The largest U.S. banks are scrutinizing members of the Federal Reserve for any insight into how the central bank will tinker interest rates.Banksread more
Facebook's cryptocurrency project has already been met with skepticism from policymakers around the world.Technologyread more
The U.S. and China restarted their trade talks, but signs are showing a comprehensive deal could be a long way off, if it happens at all.Marketsread more
Stone, 66, a notorious Republican political operative who has described himself as a "dirty trickster," had previously been dressed down by the judge for his public remarks...Politicsread more
The Biden team's second-quarter Federal Election Commission filing shows that the campaign wrote a check of just over $5,300 on June 28 to Sheehan Associates for "strategic...2020 Electionsread more
See which stocks are posting big moves after the bell on July 16.Market Insiderread more
While the vote served as a show of solidarity for Democrats, it recommended no substantive penalty against Trump.Politicsread more
United Airlines' second-quarter profit tops estimates but questions about the 737 Max linger.Airlinesread more
Three civil rights groups filed a federal lawsuit on Tuesday challenging the Trump administration's new asylum rule, which bars asylum claims from most noncitizens who travel...Politicsread more
Google VP of policy Karan Bhatia started sweating early as hearing chair Ted Cruz brings out an internal presentation created within the company.Technologyread more
At a hearing with the House Judiciary subcommittee on antitrust, an Amazon representative disputed a key argument about how it users sellers' data.Technologyread more
Robert Mazur was a federal agent — but not with the FBI like you might assume.
He worked for the IRS, the United States Customs Service (now part of the Department of Homeland Security) and the Drug Enforcement Agency.
And, he pulled off one of the biggest undercover operations of all time: He infiltrated Pablo Escobar's Colombian drug cartel for two years in the mid-1980s by pretending to be Robert Musella, a money-laundering, mob-connected businessman from New Jersey. It's the basis for the new movie "The Infiltrator," starring Bryan Cranston as Mazur/Musella.
"My role was to come across to the cartel as a credible money launderer," Mazur said. "Well, in order to do that, I had to be embedded in real businesses. So, over a period of 18 months, we put the undercover operation together. I used informants and concerned businessmen to get into real businesses. So, when I met with the cartel, they knew that there was an investment company. I took them to it."
He created an entire life and career as Musella, working at a mortgage-broker business that was based in Florida but had a seat on the New York Stock Exchange. He would entertain his "clients" (drug traffickers and corrupt bankers) at the most exclusive restaurants and clubs around the world and lavish them with other perks that came with the territory. This being the mid-1980s (pre-Sept. 11), he would even fly his clients up to New York on the company jet and take them right onto the floor of the stock exchange.
"It was pretty eye-popping for people in the financial underworld to be with somebody who could take them right onto the floor of the [stock] exchange," Mazur explained.
As an undercover agent, Mazur learned early on that the way to catch these guys was to follow the money — not the drugs. In fact, the operation was dubbed "C-Chase" — as in currency chase.
There are more than $320 billion in illicit drugs sold worldwide every year, according to the United Nations Office on Drugs and Crime. The UNODC estimates that 30 percent to 40 percent of the cocaine and opiates being sold are intercepted — but less than 1 percent of the money is recovered.
"You can launder money so many different ways. It's as unique as snowflakes," Mazur said.
Typically, Mazur said, the money moves around a lot — through various businesses or offshore accounts in different jurisdictions to avoid being traced back to drug traffickers. That's a tactic in the drug business known as "layering." They're also big on using free-trade zones.
Mazur never actually met Escobar in person (it was too dangerous to go to Colombia) but he became close with Roberto Alcaino, who is played by Benjamin Bratt in "The Infiltrator," and others who worked closely with Escobar. (Alcaino is portrayed as Escobar's No. 2, but in real life, Mazur said, he's just a high-level operative in the cartel.)
Alcaino, Mazur said, used an anchovy-packing plant based in Buenos Aires to move the cocaine. They would fill some cans with anchovies and others would be filled with cocaine and balanced with lead ingots and sand to make them the exact same weight as the anchovy cans.
