America’s NarcoBank: Wachovia Bank was BCCI with a drawl

Convicted Sarasota Ponzi fraudster Art Nadel, currently holed up in a Federal prison in North Carolina, is back in the news, after a Federal bankruptcy receiver filed a lawsuit accusing Wachovia Bank of criminal complicity in Nadel’s theft of $168 million. 

This is a story about financial fraud, drug money,  and a global crime network that links BCCI, known as the Bank of Crooks & Criminals Incorporated, with North Carolina’s Wachovia Bank.

While Art Nadel's Ponzi scheme was at its peak, between 2003 and 2007,  Wachovia Bank was engaged in more continuing criminal activity than in all six seasons of The Sopranos. 

Wachovia helped Nadel—who had recently been playing piano lounges around Sarasota for a living— masquerade as a "hedge fund advisor," even though the bank knew he was nothing of the kind, the suit alleges.

Wachovia Bank was “inexplicably unconcerned,” the suit alleges, that Nadel, a lawyer disbarred for stealing $50K from his clients to pay off a loan-shark, improperly opened shadow bank accounts to loot six hedge funds he was supposedly “advising.”

Nadel engaged in at least a dozen regular financial transactions that were serious criminal violations, the suit alleges. About them all, Wachovia remained "inexplicably unconcerned."

For Wachovia's failure, there is "no legitimate explanation," the suit states baldly.

One of the attorneys for federal receiver Burt Wiand, Terry Smiljanich, told me flatly, “Wachovia has a history of assisting and profiting from the commission of fraud by the bank’s account holders.”

The American Drug Lords speak English solamente.

Wachovia was assisting in systematically defrauding $150 million from senior citizens on fixed incomes. While there was far more to be made laundering drug money, for the bank this was still a sweet score.

They tricked people like Richard Guthrie, 92, a World War II veteran in Iowa, into revealing their banking information. Guthrie lived alone since his wife died. His children had moved away from the farm.

“I loved getting those calls,” Guthrie told the New York Times. "Since my wife passed away, I don’t have many people to talk with. One gal in particular loved to hear stories about when I was younger.

After getting the banking information, the crooks emptied the old people’s bank accounts, assisted by  Wachovia Bank.  Wachovia let them withdraw funds from Guthrie’s account using unsigned checks.

When Guthrie’s bank told Wachovia that the checks had not been authorized, Wachovia returned his funds, but never investigated whether the bank was being used by criminals, according to prosecutors who studied the transactions. They never asked the question because they already knew the answer.

Wachovia collected millions of dollars in fees for cashing $142 million in unsigned checks.

“I can’t understand why they were allowed inside my account,” Guthrie told a reporter. “I just chatted with this woman for a few minutes. I didn’t know they were stealing from me until everything was gone. They took everything I had.”

Meet George Jetson

But financial fraud was just an appetizer. The bank's biggest "earner"—by far—was laundering, according to government investigators, $375 billion (that’s ‘billion’ with a ‘b’) dollars of drug money.

It's a specialized world, and modern day drug trafficking is a specialized activity. When Mexican drug cartels needed a transportation coordinator, they bought a DC-9—as well as at least a dozen luxury jets—from two companies in St. Petersburg, Florida. Both were named SkyWay Aircraft.

They claimed to be singular entities. But both sold airplanes to traffickers. 

And since these its bad form to walk into an airplane dealership in Florida with a paper bag filled with cash, the traffickers turned to Wachovia Bank to pay for the planes.

Even Ponzi fraudster Art Nadel had a specialty. He was a ‘plane mover.’

Nadel owned Tradewinds LLC, with aircraft and hangers in North Carolina and Newnan-Coweta County Airport in Georgia.  And in Venice Florida Art Nadel succeeded secretive Wisconsin financier Wally Hilliard  as owner of  infamous Huffman Aviation, which trained terrorists like Mohamed Atta to fly. 

"Both aviation entities were funded with money from Nadel's scheme,” said federal receiver Wiand in court documents.

Nadel re-named Huffman the “Venice Jet Port.”

It was lipstick on a pig. Many found it odd that— for the second time in less than a decade—the business occupying an otherwise nondescript building at the tiny Venice Airport had become a major crime scene.

The FBI, of course, did nothing to encourage this speculation.

Slouching towards Salt Lake City

The jig was up for Wachovia, finally, when the American-registered (N900SA) DC-9 airliner from St. Petersburg  was busted in the Yucatan carrying 5.5 tons of cocaine in April 2006.

No thanks to the FBI or the DEA… It was the Mexican Attorney General who discovered that Wachovia had laundered the money used to buy the DC-9, as well as a second plane which went down 18 months later. (An archive of stories of our investigation into the DC-9's true ownership is here. )

That set off a chain of consequences which resulted  in the disappearance of America’s 4^th largest bank, after Wachovia was repeatedly cited by the Federal Government for “failing to maintain an anti-money laundering program.”

Once again, the bank ignored the warnings.

Charged with criminal violations in March of 2009, the bank paid a record fine of $160 million, was sold to Wells Fargo in a Fed-brokered transaction, and slunk away to lay low in Salt Lake City.
 

BCCI and Wachovia serve same satisfied customers

It was a cold day in Detroit. That day, Dec 8, 1987, Colombian drug trafficker Jamie Giraldo delivered $1.2 million to an undercover U.S. Customs Agent.

The next day, a BCCI bank manager in Tampa opened an account for him at BCCI Panama, arranged for the funds to be transferred there, and then on to a bank in Tampa.

