Authorities charge man with money laundering after traffic stop

By Sanford Schmidt

EDWARDSVILLE — Authorities have charged a California man with money laundering after state police found more than $263,000 in a car he was driving.

Charged with two counts of money laundering is Daniel J. Hovland, 36, of Hayward, Calif. He is accused of transporting criminally derived property and carrying the property in bundles with rubber bands to avoid a transaction requirement. Bail was set at $200,000.

The charge came after a state trooper stopped a 2018 Toyota Camry, driven by Hovland April 26 on Interstate 70 in Collinsville. The details of the case became public Friday.

He was stopped for improper lane use, and told an officer he was traveling from “out east” back to California. However, he was unable to specify exactly from where “out east” he came.

Police brought in a drug dog who alerted on the Camry. Hovland told police he had $6,000 in his position. Police searched the car and found a suitcase in the trunk containing a large amount of bundled cash. Officers also found seven cell phones in the car.

Hovland declined to be interviewed without an attorney present. The Madison County State’s Attorney’s Office filed suit under a state law that allows law enforcement authorities to obtain assets believed used in the drug trade.

The suit claims Hovland was unable to explain the money and that he did not have a legitimate source of income for that amount of money. The suit claims the cell phones were intended for use in concealing the proceeds from some form of unlawful activity.

USA names Belize as a major drug trafficking and money laundering country

The 2018 International Narcotics Control Strategy Report (INCSR) prepared by the US Department of State has listed Belize as a major drug trafficking and money laundering country.

The INCSR is an annual report compiled by the Department of State to Congress in accordance with the Foreign Assistance Act. The report describes the efforts of key countries to attack all aspects of the international drug trade in Calendar Year 2017. Volume I covers drug and chemical control activities while Volume II covers money laundering and financial crimes.

Belize, the Bahamas, Haiti and Jamaica, were among 22 countries worldwide considered as major drug producing or major drug transit countries.

In the report, Jamaica was named as the largest Caribbean supplier of marijuana to the United States.

Washington describes a major illicit drug producing country as follows:

(A) a country where 1,000 hectares or more of illicit opium poppy is cultivated or harvested during a year; (

  1. B) a country where 1,000 hectares or more of illicit coca is cultivated or harvested during a year; or

(C) a country where 5,000 hectares or more of illicit cannabis is cultivated or harvested during a year, unless the President determines that such illicit cannabis production does not significantly affect the United States.

Belize is also named along with Bahamas, Barbados, British Virgin Islands, Cayman Islands, the Eastern Caribbean, Guyana, Haiti, Jamaica, Suriname and Trinidad and Tobago, as major money laundering countries.

The report describes a major drug-transit country as follows:

(A) a country that is a significant direct source of illicit narcotic or psychotropic drugs or other controlled substances significantly affecting the United States; or

(B) through which are transported such drugs or substances.

In January 2018,  Belize was one of three countries, the others being Haiti and Samoa, that were banned from applying for H-2A (agricultural) and H-2B (non-agricultural) work Visas by the Trump Administration.

Belize was reportedly banned from the list of countries whose citizens can apply for work Visas because of its standing on the 2017 US State Department report on Human Trafficking. In that report, Belize ranked the worst among all Central American nations with a tier 3 rating.

Man convicted of running drug, money laundering scheme

By Phil Villarreal

TUCSON, Ariz. – A Tucson man was found guilty of running a drug and money laundering scheme.

According to Attorney General Mark Brnovich, Carlos David Nogales Sr. was found guilty of laundering more than $2.8 million in drug money, as well as controlling a criminal enterprise and forgery.

The Pima County Sheriff’s Department assisted the Attorney General’s Office Southern Arizona White Collar and Criminal Enterprise and Special Investigations Section.

A Department of Economic Security audit found that Nogales received $30,000 in state benefits by not disclosing income and assets on his applications between 2011 and 2015.

Nogales was found guilty of laundering money across the country and shipping marijuana to the east coast. He had 20 pounds of marijuana when he was arrested.