Mazur said as an undercover operative, he was working with the Bank of Credit and Commerce International, a Luxembourg-based bank with branches in more than 70 countries, in order to launder the cartel's money. BCCI was known to have accounts of drug operatives, terrorists, dirty bankers and others who want to hide money.
They might, for example, use the Bahamas branch of BCCI and book the cash as though it were coming from there. But the cash was never physically in the Bahamas — it was in the U.S. and just logged as though it came from the Bahamas. (Escobar's Medellin cartel, at its height, was thought to have controlled more than 80 percent of the cocaine smuggled into the U.S.)
Or they might take the money to Luxembourg and put it in an offshore account there. Then, a loan would be made in almost an equal amount in another part of the world in the name of another offshore entity.
"Very similar to what you see in the Panama Papers today in the way this money moves around," Mazur explained. "These were off-book loans so that you couldn't directly tie it to the capital that was sitting in Luxembourg. The money would then be moved through two or three other offshore jurisdictions, ultimately into Panama, where it was placed into an account, from which we made payouts to the cartel, who received those funds into other Panamanian accounts at different banks that were in nominee names."
At one point, he was out at a social event in Miami with a senior bank officer at BCCI who asked him point blank, "You know who the biggest money launderer in the world is? It's the Federal Reserve, of course."
That sounds like a crazy allegation, but Mazur said the banker connected the dots for him: In Colombia, it's illegal for anyone to have a U.S. dollar account. But at the state-run Bank of the Republic there is a window they call the "sinister window" or the "anonymous window." There, you can trade in as much U.S. currency as you want. The central bank exchanges it for Colombian pesos at a high rate immediately.
Mazur recalls the banker asking: "What do you think happens with that cash? It gets put on pallets, they shrink-wrap it and they're sending hundreds of millions of dollars back to the Federal Reserve. Don't you think there's someone smart enough at the Federal Reserve who knows this is Colombia, they're not allowed to have U.S. dollar accounts and we're getting hundreds of millions of dollars in currency from their central bank? Why didn't anyone have enough common sense to ask where this money was coming from?"
That banker was one of the more than 100 drug operatives and dirty bankers indicted (and he was later convicted) as a result of the sting operation. The big bust, where several arrests went down, happened at a bachelor party for a fake wedding planned for Mazur and another undercover agent playing his fiancee. The guests/suspects were ushered into Town Cars, thinking they were headed to a bachelor party — instead, they were under arrest. (The wedding never occurred.)
In all, there were more than 3,100 pounds of cocaine seized and more than $600 million in fines and forfeitures as a result of this operation. And BCCI, which was the seventh largest privately held bank in the world at that time, ultimately collapsed.
Mazur will likely get a lot of the credit, with an A-list Hollywood actor like Bryan Cranston playing him in the movie, but he's quick to point out that there were around 250 people involved in the operation.
One of the most disturbing discoveries in his undercover work was the connection between drug cartels and terrorism.
"There's some very clear evidence of the alliance between the Mexican and Colombian cartels with terrorist organizations — Hezbollah, Hamas, al-Qaida all have been documented … they recognize, the same way that the cartels do, that there's a massive amount of profit that's involved in this business."
There are two main drug routes, Mazur said: One that goes up through Mexico and other countries in Central America and into the U.S. and Canada, and the other, more lucrative route, which originates in Venezuela and goes into Europe. In Europe, he said, you can sell the same kilo of cocaine for 2.5 times what you could sell it for in the U.S.
"You have the movement of cash into Lebanon, Dubai, Abu Dhabi, Bahrain, other parts of the world, and then you have the drugs going up into Europe. This is a very lucrative route," Mazur said. "It's a route that relies very much on the longstanding smuggling route in West African nations and countries within the Middle East where there are factions loyal to Hezbollah."
The drug world controls very legitimate looking international businesses, like that anchovy plant, which provides an easy cover for terrorists to smuggle money and other things.
"It's bad enough that drugs and money, guns, human trafficking is occurring with those assets," Mazur explained. "But it doesn't take a lot of imagination to think that the day may come when terrorist organizations that want to move things that are far more dangerous will use those same smuggling routes to create death and destruction."