Pubdate: Sun, 22 Aug 1999 Source: Standard-Times (MA) Copyright: 1999 The Standard-Times Contact: 25 Elm Street, New Bedford, MA 02740 Website: http://www.s-t.com/ Forum: http://www.s-t.com/cgi-bin/Ultimate.cgi?actionintro Author: Polly Saltonstall, Standard-Times staff writer COVERING UP THEIR TRACKS Drug Dealers Often Clever In Masking Illegal Profits NEW BEDFORD -- During one in a series of meetings this spring between an undercover federal drug officer and an accused drug dealer, the agent got some business advice. He was told to invest in real estate. He "told me I should do what he does with my drug profits, buy property," relates Drug Enforcement Agency agent Todd Shea in an affidavit on file in federal court. "He told me that is why he has never been caught." The suspect, Antonio D. Bairos, 52, also known as Tony Pena, was indicted by a federal grand jury early this month on eight counts of possession of cocaine with intent to distribute, and distribution of cocaine. Word of yet another arrest for cocaine trafficking in drug-plagued New Bedford is nothing new. But the federal agent's account of his meetings with the alleged drug dealer provide a rare glimpse into the outrageous profits and risks of the drug-trafficking business. The case also provides insight into a phenomenon city police say they know about but have been unable to track as much as they'd like: the diversion of illicit profits into legitimate enterprises. Mr. Bairos owns close to $640,000 worth of real estate properties in the New Bedford area, including a downtown building just across from the former Star Store, and several tenements, according to the U.S. attorney's office. Mr. Bairos, who immigrated from the Azores in 1971, told a newspaper reporter several years ago that he had built up his fortune by buying and rehabilitating run-down buildings. But federal agents contend the New Bedford man's investments have been funded at least in part by the profits from his illegal drug business. And those profits appear to be considerable. According to court records, Mr. Bairos told the federal agent he paid between $23,000 and $32,000 for a kilogram of cocaine -- which can sell on the street for $40,000 or more. Initially, the cocaine Mr. Shea purchased from Mr. Bairos was heavily diluted. He says the New Bedford man offered to sell him uncut cocaine that could be diluted, thus enabling Mr. Shea to double his profits. Also in his affidavit, the agent says Mr. Bairos told him to transport his cocaine in joint compound, available at Home Depot, "because drug-sniffing dogs could not smell the drugs in the compound." The transactions between the two men took place in several locations: Turner's Pond in Dartmouth, where Mr. Bairos drove by and tossed out of his window a can containing an ounce of cocaine; Mr. Bairos' property on High Hill Road in Dartmouth; and in the Keystone building, as well as in a New Bedford sub shop and in a wooded area near the city, according to Mr. Shea. Initially, the transfer of drugs and money was not face-to-face. The agent said he would leave money in a prearranged spot -- on at least two occasions in Mr. Bairos' empty truck, which was parked on his property -- and Mr. Bairos in turn would drop off the drugs. "Bairos told me that transporting the money was not risky, it was transporting the cocaine that was risky," Mr. Shea stated in his affidavit. Although city records list the properties as belonging to either Mr. Bairos' daughter, Deanna Bairos, or his fiancee, Maria J. Botelho, the U.S. attorney's office contends they either were financed by or were used to facilitate Mr. Bairos' drug transactions. The government has filed a claim to force Mr. Bairos to forfeit the real estate as well as about $71,100 in cash. Close to $52,000 was found in a safe deposit box at the Fleet bank branch on Union Street in New Bedford, according to the U.S. attorney's office. The rest was money the drug agent paid Mr. Bairos for cocaine. Mr. Bairos' attorney argues the properties were not bought with drug profits and he contends the U.S. attorney will fail in his effort to seize the real estate. Regardless, local police say such funneling of ill-gotten gains into legitimate businesses occurs, both in New Bedford and in other urban areas plagued with similar drug problems. New Bedford police detectives say they hear stories about dealers funneling money into other businesses. And they have made drug cases in the past year against several small businessmen, including the owner of a beeper business and the owner of a painting business. - ---------------------------------- Some dealers like to flaunt their wealth by buying expensive cars, jewelry and other luxury items. Others buy property, restaurants, apartment buildings and other investments that provide a front for cash flow, explains New Bedford Police Chief Arthur Kelly. "If I show up at a bank every week with $10,000 in cash, they will report that to the IRS. But if I make deposits on a daily basis of money I identify as rent from my business, they will not report that," he says. Those drug dealers who may not want to stay long in the drug trade will build up a nest egg by investing in legitimate businesses, he adds. "You can't just stick it under your bed. Pretty soon you're 4 feet off the floor and your mattress is lumpy." But while he knows such transactions occur in New Bedford, the chief says his department has focused its efforts on stomping out the criminal side of the business ledger, rather