Nogales will be sentenced May 25 and faces more than nine years of prison time.

Randolph man gets 15 years for dealing drugs, money laundering

BOSTON – A Randolph man was sentenced in federal court in Boston on Monday for his role in a transnational marijuana scheme that distributed thousands of pounds of marijuana and laundered millions of dollars in proceeds.

Michael Gordon, 48, was sentenced by U.S. District Court Judge Douglas P. Woodlock to 15 years in prison and five years of supervised release, and was ordered to forfeit $5 million, his interests in a house in Randolph, two houses in Florida, $371,239 seized during the investigation and an Acura SUV used to facilitate his crimes.

Last December, Gordon and his co-conspirator, Daphne Jean, were convicted by a federal jury of conspiracy to distribute and possession with intent to distribute marijuana, and conspiring to launder drug money through real estate transactions. Gordon was also convicted of conspiracy to distribute and possession with intent to distribute more than 2,000 pounds of marijuana and various counts of money laundering involving the purchase of real estate in Florida and Randolph.

From at least July 2011 to November 2014, Gordon shipped large amounts of marijuana from California to Boston through the U.S. Postal Service and Federal Express, and then distributed the drug in the Boston area. Jean assisted Gordon by renting apartments that were used to receive the shipments and helping to launder money.

Jean is scheduled to be sentenced on April 6.

Massive money laundering, drug network taken down by federal authorities

ederal prosecutors in San Diego announced Thursday they have indicted 75 people nationwide, including 40 in San Diego, in a massive drugs and money operation that interim U.S. Attorney Adam Braverman called the biggest money laundering investigation ever in San Diego.

The defendants laundered drug proceeds from the Sinaloa cartel for years, Braverman said at a news conference at the federal building in downtown San Diego announcing the wide-ranging operation. He said the network was responsible for laundering tens of millions of dollars in drug profits in the past three years.

Investigators have seized $6 million in cash as a result of a three-year probe undertaken by a long roster of federal and local law enforcement under the FBI’s Cross Border Violence Task Force, as well as hundreds of pounds of drugs like methamphetamine, fentanyl, heroin, cocaine and marijuana.

The leader of the operation, 32-year-old Jose Roberto Lopez-Albarran, was arrested in San Diego on Feb. 9 and has been in custody ever since. He made an initial court appearance Thursday afternoon in federal court.

Another 21 people who were named in a series of four related indictments handed down by a San Diego grand jury are also in custody, officials said. The balance of the 19 San Diego defendants are under indictment but remain fugitives.

While the investigation was centered in San Diego and has the majority of defendants, Braverman said another 35 people were charged for their role in the money laundering and drug sales in federal courts in Ohio, Kentucky, Kansas and Washington. At least 25 of those defendants were in custody as of Thursday.

The leader of the organization was Lopez, who authorities said oversaw a large network of people dubbed “money movers” who shuttled huge amounts of cash around the country, picking up drug sale proceeds for eventual transfer to Mexico.

The mover stashed the cash in hidden compartments of vehicles, or in cash-stuffed duffel bags, luggage, even shoe boxes. They picked up the cash in parking lots, hotels and restaurants in San Diego and other cities large and small — Dayton, Ohio, Los Angeles, and Lexington, Ky.

The cash was then deposited in banks using so-called “funnel accounts.” Such accounts, a tool of money-laundering criminal groups, are set up at U.S. banks that can receive deposits from multiple states. The money is deposited in chunks of less than $10,000 — the threshold over which banks are required to file official reports with regulators.

The money would then be wire transferred to Mexican bank accounts for bogus Mexican companies, which were actually businesses controlled by the organization. Another co-defendant, Manuel Reynoso Garcia, orchestrated the money-laundering activities.

The 62-year-old Garcia was charged last month in federal court here with money laundering conspiracy and other charges. He has pleaded not guilty. Court records show he was released on Jan. 31 on a $25,000 bond and ordered to remain on home detention and wear a GPS device to track his movements.

