Florida courts, 77.6% went to prison, according to U.S. Sentencing Commission statistics.

As noted in that April 2011 article in The Observer, the conclusion of the Wachovia case “was only the tip of an iceberg, demonstrating the role of the “legal” banking sector in swilling hundreds of billions of dollars – the blood money from the murderous drug trade in Mexico and other places in the world – around their global operations, now bailed out by the taxpayer.”

That Observer article included observations made in 2008 by the then head of the United Nations office on drugs and crime providing evidence suggesting that drug/crime money was “the only liquid investment capital” available to banks on the brink of collapse.

“Inter-bank loans were funded by money that originated from the drug trade,” the Observer article quoted the U.N. official as stating. “There were signs that some banks were rescued that way.”

The June 2010 Bloomberg News article provided an ominous observation about the wrist-slap protection large banks receive from criminal indictments due to a variant of the too-big-to-fail theory:

“Indicting a big bank could trigger a mad dash by investors to dump shares and cause panic in financial markets," says Jack Blum, a U.S. Senate investigator for 14 years and a consultant to international banks and brokerage firms on money laundering. The theory is like a get-out-of-jail free card for big banks, Blum says.

Another anti-money laundering expert disappointed with the federal government’s settlement with Wachovia is Robert Mazur, identified in the Observer article as one of the world’s “foremost figures” in providing anti-money laundering training and the point-man for US law enforcement during prosecutions against Columbian drug cartels two decades ago.

Mazur told The Observer, “The only thing that will make the banks properly vigilant to what is happening is when they hear the rattle of handcuffs in the boardroom.”

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16 Borderland Beat Comments:

'lito'brito said...

these moneylender puppet master screws are the real criminals

these are the culeros that should be feeling the fear and misery

these screw bastards are behind ALL the wars in this world

Anonymous said...

Don't know about what 'lito'brito said but I gotta agree with the feelings if not the facts. It's hard to take seeing the pics of the tortured poor people while the money lenders in power are in bed with the mafias of the world and yet don't get any punishment.

Anonymous said...

Son pura mamadas.

Anonymous said...

Good for you Mr. Woods for "whistle blowing" on Wachovia. As we can see, if an entity become unethical there is a consequences, either default or merged. Technically, the government told Wachovia that they are done and W. Fargo is taking over. However, Wachovia CEO, CFO, or Senior Managements should spend some time in jail for their unethical behavior, in laundering money for the drug cartels. There is no excuse for what Wachovia had done.

Anonymous said...

The U.S. need a stricter sentences for a white-collar crime, especially if is connected to a drug cartels. To often, big companies get away with un-ethical behavior/crime/fraud. It is the people that run the companies that are guilty, especially the upper management who is supposed to be protecting the stockholders and the society. But, all they worry about is their bonuses and golden parachute, greedy.

Anonymous said...

I read BB all the time and this article was particularly chilling. I think it takes guts to publish this (and all your articles for that matter). - Reader, left speechless, from New Mexico

Anonymous said...

I worked in banking for years.
Every year we had to do training in BSA Anti-money laundering.
The law states clearly that any transactions an employee SUSPECTS as money laundering or out of the ordinary requires a SAR ( suspicious activity report) to be sent to the Feds and failure to do so can lead to jail and fines.
Someone at Wachovia should've been prosecuted for such a long term and systematic scheme. Most large banks employ predictive models to identify these transactions, so Wachovia had no excuse except greed. But it does not suprise me that noone at Wachovia was actually prosecuted because our government has let the banks get away with a ton of other shit ( *cough* banking crisis).

Anonymous said...

'lito'brito said...
these moneylender puppet master screws are the real criminals

these are the culeros that should be feeling the fear and misery

these screw bastards are behind ALL the wars in this world

Hmm now we know why the Government gave this bank a Bail out.

Anonymous said...

Texcoco Mex said.

Money greed and lust, in this type of life, ain't nobody you can trust and there is no justice.

Anonymous said...

Another good catch by BB. Not very often do we see reports on the banking system's involvement in money laundering.

Anonymous said...

Yes, the government had let the banking industry get to big. Today, merging is a common practice for corporate America. Somebody should take at look at World Bank and IMF.....bigger than Wachovia.

Anonymous said...

Here's the first article I saw on this from last year. http://www.bloomberg.com/news/2010-06-29/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html

MaxineCA

'lito'brito said...

imf and world bank are among the upper echelons of screw owned puppet master carpetbagger groups ...search.... the rapist ... dominic strauss kahn.... for the caliber of screws operating theses criminal organizations

Anonymous said...

Welcome to America, where the Ultra rich & powerful do whatever they want and keep the money/power flowing. The war on drugs is a joke and has been since it was started,ironically by a crook(Tricky Dick). Their rules are not for them, only the middle and lower classes (us). Even if they sent any of these Bankers to the klink it would be a posh resort compared to the rape academy they would send you and I to if we were caught laundering $300 let alone $300 billion. Just think about that number, with money that big do you know how many hands were in that cookie jar. All well conected, "upstanding", influencial white people. (FYI im white, so dont flame me). And im sorry but the type of damage this money has inflicted to be made is 10 times worse than any street dealer selling any drug. 40,000 dead in 5 years, and no there not all just scumbag cartel. Not to mention the instability to the reagion, our border (US), and millions of innocent lives. "To big to fail" routine is a scare tactic used on us sheeple, and after its all said and done dont think for a second that these TRUE EVIL people didnt forget to give themselves a huge bonus and a pat on the back for a job well done of keeping 9/10ths of all money in the hands of the 1%. Like I said, welcome to America where we look down our noses at the Mexico's of the world and wag our finger while we squeeze all the juice we can. And who is held accountable for this, no one, and what will we do to prevent Wells Fargo or any other bank from this in the future, nothing. There to big to fail, aint that the truth.

Anonymous said...

Kudos for BB for reporting these filthy "White Coller" criminals for what they are. You can link them to 40,000 deaths in the last 5 years, and they wont see a hint of prison time. Shame on mainstream media for never giving the american people even a hint of the real news, we should all be seeing this on the evening news and everywhere else so that the masses could at least be enraged and informed of the hypocritical insanity that is the war on drugs and our "selective" justice system. Look at the parade of rich and powerful corporate american's that have brought our great country to its knees over the last decade alone get away with murder day in and day out (housing/banking crisis, Wall street scandals/collapse, Enron, Bernie Madoff,and the list goes on and on). No jail time, no real journalism/reporting bringing the real fact's and hidden players into the light. You have to find it in obscure places like BB. Not surprising when you think about who owns the major news outlets and the fact that the 1% are all in bed together. So I end my rant where I started, KUDOS BB. Keep the real news coming and I will turn to Katie Couric when i need the weather.

Anonymous said...

The banks are too big to fail because the government has integrated them into the White House policy making staff and the country is now being run by the banks. They will take your house, overdraft you to the hilt, and make sure you don't have enough disposable income to survive. People getting killed in Mexico, you bet, and we are now being put at the level of poor illiterates from all over the world. This is globalism (capitalism) and the national borders mean nothing to those running the show. Don't be distracted by this other crap in the news.

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