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  1. 1. A Study in Money Laundering The Oropeza Family and Drug Smuggling at the Southwest Border A joint investigation by U.S. Immigration and Customs Enforcement (ICE) and the Drug Enforcement Administration (DEA) Th r t into drug trafficking at the South- e po Co west border revealed a multi- Re million dollar money laundering e r organization, utilizing multiple ne on companies, and numerous bank r st accounts, to launder narcotic pro- ceeds. This case study demonstrates Safeguarding America through methodologies used for laundering Financial Investigations criminal proceeds. Volume VI: No. 3 • Summer 2009 In 2004, ICE agents in Brownsville, U.S. currency discovered in safe deposit box and seized by ICE. Texas, received information that Oscar Oropeza, along with his wife Oquendo to the narcotic smuggling Inside This Issue Tina, daughter Paulina and son in Florida. DEA subsequently Juan, were using various businesses arrested and charged him in Florida Financial Fraud they owned to launder proceeds for his role in the organization. and Cross-Border derived from narcotic sales. The Hernandez and Oquendo were each Oropeza family owned substantial Crimes . . . . . . . . . . . . . . . . . 3 assets in both Brownsville and sentenced to ten years as a result of this indictment. The money laun- Harlingen, Texas, including a car 2nd Annual wash, landscaping business, truck- dering activities being conducted by the Oropeza family were directly European Serious ing company, a large house, and linked to Hernandez and Oquendo. Organised Crime numerous vehicles valued between $60,000–$120,000 each. In July 2006, investigators caught a Conference . . . . . . . . . . . . . 4 break in the case when Tina One of the first developments link- Oropeza was stopped and ques- ing the Oropeza family to narcotics tioned by Harlingen police officers Cornerstone is U.S. Immigration occurred in April 2004. Juan Her- while riding on a north-bound and Customs Enforcement’s (ICE) nandez and other defendants were bus headed out of the city. Officer's comprehensive investigative initiative arrested by local police in Harlin- for fighting financial crime. discovered she was carrying approx- gen, Texas, after they were linked to imately $90,000 in cash, which The Cornerstone Report is a quarterly a narcotic smuggling operation uti- bulletin highlighting key issues they seized. lizing truck lines to ship marijuana related to ICE financial, narcotics and public safety investigations. out of the Rio Grande Valley, to Subsequent financial records checks Florida. As a result of this arrest, showed that the Oropeza family Hernandez received more than had more than 20 accounts with three years in a state penitentiary. several banks. Personal bank DEA agents in West Palm Beach, accounts connected to the money Florida, learned of Hernandez's laundering activity were held by all arrest and asked ICE for additional four Oropeza's. Account statements Toll-Free Tip Line: information about his drug opera- from these personal accounts 1-866-DHS-2-ICE tion. This information linked Milton reflected cash deposits continued
  2. 2. Oropeza Family et al., Investigation, continued Th rt e po well in excess of Co Re ne rn to $1 million in just er s over two years. Of Page 2 of 4 these cash deposits, Volume VI: No. 3 Summer 2009 the vast majority consisted of cash deposits of less than $10,000, and often involved multiple cash Seized luxury jewelry discovered during exe- cution of search warrants. deposits on the same date. Statements for the multiple business cocaine; Oscar and Tina Oropeza accounts reflected cash deposits were arrested on state charges for well in excess of $2 million in just transporting cocaine. over two years. The business In May and June 2007, ICE agents accounts had over $3.6 million in served search warrants on seven deposits for 2006 alone. A large properties owned by the Oropeza portion of the cash deposits also family in Brownsville, Texas. The Vehicles seized by ICE that were purchased consisted of amounts less than with illicit proceeds from narcotics smuggling. search warrants resulted in the $10,000, and often involved multi- seizure of several vehicles, luxury ple cash deposits on the same date. jewelry items, and currency. ICE These numerous cash deposits were agents also served seizure warrants Red Flag Indicators conducted by all four Oropeza fam- on 13 bank accounts and three • Various reported occupations (attorney, owner ily members. safety deposit boxes connected to of Green Wealth Group, financial analyst, etc.) Prior to opening an investigation, the Oropeza family, resulting in the by the same individual on BSA filings. ICE learned that Oscar Oropeza seizure of more than $310,000. • The acquisition or purchase of high-value ticket items (real estate) with cash. paid for a building connected to The amount of currency, funds, • Large number of business and personal his