35 Suspects in Laundering of Money Seized

Federal authorities said Monday they have cracked an international money-laundering ring that moved $500 million in Colombian cocaine cartel money through banks in five U.S. cities, including Los Angeles.

More than 35 people were arrested and 30 offices and homes searched in Los Angeles, Atlanta, New York, Miami and Providence, R.I., according to Commissioner of Customs Carol Hallett.

In all, charges were lodged against 50 people by federal grand juries in the five cities.

The headquarters of three precious metals firms and a money exchange in the downtown Los Angeles jewelry district were raided and files seized, said Charlie J. Parsons, the FBI’s special agent in charge in Los Angeles.

“This investigation continues to show that Los Angeles has become the center of drug money laundering in the United States,” Parsons said.

He said the charges arise from an 18-month investigation which was launched based on evidence developed in “Operation Polar Cap.” That $700-million jewelry district money-laundering probe has led to three previous major sets of indictments in Los Angeles. Several defendants were sentenced to long prison terms in the first of those cases, and trials are pending in the other cases.

About $120 million in drug proceeds was laundered through the four Los Angeles companies, named in a criminal complaint Monday, court documents said.

Hallett said two of the three major figures in the case have been arrested. They are Barry Slomovits, owner of a precious metals company in New York, and Stephen A. Saccoccia of Cranston, R.I., who was arrested in Geneva, Switzerland, with his wife, Donna, who also was charged.

The third major figure, Jose Duvan Arboleda Gonzalez, was indicted in Atlanta and Miami, but is in Bogota, Colombia, and out of U.S. authorities’ reach, federal officials said.

“I wouldn’t expect to see him back in a hurry,” Hallett said. Arboleda also was named as an unindicted co-conspirator in Los Angeles.

FBI agents arrested two alleged members of the ring in Southern California--Howard (The Duck) Messer of Hawthorne and Vahan Khachatrian of Los Angeles. They were still looking for a third man charged here, Patrick Masino of Manhattan Beach.

Arboleda used several precious metals businesses in Miami as a front to launder drug money for both the Medellin and Cali cartels, according to federal officials.

FBI Agent John M. Clair, in an affidavit filed in Los Angeles federal court, said Arboleda and his brother Augusto Arboleda Gonzalez, both native Colombians, have been involved in international drug trafficking and drug money laundering since approximately 1975.

Hallett said Saccoccia has direct links to organized crime. John Hensley, assistant customs commissioner for enforcement, identified Saccoccia as “an associate” of the Raymond Patriarca crime family in Rhode Island and also said he was “a contract employee for the LCN (La Cosa Nostra.)”

Hensley said the defendants used about 25 foreign and domestic banks in their sophisticated schemes. The foreign locations include Switzerland, England, Colombia and an unnamed island nation in the Caribbean.

In Los Angeles, court documents said, the alleged launderers had accounts at branches of the Bank of America, American International Bank, City National Bank, First Interstate Bank, United National Bank and Independence Bank. (Independence Bank was secretly owned by the Bank of Credit & Commerce International, the Luxembourg-based bank that is the subject of numerous federal investigations.)

No bank officials were indicted, and Hallett said banks had cooperated in the probe.

Documents filed by federal officials in U.S. District Court in Los Angeles state that:

* Saccoccia acquired companies in Los Angeles, New York and Cranston, R.I., to launder hundreds of millions in cocaine proceeds.

* Masino and Saccoccia opened bank accounts in Los Angeles in the name of International Metal Marketing and International Metal Management and another company called Clinton Import/Export to facilitate the laundering.

* Messer and Masino, on behalf of Saccoccia, ran the daily money-laundering activities at Clinton Import/Export Corp. at 707 Wilshire Blvd. and International Metal Marketing, also known as GC Trading on 608 S. Hill St.

* Khachatrian set up five bank accounts for his purported jewelry business Real Gold Exchange, at 712 S. Olive St. He used these accounts to assist Messer and Masino in laundering money sent to Los Angeles by Saccoccia and others.

* The money was sent to Los Angeles in various ways, including the use of Brinks and Loomis armored car shipments.

* Once it reached Los Angeles, the suspects deposited money in bank accounts of the precious metal companies. One of the repositories for drug money was Coinex, located at 650 S. Hill St., one of the four companies raided Monday. From Los Angeles, the money was transferred by wire to bank accounts used by the ring in Rhode Island, South America, Switzerland and elsewhere.

Hallett said a significant break in the case occurred four months ago when Customs officials initiated several key wiretaps in the United States, picking up conversations between Arboleda and Saccoccia and their couriers. Federal investigators in Los Angeles conducted extensive wiretaps between Sept. 23 and Nov. 15.

To facilitate the movement of the laundered money, Masino, Messer and others had used cellular telephones, digital display paging devices and code words attempting to thwart law enforcement detection, according to the complaint. Nonetheless, numerous phone conversations were overheard and considerable visual surveillance of the defendants was conducted, the complaint said.

Among the code words used, according to Hallett, “High grade” meant $50 and $100 bills, “low grade” $10 and $20 bills, “karat” $5 and $10 bills, and “200 hundred ounces” described $200,000.

Messer and Khachatrian, who were being held without bail, appeared Monday before U.S. Magistrate Judge Elgin Edwards in Los Angeles and were advised of their rights. However, Edwards deferred their formal arraignment, and no pleas were entered.

The indictments from the other cities also describe elaborate schemes. The New York indictment said Saccoccia received large cash amounts at his New York business offices, obtained fax machine instructions on how to handle the money and then sent the funds to his out-of-town companies.

Saccoccia’s employees then would take the money to banks, convert it into checks payable to Saccoccia’s various precious metals companies. Then there would be a complex set of deposits and fund transfers, culminating in the final wire transfers to bank accounts in Colombia and Miami.

The Providence indictment alleged that more than $130 million was transferred from one account alone in a 12-month period.

The New York indictment said that Arboleda, Saccoccia and Slomovits “used jewelry and precious metals companies . . . as front businesses to disguise their money laundering activities. . . . The purpose of these front businesses was to provide an ostensibly legal justification for the large amounts of dollars going through bank accounts controlled by the defendants.”

The goal of the conspiracy was to “convert the currency into a form easily transferable out of the country,” with Colombia the final destination, the New York indictment said.

The Atlanta indictment also charged Arboleda and four others and two companies with a conspiracy involving importing, possessing and distributing cocaine as well as tax violations.

In addition to the FBI and Customs, the investigation involved agents from the Drug Enforcement Administration, Internal Revenue Service, the Financial Crimes Enforcement Network, state and local law enforcement authorities and the High Intensity Drug Trafficking Areas Program of the drug czar’s office, which provided financial support for the investigations.

Federal officials said houses, businesses, bank accounts and cars derived from or used in the illegal activity have been seized too.

Weinstein reported from Los Angeles and Ostrow from Washington. Times staff writer George Ramos also contributed to this story.