than on finding these apparently legitimate enterprises backed by illegal profits. Sometimes the local police make a case against a dealer but do not know about other, hidden assets. New Bedford vice squad detectives charged Mr. Bairos last year with cocaine distribution. But police might have had a difficult time tracing Mr. Bairos' properties because they were not listed in his name. "We do not have the luxury of staffing and time, where we could have people focus on assets," says the chief, who declined to comment specifically on the Bairos case. "That's almost like an entire separate investigation, and we're busy enough looking at the drug side." Instead, he said he would like to see the DEA and Internal Revenue Service take the lead in the city on this type of investigation, with the assistance of the New Bedford police. Last month, he asked members of the president's drug policy team to help persuade the DEA to reopen an office here. Complicating the situation is the fact that money laundering is a federal, not a state, charge. Only federal agencies, such as the IRS and the DEA, can make such cases. The U.S. attorney's office, working with the DEA and the IRS, as well as local and state police, has been aggressively pursuing such cases around the state. Just last week, U.S. Attorney Donald Stern announced indictments against more than two dozen people, including charges of trafficking in marijuana and cocaine and money laundering. And this fall, defendants in a Taunton marijuana smuggling ring are scheduled to be sentenced in federal court on drug trafficking and money laundering charges stemming from arrests last year. Kevin Cloherty, the chief of the U.S. attorney's drug task force, will not comment on ongoing cases and declines to say whether his office has any additional New Bedford investigations in the works. But the Bairos arrest is just one of several signs the federal team has set up shop in the city. Federal investigators occasionally will become involved in a case of laundering drug money by tracing money transactions, Mr. Cloherty said, citing as an example an investigation into a Chelsea money-wiring business. That case resulted in drug-trafficking charges as well as money laundering allegations. But more often, investigators tracking drug-trafficking learn about individuals with illegal investments. The federal agents pursue those investments, because while traffickers consider the seizure of a drug shipment the cost of doing business, the loss of accumulated assets costs them their profits. "That hurts more," Mr. Cloherty said. In recent years, heroin trafficking has involved the most cash and assets, he said, adding that a kilo of heroin sells for far more than a kilo of cocaine. "It's a problem we're seeing through New England and through eastern Massachusetts," he said. - ---------------------------------- In New Bedford, Mr. Bairos' properties mostly consist of neighborhood apartment buildings. But one, the former Keystone building, sits smack-dab in the middle of New Bedford's downtown business district. While city records place the three-story building's current value at about $149,000, economic development officials say its potential value is much greater because of its proximity to the former Star Store. Work will begin in the fall to renovate the former department store into classrooms for UMass Dartmouth's art program. The predicted influx of students into the previously near moribund downtown district, combined with concurrent construction of the new Compass Bank building, the tourist attractions in the national park, and Whaling Museum expansion, has sparked investment interest in downtown, said John Zakian, executive director of the New Bedford Economic Development Council. "It's a good investment," he said of the Keystone building. "Clearly, (Mr. Bairos) was in a position to benefit." Mr. Zakian said his organization has not done business with Mr. Bairos, whose name he had never heard before reading about the arrest in the newspaper. The economic development agency does background checks on loan applicants and looks at financial histories. But he admits the non-profit economic corporation has no fail-proof way to determine whether its clients are legitimate businessmen or not. "Frankly, unless you're law enforcement with the resources to go beyond what appears on paper, it is difficult to dig deep into ownership to find out if it is clean or not," he said. "If somebody wants to be crooked, they are going to find a way. There is no major formula anywhere in the country to enable people to tell the shady or shaky deals from the legitimate deals." Similarly, the city's acting director of community development, Patrick Sullivan, said his department checks applicants' financial records to see, for example, if they are current on their income taxes. He also checks references and asks applicants to fill out a form saying whether they have ever been convicted of a crime. But the department does not do criminal checks and would have no way of knowing whether a previously approved applicant had been arrested for drug charges. "How do you track something like that?" he asked, adding that his department has never had any such problems with its applicants. As the city's economic development picture shapes up, Mr. Zakian said he expects cases such as the one against Mr. Bairos will deter criminal investors. "New Bedford is a land for legitimate businesses, not illegitimate," he says. - --- MAP posted-by: Thunder