The investigation involved undercover work by investigators from the District Attorney’s office, sheriff and Chula Vista police to infiltrate the organization, Braverman said. Their work identified both the money movers and, through them, a network of drug trafficking cells across the country, according to authorities.

The organization used code words as well as WhatsApp, a messaging application, to communicate about the money movements and transfers.

“We have siphoned the cash and life out of a San Diego-based international money laundering organization with ties to the Sinaloa cartel,” Braverman said.

Money laundering linked to drug trade a ‘structural’ issue: SFU criminologist

Structural changes are required to clamp down on the unregulated private lending networks that drug traffickers are using to launder their illicit gains, a Simon Fraser University criminologist says.

A recent Globe and Mail investigation identified people connected to the local fentanyl trade who are also private lenders, using Vancouver-area real estate to clean their cash.

Neil Boyd, a criminology professor at SFU, said the complexity of these private lending networks and similar white-collar crimes make them notoriously hard to prosecute.

“Sometimes you can uncover it, but to prosecute it, to get the evidence, to go to court and convince a judge is incredibly difficult,” Prof. Boyd said.

“The resources required to prosecute in this area are really considerable, in contrast to a lot of the street-level crime that shows up in our courts. I think the solutions there are at the level of structure, putting in place systems that make this movement of money much more accountable.”

The Globe investigation identified, for example, Ying Zhang, Zhi Guang Zhang and Wei Zhang, a trio of private lenders that has issued millions of dollars in registered mortgages and short-term loans. In all, The Globe identified 12 private lenders associated with the illicit drug trade and other crimes.

Just as a bank does, they grant a loan, then register a land-title charge against the borrower’s real estate equal to the value of the debt, plus interest. The charge, which gives them a stake in the real estate, remains in place until the debt is cleared. If the property is sold, the loan is paid out from the sale proceeds, in clean money, all seemingly legal.

Except these financiers are unregulated and unlicensed, and the loans they grant are in cash likely derived from drug deals or other crimes. The Zhangs charge interest rates of up to 39.6 per cent, with some private lenders demanding up to 120 per cent. In the spring of 2016, police seized from the Zhangs a total of $660,970 in small bills – with traces of fentanyl and other street drugs – after watching them conduct business in and around Vancouver.

They were not charged with any crimes, but the money was seized as proceeds of crime under B.C.’s Civil Forfeiture Act. The Globe has contacted the Zhangs for comment, but has received no response.

“I don’t think there’s any doubt that people in law enforcement would like to act against this kind of predatory conduct, but I think the problem is structural,” Prof. Boyd said. “It’s almost like a shadow economic system that operates: It’s not legitimate, but how you control that system is going to require international co-operation and, in all likelihood, pretty significant restrictions against private lending.”

Staff-Sergeant Darin Sheppard of the RCMP’s Federal Serious and Organized Crime Synthetic Drug Operations, said while the scale of the issue is not yet known, it’s common for traffickers to look for new ways to launder cash. A popular newer method is through cryptocurrencies such as bitcoin.

“Drug trafficking and money laundering go hand in hand, and any method that organized crime can find to legitimize their money, they’ll likely take,” Staff-Sgt. Sheppard said. “[Private lending] is just another example.”

While people such as the Zhangs may be on police radar for an apparent connection to the local fentanyl trade, Staff-Sgt. Sheppard said the difficulty lies in drawing a direct line that would result in a conviction.

“Some of the anonymity factors that go along with all the ways that money is laundered pose challenges, as is trying to draw that line from Point A to Point B when money is being filtered, or layered, through the community,” he said.

Staff-Sgt. Sheppard said regulatory changes, such as stronger reporting requirements from all financial institutions, including private lenders, would help in investigating and prosecuting these crimes.

Attorney-General David Eby called the findings of The Globe’s investigation “very serious and deeply troubling,” and said a review expected to be complete by the end of March will be informed by its revelations.

When asked why the lenders identified by The Globe have not been charged, Mr. Eby said police are “very engaged” in an “active investigation.”