THE ICE-BURG HAS BEEN TIPPED

http://news.msn.com/us/how-colombian-drug-traffickers-used-hsbc-to-launder-money
1 day ago By Carrick Mollenkamp and Brett Wolf of Reuters,

When several Colombian men were indicted in January 2010 on money laundering charges, the case in Brooklyn federal court drew little attention. It looked like a bust of another nexus of drug traffickers and money launderers, with mainly small-time operatives paying the price for their crimes. One of the men was Julio Chaparro, a 48-year-old father of four who owned three factories that made children’s clothing in Colombia. But to U.S. authorities the case was anything but ordinary. Chaparro, prosecutors alleged, helped run a money-laundering ring for drug traffickers that took advantage of lax controls at UK-based international banking group HSBC Holdings Plc. It was one of the most important leads for U.S. investigators pursuing a case against the bank that eventually led to a $1.9 billion settlement on Dec. 11. Chaparro was “basically putting the orchestra together” and investigators saw him as “a major player in terms of cleaning a lot of money,” said James Hayes, special agent in charge of Homeland Security Investigations at U.S. Immigration and Customs Enforcement in New York. Known as ICE, the agency and its task force led the probe. The Colombian’s lawyer, Ephraim Savitt, said Chaparro was a middleman in the operation, but disputed the extent of his client’s role, saying he was the “page turner of sheet music for the conductor.” Chaparro, who was arrested in Colombia in 2010 and extradited to the U.S. in 2011, pleaded guilty to a money-laundering conspiracy count in May and is awaiting sentencing in 2013.

Much about the trail that drug traffickers used to move U.S. dollars — the proceeds from drug sales — through HSBC and other banks remains unclear. By design, the process is layered to evade detection. The federal law-enforcement task force — named after El Dorado, the mythical city of gold in South America — used wiretaps, email and computer searches, information from at least one inside source, and old-fashioned surveillance to piece together the ring’s operations. Drug cartels sold narcotics in the United States and routed the cash to Mexico, often using couriers to smuggle it across the border. That cash would then be put into bank accounts at HSBC’s Mexico unit, where large deposits could be made without arousing suspicion, according to U.S. Department of Justice documents.In one filing, U.S. prosecutors said, Chaparro and others allegedly utilized accounts at HSBC Mexico to deposit “drug dollars and then wire those funds to … businesses located in the United States and elsewhere. The funds were then used to purchase consumer goods, which were exported to South America and resold to generate ‘clean’ cash.'” The El Dorado federal task force, based in a building on the west side of Manhattan near Chelsea Piers, serves as an umbrella organization for some 250 law-enforcement officials from state, local and federal agencies.

The tipping point in the investigation came in 2009 when El Dorado agents arrested a man named Fernando Sanclemente. Two sources familiar with the case say Sanclemente was an operative in Chaparro’s network. Sanclemente, who was charged with allegedly conducting financial transactions tied to narcotics trafficking, is free on bail with a $200,000 bond, according to the latest court docket entry, which dates to January 2012. His lawyer, James Neville, declined to discuss the status of the case. According to a criminal complaint filed against him by Lana, the El Dorado agent, on June 30, 2009, task force agents followed Sanclemente for more than two hours as he drove around Queens in New York to ferry cash from drug sales.Sanclemente first met with a person for about “30 seconds” on one street corner, and left with a yellow plastic bag. Later that night, he drove to a Dunkin’ Donuts near LaGuardia Airport, where a black livery cab pulled up and the driver handed him a black bag.The El Dorado team followed Sanclemente to Laurel Hollow, N.Y., some 40 minutes away, where the investigators stopped and searched him, finding about $153,000 in the two bags. At Sanclemente’s apartment, investigators said they found ledgers and documents consistent with money laundering.

With the arrest, investigators gained insight into Chaparro’s alleged transactions. At one point, investigators set up undercover bank accounts where they were able to get Chaparro’s network to wire proceeds that could be traced back to HSBC’s Mexico operations, according to people familiar with the situation and a Department of Justice filing in the HSBC case. Federal agents would ultimately home in on $500 million that had moved from HSBC Mexico to HSBC’s operations in the United States, according to the confidential investigative records