landscaping business with two accounts at different financial institutions. property, and vehicles seized by ICE cash payments. The first payment • Numerous structured cash deposits into both agents in Brownsville totaled more was $221,000, and the second was personal and business bank accounts. than $2.1 million. Five real proper- for approximately $120,000, both • Deposits made in different bank branches ties valued in excess of $1 million on the same day, and deposited into the of which consisted of primarily were also forfeited. same account. $20 bills. In March 2008, Tina Oropeza pled The case saw another critical devel- guilty to federal charges related to opment on May 31, 2007, when tiary for conspiracy to possess more narcotics smuggling and to money Oscar and Tina Oropeza were that 1,000 kilograms of marijuana, laundering conspiracy. Paulina stopped for traffic violations by and 180 months for conspiracy to Oropeza pled guilty to federal local police in Mobile, Alabama. posses more that five kilograms of charges because of her knowledge Oscar Oropeza gave verbal consent cocaine. Oropeza was also sen- of the money laundering activities. to search their van, which revealed tenced to 180 months for conspir- In November 2009, Tina Oropeza a hidden compartment in the floor acy to possess with intent to was sentenced to 10 months prison, area. The officers discovered four distribute approximately ninety five years probation, and a $25,000 aluminum containers concealed kilograms of cocaine. All of the sen- fine. Paulina Oropeza was sentenced within the compartment containing tences are to run concurrently for a to five months in prison, five years 84 packages wrapped in plastic total of 180 months. Oropeza was probation, and a $5,000 fine. wrap and duct tape. The packages also ordered to serve five years of contained a white powdery sub- Oscar Oropeza was sentenced to supervised release and to be stance that field tested positive for 180 months in the federal peniten- deported to Mexico. $
  3. 3. Financial Fraud and Cross-Border Crimes Automated Clearing House Transactions Th rt e po Co Re ne rn to er s Page 3 of 4 Volume VI: No. 3 I n 2006, the ICE Special Agent in Charge Office in Individuals located in Canada and the United States, opened U.S. Summer 2009 Buffalo, N.Y., initi- bank accounts in order ated an investigation into Integratedto debit unsuspecting Check Technologies Inc. (ICT), a U.S. bank account payment processor linked to a pre- holders' checking vious financial fraud investigation accounts by either involving telemarketing activities. Automated Clearing The investigation revealed ICT had House (ACH) transac- knowledge that the telemarketers tions or by depositing for whom they provided payment fraudulent draft checks processing services had been com- through demand drafts. An ICE investigation into questionable practices at a pay- ment processing company uncovered a multimillion dollar mitting fraud and were involved in ICT, in business since telemarketing scheme. a complex money laundering 1998, began process- scheme exploiting the U.S. financial ing payments for tele- Using victims' bank account infor- system through telemarketing. marketing companies in March mation, ICT printed (or caused to ICE learned the state of Ohio's 2005. A review of the bank records be printed) demand drafts, drawn Attorney General's Office had an indicated that the deposits by ICT from victims' accounts. ICT on-going civil investigation of ICT substantially increased after ICT deposited the demand drafts into for processing payments for fraudu- began processing payments for tele- their bank account, causing debits lent telemarketing companies, and marketing companies. to victims' bank accounts, and cor- other states were pursuing or had Between March 2005, and January responding credits to ICT's bank pursued action against the company. 2006, ICT deposits totaled more account. Based upon a review of A review of 57 telemarketing com- than $54.3 million. The bank where multiple telemarketing companies panies that ICT processed payments the deposits were made contacted a that ICT processed transactions for, for revealed that each had a high number of the account holders who ICE learned that more than half of return rate for unauthorized debit were listed on the draft checks and the transactions processed were transactions, and the majority of inquired whether the debits on the reversed or returned due to various those companies had complaints draft checks were authorized. All reasons, including insufficient filed against them for fraud. the account holders who were con- funds, account closed, stopped pay- ments and unauthorized/fraudulent The international telemarketing tacted informed bank representa- transactions. ICT willfully ignored fraud ring included Thomas J. Cimi- tives that they did not authorize the countless complaints lodged against cato from Columbus, Ohio. Cimi- withdrawals and the majority of the