It was easy. BCCI was called the Bank of Crooks and Criminals because it rolled out the red carpet for the international drug trafficking set.

When the BCCI Bank Officer in Tampa was later arrested for money laundering, he immediately rolled. No omerta here, signor. 

He told an undercover agent that his bank, BCCI, secretly owned First American Bancshares, a shady Washington DC bank being fronted by a man who called the Godfather of the Democratic Party, Clark Clifford.

Adding an even more lurid taint, First American was being kept busy laundering the ill-gotten gains—measured in hundreds of million of dollars—of Panama strongman Manuel Noriega. 

Much later—rivers of cocaine under the bridge later, in 2001—Wachovia Bank would buy what was left of Clark Clifford’s bank. But the connection went deeper than that.

Wachovia served many, like Jaime Giraldo, who had been among BCCI's best customers.
 

Fast forward 15 years

Fifteen years later, Jaime Giraldo, still at it, was caught again  laundering drug money in 2004.  

Now Giraldo was being called the “kingpin” of a Cali, Colombia-based drug network, and an international playboy, with homes in Miami, Los Angeles, and Queens.

Two DEA stings, one called Operation Busted Manatee, the other Operation Double Talk, snared 50 suspects, including drug “kingpin” Giraldo, another Colombian “kingpin” named Elias Cobos-Munez, and a Bahamian “kingpin” named Melvin Maycock, head of what the DEA called the Maycock/Smith transportation organization.

The men didn’t know each other. The two Colombians were “kingpins” in separate Colombia-based networks. What both men  had in common was laundering their drug money through Wachovia Bank.

Giraldo was arrested,at Tequila Sunrise in Coral Gables, Fla., one of the many restaurants he owns across the country. New reports said his pockets were full of Viagra tablets. One of his lieutenants was busted at the Rainforest Café at Disney World, while on vacation with his family.

Another was busted in Miami, where she kept her stash in a room at St. Agnes Convent, a home for troubled women run by nuns.Two days after her arrest, thugs banged on the door of the convent to retrieve her belongings. But Sister Mary Pius Frey stood her ground and shooed them away before calling police.

The busts gave the DEA a key to decipher the "code" used by the drug network suspects in cell-phone conversations…

“Big Sombrero” meant Mexico.  “Okey Doky” meant the drugs are on their way. 

No word on the importance this has played in efforts to "win" the Drug War.

Congrats all around

This series of indictments and related arrests represents the successful culmination of DEA's Caribbean Initiative," Attorney General John Ashcroft said at a news conference in Washington.

“These are the modern day Pirates of the Caribbean who prey on the vulnerable, plunder for profit, and intimidate through violence," said DEA Administrator Karen Tandy. 

“We are seeking extradition of these alleged criminals to the United States so that they will answer to the courts in the same land where they profited from poisoning America's children.”

Ashcroft called the indictments “a significant victory over the culture of crime, of corruption and death that is fuelled by illicit drugs. One by one, we are dismantling the most dangerous drug cartels that poison our citizens and communities.” 

This seems a bit much, but its probably only to be expected from a man who lost a US Senate race o a dead guy. And the hyperbole didn't end with him…

''We have had one hell of an impact on the trafficking in the Caribbean,'' Thomas Raffanello, special agent in charge of the DEA's Miami field office, said in an interview.

"The Caribbean Initiative has caused a system shock to some of the operations of some major cocaine and marijuana traffickers," said John Walters, Director of National Drug Control Policy.

 “We believe this operation will severely disrupt the entire Caribbean drug trade,” an AP report out of Washington quoted Tandy as saying.

Wachovia was BCCI with a drawl, y'all

But why no word about the bank that had made it all possible? How come no one thought to "take down" Wachovia executives in dramatic pre-dawn raids in Winston-Salem?

Over five years, between 2002 and 2007, Wachovia laundered more drug money—including billions of dollars traced directly to violent Mexican drug cartels—than any bank since BCCI, the notorious international bank known in its heyday as the Bank of Crooks & Criminals.

But the entire US Government knew what Wachovia was up to well before that. Despite formidable competition, Wachovia was the most crooked bank since BCCI.

The native habitat of the elusive and seldom-photographed American Drug Lord, it turns out, isn’t a gaudy waterfront mansion in Miami,  with Uzi-carrying henchmen providing 24-hour security, like in Scarface.

Today's American Drug Lord feels more at home in a hospitality suite at a 5-star hotel,  during a meeting of the American Bankers Association.

A final note

One of the “kingpins” targeted by the two DEA operations had been Daniel Muir, a Quebec drug importer. He wasn’t indicted, however, because by then he was dead.

He was killed in downtown Montreal after being chased by two men, one with an axe, the other with a knife.  At the time of Muir's death, he held $35 million for several Quebec "investors" seeking to smuggle cocaine into Canada, but the money was "missing."

Another target of the investigation, "kingpin" Melvin Maycock, was recently in the news… A judge in the Bahamas ordered Maycock tagged with a GPS-enabled monitoring device as a condition for bail.

Maycock was on bail regarding an extradition case for his alleged role as the head of the Caribbean arm of a multi-national drug smuggling gang.

Maycock was also on bail for a drug case in the Bahamas involving 1,500 pounds of marijuana. And he had a pending case involving his alleged escape from a Bahamian Police Station.

Even so, Melvin Maycock asked a Bahamian court to remove his ankle bracelet, which he was being forced to wear while under house arrest. Officials at the monitoring center were trying to restrict his movements, his lawyers said.

Senior Justice Jon Isaacs told Maycock that if officials continued to interfere wth him, he would order the bracelet removed.