Source: San Jose Mercury News (CA) Contact: http://www.sjmercury.com/ Pubdate: Tue, 19 May 1998 Author: Carol Rosenberg - Mercury News Washington Bureau FEDERAL STING TARGETS DRUG MONEY LAUNDERING U.S. officials claim indictments prove link between cartels and major banks in Mexico WASHINGTON -- Undercover U.S. agents invited Mexican bankers to a weekend party at a Nevada casino and turned the tables on them, arresting 21 people and rolling up a three-year drug money laundering probe that seized $157 million in Colombian cocaine profits, the Clinton administration announced Monday. Officials from the Customs, Treasury and Justice departments declared the sting operation, which resulted in the indictments of three Mexican banks - -- Bancomer, Banco Serfin and Confia -- the largest and most comprehensive drug money laundering case in U.S. history. Treasury Secretary Robert Rubin and Attorney General Janet Reno said the indictments, which were unsealed in U.S. District Court in Los Angeles, represented ``the first time Mexican banks and bank officials have been directly linked to laundering . . . U.S. drug profits.'' The indictments, according to Treasury investigators, allege that officials from 12 of Mexico's 19 largest banking institutions were involved in money-laundering activities. Investigators said they established a clear money-laundering link between the Cali and Juarez cocaine cartels and several Mexican banks, which used U.S. soil and five Federal Reserve-supervised foreign banking organizations to move money between Mexico and Colombia via the United States. The crackdown, labeled ``Operation Casablanca,'' also netted 2 tons of cocaine, 4 tons of marijuana and $35 million in cash, plus $110 million seized in U.S. bank accounts and $12 million in overseas bank accounts, said Raymond Kelly, the Treasury Department's undersecretary for enforcement. ``Today, we have hurt the drug cartels where it hurts the most, in their pocketbooks,'' said Rubin. ``Today is a very bad day for drug dealers in the hemisphere,'' added Reno. Rubin said: ``By infiltrating the highest levels of this international drug-trafficking financial infrastructure, Customs was able to crack the elaborate financial schemes the drug traffickers developed to launder the tremendous volumes of cash acquired as proceeds from their deadly trade.'' Treasury officials said they also seized more than 100 U.S. bank accounts through which drug money was laundered. In all, more than 112 people were arrested over the course of the three-year operation, although only 21 were arrested Saturday and Sunday in California and Nevada. None of those arrested was a U.S. citizen, said Kelly, who described the Mexican bankers as mostly ``midlevel people.'' To keep a veil of secrecy around the operation, Kelly said, no government officials in either Mexico or Colombia were told about the probe until after the arrests. Reno said she and Rubin spoke to their Mexican government counterparts Monday morning and received assurances that they would cooperate fully. Miguel Garc(acu)a, a lawyer for Bancomer, Mexico's second-largest bank, said Monday that Bancomer has no evidence that any of its executives were involved in money laundering. However, he said the bank will cooperate fully with authorities in both countries. Garc(acu)a said the magnitude of the charges will require an investigation by Mexico's National Banking and Securities Commission. Carlos Gsmez y Gsmez, president of the Mexican Bankers' Association, said Monday evening that the indictments came as a ``total surprise'' and said his group will cooperate fully with U.S. and Mexican investigators. ``I applaud this action,'' Gsmez said. ``We should not permit narcotrafficking and money laundering to destroy our society.'' Ricardo Sandoval of the Mercury News Mexico City Bureau contributed to this report. - --- Checked-by: (Joel W. Johnson)