ICT and/or its clients by victims of cato was the president, secretary, account holders who were con- telemarketing fraud. treasurer, director and primary tacted were elderly, living on lim- shareholder of Check Free Recovery, ited incomes. In addition, some of ICT generated fees from this type of Inc. d/b/a ICT. This financial fraud the account holders were debited activity by generally charging a scheme involved the use of U.S. more than once, via draft checks, business the following recurring bank accounts to launder millions without their authorization by ICT fees: a monthly minimum charge of dollars in fraudulently obtained and by other payment processors. per account, a monthly administra- wire transfers and was designed to Through a variety of fees for serv- tive fee, a debit item origination extract money from victims' bank ices rendered, ICT retained approxi- fee, a credit item origination fee, a accounts on false pretenses or with- mately $19.9 million of the $54.3 return fee for all items that did not out authorization. million total. clear, charge back fees, continued
  4. 4. Financial Fraud and Cross-Border Crimes, continued Th t an item upfront Fraudulent telemarketers and their r e po Co Re Red Flag Indicators ne decline fee, a accomplices often trade in lists of rn to er s reversal file created prospective victims, including • The bank of initial deposit for draft checks Page 4 of 4 fee, a reversal file repeat victims who are likely to shows many draft checks deposited followed by wire transfers out of the account to both foreign Volume VI: No. 3 item origination become a victim of another fraudu- Summer 2009 and domestic bank accounts, with a large fee, wire fees, and lent scheme. These telemarketers number of the transactions returned as unauthorized or fraudulent. other fees, including a discount also have been known to use these • Accounts set up to receive wire transfers from rate based on underwriting criteria lists in order to debit victims' finan- the payment processor have many wires for large and a risk management fee for cial accounts without ever contact- amounts of money that are deposited and settlement reserve. ing the individual or offering a subsequently wired out in a relatively short period of time. service or product. This is com- The fraudulent telemarketing • Wire transfer of funds to commercial accounts monly known as "slamming a list" with no logical relationship or connection to the schemes, included unsolicited tele- sender of the funds. or "running a database". phone calls, commonly known as • Third-party service providers have a history of "cold calls", made by foreign and ICE was able to obtain seizure war- violating Automated Clearing House (ACH) network rules, generating illegal transactions, or domestic telemarketers to vulnera- rants for monies in two third party processing manipulated or fraudulent ble consumers residing throughout payment companies' bank accounts, transactions on behalf of their customers. the United States. During the cold resulting in the seizure of eight U.S. • ACH transactions for larger amounts of calls, victims were induced, through bank accounts totaling approxi- money often originate from non-bank customers for which the bank has no or insufficient misrepresentations and false prom- mately $3.1 million dollars, more due diligence. ises of goods and services of value, than $2 million of which was from to provide the telemarketer with ICT. Only after Cimicato was con- numerous State Attorney Generals personal bank account information. tacted by law enforcement and con- have filed civil actions against vari- The telemarketer then transmitted sumer protection agencies did he ous companies previously identified the personal bank account informa- take action against some of the tele- by ICE to impede these businesses tion, using the United States mail marketing companies his company from doing business within their and/or wires, to ICT. had processed payments for. To date, respective jurisdictions. $ Second Annual European Serious Organised Crime Conference I n March 2009, Deputy Assistant Director Janice Ayala, of the ICE Financial, tionally, the conference also showcased major suc- cesses in the fight against Narcotics and Public Safety organized crime and Division, delivered the encouraged the facilitation international keynote of partnerships between address at the 2nd Annual police forces, border con- European Serious Organ- trol services, immigration ised Crime Conference, enforcement agencies and sponsored by the Mersey- other key stakeholders. side Police and Merseyside Unit Chief David Eoff Police Authority in the from the Asset Forfeiture United Kingdom. Section at ICE headquar- The conference focused in ters, also participated in a part on the link between group panel discussion terrorism and organised about the use of forensic crime and looked at harm accountants during asset reduction measures. Addi- forfeiture investigations. $